2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2015 SEMI-ANNUAL REPORT
August 2015
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Reminders, Contents & Explanation
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Tsann Kuen (China) Enterprise Co., Ltd. (hereinafter referred to as “the
Company”) warrant that this report is factual, accurate and complete without any false record,
misleading statement or material omission. And they shall be jointly and severally liable for that.
All directors attended the board session for reviewing this report.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
Mr. Pan Zhirong, company principal, and Mr. Wu Yanru, head of the accounting work & the
accounting division (head of accounting) jointly declare that the financial statements carried in this
report are factual, accurate and complete.
English translation is for reference only. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Contents
Section I. Important Reminders, Contents & Explanation………………………………………………………………………………2
Section II. Company Profile …………………………………………………………………………………………………………….5
Section III. Highlights of Accounting Data & Financial Indicators ……………………………………………………………………..6
Section IV. Report of the Board of Directors…………………………………………………………………………………………….8
Section V. Significant Events…………………………………………………………………………………………………………...18
Section VI. Changes in Shares & Shareholders………………………………………………………………………………………...29
Section VII. Preference Shares…………………………………………………………………………………………………………31
Section VIII. Directors, Supervisors & Senior Management Staff …………………………………………………………………….32
Section IX. Financial Report……………………………………………………………………………………………………………32
Section X. Documents Available for Reference………………………………………………………………………………………..32
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Explanation
Term Refers to Contents
Xiamen Tsann Kuen, MCKB, Company,
Refers to TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise
South Port Electronics, TKN Refers to
Co., Ltd.
Tsann Kuen Institute, LTC Refers to Tsann Kuen (Zhangzhou) Profession and Technology Institute
STD Refers to Shanghai Canxing Trading Co., Ltd.
East Sino Development Refers to East Sino Development Limited
SCI Refers to Pt.Star Comgistic Indonesia
OSI Refers to Orient Star Investments Limited
Yuan Refers to RMB Yuan
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile
I. Basic information of the Company
Stock exchange listed with Shenzhen Stock Exchange
Chinese name of the Company 厦门灿坤实业股份有限公司
Abbr. of the Chinese name of the Company 闽灿坤
English name of the Company TSANNKUEN(CHINA) ENTERPRISE CO. LTD
Abbr. of the English name of the Company TKC
Legal representative of the Company Pan Zhirong
II. Contact information
Company Secretary Securities Affairs Representative
Name Sun Meimei
TSANN KUEN Industrial Park, Taiwanese Investment Zone,
Contact address
Zhangzhou, Fujian Province, P.R.China
Tel. 0596-6268161
Fax 0596-6268104
E-mail mm_sun@tkl.tsannkuen.com
III. Other information
1. Ways to contact the Company
Did any change occur to the registered address, office address and their postal codes, website address and email address of the
Company during the reporting period?
□ Applicable √ Inapplicable
2. About information disclosure and where this report is placed
Did any change occur to information disclosure media and where this report is placed during the reporting period?
□ Applicable √ Inapplicable
3. Change of the registered information
Did any change occur to the registered information during the reporting period?
□ Applicable √ Inapplicable
The registration date and place of the Company, its business license No., taxation registration No. and organizational code did not
change during the reporting period. The said information can be found in the 2014 Annual Report.
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Other relevant information
Did any change occur to other relevant information during the reporting period?
□ Applicable √ Inapplicable
Section III. Highlights of Accounting Data & Financial Indicators
I. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of any accounting policy or
correction of any accounting error?
□ Yes √ No
Unit: RMB Yuan
Major accounting data Reporting period Same period of last year YoY +/-（％）
Operating revenues 895,194,158.07 890,216,299.51 0.56
Net profit attributable to shareholders of the Company 15,111,025.18 14,857,989.76 1.70
Net profit attributable to shareholders of the Company
3,666,507.14 17,047,602.69 -78.49
after deducting non-recurring gains and losses
Net cash flow from operating activities -50,563,639.81 -33,079,939.03 -52.85
Basic EPS 0.08 0.08 0.00
Diluted EPS 0.08 0.08 0.00
Weighted average ROE (%) 2.73 2.82 -0.09
As at the end of the
Major accounting data As at the end of last year +/- (%)
reporting period
Total assets 1,766,285,350.11 1,651,024,619.41 6.98
Owners’ equity attributable to shareholders of the
533,817,984.80 546,574,409.55 -2.33
Company
II. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference in the reporting period.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference in the reporting period.
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2015 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. Items and amounts of extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item Amount Explanation
Gains/losses on the disposal of non-current assets (including the offset part of asset Gains/losses on the
792,596.73
impairment provisions) disposal of assets
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of
official approval documents
Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 1,571,749.00
country’s unified standards
Capital occupation charges on non-financial enterprises that recorded into current gains
and losses
Gains due to that the investment costs for the Company to obtain subsidiaries, associates
and joint ventures are lower than the enjoyable fair value of the identifiable net assets of
the investees when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management
Asset impairment provisions due to acts of God such as natural disasters
Gain/loss on debt restructuring
Expenses for business reorganization, such as expenses for staffing, reorganization etc.
Gain/loss on the part over the fair value due to transactions with distinctly unfair prices
Current gains and losses of subsidies acquired from business combination under the same
control as from period-begin to combination date
Gain/loss on contingent events irrelevant to the Company’s normal business
Gains on sale of forward
Gains and losses on change in fair value from tradable financial assets and tradable
exchange contracts, fair
financial liabilities, as well as investment income from disposal of tradable financial
14,831,578.67 value changes, wealth
assets and tradable financial liabilities and financial assets available for sales except for
management products
effective hedging related with normal businesses of the Company
and other current assets
Reversal of provision for impairment that made impairment test independently
Gain/loss on loans obtained by entrusting others
Gain/loss on change of the fair value of investing real estate of which the subsequent
measurement is carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current gains/losses
according to requirements of taxation, accounting and other relevant laws and regulations
Custody fee income when entrusted with operation
Other non-operation income and expenses other than the above 746,947.82
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 2,687,869.17
Minority interests effects (after tax) 3,810,485.01
Total 11,444,518.04
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public —Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Section IV. Report of the Board of Directors
I. Business review for the reporting period
For the reporting period, the Company achieved operating revenues of RMB 895 million, up 0.56% over RMB
890 million of the same period of last year, and net profits of RMB 15.11 million, up 1.70% over RMB 14.86
million of the same period of last year. The financial income showed a strong growth from the same period of last
year because we minimized the unfavorable factors of increased labor cost, etc. by strictly controlling our
procurement cost, introducing automated jigs and other equipment, enhancing internal operation and optimizing
the production and selling processes.
II. Main business analysis
1. Overview
According to our strategy of “lean reform and transformation for upgrading”, we introduced new technique to
improve our productivity effect, optimize our product performance and cut down our manufacturing costs.
Meanwhile, committed to green, low-carbon economy, we improved our operating efficiency to save energy and
reduce costs. Introducing new technique and at the same time upholding independent product development and
innovation with strict quality standards, we will transform our products, amid increasing competition, towards
products with high added value and build up a high-end service model to create more intimacy with customers and
therefore more market demands.
In 2015, the American and European markets continue to recover, with a larger market scale but a
slower-than-expected speed. We adjust our product structure, optimize our supplier management framework,
reduce our costs in every link of the supply chain, increase our operating efficiency and effectiveness, and provide
elaborately designed multifunctional small household appliances with high green, low-carbon technological
contents which are exactly what the market needs, trying to increase our profitability.
Meanwhile, as smart houses are becoming a trend and people are pursuing more convenient and comfortable life,
we will focus, in our efforts for product development and innovation, on smart household appliances to satisfy
people’s needs for a fully smart house. We will try to effectively enlarge our share in the market where smart
household appliances have been considered a necessary element for a comfortable life.
2. YoY changes in major financial data
Unit: RMB Yuan
As at the As at the
Item +/-% Main reasons for changes
period-end year-beginning
Financial assets measured at fair value
Fair value gains on the undelivered forward
and of which changes are recorded into 7,482,150.00 2,610,000.00 186.67
exchange contracts increased.
current gains and losses
RMB 230 million of wealth management
Other current assets 244,113,215.87 13,087,495.75 1,765.24
products were purchased.
Fees for the changes of land ownership
Construction in progress 353,168.37 233,968.67 50.95
certificates and land requisition
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
As at the As at the
Item +/-% Main reasons for changes
period-end year-beginning
Other non-current assets 3,195,929.47 1,929,374.75 65.65 Prepayments for equipment increased.
Short-term borrowings 295,103,472.00 61,190,000.00 382.27 Short-term borrowings from banks increased.
Financial liabilities measured at fair Forward exchange contracts appraised at the
value and of which changes are 27,500.00 3,956,259.85 -99.30 year-beginning produced gains in the current
recorded into current gains and losses period.
Interest payable 1,119,097.02 68,275.80 1,539.08 Short-term borrowings from banks increased.
The gains on the forward exchange contracts in
Deferred income tax liabilities 1,349,588.26 618,966.78 118.04
the current period are expected to increase.
Same period of
Item Reporting period +/-% Main reasons for changes
last year
Operating revenues 895,194,158.07 890,216,299.51 0.56
Operating costs 771,483,297.01 761,974,414.46 1.25
Business tax and surtaxes 3,084,362.18 4,930,309.19 -37.44 Exempted and offset taxes decreased.
Export expenses and advertising fees for sales
Selling expenses 41,124,129.32 34,383,454.76 19.60
promotion increased.
Administrative expenses 82,998,690.21 72,912,587.41 13.83
Financial expenses -9,197,945.66 -11,216,974.35 18.00
Bad-debt provisions for rents receivable and
Asset impairment losses 1,103,733.79 438,958.76 151.44
inventory falling price losses
The forward exchange contracts for the current
Gains on fair value changes 8,800,909.85 -26,768,171.00 132.88
period are appraised to be profitable.
Gains on delivered forward exchange contracts
Investment gains 6,030,668.82 14,000,118.50 -56.92
and wealth management products decreased.
Non-business income 3,229,489.17 8,820,848.29 -63.39 Subsidy income decreased.
Non-business expenses 118,195.62 741,772.95 -84.07 Losses on retirement of fixed assets decreased.
Income tax expenses 3,300,757.78 2,957,439.90 11.61
R&D input 36,107,424.66 30,469,780.95 18.50
Net cash flows from operating activities -50,563,639.81 -33,079,939.03 -52.85 Export tax rebates decreased.
-1,181,899,628.4 Changes in the restricted term deposits between
Net cash flows from investing activities -249,714,881.93 78.87
9 the two periods
Financings for export and borrowings from the
Net cash flows from financing activities 198,385,922.40 539,659,463.51 -63.24
controlling shareholder decreased.
Net increase in cash and cash
-103,509,996.36 -670,308,694.60 84.56
equivalents
Major changes to the profit structure or sources of the Company during the reporting period:
□ Applicable √ Inapplicable
No such cases.
Reporting period progress of the future development planning in the disclosed documents of the Company such as share-soliciting
prospectuses, offering prospectuses, asset reorganization reports, etc.:
□ Applicable √ Inapplicable
No such cases.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Review the progress of the previously disclosed business plan in the reporting period:
For the first half of 2015, the Company achieved operating revenues of RMB 895 million with a net profit attributable to the
shareholders of the Company (without subsidiaries) of RMB 15.11 million.
III. Breakdown of main business
Unit: RMB Yuan
Increase/decrease Increase/decrease Increase/decrease
Operating Gross profit of operating of operating of gross profit
Item Operating costs
revenues rate (%) revenues over costs over last rate over last
last year (%) year (%) year (%)
Classified by industry
Small home
appliance 860,571,679.13 760,838,332.58 11.59% 0.82% 1.39% -0.49%
manufacture
Total 860,571,679.13 760,838,332.58 11.59% 0.82% 1.39% -0.49%
Classified by product
Gourmet
555,817,873.00 485,035,374.13 12.73% 7.86% 8.87% -0.81%
cooking
Home
175,862,090.09 161,355,707.36 8.25% -32.66% -32.61% -0.06%
assistant
Tea/coffee 120,747,536.58 109,538,492.39 9.28% 76.05% 78.26% -1.13%
Others 8,144,179.46 4,908,758.70 39.73% -3.91% 23.23% -13.27%
Total 860,571,679.13 760,838,332.58 11.59% 0.82% 1.39% -0.49%
Classified by region
America 359,460,518.90 320,193,135.34 10.92% 8.98% 11.13% -1.73%
Asia 270,076,646.06 238,498,777.15 11.69% -0.99% -2.49% 1.36%
Europe 185,217,404.35 162,165,865.62 12.45% -2.94% -1.85% -0.97%
Australia 41,042,382.47 35,669,139.62 13.09% -23.92% -24.98% 1.22%
Africa 4,774,727.35 4,311,414.85 9.70% -22.35% -12.66% -10.02%
Total 860,571,679.13 760,838,332.58 11.59% 0.82% 1.39% -0.49%
IV. Core competitiveness analysis
As the small home appliance manufacturers, most of the products were export-oriented of the
Company. The advantages of the core competence analysis of the Company were mainly
summarized as: based on the strong technology and R&D advantages, the Company could timely
make researches and develop of the new products according to the market requirements and
continuously gained the recognition from certain global famous brand clients, then maintained the
better cooperative relationships that owned a preferable market position.
During the reporting period, the Company gained 27 R&D patent, including 2 patents for invention,
3 innovation patents and 22 appearance patents; besides there were dozens of patens under patent
application. The gaining of the patents benefited from the perfection of the intellectual property
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
protection of the Company, and the Company would continue to exert the advantages of the
proprietary intellectual property rights as well as to maintain the technology leading position for
enhancing the core competence.
During the reporting period, the controlling shareholder of the Company, Zhangzhou Tsann Kuen
had purchased all the equities of the related party-(Taiwan) Xianrui Intelligence Co., Ltd. Tsann
Kuen Xianrui currently handled the Arduino open type control platform technology, which could
make a medium and long term R&D strategic layout for the Company of the IOT and the future ICT
as well as the AI. After the completion of the purchase, the Company could in virtue of the R&D
advantages enjoyed in Taiwan of the related party Tsann Kuen Xianrui Intelligence Co., Ltd. for
further enhance the overall R&D ability of the Company and at the same integrated and focused on
the medium and long-term development of strategic management of the Company to form the R&D
resources complementary synergy of both sides of the Taiwan Straits for facing with the rapid
change of the household appliances industry, enhancing the household appliances intelligent
upgrade management and reducing the possible related transactions in the future.
V. Investment analysis
1. Overseas equity investments
(1) Overseas investments
√ Applicable □ Inapplicable
Overseas investments
Investments in Jan. – Jun of 2015 (Yuan) Investments in Jan. – Jun of 2014 (Yuan) +/- %
0.00 0.00 0.00
Particulars about investees
Proportion of the Company’s investment in
Name of investee Main business
the investee’s total equity interests (%)
ORIENT STAR INVESTMENTS
Investment 75.00
LIMITED
(2) Equity-holdings in financial enterprises
□ Applicable √ Inapplicable
The Company was not involved with any equity-holding in financial enterprises.
(3) Securities investments
□ Applicable √ Inapplicable
The Company was not involved with any security investment.
(4) Equities held in other listed companies
□ Applicable √ Inapplicable
The Company was not involved with any equity held in other listed companies.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Wealth management entrustment, derivative investments and entrustment loans
(1) Wealth management entrustment
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Actual
Related-party Principal Impairment
Name of Product Amount Beginning Payment Predicted gain/loss in
Relation transaction or Ending date actually provision (if
trustee variety entrusted date determination gain reporting
not recovered any)
period
Break-even
Xiamen
floating
International No Not 10,000.00 2015-1-19 2015-4-22 5.20% 10,000.00 Naught 134.33 134.33
income
Bank
product
Break-even
Xiamen
floating
International No Not 15,000.00 2015-1-19 2015-12-30 5.00% 0.00 Naught 718.75 0.00
income
Bank
product
Break-even
Shenzhen Ping floating
No Not 8,000.00 2015-1-20 2015-12-17 7.40% 0.00 Naught 544.31 0.00
An Bank income
product
Total 33,000.00 -- -- -- 10,000.00 1,397.39 134.33
Source of the entrusted funds Self-owned funds
Cumulative overdue principals and gains 0.00
Disclosure date of the board announcement approving the
2014-3-15
wealth management entrustment
Disclosure date of the general meeting announcement
2014-5-20
approving the wealth management entrustment
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(2) Derivative investments
√ Applicable □ Inapplicable
Unit: RMB Ten thousand Yuan
Proportion of
the closing
Actual
Related-party Type of Initial Opening Closing investment
Impairment gain/loss in
Operator Relation transaction derivative investment Beginning date Ending date investment investment amount in the
provision reporting
or not investment amount amount amount Company’s
period
closing net
assets (%)
Forward
Bank No No 83,752.76 1 Jan. 2015 30 Jun. 2015 61,298.55 51,599.23 96.66 1,348.82
exchange
Total 83,752.76 -- -- 61,298.55 51,599.23 96.66 1,348.82
Capital source for derivative investment Self-owned funds
Lawsuit N/A
Disclosure date of the board announcement approving
2013-3-12
the derivative Investment
Disclosure date of the general meeting announcement
2013-5-18
approving the derivative Investment
1. Analysis on risks from holding of derivative products: gains or losses from difference between contracted exchange rate and market
exchange rate on value date.
2. Control measures:
(1) Principle: The purpose of the financial derivative operation is to avoid risks. The Company shall not conduct transactional operation for
other purposes than risk avoidance. The Company shall not conduct complex derivative trading above the actual operation needs and shall
not speculate in derivative trading with hedging as an excuse. The overall contractual amount for risk avoidance of the Company shall not
exceed the summation of the net risk exposure of the existing assets and liabilities and the net risk exposure of assets and liabilities arising
Analysis on risks and control measures of derivative from the operation of the Company in the coming year.
products held in the reporting period (including but not (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly
limited to market risk, liquidity risk, credit risk, execute the business operation and risk management mechanisms for derivative investment.
operation risk, legal risk, etc.) (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel
for investment decision-making, business operation, risk control, etc. It shall also inquire and compare among various markets and products.
Besides, it shall strictly control the variety and size of derivative investment and try to choose derivative trading on exchange as much as
possible.
(4) Periodic evaluation: Derivative investments shall be evaluated at least twice for a month and the evaluation report shall be sent to a
high-ranking executive authorized by the Board of Directors. And a derivative investment report shall be sent to the Board of Directors
annually. The Company and its subsidiaries only need to submit to the Board of Directors of the subsidiaries.
(5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment amount.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
(1) Gains on completed transaction amount of derivative products was RMB 4.6873 million, and loss from undelivered transaction was
Changes of market prices or fair values in the reporting RMB8.8009 million in the reporting period, of which the gain rotation amount of the forward evaluation of the undelivered derivative
period of the invested derivatives. And the analysis on investment of last year was of RMB 1.3463 million.
the fair value of the derivatives should include the (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last
specific use methods and the relevant assumptions and trading day of the month.
parameters. (3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount
undue by the month*the estimated exchange rate and the currency amount when bought in.
Whether significant changes occurred to the Company’s
accounting policy and specific accounting principles of There were no significant changes between the Company’s accounting policy and specific accounting principles of derivatives in the
derivatives in the reporting period compared to the reporting period and those in the last reporting period.
previous reporting period
Special opinion from independent directors, sponsor or The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding
financial consultant on the Company’s derivatives supervision mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its
investment and risk control routine operation and is in compliance with relevant laws and regulations, with the risks controllable.
(3) Entrustment loans
□ Applicable √ Inapplicable
3. Use of raised funds
□ Applicable √ Inapplicable
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
4. Analysis to main subsidiaries and stock-participating companies
Particulars about main subsidiaries and stock-participating companies:
Unit: RMB Yuan
Company Company Operating Operating
Industry Main products/services Registered capital Total assets Net assets Net profit
name variety revenues profit
Development and production of home appliances, electronic
products, light-industrial products, and modern furniture and
relative modules, communication equipment, all kinds of lamps
and lighting devices such as mechanical and electrical product.
Processing and manufacturing non-ferrous metal composite
Tsann Kuen materials and new alloy material; Sales of the company
Small home
(Zhangzhou) Controlled products and semi-finished products; providing after-sales
appliance USD 160 million 2,129,374,415.98 1,275,007,314.49 849,902,598.38 20,802,733.88 21,350,785.76
Enterprise Co., subsidiary service and technical services; contracting the company business
manufacture
Ltd. scope of processing according to the buyer’s materials and
samples and assembling parts supplied by buyers and
compensation trade business. The wholesale of all kinds of
home appliances, electronic products, water purification
equipment, air purification equipment, communications
equipment, security products and prepackaged foods
Tsann Kuen Production and sales of household appliances, electronics, light
China Small home industrial products and modern office supplies and relevant
Controlled
(Shanghai) appliance modules. All kinds of computers and peripheral equipment and USD 40 million 99,443,567.50 95,739,099.74 3,074,552.27 -1,790,106.18 -1,726,465.40
subsidiary
Enterprise Co., manufacture components, the development of computer software, IC
Ltd. packaging and testing and sales of self-produced products
Production and sale of display/LCD TV/chandelier/table
Pt. Star Subsidiary of a Home lamps/LED lights/fluorescent
Comgistic controlled appliance lamp/dehumidifier/mixer/juice/machine/mosquito killer/coffee USD 25 million 110,157,247.80 93,423,213.53 35,414,003.17 -4,646,699.99 -4,647,501.10
Indonesia subsidiary manufacture pot / hair dryer/fan/humidifier/electric oven, microwave oven,
toaster/rice cooker/iron/deep fryer
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
5. Significant projects of investments with non-raised funds
□ Applicable √ Inapplicable
VI. Predict the operating results of Jan.-Sep. 2015
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next reporting period according to prediction, as well as explanations on the reasons:
□ Applicable √Inapplicable
VII. Explanation of the Board of Directors and the Board of supervisors concerning the
“non-standard audit report” issued by the CPAs firm for the reporting period
□ Applicable √ Inapplicable
VIII. Explanation of the Board of Directors concerning the relevant situation of the
“non-standard audit report” of last year
□ Applicable √ Inapplicable
IX. Situation of the execution of the profits distribution of the reporting period of the
Company
Situation of the execution or adjustment of the profits distribution proposals especially the cash bonus proposal and the proposal of
turning capital reserve into share capital
√ Applicable □ Inapplicable
For the details of the profits distribution of Y2014 of the Company, please refer to the Announcement on the 2014 Annual Equity
Distribution Execution disclosed on the Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 Jun. 2015, which
had completed execution according to the announcement aging.
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of association or
Yes
the requirements of the resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were
Yes
complete:
Whether the independent director acted dutifully and exerted the proper
Yes
function:
Whether the medium and small shareholders had the chances to fully
express their suggestions and appeals, of which their legal interest had Yes
gained fully protection:
Whether the conditions and the process met the regulations and was
Yes
transparent of the adjustment or altered of the cash dividend policy:
XV. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
□ Applicable √ Inapplicable
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital.
16
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
XI. Particulars about researches, visits and interviews received in this reporting period
√ Applicable □ Inapplicable
Place of Main discussion and materials provided by
Time of reception Way of reception Visitor type Visitor
reception the Company
The Company’s operating situation and
Telephone whether the factory in Indonesia had reserved
30 Jan. 2015 Company office Individual Mr. Zhang
communication a loss. No written materials provided by the
Company.
The Company’s operating situation and
Telephone
13 Mar. 2015 Company office Individual Mr. Chen relevant policy of B shares with no written
communication
materials provided by the Company
The Company’s operating situation and
Telephone
23 Mar. 2015 Company office Individual Ms. Liu relevant policy of B shares with no written
communication
materials provided by the Company
Investor: knew of the reform situation of B
shares of the Company and suggested the
Company to carry out the reform.
Reply from the Company: focusing on the
market reform cases and under the current
legislations, the Company evaluates the
feasibility without any substantial progress.
Investor: suggested the Company to enhance
the product positioning, to enlarge the
automation investment and to enhance the
whole competitiveness.
Meeting room of
26 May 2015 Zhangzhou Research Individual Chen Ling .
Tsann Kuen
Reply from the Company: the Company had
been focusing on the R&D investment, which
including the investment of the R&D of the
intelligent household electrical appliance and
developed the new products according to the
market requirements, as well as strengthened
and the strictly controlled the order receiving
profits for enhancing the accrual space. The
Company currently also executed part of the
automation and will pay attention on the
service efficiency in future and gradually
improve it.
17
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
V. Significant Events
I. Corporate governance
Company governance practice has no difference with requirements of relevant law and rules of Company Law and CSRC.
II. Litigations and arbitrations
Significant litigations and arbitrations
√Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Situation of
Lawsuit Whether form
Trial results and influences execution of
Basic situation of lawsuit (arbitration) amount (RMB into estimated Process of lawsuit (arbitration) Disclosure date Disclosure index
of lawsuit (arbitration) judgment of lawsuit
Ten thousand) liabilities
(arbitration)
The progress events of the appeal
between the Company’s controlling Fujian High People’s Court decided to http://www.cninfo.
430.49 No Not yet disclosed None 22 Feb. 2014
subsidiary—Zhangzhou Tsann Kuen and hold a hearing on 26 Mar. 2014. com.cn/
Xinda Motor
Zhangzhou Intermediate People’s
Events of the Company’s controlling
Court had put on record and originally http://www.cninfo.
subsidiary—Zhangzhou Tsann Kuen 377.04 No Not yet disclosed None 27 Dec. 2013
decided to hold a hearing on 9 Jul. com.cn/
separately sued Xinda Motor
2014 but delayed later.
Other lawsuits
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Situation of
Lawsuit Whether form
Trial results and influences execution of
Basic situation of lawsuit (arbitration) amount (RMB into estimated Process of lawsuit (arbitration) Disclosure date Disclosure index
of lawsuit (arbitration) judgment of lawsuit
Ten thousand) liabilities
(arbitration)
T he Company sued the members of the Shenzhen Luohu Court had put on According to the judgment
liquidating committee of Shenzhen record on 19 Sep. 2011; and the of second instance, the
www.cninfo.com.c
Amoz Industrial Co., Ltd. for liability 23.71 No judgment of second instance by defendant should pay for In progress 31 Dec. 2011
n
litigations (Zhu Huifeng, Gan Yuxing and Shenzhen Intermediate People’s Court RMB 124,166.00 and
Wang Xinlin) had come into effect on 20 Feb. 2013. interests
18
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Situation of
Lawsuit Whether form
Trial results and influences execution of
Basic situation of lawsuit (arbitration) amount (RMB into estimated Process of lawsuit (arbitration) Disclosure date Disclosure index
of lawsuit (arbitration) judgment of lawsuit
Ten thousand) liabilities
(arbitration)
Contract violation case of the controlling According to the judgment
Zhangzhou Longhai Court had put on
subsidiary of the Company Zhangzhou of first instance, the www.cninfo.com.c
13.75 No record on 4 Jan. 2012; and decided to In progress 31 Dec. 2011
Tsann Kuen Enterprise Co., Ltd. sued defendant should pay for n
hold a hearing on 7 Jun. 2012
DDF Company RMB 137,592
The case of the controlling subsidiary Zhangzhou Tsann Ken had submitted
Zhangzhou Tsann Kuen Enterprise Co., the indictment to the local judicatory
1,763.13 No Had no result No No No
Ltd. sued Japan UCC Ueshima Coffee in Kobe, Japan on 9 May 2014;
Co., Ltd. (contract disputes) recently is in the trial
The judgment of first
instance of Xiamen Huli
People’ Court: 1. The
defendant Tianyuan
(Xiamen) Assets
Management Co., Ltd.
should pay the late payment
The lease contract default case of the penalty due to breach of
Company sued Xiamen Tianyuan Assets Xiamen Huli People’s Court had put contract for Tsann Kuen
Management Co., Ltd. about the arrears of 29.43 No on record in Oct. 2014; the judgment within 10 days from the date No No No
rent (No. 23 of Huarong Rd, Huli District, of second instance is in progress of the judgment come into
Xiamen) effect (calculated according
to quadruple of the similar
loan interest rates over the
same period of the bank)
2. The litigation fee of RMB
360 should be borne by the
defendant.
The debt disputes case of Xiamen
Zhicheng Electrical Material s Co., Ltd.
Fujian Zhangzhou Longhai Court had
and Qidong Jilai Electronics Co.,
45.28 No put on record on 18 Nov. 2014; had Had no result No No No
Ltd. sued the controlling shareholder of
held the third hearing on 24 Jul. 2015
the Company Zhangzhou Tsann Kuen
Enterprise Co., Ltd.
The lease contract default case of the
Company sued Xiamen Tianyuan Assets
Xiamen Huli People’s Court had put
Management Co., Ltd. about the arrears of
58.46 No on record on 28 Apr. 2015; and had Had no result No No No
rent (North Building of the Factory, No.
held the hearing on 11 Jun. 2015
88 of Xinglong Rd, Huli District,
Xiamen)
19
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Situation of
Lawsuit Whether form
Trial results and influences execution of
Basic situation of lawsuit (arbitration) amount (RMB into estimated Process of lawsuit (arbitration) Disclosure date Disclosure index
of lawsuit (arbitration) judgment of lawsuit
Ten thousand) liabilities
(arbitration)
The lease contract default case of the
Company sued Xiamen Tianyuan Assets Xiamen Huli People’s Court had put
Management Co., Ltd. about the arrears of 8.32 No on record on 28 Apr. 2015; and had Had no result No No No
rent (Southeast Corner, No. 88 of held the hearing on 11 Jun. 2015
Xinglong Rd, Huli District, Xiamen)
The lease contract default case of the
Company sued Xiamen Tianyuan Assets Xiamen Huli People’s Court had put
Management Co., Ltd. about the arrears of 18.61 No on record on 28 Apr. 2015; and had Had no result No No No
rent (Northwest Corner, No. 88 of held the hearing on 11 Jun. 2015
Xinglong Rd, Huli District, Xiamen)
The house leasing contract disputes of the
controlling subsidiary Zhangzhou Tsann Xiamen Huli People’s Court had put
Kuen Enterprise Co., Ltd. sued Xiamen 13.76 No on record on 21 Jan. 2015; and had Had no result No No No
Yada Building Materials Co., Ltd. (fell held a hearing on 15 Jun. 2015
behind with the rent etc.)
The case of the controlling subsidiary
Zhangzhou Tsann Kuen Enterprise Co.,
The complaint evidence had been
Ltd. sued Dongguan
submitted to Guangzhou Intellectual
Kingsun Optoelectronic Co., Ltd. about 10.00 No Had no result No No No
Property Court on 1 Mar. 2015; and
the production and sales of the latter
had held a hearing on 27 Oct. 2015
violated the appearance design patent
products of the former
The liabilities disputes and rent arrears
case of the controlling subsidiary Zha Fujian Zhangzhou Longhai Court had
put on record on 30 Mar. 2015;
ngzhou Tsann Kuen Enterprise Co., Lt 37.58 No Had no result No No No
recently the service by publication
d. sued Zhangzhou Xingkun Plastic Pr according to law is in the progress
oducts Co., Ltd.
The case of the controlling subsidiary
Zhangzhou Tsann Kuen Enterprise Co., Had received the receipt notice fro
Ltd. sued Shanghai Sunbrem about the 10.00 No m Shanghai Intellectual Property Co Had no result No No No
production and sales of the latter violated urt on 9 Jul. 2015
the patent for invention of the former
The arbitration case of housing lease
contract disputes between the controlling Shanghai Arbitration Commission had
subsidiary Shanghai Tsann Kuen 276.63 No put on record in Apr. 2015; and had a Had no result No No No
Enterprise Co., Ltd. and Shanghai Tanghai hearing on 22 Jul. 2015
Investment Co., Ltd.
20
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
III. Media’s questions
□ Applicable √ Inapplicable
The Company was not involved with any media ’s question of the reporting period.
IV. Bankruptcy or reorganization events
□ Applicable √ Inapplicable
The Company was not involved with any bankruptcy or reorganization event of the reporting period.
V. Assets transaction events
1. Purchase of assets
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Relationship between
Ratio of the net
Transaction Asset Influence on Influence on the transaction party
profit contributed Related-party
party or acquired Transaction the operation the gains and and the Company Disclosure Disclosure
Progress by the asset to the transaction or
ultimate or bought price of the losses of the (applicable for date index
Company to the not
controller in Company Company related-party
total profit
transactions)
The company
Land controlled by the actual
PT. Shen Min
Land 80.64 transfer No 0.00 0.00% Yes controller and its Inapplicable Inapplicable
Sukabumi
completed germane family
member
Notes: the assets had been purchased in Jun. 2015.
21
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Sale of assets
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Whether or
Ratio of the Relationship
Net profit Whether or not the
net profit between the
contributed to not the creditor’s
contributed Related-p transaction
the Company Impact to ownership right and Disclo
Transaction Disposal Transactio by the asset Pricing arty party and the Disclosu
Asset sold from the the of the asset liabilities sure
party date n price to the principle transactio Company re date
period-begin company involved has involved index
Company to n or not (applicable for
to the disposal been fully have been
the total related-party
date transferred fully
profit (%) transactions)
transferred
Xinwang Machinery devices 2015.1.31 2.50 2.45 2.45 0.16 Based on Non-relate Inapplicable Yes Yes
the market d
Nanyanghuan Other devices 2015.1.31 1.51 1.29 1.29 0.09 price, and enterprise
Jinyuan Machinery devices 2015.1.31 8.00 3.09 3.09 0.20 settled
according
Li Qinghua Machinery devices 2015.1.31 9.00 3.20 3.20 0.21 to the
Ruicheng Mould devices 2015.1.31 3.40 3.26 3.26 0.22 contract
signed by
Liao Sezhong Machinery devices 2015.1.31 12.80 2.04 2.04 0.14 both
Zheng parties www.
Machinery devices 2015.1.31 1.30 0.54 0.54 0.04
Wenhui 2015.04. cninfo
Shanghai 25 .com.c
Mould devices 2015.1.31 115.00 22.72 22.72 1.50
Excellence n
Li Yiming Machinery devices 2015.3.31 10.50 3.72 3.72 0.25
Xinwang Machinery devices 2015.3.31 0.25 0.25 0.25 0.02
Haichengxing Electronic devices 2015.3.31 0.80 0.78 0.78 0.05
Baoxing Mould devices 2015.3.31 0.40 0.39 0.39 0.03
Hongyuan Mould devices 2015.3.31 13.93 13.34 13.34 0.88
Transportation
Gusong 2015.3.31 6.50 6.36 6.36 0.42
devices
Transportation Inapplic Inappl
Yongkun 2015.4.30 3.00 2.94 2.94 0.19
devices able icable
Kunsheng Mould devices 2015.4.30 1.25 1.23 1.23 0.08
Hu Songchun Machinery devices 2015.4.30 23.60 -8.54 -8.54 -0.57
Yixin Mould devices 2015.4.30 3.00 2.92 2.92 0.19
22
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Whether or
Ratio of the Relationship
Net profit Whether or not the
net profit between the
contributed to not the creditor’s
contributed Related-p transaction
the Company Impact to ownership right and Disclo
Transaction Disposal Transactio by the asset Pricing arty party and the Disclosu
Asset sold from the the of the asset liabilities sure
party date n price to the principle transactio Company re date
period-begin company involved has involved index
Company to n or not (applicable for
to the disposal been fully have been
the total related-party
date transferred fully
profit (%) transactions)
transferred
Liao Sezhong Other devices 2015.4.30 1.10 0.94 0.94 0.06
Hongyuan Mould devices 2015.4.30 2.62 2.54 2.54 0.17
Haicheng
Electronic devices 2015.5.31 0.80 0.78 0.78 0.05
Xingxin
Hufeng
Industry and Machinery devices 2015.5.31 0.50 0.48 0.48 0.03
Trade
Jinjing Machinery devices 2015.5.31 0.08 0.08 0.08 0.01
Jinjing Other devices 2015.5.31 0.08 0.08 0.08 0.01
Yixin Mould devices 2015.5.31 1.50 1.45 1.45 0.10
Haikun Mould devices 2015.5.31 3.70 3.50 3.50 0.23
Nanyang
Mould devices 2015.5.31 1.28 1.24 1.24 0.08
University
Hongyuan Mould devices 2015.5.31 3.06 3.00 3.00 0.20
Hongyuan Other devices 2015.5.31 0.19 0.16 0.16 0.01
Dakun Mould devices 2015.6.30 6.35 6.20 6.20 0.41
Suyuan Machinery devices 2015.6.30 5.10 -1.78 -1.78 -0.12
Total 243.10 80.65 80.65 5.34
3. Business combination
In Feb. 2015, the controlled subsidiary of the Company Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. had written off its subsidiary Tsann Kuen (Zhangzhou) Profession and Technology
Institute. Since the date that completed the written-off, Tsann Kuen (Zhangzhou) Profession and Technology Institute would be no longer included in the consolidated statement scope, while the
income, expenses and profits before the completion of the written-off included in the consolidated statement and the cash flow in the consolidated cash flow statement.
In Apr. 2015, the controlled subsidiary of the Company Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. had purchased its subsidiary Orient Star Investments Limited and recently had completed
23
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
the business registration formalities but had not paid for the investment account.
VI. Implementation situation and influence of equity incentive plan of the Company
□ Applicable √ Inapplicable
The Company had not involved with any equity incentive plan and its execution situation during the reporting period.
VII. Significant related-party transactions
1. Related-party transactions relevant to routine operation
Unit: RMB Ten Thousand Yuan
Settlemen
Proportio Whether t method
Pricing Trans Simil
Type of the Content of the n in same Approved exceeded of the Discl Disclos
principle of the actio Transaction ar
Related party Relationship related-party related-party kind of transaction the related-pa osure ure
related-party n amount marke
transaction transaction transactio quota approved rty date index
transaction price t price
ns (%) quota transactio
n
Company directly controlled by
Thermaster Electronic Purchase of Purchase of raw
actual controller and their close 1,662.55 2.92 4,000.00 No
(Xiamen) Ltd. commodities parts
family members
Based on the Settled
STAR COMGISTIC Purchase of Purchase of raw
Ultimate controlling company market price 229.77 0.40 280.00 No according
CAPITAL CO., LTD. commodities parts www.c
and both to the 13
ninfo.c
parties abide N/A contract N/A Mar.
om.cn
Sales of parts by the fair and signed by 2015
TSANN KUEN JAPAN CO.,
Same ultimate controlling company Sales of commodities and finished reasonable 266.43 0.31 845.00 No both
LTD
products principle parties
Sales of parts
STAR COMGISTIC
Ultimate controlling company Sales of commodities and finished 676.38 0.79 1,945.00 No
CAPITAL CO., LTD.
products
Total 2,835.13 7,070.00
Details of large amount of sales returns N/A
The amount for the above related-party transactions were not exceed the predicted amount in the Announcement on Prediction of
As for the prediction on the total amount of routine related-party transactions to be occurred in the reporting period the 2015 Annual Routine Related-party Transactions disclosed on Securities Times, Hong Kong Ta Kung Pao and
by relevant types, the actual performance in the reporting period http://www.cninfo.com.cn dated 13 Mar. 2015.
Reason for significant difference between the transaction price and the market price N/A
24
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Related-party transactions regarding purchase and sales of assets
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Assessed
Book value of value of Market Transaction
Transfer Settlement Disclosure Disclosure
Related party Related relation Type Content Pricing principle the transferred the fair gains and
price method date index
assets transferred value losses
assets
The company
Settled
controlled by Based on the market
according to
PT. Shen Min the actual Purchase Purchase price and both parties
71.31 N/A N/A 80.64 the contract 9.33 Inapplicable Inapplicable
Sukabumi controller and land land abide by the fair and
signed by
its germane reasonable principle
both parties
family member
Reason for significant difference between the transaction
N/A
price and the market price or the assessed price
Influence situation on the operating results and the
N/A
financial conditions of the Company
3. Related-party transitions with joint investments
□ Applicable √ Inapplicable
4. Significant credits and liabilities with related parties
□ Applicable √ Inapplicable
Was there any non-operating credit or liability with any related party?
□ Yes √ No
25
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
5. Other related-party transactions
√ Applicable □ Inapplicable
Unit: RMB Ten thousand Yuan
Settlement
Pricing
Type of Content of Proportio method of
principle Approve
the the Transacti n in same Whether the Similar
Relationsh of the Transacti d Disclosure Disclosu
Related party related-par related-par on kind of transacti
exceeded the related-pa market
ip related-par on price approved quota date re index
ty ty amount transactio on quota rty price
ty
transaction transaction ns (%) transactio
transaction
n
STAR
Ultimate Accepting Purchase
COMGISTIC
controlling labor agency 10.83 100.00 14.00 No
CAPITAL Based on
company services cost
CO., LTD. the market
Settled
WU WHA MA price and
Ultimate according
RESTAURAN both www.cni
holding to the
T Providing Workshop parties 13 Mar. nfo.com.
company N/A 6.54 0.21 13.00 No contract N/A
MANAGEME service rent abide by 2015 cn
have signed by
NT CO., LTD. the fair
equity both
IN XIAMEN and
parties
Xiamen reasonable
Under principle
Canxing Providing Workshop
same 75.00 2.44 150.00 No
Trading Co., service rent
controller
Ltd.
Total 92.37 177.00
Related party transactions interim report disclosure website
Name of interim report Disclosure dare Name of the website
Announcement on 2015 Daily Related Party
13 Mar. 2015 www.cninfo.com.cn
Transactions Plan
26
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
VIII. Occupation of the Company’s funds for non-operating purposes by the controlling
shareholder and its related parties
□ Applicable √ Inapplicable
IX. Significant contracts and execution
1. Particulars about trusteeship, contract and lease
(1) Trust
□ Applicable √ Inapplicable
(2) Contract
□ Applicable √ Inapplicable
(3) Lease
Notes of the leasing
Explanation of lease
The Proposal on Lease of Property & Related-party Transactions was reviewed and approved at the Fourth Session of the Board of
Directors for 2011 dated 13 Aug. 2011 and the First Special Shareholders’ General Meeting for 2011 dated 16 Sept. 2011, for details,
please refer to the Announcement on Lease of Property & Related-party Transactions, Announcement on Resolutions Made at the
Fourth Session of the Board of Directors for 2011 and Announcement on Resolutions Made at the First Special Shareholders ’ General
Meeting for 2011 disclosed on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn.
The Proposal on Change of Property Leasing Agreement & Related-party Transaction was reviewed and approved at the Second
Special Session of the Board of Directors for 2012 dated 30 Jun. 2012 and the Second Special Shareholders’ General Meeting for
2012 dated 24 Jul. 2012, for details, please refer to the Announcement on Change of Property Leasing Agreement & Related-party
Transaction, Announcement on Resolutions Made at the Second Special Session of the Board of Directors for 2012 and
Announcement on Resolutions Made at the Second Special Shareholders’ General Meeting for 2012 disclosed on Securities Times,
Hong Kong Ta Kung Pao and http://www.cninfo.com.cn.;
The proposal on Lease of Property was received and approved at the First Session of the Board of Directors for 2013 dated 26 Jun.
2013 and for details, please refer to the Announcement on Lease of Property, Announcement on Resolutions Made at the First
Session of the Board of Directors for 2013 disclosed on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn.
The lease whose profits reaching more than 10% of the total profits of the Company in the reporting period
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Recogni Influences Related-
Involved
Name of Status of Initial Ending tion of rental party
Name of amount of Rental Relati
contract-out leased date of date of basis of income on transacti
leaser the leased income onship
party assets leasing leasing rental the on or
assets
income Company not
Xiamen
Tianyuan(Xia Accordi
Tsann Kun
men) Assets Building 1 Jul. 30 Sep. ng to the Naugh
(China) 1,968.99 360.78 23.88% No
Management and land 2013 2018 contract t
Enterprise
Co., Ltd. price
Co., Ltd.
2. Guarantees provided by the Company
□ Applicable √ Inapplicable
27
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(1) Particulars about illegal external guarantee
□ Applicable √ Inapplicable
The Company was not involved with any illegal external guarantee.
3. Other significant contracts
□ Applicable √ Inapplicable
4. Other significant transactions
□ Applicable √ Inapplicable
X. Commitments made by the Company or shareholders holding over 5% of the Company’s
shares in the reporting period or such commitments carried down into the reporting period
√ Applicable □ Inapplicable
Time of
Commitment making Period of
Commitment Contents Fulfillment
maker commit commitment
ment
Commitment on share
reform
Commitment in the
acquisition report or the
report on equity changes
Commitments made upon
the assets replacement
Commitments made upon
first issuance or refinance
Based on the confidence on the continuous and The Company’s
stable development of the Company, it stocks resumed
committed to increase the shareholding if the trading on 31 Dec.
Company’s stock price lower than HKD2.40 per 2012, but the
share after the implementation of the shares Company’s stock
contraction and trading resumption, and it price hasn’t met the
Within one
would increase no more than 2% shares condition for
FILLMAN year since the
Other commitments made (i.e.3,707,800 shares ) of the total shares issued 28 Dec. shareholding
INVESTMENT date of initial
to minority shareholders by the Company within one year since the date 2012 increase since the
S LIMITED shareholding
of initial shareholding increase. If the plan on date of trading
increase
increasing holding 2% shares of the total shares resumption,
is completed, if the stock price hasn’t reached FILLMAN
the target price, it will perform relevant Investment Limited
approval procedures, and propose to CSRC on hasn’t implemented
continuous implementation of shareholding the shareholding
increase by exemption of offering. increase plan.
Executed timely or not? Yes
Detailed reason for failing The Company’s stocks resumed trading o n 31 Dec. 2012, but the Company’s stock price hasn’t met the condition
to execute and the next for shareholding increase since the date of trading resumption, FILLMAN Investment Limited hasn’t
plan implemented the shareholding increase plan.
XI. Particulars about engagement and disengagement of CPAs firm
Has this semi-annual report been audited?
□ Yes √ No
The semi-annual report had not been audited.
28
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
XII. Particulars about punishment and rectification
□ Applicable √ Inapplicable
The Company was not involved with any punishment and rectification
XIII. Delisting risk due to violation of any law or regulation
□ Applicable √ Inapplicable
The Company was not involved with any risk due to violation of any law or regulation
XIV. Other significant events
√ Applicable □ Inapplicable
The Company considered and judged as well as in virtue of the R&D advantages enjoyed in Taiwan of the related party Tsann Kuen
Xianrui Intelligence Co., Ltd. (refer to as “Tsann Kuen Xianrui Intelligence” for short) for further enhance the overall R&D ability of
the Company and at the same integrated and focused on the medium and long-term development of strategic management of the
Company to form the R&D resources complementary synergy of both sides of the Taiwan Straits for facing with the rapid change of
the household appliances industry, enhancing the household appliances intelligent upgrade management and reducing the possible
related transactions in the future. Based on which, the controlling subsidiary of the Company, Zhangzhou Tsann Kuen had set up a
wholly-owned subsidiary in Hong Kong, which purchased the whole equity of “Tsann Kuen Xianrui Intelligence”. For the specific
contents, please refer to the Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its
Wholly-owned Subsidiary which Purchased the Equity of Tsann Kuen Xianrui Intelligence and the Related Transactions as well as
the Correcting Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned
Subsidiary which Purchased the Equity of Tsann Kuen Xianrui Intelligence and the Related Transactions simultaneously disclosed on
Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn. on 25 Apr. 2015 and 28 Apr. 2015.
The wholly-owned subsidiary in Hong Kong invested by the Company, “ORIENT STAR INVESTMENTS LIMITED” had
completed business registration formalities and as for the details, please refer to the Announcement on the Wholly-owned Subsidiary
in Hong Kong of Zhangzhou Tsann Kuen, the Controlling Subsidiary of the Company Completed the Business Registration
Formalities simultaneously disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn. on 21 May 2015.
Recently the Company is managing the equity f examination and approval formalities of purchasing “Tsann Kuen Xianrui
Intelligence” at Taiwan authorities.
Section VI. Change in Shares & Shareholders
I. Changes in shares
Unit: share
Before the change Increase/decrease in the change (+,-) After the change
Issuance Capitalization of
Bonus
Number Proportion of new public reserve Other Subtotal Number Proportion
shares
shares fund
I. Restricted shares 0 0.00% 0 0.00%
II. Non-restricted shares 185,391,680 100.00% 185,391,680 100.00%
1. Domestically listed foreign shares 185,391,680 100.00% 185,391,680 100.00%
III. Total shares 185,391,680 100.00% 185,391,680 100.00%
29
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Reasons for change in share capital
□ Applicable √ Inapplicable
Particulars about the approval of the change in share capital
□ Applicable √ Inapplicable
The transfer of change in share capital
□ Applicable √ Inapplicable
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and net assets per share attributed to
equity shareholder and financial index etc.
□ Applicable √ Inapplicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Inapplicable
Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure
□ Applicable √ Inapplicable
Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure
□ Applicable √ Inapplicable
II. Total number of shareholders and their shareholding
Unit: share
Total number of common shareholders at the end of the Total number of preferred share holders who had resumed
18308 0
reporting period their voting right at the end of the reporting period
Particulars about shares held by shareholders with a shareholding percentage over 5% or by the top ten shareholders holding shares
Number Pledged or frozen
Increase/decre
Total shares of Number of shares
Nature of Shareholding ase during the
Name of shareholder held at the restricted non-restricted
shareholder percentage reporting
period-end shares shares held Status of Number of
period shares shares
held
FORDCHEE
DEVELOPMENT Foreign corporation 29.10% 53,940,530 53,940,530 N/A N/A
LIMITED
EUPA INDUSTRY 13.04% 24,172,340
Foreign corporation -1,461,378 24,172,340 N/A N/A
CORPORATION LIMITED
GUOTAI JUNAN
SECURITIES(HONGKON Foreign corporation 6.12% 11,339,350 11,339,350 N/A N/A
G) LIMITED
FILLMAN
Foreign corporation 2.49% 4,621,596 4,621,596 N/A N/A
INVESTMENTS LIMITED
Chen Yongquan Domestic individual 1.02% 1,888,819 220,072 1,888,819 N/A N/A
Shanghai Hong Kong
Foreign corporation 0.94% 1,746,982 1,728,648 1,746,982 N/A N/A
Wanguo Securities
Ding Xiaolun Domestic individual 0.65% 1,208,818 176,800 1,208,818 N/A N/A
WU CHI LI Foreign individual 0.61% 1,128,006 807,206 1,128,006 N/A N/A
Xie Qingjun Domestic individual 0.60% 1,107,376 1,876 1,107,376 N/A N/A
Chen Yongqing Foreign individual 0.56% 1,037,898 56,300 1,037,898 N/A N/A
Strategic investor or general corporation
becoming a top ten shareholder due to placing of N/A
new shares
The first, the second and the fourth shareholders are the Company’s corporate controlling
Explanation on associated relationship or/and
shareholders. It is unknown whether the other shareholders of tradable shares are related
persons acting in concert among the
parties or acting-in-concert parties as prescribed in the Administrative Methods for
above-mentioned shareholders
Disclosure of the Shareholding Changes of the Listed Company ’s Shareholders.
30
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium
Number of non-restricted shares Type of shares
Name of shareholder
held at the period-end Type Number
FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign shares 53,940,530
EUPA INDUSTRY CORPORATION LIMITED 24,172,340 Domestically listed foreign shares 24,172,340
GUOTAI JUNAN SECURITIES(HONGKONG)
11,339,350 Domestically listed foreign shares 11,339,350
LIMITED
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign shares 4,621,596
Chen Yongquan 1,888,819 Domestically listed foreign shares 1,888,819
Shanghai Hong Kong Wanguo Securities 1,746,982 Domestically listed foreign shares 1,746,982
Ding Xiaolun 1,208,818 Domestically listed foreign shares 1,208,818
WU CHI LI 1,128,006 Domestically listed foreign shares 1,128,006
Xie Qingjun 1,107,376 Domestically listed foreign shares 1,107,376
Chen Yongqing 1,037,898 Domestically listed foreign shares 1,037,898
Explanation on associated relationship or/and The first, the second and the fourth shareholders are the Company’s corporate controlling
persons acting in concert among the top ten shareholders. It is unknown whether the other shareholders of tradable shares are related
tradable shareholders and between the top ten parties or acting-in-concert parties as prescribed in the Administrative Methods for
tradable shareholders and the top ten shareholders Disclosure of the Shareholding Changes of the Listed Company ’s Shareholders.
Explanation on the top 10 shareholders
Naught
participating in the margin trading business
Whether the shareholders of a company conducted the transaction of repurchase under the agreement during the reporting period
□ Yea √ No
III. Change of the controlling shareholder or the actual controller
Change in controlling shareholder in the reporting period
□ Applicable √ Inapplicable
There was no any change of the controlling shareholder in the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
There was no any change of the actual controller during the reporting period.
IV. Particulars on shareholding increase scheme during the reporting period proposed or
implemented by the shareholders and act-in-concert persons
□ Applicable √ Inapplicable
To the best knowledge of the Company, no shareholder or its act-in-concert party proposed or implemented any shareholding increase
plan during the reporting period.
Section VII. Preference Shares
□ Applicable √ Inapplicable
There was no preference stock during the reporting period.
31
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Section VIII. Directors, Supervisors, Senior Management Staff & Employees
I. Changes in shareholding of directors, supervisors and senior management staff
□ Applicable √ Inapplicable
There was no change in shareholding of directors, supervisors and senior management staffs, for the specific information please refer
to the 2014 Annual Report.
II. Change of directors, supervisors and senior management staff
□ Applicable √ Inapplicable
There was no change of directors, supervisors and senior management staffs, for the specific information please refer to the 2014
Annual Report.
Section IX. Financial Report
I. Auditor’s Report
The auditor’s report had not audited.
II. Financial report (attached)
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
Section X. Documents Available for Reference
1. Text of Semi-annual Report 2015 signed and sealed by the Board of Directors of the Company.
2. Financial statements signed and sealed by legal representative, principal of accounting work, and manager of finance department.
3. In the reporting period, all texts and originals of the Company’s documents and public notices have been publicly disclosed in
China Securities Journal, Hong Kong Ta Kung Pao and www.cninfo.com.cn designated by CSRC.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD
The chairman of the Board: Pan Zhirong
7 Aug. 2015
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
1. Consolidated balance sheet
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Closing balance Opening balance
Current Assets:
Monetary funds 782,188,684.28 886,464,448.01
Settlement reserves
Intra-group lendings
Financial assets measured at fair value of which changes are recorded in current profits and losses 7,482,150.00 2,610,000.00
Derivative financial assets
Notes receivable 2,413,324.00 2,004,498.59
Accounts receivable 226,844,762.82 247,336,334.86
Accounts paid in advance 10,199,697.43 12,758,696.10
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable 4,019,726.47 3,590,399.84
Dividend receivable
Other accounts receivable 33,934,114.16 34,873,104.97
Financial assets purchased under agreements to resell
Inventories 207,960,623.75 193,150,144.07
Assets held for sale
Non-current assets due within 1 year
Other current assets 244,113,215.87 13,087,495.75
Total current assets 1,519,156,298.78 1,395,875,122.19
Non-current assets:
Loans by mandate and advances granted
Available-for-sale financial assets 40,000.00 40,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing real estate 49,003,184.76 51,731,414.90
Fixed assets 158,918,021.18 165,560,208.64
Construction in progress 353,168.37 233,968.67
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 13,836,871.02 12,145,423.16
R&D expense
Goodwill
Long-term deferred expenses 4,631,471.87 4,797,144.17
Deferred income tax assets 17,150,404.66 18,711,962.93
Other non-current assets 3,195,929.47 1,929,374.75
Total of non-current assets 247,129,051.33 255,149,497.22
Total assets 1,766,285,350.11 1,651,024,619.41
33
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Item Closing balance Opening balance
Current liabilities:
Short-term borrowings 295,103,472.00 61,190,000.00
Borrowings from Central Bank
Customer bank deposits and due to banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at fair value of which changes are recorded in current profits and
27,500.00 3,956,259.85
losses
Derivative financial liabilities
Notes payable 24,507,059.36 29,749,982.77
Accounts payable 436,650,060.89 533,071,295.43
Accounts received in advance 11,882,501.25 14,769,179.12
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 39,932,191.98 45,910,725.14
Tax payable 5,356,421.37 6,521,778.61
Interest payable 1,119,097.02 68,275.80
Dividend payable
Other accounts payable 66,435,616.54 53,159,623.33
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 881,013,920.41 748,397,120.05
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income
Deferred income tax liabilities 1,349,588.26 618,966.78
Other non-current liabilities
Total non-current liabilities 1,349,588.26 618,966.78
Total liabilities 882,363,508.67 749,016,086.83
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
34
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Item Closing balance Opening balance
Capital reserves 278,458,862.55 278,458,862.55
Less: Treasury stock
Other comprehensive income -958,078.13 -899,380.20
Specific reserves
Surplus reserves 16,400,043.27 16,400,043.27
Provisions for general risks
Retained profits 54,525,477.11 67,223,203.93
Total equity attributable to owners of the Company 533,817,984.80 546,574,409.55
Minority interests 350,103,856.64 355,434,123.03
Total owners’ equity 883,921,841.44 902,008,532.58
Total liabilities and owners’ equity 1,766,285,350.11 1,651,024,619.41
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
35
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Balance sheet of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Closing balance Opening balance
Current Assets:
Monetary funds 4,324,308.61 3,236,270.65
Financial assets measured at fair value of which changes are
recorded in current profits and losses
Derivative financial assets
Notes receivable 2,413,324.00 2,004,498.59
Accounts receivable 35,692,490.02 28,535,190.86
Accounts paid in advance 386,278.25 159,129.74
Interest receivable
Dividend receivable
Other accounts receivable 2,774,430.09 618,435.08
Inventories 13,857,975.23 9,123,446.86
Assets held for sale
Non-current assets due within 1 year
Other current assets 189,864.71 259,083.99
Total current assets 59,638,670.91 43,936,055.77
Non-current assets:
Available-for-sale financial assets 40,000.00 40,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 985,814,030.83 985,814,030.83
Investing real estate 41,179,546.66 43,650,654.94
Fixed assets 610,032.59 573,821.18
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 123,750.00
R&D expense
Goodwill
Long-term deferred expenses 573,866.39 758,014.49
Deferred income tax assets 1,785,960.13 1,902,042.53
Other non-current assets 4,000.00
Total of non-current assets 1,030,127,186.60 1,032,742,563.97
Total assets 1,089,765,857.51 1,076,678,619.74
36
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Item Closing balance Opening balance
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair value of which changes are
recorded in current profits and losses
Derivative financial liabilities
Notes payable
Accounts payable 64,626,914.36 52,496,435.80
Accounts received in advance 2,273,062.46 5,652,792.49
Payroll payable 1,851,016.69 2,347,177.91
Tax payable 3,046,984.48 898,026.25
Interest payable
Dividend payable
Other accounts payable 475,569,004.41 475,204,952.74
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 547,366,982.40 536,599,385.19
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 547,366,982.40 536,599,385.19
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 271,489,596.88 271,489,596.88
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 16,400,043.27 16,400,043.27
Retained profits 69,117,554.96 66,797,914.40
Total owners’ equity 542,398,875.11 540,079,234.55
Total liabilities and owners’ equity 1,089,765,857.51 1,076,678,619.74
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
3. Consolidated income statement
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Reporting period Same period of last year
I. Total operating revenues 895,194,158.07 890,216,299.51
Including: Sales income 895,194,158.07 890,216,299.51
Interest income
Premium income
Handling charge and commission income
II. Total operating costs 890,596,266.85 863,422,750.23
Including: Cost of sales 771,483,297.01 761,974,414.46
Interest expenses
Handling charge and commission expenses
Surrenders
Net claims paid
Net amount withdrawn for the insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges 3,084,362.18 4,930,309.19
Selling and distribution expenses 41,124,129.32 34,383,454.76
Administrative expenses 82,998,690.21 72,912,587.41
Financial expenses -9,197,945.66 -11,216,974.35
Asset impairment loss 1,103,733.79 438,958.76
Add: Gain/(loss) from change in fair value (“-” means loss) 8,800,909.85 -26,768,171.00
Gain/(loss) from investment (“-” means loss) 6,030,668.82 14,000,118.50
Including: share of profits in associates and joint ventures
Foreign exchange gains (“-” means loss)
III. Business profit (“-” means loss) 19,429,469.89 14,025,496.78
Add: non-operating income 3,229,489.17 8,820,848.29
Including: Gains on disposal of non-current assets 909,792.35 1,533,850.20
Less: non-operating expense 118,195.62 741,772.95
Including: Losses on disposal of non-current assets 117,195.62 548,863.12
IV. Total profit (“-” means loss) 22,540,763.44 22,104,572.12
Less: Income tax expense 3,300,757.78 2,957,439.90
V. Net profit (“-” means loss) 19,240,005.66 19,147,132.22
Net profit attributable to owners of the Company 15,111,025.18 14,857,989.76
Minority shareholders’ income 4,128,980.48 4,289,142.46
VI. After-tax net amount of other comprehensive incomes -78,263.91 368,173.96
After-tax net amount of other comprehensive incomes attributable to owners
-58,697.93 276,130.47
of the Company
(I) Other comprehensive incomes that will not be reclassified into gains
and losses
1. Changes in net liabilities or assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other comprehensive incomes in investees that
cannot be reclassified into gains and losses under the equity method
(II) Other comprehensive incomes that will be reclassified into gains and
-58,697.93 276,130.47
losses
38
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Item Reporting period Same period of last year
1. Enjoyable shares in other comprehensive incomes in investees that
will be reclassified into gains and losses under the equity method
2. Gains and losses on fair value changes of available-for-sale financial
assets
3. Gains and losses on reclassifying held-to-maturity investments into
available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation difference -58,697.93 276,130.47
6. Other
After-tax net amount of other comprehensive incomes attributable to
-19,565.98 92,043.49
minority shareholders
VII. Total comprehensive incomes 19,161,741.75 19,515,306.18
Attributable to owners of the Company 15,052,327.25 15,134,120.23
Attributable to minority shareholders 4,109,414.50 4,381,185.95
VIII. Earnings per share
(I) Basic earnings per share 0.08 0.08
(II) Diluted earnings per share 0.08 0.08
Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before
the business mergers was RMB 0, with the corresponding amount for the last period being RMB 0.
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
4. Income statement of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Reporting period Same period of last year
I. Total sales 78,674,806.46 42,607,992.64
Less: cost of sales 64,075,734.45 29,080,243.87
Business taxes and surcharges 527,918.58 666,158.20
Distribution expenses 4,199,997.82 2,999,669.89
Administrative expenses 7,324,578.11 5,578,182.60
Financial costs 486,155.88 272,108.26
Impairment loss -272,850.93 -1,498,177.31
Add: gain/(loss) from change in fair value (“-” means loss)
Gain/(loss) from investment (“-” means loss) 28,286,287.22 38,189,978.21
Including: income form investment on associates and joint ventures
II. Business profit (“-” means loss) 30,619,559.77 43,699,785.34
Add: non-operating income 59,844.56 20,923.16
Including: Gains on disposal of non-current assets
Less: non-operating expense 35,791.72
Including: Losses on disposal of non-current assets
III. Total profit (“-” means loss) 30,679,404.33 43,684,916.78
Less: Income tax expense 551,011.77 1,396,262.02
IV. Net profit (“-” means loss) 30,128,392.56 42,288,654.76
V. After-tax net amount of other comprehensive incomes
(I) Other comprehensive incomes that will not be reclassified into
gains and losses
1. Changes in net liabilities or assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other comprehensive incomes in investees
that cannot be reclassified into gains and losses under the equity method
(II) Other comprehensive incomes that will be reclassified into gains
and losses
1. Enjoyable shares in other comprehensive incomes in investees
that will be reclassified into gains and losses under the equity method
2. Gains and losses on fair value changes of available-for-sale
financial assets
3. Gains and losses on reclassifying held-to- maturity investments
into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation difference
6. Other
VI. Total comprehensive incomes 30,128,392.56 42,288,654.76
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
5. Consolidated cash flow statement
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 891,092,475.23 933,113,991.58
Net increase of deposits from customers and dues from banks
Net increase of loans from the central bank
Net increase of funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase of deposits of policy holders and investment fund
Net increase of disposal of financial assets measured at fair value of which
changes are recorded into current gains and losses
Cash received from interest, handling charges and commissions
Net increase of intra-group borrowings
Net increase of funds in repurchase business
Tax refunds received 96,320,391.21 112,084,917.29
Other cash received relating to operating activities 31,015,191.04 50,222,647.25
Subtotal of cash inflows from operating activities 1,018,428,057.48 1,095,421,556.12
Cash paid for goods and services 829,124,687.36 863,645,276.78
Net increase of customer lendings and advances
Net increase of funds deposited in the central bank and amount due from
banks
Cash for paying claims of the original insurance contracts
Cash for paying interest, handling charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 135,625,695.10 122,896,952.98
Various taxes paid 12,750,672.45 14,180,644.90
Other cash payment relating to operating activities 91,490,642.38 127,778,620.49
Subtotal of cash outflows from operating activities 1,068,991,697.29 1,128,501,495.15
Net cash flows from operating activities -50,563,639.81 -33,079,939.03
II. Cash flows from investing activities:
Cash received from withdrawal of investments 104,687,335.49 168,647,755.48
Cash received from return on investments 1,343,333.33 5,463,196.35
Net cash received from disposal of fixed assets, intangible assets and other
2,448,937.97 1,218,609.75
long-term assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities 652,082,700.00
Subtotal of cash inflows from investing activities 760,562,306.79 175,329,561.58
Cash paid to acquire fixed assets, intangible assets and other long-term
28,960,256.09 20,362,851.60
assets
Cash paid for investment 330,000,000.00 440,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities 651,316,932.63 896,866,338.47
Subtotal of cash outflows from investing activities 1,010,277,188.72 1,357,229,190.07
41
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Item Reporting period Same period of last year
Net cash flows from investing activities -249,714,881.93 -1,181,899,628.49
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Including: Cash received from minority shareholder investments by
subsidiaries
Cash received from borrowings 432,643,240.17 592,439,628.00
Cash received from issuance of bonds
Other cash received relating to financing activities 143,957,350.00
Subtotal of cash inflows from financing activities 432,643,240.17 736,396,978.00
Repayment of borrowings 197,354,358.17 143,526,470.00
Cash paid for interest expenses and distribution of dividends or profit 36,902,959.60 40,906,844.49
Including: dividends or profit paid by subsidiaries to minority
8,495,712.79 11,589,494.33
shareholders
Other cash payments relating to financing activities 12,304,200.00
Sub-total of cash outflows from financing activities 234,257,317.77 196,737,514.49
Net cash flows from financing activities 198,385,922.40 539,659,463.51
IV. Effect of foreign exchange rate changes on cash and cash equivalents -1,617,397.02 5,011,409.41
V. Net increase in cash and cash equivalents -103,509,996.36 -670,308,694.60
Add: Opening balance of cash and cash equivalents 469,965,448.01 834,088,959.68
VI. Closing balance of cash and cash equivalents 366,455,451.65 163,780,265.08
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
6. Cash flow statement of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 70,974,247.92 73,432,284.15
Tax refunds received
Other cash received relating to operating activities 23,173,816.87 27,100,050.69
Subtotal of cash inflows from operating activities 94,148,064.79 100,532,334.84
Cash paid for goods and services 66,918,834.13 77,681,958.10
Cash paid to and for employees 6,395,528.78 3,793,394.55
Various taxes paid 2,757,295.68 2,247,632.14
Other cash payment relating to operating activities 17,263,059.96 30,839,863.59
Subtotal of cash outflows from operating activities 93,334,718.55 114,562,848.38
Net cash flows from operating activities 813,346.24 -14,030,513.54
II. Cash flows from investing activities:
Cash received from retraction of investments
Cash received from return on investments 28,286,287.22 38,189,978.21
Net cash received from disposal of fixed assets, intangible assets and other
5,000.00
long-term assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities 28,286,287.22 38,194,978.21
Cash paid to acquire fixed assets, intangible assets and other long-term
119,052.90 321,135.90
assets
Cash paid for investment
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 119,052.90 321,135.90
Net cash flows from investing activities 28,167,234.32 37,873,842.31
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 0.00 0.00
Repayment of borrowings
Cash paid for interest expenses and distribution of dividends or profit 27,883,693.93 25,954,835.20
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 27,883,693.93 25,954,835.20
Net cash flows from financing activities -27,883,693.93 -25,954,835.20
IV. Effect of foreign exchange rate changes on cash and cash equivalents -8,848.67 -15,499.05
V. Net increase in cash and cash equivalents 1,088,037.96 -2,127,005.48
Add: Opening balance of cash and cash equivalents 3,236,270.65 11,811,615.43
VI. Closing balance of cash and cash equivalents 4,324,308.61 9,684,609.95
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
7. Consolidated statement of changes in owners’ equity
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Reporting period
Equity attributable to owners of the Company
Item Other equity instruments
Less: treasury Other comprehensive Specific General risk Minority interests Total owners’ equity
Share capital Perpetual Capital reserve Surplus reserve Retained profit
Preferred shares Other stock incomes reserve reserve
bonds
I. Balance at the end of the previous year 185,391,680.00 278,458,862.55 -899,380.20 16,400,043.27 67,223,203.93 355,434,123.03 902,008,532.58
Add: change of accounting policy
Correction of errors in previous periods
Business mergers under the same control
Other
II. Balance at the beginning of the year 185,391,680.00 278,458,862.55 -899,380.20 16,400,043.27 67,223,203.93 355,434,123.03 902,008,532.58
III. Increase/ decrease in the period (“-” means decrease) -58,697.93 -12,697,726.82 -5,330,266.39 -18,086,691.14
(I) Total comprehensive incomes -58,697.93 15,111,025.18 4,128,980.48 19,181,307.73
(II) Capital increased and reduced by owners
1. Common shares increased by shareholders
2. Capital increased by holders of other equity instruments
3. Amounts of share-based payments recognized in owners’ equity
4. Other
(III) Profit distribution -27,808,752.00 -9,439,680.90 -37,248,432.90
1. Appropriations to surplus reserves
2. Appropriations to general risk provisions
3. Appropriations to owners (or shareholders) -27,808,752.00 -9,439,680.90 -37,248,432.90
4. Other
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital) from capital public reserves
2. New increase of capital (or share capital) from surplus reserves
3. Surplus reserves for making up losses
4. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other -19,565.97 -19,565.97
IV. Closing balance 185,391,680.00 278,458,862.55 -958,078.13 16,400,043.27 54,525,477.11 350,103,856.64 883,921,841.44
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Unit: RMB Yuan
Same period of last year
Equity attributable to owners of the Company
Item Other equity instruments Other Minority interests Total owners’ equity
Share capital Preferred Capital reserve Less: treasury stock comprehensive Specific reserve Surplus reserve General risk reserve Retained profit
Perpetual bonds Other incomes
shares
I. Balance at the end of the previous year 185,391,680.00 278,454,447.07 -1,382,202.82 11,495,983.58 46,733,303.43 353,397,081.98 874,090,293.24
Add: change of accounting policy
Correction of errors in previous periods
Business mergers under the same control
Other
II. Balance at the beginning of the year 185,391,680.00 278,454,447.07 -1,382,202.82 11,495,983.58 46,733,303.43 353,397,081.98 874,090,293.24
III. Increase/ decrease in the period (“-” means decrease) 4,415.48 482,822.62 4,904,059.69 20,489,900.50 2,037,041.05 27,918,239.34
(I) Total comprehensive incomes 482,822.62 51,348,795.39 14,753,316.11 66,584,934.12
(II) Capital increased and reduced by owners
1. Common shares increased by shareholders
2. Capital increased by holders of other equity
instruments
3. Amounts of share-based payments recognized in
owners’ equity
4. Other
(III) Profit distribution 4,904,059.69 -30,858,894.89 -12,877,215.93 -38,832,051.13
1. Appropriations to surplus reserves 4,904,059.69 -4,904,059.69
2. Appropriations to general risk provisions
3. Appropriations to owners (or shareholders) -25,954,835.20 -12,877,215.93 -38,832,051.13
4. Other
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital) from
capital public reserves
2. New increase of capital (or share capital) from
surplus reserves
3. Surplus reserves for making up losses
4. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other 4,415.48 160,940.87 165,356.35
IV. Closing balance 185,391,680.00 278,458,862.55 -899,380.20 16,400,043.27 67,223,203.93 355,434,123.03 902,008,532.58
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
8. Statement of changes in owners’ equity of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Reporting period
Item Other equity instruments Other comprehensive
Share capital Capital reserve Less: treasury stock Specific reserve Surplus reserve Retained profit Total owners’ equity
Preferred shares Perpetual bonds Other incomes
I. Balance at the end of the previous year 185,391,680.00 271,489,596.88 16,400,043.27 66,797,914.40 540,079,234.55
Add: change of accounting policy
Correction of errors in previous periods
Other
II. Balance at the beginning of the year 185,391,680.00 271,489,596.88 16,400,043.27 66,797,914.40 540,079,234.55
III. Increase/ decrease in the period (“-” means decrease) 2,319,640.56 2,319,640.56
(I) Total comprehensive incomes 30,128,392.56 30,128,392.56
(II) Capital increased and reduced by owners
1. Common shares increased by shareholders
2. Capital increased by holders of other equity
instruments
3. Amounts of share-based payments recognized in
owners’ equity
4. Other
(III) Profit distribution -27,808,752.00 -27,808,752.00
1. Appropriations to surplus reserves
2. Appropriations to owners (or shareholders)
3. Other -27,808,752.00 -27,808,752.00
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital) from
capital public reserves
2. New increase of capital (or share capital) from
surplus reserves
3. Surplus reserves for making up losses
4. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other
IV. Closing balance 185,391,680.00 271,489,596.88 16,400,043.27 69,117,554.96 542,398,875.11
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Unit: RMB Yuan
Same period of last year
Item Other equity instruments Other comprehensive
Share capital Capital reserve Less: treasury stock Specific reserve Surplus reserve Retained profit Total owners’ equity
Preferred shares Perpetual bonds Other incomes
I. Balance at the end of the previous year 185,391,680.00 271,485,181.40 11,495,983.58 48,616,212.43 516,989,057.41
Add: change of accounting policy
Correction of errors in previous periods
Other
II. Balance at the beginning of the year 185,391,680.00 271,485,181.40 11,495,983.58 48,616,212.43 516,989,057.41
III. Increase/ decrease in the period (“-” means decrease) 4,415.48 4,904,059.69 18,181,701.97 23,090,177.14
(I) Total comprehensive incomes 49,040,596.86 49,040,596.86
(II) Capital increased and reduced by owners
1. Common shares increased by shareholders
2. Capital increased by holders of other equity
instruments
3. Amounts of share-based payments recognized in
owners’ equity
4. Other
(III) Profit distribution 4,904,059.69 -30,858,894.89 -25,954,835.20
1. Appropriations to surplus reserves 4,904,059.69 -4,904,059.69
2. Appropriations to owners (or shareholders) -25,954,835.20 -25,954,835.20
3. Other
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital) from capital
public reserves
2. New increase of capital (or share capital) from surplus
reserves
3. Surplus reserves for making up losses
4. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other 4,415.48 4,415.48
IV. Closing balance 185,391,680.00 271,489,596.88 16,400,043.27 66,797,914.40 540,079,234.55
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Wu Yanru Chief of the accounting division: Wu Yanru
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Tsann Kuen (China) Enterprise Co., Ltd.
Annotation of 30 Jun. 2015
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
I. Company Profile
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 (Hong
Kong) Co., Ltd., EUPA Industry Corporation Limited and Hong Kong Fillman Investment Co., Ltd..
On 16 February 1993, with the approval of the Ministry of Foreign Trade and Economic
Co-operation, the Company was reorganized into an incorporated company and was renamed as
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. In according to the 5th special Board of
Director in 2012, “Bill about Implementation of Drawing back Share” authorized by third special
General Meeting in 2012,document XTCS[2012] NO.698 “Subscriptions about Reduction of
Capital of TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Authorized by Xiamen Investment
Promotion Bureau” authorized by Commerce Department, the Company used the general capital of
1,112,350,077 shares as base number implementing the plan of share reduction at the ratio of 1:6 to
all the register share holders in 28 December 2012. Upon the completion of share reduction, the
general capital of the Company reduced from 1,112,350,077 shares to 185,391,680 shares. By 30
June 2015, the registered capital of the Company decreased to RMB 185,391,680.
Follow The Ministry of Commerce of the People’s Republic of China approved (The No.
[2005]3107 ), On December 6, 2006, the Company received the
[2006] No.266 file 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
2015, total B shares hold by the three legal shareholders (EUPA Industry Corporation Limited,
Fordchee Development Limited and Fillman Investment Limited) are 82,734,466 shares.( account
for 44.63% of the share capital).
Legal representative: Pan, Zhirong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province
The parent: Star Comgistic Capital Co. Ltd.
The Company operates within the electrical machinery and equipment manufacturing industry.
The industry of the company: electrical machinery and equipment manufacturing.
The approved business scope: the main business is to develop, manufacture household appliances,
electronics, light industrial products, modern office supplies. Design and manufacture of molds
associated with these products in domestic and international sales of the company’s products and
after-sales service. Wholesale and retail household appliances, electronic products, electrical
equipment, office supplies, kitchen utensils, pre-packaged food (limited to branches), import and
export related business and provide after-sales service (the above description do not involve state
trading commodity goods, involving quota license management products are according to the
relevant provisions of the State for the regulations application).
There were 8 subsidiaries be included in the 2015 semi-annual consolidated scope of the Company.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
The consolidated scope of the reporting period both increased and decreased one subsidiary over the
last year, and for the details, please refer to Note VII “Changes of scope of consolidation financial
statements”.
The Financial Report approved by the Board of the Directors of the Company and disclosed on 7
Aug. 2015.
II. Basis for preparation of the financial statements
1. Basis for preparation
The financial statements of company have been prepared on basis of going concern in conformity
with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for
Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
Finance issued order No. 33, the Ministry of Finance revised order No. 76) on 15 February 2006,
and revised Accounting Standards (order 41 of the Ministry of Finance) and Compilation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 15 – General Provisions
on Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission
(CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business
Enterprises, the company has adopted the accrual basis of accounting. Except for certain financial
instruments which are measured by at fair value, the Company adopts the historical cost as the
principle of measurement in the financial statements. Where assets are impaired, provisions for
asset impairment are made in accordance with relevant requirements.
2. Continuation
The Company was not involved with any event or situation that supposed to cause significant
misgiving on the continuation within 12 months from the period-end of the reporting period.
III. Statement of Compliance with Enterprise Accounting Standards
The financial statements of the company are recognized and measured in accordance with the
regulations in the Chinese Accounting Standards for Business Enterprises and they give a true and
fair view of the financial position, business result and cash flow of the Company as of 30 Jun. 2015.
In addition, the financial statements of the company comply, in all material respects, with the
revised disclosing requirements for financial statements and the Compilation Rules for Information
Disclosure by Companies Offering Securities to the Public No. 15—General Provisions on
Financial Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in
2014.
IV. Important Accounting Principles and Accounting Estimates
The Company and subsidiaries are principally engaged in the production and operation. The
Company and subsidiaries in accordance with the actual production and management features,
according to the relevant provisions of Accounting Standards, to make a number of specific
accounting policies and accounting estimates for other transactions and events of revenue
recognition, see Note IV. 25 “Revenue” for the description. For description of significant
accounting judgments and estimates made by management, see Note IV. 30 “Significant
accounting judgments and estimates”.
1. Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim
period refers to the reporting period shorter than a complete annual period. The accounting period
of the Company is the calendar year from January 1 to December 31.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of
assets for processing until. The company has a 12 -month operating cycle, and its assets and
liabilities as liquidity criteria for the classification.
3. Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its
domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose CNY
as their functional currency, the overseas subsidiaries decide the HKD or USD as their functional
currency in accordance with the business in which currency of the primary economic environment.
The Company adopts CNY to prepare its functional statements.
4. Business combination
A business combination is a transaction or event that brings together two or more separate entities
into one reporting entity. Business combinations are classified into business combinations involving
enterprises under common control and business combinations not involving enterprises under
common control.
(1) Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in
which all of the combining enterprises are ultimately controlled by the same party or parties both
before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the
combination date, obtains control of another enterprise participating in the combination is the
absorbing party, while that other enterprise participating in the combination is a party being
absorbed. Combination date is the date on which the absorbing party effectively obtains control of
the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the
enterprise being combined at the combination date. The difference between the carrying amount of
the net assets obtained and the carrying amount of consideration paid for the combination (or the
total face value of shares issued) is adjusted to the capital premium (or share premium) in the
capital reserve. If the balance of the capital premium (or share premium) is insufficient, any excess
is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to
the combination shall be recognized as an expense through profit or loss for the current period when
incurred.
(2) Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination
in which all of the combining enterprises are not ultimately controlled by the same party or parties
both before and after the business combination.
For a business combination not involving enterprises under common control, the party that, on the
acquisition date, obtains control of another enterprise participating in the combination is the
acquirer, while that other enterprise participating in the combination is the acquiree. Acquisition
date is the date on which the acquirer effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost
including the sum of fair value, at the acquisition date, of the assets given, liabilities incurred or
assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the
acquirer in respect of auditing, legal services, valuation and consultancy services etc and other
associated administrative expenses attributable to the business combination are recognized in profit
or loss when they are incurred.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
The transaction cost arose from issuing of equity securities or liability securities shall be initially
recognized as equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination cost at the
fair value at the acquisition date. If, within the 12 months after acquisition, additional information
can prove the existence of related information at acquisition date and the contingent consideration
need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired
through the business combination shall be measured by the fair value at the acquisition date. Where
the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall
be accounted for according to the following requirements: (i) the acquirer shall reassess the
measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent
liabilities and measurement of the cost of combination; (ii) if after that reassessment, the cost of
combination is still less than the acquirer’s interest in the fair values of the acquiree’s identifiable
net assets, the acquirer shall recognize the remaining difference immediately in profit or loss for the
current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity
with the conditions applied for recognition of deferred income tax, if, within the 12 months after
acquisition, additional information can prove the existence of related information at acquisition date
and the expected economic benefits on the acquisition date arose from deductible temporary
difference by the acquiree can be achieved, relevant income tax assets can be recognized, and
goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the
current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the
recognition of deferred income tax assets is related to the combination.
For a business combination not involving enterprise under common control, which achieved in
stages that involves multiple exchange transactions, according to “The notice of the Ministry of
Finance on the issuance of Accounting Standards Interpretation No. 5” (Cai-Kuai [2012] No. 19)
and Article 55 of “Accounting Standards for Business Enterprises No. 33 - Consolidated Financial
Statements” on the “package deal” criterion (see Note IV. 5. 2), to judge the multiple exchange
transactions whether they are the“package deal”. If it belong to the “package deal” in reference to
the preceding paragraphs of this section and the Notes described in 4.13 “long-term investment”
accounting treatment, if it does not belong to the “package deal” to distinguish the individual
financial statements and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree’s equity
investment before the acquisition date and the cost of new investment at the acquisition date, as the
initial cost of the investment, the acquiree’s equity investment before the acquisition date involved
in other comprehensive income, in the disposal of the investment will be in other comprehensive
income associated with the use of infrastructure and the acquiree directly related to the disposal of
assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or
liabilities other than in the corresponding share of the lead, and the rest into the current investment
income).
In the combination financial statements, the equity interest in the acquiree previously held before
the acquisition date re-assessed at the fair value at the acquisition date, with any difference between
its fair value and its carrying amount is recorded as investment income. The previously-held equity
interest in the acquiree involved in other comprehensive income and other comprehensive income
associated with the purchase of the foundation should be used party directly related to the disposal
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
of assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the acquiree is remeasured defined benefit plans other than changes in net
liabilities or net assets due to a corresponding share of the rest of the acquisition date into current
investment income).
5. Preparation of the consolidated financial statements
(1) The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as to
obtain benefits from its operating activities. The scope of consolidation includes the Company and
all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant
elements involved in the control of the change, the company will be re-evaluated.
(2) Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date
when the control over the net assets and business decisions of the subsidiary is effectively obtained,
and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of
disposal (the date when control is lost) are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the period,
no adjustment is made to the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating
results and cash flows from the acquisition (the date when the control is obtained) are included in
the consolidated income statement and consolidated statement of cash flows, as appropriated; no
adjustment is made to the opening balance and comparative figures in the consolidated financial
statements.
Where a subsidiary was acquired during the reporting period, through a business combination
involving enterprises under common control, the financial statements of the subsidiary are included
in the consolidated financial statements. The results of operations and cash flow are included in the
consolidated balance sheet and the consolidated income statement, respectively, based on their
carrying amounts, from the date that common control was established, and the opening balances and
the comparative figures of the consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the
Company, the Company makes necessary adjustments to the financial statements of the subsidiary
based on the Company’s own accounting period or accounting policies. Where a subsidiary was
acquired during the reporting period through a business combination not under common control, the
financial statements was reconciliated on the basis of the fair value of identifiable net assets at the
date of acquisition. Intra-Group balances and transactions, and any unrealized profit or loss arising
from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are
presented separately in the consolidated balance sheet within shareholders’/ owners’ equity and net
profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented
separately as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a
subsidiary exceeds the minority shareholders’ portion of the opening balance of
shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity
investment or other reasons, the remaining equity investment is re-measured at its fair value at the
date when control is lost. The difference between 1) the total amount of consideration received from
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
the transaction that resulted in the loss of control and the fair value of the remaining equity
investment and 2) the carrying amounts of the interest in the former subsidiary’s net assets
immediately before the loss of the control is recognized as investment income for the current period
when control is lost. Other comprehensive income related to the former subsidiary’s equity
investment, using the foundation and the acquiree directly related to the disposal of the same assets
or liabilities are accounted when the control is lost(i.e., in addition to the former subsidiary is
remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the
rest are transferred to the current investment income). The retained interest is subsequently
measured according to the rules stipulated in the - “Chinese Accounting Standards for Business
Enterprises No. 2 - Long-term equity investment” or “Chinese Accounting Standards for Business
Enterprises No. 22 - Determination and measurement of financial instruments”. See Note IV. 13
Long-term equity investments and Note IV. 9 Financial instruments for details.
The company through multiple transactions step deals with disposal of the subsidiary’s equity
investment until the loss of control, need to distinguish between equity until the disposal of a
subsidiary’s loss of control over whether the transaction is package deal. Terms of the transaction
disposition of equity investment in a subsidiary, subject to the following conditions and the
economic impact of one or more of cases, usually indicates that several transactions should be
accounted for as a package deal: ① these transactions are considered simultaneously, or in the case
of mutual influence made, ② these transactions as a whole in order to achieve a complete business
results; ③ the occurrence of a transaction depends on occurs at least one other transaction; ④ a
transaction look alone is not economical, but when considered together with other transaction is
economical. If they does not belong to the package deal, each of them separately, as the case of a
transaction in accordance with “without losing control over the disposal of a subsidiary part of a
long-term equity investments“ (see Note IV. 10. 2, 4) and “due to the disposal of certain equity
investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)
principles applicable accounting treatment. Until the disposal of the equity investment loss of
control of a subsidiary of the transactions belonging to the package deal, the transaction will be
used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing
control of the price of each disposal entitled to share in the net assets of the subsidiary ‘s investment
corresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the
loss of control or loss in the period.
6. Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. A joint
arrangement is either a joint operation or a joint venture, depending of the rights and obligation of
the Company in the joint arrangement. A joint operation is a joint arrangement whereby the
Company has rights to the assets, and obligations for the liabilities, relating to the arrangement. A
joint venture is a joint arrangement whereby the Company has rights to the net assets of the
arrangement.
The Company accounts for joint ventures using the equity method, see Note IV. 13. 2.②
“Long-term equity investment measured by equity method” for details.
The company, a joint operator, recognizes in relation to its interest in a joint operation: (a) its assets,
including its share of any assets held jointly; (b) its liabilities, including its share of any liabilities
incurred jointly; (c) its revenue from the sale of its share of the output arising from the joint
operation; (d) its share of the revenue from the sale of the output by the joint operation; and (e) its
expenses, including its share of any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint operator,
such as a sale or contribution of assets, the Company, prior to disposal of the assets to a third party
by the joint operation, recognizes gains and losses resulting from such a transaction only to the
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
extent of the other parties’ interests in the joint operation. When there is evidence of a reduction in
the net realizable value of the assets to be sold or contributed to the joint operation, or of an
impairment loss of those assets which is in line with provision stipulated by CAS 8, those losses are
recognized fully by the Company. When there is evidence of a reduction in the net realizable value
of the assets to be purchased or of an impairment loss of those assets, the Company shall recognize
its share of those losses.
7. Recognition standard of cash and cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and
investments having short holding term (normally will be due within three months from the day of
purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.
8. Translation of foreign currency operation and foreign currency statement
(1) Translation in foreign exchange transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by
applying the spot exchange rate on the date of the transaction/an exchange rate that approximates
the actual spot exchange rate on the date of transaction. The exchange of foreign currency and
transactions related to the foreign exchange are translated at the spot exchange rate.
(2) Translation of monetary foreign currency and non-monetary foreign currency
On the balance sheet date, foreign currency monetary items are translated using the spot exchange
rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss,
except for ① those relating to foreign currency borrowings specifically for construction and
acquisition of qualifying assets, which are capitalized in accordance with the principle of
capitalization of borrowing costs, ② hedging accounting, the exchange difference related to
hedging instruments for the purpose of net oversea operating investment is recorded in the
comprehensive income till the date of disposal and recognized in profit or loss of the period;
exchange difference from changes of other account balance of foreign currency monetary items,
③available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot
exchange rate prevailing on the transaction date, and the amount denominated in the functional
currency is not changed. Non-monetary foreign currency items measured at fair value are translated
at the spot exchange rate prevailing at the date when the fair values are determined. The exchange
difference thus resulted are recognized in profit or loss for the current period or as capital reserve.
(3) The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a foreign
currency monetary item constituting a net investment in a foreign operation, exchange difference
arising from changes in exchange rates are recognized as “exchange differences arising on
translation of financial statements denominated in foreign currencies” in owner’s equity, and in
profit or loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules.
Assets and liabilities in the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date; all equity items except for retained earnings are translated at the spot exchange
rates at the dates on which such items occur; income and expenses in income statement are
translated at the spot exchange rates at the date of transaction; the opening retained earnings is the
closing retained earnings of the last period after translation; the closing balance of retained earnings
is calculates and presented in the basis of each translated income statements and profit distribution
item; the difference arising between the assets and liabilities and shareholders’ equity shall be
booked as translation difference of foreign currency statements, and shall be presented as a separate
component of equity in the balance sheet. On a loss of control over Group’s oversea operation due
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to disposal, the Company transfers the accumulated or proportionate share of the accumulated
exchange difference arising on translation of financial statements of this oversea operation
attributable to the owners’ equity of the Company and presented under shareholders’ equity, to
profit or loss in the period in which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot
exchange rates on the date of cash flows. The effect of exchange rate changes on cash is separately
presented as an adjustment item in the cash flow statement.
The opening and actual amount of last year are presented in the financial statement after translation.
At the disposal of all of the company’s ownership interest in a foreign operation, or due to the
disposal of part of the equity investment or other reasons, the loss of control over a foreign
operation, the project owner’s equity in the balance sheet listed under the relevant overseas
operations attributable to statements of the parent company ‘s shareholders’ equity of foreign
currency translation differences, all transferred to the disposal of the income statement.
At the disposal of part of the equity investment or other causes lower hold percentage overseas
business interests, but does not lose control over a foreign operation, and disposal of the foreign
operation section related to foreign currency translation differences attributable to minority interests,
is not transferred to the income statement. At the disposal of a foreign operation as part of the equity
joint venture or joint ventures, foreign currency financial statements of the foreign operation and the
associated translation difference in proportion to dispose of the foreign operation into the disposal
of the income statement.
9. Financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or
financial liability. The financial assets and financial liabilities initially recognized by the Company
shall be measured at their fair values. For the financial assets and liabilities measured at their fair
values and of which the variation is recorded into the profits and losses of the current period, the
transaction expenses thereof shall be directly recorded into the profits and losses of the current
period and for other categories of financial assets and financial liabilities, the transaction expenses
thereof shall be included into the initially recognized amount.
(1) Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has
an active market, the Company uses quoted price in the active market to establish its fair value. The
quoted price in the active market refers to the price that can be regularly obtained from exchange
market, agencies, industry associations, pricing authorities; it represents the fair market trading
price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value
by using a valuation technique. Valuation techniques include using recent arm’s length market
transactions between knowledgeable, willing parties, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value
of a competitor’s interest rate swap quoted by a recognized financial institution as at the Company’s
balance sheet date in accordance with the principle of consistency.
(2) Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade
date basis. On initial recognition, the Company’s financial assets are classified into one of the four
categories, including financial assets at fair value though profit or loss, held-to maturity investments,
loans and receivables and available-for-trade financial assets. A financial asset is recognized
initially at fair value. In the case of financial assets at fair value through profit or loss, relevant
transaction costs are immediately charged to the profit and loss of the current period; transaction
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costs relating to financial assets of other categories are included in the amount initially recognized.
① Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit
or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively
managed, and there is objective evidence indicating that the enterprise recently manages this
portfolio for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging
instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by
delivery of an unquoted equity instrument (without a quoted price from an active market) whose
fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for
subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it
meets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement or
recognition of relevant gains or losses that would otherwise arise from measuring the financial
instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value
basis, and is reported to the enterprise’s key management personnel. Formal documentation
regarding risk management or investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any
gains or losses arising from changes in the fair value and any dividends or interest income earned
on the financial assets are recognized in the profit or loss.
② Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.
Such kind of financial assets are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition, impairment or amortization are
recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the
expected life of the financial asset or financial liability or, where appropriate, a shorter period to the
net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow
considering all contractual terms of the financial asset or financial liability without considering
future credit losses, and also consider all fees paid or received between the parties to the contract
giving rise to the financial asset and financial liability that are an integral part of the effective
interest rate, transaction costs, and premiums or discounts, etc.
③ Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are
not quoted in an active market. Financial assets classified as loans and receivables by the Company
include note receivables, account receivables, interest receivable dividends receivable and other
receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit
or loss.
④ Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on
initial recognition as available for trade, and financial assets that are not classified as financial
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assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses
arising from changes in the fair value are recognized as other comprehensive income and included
in the capital reserve, except that impairment losses and exchange differences related to amortized
cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss,
until the financial assets are derecognized, at which time the gains or losses are released and
recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the financial
assets available-for-trade are held, are recognized in investment gains.
(3) Impairment of financial assets
The Company shall carry out an inspection, on each balance sheet day, on the carrying amount of
the financial assets other than those measured at their fair values and of which the variation is
recorded into the profits and losses of the current period. Where there is any objective evidence
proving that such financial asset has been impaired, an impairment provision shall be made.
The Company assesses at the balance sheet date the carrying amount of every financial asset except
for the financial assets that measured by the fair value. If there is objective evidence indicating a
financial asset may be impaired, a provision is provided for the impairment.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the
estimated present value of future cash flow. The difference is recorded as impairment loss. If there
is objective evidence to indicate the recovery of value of financial assets after impairment, and it is
related with subsequent event after recognition of loss, the impairment loss recorded originally can
be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed
the amortized cost of the financial assets without provisions of impairment loss on the reserving
date.
② Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily
according to the integrated relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining
in fair value that had been recognized in capital reserve shall be removed and recognized in profit or
loss. The amount of the cumulative loss that is removed shall be difference between the acquisition
cost with deduction of recoverable amount less amortized cost, current fair value and any
impairment loss on that financial asset previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of the
financial asset is recovered, and it is objectively related to an event occurring after the impairment
loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on
available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss
on available-for-trade debt instrument is recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value
cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be
settled by delivery of such an unquoted equity instrument shall not be reversed.
(4) Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
① the rights to receive cash flows from the asset have expired;
② the enterprise has transferred its rights to receive cash flows from the asset to a third party under
a pass-through arrangement; or
③ the enterprise has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
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If the enterprise has neither retained all the risks and rewards from the financial asset nor control
over the asset, the asset is recognized according to the extent it exists as financial asset, and
correspondent liability is recognized. The extent of existence refers the level of risk by the financial
asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the
carrying amount of the financial asset transferred; and (b) the sum of the consideration received
from the transfer and any cumulative gain or loss that had been recognized in other comprehensive
income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognized and the part
that is derecognized, based on the relative fair value of those parts. The difference between (a) the
carrying amount allocated to the part derecognized; and (b) the sum of the consideration received
for the part derecognized and any cumulative gain or loss allocated to the part derecognized which
has been previously recognized in other comprehensive income, is recognized in profit or loss.
(5) Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair
value through profit or loss and other financial liabilities. For financial liabilities at fair value
through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the
current period, and transaction costs relating to other financial liabilities are included in the initial
recognition amounts.
① Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at
the initial recognition to be measured by the fair value follows the same criteria as the classification
by which financial assets held-for-trade and financial assets designed at the initial recognition to be
measured by the fair value and their changes are recorded in the current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair
values are adopted for subsequent measurement. All the gains or losses on the change of fair value
and the expenses on dividends or interests related to these financial liabilities are recognized in
profit or loss for the current period.
② Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price
in an active market and their fair value cannot be measured reliably, is subsequently measured by
cost Other financial liabilities are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition or amortization is recognized in profit
or loss for the current period.
(6) Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation
(or part of it) is discharged or cancelled or has expired. An agreement between the Company (an
existing borrower) and existing lender to replace original financial liability with a new financial
liability with substantially different terms is accounted for as an extinguishment of the original
financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference
between the carrying amount of the financial liability (or part of the financial liability) derecognized
the consideration paid (including any non-cash assets transferred or new financial liabilities
assumed) in profit or loss.
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date
when the derivative contracts are entered into and are substantially re-measured at fair value. The
resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not
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designated as a financial asset or financial liability at fair value though profit or loss, and the treated
as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative
are not closely related to the economic characteristics and risks of the host contract; and (b) a
separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative. If the Company is unable to measure the embedded derivative separately either at
acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a
financial asset or financial liability at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial
assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial
asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. The consideration received from issuing equity instruments, net
of transaction costs, are added to shareholders’ equity. All types of distribution (excluding stock
dividends) made by the Company to holders of equity instruments are deducted from shareholders’
equity. The Group does not recognize any changes in the fair value of equity instruments.
10. Receivables
The receivables by the Company includes account receivables, and other receivables.
(1) Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective
evidence proving that the receivables have been impaired, an impairment provision shall be made:
① A serious financial difficulty occurs to the issuer or debtor;
② The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the
payment of interests or the principal, etc.;
③ The debtor will probably become bankrupt or carry out other financial reorganizations;
④ Other objective evidences showing the impairment of the receivables.
(2) Method for bad debts provision
① Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 10Proportion receivables are classified as receivables
of individual significance.
For an account receivable that is individually significant, the asset is individually assessed for
impairment, the impairment loss is recognized at the difference between the present value of future
cash flow less the carrying amount, and provision is made accordingly.
② Provisions of bad debts in account receivables that individually insignificant items with similar
credit risk characteristics that have significant risk:
A. Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included
in a group of financial assets with similar credit risk characteristics and collectively assessed for
impairment. Such credit risk reflects the repayment of all due amount under the contract, and is
related to the estimation of future cash flow expected to be derived from the assets.
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Evidence of portfolios:
Item Basis
Age portfolios Age condition
Related party portfolios Related party relationship
B. Provision by credit risk characteristics
During the Company impairment test, the amount of bad debts provisions is determined by the
assessed result from the experience of historical loss and current economic status and the existing
loss in the estimated account receivables according to the set of account receivables and credit risk
characteristic.
Provision for different portfolios:
Item Provision
Age portfolios Age analysis method
Related party portfolios No allowance for bad debt, Unless the related party is insolvent
a. Portfolio by age analysis
Category Proportion for accounts receivable (%) Proportion for other receivable (%)
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
b. Adopt other methods for recognition of impairment allowances
Group name Proportion for accounts receivable (%) Proportion for other receivable (%)
Related party group 0.00 0.00
③ Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account
receivables individually for impairment when are of following characteristics: if there is objective
evidence indicating the impairment, the impairment loss is recognized at the difference between the
present value of future cash flow less the carrying amount, and provision is made accordingly. For
examples: receivables of individual insignificance bears differing credit risk characteristics to other
receivables of individual insignificance account receivables with related parties; account receivables
under litigations or arbitrations, or account receivables with obvious indication that debtor cannot
fulfill the obligation of repayment.
(3) The reversal of bad debts provision
If there is objective evidence of recovery in value of account receivables, and the recovery can be
related to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed and recognized in profit or loss. However, the reversal shall not result in
a carrying amount that exceeds what the amortized cost would have been had the impairment loss
not been recognized at the date the impairment is reversed.
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11. Inventories
(1) Classification of inventory
Inventories are classified into materials in transit, raw materials, work-in-progress, finished goods,
materials and goods of consignment and revolving materials etc.
(2) Valuation method of inventories
Inventories are initially carried at the planed cost, to record the difference between planned cost and
actual cost through the cost variances account, and carryover the cost variances of issued inventory
on schedule, to adjust the planned cost to actual cost. Cost of issue is measured using the weighted
average method.
(3) Basis for determining net realizable value of inventories and provision methods for decline in
value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
If the net realizable value is below the cost of inventories, a provision for decline in value of
inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value
items of inventories,
Provision for decline in value is made based on categories of inventories. For items of inventories
relating to a product line that are produced and marketed in the same geographical area, have the
same or similar end users or purposes, and cannot be practicably evaluated separately from other
items in that product line provision for decline in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously
caused inventories to be written down below cost no longer exist so that the net realizable value of
inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method for low cost and short-lived consumable items and packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method,
packaging materials are amortized using immediate write-off method.
12. Held-for-sale assets
If a non-current assets could be immediately sold only according to the usual terms of selling this
kind of assets under current situation, and the Group has made a decision on disposing a
non-current asset, entered into an irreversible transfer agreement with the transferee and the transfer
is likely to be completed within one year, the non-current asset is measured as a non-current asset
held for sale, which shall not be depreciated or amortized since the date held for sale but shall be
measured at the lower one of the net amounts of the book value and the fair value after deducting
the disposal expense. Non-current assets held for sale include single-item assets and disposal groups.
Where a disposal group is an asset group and the goodwill obtained in the business combination is
apportioned to the asset group according to the “Accounting Standard No. 8 for Business
Enterprises—Asset Impairment”, or a disposal group is an operation in such an asset group, the
disposal group shall include the goodwill in the business combination.
The non-current assets of single amount and the assets among the disposing group that both be
divided as assets held for sale, should be listed alone of the current assets on the balance sheet;
liabilities related to the assets transfer among the disposing group which be divided as assets held
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for sale, should be listed alone of the current assets on the balance sheet.
An asset or an disposal group was classified as held for sale before, but if it couldn’t meet the
recognition conditions for held-for-sale non-current asset later, the Company shall cease to classify
it as held for sale, and measure it by the lower amount of the followings: (1) its carrying amount
before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation,
amortization or impairment before the asset (or disposal group) being classified as held for sale; or
(2) its recoverable amount on the date of the subsequent decision not to sell.
13. Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has
control, joint control or significant influence over the long-term equity investments. The Company
invested does not have control, joint control or significant influence over the long-term equity
investments as financial assets available for sale or at fair value and the changes included financial
assets through profit or loss, which refer to the accounting policies in Note IV. 9 “financial
Instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant
stipulations are common, related activities and the arrangement must be after sharing control
participants agreed to the decision-making. Significant influence is the Company s financial and
operating policies of the entity has the right to participate in decision-making, but can not control or
with other parties joint control over those policies.
(1) Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common
control is measured at the acquirer’s share of the combination date book value of the acquiree’s net
equity in the ultimate controller’s consolidated financial statements. The difference between the cost
and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to
capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is
transferred by way of issuing equity instruments, the face value of the equity instruments issued is
recognised in share capital and the difference between the costs of the face value of the equity
instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is
insufficient. Where a business combination under common control is achieved by multiple
acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to determine
whether the multiple acquisitions shall be viewed as one single transaction. If the multiple
acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be accounted
for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one
single transaction, the difference between the cost of combination and the sum of the book value of
the investment in the acquiree immediately before the combination and the book value of the
consideration transferred to acquire additional shareholding is adjusted to capital reserves, and to
retained earnings if capital reserves is insufficient. Cumulative other comprehensive income
associated with the investment recognised as a result of the treatment of equity method or
available-for-sale financial assets prior to the combination is not affected by the combination.
The cost of a long-term equity investment acquired through business combination not under
common control is the fair value of the assets transferred, liabilities incurred or assumed and equity
instruments issued. Where a business combination not under common control is achieved by
multiple acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to
determine whether the multiple acquisitions shall be viewed as one single transaction. If the
multiple acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be
accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed
as one single transaction, the cost of combination is measured at the sum of book value of the
investment in the acquiree immediately before the combination and cost of acquisition of additional
shareholding. If the investment prior to the combination is measured by fair value, cumulative other
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
comprehensive income associated with the investment prior to the combination is not affected by
the combination. If the investment prior to the combination is measured as an available-for-sale
financial asset, the difference between the fair value and the book value of the investment
immediately before the combination and the associated cumulative other comprehensive income
recognised prior to the combination are carried to profit or loss.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure
of audit, legal services, valuation and consultancy and other administrative expenses, are recognised
in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on
initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash
paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the
assets given away in the case of non-monetary asset exchange, or the fair value of the relevant
long-term equity investments. The cost of acquisition of a long-term equity investment acquired not
through business combination also includes all directly associated expenses, applicable taxes and
fees, and other necessary expenses. The cost of a long-term equity investment, which enables the
Company, has significant influence or joint control over the acquiree which is achieved through
additional investment, is measured as the fair value determined in accordance with CAS 22 -
Financial Instruments: Recognition and Measurement plus the cost of additional investment.
(2) Subsequent measurement
To be invested joint control (except constitute common operator) or long-term equity investments
significant influence are accounted for using the equity method. In addition, the Company’s
financial statements using the cost method of accounting for long-term equity can exercise control
over the investee.
① Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except
for cash dividends or profits declared but not yet paid that are included in the price or consideration
actually paid upon acquisition of the long-term equity investment, investment income is recognized
in the period in accordance with the attributable share of cash dividends or profit distributions
declared by the investee.
② Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing
enterprise’s interest in the fair values of the investee’s identifiable net assets at the time of
acquisition, no adjustment shall be made to the initial investment cost.
The carrying amount of a long-term equity investment measured using the equity method is
adjusted by the Company’s share of the investee’s net profit and other comprehensive income,
which is recognized as investment income and other comprehensive income respectively. The
carrying amount of a long-term equity investment measured using the equity method is reduced by
profit distribution or cash dividends announced by the investee. The carrying amount of a long-term
equity investment measured using the equity method is also adjusted by the investee’s equity
movement other than net profit, other comprehensive income and profit distribution, which is
adjusted to capital reserves. The net profit of the investee is adjusted by the fair value of the
investee’s identifiable assets as at acquisition. The financial statements and hence the net profit and
other comprehensive income of an investee which does not adopt accounting policies or accounting
period uniform with the Company is adjusted by the Company’s accounting policies and accounting
period. The Company’s share of unrealized profit or loss arising from related party transactions
between the Company and an associate or joint venture is deducted from investment income.
Unrealized loss arising from related party transactions between the Company and an associate or
joint venture which is associated with asset impairment is not adjusted. Where assets transferred to
an associate or joint venture which form part of the Company’s investment in the investee but which
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does not enable the Company obtain control over the investee, the cost of the additional investment
acquired is measured at the fair value of assets transferred and the difference between the cost of the
additional investment and the book value of the assets transferred is recognized in profit or loss.
Where assets transferred to an associate or joint venture form an operation, the difference between
the consideration received and the book value of the assets transferred in recognized in profit or loss.
Where assets transferred from an associate or joint venture form an operation, the transaction is
accounted for in accordance with CAS 20 - Business Combination, any gain or loss is recognized in
profit or loss.
The Company’s share of an investee’s net loss is limited by the sum of the book value of the
long-term equity investment and other net long-term investments in the investees. Where the
Company has obligation to share additional net loss of the investee, the estimated share of loss
would be recognized as accrued liabilities and investment loss. Where the Company has
unrecognized share of loss of the investee when the investee generates net profit, the Company’s
unrecognized share of loss is reduced by the Company’s share of net profit and when the
Company’s unrecognized share or loss is eliminated in full, the Company’s share of net profit, if any,
is recognized as investment income.
For long-term equity investments in associates and joint ventures which had been held by the
Company before its first time adoption of Accounting Standards for Business Enterprises, where the
initial investment cost of a long-term equity investment exceeds the Company’s interest in the
investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or
loss on a straight line basis over the original remaining life.
③ Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests
and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital
reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted
against returned earnings.
④ Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a change in
control, the difference in the net asset between the amount of disposed long-term investment and the
amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of
long-term investment in a subsidiary involves loss of control over the subsidiary, the related
accounting policies in Note IV. 5. (2) applies. For disposal of long-term equity investments in any
situation other than the fore-mentioned situation, the difference between the book value of the
investment disposed and the consideration received is recognized in profit or loss.
Where a long-term equity investment is measured by the equity method both before and after part
disposal of the investment, cumulative other comprehensive income relevant to the investment
recognised prior to the acquisition is treated in the same manner that the investee disposes the
relevant assets or liabilities proportionate to the disposal. The investee’s equity movement other
than net profit, other comprehensive income and profit distribution is recognised in profit or loss
proportionate to the disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the
investment, cumulative other comprehensive income relevant to the investment recognised, as a
result of accounting by equity method or recognition and measurement principles applicable to
financial instruments, prior to the Company’s acquisition of control over the investee is treated in
the same manner that the investee disposes the relevant assets or liabilities and recognised in profit
or loss proportionate to the disposal. The investee’s equity movement other than net profit, other
comprehensive income and profit distribution, as a result of accounting by equity method, is
recognised in profit or loss proportionate to the disposal.
Where the Company’s control over an investee is lost due to partial disposal of investment in the
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investee and the Company continues to have significant influence over the investee after the partial
disposal, the investment in measured by the equity method in the Company’s separate financial
statements; where the Company’s control over an investee is lost due to partial disposal of
investment in the investee and the Company ceases to have significant influence over the investee
after the partial disposal, the investment in measured in accordance with the recognition and
measurement principles applicable to financial instruments in the Company’s separate financial
statements and the difference between the fair value and the book value of the remaining investment
at the date of loss of control is recognized in profit or loss. Cumulative other comprehensive income
relevant to the investment recognised, as a result of accounting by equity method or recognition and
measurement principles applicable to financial instruments, prior to the Company’s acquisition of
control over the investee is treated in the same manner that the investee disposes the relevant assets
or liabilities on the date of loss of control. The investee’s equity movement other than net profit,
other comprehensive income and profit distribution, as a result of accounting by equity method, is
recognised in profit or loss when control is lost. Where the remaining investment is measured by
equity method, the fore-mentioned other comprehensive income and other equity movement are
recognised in profit or loss proportionate to the disposal; Where the remaining investment is
measured in accordance with the recognition and measurement principles applicable to financial
instruments, the fore-mentioned other comprehensive income and other equity movement are
recognised in profit or loss in full.
Where the Company’s joint control or significant influence over an investee is lost due to partial
disposal of investment in the investee, the remaining investment in the investee is measured in
accordance with the recognition and measurement principles applicable to financial instruments, the
difference between the fair value and the book value of the remaining investment at the date of loss
of joint control or significant influence is recognized in profit or loss.Cumulative other
comprehensive income relevant to the investment recognised, as a result of accounting by equity
method, prior to the partial disposal is treated in the same manner that the investee disposes the
relevant assets or liabilities on the date of loss of joint control or significant influence. The
investee’s equity movement other than net profit, other comprehensive income and profit
distribution is recognised in profit or loss when joint control or significant influence is lost.
Where the Company’s control over an investee is lost through multiple disposals and the multiple
disposals shall be viewed as one single transaction, the multiple disposals are accounted for one
single transaction which results in the Company’s loss of control over the investee. Each difference
between the consideration received and the book value of the investment disposed is recognised in
other comprehensive income and reclassified in full to profit or loss at the time when control over
the investee is lost.
14. Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings. In addition, the Company holds for future operating lease vacant buildings, if the board
of directors (or similar body) to make a written resolution, made it clear that their intention for rent
and shall not occur in the short term change, but also as an investment real estate
presentation .Investment property is initially measured at cost. Subsequent expenditures related to
an investment real estate are likely to flow about the economic benefits of the asset and its cost can
be measured reliably, is included in the cost of investment real estate. Other subsequent
expenditures should be recorded in the current profits or losses when incurred.
The Group uses the cost model for subsequent measurement of investment property, and in
accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note IV.
17 “Non-current and non-financial assets impairment”.
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Occupied real estate for investment property or investment property is transferred to
owner-occupied real estate or stock conversion as the recorded value after the conversion, according
to the book value before the conversion.
When an investment property is changed for personal use, since the change of date, the investment
property is transferred to fixed assets or intangible assets. Owner-occupied property is changed to
earn rentals or for capital appreciation, change the date, will be converted to fixed assets or
intangible investment property. When the transition occurs, the conversion to the use of investment
property cost model, the carrying value before conversion as the book value after conversion,
convert to investment property measured at fair value model, the fair value of the conversion date as
the conversion after the recorded value.
When the investment property is disposed of or permanently withdrawn from use and no future
economic benefits are expected from the disposal, derecognition of the investment property.
Investment property is sold, transferred, retired or damaged, the disposal income after deducting the
book value and related taxes and profit or loss.
15. Fixed assets
(1) The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities,
rendering labor service, renting or business management and their useful life is in excess of one
fiscal year. Fixed assets only in the economic benefits associated with it will flow to the company
and the cost can be measured reliably only are confirmed. Fixed assets are stated at cost and
considering the expected costs of abandoning the initial measurement.
(2) The method for depreciation
From the following month of state of intended use, depreciation method of the straight-line method
is used for different categories of fixed assets to take depreciation. The recognition of the
classification, useful life and estimated residual rate are as follows:
Category Estimated residual value (%) Expected useful life Depreciation (%)
Houses and building 10.00 20 4.50
Machineries 0.00 11-18 5.56-9.09
Electronic device、furniture and modules 0.00 5-6 16.67-20.00
Vehicles 0.00 6 16.67
Improvement expense of leased fixed assets 0.00 the shorter of lease term and beneficial lives
Expected net residual value of fixed assets is the balance of the Company currently obtained from
the disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of
useful life and state the expected service life in the end.
(3) Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note IV. 17 Impairment of non-current
and non-financial assets.
(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership
of an asset. Title may or may not eventually be transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same policy as
that for the fixed assets owned by the Company. If it can be reasonably determined that the
ownership of the leased assets can be obtained at the end of the lease period, the leased assets are
depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of
the lease terms and the useful lives of the leased assets.
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(5) Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably
flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure
incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the fixed
asset, and the carrying amount of the component of the fixed asset that is replaced shall be
derecognized. Otherwise, such expenditure shall be recognized in profit or loss in the period in
which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss
after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation
methods of the fixed asset at least on an annual base. Any change is regarded as change in
accounting estimates.
16. Construction in progress
Construction in progress is measured at its actual cost. The actual costs include various construction
expenditures during the construction period, borrowing costs capitalized before it is ready for
intended use and other relevant costs. Construction in progress is transferred to a fixed asset when it
is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for
provision impairment please refer to Note IV. 20.
17. Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings,
ancillary costs incurred in connection with the arrangement of borrowings, and exchange
differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an
expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,
investment property and inventories, etc.) that necessarily take a substantial period of time for
acquisition, construction or production to get ready for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the
actual interest expense incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the
temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such
borrowings is determined by applying a weighted average interest rate to the weighted average of
the excess amounts of accumulated expenditure on the asset over and above the amounts of
specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing
denominating in foreign currency are all capitalized. Exchange differences in connection with
general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which
need a long time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted by activities other than those necessary to prepare
the asset for its intended use or sale, when the interruption is for a continuous period of more than 3
months. Borrowing costs incurred during these periods recognized as an expense for the current
period until the acquisition, construction or production is resumed.
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18. Intangible assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape,
possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the
economic benefits related to intangible assets are likely to flow into the enterprise and the cost of
intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The
expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings,
such as plants that are developed and constructed by the Company, and relevant land use rights and
buildings, are accounted for as intangible assets and fixed assets, respectively. Payments for the
land and buildings purchased are allocated between the land use rights and the buildings; if they
cannot be reasonably allocated all of the land use rights and buildings are accounted for as fixed
assets.
When an intangible asset with a definite useful life is available for use, its original cost less net
residual value and any accumulate impairment losses is amortized over its estimated useful life
using the straight-line method. An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and
amortization method at the end of the period, and makes adjustment when necessary. An additional
review is also carried out for useful life of the intangible assets with indefinite useful life. If there is
evidence showing the foreseeable limit period of economic benefits generated to the enterprise by
the intangible assets, then estimate its useful life and amortize according to the policy of intangible
assets with definite useful life.
(2) Research and development cost
Cost of research and development is distinguished into the research phase and the development
phases.
Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.
Unless the following conditions are satisfied, cost of the development phase is recognized in the
profit or loss in the period in which it is incurred:
1) It is technically feasible to complete the intangible asset so as to use it or sell it;
2) It is clearly invented to complete the intangible asset in order to use it or sell it;
3) it is probable that the intangible asset is capable of generating future economic benefit, such as
the market for the product produced by the intangible asset or the intangible asset itself, it is
objectively evidential that the intangible asset is economically usable if it is going to be used
internally;
4) There are sufficient technical, financial and other resources to complete the intangible asset and
to use it or sell it;
5) The cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognized
in the profit or loss for the period in which it is incurred.
(3) Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.20.
19. Long-term deferred expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a
beneficial period (a period during which an expense is expected to bring economic benefits to an
entity) which is longer than one year and which includes at least part of the reporting period during
which the expense was incurred and subsequent reporting periods. An item of long-term deferred
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expenses is recognized at the actual amount of the expense incurred and allocated in each month of
the beneficial period using the straight line method.
20. Impairment of long-term assets
Non-financial assets with non-current nature include fixed assets, construction in progress,
intangible assets with definite useful lives, investment properties measured by cost methods and
long-term equity investment on subsidiaries, jointly operations. The Company assesses whether
there are any indicators of impairment for all non-financial assets at the balance sheet date, and
impairment test is carried out and recoverable value is estimated if such an indicator exits. Goodwill
and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are
tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable value of
the assets is lower than the book value. The recoverable value is the higher of estimated present
value of the future expected cash flows from the asset and net fair value of the asset less disposed
cost. The fair value of asset is determined by the sales agreement price within an arm’s length
transaction. In case there is no sales agreement, but there is active market of assets, the fair value
can be determined by the selling price. If there is neither sales agreement nor active market, the fair
value of the asset can be estimated based on the best information obtained.
Disposal expenses include expenses related to the legislation, taxes, transportations and the direct
expense for the asset to be ready for sale. When calculating the present value of expected future
cash flows from an asset or asset Group, the management shall estimate the expected future cash
flows from the asset or asset Group and choose a suitable discount rate in order to calculate the
present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the
recoverable of individual asset is hard to estimate, the recoverable amount can be determined by the
asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have cash
flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the present value of the future expected cash flows from the asset Groups or sets of
asset Groups to which the goodwill is allocated. Estimating the present value requires the Company
to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups
and also choose a suitable discount rate in order to calculate the present value of those cash flows.
Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in
the subsequent periods.
21. Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health
insurance , maternity insurance, work injury insurance, housing funds, labor union funds, employee
education funds, non-monetary benefits and etc. The company provides services accounting period
in which an employee of the company will be short-term employee benefits are recognized as
liabilities actually incurred and loss account or the costs associated with the asset. The non
-monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans. Defined
contribution plan which includes the basic old-age insurance, unemployment insurance and
annuities shall be deposited in the appropriate amount accrued to the cost of related assets or profit
or loss.
Prior to the employment contracts terminate the labor relationship with employees, or to encourage
employees to accept voluntary redundancy compensation proposals in this company can not
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unilaterally withdraw due to termination of employment or layoff proposal termination benefits
provided, and the company recognized costs related to both pay and termination benefits related to
the restructuring which is early to confirm employee benefits liabilities, and recorded as profit or
loss. However, termination benefits expected at the end of the annual reporting period of twelve
months can not be fully paid, in accordance with other long-term employee benefits processing.
Retirement plan would be adopted the same principles as the unemployment. The company will
stop providing services from the employee to be paid during the normal retirement date of retired
staff salaries, social insurance and etc., when in compliance with the conditions on recognition in
profit or loss (termination benefits).
Other long-term employee benefits provided by the Company for the employees, in line with
defined contribution plans, the accounting treatment in accordance with a defined contribution plan,
in addition to the set-benefit plans in accordance with the accounting treatment.
22. Accrued liabilities
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute,
guarantee on quality of product, cut-down plan, loss of contract, recombine obligation, obligation
on abandon fixed asset, and meet the follow condition simultaneously would 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.
On balance sheet date the Company performs relate obligation that consider risk, incertitude, time
value of currency of contingency factor. According to the best estimate of the expenditure required
to settle the present obligation for estimated liabilities measured.
If the expenditure required to settle the liability is expected to be fully or partly compensated by a
third party, to determine the amount of compensation will be received at the basic, separately
recognized as an asset, and is recognized in the amount of compensation does not exceed the
carrying value of estimated liabilities.
23. Shares-based payment
(1) Categories of share-based payment
The types of shares-based payment of the Company are: cash-settle and equity-settle.
① Equity-settled share-based payment
Equity settled share-based payments for employee services are measured by the fair value of the
instruments granted to employees on the date of grant. For instruments exercisable upon satisfaction
of performance of expiry of vesting period for services, the fair value is amortized by the
straight-line method and recognized in profit or loss for the relevant periods; for those with
immediate vesting conditions, the fair value is recognized immediately in profit or loss and added to
capital reserves.
Equity settled share-based payments for services rendered by third parties are measured by the fair
value of services on the receipt date if the relevant fair value can be reliably estimated and by the
fair value of the instruments on the service receipt date if the fair value of services received cannot
be reliably estimated and the fair value of the instruments is reliably estimated. The measured fair
value is recognized in the profit or loss and added equity.
② Cash-settled share-based payment
The measurement of cash-settle is according with the fair value of liability undertake by the
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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) Implementation, modification, termination of share-based payment plan with the relevant
accounting treatment
The Company to modify the plans of shares payments, if the modification increases the fair value of
the equity instruments granted; in accordance with the increase in the fair value of equity
instruments are recognized accordingly get increased services. Increase in the fair value of the
equity instruments is the difference of fair value between before and after of the modified date. If
the modification reduces the total fair value of the shares paid or used other workers is not
conducive to the way the service will continue to be made in the accounting treatment, as if the
change had not occurred, unless the company to cancel some or all of the granted equity tool.
If canceled equity instruments granted during the waiting period, the Company canceled equity
instruments granted as an acceleration of vesting treatment, the amount of the remaining waiting
period should be recognized immediately in profit or loss, while recognizing the capital reserve.
Employees or other parties can choose to meet non-vesting conditions are not met in the waiting
period; the Company will be treated as canceled equity instruments granted.
(3) The accounting treatment related to the Company and the shareholders of the Company or actual
control of share-based payment transactions
Shares in respect of the Company and the shareholders of the Company or actual control of
payment transactions, one of the settlement enterprise and receiving services enterprise is in the
Company and the other is outside of the Company, the Company's consolidated financial statements
are accounted for the following provisions treatment:
① Settlement companies settled in its own equity instruments to pay the share transaction as an
equity-settled share-based payment processing; in additional, as a cash-settled share-based payment
processing.
Settlement companies are receiving services business investors, the fair value of the equity
instruments at the grant date fair value of liabilities assumed or to be recognized as the acceptance
of long-term equity investment service companies, while recognizing capital reserve (other capital
surplus) or liability.
② Receive services companies do not settle the obligation or the employees of the enterprise is
granted its own equity instruments, the share-based payment transaction as equity-settled
share-based payment processing; accept the obligations and settlement services companies with
enterprise workers are not granted its own equity instruments of the share-based payment
transaction as cash-settled share-based payment processing.
Shares occurred between the companies trading in the Company's payment, acceptance and
settlement service business enterprise is not the same enterprise, the recognition and measurement
of share-based payment transactions in accepting the settlement enterprise and service enterprises in
the each individual financial statement, as above principles treatment.
24. Preferred shares and sustainable debts
(1) Distinguish between preferred shares and sustainable debts
Preferred shares and sustainable debts issued by the Company are recognized as equity instruments
are all of the following conditions are satisfied:
① the financial instrument does not render the Company the obligation to transfer cash or other
financial assets to other parties or exchange financial assets or financial liabilities with other parties
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in potentially disadvantageous conditions;
② where the financial instrument must be settled by the Company's equity instruments, the
financial instrument does not render the Company the obligation to deliver variable number of
equity instruments in settlement of the financial instrument if it is not a derivative instrument or
renders the Company the obligation to deliver fixed number of equity instruments for exchange of
cash or other financial instruments in settlement of the financial instrument if it is a derivative
financial instrument.
Preferred shares and sustainable debts not satisfying the fore-mentioned conditions are recognized
as financial liabilities.
Where a financial instrument issued by the Company is a hybrid instrument, the liability element of
the instrument is recognized as a liability which is measured at the fair value of the liability element
and residual of the instrument is recognized as other equity instruments. The transaction costs of
issuance of a hybrid instrument are allocated to the liability element and equity element
proportionate to proceeds for each elements.
(2) Accounting treatment for preferred shares and sustainable debts.
Interests, dividends, gains or loss, gains or loss arising from repurchase or refinance of preferred
shares or sustainable debts recognized as liabilities, except for those satisfying the condition of
capitalization of borrowing costs (see Note 4.17 for details), are recognized in profit or loss.
The issuance, refinancing, repurchase, sales or cancellation of preferred shares or sustainable debts
recognized as equity instruments is treated as equity movement and the associated transaction costs
are deducted from equity. Distribution to holders of the Company's equity instruments are treated as
profit distribution.
Changes in fair value of the Company's equity instruments are not recognized.
25. Revenue
(1) Revenue from sales of goods
Revenue from sales of goods is recognized when significant risks and rewards attached to the
ownership of the goods sold are passed to the buyer, when neither continual involvement in the
rights normally associated with the ownership of the goods sold nor effective control over the goods
controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow
of future economic benefits is probable, and when cost incurred or to be incurred associated with
the goods sold is reliably measurable.
For the export sales of the products of the Company, no matter what the sales pattern adopt,
recognition of revenue according to the sales contract or conventions listed in the orders, for those
product sales employ the FOB domestic ports settlement, revenue recognition upon the bill of
lading acquired from the shipping company and conducted the export declaration; for those product
sales employ the FOB oversea ports settlement, revenue recognition upon the export declaration
finished and shipment at the buyer’s receiving dock, as well as acquired the bill of lading from the
shipping company.
Accounting treatment for sales return: in accordance with the international trade prevailing rules,
the FOB settlement employed, indicate to the buyer has inspected and accepted those purchased
commodities at the shipment dock, after acceptance and shipping the relevant risks has been
transferred to buyer, therefore the Company has no individually recognized for the events, but the
amount shall be recognized when incurred and accounted through in profit and loss in current
period.
Accounting treatment for product claims: calculate the claim indemnity rate, according to the
proportion of actually payment for those product claims during recently two years account for the
corresponding period sales revenue, at the end of period, on the basis of current period sales
revenue and the claim indemnity rate to recognize the claim indemnity expense.
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(2) Revenue from rendering of service
Revenue arising from rendering of services is recognized on the balance date using the percentage
of completion method when the outcome of the services rendered can be reliably estimated. The
percentage of completion of the services rendered is calculated by dividing the cost to date by the
budgeted total cost.
The outcome of the services rendered can be reliably estimated when revenue from the services
render can be reliably measured, when the inflow of associated future economic benefits is probable,
when the percentage of completion can be reliably measure, and when the cost incurred or to be
incurred associated with the services can be reliably measured.
When the outcome of the services rendered cannot be reliably estimate, revenue is recognized as
cost reimbursement received or to be received, if any, and cost incurred is recognized in profit or
loss for the period in which the cost is incurred. No revenue is recognized if cost reimbursement is
not probable.
When a contract between the group and another entity involves both sales of goods and rendering
for services, the sales of goods and rendering of services are accounted for separately if they are
distinguishable and separately measurable; the contract is accounted for as if it is a contract
involves only sales of goods if the sales of goods and rendering of services are either
indistinguishable or distinguishable but not separately measurable.
(3) Revenue from construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract should be recognized as revenue and
expenses respectively by reference to the stage of completion of the contract activity at the balance
sheet date.
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: ①total contract revenue can be measured reliably;
②it is probable that the economic benefits associated with the contract will flow to the enterprise;
③the contract costs attributable to the contract can be clearly identified and measured reliably so
that actual contract costs incurred can be compared with prior estimates; and, ④both the contract
costs to complete the contract and the stage of contract completion at the balance sheet date can be
measured reliably.
When the outcome of a construction contract cannot be estimated reliably, but revenue should be
recognized only to the extent of contract costs incurred that it is probable will be recoverable; and If
the cost can not be recovered, contract costs should be recognized as an expense in the period in
which they are incurred. So that the results of a construction contract can not be reliably estimated
uncertainties exist, to determine the percentage of completion method and construction contracts
related income and expense.
An expected loss on the construction contract should be recognized as an expense immediately.
(4) Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
(5) Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of
time for which the enterprise's cash is used by others and the actual interest rate.
26. Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to
the Company at no consideration, excluding the capital invested by the government as equity owner.
Government grant can be classified as grant related to the assets and grants related to the income.
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The government grants which were acquired by the Company will be used to purchase or otherwise
form become long-term assets will be defined as grant related to the assets; the others will be
defined as grants related to the income. If the files have not clearly defined government grants
objects, it will be divided in the following manner compartmentalize the grants related to the assets
and grants related to the income: (1) government documents defined specific projects targets,
according to the relative proportion of the budgets of specific items included the expenditure of to
form assets and the expenditure will be charged into expense to be divided, the division ratio
required at each balance sheet date for review and make changes if necessary; (2) government
documents to make a general presentation purposes only, does not specify a particular project, as
grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount
received or receivable. If a government grant is in the form of a non-monetary asset, it is measured
at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A
government grant measured at a nominal amount is recognized immediately in profit or loss for the
period.
When received the government grants actually, recognized and measured them by the actual amount
received. However, there is strong evidence that the end of fiscal support policies able to meet the
conditions specified in the relevant funds are expected to be able to receive financial support,
measured at the amount receivable. Government grants are measured according to the amount
receivable shall also comply with the following conditions: (1)grantsreceivable of government
departments issued a document entitled have been confirmed, or could reasonably estimated in
accordance with the relevant provisions of its own official release of financial resources
management approach, and the expected amount of a material uncertainty which does not exist; (2)
it is based on the local financial sector to be officially released and financial support for the project
and its financial fund management approach voluntarily disclosed in accordance with the provisions
of “Regulations on Disclosure Government Information”, and the management approach should be
(inclusive of any compliance business conditions may apply), and not specifically formulated for
specific businesses;(3) related grants approval has been clearly committed the deadline, and is
financed by the proceeds of a corresponding budget as a guarantee, so that will be received within
the prescribed period with the a reasonable assurance; (4) according to the specific circumstances of
the Company and the subsidy matter, should satisfy the other conditions (if any).
A government grant related to an asset is recognized as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset. For a government grant related to income, if
the grant is a compensation for related expenses or losses to be incurred in subsequent period, the
grant is recognized as deferred income, and recognized in profit or loss over the periods in which
the related costs are recognized. If the grant is a compensation for related expenses or losses already
incurred, the grant is recognized immediately in profit or loss for the period.
For repayment of a government grant already recognized, if there is a related deferred income, the
repayment is offset against the carrying amount of the deferred income, and any excess is
recognized in profit or loss for the period. If there is no related deferred income, the repayment is
recognized immediately in profit or loss for the period.
27. Deferred tax assets and deferred tax liabilities
(1) Income tax for the current period
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, according to the
requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities reflects
the tax consequences that would follow from the manner in which the Company expects at the
balance sheet date, to recover the assets or settle the liabilities.
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At the balance sheet date, current income tax liabilities or assets for the current and prior periods,
are measured at the amount expected to be paid (or recovered) according to the requirements of tax
laws. The calculation for income tax expenses in the current period is based on the taxable income
according to the related tax laws after adjustment to the accounting profit of the reporting period.
(2) Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax
base, or between the nil carrying amount of those items that are not recognized as assets or
liabilities and their tax base that can be determined according to tax laws, deferred tax assets and
liabilities are recognized using the balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial
recognition of an asset or liability arising from a transaction (not a business combination) that
affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset or liability is recognized.
For taxable temporary differences associated with investments in subsidiaries and associates, and
interests in joint ventures, no deferred income tax liability related is recognized except where the
Company is able to control the timing of reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except the ones
mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an asset or liability
arising from a transaction (not a business combination) that affects neither the accounting profit nor
taxable profits (or deductible losses) at the time of transaction, no deferred tax asset is recognized.
For taxable temporary deductible differences associated with investments in subsidiaries and
associates, and interests in joint ventures, no deferred income tax asset related is recognized if it is
impossible to reversal the temporary difference in the foreseeable future, or it is not probable to
obtain taxable income which can be used for the deduction of the temporary difference in the future.
Except mentioned above, the Company recognizes other deferred income tax assets that can deduct
temporary differences to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for
deductible temporary differences are recognized to the extent that it is probable that taxable profits
will be available against which the deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according
to tax laws that are expected to apply in the period in which the asset is realized or the liability is
settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is
no longer probable that sufficient taxable profit will be available in future periods to allow the
benefits of the deferred tax assets to be used, the Company reduces the carrying amount of deferred
tax assets. The amount of such reduction is reversed when it becomes probable that sufficient
taxable profit will be available.
(3) Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded
into profit or loss in current accounting period, except expense for income tax of the current period
and deferred income tax that booked into other income or equity and adjusted carrying value of
deferred income tax goodwill arose from business combination.
(4) Income tax offset
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When we have the legal right, and have intended to, to make settlement with net amount, or through
the asset acquisition and liability fulfillment simultaneously, the Company shall present the net
value from the offset between current income tax asset and current income tax liability in the
financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and
current income tax liability, and the deferred income tax asset and deferred income tax liability are
related to the same taxable subject under the same tax payer, or related to different taxable subject,
but the intension of net value settlement in regard of the current income tax asset and current
income tax liability, the Company shall present net value after the offset of deferred income tax
asset and deferred income tax liability.
28. Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership
of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a
finance lease.
(1) The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the
lease term, and either included in the cost of the related asset or charged to profit or loss for the
current period. The contingent rents shall be recorded in the profit or loss of the period in which
they actually arise.
(2) The Company as Leasor under operating Lease
Lease income from operating leases shall be recognized by the leasor in profit or loss on a
straight-line basis over the lease term. Initial direct cost of significance in amount shall be
capitalized when incurred. If another basis is more systematic and rational, that basis may be used.
Contingent rents are credited to profit or loss in the period in which they actually arise.
(3) The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is
recorded at the lower of its fair value at the lease commencement and the present value of the
minimum lease payments, and the minimum lease payment is recorded as the carrying amount of
the long-term payables; the difference between the recorded amount of the leased asset and the
recorded amount of the payable is accounted for as unrecognized finance charge, Initial direct costs
incurred by the lessee during the process of negotiating and securing the lease agreement shall be
added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance shall be
separated into long-term liabilities and long-term liability within one year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease
term. Contingent rent shall be booked into profit or loss when actually incurred.
(4) In the case of the lessor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at
the inception of the lease and the initial direct costs is recorded as a finance lease receivable, and
unguaranteed residual value is recorded at the same time; the difference between the aggregate of
the minimum lease receipt, initial direct costs, and unguaranteed residual value, and the aggregate
of their present values, is recognized as unearned finance income, which is amortized using the
effective interest rate method over each period during the lease term.
Finance lease receivable less unearned finance income shall be separated into long-term liabilities
and long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term.
Contingent rent shall be credited into profit or loss in which actually incurred.
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29. Changes in major accounting policies and accounting estimates
(1) Change of accounting policies
There is no change of accounting policies for the company during the reporting period.
(2) Change of accounting estimates
There is no significant change of accounting estimates for the company during the reporting period.
30. Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying
amounts of items in the financial statements that cannot be measured accurately, due to the internal
uncertainties of operation activities. These judgments, estimates and assumptions are based on
historical experiences of the Company’s management as well as other factors that are considered to
be relevant. These judgments, estimates and assumptions may affect value of the financial
statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead
significant adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going
concern. Where the changes in accounting estimates only affect the period when changes occurred,
and they are recognized within the same period. Where the changes in accounting estimates affect
both current period and future period, the changes are recognized within the period of change and
future period.
At balance sheet date, the followings are the significant areas where the Company needs to make
judgment, estimates and assumptions over the value of items in the financial statements:
(1) Revenue Recognition - Construction Contracts
When the result in the construction contract can be estimated reliably, contract revenue is
recognized by the Company at the balance sheet date using the percentage of completion method.
The percentage of completion of the contract is confirmed in accordance with this Note
4.25“Revenue recognition”, and a cumulative basis in each accounting year of the implementation
of the construction contract.
In determining the percentage of completion of the contract costs incurred, the estimated total
contract revenue and total costs, as well as the recoverability of the contract requires significant
judgment. Project management is primarily relying on past experience and work judgment. The
estimated total contract revenue and total cost, and the estimated contract changes the results are
likely to change the current or future periods revenues, operating costs, and gains and losses during
the impact, and may have a significant impact.
(2) Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule
stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The management
shall make analysis and judgment on whether the risks and rewards related to the title of leased
assets has been transferred to the leaser, or whether the Company has substantially held the risks
and rewards related to the ownership of leased assets.
(3) Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is
used for bad debt’s calculation. The impairment of receivables is calculated based on the assessment
of recoverable of receivables. Assurance of receivable impairment needs judgments and estimations
from the management. The difference between actual results and original estimates shall have
impact on the carrying amount of receivables and receivable bad debt provisions or the reverse
during the change of estimation.
(4) Impairment of inventories
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The Company measures inventories by the lower of cost and realizable net value according to the
accounting policies in regard of inventories and provisions for decline in value of inventories is
made if the cost is higher than their net realizable value, and obsolete and slow-movement
inventories. Inventories decline in value to net realizable value is the estimated selling price in the
ordinary course of business. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purposes of holding inventories and effect of post balance
sheet events. The difference between the actual result and the original estimates shall have impact
on reverse of the carrying amount of the inventories and their decline in value or provisions during
the period of change.
(5)The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using
various valuation methods, including of discounted cash flow analysis model. The Company needs
to estimate future cash flow, credit risk, volatility and relationship during the valuation and choose
appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact
on the fair value of financial instruments.
(6) Held-to-maturity investments
The Company will comply with the conditions of a fixed or determinable payments and fixed
maturities that the Company has the positive intention and ability to hold to maturity are
non-derivative financial assets are classified as held-to-maturity investments. This classification
requires significant judgment. In the process of this judgment, the Company should make the
assessment of its maturity willingness and ability to hold such investments. Except in specified
circumstances (for example, towards the maturity date of the sale amount is not significant
investment), if the Company is unable These investments held-to-maturity, shall be all the class
investments classified as available-for-sale financial assets and in the current fiscal year and the
next two fiscal year shall not classify any financial assets as held-to-maturity investments. in this
theoretical situation, there have a significant impact on the financial statements listed on the
reported value of financial assets, and affect the Company's financial instruments risk management
strategy.
(7) Held-to-maturity investments impairment
The Company to determine the held-to-maturity investments are impaired in dependent on
management's judgment. Occurred objective evidence of impairment including the disappearance of
severe financial difficulties that financial asset cannot continue to be traded in an active market,
unable to fulfill the terms of the contract (for example, interest or principal payments as a default) .
In processing of judgment, the Company is required to assess the occurred objective evidence of
impairment of the investment in expected future cash flows.
(8) Impairment of financial assets available-for-sale
The Company determine the available-for-sale financial asset is impaired relies on judgments and
assumptions of management, to determine whether impairment loss is recognized in the income
statement. The process of making the judgments and assumptions, the Company is required to
assess the extent and duration of the fair value of the investment below cost, as well as investment
financial position and short-term business outlook, including industry conditions, technological
change, the credit rating, default rates and counterparty risk.
(9) Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets
other than financial assets at the balance sheet date. For an intangible asset that has indefinite useful
life, impairment test is made in addition to the annual impairment test if there is any indication of
impairment. For non-current assets other than financial assets, impairment test is made when there
is any indication that its account balance cannot be recovered.
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Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of
disposal and present value of the future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the
price of similar product in a sale agreement in an arm’s length transaction or an observable market
price less the additional cost directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over the
asset’s production, selling price and relevant operating expenses, and discount rate used to calculate
present value. All available materials that are considered to be relevant shall be used in the
estimation of recoverable value. These materials include estimations of production, selling price and
operating expenses based on reasonable and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an
estimation of present value of future cash flow of the assets or assets group where goodwill has
been allocated. The Company shall makes estimation on the future cash flow derived from assets or
assets group and determine an appropriate discount rate for the present value of future cash flow
when the estimation of present value of future cash flow is made.
(10) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the
straight-line method over their useful lives after taking into account residual value. The useful lives
are regularly reviewed to determine the depreciation and amortization costs charged in each
reporting period. The useful lives are determined based on historical experience of similar assets
and the estimated technical changes. If there is an indication that there has been a change in the
factor used to determine the depreciation or amortization, the rate of depreciation or amortization is
revised.
(11) The development expenditure
In determining the amount of capitalization, the Company's management needs to make the relevant
asset the estimated future cash flows, applicable discount rate assumptions of the estimated benefit
period.
(12) Deferred tax assets
The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable
that future taxable profit will be available against which the unused tax losses and unused tax
credits can be utilized. This requires the management of the Company make a lot of judgments over
the estimation of time period, value and tax planning strategies when future taxable profit incurs so
that the value of deferred tax assets can be determined.
(13) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the
Company’s everyday operation. Whether it is possible for some items to make expenditure before
tax needs approval from competent tax authorities. If there is any difference between finalized
determination value and their initial estimations value, the difference shall have the impact on the
income tax and deferred income tax of the current period during the final determination.
(14) Early retirement benefits and supplemental retirement benefits
The Company's internal early retirement benefits and supplemental retirement benefit expenses and
liabilities amount determined based on various assumptions. These assumptions include the
discount rate, the average growth rate of health care costs, retired officers and retired officers
subsidy rate and other factors. Differences between actual results and assumptions will be
immediately recognized in the cost of the year. Although management considers reasonable
assumptions have been used, but the actual experience or changes in assumptions will affect the
Company's internal early retirement benefits and supplemental retirement benefit costs and
liabilities balance.
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(15) Accrued liabilities
According with the terms of the contract, the existing knowledge and historical experience, product
quality assurance and expected contract losses, delay in delivery of liquidated damages are
estimated and recognized as a accrued liabilities. In these matters has been the formation of a
current obligation, and fulfilling the duty is likely to lead to the outflow of economic benefits of the
Company, the Company or the best estimate of the current obligation expenditure required
recognized as a accrued liabilities. Recognition and measurement of accrued liabilities is dependent
on the judgment of management. In the processing of judgment the company needed to appraise the
related risks, uncertainties and time value of money and other factors.
The Company will sell, repair and renovation of goods sold to provide customers with quality
after-sales service commitment is accrued liabilities. Accrued liabilities have considered the recent
experience in the maintenance data, but recent maintenance experience may not reflect future
maintenance. Any increase or decrease in the accrued liabilities may affect the profit or loss in
future.
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V. Taxation
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
Urban maintenance and construction Sum of VAT payable, consumption duty payable and business tax payable for
7
surcharge the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for
Education surcharge 3
the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for
Local education surcharge 2
the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT, the rate is 0%.
2. Taxes and surcharges applicable to the primary subsidiaries
(1) Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
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
Urban maintenance and construction Sum of VAT payable, consumption duty payable and business tax payable for
5
surcharge the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for
Education surcharge 3
the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for
Local education surcharge 2
the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 15
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT, the rate is 0%.
In accordance with the “The Notice Regarding to Fujian Province 2014 Second Group of High Technology
Enterprise Review” (No. Mingkegao [2015] 6), TKL was identified as Fujian Province High Technology
Enterprise (The certification No. GR201435000140), the validity is from the year 2014 to 2016.The current
income tax at 15%.
(2) Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Taxes and surcharges Tax base Tax rate%
Value added tax Revenues from sales of products and raw materials 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the
1
and construction surcharge reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for the
Education surcharge 3
reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for the
Local education surcharge 2
reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
VI. Notes to significant elements of the financial statements
1. Monetary funds
Items 2015.06.30 2014.12.31
Cash in hand 783,900.30 554,909.96
Bank deposit 781,404,783.98 885,909,538.05
Other monetary fund 0.00 0.00
Total 782,188,684.28 886,464,448.01
Including: the total amount of deposit abroad 13,253,617.42 21,699,601.60
Notes: At the end of current year, the balance of bank deposits in financial institution for the purpose of obtaining
interest income is CNY 415,733,232.63.
2. Financial assets measured by fair value with changes in fair value recognized in profit or loss
(1) Disclosure by classification
Items 2015.06.30 2014.12.31
Held for trading financial assets 7,482,150.00 2,610,000.00
Including: Derivative financial assets 7,482,150.00 2,610,000.00
Total 7,482,150.00 2,610,000.00
(2) Explanation
The derivative financial asset is forward foreign exchange contract signed with financial institutions.
3. Notes receivable
(1) Disclosure by classification
Items 2015.06.30 2014.12.31
Bank acceptance 2,413,324.00 2,004,498.59
Total 2,413,324.00 2,004,498.59
(2) The end of the reporting period has been endorsed to other parties but not yet due bills
(3) The end of the reporting period due to no drawer has not performed then transfer into account
receivables
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
4. Accounts receivable
(1) Disclosure by classification
2015.06.30
Items Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Accounts receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Accounts receivable portfolio subject to
impairment by credit risk:
Portfolio by age 227,400,515.79 98.93 3,025,261.53 1.33 224,375,254.26
Portfolio by related parties 2,469,508.56 1.07 0.00 0.00 2,469,508.56
Subtotal 229,870,024.35 100.00 3,025,261.53 1.32 226,844,762.82
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 229,870,024.35 100.00 3,025,261.53 1.32 226,844,762.82
(Continued)
2014.12.31
Items Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Accounts receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Accounts receivable portfolio subject to
impairment by credit risk:
Portfolio by age 244,344,498.25 97.32 3,744,690.14 1.53 240,599,808.11
Portfolio by related parties 6,736,526.75 2.68 0.00 0.00 6,736,526.75
Subtotal 251,081,025.00 100.00 3,744,690.14 1.49 247,336,334.86
Accounts receivable of individually
insignificancesubject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 251,081,025.00 100.00 3,744,690.14 1.49 247,336,334.86
① Accounts receivable using age analysis method for measurement of allowance for bad debt
2015.06.30
Age
Carrying amount Allowance for bad debt Proportion
Within 1 year 225,622,523.14 1,247,268.88 0.55
Including: 1-90 days 215,857,236.93 0.00 0.00
91-180 days 8,607,304.14 860,730.42 10.00
181-270 days 962,262.87 288,678.86 30.00
271-365 days 195,719.20 97,859.60 50.00
1 to 2 years 296,229.95 296,229.95 100.00
2 to 3 years 212,413.58 212,413.58 100.00
Over 3 years 1,269,349.12 1,269,349.12 100.00
Total 227,400,515.79 3,025,261.53 1.33
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
② Accounts receivable using related party group method for measurement of allowance for bad debt
2015.06.30
Items
Carrying amount Allowance for bad debt Proportion
Related parties 2,469,508.56 0.00 0.00
Total 2,469,508.56 0.00 0.00
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the reporting period is CNY64,486.41.The amount of
recovered or reversed allowance for bad debts during the reporting period is CNY 783,863.61.
(3) Details of top five accounts receivable
The total amount of top five accounts receivablessummaried by debtors as at the end of reporting period is CNY
129,367,155.81, accounting for 56.27% of the total accounts receivable as at the end of reporting period, the total
corresponding allowance for bad debts is CNY1,939,623.44.
5. Advances to suppliers
(1) Disclosure by age
2015.06.30 2014.12.31
Age
Amount Proportion Amount Proportion
Within 1 year 9,823,571.43 96.31 12,250,817.50 96.02
1 to 2 years 376,126.00 3.69 507,878.60 3.98
Total 10,199,697.43 100.00 12,758,696.10 100.00
(2) Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of current year is CNY 8,110,626.64,
accounting for 79.52% of the total advance to suppliers.
6. Interests receivable
(1) Disclosure by classification
Items 2015.06.30 2014.12.31
Fixed deposit receipt 4,019,726.47 3,590,399.84
Total 4,019,726.47 3,590,399.84
7. Other receivable
(1) Disclosure by classification
2015.06.30
Items Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Other receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Other receivable portfolio subject
to impairment by credit risk:
Portfolio by age 34,618,445.39 96.80 1,830,401.23 5.29 32,788,044.16
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 34,618,445.39 96.80 1,830,401.23 5.29 32,788,044.16
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Other receivable of individually
insignificance subject to
1,146,070.00 3.20 0.00 0.00 1,146,070.00
individually assessment for
impairment
Total 35,764,515.39 100.00 1,830,401.23 5.12 33,934,114.16
(Continued)
2014.12.31
Items Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Other receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Other receivable portfolio subject to
impairment by credit risk:
Portfolio by age 34,410,218.27 97.25 508,563.30 1.48 33,901,654.97
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 34,410,218.27 97.25 508,563.30 1.48 33,901,654.97
Other receivable of individually
insignificance subject to individually 971,450.00 2.75 0.00 0.00 971,450.00
assessment for impairment
Total 35,381,668.27 100.00 508,563.30 1.44 34,873,104.97
① Other accounts receivable using the age analysis method for measurement of allowance for bad debt
2015.06.30
Age
Carrying amount Allowance for bad debt Proportion
Within 1 year 34,104,320.20 1,316,276.04 3.86
Including：1 to 90 days 29,326,987.80 0.00 0.00
91 to 180 days 655,884.14 65,588.42 10.00
181 to 270 days 4,050,182.58 1,215,054.78 30.00
271 to 365 days 71,265.68 35,632.84 50.00
1 to 2 years 181,448.15 181,448.15 100.00
2 to 3 years 0.00 0.00 0.00
Over 3 years 332,677.04 332,677.04 100.00
Total 34,618,445.39 1,830,401.23 5.29
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
② Other receivable of individually insignificance subject to individually assessment for impairment
Carrying Total Allowance for bad
Items Reason(s) for allowance
amount proportion debt
Niuhai E-commerce ( Shanghai ) Co., Guaranteed deposits, absence of
30,000.00 0.00 0.00
Ltd. impairment
Beijing Dangdangkewen E-Commerce Guaranteed deposits, absence of
20,000.00 0.00 0.00
Co., Ltd. impairment
Guaranteed deposits, absence of
Gome Online E-Commerce Co., Ltd. 10,000.00 0.00 0.00
impairment
Jiangsu Suning Electronic Commerce Guaranteed deposits, absence of
30,000.00 0.00 0.00
Co., Ltd impairment
Alipay (China) Network Technology Co., Guaranteed deposits, absence of
103,000.00 0.00 0.00
Ltd. impairment
Guaranteed deposits, absence of
Zhejiang Tmall Network Limited 100,000.00 0.00 0.00
impairment
Alibaba (China) Network Technology Guaranteed deposits, absence of
3,000.00 0.00 0.00
Co., Ltd. impairment
China Export & Credit Insurance Guaranteed deposits, absence of
648,450.00 0.00 0.00
Corporation, Fujian Branch impairment
Guaranteed deposits, absence of
Longhai city People's Court 201,620.00 0.00 0.00
impairment
Total 1,146,070.00 0.00 0.00
(2) Reorganization, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the reporting period is CNY1,322,132.20.There was no
recovered or reversed allowance for bad debts during the reporting period.
(3) There was no other accounts receivable written off during the reporting period.
(4) List of other accounts receivable classified according to the accounts nature
Nature Book balance at the period-end Book balance at the period-begin
Non-related 35,764,515.39 35,381,668.27
Related 0.00 0.00
Total 35,764,515.39 35,381,668.27
(5) Details of top five other receivables
Proportion at Allowance for bad debt
Debtors Nature of OR Carrying amount Age period-end as at period-end
No. 1 Export tax rebate 16,000,000.00 0-30days 44.74 0
No. 2 Rent fee 3,850,369.00 181-270 days 10.77 1,155,110.70
Dividend withholding
No. 3 2,082,094.27 0-30 days 5.82 0
income tax
No. 4 Rent fee 1,539,024.40 0-122 days 4.3 30,780.49
No. 5 Electricity bill 830,450.91 0-30 days 2.32 0
Total 24,301,938.58 67.95 1,185,891.19
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
8. Inventories
(1) Disclosure by classification
2015.06.30 2014.12.31
Items Carrying amount before Impairment Net carrying Carrying amount before Impairment Net carrying
impairment allowance allowance amount impairment allowance allowance amount
Raw material 98,602,822.98 25,513,869.05 73,088,953.93 87,977,009.15 26,097,578.86 61,879,430.29
Work in progress 16,719,226.09 0.00 16,719,226.09 17,499,962.24 17,499,962.24
Self-manufactured
semi-finished 19,135,297.42 2,663,231.89 16,472,065.53 19,932,405.48 2,663,231.89 17,269,173.59
goods
Finished goods 104,855,933.22 12,908,926.99 91,947,006.23 97,948,909.55 12,407,948.20 85,540,961.35
Low-value
6,890,741.39 0.00 6,890,741.39 6,776,739.39 0.00 6,776,739.39
consumables
Materials in transit 2,842,630.58 0.00 2,842,630.58 4,183,877.21 0.00 4,183,877.21
Total 249,046,651.68 41,086,027.93 207,960,623.75 234,318,903.02 41,168,758.95 193,150,144.07
(2) Impairment allowance for inventories
Increase in reporting period Decrease in reporting period
Items 2014.12.31 Recovered or 2015.06.30
Accrual Other Other
Written off
Raw material 26,097,578.86 0.00 0.00 583,709.81 0.00 25,513,869.05
Self-manufactured
2,663,231.89 0.00 0.00 0.00 0.00 2,663,231.89
semi-finished goods
Finished goods 12,407,948.20 500,978.79 0.00 0.00 0.00 12,908,926.99
Total 41,168,758.95 500,978.79 0.00 583,709.81 0.00 41,086,027.93
(3) The basis of recognizing impairment allowance and the reason of recovering or writing off the impairment
allowance for invertories
The basis of recognition of impairment The reason of recovering impairment The reasons for inventory
Items
allowance for invertories allowance for invertories impairment write-off at current year
Market prices decrease, and resulting in
Raw material raw material’s net realizable value Inactive disposal
lower than cost
(4) The amounts of capitalized borrowing cost is CNY0.00 of the carrying amount of inventories as at period-end
9. Other current assets
Items 2015.06.30 2014.12.31
Input tax to be deducted 14,113,215.87 13,087,495.75
Financial products 230,000,000.00 0.00
Total 244,113,215.87 13,087,495.75
10. Available-for-sale financial assets
(1) The situation of available-for-sale financial assets
2015.06.30 2014.12.31
Items Net
Net carrying
Carrying amounts Impairment Carrying amounts Impairment carrying
amounts
amounts
Available for sale
40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
equity instruments
Including: measured
40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
by cost
Total 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(2) The measurement of the cost of available for sale financial assets at the end of reporting period
Carrying amounts Impairment Cash
dividend
Investee Increase Decrease Increase Decrease Proportion for
in in in in reporting
2014.12.31 2015.06.30 2014.12.31 2015.06.30 period
reporting reporting reporting reporting
period period period period
Xiamen
Association
of
Enterprises 40,000.00 40,000.00 1.48
with
Foreign
Investment
Total 40,000.00 40,000.00 1.48
11. Investment property
(1) Investment property measured at cost method
Houses and Construction
Items Land use rights Total
buildings in-progress
I. original book value
1. Balance as at beginning of the year 128,248,009.10 29,260,577.51 0.00 157,508,586.61
2 .Increased in current year 2,401,285.29 0.00 0.00 2,401,285.29
(1) Purchase 0.00 0.00 0.00 0.00
(2) Transferred from inventories,
2,401,285.29 0.00 0.00 2,401,285.29
fixed assets, construction in-progress
(3) Increased by business combination 0.00 0.00 0.00 0.00
3 .Decreased in current year 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred to
0.00 0.00 0.00 0.00
fixed assets
4 .Balance as at year-end 130,649,294.39 29,260,577.51 0.00 159,909,871.90
II. Accumulated Depreciation and
accumulated amortization
1.Opening balance 93,971,782.93 11,805,388.78 0.00 105,777,171.71
2. Increased in current year 4,818,459.53 311,055.90 0.00 5,129,515.43
(1) Accrual or amortization 3,191,252.05 311,055.90 0.00 3,502,307.95
(2)Transferred from fix assets 1,627,207.48 0.00 0.00 1,627,207.48
3. Decreased in current year 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred to
0.00 0.00 0.00 0.00
fixed assets
4. Balance as at year-end 98,790,242.46 12,116,444.68 0.00 110,906,687.14
III. Impairment allowance
1. Balance as at beginning of the year 0.00 0.00 0.00 0.00
2 .Increased in current year 0.00 0.00 0.00 0.00
(1) Accrual 0.00 0.00 0.00 0.00
3 .Decreased in current year 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Other transferred out 0.00 0.00 0.00 0.00
4. Balance as at year-end 0.00 0.00 0.00 0.00
IV. Carrying amount
1 .Carrying amount as at year-end 31,859,051.93 17,144,132.83 0.00 49,003,184.76
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Houses and Construction
Items Land use rights Total
buildings in-progress
2 .Carrying amount as at beginning of the year 34,276,226.17 17,455,188.73 0.00 51,731,414.90
(2) Investment property with pending ownership registration
Items Carrying amount Reason for pending
Lvyuan three country villa 2,499,033.19 Legal procedures in process
12. Fixed assets
(1) Circumstance of fixed assets
Improvement
Electronic
Houses and expense of
Items Machineries device, modules Vehicles Total
buildings leased fixed
and others
assets
I. original book value
1. Balance as at beginning of the year 97,404,653.05 153,679,330.78 1,231,926,727.30 17,984,602.01 66,776,989.36 1,567,772,302.50
2. Increased in current year 2,139,441.60 4,837,383.14 11,395,477.00 -2,242.25 126,879.62 18,496,939.11
(1) Purchase 0.00 5,469,770.26 9,256,355.70 0.00 77,135.81 14,803,261.77
(2) Transferred from construction
0.00 0.00 0.00 0.00 59,031.22 59,031.22
in-progress
(3) Transferred from investment property 0.00 0.00 0.00 0.00 0.00 0.00
(4) Impact of changes in
0.00 -21,419.32 6,945.08 -2,242.25 -9,287.41 -26,003.90
exchange rates
(5) Other 2,139,441.60 -610,967.80 2,132,176.22 0.00 0.00 3,660,650.02
3. Decreased in current year 2,401,285.29 11,212,619.31 15,374,938.51 514,873.12 0.00 29,503,716.23
(1) Disposal or scrap 0.00 11,212,619.31 15,374,938.51 514,873.12 0.00 27,102,430.94
(2)Transfer from Investment property 2,401,285.29 0.00 0.00 0.00 0.00 2,401,285.29
4. Balance as at year-end 97,142,809.36 147,304,094.61 1,227,947,265.79 17,467,486.64 66,903,868.98 1,556,765,525.38
II. Accumulated Depreciation
1. Balance as at beginning of the year 38,402,482.33 104,053,421.51 1,150,750,340.51 16,375,714.50 50,764,769.54 1,360,346,728.39
2 .Increased in current year 1,924,521.23 2,197,940.38 13,521,410.41 137,377.63 3,526,007.08 21,307,256.73
(1) Accrual 1,924,521.23 2,098,383.68 13,322,297.02 137,377.63 3,526,007.08 21,008,586.64
(2) Transferred from investment property 0.00 0.00 0.00 0.00 0.00 0.00
(3) Impact of changes in
0.00 99,556.70 199,113.39 0.00 0.00 298,670.09
exchange rates
3. Decreased in current year 1,627,207.48 8,442,925.09 14,086,385.94 514,873.12 0.00 24,671,391.63
(1) Disposal or scrap 0.00 8,442,925.09 14,086,385.94 514,873.12 0.00 23,044,184.15
(2) Transferred from investment property 1,627,207.48 0.00 0.00 0.00 0.00 1,627,207.48
4. Balance as at year-end 38,699,796.08 97,808,436.80 1,150,185,364.98 15,998,219.01 54,290,776.62 1,356,982,593.49
III. Impairment allowance
1. Balance as at beginning of the year 0.00 20,736,652.60 20,138,609.01 356.88 989,746.98 41,865,365.47
2 .Increased in current year 0.00 -65.40 -55.83 0.00 0.00 -121.23
(1) Accrual 0.00 0.00 0.00 0.00 0.00 0.00
(2) Impact of changes
0.00 -65.40 -55.83 0.00 0.00 -121.23
in exchange rates
3. Decreased in current year 0.00 573,236.32 427,097.21 0.00 0.00 1,000,333.53
(1) Disposal or scrap 0.00 573,236.32 427,097.21 0.00 0.00 1,000,333.53
4. Balance as at year-end 0.00 20,163,350.88 19,711,455.97 356.88 989,746.98 40,864,910.71
IV. Carrying amount
1 .Carrying amount as at period-end 58,443,013.27 29,332,306.93 58,050,444.84 1,468,910.76 11,623,345.38 158,918,021.18
2 .Carrying amount as at beginning of the
59,002,170.72 28,889,256.67 61,037,777.78 1,608,530.63 15,022,472.84 165,560,208.64
year
(2) Fixed assets with pending ownership registration
Items Carrying amount Reason for pending
Qingying garden 217,085.55 Legal procedures in process
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Lvyuan three country villa 749,709.96 Legal procedures in process
13. Construction in progress
(1) Details of construction in progress
2015.06.30 2014.12.31
Items Carrying Impairment Net carrying Carrying Impairment Net carrying
amount allowance amount amount allowance amount
Other 353,168.37 0.00 353,168.37 233,968.67 0.00 233,968.67
Total 353,168.37 0.00 353,168.37 233,968.67 0.00 233,968.67
(2) Movement of construction in progress
Transferred to fixed
Increase during the Other
Items Budgeted cost 2014.12.31 assets during the 2015.06.30
reporting period decrease
reporting period
Factory
-- 0.00 214,500.00 0.00 214,500.00 0.00
building project
Other -- 233,968.67 419,082.24 59,031.22 240,851.32 353,168.37
Total -- 233,968.67 633,582.24 59,031.22 455,351.32 353,168.37
(Continued)
Including:
Capitalization
Weight of cost Stage of Cumulative interests
rate applicable
to date in completion capitalized
Items interests to the current Source of finance
budgeted cost during the
(%) capitalized reporting
(%) current reporting
period (%)
period
Factory building project -- -- 0.00 0.00 0.00 Self-owned
Other -- -- 0.00 0.00 0.00 Self-owned
Total -- -- 0.00 0.00 0.00
14. Intangible assets
Items Land rights Software Total
I. original book value
1. Balance as at beginning of the year 12,402,545.60 14,718,110.04 27,120,655.64
2 .Increased in current year 806,379.92 1,367,155.34 2,173,535.26
(1) Purchase 806,379.92 1,367,155.34 2,173,535.26
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
3. Decreased in current year 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
4. Balance as at year-end 13,208,925.52 16,085,265.38 29,294,190.90
II. Accumulated amortization
1. Balance as at beginning of the year 1,523,126.31 13,452,106.17 14,975,232.48
2 .Increased in current year 201,857.52 280,229.88 482,087.40
(1) Accrual 201,857.52 280,229.88 482,087.40
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
3. Decreased in current year 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Items Land rights Software Total
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
4. Balance as at year-end 1,724,983.83 13,732,336.05 15,457,319.88
III. Impairment allowance
1. Balance as at beginning of the year 0.00
2 .Increased in current year 0.00 0.00 0.00
(1) Accrual 0.00 0.00 0.00
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
3. Decreased in current year 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes
0.00 0.00 0.00
in exchange rates
4. Balance as at year-end 0.00 0.00 0.00
IV. Carrying amount
1 .Carrying amount as at period-end 11,483,941.69 2,352,929.33 13,836,871.02
2 .Carrying amount as at beginning of the year 10,879,419.29 1,266,003.87 12,145,423.16
15. Long-term deferred charge
Increase Amortisation Other decrease
Items 2014.12.31 during the reporting for the reporting during the current 2015.06.30
period period year
Telecommunications
741,866.45 0.00 168,000.06 0.00 573,866.39
engineering
Houses and buildings
4,039,129.68 1,147,902.17 1,129,426.37 0.00 4,057,605.48
renovation expenses
Landscape engineering 16,148.04 0.00 16,148.04 0.00 0.00
Total 4,797,144.17 1,147,902.17 1,313,574.47 0.00 4,631,471.87
16. Deferred tax assets and deferred tax liabilities
(1) Without offsetting deferred tax assets
2015.06.30 2014.12.31
Items Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Impairment allowance 73,308,156.51 11,178,061.40 74,390,647.44 11,367,720.13
Accrued expenses 9,275,784.04 1,796,127.60 8,451,204.35 1,585,779.18
Held for trading
27,500.00 4,125.00 3,956,259.85 593,438.98
financial liabilities
Payroll liability 24,278,388.33 3,641,758.25 29,342,266.85 4,401,340.03
Unrealized profits from
718,783.58 179,695.90 718,783.58 179,695.90
intra-group transactions
Undistributed deficit 2,337,576.71 350,636.51 2,335,954.85 583,988.71
Total 109,946,189.17 17,150,404.66 119,195,116.92 18,711,962.93
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(2) Without offsetting deferred tax liabilities
2015.06.30 2014.12.31
Items Taxable temporary Taxable temporary
Deferred tax assets Deferred tax assets
difference difference
Accumulated depreciation
909,063.04 227,265.76 909,867.12 227,466.78
of fixed assets
Held for trading financial
7,482,150.00 1,122,322.50 2,610,000.00 391,500.00
assets
Total 8,391,213.04 1,349,588.26 3,519,867.12 618,966.78
(3) Details of unrecognized deferred tax assets
Items 2015.06.30 2014.12.31
Impairment allowance for fixed assets 8,433,924.40 8,434,045.63
Bad debt 1,909,615.46 724,066.95
Accrued expenses 20,745,285.76 18,469,353.81
Impairment allowance for inventories 3,154,908.03 3,738,617.84
Payroll liability 3,179,372.52 1,384,448.27
Undistributed deficit 48,812,179.08 55,117,853.35
Total 86,235,285.25 87,868,385.85
(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following years
Year 2015.06.30 2014.12.31 Note
Year 2015 683,172.28 63,700.89
Year 2016 10,473,369.24 3,187,362.29
Year 2017 11,427,700.61 17,618,598.88
Year 2018 19,249,693.65 21,913,253.09
Year 2019 7,585,688.20 12,334,938.20
Year 2020 6,384,732.08 0.00
Total 55,804,356.06 55,117,853.35
17. Other non-current assets
Items 2015.06.30 2014.12.31
Prepaid mold fee 3,195,929.47 1,929,374.75
Total 3,195,929.47 1,929,374.75
18. Short-term borrowings
(1) Categories
Items 2015.06.30 2014.12.31
Credit borrowings 295,103,472.00 61,190,000.00
Total 295,103,472.00 61,190,000.00
19. Financial liabilities measured as at fair value and the changes recorded into profit and loss
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Items 2015.06.30 2014.12.31
Held for trading financial liabilities 27,500.00 3,956,259.85
Including: Derivative financial liabilities 27,500.00 3,956,259.85
Total 27,500.00 3,956,259.85
Note: The derivative financial liabilities are forward foreign exchange contract signed with financial institutions.
20. Notes payable
Items 2015.06.30 2014.12.31
Bank acceptance 9,791,095.40 9,672,364.33
Commercial acceptance 14,715,963.96 20,077,618.44
Total 24,507,059.36 29,749,982.77
Note: There is no note payable expired but unpaid at the end of current year.
21. Accounts payable
(1) Detail for accounts payable
Items 2015.06.30 2014.12.31
Within 1 year 431,044,267.05 522,517,246.90
Over 1 year 5,605,793.84 10,554,048.53
Total 436,650,060.89 533,071,295.43
(2) Details of significant accounts payable remaining unsettled for more than one year
Creditors Amounts outstanding as at period-end Reason(s) for unsettlement
Xingda Electronical & Mechanical Co., Ltd. 3,033,786.68 Quality disputes
Ningbo Jiesiluo Electrical Equipment Co., Ltd. 521,533.67 Quality disputes
Ningbo Chaochao Electrical Equipment Co., Ltd. 500,237.01 Quality disputes
Ningbo Bao Er Kang Electric Appliance Co., Ltd. 255,781.87 Quality disputes
Unity Optoelectronic Co., Ltd. 164,995.31 Quality disputes
Total 4,476,334.54
22. Advances from customers
(1) Detail for advances from customers
Items 2015.06.30 2014.12.31
Within 1 year 9,321,742.77 13,458,842.62
Over 1 year 2,560,758.48 1,310,336.50
Total 11,882,501.25 14,769,179.12
(2 )The details of significant advances from customers remaining unsettled for more than one year
Items 2015.06.30 Reason(s) for unsettlement
Diamond Business Trading S/A 531,902.06 Not yet complete the settlement temporarily
CAINZ CORPORATION 286,332.94 Not yet complete the settlement temporarily
Philips (China) Investment Co., Ltd. 185,653.04 Not yet complete the settlement temporarily
Tempo (AUST) Pty Limited 167,656.82 Not yet complete the settlement temporarily
Bialetti Industrie S.P.A 160,068.69 Not yet complete the settlement temporarily
Total 1,331,613.55
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
23. Employee benefits payable
(1) Disclosure by classification
Increase during the Decrease during the
Items 2014.12.31 2015.06.30
reporting period reporting period
1. Short-term employee benefits 44,132,014.98 124,822,249.61 129,158,508.80 39,795,755.79
2. Post-employment benefits 1,608,710.16 4,784,912.33 6,257,186.30 136,436.19
3. Termination benefits 170,000.00 40,000.00 210,000.00 0.00
4. Other long-term employee
0.00 0.00 0.00 0.00
benefits within one year
Total 45,910,725.14 129,647,161.94 135,625,695.10 39,932,191.98
(2 ) Disclosure by classification of short-term employee benefits
Increase during the Decrease during the
Items 2014.12.31 2015.06.30
reporting period reporting period
1. Wages, salaries and
31,405,772.66 112,961,943.18 119,231,057.92 25,136,657.92
subsidies
2. Employee welfare 2,748.00 4,629,933.92 3,636,196.77 996,485.15
3. Social insurance: 886,538.25 4,320,485.52 3,906,783.71 1,300,240.06
Including: Medical insurance 475,271.74 2,793,343.44 2,626,358.34 642,256.84
Employment injury insurance 367,778.55 1,202,497.58 958,949.25 611,326.88
Maternity insurance 43,487.96 324,644.50 321,476.12 46,656.34
4.Housing provident fund 10,086,281.81 3,154,168.60 2,384,470.40 10,855,980.01
5.Labour union fee and
employee 0.00 0.00 0.00 0.00
education fee
6. Short-term paid absences 1,750,674.26 -244,281.61 0.00 1,506,392.65
7. Short-term profit-sharing
0.00 0.00 0.00 0.00
plan
Total 44,132,014.98 124,822,249.61 129,158,508.80 39,795,755.79
(3) Disclosure by defined contribution plan
Increase during the reporting Decrease during the reporting
Items 2014.12.31 2015.06.30
period period
1. Basic pension 1,444,646.60 4,318,477.99 5,638,281.75 124,842.84
2. Unemployment insurance 164,063.56 466,434.34 618,904.55 11,593.35
3. Annuity payment 0.00 0.00 0.00 0.00
Total 1,608,710.16 4,784,912.33 6,257,186.30 136,436.19
24. Taxes payable
Items 2015.06.30 2014.12.31
Business tax 1,043,277.83 1,120,916.39
Corporate income tax 379,083.54 3,297,898.90
Value added tax 330,438.45 1.59
Personal income tax 413,149.90 602,035.27
Education surcharge 349,780.26 479,352.30
Urban maintenance and construction surcharge 312,346.02 443,507.87
Others 2,528,345.37 578,066.29
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Total 5,356,421.37 6,521,778.61
25. Interests payable
Items 2015.06.30 2014.12.31
Interests on short-term borrowings 1,119,097.02 68,275.80
Total 1,119,097.02 68,275.80
26 Other payables
(1) Detail for other payables
Items 2015.06.30 2014.12.31
Within 1 year 51,879,877.39 39,741,179.54
Over 1 year 14,555,739.15 13,418,443.79
Total 66,435,616.54 53,159,623.33
(2 )Details of significant other payables remaining unsettled for more than one year
Items 2015.06.30 Reason(s)for unsettlement
Land use fee 1,382,556.00 The other party did not open an invoice
Mold fees 674,224.20 Generation advances, unpaid
Deposit 9,179,586.04 Termination be returned
Total 11,236,366.24
27. Share capital
2014.12.31 Movements during the reporting period (+、－) 2015.06.30
Conversion
Share Bonus
Items from Others Subtotal
Total amount % issue issue Total amount %
reserves
I. Shares with restriction on disposal
1.State-held shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2. Shares held by state-owned entities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3. Shares held by other domestic investors 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Within: Held by institutional investors 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Held by non-institutional investors 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4. Shares held by foreign
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
investors
Within: Held by institutional
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
investors
Held by non-institutional
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
investors
Subtotal of shares with
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
restriction on disposal
II.Floating shares
1. Ordinary shares issued in
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CNY
2. Shares issued in domestic stock market
185,391,680.00 100.00 0.00 0.00 0.00 0.00 0.00 185,391,680.00 100.00
in foreign currency
3. Shares issued in foreign
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
market in foreign currency
4. Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Subtotal of floating shares 185,391,680.00 100.00 0.00 0.00 0.00 0.00 0.00 185,391,680.00 100.00
III. Total 185,391,680.00 100.00 0.00 0.00 0.00 0.00 0.00 185,391,680.00 100.00
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28. Capital reserves
Increase during the Decrease during the reporting
Items 2014.12.31 2015.06.30
reporting period period
Share premium 210,045,659.80 0.00 0.00 210,045,659.80
Other capital
68,413,202.75 0.00 0.00 68,413,202.75
reserves
Total 278,458,862.55 0.00 0.00 278,458,862.55
29. Other comprehensive income
Total amount in reporting period
Amount Less: previously
Less: After tax After tax
Items 2014.12.31 for the recognized in other 2015.06.30
Income attributable attributable
reporting comprehensive
tax to the parent to minority
period income transferred
expense company shareholders
before tax into profit or loss
1.Other comprehensive
income will be reclassified
into income or loss in the
future
Including: foreign currency
translation differences of -899,380.20 -78,263.91 0.00 0.00 -58,697.93 -19,565.98 -958,078.13
financial statements
Total of other comprehensive
-899,380.20 -78,263.91 0.00 0.00 -58,697.93 -19,565.98 -958,078.13
income
30. Surplus reserves
Items 2014.12.31 Increase during the reporting period Decrease during the reporting period 2015.06.30
Statutory surplus reserve 16,400,043.27 0.00 0.00 16,400,043.27
Total 16,400,043.27 0.00 0.00 16,400,043.27
31. Retained earnings
Items 2015.06.30 2014.12.31
Pre-adjustment balance brought forward 67,223,203.93 46,733,303.43
Total adjustment to retained earnings b/f (+, -) 0.00 0.00
Retained earnings b/f after adjustment 67,223,203.93 46,733,303.43
Add: Net profit attributable to shareholders of the parent 15,111,025.18 51,348,795.39
Less: Appropriation to statutory surplus reserve 0.00 4,904,059.69
Appropriation to discretionary surplus reserve 0.00 0.00
General reserve 0.00 0.00
Ordinary dividends declared 27,808,752.00 25,954,835.20
Bonus issue 0.00 0.00
Balance carrying forward 54,525,477.11 67,223,203.93
32. Operating revenues and costs
Current period Prior period
Items
Revenues Costs Revenues Costs
Principal
860,571,679.13 760,838,332.58 853,536,487.98 750,410,484.64
operating income
Other operating 34,622,478.94 10,644,964.43 36,679,811.53 11,563,929.82
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
income
Total 895,194,158.07 771,483,297.01 890,216,299.51 761,974,414.46
33. Business tax and surcharges
Items Current period Prior period
Business tax 2,026,579.47 1,941,628.44
Education surcharge 522,830.70 1,478,879.69
Urban maintenance and construction tax 533,328.80 1,489,554.01
Others 1,623.21 20,247.05
Total 3,084,362.18 4,930,309.19
34. Sales expenses
Items Current period Prior period
Export expanses 16,949,226.08 16,377,256.67
Employee remunerations 11,070,639.29 10,238,256.77
Claims experiment expenses 2,486,199.67 -1,225,317.76
Sales commission and after sales service fees 1,846,683.75 1,369,690.46
Assets lease expenses 1,480,366.65 1,485,206.71
Travel expenses 1,438,843.82 2,302,320.71
Advertisements charges and sales promotion 4,649,273.77 2,749,456.16
Administrative expenses 490,754.03 359,560.00
Transportation 520,230.75 375,274.89
Others 191,911.51 351,750.15
Total 41,124,129.32 34,383,454.76
35. General and administrative expenses
Items Current period Prior period
R&D expenses 36,107,424.66 30,469,780.95
Employee remunerations 17,469,263.60 13,510,399.40
Depreciation and amortization of assets 5,441,909.19 5,172,379.73
Rental expenses 9,564,512.91 8,260,918.04
Insurance expenses 876,240.01 905,634.04
Administrative expenses 1,684,491.29 3,063,340.05
Travel expenses 1,772,778.91 823,312.06
Consultant fees 1,358,858.98 1,025,718.06
Maintenance expenses 2,987,379.79 3,502,443.67
Taxes and surcharges 1,987,191.55 2,120,135.29
Other expenses 3,748,639.32 4,058,526.12
Total 82,998,690.21 72,912,587.41
36. Financial costs
Items Current period Prior period
Interest expenses 1,622,486.32 5,286,440.55
Less: Interest income 6,370,313.97 15,453,140.23
Less: Realized financing gains 375,581.49 551,374.62
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Exchange gain or loss -5,073,550.77 -1,817,398.65
Bank charges 999,014.25 1,318,498.60
Other 0.00 0.00
Total -9,197,945.66 -11,216,974.35
37. Impairment loss on assets
Items Current period Prior period
Impairment loss on receivables 602,755.00 -3,225,929.92
Impairment loss on inventories 500,978.79 858,827.82
Impairment loss on fixed assets 0.00 2,920,419.99
Impairment loss on construction in progress 0.00 -114,359.13
Total 1,103,733.79 438,958.76
38. Gain from changes in fair value
Source of fair value change Current period Prior period
Financial assets measured by fair value with changes in fair value recognised in profit or loss 4,872,150.00 0.00
Including: Derivative financial assets 4,872,150.00 0.00
Financial liabilities measured by fair value with changes in fair value recognised in profit or loss 3,928,759.85 -26,768,171.00
Total 8,800,909.85 -26,768,171.00
39. Investment income
Items Current period Prior period
Long-term equity investment income under equity method 0.00 0.00
Investment income from disposal of long-term equity investment 0.00 0.00
Investment income from disposal of ffinancial assets measured by
4,687,335.49 8,647,755.48
fair value with changes in fair value recognised in profit or loss
Investment income from financial products 1,343,333.33 5,352,363.02
Total 6,030,668.82 14,000,118.50
40. Non-operating income
Included in current year
Items Current period Prior period
non-recurring profit and loss
Gains from disposal of non-current assets 909,792.35 1,533,850.20 909,792.35
Including: Gains from disposal of fixed assets 909,792.35 1,533,850.20 909,792.35
Income from indemnities 0.00 0.00 0.00
Government grants 1,571,749.00 1,913,721.00 1,571,749.00
Inventory profit 0.00 0.00 0.00
Others 747,947.82 5,373,277.09 747,947.82
Total 3,229,489.17 8,820,848.29 3,229,489.17
Details of government grants which are recognized into profit or loss during current year:
Government assistance Current period Prior period Related with assets/income
Patents subsidies 63,000.00 160,500.00 Related with income
Technology development grants 0.00 500,000.00 Related with income
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Enterprise development subsidies 0.00 900,000.00 Related with income
Subsidies for export letter guarantees 751,749.00 313,221.00 Related with income
Haixi special subsidies 400,000.00 0.00 Related with income
The exhibition subsidies 350,000.00 40,000.00 Related with income
Others 7,000.00 0.00 Related with income
Total 1,571,749.00 1,913,721.00
41. Non-operating expenses
Included in current period
Items Current period Prior period
non-recurring profit and loss
Loss on disposal of non-current assets 117,195.62 548,863.12 117,195.62
Including: Loss on disposal of fixed assets 103,977.53 2,627.18 103,977.53
Loss on scraped fixed assets 13,218.09 546,235.94 13,218.09
Inventory losses of fixed assets 0.00 7,982.12 0.00
Fines 1,000.00 102,177.57 1,000.00
Public donation 0.00 14,464.05 0.00
Others 0.00 68,286.09 0.00
Total 118,195.62 741,772.95 118,195.62
42. Income tax expenses
(1) General information
Items Current period Prior period
The income tax expenses of the current period 1,008,377.01 1,273,760.49
Deferred income tax expenses 2,292,380.77 1,683,679.41
Total 3,300,757.78 2,957,439.90
(2) Reconciliation of account profit and income tax expenses
Items Current period
Total profit 22,540,763.44
Income tax computed in accordance with the applicable tax rate 5,635,190.86
Impact of differing tax rates applicable to subsidiaries -2,378,012.45
Impact of adjustment for prior period tax expenses 572,505.70
Impact of non-taxable income
Impact of non-deductible costs, expenses and losses 178,948.02
Impact of utilization of prior period deductible temporary differences and taxable temporary differences of which
0.00
no deferred tax asset has been recognized
Impact of current period deductible temporary differences and taxable temporary differences of which no deferred
1,317,235.64
tax asset has been recognized
Adjustment of deferred tax assets and deferred tax liabilities brought forward due to changes in tax rates
Impact of additional deduction for R&D expenses -2,025,109.99
Income tax expenses 3,300,757.78
43. Notes to the statement of cash flows
(1) Other cash received relating to operating activities
Items Reporting period Prior period
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Government grants 1,571,749.00 1,913,721.00
Interests income 5,941,235.93 7,432,615.24
Rent income 19,349,933.72 16,628,012.01
Funds in current account and others 4,152,272.39 24,248,299.00
Total 31,015,191.04 50,222,647.25
(2) Other cash payments relating to operating activities
Items Reporting period Prior period
Penalties and donations paid 1,000.00 116,641.62
Bank charges paid by cash 919,501.88 1,017,121.51
Sales expenses and general and administrative expenses paid by cash 56,586,074.88 73,203,627.45
Current accounts and others 33,984,065.62 53,441,229.91
Total 91,490,642.38 127,778,620.49
(3) Other cash received relating to investing activities
Items Reporting period Prior period
To recover the maturity time deposits that for purpose to earn interest income in financial
652,082,700.00 0.00
institutions
Total 652,082,700.00 0.00
(4) Other cash payments relating to investing activities
Items Reporting period Prior period
Deposits in financial institutions for the purpose of earning interest income 651,316,932.63 896,866,338.47
Total 651,316,932.63 896,866,338.47
(5) Other cash received relating to financing activities
Items Reporting period Prior period
Capital absorbed and loan between related parties 0.00 143,957,350.00
Total 0.00 143,957,350.00
(6) Other cash payments relating to financing activities
Items Reporting period Prior period
Capital absorbed and loan between related parties 0.00 12,304,200.00
Total 0.00 12,304,200.00
44. Supplementary information to the statement of cash flows
(1) Supplementary information to the statement of cash flows
Items Reporting period Prior period
① Reconciliation of cash flows from operating activities to net profit:
Net profit 19,240,005.66 19,147,132.22
Add: Loss on asset impairment 1,103,733.79 438,958.76
Depreciation of fixed assets, oil and gas assets, biological assets held for production 24,510,894.59 25,761,482.07
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Items Reporting period Prior period
Amortisation of intangible assets 482,087.40 535,676.51
Amortisation of Long-term deferred expenditure 1,313,574.47 1,008,080.19
Loss on non-current assets disposal (gain presented by "-" prefix) -805,814.82 -1,659,864.90
Loss on scrap of fixed assets (gain presented by "-" prefix) 13,218.09 554,218.06
Loss on fair value changes (gain presented by "-" prefix) -8,800,909.85 26,768,171.00
Financial costs (gain presented by "-" prefix) -4,176,211.61 -6,101,935.05
Investment loss (gain presented by "-" prefix) -6,030,668.82 -14,000,118.50
Decrease of deferred tax assets (increase presented by "-" prefix) 1,561,558.27 4,725,077.01
Increase of deferred tax liabilities (increase presented by "-" prefix) 730,621.48 -3,041,397.60
Decrease of inventories (increase presented by "-" prefix) -15,311,458.47 6,527,226.13
Decrease of operating receivables (increase presented by "-" prefix) 23,219,161.39 70,447,473.89
Increase of operating payables (decrease presented by "-" prefix) -87,613,431.38 -164,190,118.82
Others
Net cash flows generated from operating activities -50,563,639.81 -33,079,939.03
②Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
③Movement of cash and cash equivalents:
Cash as at period-end 366,455,451.65 163,780,265.08
Less: Cash as at beginning of the period 469,965,448.01 834,088,959.68
Add: Cash equivalents as at period-end
Less: Cash equivalents as at beginning of the period
Net increase of cash and cash equivalents -103,509,996.36 -670,308,694.60
(2) Net cash paid for disposal of subsidiary in reporting period
In Apr. 2015, the Company’s subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. (TKL) purchase its
subsidiary Orient Star Investments Ltd, so far, the procedures for commercial registration had been accomplished
but the investment fee had not been paid.
(3) Net Cash receive from disposal of the subsidiary
Items Reporting period
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Cash and cash equivalents receive from disposal of the subsidiary 0.00
Of which: Cash received from disposal of LTC 0.00
Net cash received from disposal of the subsidiary 0.00
(3) Cash and cash equivalents
Items Reporting period Prior period
①Cash 366,455,451.65 163,780,265.08
Including: Cash at hand 783,900.30 661,293.17
Demand bank deposit 365,671,551.35 163,118,971.91
Demand other monetary funds 0.00 0.00
Demand deposit in the Central Bank 0.00 0.00
Deposit in peer firms 0.00 0.00
Loan to peer firms 0.00 0.00
②Cash equivalents 0.00 0.00
Including: Debt instrument matured within three months 0.00 0.00
③Cash and cash equivalents as at period-end 366,455,451.65 163,780,265.08
Including: restricted cash and cash equivalents in parent company
0.00 0.00
or subsidiary
45. The assets with the ownership or use right restricted
Item Closing book value Restricted reason
Time deposits for the purpose of earning interest income in financial
Monetary capital 415,733,232.63
institutions
Total 415,733,232.63
46. Foreign currency monetary items
(1) Foreign currency monetary items
Closing foreign currency
Item Exchange rate Closing convert to RMB balance
balance
Monetary funds
Including: -USD 75,833,812.73 6.1136 463,617,597.43
-JPY 39,281,068.80 0.0501 1,966,096.05
-IDR 4,739,881,924.04 0.0005 2,173,566.18
-EUR 240,951.08 6.8699 1,655,309.82
-GBP 13,170.60 9.6422 126,993.56
-HKD 64,441.14 0.7886 50,818.93
-HUF 81,016.00 0.0220 1,782.35
-FRF 7.00 6.6600 46.62
Total 469,592,210.94
Short-term borrowings
Including: -USD 48,270,000.00 6.1136 295,103,472.00
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Closing foreign currency
Item Exchange rate Closing convert to RMB balance
balance
Total 295,103,472.00
Accounts receivable
Including： -USD 29,146,353.62 6.1136 178,189,151.90
-JPY 35,820,836.00 0.0501 1,792,899.61
Total 179,982,051.51
Accounts payable
Including: -USD 18,522,207.85 6.1136 113,237,369.91
-EUR 398,799.42 6.8699 2,739,712.14
-HKD 470,081.86 0.7886 370,711.26
-JPY 17,864,822.00 0.0501 894,170.07
Total 117,241,963.38
Other receivables
Including: -EUR 15,750.00 0.7886 12,420.61
-HKD 450,000.00 0.0501 22,523.40
-JPY 387,317.46 6.1136 2,367,904.02
-USD 4,240.10 0.0000 0.00
-IDR 2,097,630,411.66 0.0000 0.00
Total 2,402,848.03
Other payables
Including: -HKD 4,483.75 0.7891 3,538.08
-JPY 564,741.00 0.0530 29,948.09
-USD 315,062.32 6.1832 1,948,103.20
Total 1,981,589.37
(2) Description of overseas operating entities
The Company's holding sub-subsidiaries company Pt. Star Comgistic Indonesia locate at West Java province in
Indonesia, due to Pt. Star Comgistic Indonesia are mostly settled in US dollars by usual purchases and sales, so
that it adopt the US dollar as its functional currency.
VII. Changes of merge scope
1. Business merger not under same control
Unit: Yuan
Income of Net profits of
Time and
Cost of Way to gain Recognition acquiree acquiree
Name of place of Proportion of
gaining the the stock Purchase date basis of during the during the
acquiree gaining the stock rights
stock rights rights purchase date purchase date purchase date
stock rights
to period-end to period-end
Business
Orient Star Sale and
merger not
Investments 28 Apr. 2015 HKD1.00 100% 23 Apr. 2015 purchase 0.00 0.00
under same
Ltd, agreement
control
Notes:
In Apr. 2015, the Company’s subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd .(TKL) purchase its subsidiary Orient Star
Investments Ltd, so far, the procedures for commercial registration had been accomplished but the investment fee had not been paid.
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2 .Business merger under same control in reporting period
The Company's holding subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. cancelled its subsidiary Tsann
Kuen (Zhangzhou) Profession and Technology Institute (LTC). in Feb. 2015. Since the date of cancellation that
Tsann Kuen (Zhangzhou) Profession and Technology Institute (LTC). is no longer included in the consolidated
financial statements, the revenue, expense and profit before completion of cancellation are included in the
consolidated income statement, cash flow before completion of cancellation is included in the consolidated
statement of cash flows.
VIII. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Place of Place Nature Holding proportion (%)
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Manufacture home
TKL Zhangzhou Zhangzhou 75.00 75.00 Acquired through incorporation
electronic appliance
Acquired through business
Manufacture home
TKS Shanghai Shanghai 62.50 62.50 combination under common
electronic appliance
control
(2) Significant not wholly owned subsidiary
Holding proportion of Profit and loss attributable to
Dividends attributable to Total amount of minority
Subsidiaries minority shareholders minority equity during
minority shareholders equity at the period-end
(%) reporting period
TKL 25.00 4,847,832.13 9,428,762.40 311,843,339.09
TKS 37.50 -647,424.52 0.00 35,902,162.42
(3) The main financial information of significant not wholly owned subsidiary
Closing balance
Subsidiaries
Non-current Current Non-current
Current assets Total assets Total liability
assets liabilities liability
TKL 1,875,211,591.30 254,162,824.68 2,129,374,415.98 853,244,778.99 1,122,322.50 854,367,101.49
TKS 76,674,828.67 22,768,738.83 99,443,567.50 3,704,467.76 0.00 3,704,467.76
(Continued)
Opening balance
Subsidiaries Non-current Current Non-current
Current assets Total assets Total liability
assets liabilities liability
TKL 1,750,566,275.80 261,075,742.61 2,011,642,018.41 719,878,940.06 391,500.00 720,270,440.06
TKS 76,107,385.62 24,641,697.87 100,749,083.49 3,283,518.35 0.00 3,283,518.35
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(Continued)
Reporting period
Subsidiaries Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKL 849,902,598.38 21,350,785.76 0.00 -46,378,546.22
TKS 3,074,552.27 -1,726,465.40 0.00 279,283.47
(Continued)
Prior period
Subsidiaries Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKL 862,438,262.13 17,496,448.18 0.00 -22,898,200.33
TKS 3,679,952.94 4,446,435.14 0.00 7,398,050.10
2. The equity in sub-subsidiaries
(1) The construction of the sub-subsidiaries
Sub-subsidiar Place of Place Nature Holding proportion %
Acquired method
ies operation of registration of business Directly Indirectly
Manufacture home
TKN Zhangzhou Zhangzhou electronic appliance
56.25 75.00 Acquired through incorporation
Sales of home
STD Shanghai Shanghai electronic
56.25 100.00 Acquired through incorporation
Acquired through business
East Sino Hong Kong Hong Kong Investment, Trading 75.00 100.00 combination under common
control
Acquired through business
Manufacture home
SCI Indonesia Indonesia electronic appliance
74.76 99.69 combination under common
control
Orient Star Acquired through business
Investments Hong Kong Hong Kong Investment, Trading 75.00 100.00
Ltd combination under common control
(2) Significant non-wholly-owned sub-subsidiary
Dividends
Holding proportion Profit and loss attributable Total amount of
attributable to
Sub-subsidiaries of minority to minority equity during minority equity at the
minority
shareholders (%) reporting period period-end
shareholders
TKN 25.00 -56,846.71 1,091.85 1,246,595.99
STD 0.00 0.00 0.00 0.00
East Sino 0.00 0.00 0.00 0.00
SCI 0.31 -14,580.42 0.00 248,095.97
Orient Star Investments Ltd 0.00 0.00 0.00 0.00
(3) The main financial information of significant not wholly owned sub-subsidiary
Closing balance
Sub-subsidiaries Non-current Current Non-current
Current assets Total assets Total liability
assets liabilities liability
TKN 850,393.13 4,950,000.00 5,800,393.13 114,150.10 0.00 114,150.10
STD 7,790,298.54 1,011,073.83 8,801,372.37 4,551,231.42 0.00 4,551,231.42
East Sino 35,142.09 146,366,660.20 146,401,802.29 29,896.21 0.00 29,896.21
SCI 44,178,512.68 65,978,735.13 110,157,247.81 16,506,768.51 227,265.76 16,734,034.27
Orient Star
0.00 0.00 0.00 0.00 0.00 0.00
Investments Ltd
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(Continued)
Opening balance
Sub-subsidiaries Current Non-current
Current assets Non-current assets Total assets Total liability
liabilities liability
TKN 910,501.92 4,950,000.00 5,860,501.92 126,532.65 0.00 126,532.65
STD 7,895,820.60 1,135,651.53 9,031,472.13 4,557,996.61 0.00 4,557,996.61
East Sino 53,391.15 146,414,916.41 146,468,307.56 34,244.85 0.00 34,244.85
SCI 54,107,897.96 65,287,362.80 119,395,260.76 21,021,950.25 227,466.78 21,249,417.04
Orient Star
0.00 0.00 0.00 0.00 0.00 0.00
Investments Ltd
(Continued)
Reporting period
Sub-subsidiaries Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKN 0.00 -4,052.26 0.00 -18,566.66
STD 30,017.10 -223,334.57 0.00 -126,252.29
East Sino 0.00 -10,765.58 0.00 -18,249.00
SCI 35,414,003.17 -4,647,501.10 0.00 -5,114,464.46
Orient Star Investments Ltd 0.00 0.00 0.00 0.00
(Continued)
Prior period
Sub-subsidiaries Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKN 0.00 260,427.05 0.00 198,034.83
STD 135,492.21 -265,226.66 0.00 -1,546,206.92
East Sino 42,103.03 41,573.15 0.00 45,876.78
SCI 24,079,395.14 -6,739,531.08 0.00 -1,806,412.47
Orient Star Investments Ltd 0.00 0.00 0.00 0.00
IX. The risk associated with financial instruments
The main financial instruments of the Company including equity investments, loans, accounts receivable,
accounts payable, derivative financial instruments and etc., please see Note 6 for detail of related items. The risk
associated with financial instruments, and risk management policies which the company uses to reduce these risks
as described below. The management of the Company manages and supervises the risks to ensure that the risks
can be controlled within a limited range.
(I) The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to reduce the
negative impact that caused by the risk of the Company to the lowest level, and to maximize the benefits of
shareholders and other equity investors. Based on the targets of risk management, the basic strategy of the
Company’s risk management is to identify and analyze the risks which are faced by the Company, establish
suitable risk tolerance baseline and precede the risk management, and supervise a variety of risks timely and
reliably, and control the risk within a limited range.
1. Market Risk
(1) Foreign exchange risk
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Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The company bears the
foreign exchange risk primarily concerned with USD, JYP, IDR, EUR and HKD, in addition to the Company's
subsidiary TKL and SCI purchases and sales used by USD, the other main business activities of the Company
used by CNY. 30 June 2015, except the following assets or liabilities are recorded in foreign currency, the others
are recorded in CNY. Foreign exchange risk of the assets and liabilities in foreign currencies may have an impact
on the Company's performance of operation.
Items 2015.06.30 2014.12.31
Monetary funds 469,592,210.94 265,678,689.15
Accounts receivable 179,982,051.51 230,432,201.21
Other receivables 2,402,848.03 2,524,982.28
Accounts payable 117,241,963.38 64,913,478.77
Other payables 1,981,589.37 2,726,760.09
Short-term borrowing 295,103,472.00 61,190,000.00
The Group purchases foreign currency forward contracts to reduce the foreign exchange risk, and foreign currency
forward contracts shall be based on the amount of foreign currency assets.
(2) Interest rate risk - the risk of changes in cash flow
Due to the risk of changes in cash flows of a financial instrument is mainly concerned with the floating rate of
bank borrowings. The company's policy is to maintain a floating interest rate on the borrowings.
2. Credit Risk
That would lead the Company’s maximum credit risk of financial losses mainly from the losses of financial assets,
which are resulted by the other party of contract fails to fulfill the obligations, as at 30 June 2015.
In order to reduce credit risk, the Company set up a team responsible for determination of credit limits, credit
approvals and other monitoring procedures to ensure that the necessary measures be taken to recover overdue
debts. In addition, the Company reviews the recoverable amount of each individual trade debt at each balance
sheet date to ensure recognized fully provision for bad debts for the money cannot be recovered. So that the
Company's management believes the Company’s credit risk has been greatly reduced.
The Company's circulating funds deposited in banks which with high credit ratings, so that the lower credit risk of
circulating funds.
3. Liquidity risk
When managing the liquidity risks, the Company’s management believes maintaining adequate cash and cash
equivalents, and monitoring that at same time, in order to meet the needs of operation of the Company, and to
reduce the impact of fluctuations in cash flows. The management of the Company monitors the use of bank
borrowings and ensures to abide by loan agreements.
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X. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Closing fair value
Item Fair value Fair value Fair value
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
1. Continuous measurement by fair value
The financial assets are measured by fair value and the changes are recognized
into current profit or loss
1.1 Trading financial assets
(1) Debt instruments investment
(2) Equity instruments investment
(3) Derivative financial assets 7,482,150.00 7,482,150.00
Total amount of assets continuous measurement by fair value 7,482,150.00 7,482,150.00
2. Trading financial liabilities
including: Issued trading bonds
Derivative financial liabilities 27,500.00 27,500.00
Other
Total amount of liabilities continuous measurement by fair value 27,500.00 27,500.00
2. Determined on the basis of continuous first level for fair value measurement of the market of project
Based on the identical assets or liabilities acquired on unadjusted quoted in an active market at balance sheet day.
XI. Related party and related Transaction
1. Information related to parent company of the Company
Place of
Parents Relationship Type of incorporation Legal representative Nature of business
registration
STAR COMGISTIC CAPITAL Manufacture and sales
Ultimate holding company INC Taiwan Yang Wenfang
CO.,LTD. electrical equipment
(Continued)
Shareholding Voting right Ultimate controller Organization
Parents Registered capital
in the Company % in the Company % of the Company code
STAR COMGISTIC CAPITAL
TWD 1,343,000.00thousand 42.85 44.63 Wu Cankun 28986660
CO.,LTD.
2. Subsidiaries
See Note VIII. 1 “The equity in subsidiaries”.
3. Joint ventures and associated enterprises of the Company
There have no joint ventures and associated enterprises of the Company.
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4. Details of other related parties
Other related parties Relationship Organisation code
EUPA Industry Corporation Limited Shareholder 12959659-000-07-14-6
Fordchee Development Limited Shareholder 14676920-000-01-15-5
Fillman Investment Limited Shareholder 16269694-000-07-14-A
Tsann Kuen Japan Co., Ltd. Same ultimate holding company 0105-01-021064
The company directly controlled by the key
Thermaster Electronic (Xiamen) Ltd. 61201968-5
management and closed family members
Xiamen Tsann Kuen Trading Co., Ltd. Same actual controller 58126129-1
Sino Global Development Limited Same actual controller ――
The company directly controlled by the key
PT. Shen Min Sukabumi ――
management and closed family members
WU WHA MA RESTAURANT MANAGEMENT
Ultimate holding company have equity 31055232-9
CO., LTD. IN XIAMEN
Tsann Kuen Enterprise Co., Ltd. Same ultimate holding company 69568009
5.Transactions with related parties
(1) Transactions through purchase or sell goods and accept or supply services
① The situation of purchases goods or accepts services
Over the
Trading limit
Related-party Content Reporting period trading limit Prior period
approved
or not
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 16,991,120.1
16,625,490.15 40,000,000.00 No
5
STAR COMGISTIC CAPITAL CO., LTD. Purchase of goods 2,297,732.78 2,800,048.00 No 1,993,309.61
Total 18,923,222.93 42,800,048.00 18,984,429.76
②The situation of sells goods or rendering services
Related-party Content Reporting period Prior period
Tsann Kuen Japan Co., Ltd. Sale of goods 2,664,287.68 5,832,857.86
STAR COMGISTIC CAPITAL CO., LTD. Sale of goods 6,763,782.24 19,698,104.28
Total 9,428,069.92 25,530,962.14
(2) Lease between related parties
①The Company is as the leasor
Leasee classification Lease rental recognized in current period Lease rental recognized in prior period
Xiamen Tsann Kuen Trading Property
Co., Ltd 750,000.00 750,000.00
Xiamen Wuhuama Restaurant
Property
Management Co., Ltd. 65,400.00 0.00
Total 815,400.00 750,000.00
(3) Assets transfer, Debt restructuring between related parties
Related-party Content Reporting period Prior period
Tsann Kuen Enterprise Co., Ltd. Sell the fixed assets 0.00 100,099.39
Total 0.00 100,099.39
Purchase of the fixed
PT. Shen Min Sukabumi
assets 806,379.92 0.00
Total 806,379.92 0.00
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(4) Other transactions with related parties
Related-party Content Reporting period Prior period
Payments
STAR COMGISTIC CAPITAL CO., Purchasing agent fees
LTD. (Note) 108,256.44 97,839.44
Total 108,256.44 97,839.44
Note: The Company and its subsidiaries entrust related companies to purchase raw material, modules and
machineries. The procurement agency fees (including service charges) are calculated based on 110% of the actual
procurement expense incurred by the agencies.
6. The balance of payables and receivables among related parties
(1) Receivables owed by related parties
2015.06.30 2014.12.31
Related party
Carrying amount Allowance for bad debt Carrying amount Allowance for bad debt
Accounts receivable:
Tsann Kuen Japan Co., Ltd.
81,665.64 0.00 1,653,388.58 0.00
STAR COMGISTIC CAPITAL CO.,
LTD. 2,387,842.92 0.00 5,083,138.17 0.00
Total
2,469,508.56 0.00 6,736,526.75 0.00
(2) Payables owed to related parties
Related party 2015.06.30 2014.12.31
Accounts payable:
Thermaster Electronic (Xiamen) Ltd. 8,584,063.50 10,554,478.81
STAR COMGISTIC CAPITAL CO., LTD. 956,890.89 761,114.88
Total 9,540,954.39 11,315,593.69
Other payable:
Tsann Kuen Japan Co., Ltd. 17,926.47 104,052.63
STAR COMGISTIC CAPITAL CO., LTD. 50,065.13 37,181.49
Xiamen Tsann Kuen Trading Co., Ltd. 463,210.38 738,531.20
Xiamen Wuhuama Restaurant Management Co., Ltd. 55,440.00 59,100.00
Total 586,641.98 938,865.32
XII. Share payments
There is no share payment during the reporting period
XIII. Commitments and contingencies
1. Important commitments
Irrevocable lease contracts under performance and their financial effects as at the end of reporting period.
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Unit: CNYten thousands
Items 2015.06.30 2014.12.31
The minimum lease payments of irrevocable operating lease
contracts:
House rent
1st year after the balance sheet date 3,727 3,727
2nd year after the balance sheet date 3,727 3,727
rd
3 year after the balance sheet date 3,727 3,727
Subsequent years 128,575 130,438
Total 139,756 141,619
2. Contingencies
The subsidiary of the Company –Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL) signed the <
Product Supply Agreement> with Xinda Electromechanics Co., Ltd. (hereafter, Xinda) on July 20, 2009. The
validity of the contract is from July 1, 2009 to June 30, 2012. Furthermore, on 1 January 2011, they signed the
and relevant , and other agreements. According to those agreements, TKL should purchase products
from Xinda. TKL rejected to pay for the purchase and terminated those agreements due to the poor quality
products from Xinda. On 23 November 2011, Xinda lodged petition for civil litigation to the Intermediate
People’s Court of Zhangzhou for the order of Intermediate People’s Court of Zhangzhou that TKL pay for
purchase from Xinda amounting to USD 479,089.06 (CNY 3,071,535.78) immediately together with the
liquidated damages for delay payment and resume performance of the agreement (the value of the unperformed
agreement amounting to USD 189,423.25).
On 8 January 2012, TKL lodged counterclaim to the Court claiming that due to unsatisfactory quality of goods
supplied by Xinda, goods supplied by TKL had been returned from clients and orders cancelled, resulting in
substantial financial loss and reputation damage suffered by the TKL. TKL therefore petitioned for the court order
for relief of agreement and that Xinda shall pay to TKL liquidated damage amounting to CNY 1 million together
with financial loss amounting to CNY 7.6216 million.
Intermediate People’s Court of Zhangzhou made the judgement on 15 August 2013 as follow:
1. TKL should pay goods payments amount USD 479,089.06 to plaintiff Xinda within 15 days from the date on
which the judgement becomes effective, equivalent to CNY 3,071,535.78.
2. Plaintiff Xinda and the third party BoLuoLianyuan industry Co., Ltd. (hereafter Lianyuan) should jointly pay
the liquidated damage for CNY1,233,399.70toTKLwithin 15 days from the date on which the judgementbecomes
effective.
3. Unperformed 10 orders entered into by TLK, Xinda and Lianyuan are declared cancelled.
4. Reject other claims partitioned by the plaintiff Xinda.
5. Reject other claims partitioned by TKL.
After the first judgement, both parties appealed against the judgment.
Up to the end of the reporting date, the financial statement of TKL included accounts payable to Xinda amounting
to USD 479,089.06. As the second hearing was yet to be finalized, TKL unrecognized contingent assets CNY1,
233,399.70 to Xinda.
Besides, the defective motor products provided by Xinda were104,691 in total, however, only 23,035 were deal
with in the case, there were remaining 81,656 to be handled, thus, TKL filed a suit to Intermediate People’s Court
of Zhangzhou on 24 Dec. 2013, the claims amount was CNY3,770,430.64 and Intermediate People’s Court of
Zhangzhou had accepted the case.
XIV. Post reporting date events
1. Important unadjusted events
□ Applicable √ inapplicable
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
2. Distribution of profits
Unit； CNY
Profits or dividends plan to distribute 27,808,752.00
Profits or dividends approved and declare to issue 27,808,752.00
XV. Other significant events
There has no other significant event needs to disclose at the balance sheet day.
XVI. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
2015.06.30
Category Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Accounts receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Accounts receivable portfolio subject to
impairment by credit risk:
Portfolio by age 35,913,545.93 99.21 506,430.51 1.41 35,407,115.42
Portfolio by related parties 285,374.60 0.79 0.00 0.00 285,374.60
Subtotal 36,198,920.53 100.00 506,430.51 1.40 35,692,490.02
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 36,198,920.53 100.00 506,430.51 1.40 35,692,490.02
(Continued)
2014.12.31
Category Carrying amount Allowance for bad debt
Book value
Amount Proportion Amount Proportion
Accounts receivable of individual
significance subject to
0.00 0.00 0.00 0.00 0.00
individually assessment for
impairment
Accounts receivable portfolio
subject to impairment by credit
risk:
Portfolio by age 29,724,857.96 99.66 1,290,294.12 4.34 28,434,563.84
Portfolio by related parties 100,627.02 0.34 0.00 0.00 100,627.02
Subtotal 29,825,484.98 100.00 1,290,294.12 4.33 28,535,190.86
Accounts receivable of
individually insignificancesubject
0.00 0.00 0.00 0.00 0.00
to individually assessment for
impairment
Total 29,825,484.98 100.00 1,290,294.12 4.33 28,535,190.86
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
① Accounts receivable using the age analysis method for measurement of allowance for bad debt
2015.06.30
Age
Carrying amount Allowance for bad debt Proportion
Within 1 year 35,896,469.93 489,354.51 1.36
Include：1 to 90 days 31,123,643.59 0.00 0.00
91 to 180 days 4,726,395.66 472,639.57 10.00
181 to 270 days 32,502.00 9,750.60 30.00
271 to 365 days 13,928.68 6,964.34 50.00
1 to 2 years 17,076.00 17,076.00 100.00
Total 35,913,545.93 506,430.51 1.41
②Accounts receivable using the related party method for measurement of allowance for bad debt
2015.06.30
Related parties
Carrying amount Allowance for bad debt Proportion
Related parties 285,374.60 0.00 0.00
Total 285,374.60 0.00 0.00
(2) Recognization, recovery and reversal of allowance for bad debt
Recovery and reversal of allowance for bad debts is CNY783, 863.61.
(3) Accounts receivable written off during the current year
(4) Details of top five accounts receivable
The total amount of top five accounts receivables which are summaried by the balance as at the end of current
year is CNY35,937,543.81 accounting for the proportion of the total accounts receivable balance as at the end of
current year is 98.28%, the total amount of corresponding allowence for bad debts is CNY487,910.90.
2. Other receivable
(1) Disclosure by classification
2015.06.30
Items Carrying amount Allowance for bad debt Carrying amount
Book value
Amount Proportion Amount Proportion
Other receivable of individual
significance subject to
0.00 0.00 0.00 0.00 0.00
individually assessment for
impairment
Other receivable portfolio
subject to impairment by credit
risk:
Portfolio by age 2,491,433.88 89.38 13,003.79 0.52 2,478,430.09
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 2,491,433.88 89.38 13,003.79 0.52 2,478,430.09
Other receivable of
individually
insignificancesubject to 296,000.00 10.62 0.00 0.00 296,000.00
individually assessment for
impairment
Total 2,787,433.88 100.00 13,003.79 0.47 2,774,430.09
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
(Continued)
2014.12.31
Items Carrying amount Allowance for bad debt Carrying amount
Book value
Amount Proportion Amount Proportion
Other receivable of individual
significance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Other receivable portfolio subject
to impairment by credit risk:
Portfolio by age 298,404.98 48.02 2,969.90 1.00 295,435.08
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 298,404.98 48.02 2,969.90 1.00 295,435.08
Other receivable of individually
insignificancesubject to
323,000.00 51.98 0.00 0.00 323,000.00
individually assessment for
impairment
Total 621,404.98 100.00 2,969.90 0.48 618,435.08
①Accounts receivable using the age analysis method for measurement of allowance for bad debt
2015.06.30
Age
Carrying amount Allowance for bad debt Proportion
Within 1 year 2,491,433.88 13,003.79 0.52
Include：1 to 90 days 2,448,021.26 0.00 0.00
91 to 180 days 100.00 10.00 10.00
181-270 days 43,312.62 12,993.79 30.00
Total 2,491,433.88 13,003.79 0.52
(2) Recognization, recovery and reversal of allowance for bad debt
Recognization of allowance for bad debts is CNY 10,033.89 during reporting period. There was no any recovered or
reserved bad debt provision.
(3) Accounts receivable written off during the current year
There has no accounts receivable written off during the current year
(4) List of other accounts receivable classified according to the accounts nature
Nature Book balance at the period-end Book balance at the period-begin
Non-related 2,787,433.88 621,404.98
Related 0.00 0.00
Total 2,787,433.88 621,404.98
(5) Top 5 of the closing balance of the other accounts receivable colleted according to the arrears party
Closing
Proportion of the total
Name of the balance of
Nature Amount Aging year end balance of the
units the bad debt
accounts receivable %
provision
Dividend withholding income
No. 1 2,082,094.27 0-30 days 74.70 0.00
tax
No. 2 Utilities 225,679.39 0-30 days 8.10 0.00
No. 3 Margin 153,000.00 61-270 days 5.49 0.00
No. 4 Margin 100,000.00 91-120 days 3.59 0.00
No. 5 patent fee 55,556.00 0-30 days 1.99 0.00
Total 2,616,329.66 93.86 0.00
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
3. Long-term equity investments
(1) Disclosure by classification
2015.06.30 2014.12.31
Items allowance for Net carrying
Carrying amount Carrying amount allowance for bad debts Net carrying amount
bad debts amount
Invest to subsidiaries 1,116,460,573.74 130,646,542.91 985,814,030.83 1,116,460,573.74 130,646,542.91 985,814,030.83
Total 1,116,460,573.74 130,646,542.91 985,814,030.83 1,116,460,573.74 130,646,542.91 985,814,030.83
(2)Investment for subsidiaries
Withdrawn
impairment Closing balance
Items Opening balance Increase Decrease Closing balance provision in of impairment
the reporting provision
period
TKS 194,545,872.18 0.00 0.00 194,545,872.18 0.00 130,646,542.91
TKL 921,914,701.56 0.00 0.00 921,914,701.56 0.00 0.00
Total 1,116,460,573.74 0.00 0.00 1,116,460,573.74 0.00 130,646,542.91
4. Operating revenues and costs
Reporting period Prior period
Item
Revenues Costs Revenues Costs
Revenue from principal
69,782,827.53 61,811,239.11 31,655,528.61 26,639,150.58
operating activities
Revenue from other
8,891,978.93 2,264,495.34 10,952,464.03 2,441,093.29
operating activities
Total operating revenue 78,674,806.46 64,075,734.45 42,607,992.64 29,080,243.87
5. Investment income
Item Reporting period Prior period
Long-term equity investment income under cost method 28,286,287.22 38,189,978.21
Investment income from disposal of long-term equity investment 0.00 0.00
Total 28,286,287.22 38,189,978.21
XVII. Supplementary information
1. Extraordinary gains or losses for current period
Supplemental information Total amount Explanation
Loss from disposal of
Gains or losses arising from disposal of non-current assets 792,596.73
assets
Tax repayments or waiving of taxes not officially authorised or not with proper
authorisation
Government grants accounted for through profit or loss for the current reporting
period (excl. grants directly associated with the Company’s operations and 1,571,749.00
subject to national quotas)
Cost of monetary funds charged on non-financial institutions accounted for
through profit or loss for the current reporting period
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2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Supplemental information Total amount Explanation
Gains from the investment costs paid less than the acquirer’s interest in the fair
value of the bargainor’s identifiable net assets( During acquire subsidiary、joint
venture and associates)
Gains or losses arising from non-monetary assets exchange
Gains or losses arising from entrusted assets and investments
Impairment allowances arising from force majeure, such as natural disasters
Gain or loss arising from debt restructuring
Restructuring expenses, such as employee settlement and relocation costs and
costs of integration
Gains or losses arising from transactions of which the prices are deemed unfair
(the difference between the price and the fair value)
Net profit or loss of subsidiaries acquired through business combination under
common control from the beginning of the current reporting period to the
combination dates.
Gains or losses arising from contingent events not associated with the
Company’s operating activities
Mainly were investment
Gains or losses arising from changes in the fair values of financial instruments
income from forward
held for trading (excl. effective hedging instruments associated with the
foreign exchange contract,
Company’s operating activities) or disposal of financial instruments held for 14,831,578.67
changes of fair value,
trading and available-for-sale financial assets (excl. effective hedging
finance products and other
instruments associated with the Company’s operating activities)
current assets
Recovery of impairment allowance for receivables subject to individual
assessment for impairment
Gains or losses arising from entrusted borrowings
Gains or losses arising from changes in the fair values of investment property
measured at fair value
Impact of one-off adjustment required by tax laws, accounting standards and
relevant regulations on the profit or loss for the current reporting period
Revenue arising from entrusted operation
Other non-operating revenue and non-operating expenses not listed above 746,947.82
Other gains or losses satisfying the definition of extraordinary gains or losses
Less: Effect of corporate income tax 2,687,869.17
Less: Net amount attributable to minority interests (after tax) 3,810,485.01
Total 11,444,518.04
2. Yield Rate of Net Assets and Earnings Per Share
Earnings Per Share(Yuan per share)
Weighted average yield rate
Profits for the reporting period
of net assets%
Basic EPS Diluted EPS
Net profits attributable to ordinary
2.73 0.08 0.08
shareholders
Net profits attributable to ordinary
shareholders (excl. extraordinary gains or 0.67 0.02 0.02
losses)
116
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
3. Differences between accounting data under domestic and overseas accounting standards
(1) Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
(3) Explain reasons for the differences between accounting data under domestic and overseas accounting
standards, for audit data adjusting differences had been foreign audited, should indicate the name of the
foreign institutions
□ Applicable √ Inapplicable
4. Explain reasons and abnormal condition in the main items of consolidated financial statements of the
Company
Unit: CNY
Year-on-year
Closing Opening
Item increase or Reason
amount amount
decrease (%)
Financial assets measured by The increase of income of fair value
fair value with the changes be from the undelivered forward
7,482,150.00 2,610,000.00 186.67
included in the current gains foreign exchange contracts at
and losses period-end
The CNY 230 million of finance
Other current assets 244,113,215.87 13,087,495.75 1,765.24
products purchased in reporting period
The increase land changes and soil
Construction in progress 353,168.37 233,968.67 50.95
preparation cost
Other non-current assets 3,195,929.47 1,929,374.75 65.65 The increase prepayment of equipment
Short-term borrowings 295,103,472.00 61,190,000.00 382.27 The increase of short term bank loans
Financial liabilities measured
The forward exchange at beginning of
by fair value with the changes
27,500.00 3,956,259.85 -99.30 the year realized income in reporting
be included in the current
period
gains and losses
Interest payable 1,119,097.02 68,275.80 1,539.08 The increase of short term bank loans；
The increase of estimate income of
Deferred income tax
1,349,588.26 618,966.78 118.04 forward exchange contracts in
liabilities
reporting period
117
2015 Semi-Annual Report of TSANN KUEN (CHINA) ENTERPRISE CO., LTD
Year-on-year
Opening
Item Closing amount increase or Reason
amount
decrease (%)
The decrease of free of tax credits in
Business s tax and surcharges 3,084,362.18 4,930,309.19 -37.44
reporting period
The increase of export costs and
Selling expenses 41,124,129.32 34,383,454.76 19.60 advertising promotion in reporting
period
Rent received at period-end and
Assets impairment loss 1,103,733.79 438,958.76 151.44 recorded into bad debt provision and
loss on inventory valuation
Gains on the changes in the fair The evaluation income of forward
8,800,909.85 -26,768,171.00 132.88
value exchange contracts
The decrease of income from delivery
Investment income 6,030,668.82 14,000,118.50 -56.92 forward foreign exchange contracts and
income from finance products
The decrease of subsidy revenue in
Non-operating income 3,229,489.17 8,820,848.29 -63.39
reporting period
The decrease of fixed assets scrap loss
Non-operating expense 118,195.62 741,772.95 -84.07
in reporting period
Net cash flows from operating The decrease of the export tax rebate
-50,563,639.81 -33,079,939.03 -52.85
activities return in reporting period
Net cash flows from investing -1,181,899,628. Quota varied difference in limited
-249,714,881.93 78.87
activities 49 deposit amount in two periods
The decrease of export financing
Net cash flows from financing
198,385,922.40 539,659,463.51 -63.24 borrowings and borrowings from
activities
controlling shareholders
118
