TSANN KUEN (CHINA) ENTERPRISE CO. LTD.
Semi-Annual Report 2010
(Prepared under China Accounting Standards)
Contents
I. Company Profile-------------------------------------------------------------------------------1
II. Summary of Financial and Business Highlights--------------------------------------2
(I) Major accounting data and financial indexes -----------------------------------------2
(II) Explanation on difference between different accounting standards---------------3
III. Changes in Share Capital and Particulars about Shareholders-------------------------4
(I) Changes in share capital-----------------------------------------------------------------4
(II) Particulars about shareholders ----------------------------------------------------------4
(III) About controlling shareholder--------------------------------------------------------5
(IV) About actual controlling shareholder------------------------------------------------6
IV. Particulars about Directors, Supervisors and Senior Management-------------------6
V. Report of the Board of Directors-----------------------------------------------------------6
VI. Significant Events -------------------------------------------------------------------------13
VII. Financial Report (Attachment) ---------------------------------------------------------20
VIII. Documents Available for Reference--------------------------------------------------201
Important Notes
The Board of Directors, Supervisory Committee, as well as the directors, supervisors and senior
management of Tsann Kuen (China) Enterprise Co., Ltd. (hereinafter referred to as “the Company”)
hereby confirm that there is no false information, misleading statements or any material omission
carried in this report, and collectively and individually accept the responsibilities for the truthfulness,
accuracy and completeness of the whole contents.
None of directors, supervisors or senior management has ever declared that he (she) is uncertain of or
has any objection to the truthfulness, accuracy and completeness of the Semi-annual Report 2010.
All the directors had attended the Board meeting which reviewed and approved the semi-annual report
2010.
The Chairman of the Board of Directors Mr. Jian Derong and the Accounting Manager Mr. Chen
Zongyi jointly declare that the financial report in this semi-annual report is true and complete.
The financial report in this semi-annual report has not been audited.
I. Company Profile
1. Company’s name (Chinese) : 厦门灿坤实业股份有限公司
Company’s name (English) : Tsann Kuen (China) Enterprise Co., Ltd.
Company’s name (Abbr.) : TKC
2. Legal Representative : Jian Derong
3. Secretary of the Board of Directors : Luo Qingxing
Contact address :Tsann Kuen Industrial Park, Longchi Development Zone, Zhangzhou, Fujian
Province
Telephone : 0596-6268103
Fax : 0596-6268104
E-mail : allenlo@tkl.tsannkuen.com
Securities Affairs Representative : Sun Meimei
Contact address :Tsann Kuen Industrial Park, Longchi Development Zone, Zhangzhou, Fujian
Province
Telephone : 0596-6268161
Fax : 0596-6268104
E-mail : mm_sun@tkl.tsannkuen.com
4. Registered address : No.88, Xinglong Road, Huli Industry District, Xiamen, P.R.C.
Post code : 361006
Office address : Tsann Kuen Industrial Park, Longchi Development Zone, Zhangzhou, Fujian
Province
Post code : 363107
Website : www.tsannkuen.com
E-mail : allenlo@tkl.tsannkuen.com2
5. Newspapers Chosen for Disclosing the Information of the Company:
Domestic : Securities Times; Overseas: Hong Kong Ta Kung Pao
Website for publishing semi-annual report: www.cninfo.com.cn
Place Where the semi-report is prepared and placed: Tsann Kuen Industrial Park, Longchi
Development Zone, Zhangzhou, Fujian Province
6. Stock Exchange Listed with : Shenzhen Stock Exchange
Short form for stock : Tsann Kuen B
Stock code : 200512
7. Initial registered date and place : Jan. 1, 1988 in Xiamen, P.R.C.
Business license number : 350200400001420
Organization Code : 61200217-0
Tax registration code : NTW Zi 350206612002170
CPAs engaged by the Company : Reanda Certified Public Accountants Co., Ltd.
Address of CPAs engaged : Room 2008, Eastern 20/F, No. 1 Building, No.100 Xili,
Balizhuang, Chaoyang District, Beijing
II. Summary of Financial and Business Highlights
(I) Major accounting data and financial indices
Unit: RMB Yuan
Items
As at the end of this
report period
As at the end of last
year
Increase/decrease of the end
of report period compared
with the period-end of the
last year (%)
Total assets 1,991,543,605.85 2,117,764,266.23 (5.96)
Owners’ equity attributable to shareholders of listed
company
434,091,507.89 396,565,377.00 9.46
Share capital 1,112,350,077.00 1,112,350,077.00 0.00
Net assets per share attributable to shareholders of
listed company
0.39 0.36 8.33
Items The report period (Jan.
-Jun.)
The same period of
last year
Increase/decrease during the
report period compared with
that of the last year (%)
Total operating income 1,665,009,562.62 1,184,719,288.10 40.54
Operating profit 43,181,953.41 18,952,570.69 127.84
Total profit 53,632,162.53 28,666,124.42 87.09
Net profit attributable to shareholders of listed
company
36,949,302.21 20,163,216.18 83.25
Net profit attributable to shareholders of listed
company after deducting non-recurring gains and
losses
29,167,992.93 17,747,955.08 64.35
Earnings per share-basic 0.03 0.02 50.00
Earnings per share-diluted 0.03 0.02 50.00
Net return on equity 8.51% 5.54% 2.97
Net cash flows from operating activities 37,457,183.12 (36,047,687.38) 203.91
Net cash flows per share from operating activities 0.03 -0.03 200.003
Items and amount of non-recurring gains and losses
Unit: RMB Yuan
Items Amount
Net profit 36,949,302.21
Add: gains and losses from disposal of non-current assets, including the part that withdrawn reserve for
impairment of assets were offset
(5,714,461.21)
Gains and losses from change in fair value of tradable financial assets and tradable financial liabilities and
investment income from disposal of tradable financial assets, tradable financial liabilities and available-for-sale
financial assets except for effective hedging business related to normal operation business of the Company
108,826.07
Government subsidy measured into current gains and losses, while closely related with the business of the
Company, excluding the fixed-amount or fixed-proportion government subsidy enjoyed according to the certain
standard
(4,300,109.16)
Other non-operating income and expense beside for the above-mentioned each items (435,638.75)
Subtotal (10,341,383.05)
Less: influence on enterprise income tax (112.50)
Less: net profit attributable to minority shareholders after deducting non-recurring gains and losses (2,559,961.27)
Net profit attributable to shareholder of parent company after deducting non-recurring gains and losses 29,167,992.93
(II) Difference between PRC GAAP and IFRS
Unit: RMB Yuan
Net profit attributable to
shareholders of listed company
Owners’ equity attributable to
Items shareholders of listed company
This period Last period As at
period-end
As at
period-begin
Under IFRSs 35,973,827.47 19,187,741.44 432,690,362.90 396,139,706.75
Under PRC GAAP 36,949,302.21 20,163,216.18 434,091,507.89 396,565,377.00
Adjustment pursuant to IFRSs:
Adjustment of fixed assets purchased before 1994 due to
adopting adjusted rate (1,111,317.84) (1,111,317.84) 153,503.76 1,264,821.60
Writing off the depreciation in this year of evaluation
increment fixed asset of the year1993 135,843.10 135,843.10 (1,554,648.75) (1,690,491.85)
Total (975,474.74) (975,474.74) (1,401,144.99) (425,670.25)
Explanation on difference
1. Adjustment to property, plant and equipment which acquired before
1994 at swap rates
2. Writing off the depreciation in this year of evaluation increment
fixed asset of the year19934
III. Changes in Share Capital and Particulars about Shareholders
(I) Changes in share capital
√Applicable □Inapplicable
Unit:
share
Before change Increase/decrease (+,-) After change
Quantity
Proportio
n
New shares
Bonus
shares
Shares turned
from capital
reserve
Other
s
Subtot
al
Quantity
Proporti
on
Ⅰ. Unlisted shares
1. Founder’s shares
Including: shares held by the state
Shares held by domestic legal
entities
Shares held by overseas legal
entities
Others
2. Shares placed by legal entities
3. Staff shares
4. Preferred shares or others
Ⅱ. Listed shares 1,112,350,077 100% 1,112,350,077 100%
1. RMB ordinary shares
2. Domestically listed foreign
shares
1,112,350,077 100% 1,112,350,077 100%
3. Overseas listed foreign shares
4. Others
Ⅲ. Total shares 1,112,350,077 100% 1,112,350,077 100%
(II) Particulars about shareholders
Total shareholders: 34,551
Shares held by the top ten shareholders
Unit: Share
No. Name of shareholder Nature of shareholder
Shareholding
ratio
Shares held at
the period-end
Non-tradable
shares held
Shares pledged
or frozen
1 FORDCHEE DEVELOPMENT LIMITED Foreign corporation 29.10% 323,643,179 0 0
2 EUPA INDUSTRY CORPORATION LIMITED Foreign corporation 16.35% 181,855,147 0 0
3 FILLMAN INVESTMENTS LIMITED Foreign corporation 2.49% 27,729,575 0 0
4 TIMMERTON CO INC Foreign corporation 1.30% 14,505,644 0 0
5
CHEN YONGQUAN Domestic natural
person
0.84% 9,297,444 0 0
6 CSC SECURITIES (HK.) LTD Foreign corporation 0.56% 6,202,579 0 0
7 CHEN YONGQING Foreign natural person 0.53% 5,889,589 0 0
8 CHEN LIJUAN Foreign natural person 0.51% 5,695,946 0 0
9
HE JIANXIONG Domestic natural
person
0.40% 4,439,551 0 0
10 TSAI SHUHUI Foreign natural person 0.39% 4,294,433 0 05
Shares held by the top ten stockholders holding tradable shares
Unit: Share
No. Name of shareholder Number of tradable shares held Type of shares
1 FORDCHEE DEVELOPMENT LIMITED 323,643,179 B-share
2 EUPA INDUSTRY CORPORATION LIMITED 181,855,147 B-share
3 FILLMAN INVESTMENTS LIMITED 27,729,575 B-share
4 TIMMERTON CO INC 14,505,644 B-share
5 CHEN YONGQUAN 9,297,444 B-share
6 CSC SECURITIES（HK）LTD. 6,202,579 B-share
7 CHEN YONGQING 5,889,589 B-share
8 CHEN LIJUAN 5,695,946 B-share
9 HE JIANXIONG 4,439,551 B-share
10 TSAI SHUHUI 4,294,433 B-share
Explanation on related
relationship and
action-in-concert
among above
mentioned shareholders
The top three shareholders are the controlling legal-entity shareholders. Shareholder Tsai Shuhui is the wife of Mr.
Wu Tsann Kuen, who is the actual controller of the Company. The Company was not aware that whether there were
any related relationships between other shareholders holding tradable shares and whether or not the other
shareholders holding tradable shares belonged to the action-in-concert people as prescribed in The Regulations for
Information Disclosure on the Change of Shares Held by the Shareholders of the Listed Companies.
(III) About controlling shareholders
Name of shareholders Legal Representative Foundation date
Business
scope
Registered capital Pledge
FORDCHEE DEVELOPMENT LTD Jian Derong 3 Jan. 1990 Investment HKD 10,000 Naught
EUPA INDUSTRY CORPORATION LTD Jian Derong 21 Jul. 1989 Investment HKD 100,000 Naught
FILLMAN INVESTMENTS LTD Jian Derong 21 Jul. 1992 Investment HKD 10,000 Naught
(IV) About actual controlling shareholder
1. Name of actual controlling shareholder : Wu Tsann Kuen
2. Nationality : Taiwan
3. Right of abode in other countries or regions : None
4. Employment and position in the recent five years : Founder of Tsann Kuen Group in the mainland
and Taiwan6
5. Block diagram of the relationship between the Company and the real controlling shareholder
6. The actual controller controls the Company through trust or other means of asset management: No
IV. Particulars about Directors, Supervisors and Senior Management
(I) Shareholding changes of directors, supervisors and senior management
□Applicable √Inapplicable
(Ⅱ) Changes in directors, supervisors and senior management
√Applicable □Inapplicable
On 26 Jul. 2010, the Company’s original director and GM Mr. Tang Qiongshan offered his resignation
to the Board of Directors and left office for the reason of his personal career planning. On the same
day, the Company convened the 2nd provisional board meeting in 2010, at which Mr. Pan Zhirong was
engaged as GM of the Company. For more details, please refer to the Public Notice on Resolutions
Made at 2nd Provisional Board Meeting in 2010 and the Public Notice on Director and GM Tang
Qiongshan Leaving Office published on Securities Times and Hong Kong Ta Kung Pao dated 28 Jul.
2010. Despite the fact that Tang Qiongshan has resigned from the position of director, directors are
still not under the prescribed number. As such, normal operation of the Board of Directors will not be
affected. And the Board will elect a new director candidate in an appropriate time and submit the
candidate for the Shareholders’ General Meeting for election.
V. Report of the Board of Directors
(Ⅰ) Operation in report period
1. Discussion and analysis on operation in report period
For the report period, the Company achieved an operating income of RMB 1,665 million, up by
40.54% as compared with RMB 1,185 million achieved at the same period of last year; a net profit of
RMB 37 million, up by 83.25% as compared with RMB 20 million achieved at the same period of last7
year. Meanwhile, the liability ratio was improved from 64.41% at the end of 2009 to 59.76% at the end
of the report period. The encouraging results were due to a much larger number of orders along with a
gradual recovery of markets in American and European countries. At the same time, the Company
carried out an effective control on product quality, cost and delivery time. And both the supporting
manufacturing system and the supply chain system functioned well. As such, the Company made a
cost reduction and profit growth come true.
According to the strategic objectives (focusing on the main business, improving the operation
management, and expanding new markets) set at the year-begin, under the highest guiding principle of
“to increase cash and profit”, with customer needs as the direction, product quality as the guarantee
and technological innovation as the means, the Company established a high-end service operation
mode characteristic of “high speed, low cost and best solutions”. It rapidly created advantageous edges
covering R&D and marketing, adjusted its product structure, and reduced cost by strengthening the
supply chain management and production flows, so as to meet customer needs of high quality but low
prices. In the coming years, the Company will work hard to become a pioneer and leader in
development of the sector, strengthen and solidify its technology R&D in the sector of small
household appliances, increase competitiveness of its products in the market through technological
innovations, and reinforce its marketing capability in the overseas market. Meanwhile, it will stabilize
and deepen the long-term cooperation relationship with big overseas customers so as to maintain a
stable development of all its businesses.
2. Scope of main business and its operation
01. Classified according to industries and products
Unit: RMB Ten thousand
Main business classified according to industries
Industries/products
Income of
main
business
Cost of
main
business
Gross
profit
ratio (%)
Increase/decrease of
income from main
business
year-on-year (%)
Increase/decrease of
cost of main
business
year-on-year (%)
Increase/decrease of
gross profit ratio
year-on-year (%)
Household
appliance
manufacture
162,489 143,726 11.55 41.86 41.21 0.41
Tourism 1,585 1,430 9.78 701.75 684.01 2.04
Total 164,074 145,156 11.53 43.00 42.36 0.40
Main business classified according to products
Home assistant 61,959 55,703 10.10 42.19 37.14 3.31
Gourmet cooking 73,362 62,892 14.27 36.63 37.20 -0.36
Tea/coffee 18,492 17,321 6.33 31.45 39.12 -5.16
Other 8,676 7,810 9.98 170.77 171.50 -0.24
Tourism 1,585 1,430 9.78 701.75 684.01 2.04
Total 164,074 145,156 11.53 43.00 42.36 0.40
Among which: total related transaction amount on products and service of controlling shareholders
and subsidiary companies provided by listed company was RMB 1,747,600 in the report period.
02. Classified according to areas
Unit: RMB Ten thousand
Area Income from main business Increase/decrease of income from main business year-on-year (%)
America 80,805 68.29
Europe 27,028 16.18
Asia 56,241 29.41
Total 164,074 43.008
03. Products with sales income exceeded 10% of income from main business
Unit: RMB Ten thousand
Product Proportion (%) Sales income Cost of sales Gross profit ratio
Home assistant 37.76 61,959 55,703 10.10
Gourmet cooking 44.71 73,362 62,892 14.27
Tea/coffee 11.27 18,492 17,321 6.33
Other 5.29 8,676 7,810 9.98
Tourism 0.97 1,585 1,430 9.78
Total 100.00 164,074 145,156 11.53
04. Explanation for significant changes of main business and its structure
□Applicable √Inapplicable
05. Explanation on reasons for significant changes in profitability (gross profit ratio) of main
businesses compared with the previous year
□Applicable √Inapplicable
06. Analysis of reasons for significant changes in profit structure compared with last year
√Applicable □Inapplicable
Along with economic recovery in the year 2010, the main business income of the Company increased
considerably. As such, the product sales of the Company in the report period were up by 40.54% year
on year with the net profit up by 83.25% year on year.
3. Operation status and achievements of the Company’s main controlling companies and joint stock
companies
01. Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
A. Business Type: Manufacturing;
B. Major Products and Services: Production of household appliances, electronic products, light
industry products, modern office appliances and their related modules, various kinds of computers and
their related equipments or spare parts. Development of computer software, IC packing and testing;
sale of our own products (the export of which does not usually require a license and quota; where such
a license or quota is required, it should be obtained before operation.)
C. Registered capital: USD 40 million
D: Asset scale: RMB 100.84 million
E: Net assets: RMB 99.16 million
F: Net profit: RMB -1.61 million
02. Tsann Kuen Zhangzhou Enterprise Co., Ltd.
A. Business Nature: Manufacturing
B. Major Products and Services: Development, production and sale of small household electrical
appliances, new kind of electronic appliances and parts (such as electrical kits, sensors and sensitive
transmitters), light industrial products, modern office supplies; designing and producing the molds
related to the above products. Processing and manufacturing nonferrous metal composed materials,
new-typed alloy materials, marketing self-made products and semi-manufactured products, processing
supplied materials and processing with supplied materials or given samples & assembling supplied
components. (Excluding those products restricted by the government or those whose import or export
quota is under license administration; wholesale of food such as coffee, rice balls and dough;
wholesale, after-sales service and technology service of various kinds of small house appliance (When
involved in those projects which need to be examined and approved first, the company carries out its
operation and production only within the range and within the valid period set in the license.)
C. Registered Capital: USD 160,000,0009
D. Assets Scale: RMB 2,431,560,000
E. Net Assets: RMB 1,290,990,000
F. Net Profit: RMB 55,210,000
G. The influence of net profit exceeded 10%:
Main business income: RMB 1,527,510,000
Main business Cost: RMB 1,344,950,000
03. Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd.
A. Business Nature: Manufacturing
B. Major Products and Services: Development, production and sale of small household electrical
appliances, new kind of electronic appliances and parts (such as electrical kits, sensors and sensitive
transmitters), light industrial products, modern office supplies; designing and producing the molds
related to the above products. (Excluding those products restricted by the government or those whose
import or export quota is under license administration.) ; wholesale of small household appliances and
providing agent service with commission charges (excluding auctions) . (When involved in those
projects which need to be examined and approved first according to the laws and regulations, the
company will do its business only after it has obtained the license).
C. Registered Capital: USD 5,000,000
D. Assets Scale: RMB 11,600,000
E. Net Assets: RMB 10,940,000
F. Net Profit: RMB 18,000
04. Tsann Kuen (Zhangzhou) Vocational Technical Institute
A. Business Nature: Education and training
B. Business Scope: Secondary vocational education
C. Registered Capital: RMB 3,000,000
D. Assets Scale: RMB 6,710,000
E. Net Assets: RMB 2,580,000
F. Net Profit: RMB 280,000
05. Shanghai Star Travel Commerce & Trade Co., Ltd.
A. Business Nature: Sales of household electrical appliances
B. Business Scope: Importing, Wholesaling, retail and its follow-up service of household appliances,
computer sets and their attachments, communication materials, motor and electric equipments, office
supplies and the related attachments (including kitchen facilities). Self-operating and acting as an
agent of various kinds of merchandise and import & export of technology; wholesale and retail of
roasted coffee powder and general merchandise, as well as other sales (not real foods).
C. Registered Capital: RMB 5,000,000
D. Assets Scale: RMB 39,950,000
E. Net Assets: RMB 7,370,000
F. Net Profit: RMB 550,00010
06. Xiamen Star Travel International Travel Service Co., Ltd.
A. Business Nature: Tourism
B. Business Scope: 1. inbound and domestic tourist services (valid before 31 Dec. 2012); 2. providing
personal accident insurance service as an agent. (Where an authority permit is required, such a permit
will be obtained before the Company’s operation.)
C. Registered Capital: RMB 5,000,000
D. Assets Scale: RMB 6,670,000
E. Net Assets: RMB 1,400,000
F. Net Profit: RMB -1,520,000
07. Xiamen Canxing Commerce & Trade Co., Ltd.
A. Business type: sale of household appliances
B. Main products and services: 1. wholesale and retail: daily necessities, household appliances,
computer and its auxiliary products, communication equipment, electrical and mechanical equipment,
office supplies, kitchen supplies and their auxiliary products; 2. import and export of various goods
and technologies (the catalog of the imported and exported goods is not available in this report),
excluding those whose import and export are restricted by the government. (where an authority permit
is required, such a permit will be obtained before the Company’s operation.)
C. Registered capital: RMB 9,000,000
D. Asset scale: RMB 8,050,000
E: Net assets: RMB 8,120,000
F: Net profits: RMB -110,000
08. Shanghai Fanxin Airlines Service Co., Ltd.
A. Business type: airlines service
B. Main products and services: ticket-selling and agent service in passenger transportation of civil
aviation for domestic routes, excluding HK, Macau and Taiwan routes. (where a license is required,
such a license would be obtained before the Company’s operation.)
C. Registered capital: RMB 1.5 million
D. Asset scale: RMB 3.39 million
E: Net assets: RMB 0.75 million
F: Net profits: RMB -0.3 million
09. Star Travel (Dalian) International Travel Service Co., Ltd.
A. Business Nature: Tourism
B. Business Scope: inbound and outbound travel services; domestic travel service; R&D and sales of
tourism products.
C. Registered Capital: RMB 5,300,000
D. Assets Scale: RMB 7,640,000
E. Net Assets: RMB 3,200,000
F. Net Profit: RMB -800,00011
10. Xiamen Jinyuan Airlines Service Co., Ltd.
A. Business Nature: Ticket agent
B. Business Scope: Ticket agent service (in passenger transportation of civil aviation for domestic
routes, excluding HK, Macau and Taiwan routes).
C. Registered Capital: RMB 1,500,000
D. Assets Scale: RMB 1,270,000
E. Net Assets: RMB 1,000,000
F. Net Profit: RMB -79,000
11. Shenzhen Canbao Commerce & Trading Co., Ltd.
A. Business Nature: Sale of household appliances
B. Business Scope: Purchase, sale and relevant technology service of household appliances, daily
necessities, computer and its auxiliary products, electrical and mechanical equipment, office supplies
and their auxiliary products; import and export of goods and technologies (excluding those projects
forbidden by laws and administrative regulations; a permit must be obtained before operating a project
restricted by laws and administrative regulations.)
C. Registered Capital: RMB 1,000,000
D. Assets Scale: RMB 980,000
E. Net Assets: RMB 980,000
F. Net Profit: RMB -17,000
4. In the report period, significant changes occurred in the asset composition and relevant expenses
compared with the same period of last year.
Unit: RMB Ten thousand
Items
Closing
amount
Opening amount
Increase/decrease
rate
Notes
Transactional
financial assets
158.87 -100.00%
Forward exchange deals that had not been settled by
Jun. were assessed as transactional financial liabilities.
Prepayment 731.20 438.29 66.83% Increase of prepayments for goods
Other
receivables
2,279.97 1,485.31 53.50%
Mainly because the Company paid more utilities and
other fees for supporting manufacturers.
Investing
properties
2,210.36 3,366.62 -34.34% Amortization of investing properties
Payroll payable 3,891.93 4,892.95 -20.46%
Mainly because the Company withdrew more for annual
bonuses and paid compensation for outsourcing spare
part manufacturing to supporting manufacturers.
Other payables 8,605.69 25,653.17 -66.45%
Mainly because the Company paid off the loan of RMB
157 million to EUPA Industry.
Non-current
liabilities due
within one year
6,828.20 -100.00% Due long-term borrowings were paid off.
Estimated
liabilities
161.90 -100.00%
Deductible agreements had been reached on
minimum-guarantee purchase contracts.
Currency
translation
difference
(65.12) -100.00%
Difference arising from translation of financial
statements of Eupa (Hong Kong) Co., Ltd. presented in
HK dollars12
Items
Accumulative
amount in this
period
Accumulative
amount in the
previous period
Increase/decrease
rate
Notes
Operating income 166,500.96 118,471.93 40.54%
Operating cost 146,502.99 102,821.49 42.48%
Marketing expenses 5,325.31 3,979.14 33.83%
Due to economic recovery in 2010,
product sales increased year on
year.
Financial expenses (642.95) 92.60 -794.36%
Interest income increased and
interest expenses decreased due to
borrowing repayment.
Asset impairment loss 338.74 (235.48) 243.85%
Mainly because falling-price loss
was withdrawn for inventories.
Income from fair value changes
(“-”for loss)
(181.30) (54.70) 231.43%
Assessed loss increased due to
unsettled forward exchange deals.
Investment income (“-”for loss) 209.55 (67.56) 410.18%
More profit was recognized from
settled forward exchange deals.
Non-operating expenses 80.85 149.66 -45.98%
More loss from asset disposal was
recognized.
Net cash flows from operating
activities
3,745.72 (3,604.77) 203.91%
More cash inflows due to increase
of product sales
Net cash flows from investing
activities
260.69 (1,224.89) 121.28%
Fixed asset expenses registered a
year-on-year decrease of 32%.
Net cash flows from financing
activities
(22,830.08) (9,602.39) -137.75% Borrowings were paid off.
(II) Investment status
□Applicable √Inapplicable
(III) Changes proposed by the Board of Directors to the business plan for the second half
□Applicable √Inapplicable
(IV) Significant related transaction resulted from co-investment with related parties
□Applicable √Inapplicable
(V) Cautions and explanations for the estimated loss of the accumulated net profit from the year-begin
to the end of the next reporting period or significant fluctuation compared with that of the same period
of the previous year
□Applicable √Inapplicable
(VI) Explanation of the Board of Directors on changes and handling of relevant events of the Qualified
Auditor’s Report produced by the CPA firm
□Applicable √Inapplicable13
VI. Significant Events
(I) Asset acquisition and sale and mergers of the Company in the reporting period
1. Asset acquisition
□Applicable √Inapplicable
2. Sale of asset
√Applicable □Inapplicable
Tssan Kuen Zhangzhou Enterprise Co., Ltd., the Company’s holding subsidiary, invited some spare
parts plants into the Tssan Kuen Industrial Park, so as to focus on its core advantages of R&D, design
and sale, and reduce the proportion of the self-made spare parts. And the overall market
competitiveness of the Company would be strengthened for those more professional spare parts plants
in the industrial park could supply spare parts directly to Tssan Kuen Zhangzhou, which contributed to
a lower cost and a better quality; Meanwhile, such a move was able to reduce the proportion of the
occupied fixed assets and increase the overall turnover rate of assets, so as to ensure a steady and
sustained future development of the Company.
For more details, please refer to the Public Notice on Selling Some Operating Assets of Spare Parts
Plants by Holding Subsidiary Tssan Kuen Zhangzhou Enterprise Co., Ltd., the Public Notice on
Progress of Holding Subsidiary’s Selling Some Operating Assets of Spare Parts Plants and Another
Sale of Assets and the Public Notice on Progress of Holding Subsidiary’s Selling Some Operating
Assets of Spare Parts Plants and A Third Sale of Assets, all published on Securities Times, Hong Kong
Ta Kung Pao and http://www.cninfo.com.cn dated respectively on 29 Jul. 2008, 21 Jan. 2009, 28 Apr.
2009 and 29 Apr. 2010.
Due to the needs of the said spare parts plants in their actual operation, the plants purchased a small
quantity of equipments from the Company in the reported period, which was detailed as follows:
Unit: RMB’0000 Yuan
Transaction party Asset sold Date of sale
Selling
price
Net profit
contributed to
the Company by
the sold asset
from year-begin
to the date of
sale
Gains and
losses due
to selling
the asset
Whet
her a
relate
d
transa
ction
or not
Expla
natio
n on
pricin
g
princi
ple
Whether or
not the
ownership
of the
involved
asset had
been
transferred
whether or
not the
relevant
creditor’s
rights and
liabilities
had been
transferred
Relati
onshi
p
with
the
Com
pany
Xiamen Pinrui
Hardware
equipment
2010.01.31 60.00 9.30 9.30
Hongyuan Electronics
Electronic
equipment
2010.01.31 71.67 31.35 31.35
Zhangzhou Ruicheng
Die casting
equipment
2010.01.31 11.00 1.10 1.10
Suzhou Yifeng
Bakelite
equipment
2010.01.31 4.00 3.92 3.92
Xiamen Jingjing
Die casting
equipment
2010.01.31 8.65 0.99 0.99
Yes Yes
Zhangzhou
Shengyuan
Hardware
equipment
2010.02.28 142.60 9.14 9.14
Longhai Yingfa
Bakelite
equipment
2010.02.28 171.17 15.59 15.59
No No
Longhai Yingfa
Bakelite
equipment
2010.02.28 0.71 0.61 0.61 Yes Yes
Zhangzhou Bo’er
Die casting
equipment
2010.02.28 163.30 (17.45) (17.45)
Zhangzhou Xiangkun
Hardware
equipment
2010.03.31 221.38 9.84 9.84
Zhangzhou Lanboni
Injection molding
equipment
2010.03.31 173.00 17.50 17.50
No No
Zhangzhou Hongkun
Injection molding
equipment
2010.03.31 0.50 0.43 0.43
Non-r
elated
comp
any
The
transa
ction
prices
were
decid
ed
based
on
the
princi
ple of
being
above
the
book
value,
as
well
as the
asses
sment
and
mark Yes Yes
Non-r
elated
comp
any14
Transaction party Asset sold Date of sale
Selling
price
Net profit
contributed to
the Company by
the sold asset
from year-begin
to the date of
sale
Gains and
losses due
to selling
the asset
Whet
her a
relate
d
transa
ction
or not
Expla
natio
n on
pricin
g
princi
ple
Whether or
not the
ownership
of the
involved
asset had
been
transferred
whether or
not the
relevant
creditor’s
rights and
liabilities
had been
transferred
Relati
onshi
p
with
the
Com
pany
Zhangzhou Hewang
Bakelite
equipment
2010.03.31 155.44 7.89 7.89 No No
Xiamen Jingjing
Bakelite
equipment
2010.03.31 25.34 4.07 4.07 Yes Yes
Zhangzhou Kerui
Die casting
equipment
2010.03.31 115.00 23.42 23.42 No No
Zhangzhou Kerui
Die casting
equipment
2010.03.31 2.96 0.40 0.40
Zhangzhou Ruicheng
Die casting
equipment
2010.03.31 0.50 0.35 0.35
Xiamen Jingjing
Die casting
equipment
2010.03.31 5.70 0.89 0.89
Yes Yes
Zhangzhou Shunkun
Bakelite
equipment
2010.04.01 253.00 34.14 34.14
Xiamen Jingwei
Hardware
equipment
2010.04.01 210.00 2.14 2.14
No No
Zhangzhou Jiafeng Wiring equipment 2010.04.30 47.22 30.29 30.29 Yes Yes
Zhangzhou Dakun Motor equipment 2010.04.30 790.00 107.11 107.11 No No
Zhangzhou Kerui
Die casting
equipment
2010.04.30 0.65 0.20 0.20
Zhangzhou Yufeng
Die casting
equipment
2010.04.30 3.40 0.78 0.78
Zhangzhou Yongkun
Injection molding
equipment
2010.04.30 9.52 0.77 0.77
Zhangzhou Xingkun
Injection molding
equipment
2010.04.30 0.69 0.06 0.06
Yes Yes
Zhangzhou Haoyunda
Hot iron
equipment
2010.05.31 158.03 16.55 16.55 No No
Suzhou Yifeng
Injection molding
equipment
2010.05.31 0.25 0.21 0.21
Zhangzhou Keid
Bakelite
equipment
2010.05.31 0.92 0.08 0.08
Zhangzhou Yufeng
Die casting
equipment
2010.05.31 1.60 0.20 0.20
Zhangzhou Lanboni
Injection molding
equipment
2010.05.31 0.23 0.08 0.08
Zhangzhou Chuangyi
Injection molding
equipment
2010.05.31 0.40 0.05 0.05
Zhangzhou Kerui
Die casting
equipment
2010.05.31 9.50 1.25 1.25
Zhangzhou Ruicheng
Die casting
equipment
2010.05.31 18.00 7.08 7.08
Zhangzhou Haikun
Die casting
equipment
2010.05.31 0.85 0.04 0.04
Zhangzhou Fushun
Injection molding
equipment
2010.05.31 0.46 0.31 0.31
Suzhou Yifeng Motor equipment 2010.05.31 2.50 0.28 0.28
Yes Yes
Zhangzhou
Wangcheng
Injection molding
equipment
2010.06.30 91.45 9.33 9.33 No No
Zhangzhou Shunkun
Bakelite
equipment
2010.06.30 1.32 1.13 1.13
Zhangzhou Kerui
Die casting
equipment
2010.06.30 16.00 1.37 1.37
Zhangzhou Chuangyi
Injection molding
equipment
2010.06.30 0.10 0.04 0.04
Zhangzhou Qiankun
Injection molding
equipment
2010.06.30 0.30 0.05 0.05
Zhangzhou Lanboni
Injection molding
equipment
2010.06.30 0.30 0.13 0.13
Zhangzhou Fushun
Injection molding
equipment
2010.06.30 0.90 0.61 0.61
et
prices
.
Yes Yes
Total 2,950.51 333.62 333.6215
3. Progress of these events after the publication of the Assets Reorganization Report or public notices
on the purchases or sales of assets, as well as the influences of these events on the operation results
and financial status of the Company in the reporting period
□Applicable √Inapplicable
(II) Guarantees
√Applicable □Inapplicable
Unit: RMB’ 0000 Yuan
Guarantees provided for external parties (excluding guarantees provided for subsidiaries)
Name of the guaranteed
Date and No.
of Relevant
public notice
Guarantee
line
Date of
occurrence (Date
of signing
agreement)
Actual
amount
of
guarantee
Type of
guarante
e
Term of
guarantee
Implem
entation
accomp
lished
or not
Guarante
e for
related
parties or
not
Naught Naught 0 Naught 0 Naught Naught Naught Naught
Total external guarantees lines examined and approved in
the reporting period (A1)
Naught Total external guarantees occurred in
the reporting period (A2)
Naught
Total external guarantee lines examined and approved at
the period end (A3)
Naught Balance of actual guarantees at the
period end (A4)
Naught
Guarantees provided for subsidiary companies
Name of the guaranteed
Date and No,
of Relevant
public notice
Guarantee
line
Date of
occurrence (Date
of signing
agreement)
Actual
amount
of
guarantee
Type of
guarante
e
Term of
guarantee
Implem
entation
accomp
lished
or not
Guarante
e for
related
parties or
not
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
27,750 9 Jul. 2009 9,031
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
15,000 27 Nov. 2009 9,225
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
6,791 17 Jul. 2009 1,099
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
16,700 4 Aug. 2009 7,249
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
6,112 31 Aug. 2009 1,238
Tsann Kuen Zhangzhou
Enterprise Co. Ltd.
2009/4/14;200
9-014
20,000 19 Jul. 2009 10,236
Joint
responsi
bility
Within 1
year from
term of
debts
implementa
tion was
expired
No No
Total guarantees lines for subsidiaries examined and
approved in the reporting period (B1)
0
Total guarantees for subsidiaries
occurred in the reporting period (B2)
62,482
Total guarantee lines for subsidiaries examined and
approved at the period end (B3)
92,353
Balance of actual guarantees at the
period end (B4)
38,078
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined and approved in the
reporting period (A1+B1)
0
Total guarantees occurred in the
reporting period (A2+B2)
62,482
Total guarantees lines examined and approved at the report
period (A3+B3)
92,353
Total balance of actual guarantees at
the period end (A4+B4)
38,078
Proportion of total actual guarantee amount (A4+B4) in net assets of the Company 87.72%
Among which:
Amount of guarantees provided for shareholders, actual controller and other related parties
(C)
Naught
Amount of debt guarantees provided directly or indirectly for parties with asset-liability ratio
exceeding 70% (D)
Naught
Proportion of total guarantee amount exceeding 50% of the Company’s net assets (E) 16,373
Total amount of the above three guarantees (C+D+E) 16,373
Explanation on possibility of taking several and joint liability involving immature guarantees Naught16
(III) Current of non-operating related creditor’s right and debts
√Applicable □Inapplicable
Unit: RMB’0000 Yuan
Funds provided by the listed
company to related parties
Funds provide by related parties to listed company
Related party
Occurred
amount
Balance Occurred amount Balance
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 6.41 0.00
STAR COMGISTIC CAPITAL CO.,LTD. 1,991.86 907.73
TSANN KUEN USA INC 52.78 11.16
TSANN KUEN JAPAN CO., LTD. 763.31 383.80
EUPA (Hong Kong) Limited (Note) 82.50 24.82
Thermaster Electronic (Xiamen) Ltd. 123.47 8.47
STAR TRAVEL SERVICE CORP. 0.19 0.19
Total 0.00 0.00 3,020.52 1,336.17
Of which: Listed company offered a capital of RMB 0.00 to controlling shareholders and its
subsidiaries. The balance was RMB 0.00 in the report period.
Note: EUPA (Hong Kong) Limited has been finished share transferred on 29 Apr., funds provided by
related parties to the Company means occurred amount during May to Jun.
(IV) Significant lawsuits and arbitrations
□Applicable √Inapplicable
(V) Other significant events and explanation on analysis to their influences and solutions
1 Securities investment
□Applicable √Inapplicable
2. Equity of other listed companies the Company held
√Applicable □Inapplicable
Unit: RMB Yuan
Securit
ies
code
Short form
of
securities
Initial
investment
amount
Proportion
in equity of
the
Company
Book value
at
period-end
Profits
or losses
in the
report
period
Changes of
owners’ equity in
the report period
Accounting subject
Resourc
e
600838
Shanghai
Jiubai
30,700.00 0.01 251,294.40 0 (33,022.08) Financial assets
available for sale
Corpora
tion
share
Total 30,700.00 251,294.40 0 (33,022.08)
3. Statement on non-operating capital occupation by principal shareholder and affiliated enterprises
and repayment
□Applicable √Inapplicable17
4. Particulars about execution of commitments made by the Company, shareholders and actual
controllers
□Applicable √Inapplicable
5. Preplan on Profit Distribution or Transferring capital reserves to share capital from the Board of
Directors
□Applicable √Inapplicable
6. Particulars about other comprehensive earnings
√Applicable □Inapplicable
Unit: RMB Yuan
Items
Accumulative
amount of this
period
Accumulative
amount
year-on-year
1. Profits (or losses) from the available-for-sale financial assets (42,336.00) 77,112.00
Less: Effects on income tax generating from the available-for-sale financial assets 9,313.92 (17,003.82)
The amount in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period
Subtotal (33,022.08) 60,108.18
2. Interest in the investees’ other comprehensive gains according to the equity method 0.00 0.00
Less: Effects on income tax generating from the interest in the investees’ other comprehensive
gains according to the equity method 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
Subtotal 0.00 0.00
3. Profits (or losses) from cash flow hedging instrument 0.00 0.00
Less: Effects on income tax generating from the cash flow hedging instrument 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
The adjustment value that is the converted initial recognition amount of arbitrage project 0.00 0.00
Subtotal 0.00 0.00
4. Converted amount of foreign currency financial statement 651,220.33 (297,241.92)
Less: Net value of disposal of oversea operations that recognized into current profit and loss 0.00 0.00
Subtotal 651,220.33 (297,241.92)
5. Others 0.00 0.00
Less: Effects on income tax generating from the others that recognized into other comprehensive
gains 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
Subtotal 0.00 0.00
Total 618,198.25 (237,133.74)
7. Particulars about corporate governance
By the end of 2009, governance of the Company has been executed in accordance with relevant
documents from CSRC, and there was no discrepancy.18
8. Fulfillment of commitments made by shareholders holding over 5% shares
□Applicable √Inapplicable
9. Explanation on the inquisitions for the Company from CSRC in 007
On Apr. 26, 2007, the Company received the Notice of Investigation (XDCT Zi No. 0701) from CSRC
for the Company was “suspected of violating securities regulations”. For detailed information, please
refer to the Public Notice on Investigation from CSRC disclosed on Securities Times, Hong Kong Ta
Kung Pao and http://www.cninfo.com.cn dated 27 Apr. 2007; At present, the investigation has been
almost finished and the Company will disclose the relevant information in time according to rules and
regulations as soon as the result of CSRC investigation comes out.
10. Reception of researches, communication and visits in the report period
In the reporting period, according to Guidelines on Fair Information Disclosure of Listed Companies,
the Company and the staff in charge of relevant information disclosure strictly followed the principle
of fair information disclosure by not treating visitors differently, or leaking undisclosed information of
the Company to any particular party privately or selectively. The details were as follows:
Reception time Reception place Reception way Visitor Main discussion and materials provided
19 Jan. 2010 By telephone Miss Fang Operation status of the Company
25 Feb. 2010 By telephone Mr. Ding Operation status of the Company
20 Apr. 2010 By telephone Mr. Liu Operation status of the Company
28 Apr. 2010
Office of the Company
By telephone Miss Li Operation status of the Company
(VI) Significant related transactions
1. Related transactions occurred in the report period
01. Related transactions concerning share transfer
Unit: USD’0000
Related party Content Pricing principle
Original
book
value of
assets
Net book
value of
assets
Estima
ted
value
Tradin
g
price
Settlement way
SINO
GLOBAL
DEVELOPM
ENT
LIMITED
P.O.Box 957,
Offshore
Incorporations
Center,Road
Town,Tortola,British
Virgin Islands
Entrusting
Guangdong
Zhongguangxin
Assets Appraisal Co.,
Ltd to evaluate;
reference to appraisal
price and marketing
price to confirm
trading price
140 93.87 105.09 116
Pay 50% after
signed the
agreement and
then pay off the
balance when the
equity transaction
has been finished.
In order to integrate operating and decrease loss from investment, the Company transferred the whole
equity of EUPA (Hong Kong) Limited, wholly-owned subsidiary of the Company, to shareholder of
the Company--SINO GLOBAL DEVELOPMENT LIMITED, which was shareholder of FORDCHEE
DEVELOPMENT LIMITED, EUPA INDUSTRY CORPORATION LIMITED and FILLMAN
INVESTMENTS LIMITED.
For details please referred to Public Notice on Transferring Wholly-owned Subsidiary-- EUPA (Hong
Kong) Limited and Related Transaction published on Securities Times, Hong Kong Ta Kung Pao and
http://www.cninfo.com.cn dated 26 Mar. 2010.19
The first and balance payment for share transfer had been received respectively on 18 Apr. and 29 Apr.
2010.
02. Other related transactions please referred to accounting statements.
2. Pricing principle of related transaction was in accordance with Arrangement on Advance Pricing for
Business Current between related enterprises signed with State Administration of Taxation, and
referred to principle of transaction fairness of the same industry.
3. Settlement way is according to contract signed by both parties.
4. Explanation on necessary and durative of related transaction: enhanced efficiency of integration,
reduce cost trough bulk purchase and enhance market occupation by advantage of related enterprises
in different countries.
(VII) Implementation of related transactions arising from routine operation in the reporting period
Unit: (RMB) Yuan
Transaction
Nature
Name of related parties Transaction Type
Amount
disclosed in 2010
Total amount
from Jan.-Jun.
2010
Proportion
Tsann Kuen (Taiwan) Enterprise Co.,
Ltd.
Equipment/mould 0.00 64,078.48
STAR COMGISTIC CAPITAL Raw material 39,500,000.00 14,750,404.36 37.34%
CO.,LTD. Equipment/mould 3,150,000.00 415,293.05 13.18%
Purchase
Thermaster Electronic (Xiamen) Ltd. Raw material 78,000,000.00 33,478,239.20 42.92%
Tsann Kuen (Taiwan) Enterprise Co.,
Ltd.
Finished goods 20,200,000.00 11,050,441.95 54.71%
STAR COMGISTIC CAPITAL
CO.,LTD.
Finished goods 61,800,000.00 26,628,782.35 43.09%
TSANN KUEN JAPAN CO., LTD. Finished goods 239,000,000.00 122,178,556.70 51.12%
Sale
Thermaster Electronic (Xiamen) Ltd. Raw material 62,000.00 86,651.09 139.76%
Thermaster Electronic (Xiamen) Ltd. Consulting fee 2,600,000.00 1,234,691.22 47.49%
Offering labor Tsann Kuen (Taiwan) Enterprise Co.,
Ltd.
salesCommission 700,000.00 136,094.58 19.44%
STAR COMGISTIC CAPITAL
CO.,LTD.
Technical service 18,300,000.00 8,729,639.27 47.70%
STAR COMGISTIC CAPITAL
CO.,LTD.
Agency fee on
procurement
2,130,000.00 1,005,345.79 47.20%
EUPA (Hong Kong) Limited
Agency fee on
procurement
0.00 421,648.57
STAR COMGISTIC CAPITAL
CO.,LTD.
Consulting fees 1,450,000.00 403,400.17 27.82%
TSANN KUEN JAPAN CO., LTD. salesCommission 5,350,000.00 1,507,099.78 28.17%
TSANN KUEN JAPAN CO., LTD.
Relative to product
quality expenses
16,700,000.00 5,575,812.57 33.39%
Receiving
labor
TSANN KUEN USA INC Commission 2,000,000.00 527,838.83 26.39%
Receiving
service
STAR TRAVEL SERVICE CORP. Service cost 13,317,000.00 3,654,586.81 27.44%
STAR TRAVEL SERVICE CORP. Service income 5,412,000.00 2,626,370.30 48.53%
STAR COMGISTIC CAPITAL
CO.,LTD.
Service income 0.00 9,085.94
Offering
service
Thermaster Electronic (Xiamen) Ltd. Service income 73,000.00 5,261.80 7.21%20
VII. Financial Report (Refer to Attachment)
(I) Auditor’s opinion
Financial Report √Un-audited □Audited
Auditors’ Report □ Non-qualified audit report □ Qualified audit report
Un-audited
(II) Accounting statements
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of owners’ equity
VIII. Documents Available for Reference
(I) The Financial statements with signatures and seals of the legal representative, person in charge of
accounting work, person in charge of accounting organization and the statement producer.
(II) All the company’s documents and announcement originals that were publicly disclosed during the
report period on the newspapers designated by CSRC.
(III) Articles of Association of the Company.
(IV) The above-mentioned documents are placed in the secretary office of the Board of Directors.
Tsann Kuen (China) Enterprise Co., Ltd.
Chairman of the Board: Jian Derong
6 Aug. 201021
Tsann Kuen (China) Enterprise Co. Ltd
Notes to Consolidated Financial Statements
For the half year ended 30 June 2010
（All amounts are expressed in RMB yuan unless otherwise stated）
I. General
1、Company History
Tsann Kuen (China) Enterprise Co., Ltd. (“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 Tsann Kuen China
(Xiamen) Ltd. firstly, invested by the Fordchee (Hongkong) Co., Ltd , EUPA (Hongkong) Industry Co., Ltd and
Hongkong Fillman investment Co.,Ltd . On 16 February 1993, with the approval of the Ministry of Foreign Trade
and Economic Co-operation, the Company was reorganized into a incorporated company and was renamed as Tsann
Kuen (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. Until 30 June 2010, company’s share capital is RMB 1,112,350,077, B shares among the
total shares issued on the Shenzhen Stock Exchange.
Follow The Ministry of Commerce of the People’s Republic of China approved （The NO. [2005]3107《Agreed in
principle to the Ministry of Commerce on Industrial Co., Ltd. Xiamen Cankun shares traded sponsor of the
approval》）, On December 6, 2006, the Company received the [2006] No.266 file 《The notice of Xiamen Tsann
Kuen Industrial Co., Ltd. concerning the approval of non-listed foreign shares traded》from China Securities
Regulatory Commission. The China Securities Regulatory Commission agreed 700,476,830 unlisted shares (62.97%
paid in capital of the Company) hold by the company’s shareholders, EUPA (Hong Kong) Limited, Fordchee
Development Limited and Fillman Investment Limited to transfer into B shares. In November 29, 2007 these B
shares could be listed and exercised on Shenzhen Stock Exchange.
2、The industry
The Company operates within the electrical machinery and equipment manufacturing industry.
3、Scope of business
Company approved business scope: the main business is to develop, manufacture and sell household appliances,
electronics, light industrial products, modern office supplies. Those subsidiary’s main business is to manufacture
household appliances, electronics, light industrial products, sell products by wholesale, distribution appliances,
communication equipment, electrical equipment, office equipment, computer accessories, general merchandise and
food; Design, manufacture and sell Precision (Punching) Die, Precision Mold Cavity, and Model Standard Unit, as
well as engaged in the research and development of those products.22
4、Main products
The Company’s main products is: Household electrical appliance
5、Main changes
The Company has no major changes within reporting period.
II. Summary of Significant accounting policies, accounting estimates and correct previous
accounting period errors
1、Basis for preparation
The Company and its subsidiaries maintain their accounting record and prepare their statutory financial statement
based on the assumption of going concern, recognise and measurement in accordance with the fact and substance of
transactions , and according to the < Accounting Standard for Enterprises – Fundamental Standard>, as well as based
on those accounting policy and accounting estimate that described in part two of this FS notes.
2、Declaration of compliance with the Enterprise Accounting Standards
The Company’s financial statements prepared follow the requirements of the Enterprises Accounting Standard
promulgated by the Ministry of Finance; fairly and completely present the financial position, operation result and
cash flows, and other relevant information of the Company.
3、Accounting Year
The Company employs a period of calendar days from January 1 to December 31 each year as accounting year.
4、Presentation currency
The Company’s presentation currency is Renminbi (“RMB”).
5、Accounting treatment of the business combination that is under the same control and not under the same
control.
(1)Accounting treatment of the business combination that is under the same control
Those assets and liabilities obtained by the Company during the business combination should be recognized in the
carrying value of the shareholder’s equity of the subsidiary on the merger date. The difference between the carrying
amount of the net assets obtained and carrying amount of the merger consideration shall be adjusted to capital reserve.
If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
(2)Accounting treatment of the business combination that is not under the same control
The consideration paid for the business combination exceeds the acquirer’s interest in the fair value of the
bargainor’s identifiable net assets, the difference shall be recognized as goodwill; Where the cost of combination is
less than the acquirer’s interest in the fair value of the bargainor’s identifiable net assets, should be review the fair
value of bargainor’s identifiable assets、 liabilities and contingency liabilities , as well as the computation of
combination cost, after reassessment, the difference shall be recognized in profit or loss to the current period.
6、Basis of Consolidated Financial Statement
（1）Consolidation Scope
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise Accounting Standards –
Consolidated Financial Statement issued in February, 2006. The consolidated financial statements incorporate the
financial statements of the Company and enterprises direct controlled or indirect controlled by the Company (“its
subsidiaries”). Control is achieved where the Company has the power to govern the financial and operating policies
of an investee enterprise so as to obtain benefits from its operating activities.23
If there is evidence provide that the invested company is not control by holding company, the invested company
would not in consolidation scope.
(2) Buy and sale the shares of subsidiaries
The effective purchase day and sales day recognized, should has transferred the material risk and reward of
ownership of share of subsidiaries. The consolidated income statement and consolidated cash flow statement has
included the results of operation and cash flow of subsidiaries(not under the same control) before disposal or after
acquired the share; for the subsidiaries under the same control from business combination, the operation results and
cash flow has been included in the consolidated income statement and consolidated cash flow statement from
beginning of combination period to consolidation date and disclosed in statement individual, the comparative amount
in consolidation statement has been adjusted correspond to it.
If the Company acquires minority equity shares of subsidiaries, thus hold the long-term equity investment, on the
date of prepare consolidation statement, the difference between the value of the new long-term equity investment and
the value of subsidiary’s net assets enjoyed by proportion of shareholdings(begin with acquired date or combination
date), shall be adjusted to capital reserve, if the capital reserve is not sufficient to absorb the difference, any excess
shall be adjusted against retained earnings.
（3）Adjusted the subsidiaries’financial statement, when the subsidiaries has different accounting policy and
reporting period.
If the subsidiaries has different accounting policy and reporting period with the parent company, the consolidated
financial statement prepared according to the parent company’s accounting policy ,and adjusted the subsidiaries’
financial statement; For those subsidiaries acquired not under the same control, according to the fair value of
identifiable assets、liabilities and contingency liabilities of the subusidiary on the acquisition date, to adjusted
subsidiaries’ financial statement.
（4）Consolidation method
All significant intercompany transaction and balances between group enterprises are eliminated on consolidation.
The minority interest would disclosed in consolidation statement alone. Decrease minority interest if the minority
shareholders should afford to the loss of the subsidiaries that allocate to minorities, otherwise, the Company would
bear the loss of exceed.
7、Standard of cash and cash equivalents
Cash of the Company include the cash in hand and deposits that can pay in any time.
Cash equivalents of the Company include the investments with short term (it usually expires within three months
from the purchase date), highly liquidity, easy to convert into known amount of cash, and low-risk of changes in
value.
8、Conversion of foreign currency
（1）Foreign currency transactions
The Company’s foreign currency transactions are convered into presentation currency(RMB) at spot exchange rates
(Usually refers to the middle rate of the exchange price quotation that announced by the People's bank of China)
prevailing on the day in which the transactions take place.
On the balance sheet date, those foreign currency monetary items within the financial statement should be convered
at the spot rates prevailing on the balance sheet date. The exchange difference caused by the change in the exchange
rate from the initial recognized date and the current balance sheet date, included in profit and loss for the year. With
historical cost measurement of foreign currency non-monetary items, the transaction is convered at the spot exchange
rate of transaction day, without changing its presentation currency amount. In the fair value measurement of foreign
currency non-monetary items, convered at the spot exchange rate at that day when the fair value can be determined,
the difference between amount after converted into presentation currency and the original presentation currency
amount, as the changes in the fair value, recognized in the current profits and losses.24
（2）Conversion of foreign currency financial statement
①Assets and liability items in balance sheet are converted at the spot rates prevailing on the balance sheet date; items
in shareholders’ equity are converted at the spot rates prevailing on date of transaction except undistributed profit.
②Revenue and expense in income statement are converted at the spot rates prevailing on the transaction date.
The exchange differences caused by above method are disclosure in the shareholders’ equity individually.
③Cash flow statement items converted at the spot rates prevailing on the cash flow date. The exchange differences
should disclosed individually in the cash flow statement.
9、Financial Instruments: Recognition and Measurement
（1）Classification of financial assets and financial liabilities
The Company in accordance with the investment purpose and economic substance of the ownership of financial
assets are divided into four category, which is fair value through profit or loss; Held-to-maturity investments; Loans
and receivables; Available-for-sale financial assets.
According to the economic substance those financial liabilities are divided into fair value through profit or loss and
others.
① Financial assets or financial liabilities at fair value through profit or loss: including held for trading financial
assets or financial liabilities and designated by the Company as at fair value through profit or loss.
A financial asset or financial liability is classified as held for trading if it is:
a、Acquired or incurred principally for the purpose of selling or repurchasing it in the near term; or
b、Part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or
c、A derivative (except for a derivative that is a designated and effective hedging instrument, a derivative of financial
guarantee contract, a derivative that settle by equity instrument, which the price of instrument could not be quoted in
active market and the fair value could not measure reasonably).
A financial asset or financial liability is classified as designated fair value through profit or loss if it is:
a、The designation can be eliminated or significantly reduced the inconsistent situation or relate profit and loss cause
by different measurement basis of financial assets and financial liabilities;
b、Company risk management or investment strategy has been enshrined in a formal written document that the
financial assets portfolio, the financial liabilities portfolio, or the financial assets and financial liabilities portfolio are
management in fair value-based and evaluation and report to key management person.
②Held-to-maturity investments: are non-derivative financial assets with fixed or determinable payments and fixed
maturity that company has the positive intention and ability to hold to maturity. Mainly include the Company's
management has a clear intention and ability to hold to maturity of fixed-rate national bonds, floating-rate corporate
bonds.
③Receivables: are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Receivables of the Company mainly refer to the Company's sales of goods or rendering of services to25
form the accounts receivable and other receivables.
④Available-for-sale financial assets: are those non-derivative financial assets that are designated as available for sale
at initial recognized, or those financial assets are not measured in fair value based and through to profit and loss, or
loans and receivables, or held-to-maturity investments.
⑤Other financial liabilities: financial liabilities not divided into measurement in fair value base and through into
profit and loss account.
（2）Measurement of financial assets and financial liabilities
The Company’s financial asset or financial liability is recognized at its fair value initially. For financial assets or
financial liabilities at fair value through profit or loss, relevant transaction costs that are directly attributable to
current profit and loss; for other types of financial assets or financial liabilities, transaction costs related to the
amount included in the initial confirmation cost.
Subsequent measurement of financial assets and financial liabilities:
①Financial assets or financial liabilities at fair value through profit or loss measured at its fair value, at balance
sheet date, the changed difference of fair value are accounted for profit and loss in current period.
②Held-to-maturity investments, which shall be measured at amortized cost using the effective interest method, the
profit or loss of termination confirmation, impairment or amortization included in the profit and loss account.
③Loans and receivables, which shall be measured at amortized cost using the effective interest method, the profit or
loss from termination confirmation, impairment or amortization included in the profit and loss account.
④Available-for-sale financial assets, are measured with fair value, any changes of fair value of available-for-sale
financial assets at the end of period are accounted for capital reserve (other capital reserve). Disposal of
available-for-sale financial assets, the difference between consideration received and carrying value of the financial
assets included into investment profit or loss account; at the same time, turn out the original cumulative amount of
fair value change of corresponding part within the equity, included into investment profit or loss account. The
impairment losses and Exchange differences of foreign monetary financial assets including into current profit and
loss. Interest received and cash dividends received during the hold period are recognized as investment income.
⑤Other financial liabilities, together with the equity instrument that price not be quoted in active market and the fair
value could not measure reasonably measured, as well as the subsequent measurement should according to the cost of
derivative financial liabilities.
The financial guarantee contract is not belong to financial liabilities designated by the Company as at fair value
through profit or loss, as well as the loan commitment is not belong to financial liabilities designated by the
Company as at fair value through profit or loss and belower than market rate, After initial recognition, measured
higher of：(1)Amount confirmed by < Enterprise Accounting Standard 13-- Provisions, Contingent Liabilities and
Contingent Assets>；(2)Balance of initial recognition amount minus the accumulated amortization refer to
.
Other financial liabilities adopt the effective interest method, subsequent measured by amortization cost, recognized26
the profits and losses by termination confirmation or amortization to current profit and loss account.
⑥Fair value：It’s the amount for which an asset could be exchanged or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. In a fair deal, the transaction should the two sides are continuing
operations enterprises, do not intend to carry out the liquidation or a major reduction in scale of operation, or under
adverse conditions is still trading. The existence of an active market of financial assets or financial liabilities, the
quotation within the active market should be used to determine its fair value. If there is no active market, company
should adopt valuation techniques to determine the fair value.
⑦The amortized cost of a financial asset or financial liability： it’s the amount at which the financial asset or
financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative
amortization using the effective interest method of any difference between that initial recognized amount and the
maturity date amount, and minus any reduction for impairment or unrecoverable.
⑧The effective interest method: It’s a method of using effective interest calculating the amortized cost of a financial
asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income
or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash flows through the expected life of the financial instrument or, when appropriate, a shorter period to the
net carrying amount of the financial asset or financial liability. Then calculating the effective interest rate, company
shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call
and similar options) but shall not consider future credit losses.
（3）Transfers and derecognize of financial assets
①Derecognize financial asset if, and only if, meets one of the following three conditions:
a、terminate the contractual rights of cash flows from the financial asset;
b、the financial assets have been transferred, and the ownership of the risks and rewards of financial assets
transfered to other party;
c、The financial assets have been transferred, but the Company neither transfered the ownership of the risks and
rewards of financial assets, nor retained , and gives up control of the financial assets.
②When termination conditions of entire transferred assets has been satisfied, the differences between the amounts
of following items shall be recognised in the current period profits and losses account:
a、The carrying value of transferred financial assets;
b、The consideration received from the transfer, and the accumulative amount of the changes of the fair value
originally recorded in the shareholders’ equities.
③If the transfer of partial financial assets satisfies the conditions of derecognize, the entire book value of the
transferred financial asset shall apportion, between the portion whose derecognize and the recognized portion (under
such circumstance, the service asset retained shall be deemed as a portion of financial asset whose derecognize), be
apportioned according to their respective relative fair value, and the difference between the amounts of the following
two items shall be accounted for the profits and losses of the current period .
a、The portion of carrying value derecognized;
b、The consideration received from the transfer, and the accumulative amount of the changes of the fair value
originally recorded in the shareholders’ equities.
④If the Company fails to satisfy the conditions of derecognize for transferred financial assets, it shall continue to27
recognize the entire financial assets to be transferred and shall recognize the consideration it receives as a financial
liability. For those financial assets transfer adopt continuing involvement method, the Company should recognize
one financial asset and one financial liability, according to the extent of the transferred financial assets of continuing
involvement.
（4）Impairment of financial assets
① If the Company have the following evidence to prove the impairment of financial assets, should recognize the
provision of impairment:
a、significant financial difficulty of the issuer or obligor;
b、a breach of contract, such as a default or delinquency in interest or principal payments;
c、the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
d、it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
e、the disappearance of an active market for that financial asset because of financial difficulties;
f、observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of
financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the group;
g、adverse changes in the payment status of borrowers in the group, let the lender may cannot recover the investment
cost;
h、the fair value of financial instrument investment incur serious or non-temporary decline;
i、other objective evidence that prove impairment of financial assets.
②On balance sheet date, the Company should adopt different impairment test method for different category financial
assets, and recognize provision of impairment:
a、Held-to-maturity investments：on the balance sheet date, if there are objective evidence of impairment for the
investment, the Company has recognized the impairment loss by the asset’s carrying amount and the present value of
estimated future cash flows.
b、Available-for-sale financial assets：on the balance sheet date, the Company analyse the impairment evidences of
the financial assets, experienced judgement whether continuing decline in the fair value. Generally, if the fair value of
financial assets incurred serious decline, after consideration of all relevant factors, anticipate this is non-temporary,
therefore can identified the available-for-sale financial assets has impaired, should recognize the impairment loss.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and
there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity
shall be removed from equity and recognised in impairment loss account of income statement.
10、Accounts receivable
(1) Method of provision for bad debts for individual accounts receivable with significant amounts:
At the end of the period, those individual accounts receivable and individual other receivable make up more than28
10% (include 10%) is considered as individual significant amounts, One by one to carry out impairment test, if there
is objective evidence that the accounts receivable have been impaired, the impairment loss shall be recognized based
on the difference of the book values higher than the present value of future cash flows.
(2) Method of provision for bad debts for individual accounts receivable with non- significant amounts, but in
according to the characteristics of credit risk portfolio, the risk of the portfolio is high:
For other individual the amount of non-significant receivables, classification primarily on the basis of account age,
and those accounts receivable’s account age more than one year will be classified as non-significant in amount but in
accordance with the characteristics of credit risk portfolio, the risk of the portfolio is high, others classified as other
non-significant receivables.
For those account receivables classified as non-significant in amount but in accordance with the characteristics of
credit risk portfolio, the risk of the portfolio is high, as well as other individual non-significant receivable accounts
that not impaired after impairment test, these account receivables will carry out age analysis by the Company and
consider the debtor’s actual business situation and cash flow to determine the recoverable amount of receivables, a
reasonable estimate of bad debts.
（3）The Company adopt age analysis method to estimate the following percentage of provision for bad debts:
Age Percentage of account receivable% Percentage of other account receivable%
1-90days 0.00 0.00
91-180days 10.00 10.00
181-270days 30.00 30.00
271-360days 50.00 50.00
Over 360days 100.00 100.00
（4）The Company according to the contract agreed date as credit expire date to collect the long-term account
receivable, the account age counted after the contract agreed date, and considers the debtor’s actual business situation
to determine the percentage of provision for bad debts:
Age Percentage of long-term account receivable%
Not until expire date 0.00
1-60days 10.00
61-120days 30.00
121-180days 50.00
Over 181days 100.00
（5）For other account receivable (including Notes receivable、Advances to suppliers、Interest receivables etc), the
provision for bad debts recognized based on the difference of the book values higher than the present value of future
cash flows.
（6）Account receivable between the Company and related party do not calculate bad debt provision.29
11、Inventory: Recognition and Measurement
（1）Category of inventory:
Inventory of the Company refers to enterprises in the day-to-day activities of the holder for the sale of finished goods
or merchandise, product that in the production process, and materials consumed in the production process or
provision of services. Including: materials in transit, raw materials, work-in-process, finished goods, entrust
processing materials and low-value consumable supplies etc.
（2）Valuation methods of inventories input and output:
The issue of inventories is calculated by the weighted average method. The Company's inventories costs adopt
planned cost in the day-to-day accounting, over carrying the cost differences at the ending period, and adjust planned
cost to actual cost.
（3）Estimates of net realizable value and method of impairment loss for inventories:
①Estimates of net realizable value:Those stocks used for directly sale, the net realizable value is referred to the
estimated selling price minus the estimated selling expenses and related tax and fees in normal operating process.
Those stocks need to process; the net realizable value is referred to the estimated selling price minus the estimated
finished cost and estimated selling expenses and related tax and fees in normal operating process; the net realizable
value of the quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. If the
sales contracts are for less than the inventory quantities held, the net realisable value of the excess is based on
general selling prices.
②Impairment loss of inventories: At the balance sheet date, the evaluation criteria should base on the lower value
between costs and net realizable value. When net realizable values are lower than costs, provision for impairment
loss of inventories shall be made. Under normal circumstances, the Company provision impairment loss in according
to individual inventory items, but for large quantity and low-unit-price inventories, provision for impairment loss of
inventories shall be made based on the category of inventories; for those inventories that relating to the same product
line that have similar purposes or end uses, are produced and marketed in the same geographical area, and cannot be
practicably evaluated separately from other items in that product line, their impairment loss provision shall be
consolidated.
When the circumstances that previously caused inventories to be written off below cost no longer exist or when there
is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of
the write-off is reversed (i.e. the reversal is limited to the amount of the original write-off) so that the new carrying
amount is the lower of the cost and the revised net realizable value. The amount reversed recording into current
profit and loss.
（4）Inventories stock physical count system: Perpetual inventory method.
（5）Low-value consumable products and wrappage amortization method: amortized at one time.30
12、Long-term Equity Investment
Long-term equity investment including the equity investments held by the Company, who can able to exercise
control, joint control or significant influence to the invested entity, or the Company do not have control, joint control
or significant influence on the invested entity, and there is no active market quotation, the fair value measurement
should not reliable.
（1）Initial measurement
The Company separates the following two cases of long-term equity investment in the initial measurement:
① Long-term equity investment obtained through business combinations:
a、For obtaining subsidiary under common control, the consideration cost can be cash payment, non-monetary assets
transfer or taking over the subsidiary’s liability. Under this situation, the initial investment cost is carrying amount
of shareholder’s equity of the subsidiary on the merger date. The difference between the carrying amount of the net
assets obtained and initial investment cost of long-term equity investment shall be adjusted to capital reserve. If the
capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. In
the case of company issues equity securities as the consideration, the initial investment cost is carrying amount of
shareholder’s equity of the subsidiary on the merger date. If the book value amount of the issued shares is deemed
as the capital, the difference between the carrying amount of the issued shares and initial investment cost of
long-term equity investment shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the
difference, any excess shall be adjusted against retained earnings All direct expenses related to the merger,
including the auditor fee, evaluation expense, legal service expense, etc will be accrued to the
current profit and loss.
b、For obtaining subsidiary not under common control, the cost of long-term equity investment is fair value of assets
paid, liabilities undertaken by the Company, or the fair value of equity bonds issued. Where the cost of a business
combination exceeds the acquirer’s interest in the fair value of the bargainor’s identifiable net assets, the difference
shall be recognized as goodwill, Where the cost of combination is less than the acquirer’s interest in the fair value of
the bargainor’s identifiable net assets, after reassessment, the difference shall be recognized in profit or loss for the
current period (non-operating income). The costs directly related to business combinations shall be included in the
cost of business combinations (except issuing expenses of bonds and equity instruments).
② Other types of long-term equity investment, accordance with the following principles to determine their initial
investment costs:
a、Long-term equity investment, which is acquired by cash consideration, the actual cash payment amount will be
deemed as the initial investment cost. The initial investment cost includes the direct expenses related to the long-term
equity investment, taxes and other necessary expenses. But if the actual payment contains cash dividend that has not
been received but has been announced, that should be accounted separately.
b、Long-term equity investment, which is acquired by issuing equity securities, the fair value of the issued equity will
be deemed as the initial investment cost.
c、For the long-term equity investment made by the investors, the values agreed in the investment contracts or31
agreements will be deemed as the initial investment cost, except that the contracts or agreements provide that the
values are not fair.
d、Long-term equity investment is acquired by exchange of non-monetary assets, if this transaction has commercial
substance or the fair values of exchange assets can be reliably measured, the fair values of these assets and relevant
taxes will be deemed as the initial investment cost; the difference between the fair values of the assets and book
values will be record into the current profit and loss; if the non-currency asset exchange does not satisfy these two
conditions mention above, the book values of the assets and relevant taxes will be deemed as the initial investment
cost.
e、Long-term equity investment, which is acquired by the debt restructuring, the fair values of the obtained equities
will be deemed as the initial investment cost; the difference between the initial investment cost and book values of
credit will be record into the current profit and loss.
(2) Subsequent Measurement
The cost method is employed to calculate the long-term equity investment of subsidiaries and will be adjusted in
accordance with the equity method in the preparation of the consolidated financial statements.
The Company uses cost method for the following conditions: a long-term equity investment where the investing
enterprise does not have joint control or significant influence over the investee, the investment is not quoted in an
active market and its fair value can’t be reliably measured.
The Company uses equity method for the following conditions: a long-term equity investment where the investing
enterprise have joint control or significant influence over the investee.
a、When using cost method, increase or recovery of investment need to adjust the cost of long term equity investment.
Cash dividends or profit distributions declared by the investee shall be recognized as investment income in the
current period. However, investment income recognized by the investing enterprise shall be limited to the amount
distributed to it out of accumulated net profits of the investee arising after the investment was made. Any cash
dividends or distributions received in excess of this amount shall be treated as a recovery of initial investment cost.
b、When using equity method, after the investing enterprise has acquired a long-term equity investment, it shall
recognize its share of net profits or losses made by the investee as investment income or losses, and adjust the
carrying amount of the investment accordingly.
The Company shall recognize current period investment profits or losses following its share of the net profits or
losses made by the investee. Base on the investee’s book value of net profit, if the investee used inconsistent
accounting policies with the Company, the Company shall adjust the net profits by the balances of the depreciation or
amortization of the investee’s fixed assets and intangible assets measured by fair value on the investment acquired
date, as well as adjust the net profits by the balance of the impairment losses of investee’s assets measured by fair
value on the investment acquired date. Set off the internal transaction profit and loss between the Company and the
joint enterprises or the jointly-run enterprises, and then recognize the investment profit or loss on this basis. The
internal transaction profit and loss between the Company and the joint enterprises or the jointly-run enterprises, refer
to the < Enterprise Accounting Standard 8: Impairment of assets>, belong to asset impairment loss is recognized in
full.32
If an investor’s share of losses of an associate equals or exceeds its interest in the associate, the investor discontinues
recognizing its share of further losses, after the investor’s interest is reduced to zero, additional losses are provided
for, and a liability is recognized, only to the extent that the investor has incurred legal or constructive obligations or
made payments on behalf of the associate; If the associate subsequently reports profits, the investor resumes
recognizing its share of those profits only after its share of the profits equals the share of losses not recognized,
recover investment interests, and in the book value of the long-term equity investment successively.
Those long term equity for affiliated company and joint company, hold before first executive date, if ther is relevant
investment debit difference, according to residual time to amortize in straight line method, the amortization amount
recognized in current profit and loss account.
（3）Scope of joint control and significant influence for investee
The existence of jointly control by an investor is usually evidenced in one or more of the following ways:①any
venturer cannot control the jointly controlled company’s operation alone; ②the strategy decision of the jointly
controlled company, should be agreed by each venture parties;③the venturers may appoint one of them to manange
the jointly controlled company, through control or agreement, but the management must follow all venturers ‘s
financial and operation strategies. When the jointly controlled company during legal reconstruction or bankrupt, or
the transfer funds to investors strictly restricted in long time, the venturers cannot exercise joint control to the
investee. However, if the joint control is really exsit can be certified, the venturers still adopt equity method of long
term equity investment principle to account.
The existence of significant influence by an investor is usually evidenced in one or more of the following ways:①
representation on the board of directors or equivalent governing body of the investee; ② participation in
policy-making processes, including participation in decisions about dividends or other distributions;③material
transactions between the investor and the investee; ④dispatch of managerial personnel; or ⑤provision of essential
technical information.
（4）Method of impairment test of long term equity investment and provision for impairment:
On the balance sheet date, the Company shall assess the long term equity investment one by one ,according to the
investee’s operation strategy、legal environment、market demand、industry and profitability etc, to decide whether
there are impairment indicators. The long term equity investment is impaired when its carrying amount exceeds its
recoverable amount, the differences should be recognized as provision for impairment. If the impairment loss has
recognized, never carry back in future accounting periods.
13、Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment property includes leased
or ready to transfer after capital appreciation land use rights and leased buildings.
（1）Depreciation or amortization method of property investment is measured by cost model:
Property investment is measured by cost model, according to its expected useful life and net residual rate on33
buildings and land-use right to calculate depreciation or amortization. The Company’s expected useful life, net
residual rate and annual depreciation rate of investment property as follow:
Categories Expected residual rate (%) Expected useful life
Annual depreciation
(amortization) rate (%)
Buildings、structures 10.00 20years 4.50
Land use rights 0.00 20years、40years、50years 5.00、2.50、2.00
（2）Basis of impairment of property investment is measured by cost model:
At the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizable
value. When net realizable values are lower than costs, provision for impairment loss of property investment shall be
made. If the value of the impaired investment property recovered, the provided impairment loss in prior period
cannot be carry back.
14、Fixed Asset
（1）Recognition of fixed assets:
Fixed assets are tangible assets, held for use in production or supply of goods or services, for rental to others, or for
administrative purpose, and have high unit price, as well as useful lives more than one accounting year. Fixed assets
shall be recognized by actual costs incurred, if they meet the following conditions:
①The economic benefits related to fixed asset probably flows to the enterprise;
② The cost of fixed asset may be reliably measured.
The expenses relate meet above condition to fixed asset would be capitalized in the cost of asset, if not, it would be
recognized as expense in profit and loss account of that period.
（2）The depreciation method of fixed assets
Straight-line method is in used to calculate the depreciation of fixed assets.
The estimated useful lives, expected residual value and annual depreciation rate of different kinds of fixed assets are
listed as follows:
Category Estimated residual value rate % Estimated useful life Estimated annual deprec
Buildings
and structures
10.00 20years 4.50
Machineries and
equipments,
0.00 11-18years 5.56-9.09
Electronic device 、furniture and
modules
0.00 6years 16.67
Vehicles 0.00 6years 16.67
Improvment expense
of leased fixed assets
0.00 the shorter lease term and beneficial lives
（3）Method of impairment test and provision for impairment loss of fixed assets:34
At the balance sheet date, the Company assess all types of fixed assets whether there is any indication that an asset
may be impaired, if any such indication exists, the entity shall estimate the recoverable amount of the asset, reducing
the carrying value to the estimated recoverable amount, the difference recognized into the current profit and loss
account, simultaneous recognize the provision for impairment. Once the impairment loss has recognized, never carry
back in future acoounting period.
In assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the
following indications:
- during the period, an asset’s market value has declined significantly more than would be expected as a result of the
passage of time or normal use;
- significant changes with an adverse effect on the entity have taken place during the period, or will take place in the
near future, in the technological, market, economic or legal environment in which the entity operates or in the market
to which an asset is dedicated;
- market interest rates or other market rates of return on investments have increased during the period, and those
increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s
recoverable amount materially;
- evidence is available of obsolescence or physical damage of an asset;
- significant changes with an adverse effect on the entity have taken place during the period, These changes include
the asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose
of an asset before the previously expected date;
- evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be,
worse than expected. For example: the net cash inflow or realized operating profits( or losses) made by the assets
has declined significantly more than would be expected.
Other indications that an asset may be impaired.
（4）Recognision of finance leased fixed assets:
When transfered substantially all the risks and rewards incidental to ownership, the Company recognize the fixed
assets of finance lease. At the commencement of the lease term, the Company shall recognise finance leases as assets
and liabilities in their balance sheets at amounts equal to the fair value of the leased property or, if lower, the present
value of the minimum lease payments. The depreciation policy for depreciable leased assets shall be consistent with
that for depreciable assets that are owned. If there is reasonable certainty that the Company will obtain ownership by
the end of the lease term, the asset shall be fully depreciated over the lease term, however, if there is no reasonable
certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over
the shorter of the lease term and its useful life.
15、Construction in progress
（1）Category of construction in progress:
The category of construction in progress classified by the approved project.35
（2）The standard and time point of the construction in progress transfer to fixed aeeets:
Construction in progress is transferred to fixed assets when the project is substantially ready for its intended use. The
project is in condition of ready for used but not transact in the final account would be transferred to fixed assets in its
estimate value, and adjust the value after transact in the final account, but would not adjust depreciated value that
have been depreciated.
（3）Method of impairment test and provision for impairment loss of construction in progress:
On the balance sheet date, the Company shall assess the overall construction in progress, If there is evidence
provide that the value of project are declined, the entity shall estimate the recoverable amount of the asset, reducing
the carrying value to the estimated recoverable amount, the difference recognized into the current profit and loss
account, simultaneous recognize the provision for impairment. Once the impairment loss has recognized, never carry
back in future acoounting period. Execise impairment test for construction in progress, if meet the one or more the
following conditions:
① suspend the project in a long time, and according to the estimate, not restart the construction within the next
3years;
②evidence is available of obsolescence in either function or technical, and bring great uncertainty for the cash
inflows to the Company;
③Other indications that project may be impaired.
16、Borrowing costs
（1）Recognition of capitalization of borrowing costs and capitalization period:
Borrowing costs that are direct attributable to construction, purchase and production of assets and comply with
capitalization conditions, shall be capitalized and accounted to costs of relate assets; otherwise, borrowing costs shall
be recognized as expenses when incurred and accounted through in profit and loss in current period.
The capitalization of borrowing costs shall satisfy the following conditions:
① The capital expenditures have been incurred.
② The borrowing costs have been incurred.
③ Activities relating to acquisition, construction or production that are necessary to make the assets being intended
for use or sales have been launched.
Other borrowing costs、discount or premium and difference of foreign exchange, should be recognized in the current
profit and loss account.
Capitalization of borrowing costs shall be suspended during periods in which acquisition, construction or production
of assets is interrupted abnormally, and is interrupted for over continuous period of three months.
Capitalisation of borrowing costs should cease when substantially all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete. Borrowing costs should be recognised as an expense in the
subsequent period.
（2）Measurement of capitalized borrowing costs
For a specific purpose borrowing, the amount of interest to be capitalized shall be the actual interest expenses36
incurred for the period less deposit interests of the borrowing founds or investment income from the temporary
investment.
Where funds are borrowed under general purpose, the entity shall determine the amount of interest to be capitalized
by applying capitalization rate to weighted average of the excess amount between cumulative expenditures on the
asset and the amount of specific-purpose borrowings. The capitalization rate shall be weighted average of the interest
rates applicable to the general-purpose borrowings.
17、Intangible asset
（1）Recognition and measurement of intangible asset:
Intangible asset are recognize initially at cost.
（2）Estimate of useful life and impairment of intangible assets:
Period of intangible asset that could bring future economic benefit inflow to company could determined reasonably
according to the judgment according to reason of contract right or other legal right, condition in same industry,
history experience, and demonstrate of expert would be recognize as finite useful life assets. Otherwise, the asset
would be recognize as infinite useful life assets.
① To estimate the life of finite useful years asset would consider factor of: a. The life cycle of the product produced
by the assets, and the information of similar asset; b. The development of craftwork and technology, and the estimate
of future development trend; c. The demand condition in market of the product produced by the asset; d. The
estimated action would be taken by competitor or potential competitor; e. The expense expected to maintain the
assets to bring future economic benefits and the ability of the Company to pay for it; f. The relevant law restriction on
control period of the asset or other similar restriction such as franchise, lease period; g. Relation with other assets’
useful life, that hold by the Company.
② The intangible asset with finite useful years should be amortization on a systematic and rational basic according
its economic benefit achievement plan. A straight line method would be used if the plan could not define.
（3）Method of impairment test and provision for impairment of infinite useful years asset:
Intangible asset with infinite useful years would not amortize, but would conduct impairment test every year. the
useful life of such an asset should be reviewed each reporting period to determine whether events and circumstances
continue to support an indefinite useful life assessment for that asset., if still under uncertainty situation after the
revaluation, shall conduct impairment test. When the net recoverable amount lower than the carryng value, reducing
the carrying value to the estimated recoverable amount, the difference recognized into the current profit and loss
account, simultaneous recognize the provision for impairment. Once the impairment loss has recognized, never carry
back in future acoounting period..
Execise impairment test for intangible assets, if meet the one or more the following conditions:
① significant changes with an adverse effect on the profitability of intangible assets have taken place during
the period, These changes include the intangible replaced by other new technique;
② The market value has declined in current period, and may not rise in the future residual period;
③ Other indication to prove that the carrying value higher than the recoverable value.37
（4）The rules of divide the research stage and the development stage of internal research and developmet
project:
Internal organizational research expenses are accounted through profit and loss in current period; development costs
which are recognized as intangible assets shall satisfy the following conditions: ① it is technical feasible for use or
sales upon the completion of the intangible assets; ② it is intended for use or sales upon the completion of the
intangible assets; ③ the manner to provide that expect future economic benefits that are attributable to the
intangible assets including a market is exist for the asset or product of the asset or provide evidence of serviceable if
asset are inside used; ④ the entity should have enough technology, financial and other resources to support the
completion of development, and have ability to use or sale the intangible assets; ⑤ the cost of intangible asset can
be measured reliably.
18、Long-term deferred expenses
The Long-term deferred expenses are defined as those expenses in this year but should be allocated in following few
years (more than one year). The amount transfer to the account are the amount actual paid, and allocate equally in
beneficial period.
19、The buyback conditions attached to the transferred assets
The sales and buy back is one of sales mode of the Company, that is means when sale the product, simultaneously
agreed to buy back the same or similar product in the future. Under this sales mode, the Company according to the
clause of contruct or agreement to decide whether the revenue recognition criteria is satisfied. If the entity has not
transferred to the buyer the significant risks and rewards of ownership of the goods, the Company should not
recognize the revenue; If the buy back price higher than the original sales price, during the buy back period, the
Company shall recognize the interest expenses to income statement(financial expenses).
20、Accrued liabilities
（1）Recognize of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on quality
of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, and meet the
follow condition simultaneously would determined as liabilities:
①This obligation is current obligation of the Company; and,
②The performance of this obligation will probably cause economic benefits outflow of the Company;
and,
③The amount of this obligation can be reliably measured.
Loss contracts and restructuring obligations of the Company meet the above conditions shall be recognized as
accrued liabilities.
（2）Measurement of accrued liabilities
Accrued liabilities would be measured initial according to the optimum evaluation of outflow of economic benefit,
and the Company perform relate obligation that consider risk, incertitude, time value of currency of contingency
factor. Discount future cash flow to present value to determine the optimum evaluation if the time value of currency38
has great impact. On balance sheet date, check the carry amount of accrued liabilities, and make adjustment to carry
amount to reflect the optimum evaluation. The increase amount in carry amount of accrued liabilities cause by time
process would be determined as interest fee.
（3）Optimum evaluation of accrued liabilities
If the necessary payments have scopes, the optimum evaluation shall be determined based on the average amount
between the upper and lower limit amount of scope ; if the necessary payments do not have such scopes, then the
optimum evaluation shall be determined in the following method:
①If the contingent event is involved in an individual project, the optimum evaluation amount will be determined
base on the most possible amount;
②If the contingent event is involved more than one project, the optimum evaluation amount shall be determined base
on possible amount and occurrence probability. In case of all or part of payments about the confirmed liquidation
liabilities are expected to be compensated by the third parties or other parties, and the compensation amounts are
surely received, then such amounts shall be separately recognized as assets. The confirmed compensation amounts
shall not exceed book values of confirmed liabilities.
21、Shares-based payment and equity instrument
（1）Category of share-based payment
The types of shares-based payment of the Company are: cash-settle and equity-settle.
①Cash-settled share-based payment
The measurement of cash-settle is according with the fair value of liability undertake by the Company, which is
calculated base on the Company’s share or other equity instrument.
The value of cash-settle share-based payment that could exercise immediately after award would be reckoned to
relate cost or expense, and increase liability corresponds to it.
On each balance sheet date, a best estimated of situation of exercise cash-settled right that with waiting-period should
be undertaken, and reckon cost or expense and increase liability which is on the base of service award by the
Company, according to the fair value of company’s liability.
②Equity-settled share-based payment
The measurement is base on the fair value of the equity instrument granted to employees.
The value of equity-settled payment that could be exercised immediately after award would be reckoned in relates
cost and expense and increase capital reserves corresponds to it..
On each balance sheet date, a best estimated of amount of exercise equity-settled that with waiting-period should be
undertaken, and reckon in cost or expense and capital reserves which is on the base of service award by the Company,
according to the fair value of company’s liability.
（2）Determining the fair value of equity instruments granted
① For those shares granted to employees shall measure the fair value of equity instruments granted at the
measurement date, based on market prices if available, simultaneously, taking into account the terms and conditions
( exclude the vesting conditions of external market) upon which those equity instruments were granted.39
② For those share options granted to employees, the market prices are not available in most circumstance. If there is
no clauses and requirements of others similar trading options, the Company shall estimate the fair value of the share
option granted using a valuation technique.
（3）Base of the best estimate of vesting equity instrument’s recognization:
On each balance sheet date of waiting-period, the Company shall recognise an amount for the equity instrument
during the vesting period based on the best available estimate of the number of equity instruments expected to vest
and shall revise that estimate, if necessary, if subsequent information indicates that the number of equity instruments
expected to vest differs from previous estimates.
（4）Accounting treatment of share-based payment plan:
1)For cash-settled share-based payment transactions granted vest immediately, reckon cost or expense according to
the fair value of the Company’s liability on the measurement date, increase liability corresponds to it. At each
reporting date and at the date of final settlement, with any change in intrinsic value recognised in profit or loss.
2)If the equity instruments granted do not vest until completes a specified period of service or can be satisfied pre
requirment, on each balance sheet date of waiting-period, the Company shall recognise an amount for the equity
instrument during the vesting period based on the best available estimate of the number of equity instruments,
according to the fair value of the Company’s liability, recognize the received services as cost or expense,and increase
liability corresponds to it.
3)The value of equity-settled payment that could be exercised immediately after award would be reckoned in relates
cost and expense and increase capital reserves corresponds to it.
4) If the equity instruments granted do not vest until completes a specified period of service or can be satisfied pre
requirment, on each balance sheet date of waiting-period, the Company shall recognise an amount for the equity
instrument during the vesting period based on the best available estimate of the number of equity instruments,
according to the fair value on the measurement date,, recognize the received services as cost or expense,and increase
capital reserve corresponds to it.
22、Buy back the Company’s shares:
The Company according to the legal procedures and approval through legal reporting , to decrease the share capital
by the shares buy back method, reduce the paid-in capital by the amount of total nominal value of withdrawed
shares, the difference between share price paid(including trading expense) and the nominal value shall be adjust the
amount of equity, any amount more than the total nominal value, shall reducing the capital reserve(share premium)、
surplus reserve and Undistributed profits successively; any amount lower than the total nominal value, shall
increasing the the capital reserve(share premium).
The shares before buy back, as the inventory shares management, the share buy back payment recognized as cost of
inventory shares.
If the transfer revenue received higher than the cost of the inventory shares, when transfer the inventory shares,
should be increase the capital reserve(share premium); if that revenue received lower than the cost, should be reduce
the capital reserve(share premium)、surplus reserve and Undistributed profits successively.
23、Revenue
Recognition and measurement of revenue:40
（1）Sale of goods
Revenue from the sale of goods shall be recognized when all of the following conditions are satisfied:
①the entity has transferred the significant risks and reward ownership of goods to the buyer;
②the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over goods sold;
③the amount of revenue can be measured reliably;
④relate economic benefit is probably inflow to the enterprise;
⑤the associated costs incurred or to be incurred can be measured reliably.
（2）Contract revenue
①When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs
associated with the construction contract should be recognised as revenue and expenses respectively by reference to
the stage of completion of the contract activity at the balance sheet date. The recognition of revenue and expenses by
reference to the stage of completion of a contract is often referred to as the percentage of completion method. Under
this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion,
resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work
completed.
In the case of a fixed price contract, the outcome of a construction contract can be estimated reliably when all the
following conditions are satisfied:
a)total contract revenue can be measured reliably;
b)it is probable that the economic benefits associated with the contract will flow to the enterprise;
c) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract
costs incurred can be compared with prior estimates; and
d) both the contract costs to complete the contract and the stage of contract completion at the balance sheet date can
be measured reliably.
In the case of a cost plus contract, the outcome of a construction contract can be estimated reliably when all the
following conditions are satisfied:
a) it is probable that the economic benefits associated with the contract will flow to the enterprise; and
b) the contract costs attributable to the contract, can be clearly identified and measured reliably.
On the balance sheet date, under the percentage of completion method, contract revenue is recognised as revenue in
the income statement in the accounting periods in which the work is performed. Contract costs are usually
recognised as an expense in the income statement in the accounting periods in which the work to which they relate is
performed. The Company may have incurred contract costs, indemnity or reward, caused by the change of the
contract. Such contract costs can be recognised as revenue, if such costs represent an amount due from the customer
and there is an agreement with the customer.
②When the outcome of a construction contract cannot be estimated reliably:
a、revenue should be recognised only to the extent of contract costs incurred that it is probable will be recoverable;41
and
b、If the cost can not be recovered, contract costs should be recognised as an expense in the period in which they are
incurred.
③An expected loss on the construction contract should be recognised as an expense immediately
（3）Rendering of services
①The entity recognize revenue from rendering of service when come out of rendering of service can be measured
reliably at balance sheet date, and adopt percentage of completion method in recognition of revenue. The method
depends on schedule of complete to determined revenue and expense.
the outcome of service can be estimated reliably when all the following conditions are satisfied:
a、the amount of revenue can be measured reliably;
b、relate economic benefit is probably inflow to the enterprise;
c、the complete of schedule could be determined reliably;
d、the associated costs incurred or to be incurred can be measured reliably.
②When the outcome of rendering of service cannot be measured reliably at balance sheet date:
a、revenue shall be recognized to the extent of costs incurred that are expected to be recoverable if compensation are
predict to be award;
b、to those cost that without compensation in predict, through to profit and loss account without recognize revenue.
（4）Transfer of asset use right
The revenue of transfer of asset use right including : interest income、user charges etc, recognized when all the
following conditions are satisfied:
①the economic benefits related to the transaction are probably will flow into enterprise;
②the amounts can be reliably measured.
Interest income, compute base on the funds used time by other peoples and the actual interest rate.
User charges, compute base on the chargeable time and method arranged in the contract or agreement.
24、Government grants
（1）Recognition of government grants:
①comply with the conditions attached to the grant;
② the Company can receive the grant.
（2）Category and accounting treatment of government grants:
1)A government grant related to an asset shall be recognized as deferred income, when the assets is substantially
ready for its intended use, evenly amortized to profit and loss over the useful lives of the related asset. Unamortized
amount would be one-off recognized in profit and loss account when the asset is sale, convey, scrap, derogation
before its useful life.42
2)For government grant related to income, if the grant is a compensation for related expenses or losses to be incurred
in subsequent periods, the grant shall be recognized as deferred income, and recognized in profit and loss over the
periods in which the related cost are recognized.
（3）Measurement of government grants:
If the government grants is monetary assets, recognized by the amount received or to be received. If the government
grants is non monetary assets, recognized by the fair value; if the fair value cannot be estimated reliably, recognized
by the nominal value.
（4）Restitution of recognized government grants:
1)If there is relevant deferred income, decrease the carrying value of the deferred income, any exceeds the amount
shall be recognized to current profit and loss account.
2) If there is no relevant deferred income, recognized to current profit and loss account directly.
25、Deferred income tax assets and deferred income tax liability
The Company uses balance sheet-liability method in calculation of income taxes.
According the difference between carry amount of asset and liability and its tax base, apply tax rate to determine
deferred income tax asset or liability according the predict period of recover asset or discharge liability.
（1）Recognition of deferred income tax assets
① Deferred income tax assets shall be recognized according to deductible temporary differences to the extent that is
probable that tax profits will be available against which the deductible temporary differences can be utilized, but
deferred income tax asset arise from initial recognize of asset and liabilities in transaction that have character listed
below would not recognised:
a、The transaction is not business combination;
b、at the time of the transaction, it affects neither accounting profit nor taxable profit (or deductible loss)
② The company and subsidiaries, associated companies and joint venture investments that can be related to
deductible temporary differences, while meeting the following conditions, to confirm the corresponding deferred
income tax assets:
a、Temporary differences in the foreseeable future is likely to switch back to; and
b、It is likely to be used for deductible temporary differences in taxable income in the future.
③ The Company can carry forward for the subsequent year's tax losses and tax credits, to very likely be used to
offset tax losses and tax credits amount of future taxable income limit, verify the corresponding deferred income tax
assets.
（2）Recognition of deferred income tax liability
Deferred tax liabilities shall be recognized for all taxable temporary differences, except to the extent that the deferred
tax liabilities arise from:
① the initial recognition of goodwill;43
② the initial recognition of assets or liabilities, when all the following conditions are satisfied:
a、the transaction is not a business combination;
b、at the time of the transaction, it affects neither accounting profit nor taxable profit (or deductible loss).
③ Temporary differences arise from the investments in subsidiaries, associates and interests in joint ventures, when
all the following conditions are satisfied:
a、the parent, investor or venturer is able to control the timing of the reversal of the temporary difference; and
b、it is probable that the temporary difference will not reverse in the foreseeable future.
（3）The carrying amount of a deferred tax asset should be reviewed at each balance sheet date. The Company
should 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 should be reversed to the extent that it becomes probable that sufficient taxable profit will be available.
26、Operating leases and finance leases
（1）Operating leases
① When the Company as the Lessee under operating lease, lease payments under an operating lease shall be
recognised as an expense on a straight-line basis over the lease term. Initial direct expense undertaken by the
Company, recognized to the management expenses, contingent rental incurred recognized as current expenses. If the
lease contract including a rent-free period, the Company shall amortize the overall rent expenses on a straight-line
basis over the whole lease period, during the rent-free period recognize lease expenses and liability correspond to it.
If the lessee’s expenses paid by the lessor, the Company shall be reduce this expenses from the total rent expenses,
and amortize the balance.
②When the Company as the lessor under operating lease, lease income from operating leases shall be recognised in
income on a straight-line basis over the lease term. The initial costs, recognized to the current profit and loss account,
however, if the amount is large, shall be added to the carrying amount of the leased asset and recognised as an
expense over the lease term on the same basis as the lease income. If the lease contract including a rent-free period,
the Company shall recognize the total lease income for the whole lease period, during the rent-free period recognize
the income also. If the Company paid some lessee’s expenses, the Company shall amortize the income balance (total
lease income deduct the expenses) during lease period.
（2）Finance lease
①At the commencement of the lease term, lessees shall recognise finance leases as assets in their balance sheets at
amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments,
and the amount of present value of the minimum lease payments recognized as long term accounts payable, the
difference recognized as unrecognized financial charges. During each lease period, adopt actual interest rate method
to amortize the expenses, and recognized to financial expense in current period.
The depreciation policy for depreciable leased assets shall be consistent with that for depreciable assets that are
owned, the depreciation period according to the lease period. If there is reasonable certainty that the lessee will
obtain ownership by the end of the lease term, the assets shall be depreciated over its useful life. If there is no
reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully44
depreciated over the shorter of the lease term and its useful life.
②When the Company as the lessor under finance lease, lessors shall recognise assets held under a finance lease in
their balance sheets and present them as a long term accounts receivable at an amount equal to the minimum lease
receivable add the initial cost, and simultaneously recognize unguaranteed residual value. The diference between the
total of minimum lease receivable、initial costs 、unguaranteed residual value and the total of present value shall be
recognized as unrealized financing profits, adopt the actual interest rate method to recognize income during the lease
period, recording to lease income/ operating income.
27、Assets held for sale
（1）Recognition of assets held for sale
An entity shall classify a non-current asset as held for sale if when all the following conditions are satisfied:
① the appropriate level of management must be committed to a plan to sell the asset;
② the Company has entered into a irrepealable transfer agreement with buyer;
③ the sale should be expected to qualify for recognition as a completed sale within one year from the date of
classification.
(2）Accounting treatment
For those assets held for sale, the Company shall adjust the assets’ estimated net residual value, let the amount can
reflect the fair value less costs to sell, but not in excess of the original carrying amount of the non-current assets, the
difference of estimated net residual value after adjustment and the original carrying amount, shall be recognized as
assets impairment loss to current profit and loss account.
The entity shall measure a non-current asset that ceases to be classified as held for sale (or ceases to be included in a
disposal group classified as held for sale) at the lower of:
①its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any
depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been
classified as held for sale, and
②its recoverable amount at the date of the subsequent decision not to sell.
28、Changes in accounting policies, accounting estimates
（1）Change in accounting policies
There are no changes in accounting policy during current period.
（2）Change in accounting estimates
There are no changes in accounting estimates during current period.
29、Correct previous accounting period errors
There are no items of correct previous accounting period error in current period.45
Ⅲ.Taxation
1、The type of tax and tax rate for the Company are list below:
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 0、17
Business Tax Taxable revenue 5
Education Surcharge
VAT payable, business tax, consumer tax, taxes that shall not be exempt
from tax allowance and deduction
1
Corporation Tax Taxable profit 22
According to《Notice about Implementation of Preferential Policies of the on Transition of Enterprise Income Tax 》
[No.39（2007 of State Council]issued by The State Council on December 16 2007 and《Notice of the Ministry of
Finance and State Administration of Taxation about Implementation of Preferential Policies of the State Council on
Transition of Enterprise Income Tax》[No. 21 [2008] of the Ministry of Finance] issued by the ministry on February
23 2008, the income tax rate applicable to the Company is 18%, 20%, 22% and 24% for 2008, 2009, 2010 and 2011
respectively.
2、The tax type and tax rate for primary subsidiaries:
（1）Tsann Kuen (ZhangZhou) Enterprise Ltd(TKL)
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 0、17
Business Tax Business turnover 5
Local Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
1
Corporation Tax Taxable profit 15
TKL was cognizance as high technology enterprise by the Fujian Province High Technology Enterprise
Cognizance Group (No. 8[2009] Ming Ke Gao), according to the tax law, the corporation tax rate is 15% in 2010.
（2）Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd. (TKN)
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 17
Business Tax Business turnover 5
Local Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
1
Corporation Tax Taxable profit 25
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd is a production enterprise which is located at46
Zhangzhou Fujian, according to《Notice about Implementation of Preferential Policies of the on Transition of
Enterprise Income Tax 》[No.39（2007 of State Council]issued by The State Council, the Company can still enjoy
the “first two years free tax payment, and half tax payment in next three years”policy, the Company’s first profitable
year is in the year of 2005.
According to the《Notice of Implementation of Preferential Policies of Enterprise Income Tax》[No. 69 [2009] of the
Ministry of Finance] issued by the ministry, the Company is exempted from income tax from the first to the second
accounting period, and is levied at 12.5% from the third to the fifth accounting period since the Company is
profitable. Therefore, the income tax rate for the Company on 2009 is 12.5%. The corporation tax rate is 25% in
2010.
（3）Tsann Kuen (ShangHai) Enterprise Ltd(TKS)
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 17
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 1
Corporation Tax Taxable profit 25
（4）Shanghai Canxing Trading Co.Ltd
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 17
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 1
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Corporation Tax Taxable profit 25
（5）Shenzhen Canbao Trading Co., Ltd.
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 17
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 1
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Corporation Tax Taxable profit 2547
（6）STAR TRAVEL INTERNATIONAL (XIAMEN) CO., LTD
Categories of taxes Tax base Rate %
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 1
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Corporation Tax Taxable profit 25
（7）Xiamen Canxing Trading Co., Ltd
Categories of taxes Tax base Rate %
VAT Sale of product and raw material 17
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 7
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Local Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
1
Corporation Tax Taxable profit 25
（8）Shanghai Fanxin Aviation Service Co.,Ltd
Categories of taxes Tax base Rate %
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 1
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Local Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
1
Corporation Tax Taxable profit 2548
（9）STAR TRAVEL INTERNATIONAL (DALIAN) CO.,LTD
Categories of taxes Tax base Rate %
Business Tax Business turnover 5
Urban construction tax Total of VAT, business tax and consumer tax 7
Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
3
Local Education Surcharge
VAT payable, business tax, consumer tax、Tax that shall not be
exempt from tax allowance and deduction
1
Corporation Tax Taxable profit 13%*20%
The Company’s subsidiary STAR TRAVEL INTERNATIONAL (DALIAN) CO.,LTD (STID)adopt suitable
income tax levy method, and taxable profit for the company is 13%*20% of net income.
Ⅳ. Enterprise consolidation and consolidation statement scope
1、Information of subsidiaries in consolidation scope:
Company name
Registration
location
*Registere
d capital
Holding
proportion
%
Voting
rights
proportion
%
Main business
Company
type
Whether
consolidated
statements
Tsann Kuen
(ShangHai)
Enterprise
Ltd(TKS)
Shanghai USD40000 62.50% 62.50%
Production of household appliances, electronic products,
light industry products, modern office appliances and their
related modules, various kinds of computers and their
related equipments or spare parts. Development of
computer software, IC packing and testing; sale of our
own products
limited
liability
company
Yes
Tsann Kuen
(ZhangZhou)
Enterprise
Ltd(TKL)
Zhangzhou
USD
160,000
75% 75%
Development, production and sale of small household
electrical appliances, new kind of electronic appliances
and parts (such as electrical kits, sensors and sensitive
transmitters), light industrial products, modern office
supplies; designing and producing the molds related to the
above products. Processing and manufacturing nonferrous
metal composed materials, new-typed alloy materials,
marketing self-made products and semi-manufactured
products, processing supplied materials and processing
with supplied materials or given samples & assembling
supplied components. (Excluding those products restricted
by the government or those whose import or export quota
is under license administration; wholesale of food such as
coffee, rice balls and dough; wholesale, after-sales service
and technology service of various kinds of small house
appliance
limited
liability
company
Yes
Tsann Kuen
(Zhangzhou) South
Port Electronics
Enterprise Co.,
Ltd. (TKN)
Zhangzhou RMB 5,000 75% 75%
Development, production and sale of small household
electrical appliances, new kind of electronic appliances
and parts (such as electrical kits, sensors and sensitive
transmitters), light industrial products, modern office
supplies; designing and producing the molds related to the
above products. (Excluding those products restricted by
the government or those whose import or export quota is
under license administration.) ; wholesale of small
household appliances and providing agent service with
limited
liability
company
Yes49
Company name
Registration
location
*Registere
d capital
Holding
proportion
%
Voting
rights
proportion
%
Main business
Company
type
Whether
consolidated
statements
commission charges
Shanghai Canxing
Trading Co.Ltd
(Shanghai
Canxing)
Shanghai RMB 5,000 74.25% 99%
Importing, Wholesaling, retail and its follow-up service of
household appliances, computer sets and their attachments,
communication materials, motor and electric equipments,
office supplies and the related attachments (including
kitchen facilities). Self-operating and acting as an agent of
various kinds of merchandise and import & export of
technology; wholesale and retail of roasted coffee powder
and general merchandise, as well as other sales
limited
liability
company
Yes
Shenzhen Canbao
Trading Co., Ltd.
(Shenzhen
Canbao)
Shenzhen RMB 1,000 74.25% 100%
Purchase, sale and relevant technology service of
household appliances, daily necessities, computer and its
auxiliary products, electrical and mechanical equipment,
office supplies and their auxiliary products; import and
export of goods and technologies (excluding those projects
forbidden by laws and administrative regulations; a permit
must be obtained before operating a project restricted by
laws and administrative regulations.)
limited
liability
company
Yes
Tsann Kuen
(Zhangzhou)
Profession and
Technology
College (Tsann
Kuen College)
Zhangzhou
RMB 3,000
75% 100% Secondary vocational education
nonbusiness
enterprise
run by local
people
Yes
Xiamen Canxing
Trading Co., Ltd
(Xiamen Canxing)
Xiamen
RMB 9,000
73.51% 99%
1. wholesale and retail: daily necessities, household
appliances, computer and its auxiliary products,
communication equipment, electrical and mechanical
equipment, office supplies, kitchen supplies and their
auxiliary products; 2. import and export of various goods
and technologies
limited
liability
company
Yes
Star Travel
International
(Xiamen) Co., Ltd
(Xiamen Star
Travel)
Xiamen
RMB 5,000
100% 100%
1. inbound and domestic tourist services; 2. providing
personal accident insurance service as an agent.
limited
liability
company
Yes
Shanghai Fanxin
Aviation Service
Co., Ltd (Shanghai
Fanxing)
Shanghai
RMB 1,500
37.87% 51%
ticket-selling and agent service in passenger transportation
of civil aviation for domestic routes, excluding HK, Macau
and Taiwan routes.
limited
liability
company
Yes
Star Travel
International
(Dalian) Co., Ltd
(Dalian Star
Travel)
Dalian RMB 5,300 72.77% 99%
inbound and outbound travel services; domestic travel
service; R&D and sales of tourism products.
limited
liability
company
Yes
Xiamen Jinyuan
Airlines Service
Co., Ltd. (Xiamen
Jinyuan)
Xiamen RMB 1,500 70.54% 100% Ticket agent service
limited
liability
company
Yes
*The monetary unit is ten thousand unless otherwise stated50
2、New Subsidiary included in the consolidated statement during current period
Unit: RMB Yuan
Subsidiary name Date
Net assets at the end of
current period
Profit as of current
period
Reason for change
Shenzhen Canbao Trading
Co., Ltd.
29 March 2010 982,753.25 (17,246.75)
New subsidiary, the Company holds 74.25%
equities of this subsidiary
Shenzhen Canbao Trading Co., Ltd. (hereinafter referred to as “Shenzhen Canbao”) was established by Shanghai
Canxing (the subsidiary of TKN) by investment in cash, with registered capital of RMB 1,000,000.00. Shanghai
Canxing held the 100% equities of Shenzhen Canxing.
3、Subsidiary transferred through equity transfer during current period
Unit: RMB Yuan
Subsidiary name Date
Net assets at the end of
current period
Profit as of current
period
Reason for change
EUPA (Hong Kong)
Limited
1 May 2010 0.00 548,843.70 Equity transfer
In order to integrate operating and decrease loss from investment, the Company transferred the whole equity of
EUPA (Hong Kong) Limited, wholly-owned subsidiary of the Company, to shareholder of the Company--SINO
GLOBAL DEVELOPMENT LIMITED, which was shareholder of FORDCHEE DEVELOPMENT LIMITED,
EUPA INDUSTRY CORPORATION LIMITED and FILLMAN INVESTMENTS LIMITED.
For details please referred to Public Notice on Transferring Wholly-owned Subsidiary-- EUPA (Hong Kong) Limited
and Related Transaction published on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn date
d 26 March 2010.
The first and balance payment for share transfer had been received respectively on 18 April and 29 April 2010.51
Ⅴ. Main notes in the Consolidation Statement
1. Monetary fund
Items 2010.06.30 2009.12.31
Original
currency
Exchange
rate
Presentation currency
Original
currency
Exchange
rate
Presentation currency
Cash on hand
Incl.: CNY 6,934,406.68 1.0000 6,934,406.68 352,451.21 1.0000 352,451.21
HKD 15,083.85 0.8679 13,091.27 11,164.55 0.8805 9,830.39
USD 17,462.93 6.7909 118,589.01 2,008.72 6.8282 13,715.94
JPY 574,250.83 0.0766 43,859.22 402,175.90 0.0738 29,680.58
IDR 600,000.00 0.0008 450.00 600,000.00 0.0007 420.00
FRF 7.00 6.2786 43.95 7.00 6.5938 46.16
EUR 29,538.48 8.2998 245,163.48 22,809.48 9.7971 223,466.76
GBP 3.13 10.2141 31.97 3.13 10.9780 34.36
HUF 81,016.00 0.0293 2,371.34 81,016.00 0.0359 2,908.47
Subtotal 7,358,006.92 632,553.87
Cash in bank
Incl.: CNY 176,484,844.02 1.0000 176,484,844.02 414,700,956.42 1.0000 414,700,956.42
HKD 258,657.24 0.8679 224,488.63 2,604,681.59 0.8805 2,293,422.14
USD 26,424,108.68 6.7909 179,442,495.63 21,677,428.63 6.8282 148,017,818.17
JPY 196,023,877.00 0.0766 15,015,428.98 83,462,502.00 0.0738 6,159,532.65
EUR 753.03 8.2998 6,250.00 63,422.56 9.7971 621,357.16
Subtotal 371,173,507.26 571,793,086.54
Other Monetary
fund
Incl.: CNY 69,810,576.50 1.0000 69,810,576.50 59,820,784.87 1.0000 59,820,784.87
HKD - - 32,080.00 0.8805 28,246.44
Subtotal 69,810,576.50 59,849,031.31
Total 448,342,090.68 632,274,671.72
Other monetary fund including bank acceptance notes, commercial acceptance notes and the letters of credit margin
deposits.
2. Trading financial assets
Item 2010.06.30 2009.12.31
Derivative financial assets 0.00 1,588,661.38
Total 0.00 1,588,661.38
3. Notes receivable
Items 2010.06.30 2009.12.31
Bank acceptance notes 4,038,860.80 2,290,000.00
Commercial acceptance notes 766,977.63 3,561,328.67
Total 4,805,838.43 5,851,328.6752
Comparing with the beginning of reporting period, the closing balance of notes receivable has
decreased by 17.87%, which is caused by acceptance maturity.
4. Accounts receivable
(1) Accounts Receivable
Items 2010.06.30 2009.12.31
Balance Proportion% Bad debit
provision
Proportion% Balance Proportion% Bad debit
provision
Proportion%
Individual transaction
with significant amount
260,004,171.89 49.93% 1,112,579.54 2.84% 148,235,525.97 34.59% 7,804,117.44 20.17%
Individual transaction
with not so significant
amount but significant
recoverable risk
29,939,760.40 5.75% 29,939,760.40 76.52% 30,186,997.49 7.05% 30,186,997.49 78.03%
Other transaction with no
significant amount
230,790,230.56 44.32% 8,076,336.95 20.64% 250,100,202.26 58.36% 697,368.88 1.80%
Total 520,734,162.85 100.00% 39,128,676.89 100.00% 428,522,725.72 100.00% 38,688,483.81 100.00%
（2）Account receivable classified as non-significant in amount but in accordance with the characteristics of credit risk
portfolio, the risk of the portfolio is high:
Age 2010.06.30 2009.12.31
Balance Proportion% Bad debit provision Balance Proportion% Bad debit provision
1-2years 777,458.19 0.15% 777,463.19 371,158.34 0.09% 371,158.34
2-3years 142,963.67 0.03% 142,963.67 129,371.16 0.03% 129,371.16
3-4years 29,019,338.54 5.57% 29,019,338.54 29,686,467.99 6.93% 29,686,467.99
Total 29,939,760.40 5.75% 29,939,765.40 30,186,997.49 7.05% 30,186,997.49
（3）Provision for bad debts of account receivables that belong to individual significant amounts:
Name of account receivable Book value
Provision for
bad debts
Provision
proportion%
Reasons
Sunbeam Corporation Limited 68,804,519.38 1,112,579.54 0.00%-100.00%
According to the provision for bad debts accounting
policy
TKJ 83,595,005.88 0.00 0.00%
According to the provision for bad debts accounting
policy
Applica ConsumerProducts Inc 107,604,646.63 0.00 0.00%-100.00%
According to the provision for bad debts accounting
policy
Total 260,004,171.89 1,112,579.54
(4) As at 30 June 2010, the amount due from shareholder who own 5% or more than 5% of voting right as followed:
Name 2010.06.30 2009.12.31
STAR COMGISTIC CAPITAL CO.,LTD. 18,087,676.43 0.00
(5) Total amount of top five account receivable is 361,935,276.56, representing 69.5% of account receivables
balance.
(6) Other explanation
① Individual transaction with significant amount: Individual amount which represents more than
10% (includes 10%) of ending balance of account receivable shall be treated as Individual transaction
with significant amount.53
② Individual transaction with not so significant amount but significant recoverable risk which
represents any individual transaction with no so significant amount, but the age is more than 1 years,
those transaction are treated as Individual transaction with not so significant amount but significant
recoverable risk.
③ Other transactions with no significant amount represent any transaction except set forth in ①, ②.
5. Advance to suppliers
(1) Age analysis
Aging 2010.06.30 2009.12.31
Amount Proportion Amount Proportion
Within 1 year 7,311,980.05 100.00% 4,382,912.72 100.00%
Total 7,311,980.05 100.00% 4,382,912.72 100.00%
(2) The closing balance is increased of 66.83% comparing with the beginning balance is caused by
increase in advance to supplier.
(3) Total amount of top five advance to supplier is 3,448,965.82, representing 47.17% of closing
balance.
(4) Up to 30 June 2010, there is no Advance to supplier balance due from shareholders who own five
or over five percent voting rights.
6. Other accounts receivable
（1） Other accounts receivable listed according to the categories:
Items 2010.06.30 2009.12.31
Balance Proportion% Bad debit
provision
Proportion% Balance Proportion% Bad debit
provision
Proportion%
individual significant
amounts
0.00 0.00% 0.00 0.00% 1,800,511.01 10.57% 0.00 0.00%
Non-significant in amount
but in accordance with the
characteristics of credit
risk portfolio, the risk of
the portfolio is high
243,799.43 1.01% 243,799.43 19.43% 1,780,121.11 10.46% 1,780,121.11 81.88%
Other non-significant
receivables
23,810,724.40 98.99% 1,011,069.10 80.57% 13,446,489.68 78.97% 393,914.84 18.12%
Total 24,054,523.83 100.00% 1,254,868.53 100.00% 17,027,121.80 100.00% 2,174,035.95 100.00%
（2） Other accounts receivable classified as non-significant in amount but in accordance with the characteristics
of credit risk portfolio, the risk of the portfolio is high:
Items 2010.06.30 2009.12.31
Balance Proportion% Bad debit provision Balance Proportion% Bad debit provision
1-2 years 243,799.43 1.01% 243,799.43 920,589.76 5.41% 920,589.76
2-3 years 0.00 0.00% 0.00 10,158.10 0.06% 10,158.10
3-4 years 0.00 0.00% 0.00 534,582.55 3.14% 534,582.55
4-5 years 0.00 0.00% 0.00 314,790.70 1.85% 314,790.70
Total 243,799.43 1.01% 243,799.43 1,780,121.11 10.46% 1,780,121.1154
（3） Up to 30 June 2010, there is no Other accounts receivable balance due from shareholders who own five or
over five percent voting rights
（4） Total amount of top five account receivable is 6,997,096.07, representing 29.09% of other receivables
balance.
Name Amount Nature Aging Proportion%
Agency of Xiamen Customs Bureau Stationed Haicang 888,160.65 Deposit for security Within 2 year 3.68%
Zhangzhou City Boer Metal Products Co., Ltd 1,042,788.01 Electricity expenses Within 1 year 4.34%
Zhangzhou City Haikun Metal Products Co., Ltd 1,568,079.66 Electricity expenses Within 1 year 6.52%
Fujian Province Longhai City Electric Power Supply Co., Ltd 1,697,556.74 Electricity expenses Within 1 year 7.06%
Zhangzhou City Economic Development Co., Ltd 1,800,511.01 Wage Within 1 year 7.49%
Total 6,997,096.07 29.09%
（5）Other explanation
① Individual transaction with significant amount: Individual amount which represents more than 10%
(includes 10%) of ending balance of other receivables shall be treated as Individual transaction with
significant amount.
② Individual transaction with not so significant amount but significant recoverable risk which
represents any individual transaction with no so significant amount, but the age is more than 1 years,
those transaction are treated as Individual transaction with not so significant amount but significant
recoverable risk.
③ Other transactions with no significant amount represent any transaction except set forth in ①, ②.
7. Inventory
（1）Category of inventory:
Items 2010.06.30 2009.12.31
Amount
Provision for
impairment
Net value Amount
Provision for
impairment
Net value
Raw material 246,947,772.75 1,218,751.84 245,729,020.91 143,092,936.81 10,990,495.49 132,102,441.32
Work in
progress
47,159,222.51 0.00 47,159,222.51 90,319,631.61 3,490,054.78 86,829,576.83
Finished
goods
108,389,041.93 1,908,674.80 106,480,367.13 132,906,900.79 2,929,259.24 129,977,641.55
Material in
transit
3,599,273.76 0.00 3,599,273.76 1,349,054.25 0.00 1,349,054.25
Total 406,095,310.95 3,127,426.64 402,967,884.31 367,668,523.46 17,409,809.51 350,258,713.95
（2）Provision for inventory impairment:
Item 2009.12.31 Increase Reversal Write off 2010.06.30
Raw material 10,990,495.49 1,218,751.84 10,990,495.49 0.00 1,218,751.84
Work in progress 3,490,054.78 0.00 3,490,054.78 0.00 0.00
Finished goods 2,929,259.24 1,841,169.59 2,861,754.03 0.00 1,908,674.80
Total 17,409,809.51 3,059,921.43 17,342,304.30 0.00 3,127,426.6455
（3）The total procurement amount of top five suppliers is RMB 179,628,034.34 in total, accounting
for 17.69% of total procurement.
8. Available-for-Sale Financial Asset
Items 2010.06.30 2009.12.31
Available-for-sale equity instrument 251,294.40 293,630.40
Total 251,294.40 293,630.40
9. Long-term account receivable
Items 2010.06.30 2009.12.31
Installment receivable of transferred assets 109,206,922.70 99,661,083.56
Total 109,206,922.70 99,661,083.56
10. Long-term equity investment
（1）Long-term equity investment and provision for impairment
Item 2010.06.30 2009.12.31
Investment
cost
Impairment loss
provision Carrying value Investment cost
Impairment
loss provision
Carrying
value
Long-term equity
investment adopt the
cost method
40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Total 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
（2）Long-term equity investment adopt the cost method
Investee
Initial
Investment cost
2009.12.31 Increment Decrement 2010.06.30
Xiamen Foreign Investment Enterprise Association 40,000.00 40,000.00 0.00 0.00 40,000.00
Total 40,000.00 40,000.00 0.00 0.00 40,000.00
11. Investment property
(1) Investment property adopt the cost model:
Item 2009.12.31 Increment Decrement 2010.06.30
Total book values:
Buildings and structures 66,954,368.24 44,900.00 17,380,595.96 49,618,672.28
Land use rights 0.00 0.00 0.00 0.00
Subtotal 66,954,368.24 44,900.00 17,380,595.96 49,618,672.28
Total accumulated depreciation and
accumulated amortization:
Buildings and structures 33,288,163.77 3,105,809.06 8,878,895.32 27,515,077.51
Land use rights 0.00 0.00 0.00 0.00
Subtotal 33,288,163.77 3,105,809.06 8,878,895.32 27,515,077.51
Total accumulated impairment loss:
Buildings and structures 0.00 0.00 0.00 0.00
Land use rights 0.00 0.00 0.00 0.00
Subtotal 0.00 0.00 0.00 0.00
Total carrying value:
Buildings and structures 33,666,204.47 (3,060,909.06) 8,501,700.64 22,103,594.77
Land use rights 0.00 0.00 0.00 0.00
Subtotal 33,666,204.47 (3,060,909.06) 8,501,700.64 22,103,594.7756
12. Fixed assets
（1） Details
Items 2009.12.31 Increment Decrement 2010.06.30
Total book values:
Buildings and structures 137,086,695.02 21,325,467.56 3,807,282.00 154,604,880.58
Machineries and equipments 522,690,010.29 2,899,944.56 93,273,799.99 432,316,154.86
Electronic device, Modules and
Others
1,764,311,680.86 5,899,638.81 28,156,337.02 1,742,054,982.65
Vehicles 49,786,103.72 8,050.93 908,202.61 48,885,952.04
Capitalized improvement expense
of leased fixed assets
61,800,622.53 1,400.49 64,832.33 61,737,190.69
Subtotal 2,535,675,112.42 30,134,502.35 126,210,453.95 2,439,599,160.82
Total accumulated depreciation:
Buildings and structures 66,764,694.47 10,326,913.66 191,364.10 76,900,244.03
Machineries and equipments 248,843,912.04 15,892,812.51 52,309,930.74 212,426,793.81
Electronic device, Modules and
Others
1,557,493,672.39 43,012,236.68 23,588,585.00 1,576,917,324.07
Vehicles 42,475,310.86 845,096.01 823,493.91 42,496,912.96
Capitalized improvement expense
of leased fixed assets
21,794,454.10 2,964,917.01 27,284.31 24,732,086.80
Subtotal 1,937,372,043.86 73,041,975.87 76,940,658.06 1,933,473,361.67
Total net value :
Buildings and structures 70,322,000.55 10,998,553.90 3,615,917.90 77,704,636.55
Machineries and equipments 273,846,098.25 (12,992,867.95) 40,963,869.25 219,889,361.05
Electronic device, Modules and
Others
206,818,008.47 (37,112,597.87) 4,567,752.02 165,137,658.58
Vehicles 7,310,792.86 (837,045.08) 84,708.70 6,389,039.08
Capitalized improvement expense
of leased fixed assets
40,006,168.43 (2,963,516.52) 37,548.02 37,005,103.89
Subtotal 598,303,068.56 (42,907,473.52) 49,269,795.89 506,125,799.15
Total accumulated impairment
loss:
Buildings and structures 0.00 0.00 0.00 0.00
Machineries and equipments 33,554,233.36 505,682.71 1,158,189.79 32,901,726.28
Electronic device, Modules and
Others
43,079,979.42 1,213.67 2,606,288.41 40,474,904.68
Vehicles 684,607.83 0.00 3,198.88 681,408.95
Capitalized improvement expense
of leased fixed assets
1,314,100.06 0.00 0.00 1,314,100.06
Subtotal 78,632,920.67 506,896.38 3,767,677.08 75,372,139.97
Total carrying value:
Buildings and structures 70,322,000.55 10,998,553.90 3,615,917.90 77,704,636.55
Machineries and equipments 240,291,864.89 (13,498,550.66) 39,805,679.46 186,987,634.77
Electronic device, Modules and
Others
163,738,029.05 (37,113,811.54) 1,961,463.61 124,662,753.90
Vehicles 6,626,185.03 (837,045.08) 81,509.82 5,707,630.13
Capitalized improvement expense
of leased fixed assets
38,692,068.37 (2,963,516.52) 37,548.02 35,691,003.83
Subtotal 519,670,147.89 (43,414,369.90) 45,502,118.81 430,753,659.1857
（2） During current period, the amount of fixed assets that are transferred from completion of construction in
progress is RMB 5,136,229.35.
（3） The Company has no finance leased fixed assets during current period.
（4） The Company has no fixed assets leasing out by operating lease.
13. Construction in progress
（1）Details of construction in progress
Items 2010.06.30 2009.12.31
Book value
Provision for
impairment
Carrying
value
Book value
Provision for
impairment
Carrying value
Installation equipments 169,259.95 0.00 169,259.95 0.00 0.00 0.00
Work in progress Modules 1,809,613.46 0.00 1,809,613.46 905,086.98 0.00 905,086.98
Renovation project 1,939,950.00 0.00 1,939,950.00 3,750,934.04 0.00 3,750,934.04
Total 3,918,823.41 0.00 3,918,823.41 4,656,021.02 0.00 4,656,021.02
（2）Details
Project name Budget value 2009.12.31 Increment
Transferred to
Fixed assets
Other
decrement
2010.06.30
Sources of
financing
Project
input over
its budget
%
Installation
equipments
300,000.00 0.00 239,037.17 0.00 69,777.22 169,259.95 Self-owned 79.68%
Work in
progress
Modules
68,095,182.00 905,086.98 1,761,395.19 856,868.71 0.00 1,809,613.46 Self-owned 2.59%
Renovation
project
4,572,748.00 3,750,934.04 2,520,376.60 4,279,360.64 52,000.00 1,939,950.00 Self-owned 55.12%
Total 72,967,930.00 4,656,021.02 4,520,808.96 5,136,229.35 121,777.22 3,918,823.41
（3）There is no amount to interest capitalization in construction in progress until 30 June 2010.
（4）The ending balance is decreased by 15.83% compared with the beginning balance, which was
mainly due to fixed assets transferred from completion of construction in progress.
14. Intangible assets
Items 2009.12.31 Increment Decrement 2010.06.30
(1) Total cost
Land use right 29,560,727.51 0.00 0.00 29,560,727.51
Information system software 16,044,153.29 0.00 0.00 16,044,153.29
Subtotal 45,604,880.80 0.00 0.00 45,604,880.80
（2）Total accumulated amortization
Land use right 8,822,105.98 375,697.12 0.00 9,197,803.10
Information system software 9,047,516.59 1,172,850.18 0.00 10,220,366.77
Subtotal 17,869,622.57 1,548,547.30 0.00 19,418,169.8758
（3）Total accumulated impairment loss provision
Land use right 0.00 0.00 0.00 0.00
Information system software 0.00 0.00 0.00 0.00
Subtotal 0.00 0.00 0.00 0.00
（4）Total carrying value
Land use right 20,738,621.53 (375,697.12) 0.00 20,362,924.41
Information system software 6,996,636.70 (1,172,850.18) 0.00 5,823,786.52
Subtotal 27,735,258.23 (1,548,547.30) 0.00 26,186,710.93
15. Goodwill
Name of investee 2009.12.31 Increment Decrement 2010.6.30
Impairment loss
Provision
Shanghai Fanxin 71,870.08 0.00 0.00 71,870.08 0.00
Dalian Star Travel 800,109.01 0.00 0.00 800,109.01 0.00
Xiamen Jinyuan 125,000.00 0.00 0.00 125,000.00 0.00
Total 996,979.09 0.00 0.00 996,979.09 0.00
16. Long-term deferred expense
Item s 2009.12.31 Increment Decrement 2010.6.30
Telecommunications
engineering
126,758.11 0.00 15,922.02 110,836.09
SUN computer service fees 241,666.77 0.00 49,999.98 191,666.79
Internet charges 270,816.00 0.00 52,416.00 218,400.00
Fitment cost for building 510,745.38 298,748.00 304,453.76 505,039.62
Other 144,848.03 289,635.87 108,676.35 325,807.55
Total 1,294,834.29 588,383.87 531,468.11 1,351,750.05
17. Deferred income tax assets/liabilities
Items 2010.6.30 2009.12.31
Deferred income tax assets 28,900,936.59 30,706,491.08
Deferred income tax liabilities 14,878.04 296,143.90
18. Impairment provision for assets
Decrement
Items 2009.12.31 Increment
Reversal Written-off
2010.06.30
Provision for bad debts 40,862,519.76 0.00 478,974.34 0.00 40,383,545.42
Provision for falling price of inventories 17,409,809.51 0.00 14,282,382.87 0.00 3,127,426.64
Impairment loss provision for fixed assets 78,632,920.67 506,896.38 0.00 3,767,677.08 75,372,139.97
Total 136,905,249.94 506,896.38 14,761,357.21 3,767,677.08 118,883,112.03
19. Transaction financial liabilities
Items 2010.06.30 2009.12.31
Derivative financial liabilities 224,351.63 0.00
Total 224,351.63 0.00
20. Notes payable
Items 2010.06.30 2009.12.31
Bank acceptance notes 52,744,056.35 51,915,747.08
Commercial acceptance notes 5,615,371.18 4,454,563.3159
Total 58,359,427.53 56,370,310.39
（1）There is no Notes payable balance due to shareholders who own five or over five percent voting rights as at 30
June 2010.
21. Accounts payable
（1） Age analysis:
Age 2010.06.30 2009.12.31
Within 1 year 898,126,517.42 835,886,016.04
Over 1 year 1,163,217.17 1,292,740.42
Total 899,289,734.59 837,178,756.46
Accounts payable, which the aging is more than one year accounts for 0.13% of the closing balance, which caused by
unsettled payment for goods by suppliers in time.
（2）As at 30 June 2010, the amount due to shareholders who own 5% or more than 5% voting right is as followed:
Name of Shareholders amount in arrear Aging Proportion % Nature
STAR COMGISTIC CAPITAL CO., LTD 6,701,747.10 Within 1 year 0.75%
Payment for goods that
bill undue
22. Advanced from customers
（1）Age analysis:
Age 2010.06.30 2009.12.31
Within 1 year 6,371,919.77 12,685,219.10
Over 1 year 8,193,540.26 1,994,798.83
Total 14,565,460.03 14,680,017.93
（2）There is no Advanced from customers balance due to shareholders who own five or over five percent voting
rights as at 30 June 2010.
23. Payroll payables
Items 2009.12.31 Increase Payment 2010.06.30
1.Salary, bonus and allowance 38,114,847.73 135,070,250.55 145,146,657.51 28,038,440.77
2.Employee welfare 0.00 3,600,109.28 1,717,691.20 1,882,418.08
3.Social insurance: 2,370,115.40 9,691,465.92 11,157,719.54 903,861.78
Including: ① Medical insurance 36,986.65 2,525,966.05 2,250,649.16 312,303.54
②Basic retirement insurance 2,206,756.80 5,336,191.93 7,331,081.02 211,867.71
③Annuity fee 0.00 4,626.46 4,170.46 456.00
④Unemployment insurance 124,260.84 323,746.22 445,442.02 2,565.04
⑤Injury insurance 978.15 903,688.38 607,937.23 296,729.30
⑥Pregnancy insurance 1,132.96 597,246.88 518,439.65 79,940.19
4.Housing accumulation fund 8,350,052.64 3,344,761.22 3,604,401.06 8,090,412.80
5.Labour union fee and employee education fee 0.00 134,390.50 134,390.50 0.00
6.Non-monetary welfare 0.00 0.00 0.00 0.00
7.Redemption for termination of labor contract 94,226.00 6,658,183.00 6,752,409.00 0.00
8.Others 228.72 38,742.50 34,842.50 4,128.72
Total 48,929,470.49 158,537,902.97 168,548,111.31 38,919,262.1560
24. Tax payable
Types 2010.06.30 2009.12.31
Business Tax 516,927.42 390,381.59
Corporation Tax 136,027.63 (3,623,398.06)
VAT 34,898,911.65 21,167,220.69
Individual income tax 499,407.82 447,572.36
Education Surcharge 246,941.86 258,075.90
Urban construction tax 3,390.52 2,836.34
Others 12,039,631.67 21,448,449.29
Total 48,341,238.57 40,091,138.11
25. Other accounts payable
（1） Age analysis
Age 2010.06.30 2009.12.31
Within 1 year 80,566,910.90 252,504,997.57
Over 1 year 5,489,956.80 4,026,706.32
Total 86,056,867.70 256,531,703.89
Other accounts payable, which the aging is more than one year accounts for 6.38% of the closing balance, which was
due to deposits payable for rental.
（2） The details of other accounts payable, which is significant and the account’s age more than one year:
Name of Shareholders Amount in arrear Aging Outstanding reasons
Repayment
after the
balance
sheet date
Fujian Province Zhangzhou SIGMA Metal, INC 800,000.00 Over 1 year Guarantee deposits for rental 0
Xiamen Hexing Package & Print Co., Ltd 348,720.00 Over 1 year Guarantee deposits for rental 0
Guangdong Weihe Electric Co., Ltd. 300,000.00 Over 1 year Guarantee deposits for rental 0
National Treasury, Zhangzhou Central Branch 278,758.37 Over 1 year Guarantee deposits for rental 0
TOSHIBAHOMETECHHNOLOGYCORPORATION 258,989.50 Over 1 year Claim payment 0
Total 1,986,467.87
（3）As at 30 June 2010, the details of other account receivable balance due to shareholders who own five or over
five percent voting rights:
Name of Shareholders Amount in arrear Aging Proportion % Reason
STAR COMGISTIC CAPITAL CO., LTD 9,077,293.40 Within 1 year 10.55%
Payment for goods
that bill undue61
26. Accrued liabilities
Item 2010.06.30 2009.12.31
Assurance for products procurement quantity 0.00 1,618,986.20
Total 0.00 1,618,986.20
27. Other non-current liabilities
Item 2010.06.30 2009.12.31
Unrealized profits of installment
receivable of transferred assets
44,283,966.67 40,106,220.40
Total 44,283,966.67 40,106,220.40
28. Share Capital
Chang in current period（+、－）
Items 2009.12.31
Allotment
of shares
Bonus
shares
Transfer
reserves
into
shares
Additional
issue
Others Subtotal
2010.06.30
1、Unlisted shares
Including： Shares held by states 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by domestic legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by overseas legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total unlisted shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2、Listed shares
1.Domestically listed RMB ordinary
share
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2. Domestically listed foreign shares 1,112,350,077.00 0.00 0.00 0.00 0.00 0.00 0.00 1,112,350,077.00
3.Overseas listed foreign shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4.Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Listed shares 1,112,350,077.00 0.00 0.00 0.00 0.00 0.00 0.00 1,112,350,077.00
3、Total shares 1,112,350,077.00 0.00 0.00 0.00 0.00 0.00 0.00 1,112,350,077.00
29. Capital Reserves
Items 2009.12.31 Increment Decrement 2010.06.30
Share premium 62,019,360.00 0.00 0.00 62,019,360.00
Other capital reserves 63,194,630.83 0.00 33,022.08 63,161,608.75
Total 125,213,990.83 0.00 33,022.08 125,180,968.75
The increment in capital reserve is due to changes in fair value of available-for-sale financial
assets for the year.62
30. Undistributed profits
Items 2010.06.30 2009.12.31
Undistributed profits as of 31 Dec. 2009 (840,347,470.50) (893,107,158.60)
Add: profit transfer-in during current period 36,949,302.21 52,759,688.10
Other transfer-in (41,369.57) 0.00
Less: Withdrawal of statuary surplus reserve 0.00 0.00
Withdrawal of employees’ reward and welfare fund 0.00 0.00
Withdrawal of reserve fund 0.00 0.00
Withdrawal of enterprise development fund 0.00 0.00
Reimbursement of investment 0.00 0.00
Less: dividends payable for preference shares 0.00 0.00
Withdrawal of discretionary surplus reserves 0.00 0.00
Dividends payable for ordinary shares 0.00 0.00
Dividends for ordinary shares transfer into capital 0.00 0.00
Balance as at 30 Jun. 2010 (803,439,537.86) (840,347,470.50)
31. Operating revenues and operating costs
(1) Items
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Revenues from main operation 1,640,736,024.33 1,147,374,671.39
Other operation revenues 24,273,538.29 37,344,616.71
Total 1,665,009,562.62 1,184,719,288.10
Cost of main operation 1,451,556,378.11 1,019,651,336.00
Other operation costs 13,473,498.31 8,563,526.42
Total 1,465,029,876.42 1,028,214,862.42
（2）Main operation (listed according to categories of products):
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Operating revenue Operating cost Operating revenue Operating cost
Catering and
Cooking
733,621,629.61 628,919,045.80 536,929,822.94 458,392,494.49
Home helper 619,577,605.52 557,029,491.88 435,742,365.43 406,164,716.42
Tea/Coffee 184,923,651.52 173,208,475.37 140,681,760.01 124,504,414.45
Others 86,764,181.79 78,099,911.84 32,043,938.27 28,765,806.42
Tourism 15,848,955.89 14,299,453.22 1,976,784.74 1,823,904.22
Total 1,640,736,024.33 1,451,556,378.11 1,147,374,671.39 1,019,651,336.00
（3）Main operation (listed according to different districts)
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Operating revenue Operating cost Operating revenue Operating cost
America 808,041,287.24 702,663,427.05 480,136,612.90 415,316,892.87
Europe 270,284,242.76 237,463,567.17 232,649,511.17 209,432,091.91
Asia 562,410,494.33 511,429,383.89 434,588,547.32 394,902,351.22
Total 1,640,736,024.33 1,451,556,378.11 1,147,374,671.39 1,019,651,336.0063
（4）Sales revenues form top five clients
Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Name of clients
Sales
Proportion to total
sale revenues
Sales
Proportion to total
sale revenues
Total sales revenues from the top five clients 991,494,074.91 60.43% 652,232,968.01 56.85%
（5）Other operating revenues and cost by category of business:
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Other operating revenues Other operating costs Other operating revenues Other operating costs
Sales of scrap 3,376,262.62 1,001,830.58 22,224,747.37 0.00
Rental income 17,123,566.48 8,902,932.72 11,758,063.65 5,615,221.94
Income from teaching 1,408,609.92 1,353,862.56 2,113,482.98 2,100,983.38
Advisory fee 1,564,200.49 959,186.89 889,603.50 845,948.10
Other 800,898.78 1,255,685.56 358,719.21 1,373.00
Total 24,273,538.29 13,473,498.31 37,344,616.71 8,563,526.42
32. Business tax and surtax
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Business tax 1,338,953.18 786,330.45
Educational surtax 754,408.52 1,058,838.38
Urban construction tax 6,024.20 875.50
Total 2,099,385.90 1,846,044.33
33. Financial expenses
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Interest expenses 187,025.96 1,855,773.58
Less: Interest Incomes (4,381,864.45) (2,810,689.25)
Exchange gain (or loss) (4,307,430.82) (1,055,862.03)
Bank charges 2,072,792.83 2,936,736.61
Total (6,429,476.48) 925,958.91
34. Assets impairment loss
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Bad debts (177,343.64) (5,187,944.00)
Inventories impairment loss 3,059,921.43 (36,096.07)
Fixed assets impairment loss 504,857.61 2,869,270.48
Total 3,387,435.40 (2,354,769.59)
35. Gains from fluctuation in fair value
Source of Gains from fluctuation in fair values Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Tradable financial assets (1,588,661.38) 0.00
Including: Derivative financial assets (1,588,661.38) 0.00
Tradable financial liabilities (224,351.63) (547,025.01)
Including: Derivative financial liabilities (224,351.63) (547,025.01)
Total (1,813,013.01) (547,025.01)64
36. Investment income
Source of investment income
Accumulative amount
from Jan.-Jun. 2010
Accumulative amount from
Jan.-Jun. 2009
Income from long-term equity investment measured by cost method 7,500.00 7,500.00
Losses on investment recognized from transferring subsidiaries 383,778.40 0.00
Investment losses obtained during held for tradable financial assets 1,704,186.94 0.00
Investment income obtained during held for tradable financial liabilities 0.00 (683,060.97)
Total 2,095,465.34 (675,560.97)
37. Non-operating income
（1）Details of non-operating income:
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Gains from disposal of non-current assets 6,000,018.57 7,209,772.81
Including: Gains from disposal of fixed
assets
6,000,018.57 7,209,772.81
Income from penalties 40.00 0.00
Government grants 4,300,109.16 2,700,117.03
Others 958,521.12 1,300,285.67
Total 11,258,688.85 11,210,175.51
（2）Government Grants
Items
Accumulative
amount from
Jan.-Jun. 2010
Accumulative
amount from
Jan.-Jun. 2009
Approval organ Approval Documents
Appropriation for
technical innovation
project
500,000.00
Finance Bureau of
Longhai City
Zhang-Jing-Mao-Fa-Zhan [2006]263
Subsidies for export
letter guarantees
4,066,109.16 2,000,717.03
Finance Bureau of
Fujian Province
《China Export & Credit Insurance
Corporation Fujian Branch》
Provincial major
special financial
subsidy
150,000.00 0.00
Bureau of Education
of Longhai City
Long-Cai-Jiao [2009]385
Other 84,000.00 199,400.00
Intellectual Property
Office of Xiamen
Xia-Cai-jiao（2006）22
Total 4,300,109.16 2,700,117.03
38. Non-operating expenses
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Loss on disposal of non-current assets 40,632.03 1,020,524.77
Include: Loss on disposal of fixed assets 40,632.03 1,020,524.77
Losses on scraped fixed assets 244,925.33 176,091.87
Fines 300.00 5.14
Donation 500,000.00 300,000.00
Others 22,622.37 0.00
Totals 808,479.73 1,496,621.7865
39. Income tax expense
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Income tax for current period 3,730,555.64 (208,273.98)
Deferred income tax expense 0.00 1,818,082.92
Total 3,730,555.64 1,609,808.94
40. Other comprehensive gains
Items
Accumulative
amount from
Jan.-Jun. 2010
Accumulative
amount from
Jan.-Jun. 2009
1．Profits (or losses) from the available-for-sale financial assets (42,336.00) 77,112.00
Less: Effects on income tax generating from the available-for-sale financial assets 9,313.92 (17,003.82)
The amount in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period
Subtotal (33,022.08) 60,108.18
2．Interest in the investees’other comprehensive gains according to the equity method 0.00 0.00
Less: Effects on income tax generating from the interest in the investees’other comprehensive
gains according to the equity method 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
Subtotal 0.00 0.00
3．Profits (or losses) from cash flow hedging instrument 0.00 0.00
Less: Effects on income tax generating from the cash flow hedging instrument 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
The adjustment value that is the converted initial recognision amount of arbitrage project 0.00 0.00
Subtotal 0.00 0.00
4．Converted amount of foreign currency financial statement 651,220.33 (297,241.92)
Less: Net value of disposal of oversea operations that recognized into current profit and loss 0.00 0.00
Subtotal 651,220.33 (297,241.92)
5. Others 0.00 0.00
Less: Effects on income tax generating from the others that recognized into other comprehensive
gains 0.00 0.00
Net value in current period transferred into profit and loss that recognized into other
comprehensive gains in prior period 0.00 0.00
Subtotal 0.00 0.00
Total 618,198.25 (237,133.74)
41. Cash received related to other operating activities
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Deposit collected 707,666.00 747,842.40
Rental 7,751,484.40 13,499,880.34
Interest Income 4,381,864.45 2,810,689.25
Income from compensation and penalties 0.00 0.00
Government grants 4,287,874.98 2,700,117.03
Others 52,208,105.72 17,266,302.96
Totals 69,336,995.55 37,024,831.9866
42. Cash paid related to other operating activities
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Compensation as to technological know-how 7,863,981.69 7,601,361.22
Bank commission charge 2,071,779.73 2,933,883.41
Expense for purchase and sales commission 5,271,726.87 9,152,208.41
Cash paid in sales expense and administration
expense
156,353,728.53 128,923,266.26
Security deposit for notes 0.00 0.00
Penalties and donation 0.00 300,005.14
Total 171,561,216.82 148,910,724.44
43. Supplemental information for cash flow statement
Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Items
(Consolidation) (Parent
company) (Consolidation) (Parent
company)
Adjusting net profit to cash flow from
operating activities：
Net profits 49,901,606.89 2,619,218.93 27,056,315.48 (2,633,967.30)
Add：Provision for assets impairment loss 3,387,435.40 (672,007.38) (2,354,769.59) (1,244,367.88)
Depreciation of fixed assets、oil and gas assets
and productbility biological assets
76,147,784.93 12,099,156.90 113,576,510.29 1,819,991.65
Amortization of intangible assets 1,548,547.30 507,633.54 1,627,202.29 450,957.96
Amortization of Long-term deferred expenses 531,468.11 14,350.02 39,662.94 0.00
Loss on disposal of fixed assets、intangible assets
and other long-term assets (The gain is listed
beginning with “-“)
(5,959,630.17) 0.00 (6,189,248.04) (23,506.28)
Losses on scraped fixed assets (The gain is listed
beginning with “-“)
244,925.33 0.00 176,091.87 (7,345.57)
Losses from fluctuation in fair values (The gain is
listed beginning with “-“)
1,813,013.01 0.00 547,025.01
Financial costs (The gain is listed beginning with
“-“)
(4,120,405.56) 63,406.95 799,911.55 (577,556.64)
Losses on investment (The gain is listed
beginning with “-“)
(2,095,465.34) (5,266,277.58) 675,560.97 (7,500.00)
Decrease of deferred income tax assets (The
increase is listed beginning with “-“)
(1,805,554.49) 0.00 2,423,274.92
Increase of deferred income tax liabilities (The
decrease is listed beginning with “-“)
(281,265.86) (9,313.92) (605,192.00) 17,003.82
Decrease of inventories (The increase is listed
beginning with “-“)
(38,426,787.49) 0.00 91,723,836.79 0.00
Decrease of operating receivables (The increase
is listed beginning with “-“)
(110,575,445.65) (1,950,070.74) (79,454,979.91) (2,530,865.00)
Increase of operating payables (The decrease is
listed beginning with “-“)
(7,767,409.53) (18,493,163.01) (186,088,889.95) 2,797,475.92
Net cash flow arising from operating activities (37,457,183.12) (11,087,066.29) (36,047,687.38) (1,939,679.32)
Significant investment and financing activities
that not relate to cash flows:
Debts convert to capital
Net increase (decrease) of cash and cash
equivalents:
Ending balance of cash equivalents 352,122,301.26 5,866,334.79 254,320,197.38 400,802.17
Less: Beginning balance of cash equivalents 540,739,906.30 494,441.23 399,276,546.68 4,939,594.77
Net increase of cash and cash equivalents (188,617,605.04) 5,371,893.56 (144,956,349.30) (4,538,792.60)67
44. Cash and cash equivalent
Items Accumulative amount from Jan.-Jun.
2010
Accumulative amount from Jan.-Jun.
2009
1、Cash
Including: Cash on hand 764,317.61 517,083.03
unrestricted bank deposit 377,867,196.57 209,572,299.85
unrestricted other monetary funds 69,710,576.50 44,230,814.50
2、Cash equivalents 0.00 0.00
3、Ending balance of cash and cash equivalents 448,342,090.68 254,320,197.38
VI、Main notes to financial statements of parent company
1、Other accounts receivable
（1）Other accounts receivable
Items 2010.06.30 2009.12.31
Balance Proportion% Bad debit
provision
Proportion% Balance Proportion% Bad debit
provision
Proportion%
individual significant
amounts
0.00 0.00% 0.00 0.00% 800,000.00 82.98% 650,000.00 88.56%
Non-significant in amount
but in accordance with the
characteristics of credit risk
portfolio, the risk of the
portfolio is high
0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.00%
Other non-significant
receivables
2,869,091.30 100.00% 228.55 100.00% 164,043.08 17.02% 84,005.93 11.44%
Total 2,869,091.30 100.00% 228.55 100.00% 964,043.08 100.00% 734,005.93 100.00%
（2）Up to 30 June 2010, there is no Other accounts receivable balance due from shareholders who own five or over
five percent voting rights
（3）Total amount of top five account receivable is 2,865,175.53, representing 99.86% of other receivables balance.
Name Amount Nature Aging Proportion%
China Securities Depository and Clearing Company
Limited, Shenzhen Branch
5,259.00 Fee for information services
Within 1 year
0.18%
Beijing Jijia Intellectual Property Agency Co., Ltd. 14,400.00 Fee for trademark reconsideration Within 1 year 0.50%
Tsann Kuen Profession and Technology College 30,251.62 Social insurance for June 2010 Within 1 year 1.05%
Xia Men Shou Chuang Jun He Patent Firm Ltd 212,623.30 Patent fee Within 1 year 7.41%
Tsann Kuen (ZhangZhou) Enterprise Ltd 2,602,641.61 water and electricity charge and rent Within 1 year 90.71%
Total 2,865,175.53 99.86%68
2、Long-term equity investment
（1）Long-term equity investment and impairment provision
2010.06.30 2009.12.31
Item
Investment cost
Impairment loss
provision Carrying value Investment cost
Impairment loss
provision Carrying value
Investing in
subsidiaries
1,125,210,573.74 130,646,542.91 994,564,030.83 1,135,712,021.76 130,646,542.91 1,005,065,478.85
Other equity
investment
40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Total 1,125,250,573.74 130,646,542.91 994,604,030.83 1,135,752,021.76 130,646,542.91 1,005,105,478.85
(2) Long-term equity investment measured by cost method:
Investee Initial
Investment cost
2009.12.31 Increment Decrement 2010.06.30
TKS 194,545,872.18 194,545,872.18 0.00 0.00 194,545,872.18
TKL 921,914,701.56 921,914,701.56 0.00 0.00 921,914,701.56
TKN 3,750,000.00 3,750,000.00 0.00 0.00 3,750,000.00
EUPA(Hong Kong) 10,503,848.02 10,501,448.02 0.00 10,501,448.02 0.00
Star Travel International (Xiamen)
Co., Ltd
5,000,000.00 5,000,000.00 0.00 0.00 5,000,000.00
Xiamen Institute of Foreign
Investment Enterprise
40,000.00 40,000.00 0.00 0.00 40,000.00
Total 1,135,754,421.76 1,135,752,021.76 0.00 10,501,448.02 1,125,250,573.74
(3) Impairment provision
Investee Beginning balance
Withdrawal for current
period
Decreased for current
period
Closing balance
TKS 130,646,542.91 0.00 0.00 130,646,542.91
Total 130,646,542.91 0.00 0.00 130,646,542.91
3、Operating Revenues and Operating Costs
（1）Items
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Revenues from main operation 0.00 0.00
Other operation revenues 3,021,092.42 2,706,627.73
Total 3,021,092.42 2,706,627.73
Cost of main operation 0.00 0.00
Other operation costs 2,920,911.71 2,645,120.32
Total 2,920,911.71 2,645,120.32
（2）Other operating revenues and cost by category of business:
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Other operating revenues Other operating costs Other operating revenues Other operating costs
Rental income 1,787,622.03 1,746,178.02 1,818,382.22 1,799,172.22
Advisory fee 1,233,470.39 1,174,733.69 888,245.51 845,948.10
Total 3,021,092.42 2,920,911.71 2,706,627.73 2,645,120.3269
4、Business tax and surtax
Items Accumulative amount from Jan.-Jun. 2010 Accumulative amount from Jan.-Jun. 2009
Business tax 149,054.64 142,675.31
Educational surtax 1,490.02 1,347.82
Total 150,544.66 144,023.13
5、Investment income
Source of investment income
Accumulative amount from
Jan.-Jun. 2010
Accumulative amount from
Jan.-Jun. 2009
Income from long-term equity investment measured by cost method 7,849,213.97 7,500.00
Losses on investment recognized from transferring subsidiaries (2,582,936.39) 0.00
Total 5,266,277.58 7,500.00
VII、Related party relationships and transactions
1、Confirmation related parties
The Company has control, jointly control or significant influence on the other party, or is under same party’s control,
jointly control or significant influence with other company, is deemed as related parties.
2、The relationship of related parties
（1） Related party with controllable relationship
Name
Relationship with
the Company
Type of
enterprise
Place of
registration
Legal
representative
Nature of
business
Registered capital (‘000)
STAR COMGISTIC CAPITAL
CO., LTD.
Final
controlling
party
Limited
Corporation
Taiwan Jian Derong
Manufacture,
sales electrical
equipment
TWD1,926,000.00
Con.
Name Holding proportion Voting rights proportion
The Company’s
final controller
Code of organization
STAR COMGISTIC
CAPITAL CO., LTD.
45.89% 47.94% TsannKuen Wu Zi No. 09801262480
（2）The related party without controllable relationship
Relate Party Relationship Organization code
EUPA Industry Corporation Limited Shareholder 12959659-000-07-6
Tsann Kuen (Taiwan) Enterprise Co., Ltd. Under control by the same final holding company 00408469-10
EUPA (Hong Kong) Ltd Under control by the same final holding company 35383887-000-02-10-1
SINO GLOBAL DEVELOPMENT LIMITED Under control by the same final holding company 174837
Tsann Kuen (USA) Co., Ltd Under control by the same final holding company
Tsann Kuen (Japan) Co., Ltd Under control by the same final holding company 0105-01-021064
Xiamen Shengming Electronic Co., Ltd Under control directly by key management and closed family members 61201968-5
Canxing Travel Network Travel Service Co., Ltd Under control by the same final holding company 8017007670
3、Related party transactions between the Company and the above related party
（1）Sales of accessories and finished products
Related parties
Accumulative amount in the current
period
Accumulative amount at the same period
of last year
Tsann Kuen (Japan) Co., Ltd 122,178,556.70 116,360,731.09
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 11,050,441.95 34,435,924.06
STAR COMGISTIC CAPITAL CO., LTD 26,628,782.35 0.00
Xiamen Shengming Electronic Co., Ltd 86,651.09 20,423.23
Total 159,944,432.09 150,817,078.38
The price of transaction between the Company and related parties is based on the market price in contract signed by
both parties.
（2）Purchase of raw materials, spare parts and machine accessories
Related parties
Accumulative amount in the current
period
Accumulative amount at the same period
of last year
Tsann Kuen (Japan) Co., Ltd 0.00 604,590.03
Xiamen Shengming Electronic Co., Ltd 33,478,239.20 22,470,088.03
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 0.00 18,372,929.16
STAR COMGISTIC CAPITAL CO., LTD 14,750,404.36 0.00
Total 48,228,643.56 41,447,607.22
The Company and its subsidiaries purchase raw materials, spare parts and machine accessories from related parties at
cost price except Xiamen Shengming Electronic Co., Ltd. The Company purchases raw materials, spare parts and
machine accessories Xiamen Shengming Electronic Co., Ltd at market price in the contract signed by both parties.
（3）Purchase of modules and machineries
Related parties
Accumulative amount in the current
period
Accumulative amount at the same period
of last year
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 64,078.48 1,277,645.01
STAR COMGISTIC CAPITAL CO., LTD 415,293.05 0.00
Total 479,371.53 1,277,645.01
The Company purchases asset from related parties at its carrying value.
（4）Other transactions
Names of related parties Transaction details
Accumulative amount
in the current period
Accumulative amount at the
same period of last year
Payment:
Tsann Kuen (Taiwan) Enterprise Co., Ltd. Technical knowledge support fee（Note1） 0.00 7,601,361.22
STAR COMGISTIC CAPITAL CO., LTD Technical knowledge support fee（Note1） 8,729,639.27 0.00
Tsann Kuen (USA) Co., Ltd Pay for after sales service in America area
（Note2） 527,838.83 646,779.34
Tsann Kuen (Taiwan) Enterprise Co., Ltd. Agency fee on procurement（Note3） 0.00 1,000,104.12
STAR COMGISTIC CAPITAL CO., LTD Agency fee on procurement（Note4） 1,005,345.79 0.00
EUPA (Hong Kong) Ltd Agency fee on procurement（Note5） 421,648.57 0.0071
Tsann Kuen (Japan) Co., Ltd Sales commission（Note 6） 1,507,099.78 5,233,549.98
STAR COMGISTIC CAPITAL CO., LTD Consulting fees（Note 7） 403,400.17 0.00
Tsann Kuen (Japan) Co., Ltd Relative to product quality expenses（Note 8） 5,575,812.57 0.00
Canxing Travel Network Travel Service Co., Ltd Acceptance labour services（Note 9） 3,654,586.81 0.00
Total 21,825,371.79 14,481,794.66
Receivable:
Xiamen Shengming Electronic Co., Ltd Consulting fees（Note 10） 1,234,691.22 889,603.50
Tsann Kuen (Taiwan) Enterprise Co., Ltd. Sales commission（Note 11） 136,094.58 0.00
Canxing Travel Network Travel Service Co., Ltd Provide labour services（Note 9） 2,626,370.30 0.00
STAR COMGISTIC CAPITAL CO., LTD Provide labour services 9,085.94 0.00
Xiamen Shengming Electronic Co., Ltd Provide labour services（Note 12） 5,261.80 0.00
Total 4,011,503.84 889,603.50
Note1: The Company and its subsidiaries measure technical knowledge support fees base on proportionate monthly
excess accumulated sales of net amount of licensed products.
Note2: Tsann Kuen (USA) Co., Ltd provides after sales services in America area for the Company and its
subsidiaries’ sales in American area, the Company and its subsidiaries pay for those after sales service base on 102%
of the actual related expenses incurred.
Note3: The Company and its subsidiaries entrust Tsann Kuen (Taiwan) Enterprise Co., Ltd to purchase raw material,
modules and machineries. The procurement agency fees (including service charges) are calculated base on 110% of
the actual procurement expense incurred by the agencies.
Note4：The Company and its subsidiaries entrust STAR COMGISTIC CAPITAL CO., LTD to purchase raw material,
modules and machineries. The procurement agency fees (including service charges) are calculated base on 110% of
the actual procurement expense incurred by the agencies.
Note 5: EUPA (Hong Kong) Ltd. handles import & export businesses such as transit raw materials, finished products,
customs clearing procedure for export, arrangement of Transportation channels and joint air-sea-land transportation,
BL and picking instead of the Company and its subsidiaries, the procurement agency fees are calculated base on
107% of the actual procurement expense incurred by EUPA (Hong Kong) Ltd.
Note 6: The Company sale products to Japan, and signed agreement with TKJ, the Company pay for commission
limited to the 10% of total revenues from Japan sales.
Note 7: Since the 1 November 2009, STAR COMGISTIC CAPITAL CO., LTD provided professional consultant
service for the Company and its subsidiaries related to the worldwide purchase activities. The Company and its
subsidiaries pay for the consultant fees base on 105% of the actual related expenses incurred.
Note8：It refers to relative product quality expenses for those sales from TKL to TKJ.
Note 9: The Company with Canxing Travel Network Travel Service Co., Ltd signed non-exclusive agreements for
provide “Agency services”, dealing with travel and relevant matters , the agency service charges based on the actual72
quote of each order.
Note 10: The Company assists Xiamen Shengming Electronic Co., Ltd for its management, the consulting fees from
Xiamen Shengming Electronic Co., Ltd are calculated base on 105% of actual expenses incurred from the assistance
of management.
Note 11: The Company with Tsann Kuen (Taiwan) Enterprise Co., Ltd agreed, by the Company to undertake the
purchase orders, and send semi-finished products to Tsann Kuen (Taiwan) Enterprise Co., Ltd for further processing,
and Tsann Kuen (Taiwan) Enterprise Co., Ltd shall be paid to the Company sales commission based on USD 1.2 per
actual sold products.
Note12: The Company provides agency services for Xiamen Shengming Electronic Co., Ltd, and each agency
service charges based on the actual quote.
4、The balance of payables and receivables among related parties:
2010.06.30 2009.12.31
Related parties
Amount Percentage Amount Percentage
Accounts receivable:
Tsann Kuen (Japan) Co., Ltd 83,595,005.88 17.36% 56,406,115.97 14.47%
Xiamen Shengming Electronic Co., Ltd 17,537.81 0.00% 24,266.07 0.01%
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 0.00 0.00% 19,645,910.91 5.04%
STAR COMGISTIC CAPITAL CO., LTD 18,087,676.43 3.76% 0.00 0.00%
Canxing Travel Network Travel Service Co., Ltd 553,549.41 0.11% 15,082.99 0.00%
Total 102,253,769.53 21.23% 76,091,375.94 19.52%
Accounts payable:
Xiamen Shengming Electronic Co., Ltd 17,890,487.24 1.99% 14,449,316.58 1.73%
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 0.00 0.00% 8,175,417.39 0.98%
STAR COMGISTIC CAPITAL CO., LTD 6,701,747.10 0.75% 0.00 0.00%
Tsann Kuen (Japan) Co., Ltd 0.00 0.00% 46,125.02 0.01%
Canxing Travel Network Travel Service Co., Ltd 627,064.11 0.07% 931,880.09 0.11%
Total 25,219,298.45 2.81% 23,602,739.08 2.83%
Other payables:
Tsann Kuen (USA) Co., Ltd 111,573.02 0.13% 148,076.26 0.06%
Tsann Kuen (Japan) Co., Ltd 3,838,011.35 4.46% 4,254,113.80 1.66%
Xiamen Shengming Electronic Co., Ltd 84,657.18 0.10% 102,407.11 0.04%
Industry Corporation Limited 0.00 0.00% 157,261,700.00 61.30%
EUPA (Hong Kong) Ltd. 248,223.48 0.29% 0.00 0.00%
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 0.00 0.00% 4,017,049.76 1.57%
STAR COMGISTIC CAPITAL CO., LTD 9,077,293.40 10.55% 4,191,646.31 1.63%
Canxing Travel Network Travel Service Co., Ltd 1,958.03 0.00% 150,220.40 0.06%
Total 13,361,716.46 15.53% 170,125,213.64 66.32%
Advance from customers:
Canxing Travel Network Travel Service Co., Ltd 0.00 0.00% 8,585.00 0.00%
Total 0.00 0.00% 8,585.00 0.00%73
VIII. Contingency
1、The financial impact of contingent liability caused by pending litigation or arbitration
On 12 April 2008, the Company’s subsidiary TKL signed with Longhai Chaoda Industries Co., Ltd (“Longhai
Chaoda”) 《Cooperative frame agreement》, 《Operating assets transfer and lease agreement》and relevant
supplemental agreement. The main contents of the agreements are summarised as follow: TKL contracted to purchase
supplies from Longhai Chaoda. In covenant, Longhai Chaoda contracted to purchase from TKL the machinery and
equipments for the production of the subject supply, to lease from TKL the property located at Tssan Kuen Industrial
Park, Longchi Development Zones, and to allocate and effect investment exclusively for the construction of
production.
On 3 November 2009, Longhai Chaoda lodged two petitions for litigation to the Intermediate People’s Court of
Zhangzhou, Fujian province, the detailed information are as follows:
1) Dispute on purchase and lease of machinery and equipment: Longhai Chaoda petitioned to unwind the
obligations of both parties in relation to purchase and lease of machinery and equipments and that TKL refunds
the amount of RMB 8,174,960 for the purchase and lease machinery and equipments paid by Longhai Chaoda.
TKL counter-petitioned against Longhai Chaoda for that the subject payment for the purchase and lease of
machinery and equipment has not yet been fully received from Longhai Chaoda and that the Court orders that
Longhai Chaoda advances the undue payment amounts to RMB 4,042,110.00. Up to the reporting date, the said
legal proceeding was undergoing litigation procedures, of which the outcomes were unable to be reliably
estimated.
2) Dispute on cancellation of product supply agreement and compensation: Longhai Chaoda petitioned that the
Court orders that TKL compensates the damages suffered by Longhai Chaoda for the total amount of RMB
12,600,000 and that TKL refunds the Performance Bond amounted RMB 200,000 paid by Longhai Chaoda. On
29 June 2010, the Intermediate People’s Court of Zhangzhou made the judgment that the product supply
agreement was cancelled, at the same time TKL should pay the payment for materials of RMB 6.06 million and
refund deposit of RMB 200,000 to Longhai Chaoda. The said judgment will have no effect on the Company’s
gains and losses. TKL refused to accept the judgment and ruling of the first trial, and filed an appeal with the
Count on 14 July 2010. Up to the reporting date, the said case failed to be heard.
2. Up to the reporting date, no need to disclose the contingent liabilities and relevant financial impact
that caused by provision of debt guarantees to other units.
3、Other contingent liabilities and relevant financial impact
During the year 2002 to the year 2008, TKL sold Tsann Kuen coffee grinder to Starbucks, however incurred
consumer complaints, after negotiation, Starbucks and U.S. Consumer Product Safety Commission agreed using
replacement approach to recall those coffee grinder, traders place 40 thousand units order to TKL, based on the
number of new machines replaced to consumers and status of possible future recovery , TKL has delivered 36
thousand units finished goods in September 2009, form losses RMB 1,180,400.00. Up to the reporting date, no
new consumer orders, and traders did not request to delivering the remaining 4000 units finished goods, that74
4000 units machines is expected to form losses of about RMB 130,000.00.
IX、Commitment
1、Capital commitment: None
2、Leasing commitment
Up to the balance sheet date, the details of irrevocable operating lease contracts signed with third parties as
followed:
Items 30 June 2010 30 June 2009
RMB Yuan RMB Yuan
The minimum lease payments of irrevocable operating lease contracts
House lease
1st year after balance sheet date 3,727 3,727
2nd year after balance sheet date 3,727 3,727
3rd year after balance sheet date 3,727 3,727
Subsequent years 145,346 149,073
Total 156,527 160,254
X、ROE and EPS
ROE（%） EPS (Yuan/Share)
Profit in the report period
Fully diluted
Weighted
average
Basic EPS Diluted EPS
Net profits attributable to ordinary
shareholders
36,949,302.21 8.51% 8.90% 0.03 0.03
Net profits attributable to ordinary
shareholders that have deducted
extraordinary profits or losses.
29,167,992.93 6.72% 7.02% 0.03 0.0375
XI、Other events
The Company’s subsidiary TKL signed agreements pursuant to Co-operation frame agreement and
Transfer of Operating Assets and Material Supplies agreement with SHANGHAI SIGMA
METAL,INC(“SIGMA” as below), the content of the agreements are shown as followed: TKL transfers its
operating assets and business opportunities to SIGMA with total transaction amount of RMB 100,000,000.
SIGMA shall be TKL’s main aluminum material supplier, and adjust settlement price below some amount
or rate as negotiated by both parties for each ton. According to the transfer of operating assets agreement,
SIGMA shall pay RMB 38,000,000 to TKL as its initial payment, and the rest of RMB 62,000,000 shall be
deducted from the charges of aluminum material work in process by monthly. TKL promises SIGMA to
purchase aluminum material every year effective in three years from the date of the agreements signed,
with purchase quantities shall not less than 70% of the Company’s total demands. After three years, if
TKL’s purchase orders are no enough to deduct the balance of the transaction, then TKL shall agree to
extent the agreement until the balance can be offset fully. If TKL terminates responsibility by itself, the
SIGMA will not need to pay the rest of outstanding balance. If SIGMA terminates its responsibility, then
SIGMA shall have to pay off the rest of outstanding balance at one time.
Up to the reporting date, the both parties are negotiating to seek new cooperation. The balance of RMB
39,746,220.40 was not carried forward, which was recorded in the item “Long-term accounts receivable”
and “Other non-current liabilities” for calculation.76
Tsann Kuen (China) Enterprise Co., Ltd
Balance Sheet (Un-audited)
30 Jun. 2010
Monetary unit: ( RMB) Yuan
30 June 2010 31 December 2009
Items Note
Consolidation Parent Company Consolidation Parent Company
Current Assets：
Cash and cash equivalents IX、1 448,342,090.68 5,866,334.79 632,274,671.72 494,441.23
Held for trading financial assets IX、2 1,588,661.38
Notes receivable IX、3 4,805,838.43 5,851,328.67
Accounts receivable IX、4 481,605,485.96 389,834,241.91
Advances to suppliers IX、5 7,311,980.05 93,254.00 4,382,912.72 48,231.48
Interests receivable
Dividend receivable
Other accounts receivable IX、6 22,799,655.30 2,868,862.75 14,853,085.85 230,037.15
Inventories IX、7 402,967,884.31 350,258,713.95
Non-current assets due within one
year
Other current assets
Total Current Assets 1,367,832,934.73 8,828,451.54 1,399,043,616.20 772,709.86
Non-current assets:
Available-for-sale financial assets IX、8 251,294.40 251,294.40 293,630.40 293,630.40
Held-to-maturity investments
Long-term account receivables IX、9 109,206,922.70 99,661,083.56
Long-term equity investments IX、10 40,000.00 994,604,030.83 40,000.00 1,005,105,478.85
Investment properties IX、11 22,103,594.77 25,523,027.29 33,666,204.47 35,507,404.55
Fixed assets IX、12 430,753,659.18 29,822,161.43 519,670,147.89 19,068,274.15
Construction in progress IX、13 3,918,823.41 4,656,021.02 3,632,934.04
Construction materials
Liquidation of fixed assets
Production biology assets
Oil and gas assets
Intangible assets IX、14 26,186,710.93 19,823,014.92 27,735,258.23 20,330,648.46
Development expenses
Goodwill IX、15 996,979.09 996,979.09
Long-term deferred assets IX、16 1,351,750.05 273,897.13 1,294,834.29 126,758.11
Deferred income tax assets IX、17 28,900,936.59 30,706,491.08
Other non-current assets
Total non-current assets 623,710,671.12 1,070,297,426.00 718,720,650.03 1,084,065,128.56
Total assets 1,991,543,605.85 1,079,125,877.54 2,117,764,266.23 1,084,837,838.42
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)77
Tsann Kuen (China) Enterprise Co., Ltd
Balance Sheet (Un-audited)-Con.
30 Jun. 2010
Monetary unit: ( RMB) Yuan
30 June 2010 31 December 2009
Items Note
Consolidation Parent Company Consolidation Parent Company
Current liabilities:
Short-term loans
Held for trading financial liabilities IX、19 224,351.63
Notes payables IX、20 58,359,427.53 56,370,310.39
Account payables IX、21 899,289,734.59 501,109.66 837,178,756.46 1,665,294.11
Advances from customers IX、22 14,565,460.03 30,000.00 14,680,017.93
Payroll payables IX、23 38,919,262.15 169,160.14 48,929,470.49 113,858.79
Tax payable IX、24 48,341,238.57 68,949,958.99 40,091,138.11 68,631,609.07
Interest payables
Dividend payables
Other account payables IX、25 86,056,867.70 609,271,531.19 256,531,703.89 616,799,841.82
Non-current liabilities due within one year 68,282,000.00
Other current liabilities
Total current liabilities 1,145,756,342.20 678,921,759.98 1,322,063,397.27 687,210,603.79
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term account payable
Special account payable
Accrued liabilities IX、26 1,618,986.20
Deferred income tax liabilities IX、17 14,878.04 48,530.77 296,143.90 57,844.69
Other non-current liabilities IX、27 44,283,966.67 40,106,220.40
Total non-current liabilities 44,298,844.71 48,530.77 42,021,350.50 57,844.69
Total liabilities 1,190,055,186.91 678,970,290.75 1,364,084,747.77 687,268,448.48
Shareholders' equity:
Share capital IX、28 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00
Capital reserve IX、29 125,180,968.75 123,657,245.03 125,213,990.83 123,690,267.11
Less: inventory shares
Surplus reserve
Undistributed profits IX、30 (803,439,537.86) (835,851,735.24) (840,347,470.50) (838,470,954.17)
Exchange difference of foreign currency
financial statements translation
(651,220.33)
Equity attributable to the shareholders of
parent company 434,091,507.89 400,155,586.79 396,565,377.00 397,569,389.94
Minority interests 367,396,911.05 357,114,141.46
Total shareholders’ equity 801,488,418.94 400,155,586.79 753,679,518.46 397,569,389.94
Total liabilities and shareholders’ equity 1,991,543,605.85 1,079,125,877.54 2,117,764,266.23 1,084,837,838.42
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)78
Tsann Kuen (China) Enterprise Co., Ltd
Income Statement – (Un-audited)
1 January 2010 – 30 June 2010
Monetary unit: ( RMB) Yuan
January–June 2010 January–June 2009
Items Note
Consolidation Parent Company Consolidation Parent Company
1. Total operating income IX、31 1,665,009,562.62 3,021,092.42 1,184,719,288.10 2,706,627.73
Less: Operating cost IX、31 1,465,029,876.42 2,920,911.71 1,028,214,862.42 2,645,120.32
Business taxes and surtax IX、32 2,099,385.90 150,544.66 1,846,044.33 144,023.13
Selling expenses 53,253,148.06 39,791,416.35
Administrative expenses 104,769,692.24 3,335,784.74 96,120,619.01 3,914,353.55
Financial costs IX、33 (6,429,476.48) 46,839.75 925,958.91 506,023.23
Impairment loss of assets IX、34 3,387,435.40 (672,007.38) (2,354,769.59) (1,244,367.88)
Add: gains from the fair value changes (The
loss is listed beginning with “-“)
IX、35 (1,813,013.01) (547,025.01)
Investment income (The loss is listed
beginning with “-“)
IX、36 2,095,465.34 5,266,277.58 (675,560.97) 7,500.00
Including: the investment income from
associated and joint ventures enterprises
II. Operating profit(The loss is listed
beginning with “-“)
43,181,953.41 2,505,296.52 18,952,570.69 (3,251,024.62)
Add: non-operating income IX、37 11,258,688.85 113,922.41 11,210,175.51 614,342.39
Less: non-operating expense IX、38 808,479.73 0.00 1,496,621.78 (2,714.93)
Including: loss from disposal of non-current
assets
40,632.03 1,020,524.77 (2,714.93)
III. Total profits (The loss is listed
beginning with “-“)
53,632,162.53 2,619,218.93 28,666,124.42 (2,633,967.30)
Less: income tax expense IX、39 3,730,555.64 1,609,808.94
IV. Net profits (the net loss is listed
beginning with “-”)
49,901,606.89 2,619,218.93 27,056,315.48 (2,633,967.30)
Net profits attributable to shareholders of
the parent company
36,949,302.21 2,619,218.93 20,163,216.18 (2,633,967.30)
Minority interests 12,952,304.68 6,893,099.30
V. Earnings per share
Basic earnings per share 0.03 0.02
Diluted earnings per share 0.03 0.02
Ⅵ.Other comprehensive gains IX、40 618,198.25 (33,022.08) (237,133.74) 60,108.18
Ⅶ.Total comprehensive gains 50,519,805.14 2,586,196.85 26,819,181.74 (2,573,859.12)
Total comprehensive gains attributable
to shareholders of the parent company
37,567,500.46 2,586,196.85 19,926,082.44 (2,573,859.12)
Total comprehensive gains attributable
to minority shareholders
12,952,304.68 6,893,099.30
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)79
Tsann Kuen (China) Enterprise Co., Ltd.
Consolidated Cash Flow Statement (Un-audited)
1 January 2010 – 30 June 2010
Monetary unit: ( RMB) Yuan
January–June 2010 January–June 2009
Items Note
Consolidation Parent Company Consolidation Parent Company
I. Cash flows from operating activities:
Cash received from sales of goods or rendering of
services
1,509,023,842.54 1,274,906,800.81
Refund of taxes and levies 128,382,963.21 67,793,346.42
Cash received related to other operating activities IX、41 69,336,995.55 21,114,353.05 37,024,831.98 19,833,717.68
Subtotal of cash inflow from operating activities 1,706,743,801.30 21,114,353.05 1,379,724,979.21 19,833,717.68
Cash paid for goods and services 1,299,998,498.43 1,097,811,391.75 118,008.42
Cash paid to and on behalf of employees 186,206,736.77 16,602,775.16 157,865,803.60 15,632,959.79
Payments of taxes and levies 11,520,166.16 1,520,817.79 11,184,746.80 1,464,239.15
Cash paid related to other operating activities IX、42 171,561,216.82 14,077,826.39 148,910,724.44 4,558,189.64
Subtotal of cash outflow from operating activities 1,669,286,618.18 32,201,419.34 1,415,772,666.59 21,773,397.00
Net cash flow arising from operating activities 37,457,183.12 (11,087,066.29) (36,047,687.38) (1,939,679.32)
II. Cash flow from investment activities:
Cash received from investments 421,500.00
Cash dividends received from investment 7,925,803.21 15,767,517.18 7,500.00 7,500.00
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets
11,399,847.75 11,765,565.84
Net cash received from disposal of subsidiaries
and other business units
Cash received related to other investing activities
Subtotal of cash inflow from investing activities 19,325,650.96 15,767,517.18 12,194,565.84 7,500.00
Cash paid to acquire and construct fixed assets,
intangible assets and other long-term assets
16,496,779.67 1,697,057.89 24,443,477.66 418,550.00
Cash paid to acquire investments 222,000.00 5,000,000.00
Net cash paid to acquire subsidiaries and other
business units
Cash paid related to other investing activities
Subtotal of Cash outflow from investing activities 16,718,779.67 1,697,057.89 24,443,477.66 5,418,550.00
Net cash flow arising from investing activities 2,606,871.29 14,070,459.29 (12,248,911.82) (5,411,050.00)
III. Cash flow from financing activities:
Cash received from investments
Including: subsidiaries received cash investment
from minority shareholders
Cash received from loans 253,061,652.18 157,261,700.00
Cash received from issuance of securities
Cash received related to other financing activities 160,000,000.00 120,000,000.00
Subtotal of cash inflow from financing activities 160,000,000.00 253,061,652.18 277,261,700.00
Repayment of loans or debts 225,948,239.46 157,577,962.02 349,085,555.47 274,400,368.22
Cash payments for interest expenses and
distribution of dividends or profits
2,352,514.18
Including: subsidiaries paid to minority
shareholders with cash dividends and profits 2,352,514.18
Cash paid related to other financing activities
Subtotal of cash outflow from financing activities 228,300,753.64 157,577,962.02 349,085,555.47 274,400,368.22
Net cash flow arising from financing activities (228,300,753.64) 2,422,037.98 (96,023,903.29) 2,861,331.78
IV. Effects on cash and cash equivalents for
the change of foreign exchange rates (380,905.81) (33,537.42) (635,846.81) (49,395.06)
V. Net increase in cash and cash equivalents (188,617,605.04) 5,371,893.56 (144,956,349.30) (4,538,792.60)
Add: beginning balance of cash and cash
equivalents 540,739,906.30 494,441.23 399,276,546.68 4,939,594.77
VI .Ending balance of cash and cash
equivalents IX、44 352,122,301.26 5,866,334.79 254,320,197.38 400,802.17
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)80
Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Equity Monetary unit: ( RMB) Yuan
Jan.-Jun 2010
Equity attributable to the shareholders of parent company
Items
Share capital Capital reserve
minus:
Inventory
shares
Reserve
Funds
Surplus
reserve
Normal risk
provision
Undistributed
profits
Exchange
difference of
foreign currency
Minority interests Total shareholders’
equity
I. Balance at the end of previous year 1,112,350,077.00 125,213,990.83 (840,347,470.50) (651,220.33) 357,114,141.46 753,679,518.46
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 125,213,990.83 (840,347,470.50) (651,220.33) 357,114,141.46 753,679,518.46
III. Changes in equity in the year (33,022.08) 36,907,932.64 651,220.33 10,282,769.59 47,808,900.48
(I)Net profit for the year 36,949,302.21 12,952,304.68 49,901,606.89
(II)Other comprehensive gains (33,022.08) 651,220.33 618,198.25
Sub-total of above (I) and (II) (33,022.08) 36,949,302.21 651,220.33 12,952,304.68 50,519,805.14
(III) Capital investment by the shareholders (41,369.57) (2,669,535.09) (2,710,904.66)
1.Capital investment by shareholders in the year
2. Amount calculated into equity paid in shares
3. Others (41,369.57) (2,669,535.09) (2,710,904.66)
(IV) Profit distribution in the year
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others
(V) Internal settlement and transfer of
shareholders' equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. Others
（Ⅵ）Reserve Funds
1．Appropriated in current year
2．Used in current year
IV. Balance at the end of this period 1,112,350,077.00 125,180,968.75 (803,439,537.86) 367,396,911.05 801,488,418.94
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)81
Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Equity Monetary unit: ( RMB) Yuan
Amount for the year 2009
Equity attributable to the shareholders of parent company
Items
Share capital Capital reserve
minus:
Inventory
shares
Reserve
Funds
Surplus
reserve
Normal
risk
provision
Undistributed
profits
Exchange
difference of
foreign currency
Minority interests Total shareholders’
equity
I. Balance at the end of previous year 1,112,350,077.00 125,073,743.50 (893,107,158.60) (539,902.93) 337,417,868.22 681,194,627.19
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 125,073,743.50 (893,107,158.60) (539,902.93) 337,417,868.22 681,194,627.19
III. Changes in equity in the year 140,247.33 52,759,688.10 (111,317.40) 19,696,273.24 72,484,891.27
(I)Net profit for the year 52,759,688.10 18,906,399.19 71,666,087.29
(II)Other comprehensive gains 140,247.33 (111,317.40) 28,929.93
Sub-total of above (I) and (II) 140,247.33 52,759,688.10 (111,317.40) 18,906,399.19 71,695,017.22
(III) Capital investment by the shareholders 789,874.05 789,874.05
1.Capital investment by shareholders in the year 730,000.00 730,000.00
2. Amount calculated into equity paid in shares
3. Others 59,874.05 59,874.05
(IV) Profit distribution in the year
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others
(V) Internal settlement and transfer of
shareholders' equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. Others
（Ⅵ）Reserve Funds
1．Appropriated in current year
2．Used in current year
IV. Balance at the end of this period 1,112,350,077.00 125,213,990.83 (840,347,470.50) (651,220.33) 357,114,141.46 753,679,518.46
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)82
Tsann Kuen (China) Enterprise Co., Ltd
Statement of Changes in Equity of Parent Company Monetary unit: ( RMB) Yuan
Jan.-Jun 2010
Items
Share capital Capital reserve
minus:
Inventory
shares
Reserve
Funds
Surplus
reserve
Normal risk
provision
Undistributed profits Total shareholders’
equity
I. Balance at the end of previous year 1,112,350,077.00 123,690,267.11 (838,470,954.17) 397,569,389.94
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 123,690,267.11 (838,470,954.17) 397,569,389.94
III. Changes in equity in the year (33,022.08) 2,619,218.93 2,586,196.85
(I)Net profit for the year 2,619,218.93 2,619,218.93
(II)Other comprehensive gains (33,022.08) (33,022.08)
Sub-total of above (I) and (II) (33,022.08) 2,619,218.93 2,586,196.85
(III) Capital investment by the shareholders
1.Capital investment by shareholders in the year
2. Amount calculated into equity paid in shares
3. Others
(IV) Profit distribution in the year
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others
(V) Internal settlement and transfer of shareholders' equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. Others
（Ⅵ）Reserve Funds
1．Appropriated in current year
2．Used in current year
IV. Balance at the end of this period 1,112,350,077.00 123,657,245.03 (835,851,735.24) 400,155,586.79
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.)83
Tsann Kuen (China) Enterprise Co., Ltd
Statement of Changes in Equity of Parent Company Monetary unit: ( RMB) Yuan
Amount for the year 2009
Items Note
Share capital Capital reserve
minus:
Inventory
shares
Reserve
Funds
Surplus
reserve
Normal risk
provision
Undistributed profits Total shareholders’
equity
I. Balance at the end of previous year 1,112,350,077.00 123,550,019.78 (828,377,174.42) 407,522,922.36
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 123,550,019.78 (828,377,174.42) 407,522,922.36
III. Changes in equity in the year 140,247.33 (10,093,779.75) (9,953,532.42)
(I)Net profit for the year (10,093,779.75) (10,093,779.75)
(II)Other comprehensive gains 140,247.33 140,247.33
Sub-total of above (I) and (II) 140,247.33 (10,093,779.75) (9,953,532.42)
(III) Capital investment by the shareholders
1.Capital investment by shareholders in the year
2. Amount calculated into equity paid in shares
3. Others
(IV) Profit distribution in the year
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others
(V) Internal settlement and transfer of shareholders' equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. Others
（Ⅵ）Reserve Funds
1．Appropriated in current year
2．Used in current year
IV. Balance at the end of this period 1,112,350,077.00 123,690,267.11 (838,470,954.17) 397,569,389.94
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
(The notes form an integral part of these consolidated financial statements.
