TSANN KUEN (CHINA) ENTERPRISE CO. LTD.
Semi-Annual Report 2011
(Prepared under China Accounting Standards)
Contents
I. Company Profile-------------------------------------------------------------------------------1
II. Summar y of Financial and Business Highlight s--------------------------------------2
(I) Major accounting data and financial indexes -----------------------------------------2
(II) Explanat ion 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------------------------------------------------5
IV. Particulars about Directors, Supervisors and Senior Management-------------------6
V. Report of the Board of Directors-----------------------------------------------------------7
VI. Significant Events -------------------------------------------------------------------------14
VII. Financial Report (Attachment) ---------------------------------------------------------20
VIII. Documents Available for Reference----------------------------------------------------------------------21
0
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
2011.
All the directors had attended the Board meeting which reviewed and approved the semi-annual
report 2011.
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 : Sun Meimei
Contact address :Tsann Kuen Industrial Park, Longchi Development Zone, Zhangzhou, Fujian
Province
Telephone : 0596-6268103
Fax : 0596-6268104
E-mail : mm_sun@tkl.tsannkuen.com
Securities Affairs Representative :
Contact address :
Telephone :
Fax :
E-mail :
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 : mm_sun@tkl.tsannkuen.com
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
1
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
Increase/decrease
of the end of the
As at the end of
As at the end of reporting period
Items the reporting
last year compared with the
period
end of last year
(%)
Total assets 2,002,896,080.72 1,985,108,875.38 0.90
Owners’ equity attributable to shareholders of the
483,955,065.10 461,411,506.21 4.89
Company
Share capital 1,112,350,077.00 1,112,350,077.00 0.00
Net assets per share attributable to shareholders of the
0.44 0.41 7.32
Company
Increase/decrease
during the
The reporting
The same period reporting period
Items period (Jan.
of last year compared with the
-Jun. )
same period of the
last year (%)
Total operating income 1,373,364,867.20 1,665,009,562.62 (17.52)
Operating profit 30,615,169.90 43,181,953.41 (29.10)
Total profit 35,183,410.97 53,632,162.53 (34.40)
Net profit attributable to shareholders of the Company 22,548,469.85 36,949,302.21 (38.97)
Net profit attributable to shareholders of the Company
7,619,492.26 29,167,992.93 (73.88)
after deducting non-recurring gains and losses
Earnings per share-basic 0.02 0.03 (33.33)
Earnings per share-diluted 0.02 0.03 (33.33)
Weighted average ROE (%) 4.77% 8.90% (4.13)
Weighted average ROE after deducting non-recurring
1.61% 7.02% (5.41)
gains and losses (%)
Net cash flows from operating activities (124,787,026.82) 37,457,183.12 (433.15)
Net cash flows per share from operating activities （0.11） 0.03 (466.67)
2
Items and amount of non-recurring gains and losses
Unit: RMB Yuan
Items Amount
Net profit 22,548,469.85
Add: gains and losses from disposal of non-current assets, including the part that
(1,508,177.01)
withdrawn reserve for impairment of assets were offset
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,
(18,796,938.42)
tradable financial liabilities and available-for-sale financial assets except for effective
hedging business related to normal operation business of the Company
Government subsidy measured into current gains and losses, while closely related with
the business of the Company, excluding the fixed-amount or fixed-proportion (2,336,916.06)
government subsidy enjoyed according to the certain standard
Other non-operating income and expense other than the above-mentioned each items (723,148.00)
Subtotal (23,365,179.49)
Less: influence on enterprise income tax (3,485,169.79)
Less: net profit attributable to minority shareholders after deducting non-recurring gains
(4,951,032.11)
and losses
Net profit attributable to shareholder of parent company after deducting non-recurring
7,619,492.26
gains and losses
(II) Difference between PRC GAAP and IFRS
Unit: RMB Yuan
Net profit attributable to Owners’ equity attributable to
shareholders of listed company shareholders of listed company
Items
As at
This period Last period As at period-end
period-begin
Under IFRSs 23,257,872.68 35,973,827.47 483,245,662.27 459,992,700.55
Under PRC GAAP 22,548,469.85 36,949,302.21 483,955,065.10 461,411,506.21
Adjustment pursuant to IFRSs:
Adjustment of fixed assets purchased before 1994 due
0.00 (1,111,317.84)
to adopting adjusted rates
Writing off the depreciation in this year of evaluated
709,402.83 135,843.10 (709,402.83) (1,418,805.66)
increment of fixed assets of the year 1993
Total difference 709,402.83 (975,474.74) (709,402.83) (1,418,805.66)
1. Concerning the adjustment of fixed assets purchased before 1994 due to
adopting adjusted rates, the amortization ended in Dec. 2010.
Explanation on difference
2. Concerning writing off the depreciation of evaluated increment of fixed
assets of the year 1993, the amortization was to end in 2011.
3
III. Changes in Share Capital and Particulars about Shareholders
(I) Changes in share capital
√Applicable □Inapplicable
Unit: share
Before change Increase/decrease (+,-) After change
New Bonus Shares turned from
Quantity Proportion Others Subtotal Quantity Proportion
shares shares capital reserve
I. Unlisted shares
1. Founders’ shares
Including: shares held by
the state
Shares held by domestic
legal persons
Shares held by overseas
legal persons
Others
2. Shares placed by legal
persons
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
1,112,350,077 100% 1,112,350,077 100%
foreign shares
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: 32,929
Shares held by the top ten shareholders
Unit: Share
Sharehol Shares
Shares held at Non-tradable
No Name of shareholder Nature of shareholder ding pledged or
the period-end shares held
ratio frozen
1 FORDCHEE DEVELOPMENT LIMITED Foreign legal person 29.10% 323,643,179 0 0
2 EUPA INDUSTRY CORPORATION LIMITED Foreign legal person 13.83 % 153,802,306 0 0
3 FILLMAN INVESTMENTS LIMITED Foreign legal person 2.49% 27,729,575 0 0
4 TIMMERTON CO INC Foreign legal person 1.30% 14,505,644 0 0
5 CHEN YONGQUAN Domestic natural person 0.90% 10,004,383 0 0
6 LI YIJUN Domestic natural person 0.69% 7,692,959 0 0
Foreign natural person
7 CHEN LIJUAN 0.55% 6,076,746
Foreign natural person
8 CHEN YONGQING 0.53% 5,889,589 0 0
SHENYIN WANGUO SECURITIES (H.K.) Foreign legal person
9 0.44% 4,840,002 0 0
LIMITED
Foreign legal person
10 CSC SECURITIES (HK) LTD. 0.42% 4,617,279 0 0
4
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 153,802,306 B-share
3 FILLMAN INVESTMENTS LIMITED 27,729,575 B-share
4 TIMMERTON CO INC 14,505,644 B-share
5 CHEN YONGQUAN 10,004,383 B-share
6 Li YIJUN 7,692,959 B-share
7 CHEN LIJUAN 6,076,746 B-share
8 CHEN YONGQING 5,889,589 B-share
9 SHENYIN WANGUO SECURITIES (H.K.) LIMITED 4,840,002 B-share
10 CSC SECURITIES (HK) LTD. 4,617,279 B-share
The top three shareholders are the controlling legal-person shareholders. The
Explanation on related Company was not aware that whether there were any related relationships between
relationship and other shareholders holding tradable shares and whether or not the other shareholders
action-in-concert among above holding tradable shares belonged to the action-in-concert people as prescribed in The
mentioned shareholders Regulations for Information Disclosure on the Change of Shares Held by the
Shareholders of the Listed Companies.
(III) About controlling shareholders
Legal Foundation Business
Name of shareholders Registered capital Pledge
Representative date scope
FORDCHEE DEVELOPMENT LTD Jian Derong 3 Jan. 1990 Investment HKD 134,246,851 Naught
EUPA INDUSTRY CORPORATION LTD Jian Derong 21 Jul. 1989 Investment HKD 126,002,760 Naught
FILLMAN INVESTMENTS LTD Jian Derong 21 Jul. 1992 Investment HKD 62,400,000 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 Taiwan
5
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 23 Apr. 2011, the Company’s original Secretary to the Board Mr. Luo Qingxing 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 board meeting in 2011, at which the original Securities
Affairs Representative Sun Meimei was engaged as Secretary to the Board of the Company. For
details, please refer to the Public Notice on Secretary to the Board Leaving Office and Resolutions
Made at 2nd Board Meeting in 2011 published on Securities Times and Hong Kong Ta Kung Pao
dated 26 Apr. 2011.
The Company convened the Shareholders’ General Meeting for Y2010 on 21 May 2011, at which
reviewed and approved the Re-election of the members of the Board of Directors and the Supervisory
Committee due to the expiration of their office terms. There the original independent director Xu
Rentang left his office, and Jian Derong, Pan Zhirong, Zhuang Xing, Chen Yanjun, Lu Jianxin
(Independent director), Ge Xiaoping (Independent director), Tu Liandong (Independent director) were
elected and approved as the members of the 7th Board of Directors. Meanwhile, the original
Shareholders-representative Supervisor of the 6th Supervisory Committee Zhou Zhonggeng, Diao
Weiren left their office, Luo Qingxing and Wei Xuezhong were engaged as the
Shareholders-representative Supervisor of the 7th Supervisory Committee. For details, please refer to
the Public Notice on Resolutions Made at the Shareholders’ General Meeting for Y2010 published on
Securities Times and Hong Kong Ta Kung Pao dated 24 May. 2011.
The Company convened the First Staffs’ Congress on 21 May 2011, at which elected Mr. Cai
Shuren as the Staff-representative Supervisor of the 7th Supervisory Committee continuously. For
details, please refer to the Public Notice on the First Staffs’ Congress published on Securities Times
and Hong Kong Ta Kung Pao dated 24 May. 2011.
6
On the third session of the Board of Directors and the third session of the Supervisory Committee
for 2011 held on 21 May 2011, Mr. Jian Derong was elected as the Chairman for the Seventh Board of
Directors and Mr. Luo Qingxing as the Chairman for the Seventh Supervisory Committee. For details,
please refer to the Company’s Announcement on Resolutions of the Third Session of the Board of
Directors for 2011 and Announcement on Resolutions of the Third Session of the Supervisory
Committee for 2011, both disclosed on Securities Times and Ta Kung Pao (HK) on 24 May 2011.
V. Report of the Board of Directors
(Ⅰ) Discussion and analysis on the Company’s performance for the reporting period
For the reporting period, the Company achieved operating revenues of RMB 1.373 billion, down
17.52% when compared with RMB 1.665 billion from a year earlier; and net profit of RMB 23 million,
down 38.97% when compared with RMB 37 million from a year earlier. Operating revenues and net
profit both experienced year-on-year decrease mainly due to the fact that the Company shifted its
focus to people with ordinary incomes in the American and European markets considering the
appreciation of RMB; and the fact that new products were launched not as early as before due to
marketing strategy changes caused by the adjustment of the customer structure.
According to the strategic goals—focusing on main business, improving operational management
and expanding emerging markets—set at the year-begin, with “cash and profit growth” as the highest
guiding principal, customers’ needs as the orientation, product quality as a guarantee and technical
innovation as the means, the Company will continue to build a high-end service mode featuring “high
speed, low cost and effective solution”, and rapidly create leading advantages in areas from R&D to
the marketing system. We will also adjust our product mix, enhance supply chain management and
renew the production technical process so as to reduce cost and provide products with high quality but
competitive prices to our customers. In the future, we will continue to input for small household
appliance R&D, increase competitiveness of our products through technical innovation, and take
product innovation as the core of the Company’s operation. Meanwhile, we will draw up plans for
overseas production bases and LED green products, try to satisfy various purchase needs of customers
worldwide, and stabilize and develop our long-term cooperation relationship with customers so as to
achieve stable development on all business lines of the Company.
7
2. Main business lines and performance thereof
01. Classified according to industries and products
Unit: RMB Ten thousand
Main business lines classified according to industries
Gross Increase/decrease Increase/decrease Increase/decrease
Income Cost of
profit of income from of cost of main of gross profit
Industries/products of main main
ratio main business business ratio year-on-year
business business
(%) year-on-year (%) year-on-year (%) (%)
Household appliance
132,597 116,173 12.39 -18.4 -19.17 0.84
manufacture
Tourism 1,085 971 10.51 -31.53 -32.07 0.71
Total 133,682 117,145 12.37 -18.52 -19.30 0.84
Main business lines classified according to products
Gourmet cooking 65,256 56,463 13.47 -11.05 -10.22 -0.80
Home assistant 44,754 40,773 8.90 -25.77 -25.72 -0.06
Tea/coffee 12,044 10,837 10.03 -34.87 -37.44 3.69
LED Green Products 6,293 5,138 18.36 277.85 532.94 -32.9
Other 4,250 2,962 30.3 -51.02 -62.07 20.32
Tourism 1,085 971 10.48 -31.53 -32.07 0.71
Total 133,682 117,145 12.37 -18.52 -19.30 0.84
Among which: The Company sold products and provided labor service, which incurred
related-party transactions valuing RMB 174,041,400 in total, to the controlling shareholder and its
subsidiaries in the reporting period.
Reasons for significant year-on-year changes of the gross profit ratio: N/A
02. Classified according to areas
Unit: RMB Ten thousand
Area Income from main business Increase/decrease of income from main business year-on-year (%)
Australia 8,184 42.19
Africa 1,519 25.61
America 55,606 -31.18
Europe 25,634 -5.16
Asia 42,739 -13.27
Total 133,682 -18.52
03. Products of which sales exceeded 10% of income from main business
Unit: RMB Ten thousand
Product Proportion (%) Sales income Cost of sales Gross profit ratio
Home assistant 33.48 44,754 40,773 8.89
Gourmet cooking 48.81 65,256 56,463 13.47
Tea/coffee 9.01 12,044 10,837 10.03
LED Green Products 4.71 6,293 5,138 18.36
Other 3.18 4,250 2,962 30.30
Tourism 0.81 1,085 971 10.48
Total 100.00 133,682 117,145 12.37
04. Explanation for significant changes of main business and its structure
8
□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
Main business income was down 18.52% from a year earlier, which was mainly because the
Company shifted its focus to people with ordinary incomes in the American and European markets
considering the year-on-year appreciation of 4.7% of RMB; and new products were launched not as
early as before due to marketing strategy changes caused by the adjustment of the customer
structure.
3. Operating status and performance of the Company’s main controlled companies and joint stock
companies
01. Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
A. Business nature: Manufacturing;
B. Business scope: 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 40,000,000
D: Asset scale: RMB 97,430,000
E: Net assets: RMB 96,120,000
F: Net profit: RMB -1,510,000
02. Tsann Kuen Zhangzhou Enterprise Co., Ltd.
A. Business nature: Manufacturing
B. Business scope: 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 160,000,000
9
D. Asset scale: RMB 2,356,860,000
E. Net assets: RMB 1,283,730,000
F. Net profit: RMB 37,910,000
G. Over 10% net profit influence:
Main business income: RMB 1,310,050,000
Main business cost: RMB 1,150,830,000
03. Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd.
A. Business nature: Manufacturing
B. Business scope: 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 electronics, chemicals (excluding
hazardous materials), hardware plates, metal materials, packing materials, household appliances, etc.
(not involving any state trading or any commodities under special government management such as
the import & export quota certificate, export quota public bidding, export permit, etc.); 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: RMB 5,000,000
D. Asset scale: RMB 14,240,000
E. Net assets: RMB 10,960,000
F. Net profit: RMB 40,000
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. Asset scale: RMB 6,160,000
E. Net assets: RMB 1,980,000
F. Net profit: RMB 520,000
05. Shanghai Star 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).
10
C. Registered capital: RMB 4,950,000
D. Asset scale: RMB 25,780,000
E. Net assets: RMB 4,940,000
F. Net profit: RMB 860,000
06. Xiamen Star International Travel Service Co., Ltd.
A. Business nature: Tourism
B. Business scope: 1. inbound and domestic tourist services; 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. Asset scale: RMB 2,310,000
E. Net assets: RMB -2,160,000
F. Net profit: RMB -1,330,000
07. Xiamen Star Commerce & Trade Co., Ltd.
A. Business nature: sale of household appliances
B. Business scope: 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 30,000,000
D. Asset scale: RMB 29,020,000
E: Net assets: RMB 29,120,000
F: Net profit: RMB 48,000
08. Xiamen Star Comgistic Capital Co., Ltd
A. Business nature: Sale of household appliances
B. Business scope: 1. Wholesale and retail: daily necessities, household appliances, computer sets
and auxiliary products, communication equipments, electrical and mechanical equipments, office
supplies, kitchen supplies and their auxiliary products; 2. Import and export of various goods and
technologies (Without the attachments of catalogue of export & import products), while excluding
those products and technologies restricted by the government or to be imported or exported. (Where
an administrative license is required, such a license will be obtained before operation.)
C. Registered capital: RMB 28,000,000
D. Asset scale: RMB 27,980,000
E. Net assets: RMB 27,980,000
F. Net profit: RMB 2,500
11
09. Shanghai Fanxin Airlines Service Co., Ltd.
A. Business nature: Ticket agent
B. Business scope: Ticket agent service in passenger transportation of civil aviation for domestic
routes and international routes, or HK, Macau and Taiwan routes. (Where an administrative license
is required, such a license will be obtained before operation.)
C. Registered capital: RMB 5,500,000
D. Asset scale: RMB 9,320,000
E. Net assets: RMB 3,770,000
F. Net profit: RMB -550,000
10. Star International Travel Service (Dalian) 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. Asset scale: RMB 7,890,000
E. Net assets: RMB 1,060,000
F. Net profit: RMB 4,900
11. Xiamen Star 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. Asset scale: RMB 2,980,000
E. Net assets: RMB 1,050,000
F. Net profit: RMB -90,000
12. Brilliant Leader Co., Ltd.
A. Business nature: Comprehension
B. Business scope: Trade, purchasing agent, R&D of small household appliances, market research,
etc.
C. Registered capital: USD 4,950,000
D. Asset scale: RMB 12,470,000
E. Net assets: RMB 8,050,000
F. Net profit: RMB -710,000
12
13. Globe Strong Co., Ltd.
A. Business nature: Comprehension
B. Business scope: Trade, purchasing agent, R&D of small household appliances, market research,
etc.
C. Registered capital: USD 50,000
D. Asset scale: RMB 317,000
E. Net assets: RMB 314,000
F. Net profit: RMB -3,500
14. Pt. Tsann Kuen Zhangzhou Indonesia
A. Business nature: Manufacturing
B. Business scope: Production of small household appliances
C. Registered capital: USD 5,000,000
D. Asset scale: RMB 8,090,000
E. Net assets: RMB 8,090,000
F. Net profit: RMB -160,000
4. In the reporting period, significant changes occurred in the asset composition and relevant expenses
compared with the same period of last year.
Unit: RMB Ten thousand
Closing Opening Increase/dec
Items Main reasons for the movement
amount amount rease rate
Transactional financial Unsettled forward exchange contracts increased in
1,609.66 230.16 599.37%
assets the reporting period.
Interest incomes from mature term deposits were
Interest receivable 8.92 12.82 -30.42%
recognized.
Export rebates for 2010 from the Zhangzhou
Other receivables 1,866.77 6,042.29 -69.10%
Municipal Office of SAT were received.
Goodwill 99.70 249.70 -60.07% Equity transfer of Suzhou Tai Lake
The input tax amount increased in the reporting
Taxes and fares payable 1,314.09 4,836.23 -72.83%
period.
A borrowing of USD 20 million from the
Other payables 20,566.16 9,069.72 126.76%
controlling shareholder in the reporting period
Unsettled forward exchange contracts at the end of
Deferred income tax
241.45 34.52 599.45% the reporting period were estimated to generate
liabilities
more profit.
Accumulativ
Accumulativ e amount in Increase/de
Items e amount in Notes
this period the last crease rate
period
Business taxes and 806.75 209.94 284.28% The city maintenance tax was levied as a new tax
surtaxes and surtax rates increased.
Foreign exchange loss increased due to a 4.7%
Financial expenses 248.31 (642.95) 138.62% year-on-year appreciation of RMB.
13
Accumulativ Accumulativ
Items e amount in e amount in Increase/de Notes
this period the last crease rate
period
Asset impairment loss 7.76 338.74 -97.71% Falling price loss on inventory was provisioned in
the same period of last year.
Gain on fair value Unsettled forward exchange contracts at the end of
changes 1,379.50 (181.30) 860.89% the reporting period were estimated to generate
more profit.
Investment gains 530.66 209.55 153.24% More forward exchange contracts were settled.
Non-operating 528.17 1,125.87 -53.09% Decrease of gains on asset disposal
incomes
Main business income and gains on asset disposal
Net profit 3,165.87 4,990.16 -36.56% went down by RMB 330 million and RMB 3.97
million from a year earlier.
Net cash flows from (12,478.70) 3,745.72 -433.15% Decrease of main business income
operating activities
Net cash flows from (959.64) 260.69 -468.12% Decrease of gains on asset disposal
investing activities
Net cash flows from A borrowing from the controlling shareholder to
financing activities 10,888.14 (22,856.21) 147.64% the Company
(II) Investments made by the Company
□Applicable √Inapplicable
(III) Changes proposed by the Board of Directors to the business plan for the second half
□Applicable √Inapplicable
(IV) Significant related transactions 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 for the previous year
□Applicable √Inapplicable
VI. Significant Events
(I) Acquisition, sale and reorganization of assets
1. Asset acquisition
□Applicable √Inapplicable
2. Sale of asset
√Applicable □Inapplicable
In the reporting period, due to the needs of the spare parts plants in their actual operation, the
Company sold a small quantity of equipments, which were detailed as follows:
Unit: RMB’0000 Yuan
14
Net profit Gains Explan whether or not
contributed to and ation Whether or not the relevant
Whether the ownership Relations
Transactio Selling the Company losses a related on creditor’s rights hip with
n party Asset sold Date of sale price by the sold due to pricing of the involved and liabilities
asset from transacti asset had been the
selling on or not princip had been Company
year-begin to transferred
the asset le transferred
the date of sale
Zhangzhou Motor
2011.01.31 12.00 5.47 5.47
Baokun equipment
Zhangzhou Bakelite
Shunkun equipment 2011.01.31 0.35 0.31 0.31
Zhangzhou Die casting
Haikun equipment 2011.02.28 36.20 34.33 34.33
Zhangzhou Die casting
Bo’er equipment 2011.02.28 17.50 15.71 15.71
Zhangzhou Die casting
2011.02.28 6.30 6.18 6.18
Yufeng equipment
Zhangzhou Die casting
Hongyuan equipment 2011.02.28 3.60 3.53 3.53
Zhangzhou Die casting
Ruicheng equipment 2011.02.28 6.00 5.88 5.88
Zhangzhou Hardware
Shengyuan equipment 2011.03.30 5.20 4.46 4.46
Zhangzhou Hardware
2011.03.30 2.67 2.42 2.42
Xiangkun equipment
Zhangzhou Bakelite
Hewang equipment 2011.03.30 0.80 0.49 0.49
Zhangzhou Die casting
Haikun equipment 2011.03.30 1.10 1.03 1.03
Xiamen Hardware
Pinrui equipment 2011.04.30 1.90 0.50 0.50
Xiamen Hardware The
2011.04.30 40.37 2.84 2.84
Jinyuan equipment transac
Zhangzhou Hardware tion
Hailong equipment 2011.04.30 2.15 1.68 1.68
prices
Zhangzhou Die casting were
Shengliang equipment 2011.04.30 1.20 1.08 1.08
decide
Zhangzhou Bakelite d based
Shunkun equipment 2011.04.30 3.71 0.70 0.70
on the
Zhangzhou Die casting princip
2011.04.30 2.08 2.04 2.04
Yufeng equipment le of
Non-rela Non-relat
Zhangzhou Die casting being Yes Yes
2011.04.30 3.20 2.27 2.27 ted above ed
Hongyuan equipment company company
Zhangzhou Die casting the
Hongyuan equipment 2011.04.30 11.50 3.19 3.19 book
Xiamen Hardware value,
Pinrui equipment 2011.05.31 3.57 1.23 1.23 as well
Zhangzhou Die casting as the
2011.05.31 6.43 0.75 0.75 assess
Haikun equipment
Zhangzhou Die casting ment
Haikun equipment 2011.05.31 3.48 3.24 3.24 and
Zhangzhou Die casting market
Shengliang equipment 2011.05.31 1.20 1.13 1.13 prices.
Zhangzhou Wiring
Jiafeng equipment 2011.05.31 1.60 0.67 0.67
Xiamen Die casting
2011.05.31 3.00 2.56 2.56
Jingjing equipment
Zhangzhou Die casting
Ruicheng equipment 2011.05.31 1.75 1.72 1.72
Zhangzhou Die casting
Hongyuan equipment 2011.05.31 11.54 3.25 3.25
Zhangzhou Die casting
Hongyuan equipment 2011.05.31 24.79 4.83 4.83
Zhangzhou Fitting
2011.06.30 6.45 2.82 2.82
Jinkun equipment
Zhangzhou Die casting
Hongyuan equipment 2011.06.30 10.79 9.23 9.23
Zhangzhou Bakelite
Hewang equipment 2011.06.30 0.36 0.33 0.33
Zhangzhou Die casting
Haikun equipment 2011.06.30 8.10 1.98 1.98
Zhangzhou Bakelite
2011.06.30 0.25 0.23 0.23
Yingfa equipment
Xiamen Die casting
Jingjing equipment 2011.06.30 1.10 1.00 1.00
Zhangzhou Die casting
Hongyuan equipment 2011.06.30 3.64 3.57 3.57
Total 245.87 132.65 132.65
For details， please refer to Public Notice on Sale of Some Operation Assets of Spare Parts Plant
by Share Controlling Subsidiary Zhangzhou Tsann Kuen, Public Notice on Explanation on Progress of
Sale of Some Operation Assets of Spare Parts Plant by Share Controlling Subsidiary and New Assets
15
for Sale, and Public Notice on Explanation on Progress of Sale of Some Operation Assets of Spare
Parts Plant by Share Controlling Subsidiary and New Assets for Sale for the Second Time, which were
published on Securities Times, HK Ta Kung Pao and http:// www.cninfo.com.cn respectively on 29 Jul.
2008, 21 Jan. 2009, 28 Apr. 2009 and 28 Apr. 2010.
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)
Date of Actual Implementati Guarant
Guarante occurrence amount ee for
Name of Date and No. of
the Relevant public (Date of of Type of Term of on related
e line guarantee guarantee accomplishe
guaranteed notice signing guarant d or not parties
agreement) ee or not
Naught Naught 0 Naught 0 Naught Naught Naught Naught
Total external guarantees lines examined
Naught Total external guarantees occurred in Naught
and approved in the reporting period the reporting period (A2)
(A1)
Total external guarantee lines examined Balance of actual guarantees at the
and approved at the period end (A3) Naught period end (A4) Naught
Guarantees provided for subsidiary companies
Guara
Date of Actua ntee
l Implementat
Date and No, of occurrence ion for
Name of the
Relevant public
Guaran (Date of amou Type of Term of relate
guaranteed tee line nt of guarantee guarantee accomplishe
notice signing guara d or not d
agreement) ntee parties
or not
Tsann Kuen 2010/12/4;2010-030 8,000 2011/3/4 237 No
(Zhangzhou
Within 1 year
2010/12/4;2010-030 4,750 2010/12/4 161 Joint from term of No
) South Port
Electronics
responsibi debts No
Enterprise 2011/4/23;2011-008 10,000 2011/4/23 0 lity implementation No
Co., Ltd.
was expired
Total guarantees lines for subsidiaries Total guarantees for subsidiaries
examined and approved in the reporting 12,275 398
occurred in the reporting period (B2)
period (B1)
Total guarantee lines for subsidiaries
examined and approved at the period end 25,025 Balance of actual guarantees at the 201
period end (B4)
(B3)
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined and 12,275 Total guarantees occurred in the 398
approved in the reporting period (A1+B1) reporting period (A2+B2)
Total guarantees lines examined and Total balance of actual guarantees at
approved at the report period (A3+B3) 25,025 the period end (A4+B4) 201
Proportion of total actual guarantee amount (A4+B4) in net 0.42%
assets of the Company
Among which:
16
Amount of guarantees provided for shareholders, actual Naught
controller and other related parties (C)
Amount of debt guarantees provided directly or indirectly Naught
for parties with asset-liability ratio exceeding 70% (D)
Proportion of total guarantee amount exceeding 50% of the (23,800)
Company’s net assets (E)
Total amount of the above three guarantees (C+D+E) (23,800)
Explanation on possibility of taking several and joint Naught
liability involving immature guarantees
(III) Current of non-operating related creditor’s right and debts
√Applicable □Inapplicable
Unit: RMB’0000 Yuan
Funds provide by related parties
Funds provided to related parties
to the listed company
Related party
Occurred Occurred
Balance Balance
amount amount
STAR COMGISTIC CAPITAL CO.,LTD. 0.00 0.00 1,507.67 436.36
TSANN KUEN USA INC 0.00 0.00 19.40 3.60
TSANN KUEN JAPAN CO., LTD. 0.00 0.00 1,125.41 261.25
STAR TRAVEL SERVICE CORP. 0.00 0.00 123.17 0.51
HONG KONG ALIENS INVESTMENT CO., LTD. 0.00 0.00 6,471.60 6,471.60
CHINA GLOBAL DEVELOPMENT CO., LTD. 0.00 0.00 6,471.60 6,471.60
Total 0.00 0.00 15,718.85 13,644.92
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.
(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
17
3. Statement on non-operating capital occupation by principal shareholder and affiliated enterprises
and repayment
□Applicable √Inapplicable
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
Accumulative amount Occurred amount
Items
of this period of last period
1. Profits (or losses) from the available-for-sale financial assets (42,336.00)
Less: Effects on income tax generating from the available-for-sale financial
9,313.92
assets
The amount in current period transferred into profit and loss that recognized
into other comprehensive gains in prior period
Subtotal 0.00 (33,022.08)
2. Interest in the investees’ other comprehensive gains according to the equity
method
Less: Effects on income tax generating from the interest in the investees’ other
comprehensive gains according to the equity method
Net value in current period transferred into profit and loss that recognized
into other comprehensive gains in prior period
Subtotal 0.00 0.00
3. Profits (or losses) from cash flow hedging instrument
Less: Effects on income tax generating from the cash flow hedging instrument
Net value in current period transferred into profit and loss that recognized
into other comprehensive gains in prior period
The adjustment value that is the converted initial recognition amount of
arbitrage project
Subtotal 0.00 0.00
4. Converted amount of foreign currency financial statement (4,910.96) 651,220.33
Less: Net value of disposal of oversea operations that recognized into current
profit and loss
Subtotal (4,910.96) 651,220.33
5. Others
Less: Effects on income tax generating from the others that recognized into other
comprehensive gains
Net value in current period transferred into profit and loss that recognized into
other comprehensive gains in prior period
Subtotal 0.00 0.00
Total (4,910.96) 618,198.25
18
7. Particulars about corporate governance
By the end of December 2008, governance of the Company has been executed in accordance with
relevant documents from CSRC, and there was no discrepancy.
8. Fulfillment of commitments made by shareholders holding over 5% shares
□Applicable √Inapplicable
9. Explanation on the inquisitions for the Company from CSRC in 2007
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 interviews in the reporting 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 Reception Main discussion and
Reception way Visitor
time place materials provided
He Minji, the investment director, and
2011.01.05 Field research Ouyang Jinwen, the analyst of Value
Partners (HK) Limited
2011.01.07 By telephone Mr. Wang Operation status of the
Office of the Company.
2011.01.21 Company By telephone Mr. Wang No written information
2011.03.07 By telephone Mr. Zhou was provided.
2011.03.08 By telephone Mr. Zhong
2011.04.07 By telephone Mr. Miao
2011.05.11 By telephone Mr. Chen
(VI) Significant related transactions
1. For details about related transactions in the reporting period, please refer to the notes of financial
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 necessity and continuity of related-party transactions: to increase the efficiency of
vertical work distribution within the Group, bring individual advantages together to give the best
possible performance, greatly reduce costs and increase the market share by making use of the location
19
advantage of all related parties around the world.
(VII) Implementation of transactions of listed companies related to routine operation in the reporting
period
Unit: (RMB) Yuan
Transact Amount Total amount
Proportio
ion Name of related parties Transaction Type disclosed in from Jan.-Jun.
n
Nature 2011 2011
Raw material 30,000,000.00 11,156,148.32 37.19%
Purchas STAR COMGISTIC CAPITAL CO.,LTD.
Equipment/mould 1,000,000.00 84,385.00 8.44%
e
Thermaster Electronic (Xiamen) Ltd. Raw material 72,000,000.00 24,406,402.96 33.90%
STAR COMGISTIC CAPITAL CO.,LTD. Finished goods 73,500,000.00 33,353,813.98 45.38%
TSANN KUEN JAPAN CO., LTD. Finished goods 232,200,000.00 135,833,993.47 58.50%
Sale
Thermaster Electronic (Xiamen) Ltd. Raw material 130,000.00 50,858.00 39.12%
PT. STAR COMGISTIC Finished goods 4,455,684.83
STAR COMGISTIC CAPITAL CO.,LTD. Technical service 18,200,000.00 7,914,482.47 43.49%
STAR COMGISTIC CAPITAL CO.,LTD. Service charge 1,550,000.00 558,357.18 36.02%
Offering TSANN KUEN JAPAN CO., LTD. Commission 3,670,000.00 1,758,258.94 47.91%
labor Expense for repair,
TSANN KUEN JAPAN CO., LTD. exchange and return of 20,000,000.00 7,682,023.81 38.41%
goods
TSANN KUEN USA INC Commission 1,200,000.00 194,011.47 16.17%
Receivi
STAR TRAVEL SERVICE CORP. Service cost 10,647,000.00 2,094,148.21 19.67%
ng labor
STAR TRAVEL SERVICE CORP. Service income 2,007,600.00 397,880.79 19.82%
Offering
service
Thermaster Electronic (Xiamen) Ltd. Service income 14,300.00 0.00 0.00%
Note: Explanation on the difference between the disclosed data as at the year-begin and the disclosed
data as at the period-end of PT. STAR COMGISTIC: Due to business need, the Company started to be
involved in sales businesses successively with PT. STAR COMGISTIC in May.
For more details, please refer to the Announcement on Expected New Routine Related-party Transacti
ons for 2011 disclosed by the Company today on Securities Times, Ta Kung Pao (HK) and http://www.
cninfo.com.cn.
VII. Financial Report (Refer to Attachment)
(I) Auditor’s opinion
Financial Report √Un-audited □Audited
Auditors’ Report □Qualified audit report □Non-qualified audit report
Un-audited
20
(II) Accounting statements
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of changes in owners’ equity
VIII. Documents Available for Reference
(I) The Financial statements with signatures and seals of the legal representative, head of the
accounting work, principal of the accounting organ.
(II) All the company’s documents and announcement originals that were publicly disclosed during the
reporting 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
13 Aug. 2011
21
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Six Months Ended 30 Jun. 2011
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
Note 1: Company Profile
1.1 History
Tsann Kuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established in the People’s
Republic of China (“the PRC”) in 1988 as a wholly owned foreign investment enterprise, the Company named in
Tsann Kuen China (Xiamen) Ltd. firstly, invested by the Fordchee (Hongkong) Co., Ltd. , EUPA Industry
Corporation Limited 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 an 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 2011, the Company’s share
capital is CNY 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 Tsann Kuen (China) Enterprise Co., Ltd. shares traded
sponsor of the approval》）, On December 6, 2006, the Company received the [2006] No.266 file 《The notice of
Tsann Kuen (China) Enterprise Co., Ltd concerning the approval of non-listed foreign shares traded》from China
Securities Regulatory Commission. The China Securities Regulatory Commission agreed 700,476,830 unlisted
shares (account for 62.97% of the share capital) hold by the Company’s shareholders, EUPA Industry Corporation
Limited, Fordchee Development Limited and Fillman Investment Limited to transfer into B shares. In November
29, 2007 these B shares could be listed and exercised on Shenzhen Stock Exchange. Up to 30 June 2011, total B
shares hold by the three legal shareholders (EUPA Industry Corporation Limited, Fordchee Development Limited
and Fillman Investment Limited) are 505,175,060 shares.( account for 45.42% of the share capital).
Legal representative: Jian, Derong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province
The parent: Star Comgistic Capital Co. Ltd.
1.2 Industry
The Company operates within the electrical machinery and equipment manufacturing industry.
1.3 Scope of business
The 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
1.4 Main products
The Company’s main products are: Household electrical appliance.
1.5 Main business of the Company remained unchanged during the reporting period.
Note 2: Summary of Significant accounting policies、accounting estimates and correct previous accounting
period errors
2.1 Basis for preparation of the financial statements
The financial statements are prepared on the basis of going concern, with reference to the actual occurrence of
transactions and events, and in accordance with the Enterprise Accounting Standards of China, the Practice Guide
for Enterprise Accounting Standards of China and explanatory notes issued by the Ministry of Finance of the
People’s Republic of China and other relevant regulations (hereafter collectively, the Enterprise Accounting
Standards of China or the CASs), as well as based on those accounting policies and accounting estimates that
described in Note 2.
2.2 Declaration of compliance with the Enterprise Accounting Standards of China
The financial statements of (the Group and) the Company have been prepared in accordance with the Enterprise
Accounting Standards of China and present truly, fairly and completely, in all material respects, the financial
position of (the Group and) the Company as at 30 June 2011, the performance, the cash flows and other relevant
information of (the Group and) the Company for the six months then ended.
2.3 Accounting year
The accounting year adopted by the Company is the calendar year (ie. from 1 January to 31 December).
2.4 Functional currency
The functional currency of the Company is the Renminbi (CNY).
2.5 Accounting methods for business combination
2.5.1 Business combination under common control
Identifiable assets acquired and liabilities assumed through business combination of an entity under common
control are measured at their carrying amounts in the acquiree’ account as at the combination date. The excess of
the consideration for combination over the net identifiable assets acquired as at the combination date is debited to
capital reserves, and to retained earnings where capital reserves are insufficient.
2.5.2 Business combination not under common control
Identifiable assets acquired and liabilities assumed through business combination of an entity not under common
control are measured at their fair values as at the combination date. Goodwill as of the combination date is
recognised and measured as the excess of the consideration for combination over the net identifiable assets
acquired as at the combination date. If the net identifiable assets acquired as at the combination date exceeds the
23
consideration for combination, the excess of the consideration for combination over the net identifiable assets
acquired as at the combination date, after the assessment of the fair value of the net identifiable assets acquired as
at the combination date, is recognised as a gain through profit or loss for the reporting period in which the
combination occurred.
2.6 Preparation of the consolidated financial statements
2.6.1 Scope of consolidated financial statements
The consolidated financial statements are prepared in accordance with CAS 33 – Consolidated Financial
Statements issued on February 2006. The scope of consolidated financial statements, determined on the basis of
control existence. The consolidated financial statements consolidate separate financial statements of the parent
company and subsidiaries and entities for specific purposes directly or indirectly controlled by the parent company.
Control exists is when the parent company has power to govern the financial and operating policies of an entity
and is able to obtain economic benefits from the entity’s operation.
If it is objectively evidential that the parent company has no control over a subsidiary, the subsidiary is excluded
from consolidation.
2.6.2 Acquisition and disposal the shares of subsidiaries
The transaction date of acquisition or disposal of share of subsidiary is the date on which the risks and economic
benefits associated with the transferred share is transferred to the transferee. The post-acquisition or pre-disposal
performance and cash flows of a subsidiary acquired or disposed through business combination not under common
control are adequately consolidated in the consolidated statement of comprehensive income and the consolidated
statement of cash flows. The performance and cash flows for the current reporting period of a subsidiary acquired
through business combination under common control during the current reporting period has consolidated in the
consolidated statement of comprehensive income and the consolidated statement of cash flows; and, the
comparables of the consolidated financial statements has adjusted accordingly.
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.
2.6.3 Uniform accounting policies and accounting period
Where the accounting policies and accounting period of a subsidiary are different from those of the parent
company, the separate financial statements of the subsidiary are adjusted using the accounting policies and
accounting period adopted by the parent company before consolidation. The separate financial statements of a
subsidiary acquired through business combination not under common control are adjusted to reflect the fair values
of the identifiable assets, liabilities and contingent liabilities of the subsidiary as at the combination date before
consolidation.
2.6.4 Consolidation method
During the preparation of the consolidated financial statements, intra-group balances and transactions are
eliminated.
The net identifiable assets of subsidiaries attributable to minority interest of subsidiaries are separately presented in
the consolidated financial statements.
24
2.7 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits and short-term and highly liquid investments and
which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in
value.
2.8 Transactions denominated in foreign currencies and translation of financial statements denominated in
foreign currencies
2.8.1 Transactions denominated in foreign currencies
Transactions denominated in foreign currencies (currencies other than the functional currency) are accounted for in
the functional currency using the transaction-date spot exchange rates (the middle rates quoted by the People’s
Bank of China; hereafter, the same applies).
Monetary assets held on a balance sheet date denominated in foreign currencies are translated into the functional
currency using the balance-sheet-date spot exchange rates; differences in value arising from differences between
the transaction-date spot exchange rates and the balance-sheet-date spot exchange rates are accounted for through
profit or loss for the reporting period ended on that balance sheet date. Non-monetary assets held and liabilities
outstanding on a balance sheet date measured using the historical cost convention are translated into the functional
currency using the transaction-date spot exchange rates. Non-monetary assets held and liabilities outstanding on a
balance sheet date measured at fair value are translated into the functional currency using the spot exchange rates
prevailing on the dates of fair value assessments; differences in value arising from differences between the
transaction-date spot exchange rates and the assessment-date spot exchange rates are accounted for through profit
or loss for the reporting period during which the assessments occurred.
2.8.2 Translation of financial statements denominated in foreign currencies
① Elements of assets and liabilities of financial statements denominated in foreign currencies are translated into
the functional currency using the balance-sheet-date spot exchange rates; elements of owner’s equity of financial
statements denominated in foreign currencies, except undistributed profit, are translated into the functional
currencies using the transaction-dates spot exchange rates.
② Elements of income and expenses of financial statements denominated in foreign currencies are translated into
the functional currency using the transaction-date spot exchange rates.
Foreign exchange differences arising from treatments described in the above paragraph are separately presented in
the financial statements as an element of owners’ equity.
③ Cash flows denominated in foreign currencies are translated into the functional currency using the
transaction-date spot exchange rates. The impact of changes in exchange rates on cash flows is separately
presented in the statement of cash flows.
2.9 Financial instruments
2.9.1 Classification of financial assets and financial liabilities
Financial assets, according to their purposes of investment and economic substance, are classified into fair value
through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets
four categories.
Financial liabilities, according to their economic substance, are classified into fair value through profit or loss and
others.
25
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; or
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.
② Held-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.
③ Receivables: 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
to form the accounts receivable and other receivables.
④ Available-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.
⑤ Other financial liabilities: financial liabilities not divided into measurement in fair value base and through into
profit and loss account.
2.9.2 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:
① Financial 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.
② Held-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.
③ Loans and receivables, which shall be measured at amortized cost using the effective interest method, the profit
26
or loss from termination confirmation, impairment or amortization included in the profit and loss account.
④ Available-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.
⑤ Other 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.
A financial guarantee contracts not classified into financial liabilities designated at fair value with changes in fair
value accounted through profit for loss for the relevant reporting period or a deep-discounted loan not classified
into financial liabilities designated at fair value with changes in fair value accounted through profit for loss for the
relevant reporting period is subsequently measured at the higher of the amount determined by CAS 13 –
Contingencies and the residual amount after deducting the cumulative amortisation determined by CAS 14 –
Revenue from the amount upon the initial recognition.
Other financial liabilities adopt the effective interest method, subsequent measured by amortization cost,
recognized the profits and losses by termination confirmation or amortization to current profit and loss account.
⑥ Fair 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.
⑦ The 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.
⑧ The 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.
2.9.3 Transfer and derecognition of financial assets
① Derecognize financial asset if, and only if, meets one of the following three conditions:
27
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
transferred to other party;
c. the financial assets have been transferred, but the Company neither transferred the ownership of the risks
and rewards of financial assets, nor retained , and gives up control of the financial assets.
② When 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.
③ If 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.
④ If the Company fails to satisfy the conditions of derecognize for transferred financial assets, it shall continue to
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.
2.9.4 Impairment assessment of and impairment allowance for 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;
28
i. other objective evidence that prove impairment of financial assets.
② On balance sheet date, the Company should adopt different impairment test method for different category of
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 judgment 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.
2.10 Accounts receivable
2.10.1 Accounts receivable belong to individual significance and individually assessed for impairment:
Criteria and norm of individual significance: On the balance sheet date, those individual accounts receivable and
individual other receivable account for more than 10% (include 10%) of total balance of the accounts receivable is
considered as individual significant amounts.
Measurement of impairment allowances for receivables of individual significance: A receivable of individual
significance is individually assessed for impairment on the balance sheet date. If it is objectively evidential that a
receivable of individual significance has impaired, the impairment loss shall be recognized based on the difference
of the book values higher than the present value of future cash flows.
If receivable of individual significance is not impaired by individually assessed for impairment, the impairment
loss shall be recognized based on the accounts’ age (as credit risk portfolio), refer to Note 2.10.2 for details.
2.10.2 Accounts receivable belong to recognition of impairment allowances by group:
Basis of determination of Method for recognition of impairment
Group type
group allowances by group
Account’sage Condition of account’s age Age analysis
group
Relatedparty group Relationship of related parties Not recognise impairment allowances
Adopt the age analysis method:
Age % for accounts receivable % for other receivables
1-90 days 0.00 0.00
91-180 days 10.00 10.00
181-270 days 30.00 30.00
271-365 days 50.00 50.00
Over 365 days 100.00 100.00
29
Adopt other methods:
Group name Explanation
Not recognise impairment allowances for balances of related
Related party group
party transaction
2.10.3 Accounts receivable belong to individually insignificant but individually assessed for impairment:
The reason for individually assessed for impairment: the credit risk is high.
Method for recognition of impairment allowances: A receivable which is individually insignificant but the credit
risk is high, should be individually assessed for impairment, the impairment loss shall be recognized based on the
difference of the book values higher than the present value of future cash flows.
2.10.4 The Company according to the contract agreed date as credit expire date to collect the long-term
accounts receivable, the account age counted after the contract agreed date, and considered the debtor’s actual
business situation to determine the percentage of provision for impairment allowances:
Age % for long-term accounts receivable
Not until expire date 0.00
1-60 days 10.00
61-120 days 30.00
121-180 days 50.00
Over 181 days 100.00
2.10.5 For other receivables (including Notes receivable, Advances to suppliers, Interest receivables etc), the
provision for impairment allowances recognized based on the difference of the book values higher than the present
value of future cash flows.
2.11 Inventories
2.11.1 Classification of inventories
Inventories include finished goods and merchandises held for sale, work-in-progress and materials and supplies to
be consumed in the course of production of goods or rendering of services. Inventories are classified into materials
in transit, raw materials, work-in-progress, finished goods, materials and goods of consignment and revolving
materials etc.
2.11.2 Measurement of inventories upon issuance
Inventories are measured using the weighted average method upon issuance. Inventories are initially carried at
standard costs; cumulative cost variation shall be incorporated at the year-end so that standard costs matches actual
costs.
2.11.3 Determination of net realisable value of inventories and recognition of impairment allowances for
inventories
① Estimates 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
30
price. If the sales contracts are for less than the inventory quantities held, the net realizable value of the excess is
based on general selling prices.
② Withdrawal method of impairment 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.
2.11.4 Inventories physical count system
The inventory physical count system adopted by the Company is the perpetual inventory system.
2.11.5 Low-value consumables and packaging materials
Low-value consumables and packaging materials are expended using the full amortization method.
2.12 Long-term equity investments
Long-term equity investment including the equity investments held by the Company, who can able to exercise
control, joint control or significant influence over the investees, or the Company do not have control, joint control
or significant influence over the investees, and which are not quoted in an active market and of which the fair
values cannot be reliably measured.
2.12.1 Investment cost of long-term equity investments
The Company separates the following two cases of long-term equity investment for 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 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 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 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 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 into the current profit and loss.
b. For obtaining subsidiary not under common control, the cost of long-term equity investment is fair value of
31
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 audit fees、legal services fees、assessment and
consultation fees and other costs directly related to business combinations shall be recognised in the transaction
period profits and losses, while instruments issued as the consideration of business combinations, the issuing
expenses of bonds or equity instruments recognised as the initial costs of bonds or equity instruments included in
the cost of business combinations (except for issuing expenses of bonds and equity instruments).
② Other long-term equity investment that obtained not through business combinations, accordance with the
following principles to determine the investment costs:
a. Long-term equity investment, which is acquired by cash consideration, the actual cash payment amount will be
deemed as the investment cost. The 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 investment cost.
c. For those long-term equity investments that invested by the investors, the values agreed in the investment
contracts or agreements will be deemed as the 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 the 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 investment cost; the difference between the fair values of the assets and book values
will be recognised 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 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 investment cost; the difference between the investment cost and book values of credit will be
recognised into the current profit and loss.
2.12.2 Subsequent measurement of long-term equity instruments and recognition of gains or losses
The historical cost convention 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 adopt historical cost convention 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 adopt 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 a long-term equity investment is subsequently measured using the historical cost convention, 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
32
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 investment cost.
b. When a long-term equity investment is subsequently measured using the 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.
Investment income for the reporting period is recognised as the investor’s share of the net profit or loss of the
investee for that reporting period. In computing the investor’s share of the net profit or loss of the investee, the net
profit or loss of the investee in the investee’s account is adjusted for non-uniform accounting policies, the
increased or decreased depreciation and amortization resulting from the acquisition fair value adjustments on fixed
assets and intangible assets of the investee, the acquisition fair value adjustments on impairment allowance for
assets and the elimination of intra-group transaction except losses arising from intra-group transactions which are
impairment loss on assets in accordance with CAS 8 – Impairment of assets.
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 there 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.
2.12.3 Criterion for the existence of joint control or significant influence
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 manage
the jointly controlled company, through control or agreement, but the management must follow all venturers’
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 exist 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:
①representation on the board of directors or equivalent governing body of the investee; ②participation 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.
2.12.4 Impairment assessment for long-term equity investments and recognition of impairment allowance for
long-term equity investments:
Each long-term equity investment is individually assessed for impairment on the balance sheet date. The
assessment takes into account factors such as the investee’s operating strategies, the legal environment in which
the investee operates, the demand of the market in which the investee operates and the investee’s profit-making
33
ability to determine whether a long-term equity investment is subject to impairment. If the carrying amount of a
long-term equity investment exceeds its net recoverable amount as at the balance sheet date, the excess is
recognised as impairment loss of assets for the reporting period during which the impairment occurred; and an
impairment allowance for that long-term equity investment of equal amount is also recognised. The recognised
impairment loss for long-term equity investment is irreversible.
2.13 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.
2.13.1 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 on
buildings and land-use right to calculate depreciation or amortization. The Company’s estimated useful life, net
residual rate and annual depreciation rate of investment property set out below:
Estimated Annual depreciation
Categories Estimated useful life
residual rate % (amortization) rate %
Houses and buildings 10.00 20 years 4.50
Land use rights 0.00 20 years、40 years、50 years 5.00、2.50、2.00
2.13.2 Basis of impairment of property investment is measured by cost model
On 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.
2.14 Fixed assets
2.14.1 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:
① The 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.
34
2.14.2 Depreciation of fixed assets
Straight-line method is in used to calculate the depreciation of fixed assets.
The estimated useful lives, the estimated residual rates and the annual depreciation rate of each class of fixed
assets are set out below:
Estimated residual Estimated annual
Categories Estimated useful life
value rate % depreciation rate%
Houses and buildings 10.00 20 years 4.50
Machineries 0.00 11-18 years 5.56-9.09
Electronic device 、
0.00 6 years 16.67
furniture and modules
Vehicles 0.00 6 years 16.67
Improvement expense of
0.00 the shorter of lease term and beneficial lives
leased fixed assets
2.14.3 Impairment assessment for fixed assets and recognition of impairment allowance for fixed assets
On 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 accounting period. In assessing whether there is any indication that an asset may be
impaired, the Company 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.
35
2.14.4 Recognition of finance leased fixed assets
When transferred 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 recognize 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.
2.15 Construction in progress
2.15.1 Category of construction in progress
The category of construction in progress classified by the approved project.
2.15.2 Criteria for conversion of construction in progress to fixed assets
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.
2.15.3 Impairment assessment for construction in progress and recognition of impairment allowance for
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 accounting period. Exercise 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;
② evidence is available of obsolescence in either function or technical, and bring great uncertainty for the cash
inflows to the Company;
③ other indications that project may be impaired.
2.16 Borrowing costs
2.16.1 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.
36
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.
Capitalization 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.
2.16.2 Measurement of capitalized borrowing costs
For a specific purpose borrowing, the amount of interest to be capitalized shall be the actual interest
expenses 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.
2.17 Intangible assets
2.17.1 Recognition and measurement of intangible assets:
Intangible assets are recognized initially at cost.
2.17.2 Estimate of useful life and amortization 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.
2.17.3 Impairment assessment for infinite useful years assets and recognition of impairment allowance for
infinite useful years assets
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
37
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
carrying value, reducing the carrying value to the estimated recoverable amount, the difference recognized into the
current profit and loss account, simultaneous recognize the impairment allowance. The recognised impairment
allowance is irreversible in subsequent reporting periods.
Exercise 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.
2.17.4 The rules of divide the research stage and the development stage of internal research and development
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.
2.18 Long-term deferred expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (a
period during which an expense is expected to bring economic benefits to an entity) which is longer than one year
and which includes at least part of the reporting period during which the expense was incurred and subsequent
reporting periods. An item of long-term deferred expenses is recognised at the actual amount of the expense
incurred and allocated in each month of the beneficial period using the straight line method.
2.19 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 contract or agreement to decide whether the revenue recognition criteria is satisfied. If the Company 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).
2.20 Accrued liabilities
2.20.1 Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on
38
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.
2.20.2 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
currency 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.
2.20.3 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:
① If the contingent event is involved in an individual project, the optimum evaluation amount will be determined
base on the most possible amount;
② If 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.
2.21 Shares-based payment and equity instrument
2.21.1 Categories of share-based payment
The types of shares-based payment of the Company are: cash-settle and equity-settle.
① Cash-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.
② Equity-settled share-based payment
39
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.
2.21.2 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.
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.
2.21.3 Base of the best estimate of vesting equity instrument’s recognition
On each balance sheet date of waiting-period, the Company shall recognize 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.
2.21.4 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
requirement, on each balance sheet date of waiting-period, the Company shall recognize 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
requirement, on each balance sheet date of waiting-period, the Company shall recognize 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.
2.22 Share repurchase
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 withdrawn
40
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 capital reserve(share premium).
The shares before buy back, as the treasury stock management, the share buy back payment recognized as cost of
treasury stock.
If the transfer revenue received higher than the cost of the treasury stock, transfer the treasury stock, 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.
2.23 Revenue
Recognition and measurement of revenue:
2.23.1 Revenue from sales of goods
Revenue from the sale of goods shall be recognized when all of the following conditions are satisfied:
① the entity has transferred the significant risks and reward ownership of goods to the buyer;
② the entity retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over goods sold;
③ the amount of revenue can be measured reliably;
④ relate economic benefit is probably inflow to the enterprise;
⑤ the associated costs incurred or to be incurred can be measured reliably.
2.23.2 Revenue from construction contracts
① When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs
associated with the construction contract should be recognised as revenue and expenses 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:
41
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.
② When 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; 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.
③ An expected loss on the construction contract should be recognised as an expense immediately
2.23.3 Revenue from rendering of services
① The Company 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.
② When 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.
2.23.4 Revenue from transfer of assets use right
The revenue of transfer of assets use right including : interest income、user charges etc, recognized when all the
following conditions are satisfied:
① the economic benefits related to the transaction are probably will flow into the Company;
② the 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.
42
2.24 Government grants
2.24.1 Recognition of government grants
① comply with the conditions attached to the grant;
② the Company can receive the grant.
2.24.2 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.
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.
2.24.3 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.
2.24.4 Restitution of recognized government grants:
①If 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.
②If there is no relevant deferred income, recognized to current profit and loss account directly.
2.25 Deferred tax assets and deferred tax liabilities
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 tax assets or liabilities according the predict period of recover assets or discharge liabilities.
2.25.1 Recognition of deferred income tax assets
① Deferred 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 tax assets arise from initial recognize of assets 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
43
offset tax losses and tax credits amount of future taxable income limit, verify the corresponding deferred income
tax assets.
2.25.2 Recognition of deferred tax liabilities
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;
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.
2.25.3 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 utilized. Any such reduction
should be reversed to the extent that it becomes probable that sufficient taxable profit will be available.
2.26 Operating leases and finance leases
2.26.1 Operating lease
① When the Company as the Lessee under operating lease, lease payments under an operating lease shall be
recognized 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.
② When the 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 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.
2.26.2 Finance lease
① At the commencement of the lease term, lessees shall recognize 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
44
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 fully
depreciated over the shorter of the lease term and its useful life.
② When the Company as the lessor under finance lease, lessor shall recognize 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 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 other operating income.
2.27 Non-current assets held for sale
2.27.1 Recognition of non-current assets held for sale
The Company 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 assets;
② The Company has entered into a irrepealably 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.
2.27.2 Accounting treatment
A non-current asset classified as held for sale is measured at the net residual amount after deducting the costs
necessary to make a sale from its held-for-sale-classification fair value upon classification. The net residual
amount is capped by the carrying amount of the asset immediately before the classification. The excess of the
carrying amount of the asset immediately before the classification over the net residual amount is accounted for as
impairment loss on assets for the reporting period during which the asset is classified as held for sale.
If a non-current asset (or disposal group) held for sale no longer meets the criteria for recognition as held for sale,
the asset (or disposal group) is ceased to be recognised as held for sale and measured at the lower of:
① Its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any
depreciation, amortization or revaluations that would have been recognised had the asset (or disposal group) not
been classified as held for sale, and
② Its recoverable amount at the date of the subsequent decision not to sell.
2.28 Significant changes of accounting policies and accounting estimates
2.28.1 Changes of accounting polices
There are no changes in accounting policies during current reporting period.
2.28.2 Changes of accounting estimates
There are no changes in accounting estimates during current reporting period.
2.29 Corrections of errors of prior periods
There are no corrections of errors of prior periods during current reporting period.
45
Note 3: Taxation
3.1 Taxes and surcharges applicable to the Company:
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of products and raw materials 0、17
Business tax Business tax taxable revenue 5
Sum of VAT payable, consumption duty payable and business
Urban maintenance
tax payable for the reporting period, and exempt and deductible 7
and construction surcharge
tax
Sum of VAT payable, consumption duty payable and business
Education surcharge tax payable for the reporting period, and exempt and deductible 3
tax
Sum of VAT payable, consumption duty payable and business
Local education surcharge tax payable for the reporting period, and exempt and deductible 1
tax
Corporate income tax Taxable profits 24
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.
3.2 Taxes and surcharges applicable to primary subsidiaries:
3.2.1Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 0、17
Business tax Business tax taxable revenue 5
Sum of VAT payable, consumption duty payable and business
Urban maintenance
tax payable for the reporting period, and exempt and deductible 5
and construction surcharge
tax
Sum of VAT payable, consumption duty payable and business
Education surcharge tax payable for the reporting period, and exempt and deductible 3
tax
Sum of VAT payable, consumption duty payable and business
Local education surcharge tax payable for the reporting period, and exempt and deductible 1
tax
Corporate income tax Taxable profit 15
Subsidy Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. is defined as a high technology enterprise. According to the
tax law, corporate income tax rate is 15% for the year 2010.
46
3.2.2 Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd.
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
5
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Local education surcharge 1
business tax payable for the reporting period
Corporate income tax Taxable profit 25
Subsidy Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd. which is located at 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 Corporate income tax rate for the Company on 2009 is 12.5%, and on
2010 is 25%.
3.2.3 Tsann Kuen China (Shang Hai) Enterprise Co., Ltd.
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
1
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Corporate income tax Taxable profit 25
3.2.4 Shanghai Canxing Trading Co.,Ltd.
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
1
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Corporate income tax Taxable profit 25
47
3.2.5 Star Travel International (Xia Men) Co.,Ltd.
Taxes and surcharges Tax base Tax rate%
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and business
7
and construction surcharge tax payable for the reporting period
Sum of VAT payable, consumption duty payable and business
Education surcharge 3
tax payable for the reporting period
Sum of VAT payable, consumption duty payable and business
Local education surcharge 1
tax payable for the reporting period
Corporate income tax Taxable profit 25
3.2.6 Xiamen Canxing Trading Co.,Ltd.
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
7
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Local education surcharge 1
business tax payable for the reporting period
Corporate income tax Taxable profit 25
3.2.7 Shanghai Fanxin Airlines Service Co., Ltd.
Taxes and surcharges Tax base Tax rate%
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
1
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Corporate income tax Taxable profit 25
3.2.8 Star Travel International (Da Lian) Co.,Ltd.
Taxes and surcharges Tax base Tax rate%
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
7
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Local education surcharge 1
business tax payable for the reporting period
48
Taxes and surcharges Tax base Tax rate%
Corporate income tax Taxable profit 25
3.2.9 Xiamen Star Comgistic Trading Co.,Ltd.
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of product and raw material 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and
7
and construction surcharge business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Education surcharge 3
business tax payable for the reporting period
Sum of VAT payable, consumption duty payable and
Local education surcharge 1
business tax payable for the reporting period
Corporate income tax Taxable profit 25
3.2.10 Hongkong Brilliant Leader Limited (Brilliant Leader Ltd)
Taxes and surcharges Tax base Tax rate%
Corporate income tax Taxable profit 16.5%
3.2.11 Hongkong Globe Strong Limited (Globe Strong Ltd)
Taxes and surcharges Tax base Tax rate%
Corporate income tax Taxable profit 16.5%
3.2.12 PT. TSANN KUEN ZHANGZHOU INDONESIA
Taxes and surcharges Tax base Tax rate%
VAT Trade amount 10%
Corporate income tax Income tax after tax auditing service 25%
Ⅳ. Business combination and the consolidated financial statements
4.1 Circumstance of subsidiaries
4.1.1 Subsidiaries acquired through incorporation or investment
Type Place
Nature *Registered
Subsidiaries of of Business scope
of business capital
incorporation registration
Development, production and
TsannKuen Manufacture sales of small home electronic
(Zhangzhou) Sino-foreign home USD 160 appliance, new style of electronic
Zhangzhou
EnterpriseCo., joint venture electronic million device, light-industrial product,
Ltd.(TKL) appliance and modern furniture and relative
modules
StarTravel Limited
Travel CNY 5 Inbound tourism business;
International(Xia Men) liability Xiamen
business million domestic tourism business
Co.,Ltd.(TSX) company
49
Subsidiaries acquired through incorporation or investment (Continued)
The balance of
other items that,
* Actual amount
substantially Holding proportion Voting rights
Subsidiaries of investment
constitute the net % proportion %
as at 30/6/2011
investment in
subsidiary
TKL USD 120 million 0.00 75.00 75.00
TSX CNY 5 million 0.00 100.00 100.00
Subsidiaries acquired through incorporation or investment (Continued)
The balance of parent company’s
The amount of
equity, that is equal to the parent
minority equity
Whether shareholders’ equity less the
used for decrease
Subsidiaries consolidated Minority equity subsidiary’s current loss undertaken
the profits and
statements by the minority shareholders
losses of minority
according their quotient of the
shareholders
beginning of the period
TKL Yes 323,979,988.28 0.00 0.00
TSX Yes 0.00 0.00 0.00
4.1.2 Subsidiaries acquired through business combination under common control
Type Place
Nature Registered
Subsidiaries of of Business scope
of business capital
incorporation registration
TsannKuenChina Manufacture and sales of small
Manufacture
(ShangHai) home electronic appliance,
Sino-foreign home USD 40
Enterprise Co., Ltd. Shanghai electronic device, light-industrial
joint venture electronic million
(TKS) product, and modern furniture
appliance
and relative modules
Subsidiaries acquired through business combination under common control (Continued)
The balance of other items
* Actual amount
that, substantially Holding proportion Voting rights
Subsidiaries of investment
constitute the net % proportion %
as at 31/12/2010
investment in subsidiary
TKS USD25 million 0.00 62.50 62.50
Subsidiaries acquired through business combination under common control (Continued)
The balance of parent company’s equity, that
The amount of minority
Whether is equal to the parent shareholders’ equity
equity used for decrease the
Subsidiaries consolidated Minority equity less the subsidiary’s current loss undertaken
profits and losses of minority
statements by the minority shareholders according their
shareholders
quotient of the beginning of the period
TKS Yes 36,045,629.36 566,692.72 0.00
4.2. Circumstance of sub-subsidiaries
4.2.1 Sub-subsidiaries acquired through incorporation or investment
Place Nature *Registered
Type
Sub-subsidiaries of of business capital Business scope
of incorporation
registration
TsannKuen
Development and production of
(Zhangzhou) Manufacture
small home electronic appliance,
SouthPort Sino-foreign joint home electronic CNY 5
Zhangzhou new style of electronic device,
Electronics venture appliance million
light-industrial product, and
EnterpriseCo., Ltd.
modern furniture
(TKN)
TsannKuen Nonbusiness Secondary
CNY
(Zhangzhou) Enterprise Zhangzhou vocational Secondary vocational education
3million
Professionand Run by local education
50
Place Nature *Registered
Type
Sub-subsidiaries of of business capital Business scope
of incorporation
registration
Technology People
Institute (LTC)
Engaging in household
appliances, calculators and
accessories, communication
equipment, electrical equipment,
office supplies and related
Shanghai Canxing products (including kitchen
Limited liability Sales of home CNY supplies) the import, wholesale,
Trading Co.,Ltd Shanghai retail and after-sales service;
company electronic 4.95million
(STD) self-and agent all kinds of goods
and technology import and
export, production: roasted
coffee powder, daily use of the
wholesale, retail and other sales
(food is non-food way)
Wholesale, retail, general
merchandise, home electronic
appliance, computer and its
fitting equipment,
communication equipments,
Xiamen Canxing
Limited liability Sales of home CNY mechanical and electronic
Trading Co.,Ltd. Xiamen
company electronic 30million equipments, office equipments,
(TSX3C)
kitchen appliance and related
complete product; Import or
export products or technology,
but those products prohibit by the
Country are exempt..
Wholesale, retail, general
merchandise, home electronic
appliance, computer and its
fitting equipment,
communication equipments,
XiamenStar
Limited liability Sales of home CNY mechanical and electronic
Comgistic Trading Xiamen
company electronic 28milion equipments, office equipments,
Co.,Ltd. (SCCX)
kitchen appliance and related
complete product; Import or
export products or technology,
but those products prohibit by the
Country are exempt..
Investment business for industry
Hongkong of home electronic appliance,
Brilliant Leader Limited liability Trade, USD receive trade orders, agency
Hongkong
Limited (Brilliant company Investment 4.95million procurement, research and
Leader Ltd) development home electronic
appliance, market research, etc.
Investment business for industry
of home electronic appliance,
Hongkong Globe
Limited liability Trade, USD receive trade orders, agency
Strong Limited Hongkong
company Investment 50,000 procurement, research and
(Globe Strong Ltd)
development home electronic
appliance, market research, etc.
PT. TSANN
KUEN
ZHANGZHOU Limited liability Manufacture of USD
Indonesia Manufacture industry
INDONESIA company home electronic 5million
(TKLI)
51
Sub-subsidiaries acquired through incorporation or investment (Continued)
The balance of other items
Actual amount that, substantially constitute Holding
Sub-subsidiaries of investment Voting rights proportion %
as at 30/6/2011 the net investment in proportion %
sub-subsidiary
TKN CNY 3.75million 0.00 75.00 75.00
LTC CNY 3milion 0.00 75.00 100.00
STD CNY 4.95million 0.00 75.00 100.00
TSX3C CNY 30million 0.00 75.00 100.00
SCCX CNY 28million 0.00 75.00 100.00
Brilliant Leader
USD 1.41million 0.00 75.00 100.00
Ltd
Globe Strong
USD 50,000 0.00 75.00 100.00
Ltd
ITK USD 1,262.600 0.00 75.00 100.00
Sub-subsidiaries acquired through incorporation or investment (Continued)
The balance of parent company’s
The amount of equity, that is equal to the parent
Whether minority equity used shareholders’ equity less the
Sub-subsidiaries consolidated Minority equity for decrease the sub-subsidiary’s current loss
statements profits and losses of undertaken by the minority
minority shareholders shareholders according their quotient
of the beginning of the period
TKN Yes 2,747,536.91 0.00 0.00
LTC Yes 0.00 0.00 0.00
STD Yes 0.00 0.00 0.00
TSX3C Yes 0.00 0.00 0.00
SCCX Yes 0.00 0.00 0.00
Brilliant Leader
Yes 0.00 0.00 0.00
Ltd
Globe Strong
Yes 0.00 0.00 0.00
Ltd
TKLI Yes 0.00 0.00 0.00
4.2.2 Sub-subsidiaries acquired through business combination not under common control
Type Place Nature *Registered
Sub-subsidiaries of of business capital Business scope
of incorporation
registration
Engage in domestic airline of civil
Shanghai Fanxin
Limited liability Shanghai Ticket agent CNY air transport sales agency business,
Airlines Service Co.,
company 5.5million except in Hong Kong, Macao, and
Ltd. (TSST)
Taiwan regions
Inbound tourism business;
Star Travel Travel
Limited liability Dalian CNY outbound tourism business;
International (Da Lian)
company business 5.3million domestic tourism business; travel
Co.,Ltd. (TSD)
products research and sales
Ticket agent(Engage in domestic
Xiamen Canxing
Limited liability Xiamen Ticket agent CNY airline of civil air transport sales
Airlines Service Co.,
company 1.5million agency business, except in Hong
Ltd.( TSXT)
Kong, Macao, and Taiwan regions)
52
Sub-subsidiaries acquired through business combination not under common control (Continued)
The balance of other items
* Actual amount that, substantially constitute Voting rights
Sub-subsidiaries of investment Holding proportion %
as at 30/6/2011 the net investment in proportion %
sub-subsidiary
TSST CNY 0.99 million 0.00 75.00 100.00
TSD
CNY 5.247million 0.00 74.25 99.00
TSXT CNY 1.25million 0.00 75.00 100.00
Sub-subsidiaries acquired through business combination not under common control (Continued)
The balance of parent company’s
equity, that is equal to the parent
The amount of
shareholders’ equity less the
Whether minority equity used
sub-subsidiary’s current loss
Sub-subsidiaries consolidated Minority equity for decrease the
undertaken by the minority
statements profits and losses of
shareholders according their
minority shareholders
quotient of the beginning of the
period
0.00
TSST Yes 0.00 0.00
10,638.02
TSD Yes 0.00 0.00
0.00
TSXT Yes 0.00 0.00
4.3 Changes of scope of consolidation financial statements
Suzhou Tai Lake International Travel Service Co., Ltd., of which 100% equity that had been held by Tang
Yijun was purchased on 10 Sept. 2010 by Xiamen Star Commerce & Trade Co., Ltd. with monetary capital of
CNY 486,867.80, has a registered capital of CNY 1.50 million. Due to business needs, the Company transferred
the equity of Suzhou Tai Lake International Travel Service Co., Ltd. in this March, which was thus
de-consolidated for the reporting period. But earnings, expenses and profits generated by the enterprise before the
equity transfer were included in the consolidated income statement.
The Company’s subsidiary Tsann Kuen Zhangzhou Enterprise Co. Ltd. intended to invest its own capital of
USD 5,000,000 to establish 2 wholly-owned subsidiaries in Hong Kong, namely Brilliant Leader Co., Ltd. and
Globe Strong Co., Ltd. (or Hong Kong Brilliant Leader and Hong Kong Globe Strong for short), of which the
registered capital recorded at USD 4,950,000 and USD 50,000 respectively. Tsann Kuen Zhangzhou Enterprise Co.
Ltd. had finished commercial registration procedures of Hong Kong Brilliant Leader and Hong Kong Globe Strong
on 28 Sep. 2010 and paid investment of USD 2,660,000 and USD 50,000 to Hong Kong Brilliant Leader and Hong
Kong Globe Strong respectively up to the date of this announcement.
Brilliant Leader Co., Ltd. and Globe Strong Co., Ltd., both wholly-owned subsidiaries of the Company’s
subsidiary Tsann Kuen Zhangzhou Enterprise Co. Ltd., made joint investments in Pt. Tsann Kuen Zhangzhou
Indonesia with USD 4,950,000 and USD 50,000 respectively. Up to 30 Jun. 2011, Brilliant Leader Co., Ltd. and
Globe Strong Co., Ltd. had respectively paid USD 1,250,000 and USD 12,627 with monetary funds. As such, Pt.
Tsann Kuen Zhangzhou Indonesia was newly included in the consolidation scope for the reporting period.
53
4.4 New subsidiaries included in the consolidated financial statement during current reporting period and
subsidiaries no longer included in the consolidated financial statement during current reporting period
4.4.1 New subsidiaries included in the consolidated financial statement during current reporting period
Net profit
Date of written into con-solidate Net profit of current Reason for changes in co
Subsidiaries for the current
d financial state-ment period nsolidation scope
reporting period
TKLI 21 Apr.2011 8,089,638.76 (158,669.09) Established
4.4.2 Subsidiaries no longer included in the consolidated financial statement during current reporting period
Net assets value as Net profit for the period
Date that no longer included in Reason for changes in
Subsidiaries at the date of from 12/31/2010
the consolidated scope consolidated scope
disposal to the date of disposal
TSSZ 1 Mar. 2011 (1,297,175.94) (119,956.55) Equity transfer
4.5 Foreign exchange rates applicable to significant elements of financial statements of overseas operating
entities
Within the consolidated financial statement, Brilliant Leader Ltd and Globe Strong Ltd were oversea business
entity, the functional currency adopt HKD. The applicable exchange rate is HKD/CNY 0.83162 (the balance sheet
date spot rate) for assets and liabilities items; elements of owner’s equity of financial statements except undistributed
profit, are translated into the functional currencies using the exchange rate is HKD/CNY 0.85447 (the
transaction-dates spot exchange rates); elements of income and expenses of financial statements denominated in
foreign currencies are translated into the functional currency using the spot exchange rate of HKD/CNY at the
transaction-date; foreign exchange differences arising from treatments described in the above paragraph are
separately presented in the financial statements as an element of owners’ equity.
Within the consolidated financial statement, TKLI were oversea business entity, the functional currency adopt
IDR. The applicable exchange rate is HKD/CNY 0.000754 (the balance sheet date spot rate) for assets and
liabilities items; elements of owner’s equity of financial statements except undistributed profit, are translated into the
functional currencies using the exchange rate is HKD/CNY 0.000753 (the transaction-dates spot exchange rates);
elements of income and expenses of financial statements denominated in foreign currencies are translated into the
functional currency using the spot exchange rate of IDR/CNY at the transaction-date; foreign exchange differences
arising from treatments described in the above paragraph are separately presented in the financial statements as an
element of owners’ equity.
54
Statement of Financial Position
Un-audited
As at 30 June 2011
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renminbi (CNY)
As at 30 June 2011 As at 31 Dec. 2010
Items Note
Consolidation The Company Consolidation The Company
Current assets:
Monetary funds V.1 597,930,971.16 16,091,077.74 640,945,107.83 904,966.64
Held for trading financial assets V.2 16,096,613.00 2,301,579.95
Notes receivable V.3 4,816,348.40 4,304,903.10
Accounts receivable V.5 544,589,326.69 458,742,818.28
Advances to suppliers V.6 6,778,076.34 104,433.38 8,658,966.52 93,254.00
Interests receivable V.4 89,249.79 128,237.14
Dividends receivable
Other receivables V.7 18,667,742.77 2,840,658.25 60,422,920.42 126,090.00
Inventories V.8 336,899,692.02 276,589,483.95
Non-current assets due within one
year
Other current assets
Total current assets 1,525,868,020.17 19,036,169.37 1,452,094,017.19 1,124,310.64
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables V.9 60,247,157.64 71,186,747.74
Long-term equity investments V.10 40,000.00 990,854,030.83 40,000.00 990,854,030.83
Investment property V.11 27,762,244.89 23,487,687.49 29,344,230.78 24,409,738.09
Fixed assets V.12 367,750,001.33 27,071,431.70
328,831,807.49 25,112,591.06
Construction in progress V.13 2,206,716.38 2,842,516.56
Materials held for construction
Fixed assets held for sale
Biological assets held for production
Oil and gas assets
Intangible assets V.14 23,774,099.03 18,807,747.84 25,021,404.35 19,315,381.38
Development expenditure
Goodwill V.15 996,979.09 2,496,979.09
Long-term deferred expenses V.16 6,142,637.04 129,191.04 5,953,419.25 145,340.04
Deferred tax assets V.17 27,026,418.99 28,379,559.09
Other non-current assets
Total non-current assets 477,028,060.55 1,058,391,248.26 533,014,858.19 1,061,795,922.04
Total assets: 2,002,896,080.72 1,077,427,417.63 1,985,108,875.38 1,062,920,232.68
L e g a l R e p r e s e n t a t i v e : :Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
55
Statement of Financial Position (Con.)
As at 30 June 2011
Un-audited
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renminbi (CNY)
As at 30 June 2011 As at 31 Dec. 2010
Items Note
Consolidation The Company Consolidation The Company
Current liabilities:
Short-term borrowings
Held for trading financial liabilities
Notes payable V.19 58,643,699.65 77,161,578.38
Accounts payable V.20 781,897,208.20 59,982.39 836,505,277.66 274,567.76
Advances from customers V.21 14,065,880.21 30,000.00 15,875,235.26 31,260.00
Employee benefits payable V.22 39,793,895.52 142,480.10 37,912,505.82 208,568.85
Taxes payable V.23 13,140,899.11 68,929,682.80 48,362,325.48 68,937,341.03
Interests payable
Dividends payable
Other payables V.24 205,661,602.49 545,444,343.93 90,697,163.04 594,840,595.36
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 1,113,203,185.18 614,606,489.22 1,106,514,085.64 664,292,333.00
Non-current liabilities:
Long-term borrowings
Debt instruments payable
Long-term payables
Designated payables
Deferred tax liabilities
Accrued liabilities
Deferred tax liabilities V.17 2,414,491.95 345,236.99
Other non-current liabilities V.25 39,746,220.40 39,746,220.40
Total non-current liabilities 42,160,712.35 0.00 40,091,457.39 0.00
Total liabilities 1,155,363,897.53 614,606,489.22 1,146,605,543.03 664,292,333.00
Shareholders' equity:
Share capital V.26 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00
Capital reserves V.27 125,035,204.92 123,485,181.40 125,035,204.92 123,485,181.40
Less: Treasury stock
Surplus reserves
Undistributed profit V.28 (753,425,385.37) (773,014,329.99) (775,973,855.22) (837,207,358.72)
Foreign exchange differences (4,831.45) 79.51
Equity attributable to shareholders
483,955,065.10 462,820,928.41 461,411,506.21 398,627,899.68
of the Company
Minority equity 363,577,118.09 377,091,826.14
Total shareholders' equity 847,532,183.19 462,820,928.41 838,503,332.35 398,627,899.68
Total liabilities and shareholders'
2,002,896,080.72 1,077,427,417.63 1,985,108,875.38 1,062,920,232.68
equity
L e g a l R e p r e se n t a t i v e : :Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
56
Income Statement from January 2011 to June 2011
Un-audited
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY).
Accumulative amounts for the reporting Accumulative amounts for the same
Items Note period period of last year
Consolidation The Company Consolidation The Company
I. Operating revenue V.29 1,373,364,867.20 1,176,065.20 1,665,009,562.62 3,021,092.42
Less: Operating costs V.29 1,195,113,403.66 959,931.54 1,465,029,876.42 2,920,911.71
Business tax and surcharges V.30 8,067,474.39 65,289.66 2,099,385.90 150,544.66
Sales expenses V.31 51,971,319.51 53,253,148.06
General and administrative expenses V.32 104,138,411.58 3,942,983.19 104,769,692.24 3,335,784.74
Financial costs V.33 2,483,092.83 (184,015.61) (6,429,476.48) 46,839.75
Impairment loss on assets V.34 77,609.69 1,166.52 3,387,435.40 (672,007.38)
Add: Gain from changes in fair value
V.35 13,795,033.05 (1,813,013.01)
(loss presented with "-" prefix)
Investment income (loss presented
V.36 5,306,581.31 67,732,295.69 2,095,465.34 5,266,277.58
with "-" prefix)
Including: Income from investments
in associates and joint ventures
II. Operating profit (loss presented
30,615,169.90 64,123,005.59 43,181,953.41 2,505,296.52
with "-" prefix)
Add: Non-operating income V.37 5,281,735.17 160,023.14 11,258,688.85 113,922.41
Less: Non-operating expenses V.38 713,494.10 90,000.00 808,479.73
Including: Loss on disposals of
36,996.37 40,632.03
non-current assets
III. Profit before taxation (loss
35,183,410.97 64,193,028.73 53,632,162.53 2,619,218.93
presented with "-" prefix)
Less: Corporate income tax expenses V.39 3,524,717.27 3,730,555.64
IV. Net profit (loss presented with
31,658,693.70 64,193,028.73 49,901,606.89 2,619,218.93
"-" prefix)
Attributable to shareholders of the
22,548,469.85 64,193,028.73 36,949,302.21 2,619,218.93
Company
Attributable to minority shareholders 9,110,223.85 12,952,304.68
V. Earnings per share
Basic earnings per share 0.02 0.03
Diluted earnings per share 0.02 0.03
VI. Other comprehensive income V.41 (4,910.96) 618,198.25 (33,022.08)
VII. Total comprehensive income 31,653,782.74 64,193,028.73 50,519,805.14 2,586,196.85
Attributable to shareholders of the
22,544,786.63 64,193,028.73 37,567,500.46 2,586,196.85
Company
Attributable to minority shareholders 9,108,996.11 0.00 12,952,304.68 0.00
L e g a l R e p r e s e n t a t i v e : Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
There is no net profit achieved by the consolidated party under company combination of the current period before the
combination.
57
Cash Flow Statement from January 2011 to June 2011
Un-audited
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY).
Accumulative amounts for the reporting Accumulative amounts for the same
Items Note period period of last year
Consolidation The Company Consolidation The Company
I. Cash flows from operating activities:
Cash receipts from sale of goods or rendering of
1,340,362,580.91 1,509,023,842.54
services
Tax refunds receipts 121,832,937.70 15,060.94 128,382,963.21
Other cash receipts in relation to operating
V.42 35,612,135.20 19,050,645.52 69,336,995.55 21,114,353.05
activities
Subtotal of cash inflows from operating activities 1,497,807,653.81 19,065,706.46 1,706,743,801.30 21,114,353.05
Cash paid for goods and services 1,334,166,997.08 1,299,998,498.43
Cash paid to and on behalf of employees 134,280,688.43 17,318,260.05 186,206,736.77 16,602,775.16
Taxes and surcharges paid 11,437,017.15 777,047.22 11,520,166.16 1,520,817.79
Other cash payments in relation to operating
V.42 142,709,977.97 2,801,662.78 171,561,216.82 14,077,826.39
activities
Subtotal of cash outflows from operating activities 1,622,594,680.63 20,896,970.05 1,669,286,618.18 32,201,419.34
Net cash flows from operating activities (124,787,026.82) (1,831,263.59) 37,457,183.12 (11,087,066.29)
II. Cash flows from investing activities
Cash receipts from withdrawal of investments
Cash receipts from investment income 5,306,581.31 67,732,295.69 7,925,803.21 15,767,517.18
Net cash receipts from disposals of fixed assets,
3,991,626.41 11,399,847.75
intangible assets and other long-term assets
Net cash receipts from disposal of subsidiaries
202,824.06
and other operating entities
Other cash receipts in relation to investing
activities
Subtotal of cash inflows from investing activities 9,501,031.78 67,732,295.69 19,325,650.96 15,767,517.18
Cash paid for acquisition of fixed assets,
18,805,290.46 214,500.00 16,496,779.67 1,697,057.89
intangible assets and other long-term assets
Cash paid for investments 292,120.68 222,000.00
Net Cash paid for acquisition of subsidiaries and
other operating entities
Other cash payments in relation to investing
activities
Subtotal of cash outflows from investing activities 19,097,411.14 214,500.00 16,718,779.67 1,697,057.89
Net cash flows from investing activities (9,596,379.36) 67,517,795.69 2,606,871.29 14,070,459.29
III. Cash flows from financing activities
Cash proceeds from issuing shares or other equity
instruments
Including: cash proceeds received from acquiring
minority investment from subsidies
Cash proceeds from issuing borrowings
Cash proceeds from issuing debt instruments
Other cash proceeds in relation to financing
131,431,000.00 5,000,000.00 160,000,000.00
activities
Subtotal of cash inflows from financing activities 131,431,000.00 5,000,000.00 0.00 160,000,000.00
Repayment of loans or debts 225,948,239.46 157,577,962.02
Cash payments for interests, dividends and profit
22,549,593.07 2,613,904.66
distribution
Other cash payments in relation to financing
22,549,593.07 2,613,904.66
activities
Including: dividend, profit paid to minorities by
55,500,000.00
subsidies
Subtotal of cash outflows from financing activities 22,549,593.07 55,500,000.00 228,562,144.12 157,577,962.02
Net cash flows from financing activities 108,881,406.93 (50,500,000.00) (228,562,144.12) 2,422,037.98
IV. Impact of changes in foreign exchange rates on
(4,044,762.69) (421.00) (380,905.81) (33,537.42)
cash and cash equivalents
V. Net increase in cash and cash equivalents (29,546,761.94) 15,186,111.10 (188,878,995.52) 5,371,893.56
Add: Opening cash and cash equivalents 627,477,733.10 904,966.64 540,739,906.30 494,441.23
VI. Closing cash and cash equivalents V.43 597,930,971.16 16,091,077.74 351,860,910.78 5,866,334.79
L e g a l R e p r e s e n t a t i v e : Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
58
Consolidated Statement of Changes in Equity
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY).
Jan.-Jun. 2011
Equity attributable to shareholders of the Company
Exchange Total
Items minus: Normal Minority
Special Surplus Undistributed difference of shareholders’
Share capital Capital reserve Inventory risk interests
reserve reserve profits foreign equity
shares provision
currency
I. Balance at the end of the previous year 1,112,350,077.00 125,035,204.92 (775,973,855.22) 79.51 377,091,826.14 838,503,332.35
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 125,035,204.92 (775,973,855.22) 79.51 377,091,826.14 838,503,332.35
III. Changes in equity in the year 0.00 0.00 0.00 0.00 0.00 0.00 22,548,469.85 (4,910.96) (13,514,708.05) 9,028,850.84
(I)Net profit for the year 22,548,469.85 9,110,223.85 31,658,693.70
(II)Other comprehensive gains (4,910.96) (4,910.96)
Sub-total of above (I) and (II) 0.00 0.00 0.00 0.00 0.00 0.00 22,548,469.85 (4,910.96) 9,110,223.85 31,653,782.74
(III) Capital investment by the shareholders 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (50,000.00) (50,000.00)
1. Capital investment by shareholders in the year
2. Amount calculated into equity paid in shares
3. Others (50,000.00) (50,000.00)
(IV) Profit distribution in the year 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (22,574,931.90) (22,574,931.90)
1. Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders (22,574,931.90) (22,574,931.90)
4．Others
(V) Internal settlement and transfer of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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）Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1．Appropriated in current period
2．Used in current period
(VII) Other
IV. Balance at the end of this period 1,112,350,077.00 125,035,204.92 0.00 0.00 0.00 0.00 (753,425,385.37) (4,831.45) 363,577,118.09 847,532,183.19
L e g a l R e p r e s e n t a t i v e : Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
59
Consolidated Statement of Changes in Equity
As at 30 June 2011
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY)
As of the year 2010
Equity attributable to shareholders of the Company
Exchange Total
Items minus: Normal Minority
Special Undistributed difference of shareholders’
Share capital Capital reserve Inventory Surplus risk interests
reserve profits foreign equity
shares reserve provision
currency
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 (178,785.91) 64,373,615.28 651,299.84 19,977,684.68 84,823,813.89
(I)Net profit for the year 64,373,615.28 23,050,073.39 87,423,688.67
(II)Other comprehensive gains (205,085.71) 651,299.84 446,214.13
Sub-total of above (I) and (II) (205,085.71) 64,373,615.28 651,299.84 23,050,073.39 87,869,902.80
(III) Capital investment by the shareholders (832,080.00) (832,080.00)
1. Capital investment by shareholders in the
(832,080.00) (832,080.00)
year
2. Amount calculated into equity paid in shares
3. Others
(IV) Profit distribution in the year (2,613,904.66) (2,613,904.66)
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others (2,613,904.66) (2,613,904.66)
(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）Special reserve
1．Appropriated in current period
2．Used in current period
(VII) Other 26,299.80 373,595.95 399,895.75
IV. Balance at the end of this period 1,112,350,077.00 125,035,204.92 (775,973,855.22) 79.51 377,091,826.14 838,503,332.35
L e g a l R e p r e s e n t a t i v e : :Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
60
Statement of Changes in Equity of the Company
As at 30 June 2011
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY).
Amount for the reporting period
Less:
Items Special Surplus General risk Total shareholders’
Share capital Capital reserve treasury Retained profit
reserves reserve provision equity
stock
I. Balance at the end of previous year 1,112,350,077.00 123,485,181.40 (837,207,358.72) 398,627,899.68
Add: Changes of accounting policies
Correction of errors in prior years
Others
II. Balance at the beginning of the year 1,112,350,077.00 123,485,181.40 0.00 0.00 0.00 0.00 (837,207,358.72) 398,627,899.68
III. Changes in equity in the year 0.00 0.00 0.00 0.00 0.00 0.00 64,193,028.73 64,193,028.73
(I)Net profit for the year 64,193,028.73 64,193,028.73
(II)Other comprehensive gains
Sub-total of above (I) and (II) 0.00 0.00 0.00 0.00 0.00 0.00 64,193,028.73 64,193,028.73
(III) Capital investment by the shareholders 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Capital investment by shareholders in the year
2. Amount calculated into equity paid in shares
3. Others
(IV) Profit distribution in the year 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1．Appropriation of surplus reserve
2．Appropriation of normal risk provision
3．Distribution to shareholders
4．Others
(V) Internal settlement and transfer of
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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）Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1．Appropriated in current period
2．Used in current period
(VII) Other
IV. Balance at the end of this period 1,112,350,077.00 123,485,181.40 0.00 0.00 0.00 0.00 (773,014,329.99) 462,820,928.41
L e g a l R e p r e s e n t a t i v e : :Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e m e n t s )
61
Statement of Changes in Equity of the Company
As at 30 June 2011 (Con.)
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. All amounts presented are in Renmibi (CNY).
Amount for the year 2010
Items Less: Special Surplus General risk Total shareholders’
Share capital Capital reserve Retained profit
treasurystock reserves reserve provision 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 (205,085.71) 1,263,595.45 1,058,509.74
(I)Net profit for the year 1,263,595.45 1,263,595.45
(II)Other comprehensive gains (205,085.71) (205,085.71)
Sub-total of above (I) and (II) (205,085.71) 1,263,595.45 1,058,509.74
(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）Special reserve
1．Appropriated in current period
2．Used in current period
IV. Balance at the end of this period 1,112,350,077.00 123,485,181.40 (837,207,358.72) 398,627,899.68
L e g a l R e p r e s e n t a t i v e : :Jian Derong C h i e f a c c o u n t a n t : Chen Zongyi F i n a n c i a l d i r e c t o r : Chen Zongyi
( T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e se f i n a n c i a l st a t e me n t s )
62
Note 5: Notes to elements of the consolidated financial statements
5.1 Monetary funds
5.1.1 Details of monetary funds
Balance as at 30 June 2011 Balance as at 31 December 2010
Foreign Foreign
Items Translated
Original amount exchange Translated amount Original amount exchange
amount
rate rate
Cash in hand
Including: CNY 368,173.81 1.000 368,173.81 362,565.28 1.000 362,565.28
HKD 41,768.30 0.832 34,735.35 28,777.65 0.851 24,486.90
USD 40,367.75 6.472 261,243.93 75,862.95 6.623 502,417.56
JPY 803,190.80 0.080 64,450.44 1,291,163.40 0.081 104,919.94
IDR 18,389,100.00 0.001 12,851.91
FRF 7.00 7.752 54.27 7.00 7.056 49.39
EUR 14,405.48 9.361 134,852.58 21,405.48 8.807 188,507.36
GBP 3.13 10.40 32.55 3.13 10.218 31.98
HUF 81,016.00 0.031 2,552.00 81,016.00 0.032 2,576.31
Subtotal 878,946.84 1,185,554.72
Demand
deposits
Including: CNY 317,232,996.29 1.000 317,232,996.29 485,800,029.16 1.000 485,800,029.16
HKD 282,458.53 0.832 234,898.16 2,038,792.96 0.851 1,734,808.93
USD 41,803,759.45 6.472 270,537,209.66 14,924,396.42 6.623 98,839,800.17
JPY 51,179,563.00 0.080 4,106,801.67 28,925,718.00 0.081 2,350,503.84
EUR 732.70 9.361 6,858.95 3,175.98 8.807 27,969.27
IDR 5,275,817,194.73 0.001 4,000,431.97
Subtotal 596,119,196.70 588,753,111.37
Other monetary
funds
Including: CNY 932,827.62 1.000 932,827.62 51,006,441.74 1.000 51,006,441.74
Subtotal 932,827.62 51,006,441.74
Total 597,930,971.16 640,945,107.83
5.1.2 Other monetary funds including bank acceptances and the margin deposits of L/C.
63
5.2 Held for trading financial assets
5.2.1 Disclosure by classification
Items As at 30 June 2011 As at 31 December 2010
Derivative financial assets 16,096,613.00 2,301,579.95
Total 16,096,613.00 2,301,579.95
5.2.2 The derivative financial asset is forward foreign exchange contract signed with financial institutions.
5.3 Notes receivable
5.3.1 Disclosure by classification
Items 2011.06.30 2010.12.31
Bank acceptance 4,816,348.40 3,910,322.48
Trade acceptance 0.00 394,580.62
Total 4,816,348.40 4,304,903.10
5.3.2 As at 30 June 2011, the Company has no pledged notes receivable.
5.3.3 As at 30 June 2011, the Company has no discounted or pledged trade acceptance.
5.3.4 As at 30 June 2011, the Company has no notes receivable transferred to accounts receivable due to issuers’
defaults and notes receivable transferred by endorsement remaining immature.
5.4 Interests receivable
5.4.1 Disclosure by classification
Carrying amount Increase during Decrease during Carrying amount
Items
as at 31 December 2010 the current period the current period as at 30 June 2011
Interests of fixed deposit 128,237.14 51,953.40 90,940.75 89,249.79
Total 128,237.14 51,953.40 90,940.75 89,249.79
5.5 Accounts receivable
5.5.1 Disclosure by classification
Items Balance as at 30 June 2011
Impairment
Amount % of total % of total
allowance
Accounts receivable belong to individual
significance and individually assessed for 0.00 0.00% 0.00 0.00%
impairment
Accounts receivable belong to recognition of
impairment allowances by group:
436,948,928.47 78.92% 9,081,866.73 2.08%
Age group
116,722,264.95 21.08% 0.00 0.00%
Related party group
553,671,193.42 100.00% 9,081,866.73 1.64%
Subtotal of groups:
Accounts receivable belong to individually
insignificant but individually assessed for 0.00 0.00% 0.00 0.00%
impairment
553,671,193.42 100.00% 9,081,866.73 1.64%
Total
64
(Continued)
Balance as at 31 December 2010
Items Impairment
Amount % of total % of total
allowance
Accounts receivable belong to individual significance
0.00 0.00% 0.00 0.00%
and individually assessed for impairment
Accounts receivable belong to recognition of
impairment allowances by group:
Age group 380,081,298.11 81.23% 9,153,564.59 2.41%
Related party group 87,815,084.76 18.77% 0.00 0.00%
Subtotal of groups: 467,896,382.87 100.00% 9,153,564.59 1.96%
Accounts receivable belong to individually
0.00 0.00% 0.00 0.00%
insignificant but individually assessed for impairment
Total 467,896,382.87 100.00% 9,153,564.59 1.96%
5.5.2 Accounts receivable using the age analysis method for measurement of impairment allowances:
Balance as at 30 June 2011 Balance as at 31 December 2010
Age Impairment Impairment
Amount % of total Amount % of total
allowance allowance
Within 1 year 430,358,630.74 98.49% 2,491,569.00 372,994,513.84 98.14% 2,066,780.32
Including:1-90 days 409,421,788.31 93.70% 0.00 354,126,985.71 93.18% 0.00
91-180 days 19,181,236.80 4.39% 1,918,123.68 18,057,005.14 4.75% 1,805,700.52
181-270 days 1,521,787.48 0.35% 456,536.24 720,908.47 0.19% 216,272.54
271-365 days 233,818.15 0.05% 116,909.08 89,614.52 0.02% 44,807.26
1-2 years 626,236.43 0.14% 626,236.43 927,868.91 0.24% 927,868.91
2-3 years 672,732.23 0.15% 672,732.23 2,098.19 0.00% 2,098.19
Over 3years 5,291,329.07 1.22% 5,291,329.07 6,156,817.17 1.62% 6,156,817.17
Total 436,948,928.47 100.00% 9,081,866.73 380,081,298.11 100.00% 9,153,564.59
5.5.3 Accounts receivable according to the related party group for measurement of impairment allowances:
Carrying amount Allowance
Impairment Reason(s)
before percentage
Related parties for allowance
impairment allowance (%)
allowance
According to the accounting
Tsann Kuen Japan Co., Ltd 0.00 0.00%
96,307,299.61 policy of impairment allowance
Thermaster Electronic (Xiamen) According to the accounting
0.00 0.00%
Ltd. 13,448.00 policy of impairment allowance
STAR COMGISTIC CAPITAL According to the accounting
0.00 0.00%
CO., LTD 15,873,290.19 policy of impairment allowance
According to the accounting
STAR TRAVEL SERVICE CORP. 0.00 0.00%
78,341.14 policy of impairment allowance
According to the accounting
PT. STAR COMGISTIC 4,449,886.01 0.00 0.00%
policy of impairment allowance
Total 116,722,264.95 0.00 0.00%
5.5.4 As at 30 June 2011, the Company has no accounts receivable belong to individually insignificant but
individually assessed for impairment.
5.5.5 As at 30 June 2011, the Company has no circumstances on non-reversal or non-recovery.
5.5.6 As at 30 June 2011, the Company has no accounts receivable written off.
65
5.5.7 Details of accounts receivable owed by entities which own 5% or more of the shares of the Company during the
current reporting period:
As at 30 June 2011 As at 31 December 2010
Shareholder Impairment Impairment
Carrying amount Carrying amount
allowance allowance
STAR COMGISTIC
15,873,290.19
CAPITAL CO., LTD 0.00 10,577,697.22 0.00
Total 15,873,290.19
0.00 10,577,697.22 0.00
5.5.8 Details of top five accounts receivable:
Relationship with Carrying amount % of total
Debtors Age
the Company as at 30/6/2011 accounts receivable
Tsann Kuen Japan Co., Ltd. Related party 96,307,299.61 Within 1 year 17.39%
Applica Consumer Products Inc. Non-related party 87,399,456.11 Within 1 year 15.79%
SEBAsiaLtd. Non-related party 34,537,712.84 Within 1 year 6.24%
Sensio Inc Non-related party 26,283,560.20 Within 1 year 4.75%
Sunbeam Corporation Limited Non-related party 26,074,450.62 Within 1 year 4.71%
Total 270,602,479.38 48.88%
5.5.9 Details of accounts receivable balance due from related parties:
Relationship with the Carrying amount % of total
Debtors
Company as at 30/6/2011 accounts receivable
Same ultimate holding
Tsann Kuen Japan Co., Ltd 96,307,299.61 17.39%
company
The company directly
Thermaster Electronic (Xiamen) controlled by the key
13,448.00 0.00%
Ltd. management and closed
family members
STAR COMGISTIC CAPITAL
Ultimate holding company 15,873,290.19 2.87%
CO., LTD
Same ultimate holding
STAR TRAVEL SERVICE CORP. 78,341.14 0.01%
company
Same ultimate holding
PT. STAR COMGISTIC 4,449,886.01 0.80%
company
Total
116,722,264.95 21.08%
5.6 Advances to suppliers
5.6.1 Disclosure by age:
Carrying amount as at 30 June 2011 Carrying amount as at 31 December 2010
Age Amount % of total Amount % of total
Within 1 year 6,218,330.42 91.74% 7,103,591.42 82.04%
1-2 years 559,745.92 8.26% 1,555,375.10 17.96%
Total 6,778,076.34 100.00% 8,658,966.52 100.00%
66
5.6.2 Details of top five advance to suppliers:
Relationship with Carrying amount Reason(s)
Suppliers Age
the Company as at 31/12/2010 for unsettlement
Supplier has not delivered
Sadoshima Corporation Non-related party 616,287.64 Within 1 year
goods
Supplier has not delivered
Xinhui Industrial Corporation Non-related party 366,007.92 Within 1 year
goods
ARS ELETTROMECCANICA Non-related party Supplier has not delivered
324,020.35 Within 1 year
S.R.L goods
Ping An Property
The implementation of the
& Casualty Insurance Company Of Non-related party 281,548.74 Within 1 year
contract has not completed
China
Shanghai Jiading Power Supply Electric power char-ges
Non-related party 248,700.00 Within 1 year
Branch pay in advance
Total 1,836,564.65
5.6.3 The Company has no advances to entities which own 5% or more of the shares of the Company.
5.7 Other receivables
5.7.1 Disclosure by classification
Balance as at 30 June 2011
Items
Amount % of total Impairment allowance % of total
Other receivables belong to individual significance and
0.00 0.00% 0.00 0.00%
individually assessed for impairment
Other receivables belong to recognition of impairment
allowances by group:
Age group 19,640,712.51 100.00% 972,969.74 4.95%
Related party group 0.00 0.00% 0.00 0.00%
Subtotal of groups: 19,640,712.51 100.00% 972,969.74 4.95%
Other receivables belong to individually insignificant
0.00 0.00% 0.00 0.00%
but individually assessed for impairment
Total 19,640,712.51 100.00% 972,969.74 4.95%
(Continued)
Balance as at 31 December 2010
Items
Amount % of total Impairment allowance % of total
Other receivables belong to individual significance
0.00 0.00% 0.00 0.00%
and individually assessed for impairment
Other receivables belong to recognition of
impairment allowances by group:
Age group 62,092,094.02 100.00% 1,669,173.60 2.69%
Related party group 0.00 0.00% 0.00 0.00%
Subtotal of groups: 62,092,094.02 100.00% 1,669,173.60 2.69%
Other receivables belong to individually insignificant
0.00 0.00% 0.00 0.00%
but individually assessed for impairment
Total 62,092,094.02 100.00% 1,669,173.60 2.69%
5.7.2 Other receivables using the age analysis method for measurement of impairment allowances:
Items Balance as at 30 June 2011 Balance as at 31 December 2010
Amount % of total Impairment allowance Amount % of total Impairment allowance
Within 1 year 18,793,220.85 95.69% 125,478.08 60,768,652.13 97.87% 345,731.71
Including:
18,027,529.52 91.79% 0.00 59,523,466.16 95.87% 0.00
1-90 days
91-180 days 539,545.37 2.75% 53,954.54 529,646.80 0.85% 52,964.68
181-270 days 207,747.23 1.06% 62,324.17 325,012.77 0.52% 97,503.83
271-365 days 18,398.73 0.09% 9,199.37 390,526.40 0.63% 195,263.20
1-2 years 594,414.66 3.03% 594,414.66 328,585.62 0.53% 328,585.62
2-3 years 4,000.00 0.02% 4,000.00 69,270.74 0.11% 69,270.74
Over 3years 249,077.00 1.26% 249,077.00 925,585.53 1.49% 925,585.53
Total 19,640,712.51 100.00% 972,969.74 62,092,094.02 100.00% 1,669,173.60
67
5.7.3 As at 30 June 2011, the Company has no other receivables belong to individually insignificant but individually
assessed for impairment.
5.7.4 Other receivables written off CNY 642,602.51 during the current reporting period, details set out below:
Amount written off Reason(s) Whether the writing-off resulted
during the current Nature of for the from transactions with related
Debtors reporting period other receivables writing-off parties
Employee borrowings Employee borrowings 32,148.16 Cannot recovered No
Payment for bad quality
SALTON INC. 467,571.95 Cannot recovered No
TOASTMASTER Payment for bad quality
25,310.22 Cannot recovered No
INC
ZOJIRUSHI Payment for bad quality Cannot recovere
6,577.60 No
CORPORATION d
TOSHIBA TEC Payment for bad quality
110,994.58 Cannot recovered No
CORP.
Total 642,602.51
5.7.5 The Company has no other receivables owed by entities which own 5% or more of the shares of the Company.
5.7.6 Details of top five other receivables:
Relationship
with the Carrying amount % of total
Debtors Company as at 30/6/2011 Age other receivables
Fujian Province Longhai City Electric Power
Non-related party 1,448,704.32 0-30 days 7.38%
Supply Co., Ltd
Secondary account of Provincial Financial
Non-related party 1,297,910.18 0-120 days 6.61%
Special Account
Zhonghang Xingang Guarantee Co., Ltd. Non-related party 1,080,000.00 0-360 days 5.50%
Xiamen Jindong Material Trading Co., Ltd. Non-related party 958,840.54 0-90 days 4.88%
Zhangzhou Boer Metal Products Co., Ltd. Non-related party 828,553.02 0-60 days 4.22%
Total 5,614,008.06 28.59%
5.8 Inventories
5.8.1 Disclosure by classification
As at 30 June 2011 As at 31 December 2010
Items Impairment Impairment
Carrying amount Net carrying amount Carrying amount Net carrying amount
allowance allowance
Raw material 187,956,390.09 9,111,759.62 178,844,630.47 152,246,727.73 9,111,759.62 143,134,968.11
Workin progress 70,351,636.06 0.00 70,351,636.06 15,398,841.08 0.00 15,398,841.08
self-manufactur
ed semi-finished 30,524,271.60 2,215,173.10 28,309,098.50 36,412,428.23 2,215,173.10 34,197,255.13
goods
Finished goods 58,850,761.88 1,557,791.33 57,292,970.55 83,934,772.60 1,557,791.33 82,376,981.27
Low-value
1,419,421.36 0.00 1,419,421.36 1,242,488.28 0.00 1,242,488.28
consumables
Materials in
681,935.08 0.00 681,935.08 238,950.08 0.00 238,950.08
transit
Total 349,784,416.07 12,884,724.05 336,899,692.02 289,474,208.00 12,884,724.05 276,589,483.95
68
5.8.2 Impairment allowance for inventories
Recovered value as
Carrying amount as
Increase in curr Written Carrying amount % of total of
Items at 31 December Recovered
ent period off as at 30 June 2011 inventories
2010
%
Raw material 9,111,759.62 0.00 0.00 0.00 9,111,759.62 0.00
self-manufactur
ed semi-finished 2,215,173.10 0.00 0.00 0.00 2,215,173.10 0.00
goods
Finished goods 1,557,791.33 0.00 0.00 0.00 1,557,791.33 0.00
Total 12,884,724.05 0.00 0.00 0.00 12,884,724.05 0.00
5.9 Long-term receivables
5.9.1 Circumstance of long-term receivables
30 Jun. 2011 31 Dec. 2010
Carrying Carrying
Item amount amount
Impairment Net carrying Impairment Net carrying
before before
allowance amount allowance amount
impairment impairment
allowance allowance
Installment receivables
62,671,361.58 13,365.50 62,657,996.08 74,892,982.80 7,721.47 74,885,261.33
of transferred assets
Less: unrealized
2,410,838.44 0.00 2,410,838.44 3,698,513.59 0.00 3,698,513.59
financing gains
Total 60,260,523.14 13,365.50 60,247,157.64 71,194,469.21 7,721.47 71,186,747.74
5.9.2 The amount of installment receivables of transferred assets including CNY 39,746,220.40 for the TKL
transferred operating assets and business opportunities to Shanghai Sigma Metals Inc., please refer Note 10.3 for
details.
5.10 Long-term equity investments
5.10.1 Circumstance of long-term equity investments
Impairment allowance
Increase/ decrease
Carrying amount Carrying amount Impairment withdrawn during the
Investee during the current
as at period-begin as at period-end allowance current reporting
reporting period
period
Long-term equity
investments measured using
the historical cost
convention:
Xiamen Institute of Foreign
40,000.00 0.00 40,000.00 0.00 0.00
Investment Enterprise
Total 40,000.00 0.00 40,000.00 0.00 0.00
69
(Continued)
Explanation for the
difference between Cash dividend for
Investment Proportion of Proportion of
Investee shareholding proportion current reporting
cost shareholding % voting rights%
and voting rights period
proportion
Long-term equity investments
measured using the historical cost
convention:
Xiamen Institute of Foreign
40,000.00 1.48 1.48 7,500.00
Investment Enterprise
Total 40,000.00 7,500.00
5.11 Investment property
5.11.1 Investment property measured using the historical cost convention
Increase during Decrease during
Carrying amount Carrying amount
Items the current the current
as at 31 Dec. 2010 as at 30 Jun. 2011
reporting period reporting period
1、Cost: 66,316,293.90 0.00 0.00 66,316,293.90
Houses and buildings 66,316,293.90 0.00 0.00 66,316,293.90
Land use rights 0.00 0.00 0.00 0.00
Newly Withdrawal for
increased current year
2. Cumulative depreciation and
36,972,063.12 0.00 2,496,531.18 914,545.29 38,554,049.01
amortization:
Houses and buildings 36,972,063.12 0.00 2,496,531.18 914,545.29 38,554,049.01
Land use rights 0.00 0.00 0.00 0.00 0.00
3. Carrying amount before
29,344,230.78 27,762,244.89
impairment allowance
Houses and buildings 29,344,230.78 27,762,244.89
Land use rights 0.00 0.00
4. Cumulative impairment
0.00 0.00 0.00 0.00
allowance
Houses and buildings 0.00 0.00 0.00 0.00
Land use rights 0.00 0.00 0.00 0.00
5. Net carrying amount 29,344,230.78 27,762,244.89
Houses and buildings 29,344,230.78 27,762,244.89
Land use rights 0.00 0.00
5.11.2 The depreciation and amortization of investment property withdrawn during the current reporting period
amount to CNY2,496,531.18.
5.12 Fixed assets
5.12.1 Circumstance of fixed assets
Carrying amount Withdrawal for Decreased for Carrying amount
Items
as at 31 Dec. 2010 current year current period as at 30 Jun. 2011
1. Cost 2,255,917,726.98 13,717,635.49 56,597,607.76 2,213,037,754.71
Houses and buildings 137,907,258.96 1,072.50 0.00 137,908,331.46
Machineries 351,142,349.67 1,033,530.89 797,444.55 351,378,436.01
Electronic device、 modules
1,670,303,456.15 12,683,032.10 55,695,949.57 1,627,290,538.68
and others
Vehicles 35,142,533.50 0.00 104,213.64 35,038,319.86
Improvement expense of
61,422,128.70 0.00 0.00 61,422,128.70
leased fixed assets
Newly Withdrawal for
increased current year
70
1,821,546,379.13 918,297.15 49,629,864.67 49,838,054.99 1,822,256,485.96
2. Cumulative depreciation
Houses and buildings 72,155,779.79 918,297.15 2,027,523.47 0.00 75,101,600.41
Machineries 160,485,645.44 0.00 11,503,969.84 638,998.19 171,350,617.09
Electronic device、 modules
1,530,466,655.40 0.00 32,871,285.74 49,121,414.58 1,514,216,526.56
and others
Vehicles 30,808,372.55 0.00 280,147.46 77,642.22 31,010,877.79
Improvement expense of
27,629,925.95 0.00 2,946,938.16 0.00 30,576,864.11
leased fixed assets
3. Carrying amount before 434,371,347.85 390,781,268.76
impairment allowance
Houses and buildings 65,751,479.17 62,806,731.05
Machineries 190,656,704.23 180,027,818.93
Electronic device、 modules
139,836,800.75 113,074,012.12
and others
Vehicles 4,334,160.95 4,027,442.07
Improvement expense of
33,792,202.75 30,845,264.59
leased fixed assets
4. Cumulative impairment 66,621,346.52 0.00 4,671,885.25 61,949,461.27
allowance
Houses and buildings 0.00 0.00 0.00
Machineries 26,011,180.18 15,502.32 25,995,677.86
Electronic device、 modules
39,201,359.80 4,656,339.80 34,545,020.00
and others
Vehicles 94,706.48 43.13 94,663.35
Improvement expense of
1,314,100.06 0.00 1,314,100.06
leased fixed assets
367,750,001.33 328,831,807.49
5. Net carrying amount
Houses and buildings 65,751,479.17 62,806,731.05
Machineries 164,645,524.05 154,032,141.07
Electronic device、 modules
100,635,440.95 78,528,992.12
and others
Vehicles 4,239,454.47 3,932,778.72
Improvement expense of
32,478,102.69 29,531,164.53
leased fixed assets
5.12.2 Cost of fixed assets transferred from construction in progress during current reporting period amounts to
CNY 2,691,384.88.
5.12.3 The withdrawal of depreciation during current reporting period amounts to CNY49,629,864.67.
5.12.4 Details of temporary idle assets for current period:
Cumulative Cumulative impairment
Items Cost Net carrying amount Estimated start use date
depreciation allowance
Machineries 55,587,378.66 21,049,352.01 22,320,367.85 12,217,658.80 November 2011
Electronic device、
6,289,371.40 2,819,713.59 3,255,889.30 213,768.51 November 2011
modules and others
Vehicles 68,800.00 56,760.00 0.00 12,040.00 November 2011
Improvement expense of
278,000.00 107,869.20 59,128.92 111,001.88 November 2011
leased fixed assets
Total 62,223,550.06 24,033,694.80 25,635,386.07 12,554,469.19
5.12.5 The Company has no fixed assets held for sale during current reporting period.
5.12.6 The Company has no fixed assets acquired under financial leases during current reporting period.
71
5.12.7 Details of fixed assets let under operating leases during current reporting period:
Cumulative
Items Cost Cumulative depreciation impairment Net carrying amount
allowance
Machineries 8,719,638.97 3,839,566.73 0.00 4,880,072.24
Electronic device、 modules and others 4,941,734.04 4,678,655.84 99,780.43 163,297.77
Vehicles 46,500.00 46,500.00 0.00 0.00
Improvement expense of leased fixed assets 22,865.00 11,051.32 0.00 11,813.68
Total 13,730,738.01 8,575,773.89 99,780.43 5,055,183.69
5.12.8 Fixed assets with pending ownership registration during current reporting period
Cumulative
Cumulative
Item Cost impairment Net carrying amount Reasons
depreciation
allowance
Jingying garden 806,391.00 163,082.46 0.00 643,308.54 In progress
5.12.9 The Company has no pledged and warranted fixed assets during current reporting period.
5.13 Construction in progress
5.13.1 Details of construction in progress
As at 30 Jun. 2011 As at 31 Dec. 2010
Item Carrying amount before Impairment Net carrying Carrying amount before Impairment Net carrying
impairment allowance allowance amount impairment allowance allowance amount
Installation
525,460.82 0.00 525,460.82 0.00 0.00 0.00
equipment
Modules work
1,399,005.56 0.00 1,399,005.56 2,602,516.56 0.00 2,602,516.56
in progress
Decoration
282,250.00 0.00 282,250.00 240,000.00 0.00 240,000.00
project
Total 2,206,716.38 0.00 2,206,716.38 2,842,516.56 0.00 2,842,516.56
5.13.2 Changes on construction in progress
Transferred
Other
Increase to fixed Proportion
Carrying decrease Carrying
during assets of
Budgeted amount during amount Source of
Items current during input to
cost as at current as at fund
reporting current budgeted
31 Dec. 2010 reporting 30 Jun. 2011
period reporting cost
period
period
Installation
1,254,904.53 0.00 418,301.51 137,826.22 26,237.09 254,238.20 Self-owned 33.33%
equipment
Modules
work 11,733,340.53 2,602,516.56 1,641,850.28 2,553,558.66 20,580.00 1,670,228.18 Self-owned 13.99%
in progress
Decoration
877,500.00 240,000.00 292,500.00 0.00 250,250.00 282,250.00 Self-owned 33.33%
project
Total 13,865,745.06 2,842,516.56 2,352,651.79 2,691,384.88 297,067.09 2,206,716.38
5.14 Intangible assets and cumulative amortization
5.14.1 Circumstance of intangible assets:
Carrying amount Increase Decrease Carrying amount
Items as at during current during current as at
31 Dec. 2010 reporting period reporting period 30 Jun. 2011
1. Cost 45,912,402.19 239,059.84 0.00 46,151,462.03
Land use rights 29,560,727.51 0.00 0.00 29,560,727.51
Software 16,351,674.68 239,059.84 0.00 16,590,734.52
72
2. Cumulative amortization 20,890,997.84 1,486,365.16 0.00 22,377,363.00
Land use rights 9,476,482.78 323,436.54 0.00 9,799,919.32
Software 11,414,515.06 1,162,928.62 0.00 12,577,443.68
3. Carrying amount before impairment allowance 25,021,404.35 23,774,099.03
Land use rights 20,084,244.73 19,760,808.19
Software 4,937,159.62 4,013,290.84
4. Cumulative impairment allowance 0.00 0.00 0.00 0.00
Land use rights 0.00 0.00 0.00 0.00
Software 0.00 0.00 0.00 0.00
5. Net carrying amount 25,021,404.35 23,774,099.03
Land use rights 20,084,244.73 19,760,808.19
Software 4,937,159.62 4,013,290.84
5.14.2 Within the increase of amortization of intangible assets during current reporting period, CMY1,486,365.16
is the amortization withdrawn for the current reporting period.
5.14.3 CNY 48,040,176.62 is research and development expenditure incurred during current reporting period,
which has been recognized in current profits and losses.
5.15 Goodwill
Increase Decrease
Carrying amount as at Carrying amount as at Impairment
Investee during current during current
31 Dec. 2010 30 Jun. 2011 allowance
reporting period reporting period
TSST 71,870.08 0.00 0.00 71,870.08 0.00
TSD 800,109.01 0.00 0.00 800,109.01 0.00
TSXT 125,000.00 0.00 0.00 125,000.00 0.00
TSSZ 1,500,000.00 0.00 1,500,000.00 0.00 0.00
Total 2,496,979.09 0.00 1,500,000.00 996,979.09 0.00
5.16 Long-term deferred expenses
5.16.1 Details of long-term deferred expense
Increase Decrease
Carrying amount as at Carrying amount as at
Items during current during current
31 Dec. 2010 30 Jun. 2011
reporting period reporting period
Telecommunications engineering 145,000.01 258,499.97 203,166.66 200,333.32
SUN computer service fees 141,666.76 0.00 50,000.04 91,666.72
Internet charges 165,984.00 0.00 52,416.00 113,568.00
Houses and buildings renovation expenses 5,268,167.35 963,000.00 676,761.33 5,554,406.02
Landscape engineering 145,340.04 0.00 16,149.00 129,191.04
Others 87,261.09 16,150.02 49,939.17 53,471.94
Total 5,953,419.25 1,237,649.99 1,048,432.20 6,142,637.04
73
5.17 Deferred tax assets and deferred tax liabilities
5.17.1 Recognized deferred tax assets and deferred tax liabilities:
Items As at 30 Jun. 2011 As at 31 Dec. 2010
Deferred tax assets:
Assets impairment allowance 10,944,865.46 11,791,791.49
Accrued expenses 630,930.45 834,257.00
Deductible losses 15,450,623.08 15,633,491.63
Unrealized profits from intragroup transactions 0.00 120,018.97
Total 27,026,418.99 28,379,559.09
Deferred tax liabilities:
Transactional financial assets 2,414,491.95 345,236.99
Total 2,414,491.95 345,236.99
5.18 Impairment allowance for assets
Increase Decrease
Carrying amount as Carrying amount as
during current during current
Items at at
reporting reporting period
31 Dec. 2010 30 Jun. 2011
period Reversal Written off
Impairment allowance for
10,830,459.66 585,199.52 704,854.70 642,602.51 10,068,201.97
receivables
Impairment allowance for
12,884,724.05 0.00 0.00 0.00 12,884,724.05
inventories
Impairment allowance for
66,621,346.52 0.00 0.00 4,671,885.25 61,949,461.27
fixed assets
Total 90,336,530.23 585,199.52 704,854.70 5,314,487.76 84,902,387.29
5.19 Notes payable
5.19.1 Disclosure by classification
Items Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Bank acceptance 0.00 71,962,430.01
Trade acceptance 58,643,699.65 5,199,148.37
Total 58,643,699.65 77,161,578.38
5.19.2 Notes payable expected to mature during the next reporting period amount to CNY58,643,699.65.
The maturity date is Jul.-Nov. 2011.
5.19.3 The Company has no notes payable owed to entities which own 5% or more of the shares of the Company.
5.20 Accounts payable
5.20.1 Age analysis:
Age Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Within 1 year 779,342,973.30 834,687,604.32
Over 1 year 2,554,234.90 1,817,673.34
Total 781,897,208.20 836,505,277.66
5.20.2 The details of significant accounts payable remaining unsettled for more than one year during current
reporting period:
Amount as at Reason(s) for Post balance sheet
Creditors Age
31 Dec. 2010 unsettlement date repayment
Temporary
Xiamen Zhicheng electrotechnics materials Co., Ltd. 352,174.25 0.00
2-3 years unsettlement
Temporary
Ningbo Chaochao Electrical Appliance Co., Ltd. 498,500.46 0.00
1-2 years unsettlement
Total 850,674.71 0.00
74
5.20.3 Details of accounts payable owed to entities which own 5% or more of the shares of the Company during the
current reporting period
Content of
Shareholder Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
balance
Purchase of
STAR COMGISTIC CAPITAL CO., LTD 6,350,975.59 2,621,183.79
materials
Total 6,350,975.59 2,621,183.79
5.20.4 Details of accounts payable due to related parties:
Creditors Content of balance Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Material
Thermaster Electronic (Xiamen) Ltd. 15,552,582.19 5,291,500.93
purchased
Material
STAR COMGISTIC CAPITAL CO., LTD 6,350,975.59 2,621,183.79
purchased
STAR TRAVEL SERVICE CORP. Services accepted 338,373.21 832,348.34
Total 22,241,930.99 8,745,033.06
5.21 Advances from customers
5.21.1 Age analysis:
Age Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Within 1 year 12,460,335.78 14,052,686.12
Over 1 year 1,605,544.43 1,822,549.14
Total 14,065,880.21 15,875,235.26
5.21.2 The Company has no advances from entities which own 5% or more voting rights of the Company.
5.22 Employee benefits payable
5.22.1 Details of employee benefits payable
Increase Payment
Amount as at Amount as at
Items during current during current
31 Dec. 2010 30 Jun. 2011
reporting period reporting period
Wages, salaries and subsidies 29,763,873.87 119,702,372.68 118,287,380.27 31,178,866.28
Employee welfare 0.00 2,812,825.61 2,812,825.61 0.00
Social insurance: 208,562.31 9,834,247.14 9,815,380.15 227,429.30
Including: Medical insurance 31,816.91 2,875,610.92 2,866,230.22 41,197.61
Basic pension 161,668.99 4,891,269.32 4,884,639.30 168,299.01
Life annuity 0.00 0.00 0.00 0.00
Redundancy insurance 9,086.84 592,141.12 589,326.58 11,901.38
Employment injury insurance 4,624.94 901,898.20 902,428.08 4,095.06
Maternity insurance 1,364.63 573,327.58 572,755.97 1,936.24
Housing provident fund 7,936,079.64 3,281,810.04 2,838,909.74 8,378,979.94
Labour union fee and employee
0.00 109,186.40 109,186.40 0.00
education fee
Non-monetary welfare 0.00 0.00 0.00 0.00
Redundancy compensation 3,990.00 1,213,805.04 1,213,805.04 3,990.00
9. Others 0.00 42,055.50 37,425.50 4,630.00
Total 37,912,505.82 136,996,302.41 135,114,912.71 39,793,895.52
5.22.2 No amount of employee benefits payable belongs to default during current reporting period.
75
5.23 Taxes payable
Items Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Business tax 433,167.49 726,979.99
Corporate income tax (172,114.23) 186,649.15
Value added tax (1,785,227.72) 25,599,931.09
Personal income tax 632,000.87 355,256.02
Education surcharge 912,161.71 87,235.01
Urban maintenance and construction surcharge 1,106,984.82 62,962.53
Others 12,013,926.17 21,343,311.69
Total 13,140,899.11 48,362,325.48
5.24 Other payables
5.24.1 Age analysis:
Age Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Within 1 year 197,918,959.70 84,470,030.06
Over 1 year 7,742,642.79 6,227,132.98
Total 205,661,602.49 90,697,163.04
5.24.2 Details of significant other payables remaining unsettled for more than one year during current reporting
period
Amount Reason(s) Post balance sheet
Creditors Age
unsettled for unsettlement date repayment
Xiamen Jinyuan Steel Industry Co., Ltd. 1-2 years guarantee deposit 0.00
331,000.00
Xiamen Hexing Packaging Printing Co., Ltd. 1-2 years guarantee deposit 0.00
600,000.00
Fujian Province Zhangzhou SIGMA Metal,INC 1-4 years guarantee deposit 0.00
600,000.00
Zhangzhou Dakun Electrical Applicance Co., Ltd. 1-2 years guarantee deposit 0.00
748,720.00
Zhangzhou Huadaxin Metal Co., Ltd. 800,000.00 1-3 years guarantee deposit 0.00
Total 3,079,720.00 0.00
5.24.3 Details of other payables to entities which own 5% or more voting rights of the Company during current
reporting period:
Shareholders Content of balance Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Fullman Investments Ltd. Capital absorbed and loan 64,716,000.00 0.00
Sinoglobal Development Limited Capital absorbed and loan 64,716,000.00 0.00
Technology compensation
Star Comgistic Capital Co., Ltd. 4,363,584.64 4,689,060.68
and commission fee ,etc.
Total 133,795,584.64 4,689,060.68
5.24.4 Details of other payables due to related parties:
Creditors Content of balance Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
Tsann Kuen USA, Inc. Sales commission 36,033.87 138,557.28
Materials purchase and
Tsann Kuen Japan Co., Ltd. 2,612,489.97 2,213,246.77
sales commission
Thermaster Electronic (Xiamen) Ltd. Materials purchase 79,475.91
Technology compensation
4,363,584.64 4,689,060.68
Star Comgistic Capital Co., Ltd. and commission fee ,etc
Charges for rendering of
5,132.17 162,302.37
Star Travel Service Corp. service
Sinoglobal Development Limited Capital absorbed and loan 64,716,000.00 0.00
Fullman Investments Ltd. Capital absorbed and loan 64,716,000.00 0.00
Total 136,449,240.65 7,282,643.01
76
5.25 Other non-current liabilities
Item Amount as at 30 Jun. 2011 Amount as at 31 Dec. 2010
39,746,220.40 39,746,220.40
Unrealized profits of installment receivables of transferred assets
39,746,220.40 39,746,220.40
Total
The amount of other non-current liabilities including CNY 39,746,220.40 for the unrealized profits from TKL
transferred assets and business opportunities to Shanghai Sigma Metals Inc., please refer Note 10.3 for details.
5.26 Share capital
Unit：shares
Increase/decrease during the reporting preiod（+、－）
Conversion
Items Share Bonus Others Subtotal
Amount as at from public Amount as at 30
31 Dec. 2010 issue issue Jun. 2011
reserves
1.Unlisted shares
(1)Founders’ shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Including： 0.00 0.00 0.00 0.00 0.00 0.00 0.00
State-owned shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by domestic
Legal person 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shares held by foreign
legal person 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
(2) Shares placed by legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(3) Staff shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(4) Preferred shares or others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Including: Transferrable shares 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
2. Listed shares
Domestically listed foreign shares 1,112,350,077.00 0.00 0.00 0.00 0.00 0.00 1,112,350,077.00
Including：Executives shares 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 1,112,350,077.00
3.Restricted listed shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4.Total shares 1,112,350,077.00 0.00 0.00 0.00 0.00 0.00 1,112,350,077.00
The aforesaid shares are listed with par value CNY 1.00 per share. No changes of the total amount of share
capital during current reporting period.
5.27 Capital reserves
Amount as at Increase during current Decrease during current Amount as at
Item 31 Dec. 2010 reporting period reporting period 30 Jun. 2011
Share premium 62,045,659.80 0.00 0.00 62,045,659.80
Other capital reserves 62,989,545.12 0.00 0.00 62,989,545.12
Total 125,035,204.92 0.00 0.00 125,035,204.92
77
5.28 Undistributed profit
Amount as at Amount as at
Items
30 Jun. 2011 31 Dec. 2010
Undistributed profits as at 31 Dec. 2010 -775,973,855.22 -840,347,470.50
Add: profits reversed at current period 22,548,469.85 64,373,615.28
Other reversals 0.00 0.00
Less: transferred to statutory surplus reserves 0.00 0.00
Transferred to employees’ rewards and welfare fund 0.00 0.00
Transferred to reserve fund 0.00 0.00
Transferred to enterprise development fund 0.00 0.00
Profits returned to investors 0.00 0.00
Less: dividends of preferred shares payable 0.00 0.00
Transferred to discretionary surplus reserve 0.00 0.00
Dividends payable 0.00 0.00
Dividends converted to share capital 0.00 0.00
Balance as at 30 Jun. 2011 -753,425,385.37 -775,973,855.22
5.29 Operating revenues and costs
5.29.1 Operating revenues
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Revenues from principal operating activities 1,336,822,391.83 1,640,736,024.33
Revenues from other operating activities 36,542,475.37 24,273,538.29
Total operating revenues 1,373,364,867.20 1,665,009,562.62
Operating costs for principal operating activities 1,171,445,880.72 1,451,556,378.11
Operating costs for other operating activities 23,667,522.94 13,473,498.31
Total operating costs 1,195,113,403.66 1,465,029,876.42
5.29.2 Revenues from principal operating activities by products
Cumulative amount in Cumulative amount in
Product current reporting period last reporting period
Operating revenues Operating costs Operating revenues Operating costs
Catering and Cooking 652,555,822.78 564,629,989.77 733,621,629.61 628,919,045.80
Home helper 447,538,289.55 407,734,087.66 602,922,074.30 548,911,669.01
Tea/Coffee 120,443,287.31 108,365,954.94 184,923,651.52 173,208,475.37
LED Green Products 62,933,210.31 51,381,235.88 16,655,531.22 8,117,822.87
Others 42,500,072.91 29,620,575.38 86,764,181.79 78,099,911.84
Tour 10,851,708.97 9,714,037.09 15,848,955.89 14,299,453.22
Total 1,336,822,391.83 1,171,445,880.72 1,640,736,024.33 1,451,556,378.11
5.29.3 Principal operating activities by areas
Cumulative amount in Cumulative amount in
Area
current reporting period last reporting period
Operating revenues Operating costs Operating revenues Operating costs
Australia 81,836,703.77 73,613,133.93 57,553,202.94 55,335,063.96
Africa 15,191,129.12 12,323,012.12 12,093,776.94 10,176,889.37
America 556,059,490.11 497,068,849.97 808,041,287.24 702,236,367.26
Europe 256,340,291.76 230,094,635.07 270,284,242.76 237,308,834.54
Asia 427,394,777.07 358,346,249.63 492,763,514.45 446,499,222.99
Total 1,336,822,391.83 1,171,445,880.72 1,640,736,024.33 1,451,556,378.11
78
5.29.4 Details of operating revenues from top five clients:
Cumulative amount in
Clients current reporting period
Operating revenues Proportion of total operating revenue
Applica Consumer Products Inc. 197,450,445.03 14.38%
Tsann Kuen Japan Co., Ltd. 135,833,993.47 9.89%
ZOJIRUSHI CORPORATION 112,284,763.02 8.18%
SEB GROUPE ASIA.LTD 73,332,396.30 5.34%
Sensio Inc. 66,765,547.45 4.86%
Total 585,667,145.27 42.64%
5.30 Business tax and surcharges
Cumulative amount in Cumulative amount in
Items Tax rate
current reporting period last reporting period
Business tax 1,450,766.74 1,338,953.18 5%
Education surcharge 2,982,668.96 754,408.52 1%、3%
Urban maintenance and
3,633,212.84 6,024.20 1%、5%、7%
construction surcharge
Others 825.85 0.00
Total 8,067,474.39 2,099,385.90
5.31 Sales expenses
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Export charges 19,133,776.40 20,775,306.15
Employee remunerations 11,834,602.74 11,014,265.33
Claims 8,265,462.04 1,903,487.66
Sales commission and after sales
4,045,663.11 8,752,802.18
service fees
Assets lease expenses 2,117,202.62 2,052,018.30
Travel expenses 1,382,055.27 2,554,434.48
Advertisements charges and sales
2,473,112.37 3,817,805.49
promotion
Administrative expenses 499,845.94 743,472.74
Transportation charges 377,411.73 492,953.36
Business entertainment 185,391.30 277,113.88
Maintenance expenses 284,239.29 28,226.44
Depreciation of assets 356,338.16 103,179.68
Water and electricity charges 160,581.53 130,621.02
Other expenses 855,637.01 607,461.35
Total 51,971,319.51 53,253,148.06
79
5.32 General and administrative expenses
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
R&D expenses 48,040,176.62 48,581,873.77
Employee remunerations 20,717,376.16 20,218,602.85
Depreciation and amortization of
9,374,734.99 10,755,389.34
assets
Rental expenses 10,858,476.30 6,603,469.31
Insurance expenses 2,173,778.21 4,018,161.09
Administrative expenses 2,460,417.82 2,958,683.69
Travel expenses 1,613,274.61 2,303,017.51
Consultant fees 2,893,811.73 2,905,214.69
Maintenance expenses 1,495,757.63 1,835,314.99
Taxes and surcharges 1,425,185.51 1,481,408.14
Business entertainment 732,040.31 877,008.66
Board fees 462,273.29 469,472.08
Water and electricity charges 857,044.96 436,900.65
Other expenses 1,034,063.44 1,325,175.47
Total 104,138,411.58 104,769,692.24
5.33 Financial costs
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Interest expenses 855,253.60 187,025.96
Less: Interest income 7,550,716.49 2,293,850.09
Less: Realized financing gains 1,287,675.15 2,088,014.36
Exchange gain or loss 9,087,315.51 (4,307,430.82)
Bank charges 1,378,915.36 2,072,792.83
Total 2,483,092.83 (6,429,476.48)
5.34 Impairment loss on assets
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Impairment loss on bad debts 77,609.69 (177,343.64)
Impairment loss on falling price of inventories 0.00 3,059,921.43
Impairment loss on fixed assets 0.00 504,857.61
Total 77,609.69 3,387,435.40
5.35 Gains from changes in fair value
Cumulative amount in Cumulative amount in
Source of gains from changes in fair value
current reporting period last reporting period
Transactional financial assets 13,795,033.05 (1,588,661.38)
Including: Derivative financial assets 13,795,033.05 (1,588,661.38)
Transactional financial liabilities 0.00 (224,351.63)
Including: Derivative financial liabilities 0.00 (224,351.63)
Total 13,795,033.05 (1,813,013.01)
5.36 Investment income
Cumulative amount in Cumulative amount in
Source of investment income
current reporting period last reporting period
Transactional financial assets 5,001,905.37 1,704,186.94
Gains from disposal of investment in subsidiaries 297,175.94 383,778.40
Other 7,500.00 7,500.00
Total 5,306,581.31 2,095,465.34
80
5.37 Non-operating income
5.37.1 Details of non-operating income:
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Gains from disposal of non-current assets 2,024,215.83 6,000,018.57
Including: Gains from disposal of fixed assets 2,024,215.83 6,000,018.57
Government grants 2,336,916.06 4,300,109.16
Others 920,603.28 958,561.12
Total 5,281,735.17 11,258,688.85
5.37.2 Government grants
Cumulative
Cumulative
amount in
amount in
Items current Approval authority Approval Documents
last reporting
reporting
period
period
Subsidies for export Fujian Province China Exports & Credit Insurance
1,299,401.06 4,066,109.16
letter guarantees Finance Bureau Corporation Fujian Branch
Provincial significant Longhai Education
0.00 150,000.00 Longjiaocai[2009]No. 385
financial subsidies Bureau
Subsidies for industrial Longhai Municipal
540,000.00 0.00 Longwei【2011】No. 01
design Committee
Zhangzhou
Education Bureau
Subsidies for patents Zhangcaijiao【2010】No. 153 号、Longwei
370,000.00 0.00 and Longhai
application 【2011】No. 4
Municipal
Committee
Special funds for Longhai
Special funds for environmental protection
environmental 20,000.00 0.00 Environmental
in 2009
protection Protection Bureau
Subsidies for excellent Fujian Provincial
enterprises in Bureau of Quality
10,000.00 0.00 Minzhijianbiao【2010】No. 763
Technology Standard and Technical
Strategy Supervision
Zhangzhou Finance Document from Zhangzhou Intellectual
Special funds for patent 95,515.00 0.00
Department Property Bureau
Xiamen Intellectual
Others 2,000.00 84,000.00 Xiajiaocai（2006）No. 22
Property Bureau
Total 2,336,916.06 4,300,109.16
5.38 Non-operating expenses
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Loss on disposal of non-current assets 36,996.37 40,632.03
Including: Loss on disposal of fixed assets 36,996.37 40,632.03
Losses on scraped fixed assets 479,042.45 244,925.33
Fines 53.60 300.00
Public donation 195,000.00 500,000.00
Others 2,401.68 22,622.37
Total 713,494.10 808,479.73
81
5.39 Corporate income tax expenses
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Current income tax 2,808,602.40 5,817,376.02
Deferred income tax 716,114.87 (2,086,820.38)
Total 3,524,717.27 3,730,555.64
5.40 Computation of basic earnings per share (EPS) and diluted earnings per share
Cumulative amount in Cumulative amount in
Profits for current reporting period current reporting period last reporting period
Basic EPS Diluted EPS Basic EPS Diluted EPS
Net profits attributable to ordinary
shareholders 0.02 0.02 0.03 0.03
Net profits (deducted extraordinary profits or
0.01 0.01 0.03 0.03
losses) attributable to ordinary shareholders
5.41 Other comprehensive income
Amount at Amount at
Item
current period last period
1. Gain or loss on available-for-sale financial assets (42,336.00)
Less: Income tax chargeable on gain or loss on available-for-sale financial assets 9,313.92
Net amount transferred to profit or loss for the current reporting period from gain or
loss on available-for-sale financial assets recognized in other comprehensive income in
prior reporting periods
Subtotal 0.00 (33,022.08)
2. Share of other comprehensive income of investments measured using the equity
method
Less: Income tax affect on share of other comprehensive income of investments
measured using the equity method
Net amount transferred to profit or loss for the current reporting period from share of
other comprehensive income of investments measured using the equity method
recognized in other comprehensive income in prior reporting periods
Subtotal
3. Gain or loss on cash flow hedges
Less: Income tax affect on gain or loss on cash flow hedges
Net amount transferred to profit or loss for the current reporting period from gain or
loss on cash flow hedges recognized in other comprehensive income in prior reporting
periods.
Adjustment to the initial amounts hedged items
Subtotal
4. Translation of financial statement denominated in
foreign currencies (4,910.96) 651,220.33
Less: Net amount of disposal of overseas operation transferred to profit or loss for the
current reporting period
Subtotal (4,910.96) 651,220.33
5. Others
Less: Income tax affect on others
Net amount transferred to profit or loss for the current reporting period from others
recognized in other comprehensive income in prior reporting periods
Subtotal 0.00 0.00
Total (4,910.96) 618,198.25
82
5.42 Notes to elements of the cash flows statement
5.42.1 Other cash receipts in relation to operating activities
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Guarantee deposit receipts 1,948,833.00 707,666.00
Rental income 11,258,608.03 7,751,484.40
Interest income 8,838,391.64 4,381,864.45
Government grants 1,350,163.50 4,287,874.98
Others 12,216,139.03 52,208,105.72
Total 35,612,135.20 69,336,995.55
5.42.2 Other cash payments in relation to operating activities
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Compensation for technological knowledge 7,442,465.70 7,863,981.69
Bank charges 1,369,979.27 2,071,779.73
Purchase and sales commission 2,488,875.74 5,271,726.87
Operation expenses and other items in
131,408,657.26 156,353,728.53
administration expenses
Total 142,709,977.97 171,561,216.82
5.43 Supplementary information for the cash flows statement
5.43.1 Supplementary information for the cash flows statement
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
Adjusting net profit to cash flow from operating activities:
Net profits 31,658,693.70 49,901,606.89
Add: Impairment allowance of assets 77,609.69 3,263,185.40
Depreciation of fixed assets and biological assets held for
105,158,665.66 62,446,481.40
production and depletion of oil and gas assets
Amortization of intangible assets 1,486,365.16 1,548,547.30
Amortization of long-term deferred expenses 1,048,432.20 578,248.08
Loss on disposal of fixed assets, intangible assets and other
(1,987,219.46) (6,000,043.29)
long-term assets (gain presented with “-” prefix)
Loss on writing-off of fixed assets (gain presented with “-”
479,042.45 40,632.03
prefix)
Loss on changes in fair value (gain presented with “-” prefix) (13,795,033.05) 1,813,013.01
Financial costs 9,942,569.11 (3,261,515.30)
Investment loss (income presented with “-” prefix) (5,306,581.31) (6,963,369.74)
Decrease of deferred tax assets (increase presented with “-”
1,353,140.10 1,818,397.63
prefix)
Increase of deferred tax liabilities (decrease presented with
2,069,254.96 (281,265.86)
“-” prefix)
Decrease of inventories (increase presented with “-” prefix) (60,310,208.07) (52,551,026.85)
Decrease of operating receivables (increase presented with
(41,953,984.16) (226,481,633.03)
“-” prefix)
Increase of operating payables (decrease presented with “-”
(154,707,773.80) 211,585,925.45
prefix)
Net cash flows from operating activities (124,787,026.82) 37,457,183.12
Significant investing and financing activities not involving
incoming and outgoing of cash flows：
Debt-to-equity conversion - -
83
Changes on cash and cash equivalents:
Add: Cash equivalents as at the end of the reporting period 597,930,971.16 351,860,910.78
Less: Cash equivalents as at the beginning of the reporting
627,477,733.10 540,739,906.30
period
Net increase of cash and cash equivalents (29,546,761.94) (188,878,995.52)
5.43.2 Composition of cash and cash equivalents
Cumulative amount in Cumulative amount in
Items
current reporting period last reporting period
1. Cash
Including: Cash in hand 878,946.84 764,317.61
Demand deposits 596,119,196.70 351,096,593.17
Unrestricted other monetary funds 932,827.62
2. Cash equivalents
3. Cash and cash equivalents as at the end of
597,930,971.16 351,860,910.78
reporting period
Note 6: Related parties and transactions with related parties
6.1 Details of the Parent Company
Type of Place of Legal Nature of
Parent company Relationship Registered capital
incorporation registration representative business
STAR Manufacture
COMGISTIC Current ultimate and sales TWD 2,186,000.00
INC Taiwan Jian Derong
CAPITAL CO., holding company electrical thousand
LTD. equipment
(Continued)
Ultimate
Shareholding Voting right controller
Parent company Organization code
in the Company in the Company of the
Company
STAR COMGISTIC CAPITAL CO., LTD. 43.37% 45.42% Wu Cankun Zidi 09801262480
6.2 Details of subsidiaries and sub-subsidiaries
*The monetary unit is ten thousand unless otherwise stated.
Type of Place of Legal Shareh Voting
Nature of *Registered Organizatio
Company name incorporati registrat represent olding right
business capital n code
on ion ative (%) (%)
Sino-foreig Home
Zhangz Jian
TKL n joint appliances USD16,000 75.00 75.00 73954770-9
hou Derong
venture manufacture
Sino-foreig Home
Zhangz Jian
TKN n joint appliances CNY 500 56.25 75.00 77067325-2
hou Derong
venture manufacture
limited Home
Shangha Jian
TKS liability appliances USD4,000 62.50 62.50 607291035
i Derong
company manufacture
nonbusines
s Secondary
Zhangz Zhu
LTC enterprise vocational CNY 300 75.00 100.00 79176918-1
hou Chengde
run by local education
people
limited Shangha Jian Sales of
STD CNY 495 56.25 100.00 67455210-0
liability i Derong home
84
Type of Place of Legal Shareh Voting
Nature of *Registered Organizatio
Company name incorporati registrat represent olding right
business capital n code
on ion ative (%) (%)
company appliances
limited
Zhu Travel
TSX liability Xiamen CNY 500 100.00 100.00 67829338-8
Chengde business
company
limited Sales of
Dai
TSX3C liability Xiamen home CNY 3,000 75.00 100.00 68525122-3
Huiyuan
company appliances
limited
Shangha Zhu
TSST liability Ticket agent CNY 550 75.00 100.00 73408027-3
i Chengde
company
limited
Dai Travel
TSD liability Dalian CNY 530 74.25 99.00 66112308-3
Huiyuan business
company
limited
Dai
TSXT liability Xiamen Ticket agent CNY 150 75.00 100.00 73788566-7
Huiyuan
company
limited Sales of
Jian
SCCX liability Xiamen home CNY 2,800 75.00 100.00 55623112-X
Derong
company appliances
limited
Hongko Jian Investment、
Brillant Leader Ltd liability USD 495 75.00 100.00 1490869
ng Derong trade
company
limited
Hongko Jian Investment、
Globe Strong Limited liability USD 5 75.00 100.00 1490775
ng Derong trade
company
limited Electrical
Indonesi Jian
T KI liability appliances USD 500 75.00 100.00
a Derong
company manufacture
6.3 Details of other related parties
Other related parties Relationship Organization code
EUPA Industry Corporation Limited Shareholder 12959659-000-07-6
Fordchee Development Limited Shareholder 14676920-000-01-09-A
Fillman Investment Limited Shareholder 16269694-000-07-08-4
Tsann Kuen USA, Inc. Same ultimate holding company
Tsann Kuen Japan Co., Ltd. Same ultimate holding company 0105-01-021064
The company directly controlled by the key management
Thermaster Electronic (Xiamen) Ltd. 61201968-5
and closed family members
STAR TRAVEL SERVICE CORP. Same ultimate holding company 80170076
PT. STAR COMGISTIC Same ultimate holding company
6.4 Transactions with related parties
6.4.1 Transactions through which goods are purchased or services are accepted
Cumulative amount in Cumulative amount in
Related parties
current reporting period last reporting period
Thermaster Electronic (Xiamen) Ltd. 24,406,402.96 33,478,239.20
STAR COMGISTIC CAPITAL CO., LTD 11,156,148.32 14,750,404.36
Total 35,562,551.28 48,228,643.56
85
6.4.2 Transactions to supply goods or services
Cumulative amount in Cumulative amount in
Related parties
current reporting period last reporting period
Tsann Kuen Japan Co., Ltd. 135,833,993.47 122,178,556.70
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. 0.00 11,050,441.95
STAR COMGISTIC CAPITAL CO., LTD 33,353,813.98 26,628,782.35
Thermaster Electronic (Xiamen) Ltd. 50,858.00 86,651.09
PT. STAR COMGISTIC 4,455,684.83 0.00
Total 173,694,350.28 159,944,432.09
6.4.3 Capital absorbed and loan between related parties
Related parties Amount Inception date Expiry date Remarks
Capital absorbed:
The interest rate is
Fillman Investment Limited 64,716,000.00 2011/1/28 2011/12/27
LIBOR+1%
The interest rate is
Sinoglobal Development Limited 64,716,000.00 2011/2/25 2011/12/24
LIBOR+1%
Total 129,432,000.00
6.4.4 Purchase of modules and machineries
Cumulative amount in Cumulative amount in
Related parties
current reporting period last reporting period
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. 0.00 64,078.48
STAR COMGISTIC CAPITAL CO., LTD 84,385.00 415,293.05
Total 84,385.00 479,371.53
6.4.5 Other transactions with related parties
Content Cumulative amount in Cumulative amount in
Related parties
of transaction current reporting period last reporting period
Payment:
STAR COMGISTIC CAPITAL CO., Technical knowledge support fee
7,914,482.47 8,729,639.27
LTD. （Note 1）
Tsann Kuen USA, Inc. Agency fee for sales（Note 2） 194,011.47 527,838.83
STAR COMGISTIC CAPITAL CO., Agency fee for procurement（Note
558,357.18 1,005,345.79
LTD. 3）
EUPA INDUSTRY CORPORATION Agency fee for procurement（Note
0.00 421,648.57
LTD 11）
Tsann Kuen Japan Co., Ltd. Sales commission (Note 6） 1,758,258.94 1,507,099.78
STAR COMGISTIC CAPITAL CO.,
0.00 403,400.17
LTD. Consulting fees（Note 5）
Three guarantee expenses on
repair, replacement and refund of 7,682,023.81 5,575,812.57
Tsann Kuen Japan Co., Ltd. substandard （Note 4）
STAR TRAVEL SERVICE CORP. Receiving services（Note 7） 2,094,148.21 3,654,586.81
Total 20,201,282.08 21,825,371.79
Income
Tsann Kuen Enterprise Co., Ltd Consulting fees（Note 9） 0.00 1,234,691.22
Tsann Kuen Enterprise Co., Ltd Sales commission (Note 8） 0.00 136,094.58
STAR TRAVEL SERVICE CORP. Rendering of service（Note 7） 397,880.79 2,626,370.30
STAR COMGISTIC CAPITAL CO., Rendering of service
0.00 9,085.94
LTD.
Tsann Kuen Enterprise Co., Ltd Rendering of service（Note 10） 0.00 5,261.80
Total 397,880.79 4,011,503.83
86
Note 1: The Company and subsidiaries measures technical knowledge support fees based on proportionate monthly
excess accumulated sales of net amount of licensed products.
Note 2: Tsann Kuen USA, Inc. is responsible for provide “after sales services” in America area for the sales of
American of the Company and its subsidiaries, the Company and its subsidiaries pay for those after sales service
based on 102% of the actual related expenses incurred by Tsann Kuen USA, Inc..
Note 3: The Company and its subsidiaries entrust related companies 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 4: It refers to relative product quality expenses for those sales from TKL to TKJ.
Note 5: Since 1 November 2009, STAR COMGISTIC CAPITAL CO., LTD. provided professional consultant
services 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.
Note 6: The Company sale products to Japan, and simultaneous signed agreement with TKJ, the Company shall be
paid for commission limited to the 10% of total revenues from TKJ.
Note 7: The Company with STAR TRAVEL SERVICE CORP. signed non-exclusive agreements for provide “Agency
services”, dealing with travel and relevant matters , the agency service charges based on the actual quote of each
order.
Note 8: The Company with Tsann Kuen Enterprise Co., Ltd agreed, the Company is responsible for take the purchase
orders, and send semi-finished products to Tsann Kuen Enterprise Co., Ltd for further processing, and Tsann Kuen
Enterprise Co., Ltd shall be paid to the Company sales commission based on USD 1.20 per actual sold products.
Note 9: The Company assists Thermaster Electronic (Xiamen) Ltd. for its general management, the consulting fees
paid by Thermaster Electronic (Xiamen) Ltd. are calculated based on 105% of actual expenses incurred from the
assistance of management. In 2011, Thermaster Electronic (Xiamen) Ltd. is able to manage the company by itself,
and as a result, the contract of consulting fees has been terminated.
Note 10: The Company provides agency services for Thermaster Electronic (Xiamen) Ltd., and each series of agency
service charges based on the actual quote.
Note 11: EUPA INDUSTRY CORPORATION LTD deals with procedures and assignments needed in import and
export for the Company and its subsidiaries, including transiting raw material and finished goods, making export
declaration, arranging transport channels (land, sea, and air transport), taking bills of lading, picking up goods.
Charges thereof are paid at the rate of 107% of expenses arising from agency service provided by EUPA INDUSTRY
CORPORATION LTD.
Note 12: The Company signed advanced pricing arrangement with National tax authorities of Xiamen city,
Zhangzhou city, Shanghai city, which regarding the above-mentioned pricing arrangement for technical knowledge,
sales agency fees, and after sales service fees and procurement agency fees.
87
6.5 The balance of payables and receivables among related parties:
2011.06.30 2010.12.31
Name of related party
Amount Percentage Amount Percentage
Accounts receivable
Tsann Kuen Japan Co., Ltd. 96,307,299.61 17.39% 76,907,815.34 16.44%
Thermaster Electronic (Xiamen) Ltd. 13,448.00 0.00% 9,750.00 0.00%
Tsann Kuen Japan Co., Ltd 0.00 0.00% 242,282.90 0.05%
STAR COMGISTIC CAPITAL CO., LTD 15,873,290.19 2.87% 10,577,697.22 2.26%
STAR TRAVEL SERVICE CORP.
78,341.14 0.01% 77,539.30 0.02%
PT. STAR COMGISTIC 4,449,886.01 0.80% 0.00 0.00%
Total 116,722,264.95 21.08% 87,815,084.76 18.77%
Accounts payable
Thermaster Electronic (Xiamen) Ltd. 15,552,582.19 1.99% 5,291,500.93 0.63%
STAR COMGISTIC CAPITAL CO., LTD 6,350,975.59 0.81% 2,621,183.79 0.31%
STAR TRAVEL SERVICE CORP.
338,373.21 0.04% 832,348.34 0.10%
Total 22,241,930.99 2.84% 8,745,033.06 1.05%
Other payables
Tsann Kuen USA, Inc. 36,033.87 0.02% 138,557.28 0.15%
Tsann Kuen Japan Co., Ltd. 2,612,489.97 1.27% 2,213,246.77 2.44%
EUPA Industry Corporation Limited 0.00 0.00% 79,475.91 0.09%
China Global Development Co., Ltd. 64,716,000.00 31.47% 0.00 0.00%
Aliens Investment Co., Ltd. 64,716,000.00 31.47% 0.00 0.00%
STAR COMGISTIC CAPITAL CO., LTD 4,363,584.64 2.12% 4,689,060.68 5.17%
STAR TRAVEL SERVICE CORP.
5,132.17 0.00% 162,302.37 0.18%
Total 136,449,240.65 66.35% 7,282,643.01 8.03%
Note 7: Contingencies
No significant contingency is required for disclosure as at the balance sheet date.
Note 8: Financial commitments
8.1 Irrevocable lease contracts under performance and their financial effects
Items 2011.6.30 2010.12.31
RMB Ten thousand RMB Ten thousand
The minimum lease payments of irrevocable operating lease
contracts
House leasing
1st year after the balance sheet date
3,727 3,727
2nd year after the balance sheet date
3,727 3,727
3rd year after the balance sheet date
3,727 3,727
Subsequent years
141,619 145,346
Total
152,800 156,527
88
8.2 Performance of financial commitments of prior reporting periods
Up to the current reporting date, the above commitments are being kept performed without violation.
Note 9: Post-balance-sheet-date events
No other post-balance-sheet-date event is required for disclosure as at the balance sheet date.
Note 10: Other significant events
10.1 Assets and liabilities measured at fair value
Impairment
Gains and losses
Cumulative changes allowance
arising from changes
in fair value recognized
Items 2010.12.31 in fair value during the 2011.6.30
recognized in during the
current reporting
equity current reporting
period
period
Financial assets
1. Financial assets at fair
value through profit or loss 0.00 0.00 0.00 0.00 0.00
（not include derivative）
2. Derivative financial
2,301,579.95 13,795,033.05 0.00 0.00 16,096,613.00
assets
s3.Available-for-sale
financial assets
0.00 0.00 0.00 0.00 0.00
Subtotal of financial assets
Investment properties
Biological assets held for
production
Others
Total of assets 2,301,579.95 13,795,033.05 0.00 0.00 16,096,613.00
10.2 Financial assets and financial liabilities denominated in foreign currencies
Impairment
Gains and losses
allowance
arising from
Cumulative changes recognized
changes in fair
Items 2010.12.31 in fair value during the 2011.6.30
value during the
recognized in equity current
current reporting
reporting
period
period
Financial assets
1. Financial assets at fair 0.00 0.00 0.00 0.00 0.00
value through profit or loss
（not include derivative）
2. Derivative financial 0.00 0.00 0.00 0.00 0.00
assets
3. Loans and receivables 463,619,163.85 0 0 (42,155.17) 536,015,584.53
4.Available-for-sale 0.00 0.00 0.00 0.00 0.00
financial assets
5.Held-to-maturity 0.00 0.00 0.00 0.00 0.00
investments
Subtotal of financial assets 463,619,163.85 0.00 0.00 (42,155.17) 536,015,584.53
Financial liabilities 112,448,659.93 0.00 0.00 0.00 367,349,571.98
89
10.3 Others
The Company’s subsidiary Zhangzhou Tsann Kuen signed Cooperation Framework Agreement, Agreement on
Transaction of Working Assets, and Supply Agreement on Raw Materials etc. with Shanghai Sigma Metals Co., Ltd.
on 31 Dec. 2006. The main content of the agreements were as follows: besides selling working assets, Zhangzhou
Tsann Kuen had to transfer business opportunities to Shanghai Sigma, and the total amount of the transactions
reached RMB 100,000,000; Shanghai Sigma would act as the Company’s main supplier of raw materials for
aluminum products, fixing settlement price in accordance with reduced amount and ratio per ton engaged by both
parties. In light of the Agreement on Transaction of Working Assets, Shanghai Sigma paid down payment of RMB
38,000,000, and would monthly deduct and offset the balance of RMB 62,000,000 from processing fee of molten
aluminum, which was commissioned to manufacturer by Zhangzhou Tsann Kuen and produced by Shanghai Sigma,
in the future. Zhangzhou Tsann Kuen committed to procure molten aluminum or aluminum ingots from Shanghai
Sigma with procurement volume no less than 70% of its total demand for molten aluminum or aluminum ingots
during the next three years upon the effectiveness of Supply Agreement on Raw Materials. When it comes to the
expiry of the aforesaid three years, and the balance still hasn’t been offset completely from the processing fee for the
sake of insufficiency of orders from Zhangzhou Tsann Kuen -- Zhangzhou Tsann Kuen will then agree on the
extension of Supply Agreement on Raw Materials and offset the rest balance by business cooperation. Shanghai
Sigma won’t have to pay the rest balance if the agreement is terminated because of Zhangzhou Tsann Kuen’s fault; or
Shanghai Sigma will have to implement one-time payment if the agreement is terminated because of its own fault.
The aforesaid agreements had been executed for three years as at the balance sheet date. The rest balance of RMB
39,746,220.40 hadn’t been carried over yet and would be continually deducted and offset in the future. So far, the
Company has employed a lawyer to study on those agreements and discussed with Shanghai Sigma Metals Co., Ltd.
Note 11: Notes to the main elements of the separate financial statement of the Company
11.1 Other receivables
11.1.1 Disclosure by classification
Items 2011.06.30 2010.12.31
Amount Proportion Bad debt Proportion Amount Proportion Bad debt Proportion
provision provision
Other accounts
receivable belong
to individual
significance and 0.00 0.00 0.00% 0.00 0.00% 0.00 0.00%
individually
assessed for
impairment
Other accounts 0.00 0.00 0.00% 0.00 0.00% 0.00 0.00%
receivable belong
to recognition of
impairment
allowances by
group:
Age group 98,559.37 3.47% 1,166.52 0.04% 126,090.00 100.00% 0.00 0.00%
Related party 2,743,265.40 96.53% 0.00 0.00% 0.00 0.00% 0.00 0.00%
group
Subtotal of groups 2,841,824.77 100.00% 1,166.52 0.04% 126,090.00 100.00% 0.00 0.00%
Other accounts
receivable belong
to individually
insignificant but 0.00 0.00% 0.00 0.00% 0.00% 0.00%
individually
assessed for
impairment
Total 2,841,824.77 100.00% 1,166.52 0.04% 126,090.00 100.00% 0.00 0.00%
90
11.1.2 Other receivables using the age analysis method for measurement of impairment allowances:
2011.06.30 2010.12.31
Items
Amount Proportion Bad debt provision Amount Proportion Bad debt provision
Within 1 year 98,559.37 100.00% 1,166.52 126,090.00 100.00% 0.00
Including: 1-90
86,894.21 88.16% 126,090.00 100.00% 0.00
days
91-180 days 11,665.16 11.84% 1,166.52
Total 98,559.37 100.00% 1,166.52 126,090.00 100.00% 0.00
11.1.3 The Company has no other receivables owed by entities which own 5% or more of the shares of the
Company.
11.2 Long-term equity investments
11.2.1 Circumstance of long-term equity investments:
Reason(s) for
discrepancy
Investees Measurement Investment costs Shareholding % Voting right %
between shareholding
and voting right
TKS Cost method 194,545,872.18 62.50 62.50
TKL Cost method 921,914,701.56 75.00 75.00
TSX Cost method 5,000,000.00 100.00 100.00
Xiamen Institute of Foreign
Cost method 40,000.00 1.48 1.48
Investment Enterprise
Total 1,121,500,573.74
(Continued)
Impairment
Movement allowance Cash dividends
Carrying
during the recognized during
Carrying amount amount Impairment
Investees current during the the current
as at 31/12/2010 as at allowance
reporting current reporting
31/12/2011
period reporting period
period
TKS 194,545,872.18 0 194,545,872.18 130,646,542.91 0 0
TKL 921,914,701.56 0 921,914,701.56 0 0 67,724,795.69
TSX 5,000,000.00 0 5,000,000.00 0 0 0
Xiamen Institute of
Foreign Investment 40,000.00 0 40,000.00 0 0 7,500.00
Enterprise
Total 1,121,500,573.74 0.00 1,121,500,573.74 130,646,542.91 0.00 67,732,295.69
91
11.3 Operating revenues and costs
11.3.1 Operating revenues
Items Cumulative amount of the reporting period Cumulative amount of the same period of last year
Revenue from principal
0.00 0.00
operating activities
Revenue from other
1,176,065.20 3,021,092.42
operating activities
Total operating revenue 1,176,065.20 3,021,092.42
Operating costs for
principal operating 0.00 0.00
activities
Operating costs for other
959,931.54 2,920,911.71
operating activities
Total operating costs 959,931.54 2,920,911.71
11.3.2 Revenue from other operating activities disclosure by classification
Items Cumulative amount of the reporting period Cumulative amount of the same period of last year
Other operating revenue Other operating costs Other operating revenue Other operating costs
Rental income 1,176,065.20 959,931.54 1,787,622.03 1,746,178.02
Consultant income 0.00 0.00 1,233,470.39 1,174,733.69
Total 1,176,065.20 959,931.54 3,021,092.42 2,920,911.71
11.4 Investment income
11.4.1 Details of investment income
Cumulative amount of Cumulative amount of the same
Source of investment incomes
the reporting period period of last year
Others 67,732,295.69 7,500.00
Total 67,732,295.69 7,500.00
11.4.2 Investment income from long-term equity investments measured using the historical cost convention
Occurred amount Occurred amount of t Reason(s) for changes
Investees of the reporting p he same period of las from the previous period
eriod t year
TKL 67,724,795.69 7,841,713.97 Received cash dividends
Investment income arising from disposal
(2,582,936.39)
of subsidiaries
Xiamen Institute of Foreign Investment
7,500.00 7,500.00
Enterprise
Total 67,732,295.69 5,266,277.58
11.5 Supplementary information to the separate statement of cash flows of the Company
Cumulative amount of Cumulative amount of the s
Items
the reporting period ame period of last year
Adjusting net profit to cash flow from operating
activities:
Net profits 64,193,028.73 2,619,218.93
Add: Impairment allowance of assets 1,166.52 (672,007.38)
Depreciation of fixed assets and biological assets
held for production and depletion of oil and gas 2,880,891.25 1,470,082.70
assets
Amortization of intangible assets 507,633.54 507,633.54
Amortization of long-term deferred expenses 16,149.00 147,139.02
Loss on disposal of fixed assets, intangible assets 0.00 0.00
92
Cumulative amount of Cumulative amount of the s
Items
the reporting period ame period of last year
and other long-term assets (negative: gains)
Loss on writing-off of fixed assets (negative:
0.00 0.00
gains)
Loss on changes in fair value (negative: gains) - 0.00
Financial costs 358.09 64,893.19
Investment loss (negative: gains) (67,732,295.69) (5,266,277.58)
Decrease of deferred tax assets (negative: increase) - 0.00
Increase of deferred tax liabilities (negative:
0.00 (9,313.92)
decrease)
Decrease of inventories (negative: increase) 0.00 0.00
Decrease of operating receivables (negative:
(2,977,927.63) (1,950,070.74)
increase)
Increase of operating payables (negative: decrease) 1,279,732.60 (7,998,364.05)
Net cash flows from operating activities (1,831,263.59) (11,087,066.29)
Significant investing and financing activities not
involving movements of cash flows：
Debt-to-equity conversion - -
Net changes of cash and cash equivalents:
Closing balance of cash equivalents 16,091,077.74 5,866,334.79
Less: opening balance of cash equivalents 904,966.64 494,441.23
Net increase of cash and cash equivalents 15,186,111.10 5,371,893.56
Note 12: Supplementary information
12.1 Extraordinary gains or losses for current reporting period
Items Amount
Add: (1)Gains and Losses on disposal of non-current assets, including provision for the
write-off part of asset impairment 1,508,177.01
(2)Refunding and exemption of taxes in excess of authority or without official approval
documents, or with contingency
(3)Government subsidies accounted into current income account, except for those
government subsidies closely related to the Company’s normal operation business, according 2,336,916.06
with state policies, and sustainably received by quota or ration
(4)Capital adoption fee collected from non-financial organizations and accounted into
current gain/loss
(5)Gain/loss from differences between the investment cost from subsidiaries, associated
enterprise, as well as joint ventures and the fair value of recognizable net asset of the
invested entities
(6)Gain/loss from non-monetary assets
(7)Gain/loss from commissioned investment or assets
(8)Asset impairment provisions provided for force-majeure, for example, natural disasters
(9)Gain/loss from debt reorganization
(10)Enterprise reorganizing expenses, such as employee placement fee and integration fee
(11)Gain/loss from trade departing from fair value
(12)Current net gain/loss of subsidiaries under same control from beginning of term till date
of consolidation
(13)Gain/loss generated by contingent liabilities without connection with main businesses
93
Items Amount
(14)Gain/loss from change of fair value of transactional asset and liabilities, and investment
gains from disposal of transactional financial assets and liabilities and sellable financial
18,796,938.42
assets, other than valid period value instruments related to the Company’s common
businesses
(15)Restoring of receivable account impairment provision tested individually
(16)Gain/loss from commissioned loans
(17)Gain/loss from change of fair value of investment property measured at fair value in
follow-up measurement
(18)Influence of one-time adjustment made on current gain/loss account according to the
laws and regulations regarding tax and accounting
(19)Consigning fee received for consigned operation
(20)Other non-business income and expenditures other than the above 723,148.00
(21)Other gain/loss items satisfying the definition of nonrecurring gain/loss account
Subtotal 23,365,179.49
Less: Influenced amount of income tax 3,485,169.79
Less: Influenced amount of minor shareholders’ equity 4,951,032.11
Total 14,928,977.59
12.2 Yield Rate of Net Assets and Earnings Per Share
Weighted Earnings Per Share(Yuan per share)
average yield
Profits for the reporting period Reporting period Basic EPS Diluted EPS
rate of net
assets%
Net profits attributable to ordinary For year 2011 4.77% 0.02 0.02
shareholders For year 2010 15.01% 0.06 0.06
Net profits attributable to ordinary For year 2011 1.61% 0.0068 0.0068
shareholders (excl. extraordinary gains or
losses)
For year 2010 13.78% 0.05 0.05
Note 13: Authorization for publication
The financial statements have been authorized to publish by the Board of Directors on 13 Aug. 2011.
Tsann Kuen (China) Enterprise Co., Ltd.
94
