2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2016 SEMI-ANNUAL REPORT
(Unaudited)
August 2016
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2016 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. Feng Zhiqing, 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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2016 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............................................................................................................. 9
Section V. Significant Events................................................................................................................................... 19
Section VI. Change in Shares & Shareholders ........................................................................................................ 32
Section VII. Preference Shares ................................................................................................................................ 35
Section VIII. Directors, Supervisors, Senior Management Staff & Employees ...................................................... 35
Section IX. Financial Report ................................................................................................................................... 36
Section X. Documents Available for Reference ...................................................................................................... 36
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Explanation
Term Refers to Contents
Xiamen Tsann Kuen, TKC B, Company,
Refers to TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise
South Port Electronics, TKN Refers to
Co., Ltd.
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
Tsannkuen Edge Intelligence Refers to Tsannkuen Edge Intelligence Co., Ltd.
XTHAD Refers to Xiamen Tsannkuen Home Appliance Design Co., Ltd.
RMB Refers to RMB Yuan
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile
I. Basic information about the Company
Stock name TKC B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Chinese name of the Company 司公限有份股业实坤灿门厦
Abbr. of the Chinese name of the Company 坤灿闽
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
Board Secretary Securities Representative
Name Sun Meimei
TSANN KUEN Industrial Park, Taiwanese Investment Zone, Zhangzhou,
Contact address
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 √ Not applicable
2. About information disclosure and where this report is placed
Did any change occur to information disclosure media and where this report is placed during the Reporting Period?
□ Applicable √ Not applicable
3. Change of the registered information
Did any change occur to the registered information during the Reporting Period?
□ Applicable √ Not applicable
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 d. The said information can be found in the 2015 Annual Report.
4. Other relevant information
Did any change occur to other relevant information during the Reporting Period?
□ Applicable √ Not applicable
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
Same period of last year
Item Reporting period YoY +/- ）％（
Before adjustment After adjustment
Operating revenues 798,108,689.27 895,194,158.07 895,194,158.07 -10.85
Net profit attributable to shareholders of
17,789,801.36 15,111,025.18 14,297,544.70 24.43
the Company
Net profit attributable to shareholders of
the Company after excluding 15,944,852.56 3,666,507.14 3,666,507.14 334.88
non-recurring gains and losses
Net cash flow from operating activities -60,172,006.29 -50,563,639.81 -51,228,475.46 -17.46
Basic EPS (RMB Yuan/share) 0.10 0.08 0.08 25.00
Diluted EPS (RMB Yuan/share) 0.10 0.08 0.08 25.00
Weighted average ROE (%) 3.11 2.73 2.58 0.53
As at the end of the As at the end of last year
Item +/- (%)
reporting period Before adjustment After adjustment
Total assets 1,508,112,295.06 1,766,285,350.11 1,662,657,829.11 -9.30
Net assets attributable to shareholders
576,709,428.29 533,817,984.80 562,024,410.53 2.61
of the Company
Notes to the retroactive adjustment of 2016 opening amount and that of the same period of last year:
On 24 April 2015, the Company held the 2015 2nd Board of Directors had approved the resolutions, of which the controlling
subsidiary Zhangzhou Tsann Kuen Industrial Co., Ltd. (named “Zhangzhou Tsann Kuen” for short with the shareholding of 75%) and
firstly set up the wholly owned subsidiary Orient Star Investments Limited (named “Orient Star Investments”) then secondly Orient
Star Investments invested and purchased the 100% equities of the wholly owned subsidiary Tsannkuen Edge Intelligence Co., Ltd.
(named “Tsannkuen Edge Intelligence” for short) of STAR COMGISTIC CAPITAL CO., LTD. (named “STAR COMGISTIC
CAPITAL” for short). Orient Star Investments received the relevant letter about approving the purchase of the 100% equities of
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Tsannkuen Edge Intelligence from Taiwan competent authorities on 15 March 2016 and amount that STAR COMGISTIC CAPITAL
received the purchase of the whole equities of Tsannkuen Edge Intelligence by Orient Star Investments on 21 March 2016 was of
USD968,545.48. And had completed the relevant alternation procedures of the commercial registration of the equity transfer on 19
April 2016 and with the details, 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 Tsannkuen Edge Intelligence and the Related
Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 25 April 2015, the Correcting
Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned Subsidiary
which Purchased the Equity of Tsannkuen Edge Intelligence and the Related Transactions that disclosed on Securities Times, Hong
Kong Ta Kung Pao and www.cninfo.com.cn on 28 April 2015, Announcement on the Completion of the Commercial Registration
Procedures of the Hong Kong Wholly-owned Subsidiary of Zhangzhou Tsann Kuen that disclosed on Securities Times, Hong Kong
Ta Kung Pao and www.cninfo.com.cn on 21 May 2015, Announcement on the Controlling Subsidiary of the Company Zhangzhou
Tsann Kuen Purchased Tsannkuen Edge Intelligence and the Progress of the Related Transactions that disclosed on Securities Times,
Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 March 2016 and the Announcement on the Completion of the Commercial
Alternation Registration of the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen through the Purchase of Tsannkuen
Edge Intelligence by Hong Kong Subsidiary that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on
21 April 2016.
According to No. 20 of ASBE - Enterprise Merger, the Transaction formed the enterprise merger under the same control and the main
body was regarded as always exist in the previous periods after the merger. The combining party shall adjust the opening amounts
and the amounts for the same period of last year of relevant items in the statements.
Total share capital up to the trading day before the disclosure:
Total share capital up to the trading day before the disclosure (share) 185,391,680
Fully diluted EPS calculated according to the latest share capital (RMB Yuan/share) 0.10
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 √ Not applicable
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 √ Not applicable
No difference in the Reporting Period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Not applicable
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. Items and amounts of extraordinary gains and losses
√ Applicable □ Not applicable
Unit: RMB Yuan
Item Amount Explanation
Gains/losses on the disposal of non-current assets (including the offset part of asset impairment Gains/losses on the
525,173.19
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
2,627,972.00
business or granted at certain quotas or amounts according to the 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
Loss of Tsannkuen Edge
Current gains and losses of subsidies acquired from business combination under the same control as
-2,224,231.59 Intelligence before
from period-begin to combination date
combination
Gain/loss on contingent events irrelevant to the Company’s normal business
Gains and losses on change in fair value from tradable financial assets and tradable financial liabilities,
Gains on sale of forward
as well as investment income from disposal of tradable financial assets and tradable financial liabilities
1,202,138.05 exchange contracts and
and financial assets available for sales except for effective hedging related with normal businesses of
fair value changes
the Company
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 1,134,179.24
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 848,609.22
Minority interests effects (after tax) 571,672.87
Total 1,844,948.80
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Not applicable
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2016 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 RMB798 million, down 10.85% over
RMB895 million of the same period of last year, and net profit of RMB17.79 million, up 24.43% over RMB14.30
million of the same period of last year. The net profit grew mainly because of the depreciation of RMB, lower
prices of procured items and lower labor cost due to a downsizing campaign at the end of last year. We will
continue to control our procurement cost, stick to lean manufacturing, strengthen internal operation and improve
our production and marketing procedures.
II. Main business analysis
1. Overview
We will carry on with the simplification and transformation strategies. We are checking the structures and
functions of our departments of development, procurement, manufacturing and marketing to make sure the
implementation of lean production. Meanwhile, new raw materials, techniques and manufacturing equipment are
being brought in to increase our yield rate and production efficiency. Upholding the strategy of innovation-driven
transformation, we ask for better execution in our innovation, production and differentiation to become more
competitive and provide products with multi-functions, high added value and high quality.
The continuous recovery of the US and European markets is expected to boost demand for small home appliances.
Through being more intimate with customers and cost leadership, we create market demand by developing
smart-home and low-carbon products, which effectively expands our market share and strengthen our profitability.
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
and of which changes are recorded into 27,300.00 0.00 100.00 Appraised gain from forward forex contracts
current gains and losses
Notes receivable 3,388,917.00 1,483,710.00 128.41 Undue notes receivable in the period
Other receivables 25,608,750.65 50,308,515.39 -49.10 Receipt of export tax rebates
Purchase of wealth management products of
Other current assets 238,495,735.19 89,858,232.99 165.41
RMB150 million in the period
Construction in progress 396,547.71 210,796.20 88.12 Increase in outsourced construction projects
Other non-current assets 1,991,186.65 6,264,771.15 -68.22 Acceptance of the prepayment for equipment
Short-term borrowings 70,831,265.19 0.00 100.00 Short-term borrowings from bank
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2016 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
Financial liabilities measured at fair
value and of which changes are 2,844,750.00 8,462,500.00 -66.38 Appraised loss on forward forex contracts
recorded into current gains and losses
Operating revenues decreased and the payables
Accounts payable 397,421,000.82 575,930,730.06 -30.99
for procurement also decreased
Interest payable 140,337.30 0.00 100.00 Provision for interest on short-term bank loans
Larger translation difference of foreign-currency
Other comprehensive income 4,773,167.33 3,231,050.04 47.73
statements
Reporting Same period of
Item +/-% Main reasons for changes
period last year
Operating revenues 798,108,689.27 895,194,158.07 -10.85
Operating costs 662,817,165.10 771,483,297.01 -14.09
Business tax and surtaxes 2,975,879.16 3,084,362.18 -3.52
Selling expenses 40,742,161.54 41,124,129.32 -0.93
Administrative expenses 80,750,640.07 84,091,122.62 -3.97
Financial costs -9,966,312.52 -9,205,737.43 -8.26
Asset impairment losses -760,811.14 1,103,733.79 -168.93 Reversal of bad-debt provisions
Decreased appraised gain from forward forex
Gains on fair value changes 5,645,050.00 8,800,909.85 -35.86
contracts
Decreased gain from delivered forward forex
Investment gains -4,434,437.95 6,030,668.82 -173.53
deals
Non-business income 4,349,049.40 3,229,489.17 34.67 Increase in governmental subsidy
Non-business expenses 61,724.97 118,195.62 -47.78 Losses on retirement of fixed assets decreased
Income tax expenses 2,757,325.93 3,300,757.78 -16.46
R&D input 36,526,821.94 36,886,667.23 -0.98
Net cash flows from operating activities -60,172,006.29 -51,228,475.46 -17.46
Net cash flows from investing activities -279,556,638.97 -245,151,534.09 -14.03
Net cash flows from financing activities 37,283,764.50 198,385,922.40 -81.21 Decreased borrowings
Net increase in cash and cash
-295,869,076.86 -99,712,681.30 -196.72 Decreased borrowings
equivalents
Major changes to the profit structure or sources of the Company during the Reporting Period:
□ Applicable √ Not applicable
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 √ Not applicable
No such cases.
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2016 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 2016, the Company achieved operating revenues of RMB798 million with a net profit attributable to the
shareholders of the Company (without subsidiaries) of RMB17.79 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 770,647,435.81 653,194,377.94 15.24% -10.45% -14.15% 3.65%
manufacture
Total 770,647,435.81 653,194,377.94 15.24% -10.45% -14.15% 3.65%
Classified by product
Cooking
501,719,431.66 415,652,567.09 17.15% -9.73% -14.30% 4.42%
tools
Home
191,401,843.58 171,064,445.66 10.63% 8.84% 6.02% 2.38%
helpers
Tea/Coffee
64,029,112.60 53,158,318.25 16.98% -46.97% -51.47% 7.70%
makers
Others 13,497,047.97 13,319,046.94 1.32% 65.73% 171.33% -38.41%
Total 770,647,435.81 653,194,377.94 15.24% -10.45% -14.15% 3.65%
Classified by region
America 275,549,476.29 237,639,104.13 13.76% -23.34% -25.78% 2.84%
Asia 208,857,636.44 176,688,150.96 15.40% -22.67% -25.92% 3.71%
Europe 236,021,173.18 198,117,654.72 16.06% 27.43% 22.17% 3.61%
Australia 45,086,797.22 36,433,008.92 19.19% 9.85% 2.14% 6.10%
Africa 5,132,352.68 4,316,459.21 15.90% 7.49% 0.12% 6.20%
Total 770,647,435.81 653,194,377.94 15.24% -10.45% -14.15% 3.65%
IV. Core competitiveness analysis
As a manufacturer of small home appliances, most of our products are exported. And our core competitive edges mainly lie in the
capability to develop new products in a timely manner according to market needs due to our strength in technology and R&D as well
as a relatively high market position due to our good relationship with some customers with globally famous brands.
In the reporting period, we obtained 31 patents in R&D, including 9 invention patents, 2 innovation patents and 20 product design
patents. There are also dozens of patents being applied for. These patents can help better protect our intellectual property rights, give
play to our competitive edge in independent property rights, keep a leading position in technology and increase our core
competitiveness.
In addition, Tsannkuen Edge Intelligence Co., Ltd. (“Edge Intelligence”), a newly acquired subsidiary, owns the Arduino open
control platform technology, which will be a great help in our medium and long-term strategy for IOT (Internet of Things), ICT
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Information and Communication Tech) and AI (Artificial Intelligence). The R&D and technology strength of Edge Intelligence in
Taiwan will help further increase our overall strength in R&D, strengthen our medium and long-term strategy in R&D, mutually
complement R&D resources of our operations in China Mainland, and improve our smart home appliance division to cope with the
rapid changes in the market.
V. Investment analysis
1. External equity investments
(1) External investments
√ Applicable □ Not applicable
Unit: RMB Yuan
External investments
Investment amount in the same period of
Investment amount in the reporting period +/- %
last year
6,278,499.22 0.00 100.00
Particulars about investees
Proportion of the Company’s investment in the
Name of investee Main business
investee’s total equity interests (%)
Tsannkuen Edge Intelligence Co., Ltd. Design, R&D service, etc. 75.00
(2) Equity-holdings in financial enterprises
□ Applicable √ Not applicable
The Company was not involved with any equity-holding in financial enterprises.
(3) Securities investments
□ Applicable √ Not applicable
The Company was not involved with any security investment.
(4) Equities held in other listed companies
□ Applicable √ Not applicable
The Company was not involved with any equity held in other listed companies.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Wealth management entrustment, derivative investments and entrustment loans
(1) Wealth management entrustment
√ Applicable □ Not applicable
Unit: RMB Ten Thousand
Actual
Related-party Principal Impairment
Name of Amount Beginning Ending Payment Predicted gain/loss in
Relation transaction or Product variety actually provision (if
trustee entrusted date date determination gain the reporting
not recovered any)
period
Break-even
Shenzhen Ping floating income
No Not 8,000.00 2015-12-24 2016-12-23 6.00% 0.00 Naught 480.00 0.00
An Bank product
Xiamen Break-even
International No Not floating income 15,000.00 2016-01-26 2016-12-29 3.80% 0.00 Naught 527.84 0.00
Bank product
Total 23,000.00 0.00 1,007.84 0.00
Source of the entrusted funds Self-owned funds
Cumulative overdue principals and gains 0.00
Lawsuits N/A
Disclosure date of the board announcement approving the wealth
2015-03-13
management entrustment
Disclosure date of the general meeting announcement approving
2015-05-23
the wealth management entrustment
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Derivative investments
√ Applicable □ Not applicable
Unit: RMB Ten thousand
Proportion of
Purchased Sold the closing Actual
Related-part Type of Initial Opening amount in amount in Closing investment gain/loss
Relatio Beginning Ending Impairmen
Operator y transaction derivative investmen investmen the the investment amount in the in the
n date date t provision
or not investment t amount t amount reporting reporting amount Company’s reporting
period period closing net period
assets (%)
Forward 2016-01-0 2016-06-3
Bank No No 29,155.60 27,816.19 1,333.33 21,429.02 7,726.58 13.40 120.21
forex 1 0
Total 29,155.60 27,816.19 1,333.33 21,429.02 7,726.58 13.40 120.21
Capital source for derivative investment Self-owned funds
Lawsuits N/A
Disclosure date of the board announcement approving
2013-03-12
the derivative Investment
Disclosure date of the general meeting announcement
2013-05-18
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 from the
Analysis on risks and control measures of derivative operation of the Company in the coming year.
products held in the reporting period (including but
not limited to market risk, liquidity risk, credit risk, (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute
operation risk, legal risk, etc.) the business operation and risk management mechanisms for derivative investment.
(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.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment amount.
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
Changes of market prices or fair values in the (1) Profit/loss on delivered derivative financial instruments was RMB-4.4429 million in the reporting period, and evaluated profit on
reporting period of the invested derivatives. And the undelivered derivatives was RMB5.6450 million in the reporting period, including the reversed evaluated loss of RMB8.4625 million on
analysis on the fair value of the derivatives should undelivered forward exchange instruments of last year.
include the specific use methods and the relevant (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last
assumptions and parameters. trading day of the month.
Whether significant changes occurred to the (3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount
Company’s accounting policy and specific accounting undue by the month*the estimated exchange rate and the currency amount when bought in.
principles of derivatives in the reporting period There were no significant changes between the Company’s accounting policy and specific accounting principles of derivatives in the reporting
compared to the previous reporting period period and those in the last reporting period.
Special opinion from independent directors, sponsor The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision
or financial consultant on the Company’s derivatives mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation
investment and risk control and is in compliance with relevant laws and regulations, with the risks controllable.
Whether significant changes occurred to the
Company’s accounting policy and specific accounting There were no significant changes between the Company’s accounting policy and specific accounting principles of derivatives in the reporting
principles of derivatives in the reporting period period and those in the last reporting period.
compared to the previous reporting period
Special opinion from independent directors, sponsor The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision
or financial consultant on the Company’s derivatives mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation
investment and risk control and is in compliance with relevant laws and regulations, with the risks controllable.
(3) Entrustment loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Use of raised funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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2016 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 Operating Operating
Company name Industry Business scope Registered capital Total assets Net assets Net profit
type 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 USD160 million 1,778,811,981.88 1,221,365,973.88 757,339,909.16 35,247,611.60 36,328,907.41
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
Production and sales of household appliances, electronics, light
Tsann Kuen Subsidiary
Small home industrial products and modern office supplies and relevant
China (Shanghai) of a
appliance modules. All kinds of computers and peripheral equipment and USD40 million 94,291,098.33 91,144,332.39 1,319,683.80 1,615,462.46 1,615,462.46
Enterprise Co., controlled
manufacture components, the development of computer software, IC
Ltd. subsidiary
packaging and testing and sales of self-produced products
Production and sale of display/LCD TV/chandelier/table
Subsidiary
Pt. Star Home lamps/LED lights/fluorescent
of a
Comgistic appliance lamp/dehumidifier/mixer/juice/machine/mosquito killer/coffee USD25 million 109,121,028.88 92,893,021.40 30,021,531.63 -10,157,316.55 -10,158,628.72
controlled
Indonesia manufacture pot / hair dryer/fan/humidifier/electric oven, microwave oven,
subsidiary
toaster/rice cooker/iron/deep fryer
Subsidiary
Tsannkuen Edge
of a Design, R&D Industrial design, manufacturing of uncategorized home
Intelligence Co., NTD30 million 7,091,456.07 -845,343.32 2,322,951.04 -3,949,913.34 -3,929,681.29
controlled service, etc. appliances
Ltd.
subsidiary
16
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Significant projects of investments with non-raised funds
□ Applicable √ Not applicable
VI. Predict the operating results of January-September 2016
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next reporting period according to prediction, as well as explanations on the reasons:
□ Applicable √ Not applicable
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 √ Not applicable
VIII. Explanation of the Board of Directors concerning the relevant situation of the
“non-standard audit report” of last year
□ Applicable √ Not applicable
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 □ Not applicable
For the details of the profits distribution of Y2015 of the Company, please refer to the Announcement on the 2015 Annual Equity
Distribution Execution disclosed on the Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 June 2016, which
had completed execution according to the timetable given in the announcement.
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:
X. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
□ Applicable √ Not applicable
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital.
17
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XI. Particulars about researches, visits and interviews received in this reporting period
√ Applicable □ Not applicable
Place of Way of Main discussion and materials provided
Time of reception Visitor type Visitor
reception reception by the Company
Asked about the Company’s B-share
reform and transfer of equity interests of
2016-02-01 By phone Individual Mr. Wang
Tsann Kuen China (Shanghai) Enterprise
Co., Ltd., with no materials provided
Asked about the Company’s transfer of
equity interests of Tsann Kuen China
2016-02-02 By phone Individual Mr. Wang
(Shanghai) Enterprise Co., Ltd., with no
materials provided
Asked about the Company’s financial
problem mentioned in the first quarter
2016-05-09 By phone Individual Ms. Li report and transfer of equity interests of
Tsann Kuen China (Shanghai) Enterprise
Co., Ltd., with no materials provided
Asked about the Company’s transfer of
equity interests of Tsann Kuen China
2016-05-13 By phone Individual Mr. Zhang
(Shanghai) Enterprise Co., Ltd., with no
materials provided
Asked about the Company’s production
2016-05-17 By phone Individual Mr. Chen
and operation, with no materials provided
18
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section 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 □ Not applicable
Unit: RMB Ten Thousand Yuan
Lawsuit Whether
Situation of execution of
amount form into Trial results and influences of lawsuit Disclosure
Basic situation of lawsuit (arbitration) Process of lawsuit (arbitration) judgment of lawsuit Disclosure index
(RMB Ten estimated (arbitration) date
(arbitration)
thousand) liabilities
The progress events of the appeal between the
Fujian High People’s Court
Company’s controlling 22 Feb. http://www.cninfo.
430.49 No decided to hold a hearing on 26 Not yet disclosed None
subsidiary—Zhangzhou Tsann Kuen and 2014 com.cn/
Mar. 2014.
Xinda Motor
Other lawsuits
√ Applicable □ Not applicable
Unit: RMB Ten Thousand Yuan
Lawsuit Whether
Situation of execution of
amount form into Trial results and influences of lawsuit Disclosure
Basic situation of lawsuit (arbitration) Process of lawsuit (arbitration) judgment of lawsuit Disclosure index
(RMB Ten estimated (arbitration) date
(arbitration)
thousand) liabilities
Shenzhen Luohu Court had put on Received the execution
The Company sued the members of the record on 19 September 2011; and funds of RMB30,400.64
According to the judgment of second
liquidating committee of Shenzhen Amoz the judgment of second instance from Shenzhen www.cninfo.com.
23.71 No instance, the defendant should pay for 31 Dec. 2011
Industrial Co., Ltd. for liability litigations by Shenzhen Intermediate People’s Intermediate People’s cn
RMB124,166.00 and interests
(Zhu Huifeng, Gan Yuxing and Wang Xinlin) Court had come into effect on 20 Court On 16 March
February 2013. 2016.
Contract violation case of the controlling Zhangzhou Longhai Court had put
According to the judgment of first
subsidiary of the Company Zhangzhou Tsann on record on 4 January 2012; www.cninfo.com.
13.75 No instance, the defendant should pay for In progress 31 Dec. 2011
Kuen Enterprise Co., Ltd. sued DDF and decided to hold a hearing on 7 cn
RMB137,592
Company June 2012
19
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Lawsuit Whether
Situation of execution of
amount form into Trial results and influences of lawsuit Disclosure
Basic situation of lawsuit (arbitration) Process of lawsuit (arbitration) judgment of lawsuit Disclosure index
(RMB Ten estimated (arbitration) date
(arbitration)
thousand) liabilities
The case of the controlling subsidiary Zhangzhou Tsann Ken had
Zhangzhou Tsann Kuen Enterprise Co., Ltd. submitted the indictment to the
1,770.26 No Had no result No No No
sued Japan UCC Ueshima Coffee Co., Ltd. local judicatory in Kobe, Japan on
(contract disputes) 9 May 2014; 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
Xiamen Huli People’s Court had penalty due to breach of contract for
Company sued Xiamen Tianyuan Assets
put on record in October 2014; Tsann Kuen within 10 days from the date
Management Co., Ltd. about the arrears of 29.43 No No No No
the judgment of second instance is of the judgment come into effect
rent (No. 23 of Huarong Rd, Huli District, (calculated according to quadruple of the
in progress
Xiamen) 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
Fujian Zhangzhou Longhai Court
Electrical Material s Co., Ltd. and Qidong
had put on record on 18 November
Jilai Electronics Co., Ltd. sued the controlling 45.28 No The two sides reached a settlement Lawsuit settled No No
2014; had held the third hearing on
shareholder of the Company Zhangzhou
24 July 2015
Tsann Kuen Enterprise Co., Ltd.
The lease contract default case of the
Xiamen Huli People’s Court had
Company sued Xiamen Tianyuan Assets
put on record on 28 April 2015;
Management Co., Ltd. about the arrears of 58.46 No Had no result No No No
and had held the hearing on 11
rent (North Building of the Factory, No. 88 of
June 2015
Xinglong Rd, Huli District, Xiamen)
The lease contract default case of the
Xiamen Huli People’s Court had
Company sued Xiamen Tianyuan Assets
put on record on 28 April 2015;
Management Co., Ltd. about the arrears of 8.32 No Had no result No No No
and had held the hearing on 11
rent (Southeast Corner, No. 88 of Xinglong
June. 2015
Rd, Huli District, Xiamen)
The lease contract default case of the
Xiamen Huli People’s Court had
Company sued Xiamen Tianyuan Assets
put on record on 28 April 2015;
Management Co., Ltd. about the arrears of 18.61 No Had no result No No No
and had held the hearing on 11
rent (Northwest Corner, No. 88 of Xinglong
June 2015
Rd, Huli District, Xiamen)
The house leasing contract disputes of the 13.76 No Xiamen Huli People’s Court had The judgment of first instance of Xiamen In progress No No
controlling subsidiary Zhangzhou Tsann Kuen put on record on 21 January 2015; Huli People’s Court: 1. the defendant
20
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Lawsuit Whether
Situation of execution of
amount form into Trial results and influences of lawsuit Disclosure
Basic situation of lawsuit (arbitration) Process of lawsuit (arbitration) judgment of lawsuit Disclosure index
(RMB Ten estimated (arbitration) date
(arbitration)
thousand) liabilities
Enterprise Co., Ltd. sued Xiamen Yada and had held a hearing on 15 June Yada Company paid RMB41,906.60 for
Building Materials Co., Ltd. (fell behind with 2015 the rent from May to August of 2014 and
the rent etc.) RMB7,722 of the property management
fee from June to August of 2014, which
added up to RMB49,628.60 as well as the
overdue payment interests; 2. the
defendant burdened the litigation fee of
RMB1,052 and Tsann Kuen of
RMB2,000.
The judgment of Guangzhou Intellectual
Property Court: 1. the defendant
Dongguan Kingsun Optoelectronic Co.,
The complaint evidence had been
The case of the controlling subsidiary Ltd. should cease the production, sales
submitted to Guangzhou
Zhangzhou Tsann Kuen Enterprise Co., Ltd. and the commitment on selling infringing
Intellectual Property Court on 1
sued Dongguan Kingsun Optoelectronic Co., products from the date when the judgment
10.00 No March 2015; had held a hearing on No No No
Ltd. about the production and sales of the come into force, as well as should
27 October 2015; and had received
latter violated the appearance design patent compensate for the economic losses and
the appeal petition from the
products of the former the investigation fee of RMB80,000 for
defendant on 3 December 2015.
the plaintiff Tsann Kuen; 2. the litigation
fee of the case should be burdened by the
defendant.
The judgment of Fujian Zhangzhou
The liabilities disputes and rent arrears cas Fujian Zhangzhou Longhai Court Longhai Court: 1.the defendant Xingkun
had put on record on 30 March Plastic should pay the rent and the
e of the controlling subsidiary Zhangzhou
37.58 No 2015; recently the service by management fee of RMB88,320 for Tsann No No No
Tsann Kuen Enterprise Co., Ltd. sued Zha publication according to law is in Kuen; 2. Tsann Kuen burdened the
ngzhou Xingkun Plastic Products Co., Ltd. the progress litigation fee of RMB2,230 while
Xingkun of RMB2,008.
The case of the controlling subsidiary
Zhangzhou Tsann Kuen Enterprise Co., Ltd. Had received the receipt notice
The judgment of the court: turned down
sued Shanghai Sunbrem about the production 10.00 No from Shanghai Intellectual Prope No No No
all the litigant claims from Tsann Kuen.
and sales of the latter violated the patent for rty Court on 9 July 2015
invention of the former
The arbitration case of housing lease contract
Shanghai Arbitration Commission
disputes between the controlling subsidiary
276.63 No had put on record in April 2015; Had no result No No No
Shanghai Tsann Kuen Enterprise Co., Ltd.
and had a hearing on 22 July 2015
and Shanghai Tanghai Investment Co., Ltd.
21
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. Media’s questions
□ Applicable √ Not applicable
The Company was not involved with any media’s question of the Reporting Period.
IV. Bankruptcy or reorganization events
□ Applicable √ Not applicable
The Company was not involved with any bankruptcy or reorganization event of the Reporting Period.
V. Assets transaction events
1. Purchase of assets
√ Applicable □ Not applicable
Unit: RMB Ten Thousand Yuan
Transaction Ratio of the net profit Relationship between the
Influence on the Influence on the Related-part
party or Asset acquired Transaction contributed by the asset transaction party and the
Progress operation of the gains and losses y transaction Disclosure date Disclosure index
ultimate or bought in price to the Company to the Company (applicable for
Company of the Company or not
controller total profit related-party transactions)
Had completed the
relevant alternation
STAR
procedures of the
COMGISTI
Equity transfer 627.85 equity transfer No -392.97 -22.09% Yes Ultimate controlling company 21 April 2016 www.cninfo.com.cn
C CAPITAL
commercial
CO., LTD.
registration on 19 April
2016.
22
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Sale of assets
□ Applicable √ Not applicable
3. Business combination
1. On 2 March 2016, the Company set up a wholly-owned subsidiary—Xiamen Tsannkuen Home Appliance Design Co., Ltd. with a
registered capital of RMB1 million.
2. On 24 April 2015, the Company held the 2015 2nd Board of Directors had approved the resolutions, of which the controlling
subsidiary Zhangzhou Tsann Kuen Industrial Co., Ltd. (named “Zhangzhou Tsann Kuen” for short with the shareholding of 75%) and
firstly set up the wholly owned subsidiary Orient Star Investments Limited (named “Orient Star Investments”) then secondly Orient
Star Investments invested and purchased the 100% equities of the wholly owned subsidiary Tsannkuen Edge Intelligence Co., Ltd.
(named “Tsannkuen Edge Intelligence” for short) of STAR COMGISTIC CAPITAL CO., LTD. (named “STAR COMGISTIC
CAPITAL” for short). Orient Star Investments received the relevant letter about approving the purchase of the 100% equities of
Tsannkuen Edge Intelligence from Taiwan competent authorities on 15 March 2016 and amount that STAR COMGISTIC CAPITAL
received the purchase of the whole equities of Tsannkuen Edge Intelligence by Orient Star Investments on 21 March 2016 was of
USD968,545.48. And had completed the relevant alternation procedures of the commercial registration of the equity transfer on 19
April 2016 and with the details, 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 Tsannkuen Edge Intelligence and the Related
Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 25 April 2015, the Correcting
Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned Subsidiary
which Purchased the Equity of Tsannkuen Edge Intelligence and the Related Transactions that disclosed on Securities Times, Hong
Kong Ta Kung Pao and www.cninfo.com.cn on 28 April 2015, Announcement on the Completion of the Commercial Registration
Procedures of the Hong Kong Wholly-owned Subsidiary of Zhangzhou Tsann Kuen that disclosed on Securities Times, Hong Kong
Ta Kung Pao and www.cninfo.com.cn on 21 May 2015, Announcement on the Controlling Subsidiary of the Company Zhangzhou
Tsann Kuen Purchased Tsannkuen Edge Intelligence and the Progress of the Related Transactions that disclosed on Securities Times,
Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 March 2016 and the Announcement on the Completion of the Commercial
Alternation Registration of the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen through the Purchase of Tsannkuen
Edge Intelligence by Hong Kong Subsidiary that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on
21 April 2016. According to No. 20 of ASBE - Enterprise Merger, the Transaction formed the enterprise merger under the same
control and the main body was regarded as always exist in the previous periods after the merger. The combining party shall adjust the
opening amounts and the amounts for the same period of last year of relevant items in the statements.
3. In order for operation, business and investment structure integration, on 27 January 2016, the board of the Company resolved to
transfer its entire 62.5% stake in Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (“TKS”) to TsannKuen (Zhangzhou) Enterprise
23
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Co., Ltd. (“Zhangzhou Tsann Kuen”) for RMB0.13 billion, and the formalities of share transfer and business license alteration were
completed on 24 May 2016. For details, please refer to the Announcement on Transfer of Stake in Controlled Subsidiary TKS dated
28 January 2016, the Announcement on Progress on Transfer of Stake in Controlled Subsidiary TKS dated 27 April 2016 and the
Announcement on Completion of Business License Alteration Formalities of Transfer of Stake in Controlled Subsidiary TKS dated
25 May 2016, all disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn.
VI. Implementation situation and influence of equity incentive plan of the Company
□ Applicable √ Not applicable
The Company had not involved with any equity incentive plan and its execution situation during the Reporting Period.
24
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VII. Significant related-party transactions
1. Related-party transactions relevant to routine operation
Unit: RMB Ten Thousand Yuan
Pricing Proportion
Whether Settlement method
Type of the Content of the principle of Transa in same kind Approved Similar
Transactio exceeded the of the Disclosure Disclosure
Related party Relationship related-party related-party the ction of transaction market
n amount approved related-party date index
transaction transaction related-party price transactions quota price
quota transaction
transaction (%)
Company directly Settled according
Thermaster Purchase of www.cninfo
controlled by actual Purchase of raw to the contract 15 March
Electronic commodities from 1,435.59 3.01 4,200.00 No N/A .com.cn
controller and their parts signed by both 2016
(Xiamen) Ltd. the related party
close family members parties
Tsann Kuen Under the control of Purchase of
Purchase of raw
Enterprise Co., the same actual commodities from 1.23 0.00 0.00 Yes N/A N/A N/A N/A
parts
Ltd. controller the related party
Sales of Sales of parts
Star Comgistic Ultimate controlling
commodities to and finished 786.47 1.02 1,800.00 No
Capital Co., Ltd. company Based on the
the related party products Settled according
market price www.cninfo
Wu Wha Ma to the contract 15 March
and both N/A .com.cn
Restaurant Investee of the Provision of signed by both 2016
parties abide
Management ultimate controlling service for the Rent N/A 3.28 0.14 11.00 No parties
by the fair
Co., Ltd. in company related party and
Xiamen reasonable
Tsann Kuen Under the control of Provision of labor principle
Enterprise Co., the same actual service for the Service income 2.04 100.00 0.00 Yes
Ltd. controller related party
Provision of
Star Comgistic Ultimate controlling
service by the Rent 7.87 0.33 0.00 Yes N/A N/A N/A N/A
Capital Co., Ltd. company
related party
Star
Provision of
International Under the same
service by the Plane ticket fee 16.71 29.70 0.00 Yes
Traval Agency ultimate controller
related party
Co., Ltd.
Total 2,253.19 6,011.00
Details of large amount of sales returns N/A
25
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Pricing Proportion
Whether Settlement method
Type of the Content of the principle of Transa in same kind Approved Similar
Transactio exceeded the of the Disclosure Disclosure
Related party Relationship related-party related-party the ction of transaction market
n amount approved related-party date index
transaction transaction related-party price transactions quota price
quota transaction
transaction (%)
The related transactions above over the approved line was because controlled sub-subsidiary Orient Star Investments Limited
acquired related party Star Comgistic Capital Co., Ltd.’s entire stake in Tsannkuen Edge Intelligence Co., Ltd. in this March,
As for the prediction on the total amount of routine related-party transactions
and the formerly non-related transactions between Tsannkuen Edge Intelligence and some related parties of the Company
to be occurred in the reporting period by relevant types, the actual
(these transactions had occurred before the equity transfer and are likely to continue) have become related transactions due to the
performance in the reporting period
equity transfer. The Company did not disclose an announcement on these transactions after the equity transfer because they were
of a small amount (not reaching the disclosable standard).
Reason for significant difference between the transaction price and the
N/A
market price
2. Related-party transactions regarding purchase and sales of assets
√ Applicable □ Not applicable
Unit: RMB Ten Thousand Yuan
Book
Assessed
value of Market Transaction
Related Pricing value of the Transfer Settlement Disclosure Disclosure
Related party Type Content the fair gains and
relation principle transferred price method date index
transferre value losses
assets
d assets
STAR Equity transfer Settled
Ultimate
COMGISTIC Equity of the Tsann according to the 21 Apr. www.cninfo.c
controlling Assessment 88.39 600.30 N/A 627.85 -511.91
CAPITAL CO., transfer Kuen Edge contract signed 2016 om.cn
company
LTD. Intelligence by both parties
Star Comgistic Capital Co., Ltd. set up a wholly-owned subsidiary—Tsann Kuen Edge Intelligence—on 4 March 2015 with a paid-up
capital of NTD30 million (approximately RMB6.003 million). Zhangzhou Tsann Kuen, a controlled subsidiary of the Company,
acquired the equity interests of Tsann Kuen Edge Intelligence through Orient Star Investments Limited, a wholly-owned subsidiary set
up by Zhangzhou Tsann Kuen in Hong Kong.
Reason for significant difference between the transaction price Zhangzhou Tsann Kuen, Orient Star Investments and Star Comgistic Capital signed the Agreement on Transfer of Equity Interests of
and the market price or the assessed price Tsann Kuen Edge Intelligence Co., Ltd. on 24 April 2015, according to which Star Comgistic Capital would transfer the 100% equity
of Tsann Kuen Edge Intelligence to Orient Star Investments for USD968,545.48. Orient Star Investments did not receive the
acquisition approval from the Taiwan administration until 15 March 2016, and the Company actually combined the equity of Tsann
Kuen Edge Intelligence on 31 March 2016. Since there is a period of nearly a year between the actual combination day and the contract
signing day, a big difference occurs between the transfer price and the book value of Tsann Kuen Edge Intelligence.
Influence situation on the operating results and the financial The net profits realized by Tsann Kuen Edge Intelligence from January to June of 2016 were of -3.9297 million and the net profits of
conditions of the Company 2015 of RMB-2.8158 million.
26
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
4. Significant credits and liabilities with related parties
□ Applicable √ Not applicable
Was there any non-operating credit or liability with any related party?
□ Yes √ No
5. Other related-party transactions
√ Applicable □ Not applicable
Unit: RMB Ten thousand Yuan
Pricing Whether
Content of Proportion in Settlement
Type of the principle of Approved exceeded
Related the Transaction Transaction same kind of method of the Similar Disclosure Disclosure
Relationship related-party the transaction the
party related-party price amount transactions related-party market price date index
transaction related-party quota approved
transaction (%) transaction
transaction quota
Star Based on the
Ultimate
Comgistic Loan from the Loan market price
controlling 1.42 10.12 0.00 Yes
Capital Co., related party interest and both Settled
company
Ltd. parties abide according to the
N/A N/A N/A N/A
Under the by the fair contract signed
Tsann Kuen Sale of fixed Sale of fixed and by both parties
control of the
Enterprise assets to the assets to the reasonable 0.69 0.38 0.00 Yes
same actual
Co., Ltd. related party related party principle
controller
Total 2.11 0.00
Related party transactions interim report disclosure website
Name of interim report Disclosure dare Name of the website
Announcement on 2016 Daily Related Party Transactions Plan 15 March 2016 www.cninfo.com.cn
VIII. Occupation of the Company’s funds for non-operating purposes by the controlling shareholder and its related parties
□ Applicable √ Not applicable
27
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Significant contracts and execution
1. Particulars about trusteeship, contract and lease
(1) Trust
□ Applicable √ Not applicable
(2) Contract
□ Applicable √ Not applicable
(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 August 2011 and the First Special Shareholders’ General Meeting for 2011 dated 16 September 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 June 2012 and the Second Special Shareholders’ General Meeting for
2012 dated 24 July 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 June
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 □ Not applicable
Unit: RMB Ten Thousand Yuan
Influenc
Relate
Recogni es of
Involved d-part
Name of Status of tion rental
Name of amount of Initial date Ending date Rental y Relati
contract-o leased basis of income
leaser the leased of leasing of leasing income transa onship
ut party assets rental on the
assets ction
income Compan
or not
y
Xiamen
Tianyuan(Xi
Tsann Accordi
amen)
Kun Building 1 Jul. 30 Sep. ng to the
Assets 1,781.00 360.78 20.28% No N/A
(China) and land 2013 2018 contract
Managemen
Enterprise price
t Co., Ltd.
Co., Ltd.
28
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Guarantees provided by the Company
□ Applicable √ Not applicable
(1) Particulars about illegal external guarantee
□ Applicable √ Not applicable
The Company was not involved with any illegal external guarantee.
3. Other significant contracts
□ Applicable √ Not applicable
29
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Other significant transactions
□ Applicable √ Not applicable
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 □ Not applicable
Time of
making Period of
Commitment Commitment maker Contents Fulfillment
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 stable development
of the Company, it committed to
increase the shareholding if the
The Company’s
Company’s stock price lower than
stocks resumed
HKD2.40 per share after the
trading on 31 Dec.
implementation of the shares
2012, but the
contraction and trading resumption,
Company’s stock
and it would increase no more than
Within one year price hasn’t met the
2% shares (i.e.3,707,800 shares ) of
FILLMAN since the date condition for
Other commitments made to the total shares issued by the 28 Dec.
INVESTMENTS of initial shareholding increase
minority shareholders Company within one year since the 2012
LIMITED shareholding since the date of
date of initial shareholding increase.
increase trading resumption,
If the plan on increasing holding 2%
FILLMAN
shares of the total shares is
Investment Limited
completed, if the stock price hasn’t
hasn’t implemented
reached the target price, it will
the shareholding
perform relevant approval
increase plan.
procedures, and propose to CSRC
on continuous implementation of
shareholding increase by exemption
of offering.
Executed timely or not? Yes
The Company’s stocks resumed trading on 31 December 2012, but the Company’s stock price hasn’t met
Detailed reason for failing to
the condition for shareholding increase since the date of trading resumption, FILLMAN Investment
execute and the next plan
Limited hasn’t 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.
XII. Particulars about punishment and rectification
□ Applicable √ Not applicable
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The Company was not involved with any punishment and rectification
XIII. Delisting risk due to violation of any law or regulation
□ Applicable √ Not applicable
The Company was not involved with any risk due to violation of any law or regulation
XIV. Other significant events
√ Applicable □ Not applicable
On 15 March 2016, the “3.15”evening party held by CCTV that reported a product of the Company (model: TSK-2131GPN) on the
unqualified situation among the state administration of quality supervision and spot check. Owning to the case, the stock of the
Company suspended for a day on 16 May 2016 and after the “3.15”evening party, the Company immediately set up the Emergency
project working group at that night as well as executed the follow-up product recall and the rectification work according to the
requirements of the government quality inspection department. With the details disclosed by the Company on the Announcement on
the Treatment of the Product Quality Problem and the Resumption of the Company’s Stock on Securities Times, Hong Kong Ta Kung
Pao and www.cninfo.com.cn on 17 March 2016.
Up to now, the Company and the controlling subsidiary Zhangzhou Tsann Kuen had completed the recall of the products and the
rectification as well as had submitted the relevant statements and the rectification report to the government quality inspection
departments that still wait to be verified and the come out of the penalty scheme. The Company will timely disclose the information
the time receiving the penalty documents.
31
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Bonus
Number Proportion of new of public Other Subtotal Number Proportion
shares
shares reserve fund
I. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1. Shares held by the state
2. Shares held by state-owned
corporations
3. Shares held by other
domestic investors
Among which: shares held by
domestic corporations
Shares held by domestic
individuals
4. Shares held by foreign
investors
Among which: Shares held by
foreign corporations
Shares held by foreign
individuals
II. Non-restricted shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
1. RMB ordinary shares
2. Domestically listed foreign
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
3. Foreign capital stocks listed
abroad
4. Other
III. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for change in share capital
□ Applicable √ Not applicable
Particulars about the approval of the change in share capital
□ Applicable √ Not applicable
The transfer of change in share capital
□ Applicable √ Not applicable
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and net assets per share attributed to
equity shareholder and financial index etc.
□ Applicable √ Not applicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Not applicable
Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure
□ Applicable √ Not applicable
Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure
32
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Applicable √ Not applicable
II. Total number of shareholders and their shareholding
Notes: the names of the top 10 shareholders, the number of the shareholding and their sort which disclosed on the annual report based
on the share register provided by the settlement company as the criterion. Besides, shares of the listed companies held by China
Securities Finance Corporation Limited itself had been transferred to Central Huijian and the shares of the listed companies held
through each public fund and brokerage information plan was not combined for calculation.
Unit: share
Total number of preferred share
Total number of common shareholders at holders who had resumed their
17,272 0
the end of the Reporting Period voting right at the end of the
Reporting Period
Particulars about shares held by common shareholders with a shareholding percentage over 5% or by the top ten common shareholders
holding shares
Total Pledged or frozen
Increase/decrease Number of Number of shares
Nature of Shareholding shares held
Name of shareholder during the restricted non-restricted
shareholder percentage at the
reporting period shares held shares held Status of Number
period-end shares of shares
FORDCHEE
DEVELOPMENT Foreign corporation 29.10% 53,940,530 No change 0 53,940,530 N/A 0
LIMITED
EUPA INDUSTRY
CORPORATION Foreign corporation 13.09% 24,268,840 No change 0 24,268,840 N/A 0
LIMITED
GUOTAI JUNAN
SECURITIES(HONGK Foreign corporation 6.09% 11,293,881 -215,624 0 11,293,881 N/A 0
ONG) LIMITED
FILLMAN
INVESTMENTS Foreign corporation 2.49% 4,621,596 No change 0 4,621,596 N/A 0
LIMITED
WU CHILI Foreign individual 1.08% 2,000,100 32,100 0 2,000,100 N/A 0
CHEN YONGQUAN Domestic individual 1.02% 1,888,819 No change 0 1,888,819 N/A 0
CHEN YONGQING Foreign individual 0.77% 1,436,149 No change 0 1,436,149 N/A 0
CHEN LIJUAN Foreign individual 0.69% 1,287,817 No change 0 1,287,817 N/A 0
SHENWAN
HONGYUAN
Foreign corporation 0.63% 1,170,051 120,300 0 1,170,051 N/A 0
SECURITIES (H.K.)
LIMITED
DING XIAOLUN Domestic individual 0.56% 1,029,900 No change 0 1,029,900 N/A 0
Strategic investor or general corporation
becoming a top ten shareholder due to placing N/A
of new shares
The first, the second and the fourth shareholders are the Company’s corporate controlling
Related parties or acting-in-concert parties shareholders. It is unknown whether the other shareholders of tradable shares are related
among the shareholders above parties or acting-in-concert parties as prescribed in the Administrative Methods for
Disclosure of the Shareholding Changes of the Listed Company’s Shareholders.
Particulars about shares held by the top ten common shareholders holding shares not subject to trading moratorium
Number of non-restricted shares held at Type of shares
Name of shareholder
the period-end Type Number
FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign shares 53,940,530
EUPA INDUSTRY CORPORATION
24,268,840 Domestically listed foreign shares 24,268,840
LIMITED
GUOTAI JUNAN
11,293,881 Domestically listed foreign shares 11,293,881
SECURITIES(HONGKONG) LIMITED
33
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign shares 4,621,596
WU CHILI 2,000,100 Domestically listed foreign shares 2,000,100
CHEN YONGQUAN 1,888,819 Domestically listed foreign shares 1,888,819
CHEN YONGQING 1,436,149 Domestically listed foreign shares 1,436,149
CHEN LIJUAN 1,287,817 Domestically listed foreign shares 1,287,817
SHENWAN HONGYUAN SECURITIES
1,170,051 Domestically listed foreign shares 1,170,051
(H.K.) LIMITED
DING XIAOLUN 1,029,900 Domestically listed foreign shares 1,029,900
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
common tradable shareholders and between
parties or acting-in-concert parties as prescribed in the Administrative Methods for
the top ten tradable shareholders and the top
Disclosure of the Shareholding Changes of the Listed Company’s Shareholders.
ten common shareholders
Explanation on the top 10 common
shareholders participating in the margin N/A
trading business
Whether the shareholders of a company conducted the transaction of repurchase under the agreement during the Reporting Period
□ Yea √ No
No such situation of the Company during the Reporting Period.
III. Change of the controlling shareholder or the actual controller
Change in controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder in the Reporting Period.
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller during the Reporting Period.
IV. Particulars on shareholding increase scheme during the reporting period proposed or
implemented by the shareholders and act-in-concert persons
□ Applicable √ Not applicable
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.
34
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VII. Preference Shares
□ Applicable √ Not applicable
There was no preference stock during the Reporting Period.
Section VIII. Directors, Supervisors, Senior Management Staff & Employees
I. Changes in shareholding of directors, supervisors and senior management staff
□ Applicable √ Not applicable
There was no change in shareholding of directors, supervisors and senior management staffs, for the specific information please refer
to the 2015 Annual Report.
II. Change of directors, supervisors and senior management staff
√ Applicable □ Not applicable
Name Position Type Date Reason
Employee
Yang Yusheng Representative Left 31 May 2016 Personal reason
Supervisors
Employee
Succeed the former Employee
Zheng Caiyun Representative Elected 31 May 2016
Representative Supervisors
Supervisors
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 2016 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.
Board Chairman: Pan Zhirong
11 August 2016
36
2016 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 554,281,467.86 756,223,544.72
Settlement reserves
Intra-group lendings
Financial assets measured at fair value of which changes are
27,300.00
recorded in current profits and losses
Derivative financial assets
Notes receivable 3,388,917.00 1,483,710.00
Accounts receivable 212,505,897.39 219,609,267.40
Accounts paid in advance 12,002,139.01 16,919,366.87
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable 1,010,711.98 1,135,305.55
Dividend receivable
Other accounts receivable 25,608,750.65 50,308,515.39
Financial assets purchased under agreements to resell
Inventories 201,107,063.72 264,377,787.95
Assets held for sale
Non-current assets due within 1 year
Other current assets 238,495,735.19 89,858,232.99
Total current assets 1,248,427,982.80 1,399,915,730.87
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 43,851,356.22 46,185,216.68
Fixed assets 179,319,453.10 177,049,198.02
Construction in progress 396,547.71 210,796.20
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 16,522,261.34 14,136,233.55
R&D expense
Goodwill
Long-term deferred expenses 3,314,390.23 3,874,638.99
Deferred income tax assets 14,249,117.01 14,981,243.65
Other non-current assets 1,991,186.65 6,264,771.15
Total of non-current assets 259,684,312.26 262,742,098.24
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Closing balance Opening balance
Total assets 1,508,112,295.06 1,662,657,829.11
Current liabilities:
Short-term borrowings 70,831,265.19
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
2,844,750.00 8,462,500.00
recorded in current profits and losses
Derivative financial liabilities
Notes payable 19,566,032.81 26,974,641.74
Accounts payable 397,421,000.82 575,930,730.06
Accounts received in advance 13,508,900.09 15,828,556.71
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 37,455,385.68 43,460,873.84
Tax payable 4,395,473.50 6,158,817.21
Interest payable 140,337.30
Dividend payable
Other accounts payable 53,621,853.04 65,108,735.70
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 599,784,998.43 741,924,855.26
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 251,973.01 242,702.95
Other non-current liabilities
Total non-current liabilities 251,973.01 242,702.95
Total liabilities 600,036,971.44 742,167,558.21
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
38
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Closing balance Opening balance
Perpetual bonds
Capital reserves 296,808,965.78 282,916,698.67
Less: Treasury stock
Other comprehensive income 4,773,167.33 3,231,050.04
Specific reserves
Surplus reserves 20,962,521.51 20,962,521.51
Provisions for general risks
Retained profits 68,773,093.67 69,522,460.31
Total equity attributable to owners of the Company 576,709,428.29 562,024,410.53
Minority interests 331,365,895.33 358,465,860.37
Total owners’ equity 908,075,323.62 920,490,270.90
Total liabilities and owners’ equity 1,508,112,295.06 1,662,657,829.11
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
39
2016 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 9,319,102.63 7,750,025.58
Financial assets measured at fair value of which changes are
recorded in current profits and losses
Derivative financial assets
Notes receivable 3,388,917.00 589,835.00
Accounts receivable 40,584,038.43 23,997,156.18
Accounts paid in advance 558,317.48 1,202,214.48
Interest receivable
Dividend receivable
Other accounts receivable 687,548.83 3,010,844.58
Inventories 10,594,430.18 11,151,650.93
Assets held for sale
Non-current assets due within 1 year
Other current assets 55,278.38
Total current assets 65,132,354.55 47,757,005.13
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 922,914,701.56 985,814,030.83
Investing real estate 37,281,156.77 38,994,677.59
Fixed assets 2,141,343.10 2,328,116.94
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 96,749.99 110,249.99
R&D expense
Goodwill
Long-term deferred expenses 237,866.27 405,866.33
Deferred income tax assets 1,888,611.05 18,053,868.00
Other non-current assets
Total of non-current assets 964,600,428.74 1,045,746,809.68
Total assets 1,029,732,783.29 1,093,503,814.81
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
40
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Closing balance Opening balance
Accounts payable 55,693,533.66 66,922,540.32
Accounts received in advance 7,566,416.65 2,664,965.52
Payroll payable 1,921,025.78 3,390,321.73
Tax payable 1,576,834.95 966,665.47
Interest payable
Dividend payable
Other accounts payable 331,603,730.32 461,663,363.89
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 398,361,541.36 535,607,856.93
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 398,361,541.36 535,607,856.93
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 20,962,521.51 20,962,521.51
Retained profits 153,526,750.60 80,051,466.55
Total owners’ equity 631,371,241.93 557,895,957.88
Total liabilities and owners’ equity 1,029,732,783.29 1,093,503,814.81
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
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2016 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
Same period of last
Item Reporting period
year
I. Total operating revenues 798,108,689.27 895,194,158.07
Including: Sales income 798,108,689.27 895,194,158.07
Interest income
Premium income
Handling charge and commission income
II. Total operating costs 776,558,722.21 891,680,907.49
Including: Cost of sales 662,817,165.10 771,483,297.01
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 2,975,879.16 3,084,362.18
Selling and distribution expenses 40,742,161.54 41,124,129.32
Administrative expenses 80,750,640.07 84,091,122.62
Financial expenses -9,966,312.52 -9,205,737.43
Asset impairment loss -760,811.14 1,103,733.79
Add: Gain/(loss) from change in fair value (“-” means loss) 5,645,050.00 8,800,909.85
Gain/(loss) from investment (“-” means loss) -4,434,437.95 6,030,668.82
Including: share of profits in associates and joint ventures
Foreign exchange gains (“-” means loss)
III. Business profit (“-” means loss) 22,760,579.11 18,344,829.25
Add: non-operating income 4,349,049.40 3,229,489.17
Including: Gains on disposal of non-current assets 542,527.01 909,792.35
Less: non-operating expense 61,724.97 118,195.62
Including: Losses on disposal of non-current assets 17,353.82 117,195.62
IV. Total profit (“-” means loss) 27,047,903.54 21,456,122.80
Less: Income tax expense 2,757,325.93 3,300,757.78
V. Net profit (“-” means loss) 24,290,577.61 18,155,365.02
Net profit attributable to owners of the Company 17,789,801.36 14,297,544.70
Minority shareholders’ income 6,500,776.25 3,857,820.32
VI. After-tax net amount of other comprehensive incomes 2,056,156.39 -177,739.09
After-tax net amount of other comprehensive incomes attributable to owners of
1,542,117.29 -133,304.32
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 losses 1,542,117.29 -133,304.32
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Reporting period
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 1,542,117.29 -133,304.32
6. Other
After-tax net amount of other comprehensive incomes attributable to minority
514,039.10 -44,434.77
shareholders
VII. Total comprehensive incomes 26,346,734.00 17,977,625.93
Attributable to owners of the Company 19,331,918.65 14,164,240.38
Attributable to minority shareholders 7,014,815.35 3,813,385.55
VIII. Earnings per share
(I) Basic earnings per share 0.10 0.08
(II) Diluted earnings per share 0.10 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-2,224,231.59, with the corresponding amount for the last period being RMB-1,084,640.64.
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
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2016 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
Same period of last
Item Reporting period
year
I. Total sales 64,284,182.16 78,674,806.46
Less: cost of sales 51,411,479.65 64,075,734.45
Business taxes and surcharges 376,508.47 527,918.58
Distribution expenses 4,712,679.84 4,199,997.82
Administrative expenses 6,407,301.54 7,324,578.11
Financial costs 9,027.92 486,155.88
Impairment loss 904,000.92 -272,850.93
Add: gain/(loss) from change in fair value (“-” means loss)
Gain/(loss) from investment (“-” means loss) 107,582,142.80 28,286,287.22
Including: income form investment on associates and joint ventures
II. Business profit (“-” means loss) 108,045,326.62 30,619,559.77
Add: non-operating income 173,232.50 59,844.56
Including: Gains on disposal of non-current assets
Less: non-operating expense
Including: Losses on disposal of non-current assets
III. Total profit (“-” means loss) 108,218,559.12 30,679,404.33
Less: Income tax expense 16,204,107.07 870,477.13
IV. Net profit (“-” means loss) 92,014,452.05 29,808,927.20
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 92,014,452.05 29,808,927.20
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: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
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2016 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
Same period of last
Item Reporting period
year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 799,779,397.11 891,092,475.23
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 107,484,793.44 96,320,391.21
Other cash received relating to operating activities 34,806,311.83 31,020,138.26
Subtotal of cash inflows from operating activities 942,070,502.38 1,018,433,004.70
Cash paid for goods and services 764,993,901.10 829,124,687.36
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 123,885,869.23 135,904,623.96
Various taxes paid 12,713,941.82 12,754,903.38
Other cash payment relating to operating activities 100,648,796.52 91,877,265.46
Subtotal of cash outflows from operating activities 1,002,242,508.67 1,069,661,480.16
Net cash flows from operating activities -60,172,006.29 -51,228,475.46
II. Cash flows from investing activities:
Cash received from withdrawal of investments -4,442,911.95 112,655,468.82
Cash received from return on investments 1,343,333.33
Net cash received from disposal of fixed assets, intangible assets and other long-term
5,830,678.69 2,448,937.97
assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities 75,400,000.00 652,082,700.00
Subtotal of cash inflows from investing activities 76,787,766.74 768,530,440.12
Cash paid to acquire fixed assets, intangible assets and other long-term assets 30,738,906.49 29,810,368.25
Cash paid for investment 156,278,499.22 332,554,673.33
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities 169,327,000.00 651,316,932.63
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Reporting period
year
Subtotal of cash outflows from investing activities 356,344,405.71 1,013,681,974.21
Net cash flows from investing activities -279,556,638.97 -245,151,534.09
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Including: Cash received from minority shareholder investments by subsidiaries
Cash received from borrowings 65,128,000.00 432,643,240.17
Cash received from issuance of bonds
Other cash received relating to financing activities 4,519,265.19
Subtotal of cash inflows from financing activities 69,647,265.19 432,643,240.17
Repayment of borrowings 197,354,358.17
Cash paid for interest expenses and distribution of dividends or profit 32,363,500.69 36,902,959.60
Including: dividends or profit paid by subsidiaries to minority shareholders 13,824,332.69 8,495,712.79
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 32,363,500.69 234,257,317.77
Net cash flows from financing activities 37,283,764.50 198,385,922.40
IV. Effect of foreign exchange rate changes on cash and cash equivalents 6,575,803.90 -1,718,594.15
V. Net increase in cash and cash equivalents -295,869,076.86 -99,712,681.30
Add: Opening balance of cash and cash equivalents 675,803,904.11 469,965,448.01
VI. Closing balance of cash and cash equivalents 379,934,827.25 370,252,766.71
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
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2016 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 54,541,061.46 70,974,247.92
Tax refunds received
Other cash received relating to operating activities 21,305,861.45 23,173,816.87
Subtotal of cash inflows from operating activities 75,846,922.91 94,148,064.79
Cash paid for goods and services 69,402,417.98 66,918,834.13
Cash paid to and for employees 7,241,953.89 6,395,528.78
Various taxes paid 2,112,861.45 2,757,295.68
Other cash payment relating to operating activities 147,433,841.45 17,263,059.96
Subtotal of cash outflows from operating activities 226,191,074.77 93,334,718.55
Net cash flows from operating activities -150,344,151.86 813,346.24
II. Cash flows from investing activities:
Cash received from retraction of investments 130,000,000.00
Cash received from return on investments 28,286,287.22
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities 130,000,000.00 28,286,287.22
Cash paid to acquire fixed assets, intangible assets and other long-term assets 13,798.00 119,052.90
Cash paid for investment 1,000,000.00
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 1,013,798.00 119,052.90
Net cash flows from investing activities 128,986,202.00 28,167,234.32
III. Cash Flows from Financing Activities:
Cash received from capital contributions 41,472,998.07
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 41,472,998.07
Repayment of borrowings
Cash paid for interest expenses and distribution of dividends or profit 18,539,168.00 27,883,693.93
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 18,539,168.00 27,883,693.93
Net cash flows from financing activities 22,933,830.07 -27,883,693.93
IV. Effect of foreign exchange rate changes on cash and cash equivalents -6,803.16 -8,848.67
V. Net increase in cash and cash equivalents 1,569,077.05 1,088,037.96
Add: Opening balance of cash and cash equivalents 7,750,025.58 3,236,270.65
VI. Closing balance of cash and cash equivalents 9,319,102.63 4,324,308.61
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
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2016 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 Minority Total owners’
Less: treasury Other comprehensive Specific General risk interests equity
Share capital Preferred Perpetual Capital reserve Surplus reserve Retained profit
Other stock incomes reserve reserve
shares bonds
I. Balance at the end of the previous year 185,391,680.00 282,916,698.67 3,231,050.04 20,962,521.51 69,522,460.31 358,465,860.37 920,490,270.90
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 185,391,680.00 282,916,698.67 3,231,050.04 20,962,521.51 69,522,460.31 358,465,860.37 920,490,270.90
III. Increase/ decrease in the period (“-” means decrease) 13,892,267.11 1,542,117.29 -749,366.64 -27,099,965.04 -12,414,947.28
(I) Total comprehensive incomes 1,542,117.29 17,789,801.36 7,014,815.34 26,346,733.99
(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 -18,539,168.00 -13,824,332.69 -32,363,500.69
1. Appropriations to surplus reserves
2. Appropriations to general risk provisions
3. Appropriations to owners (or shareholders) -18,539,168.00 -13,824,332.69 -32,363,500.69
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 13,892,267.11 -20,290,447.69 -6,398,180.58
IV. Closing balance 185,391,680.00 296,808,965.78 4,773,167.33 20,962,521.51 68,773,093.67 331,365,895.33 908,075,323.62
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2016 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 Minority Total owners’
Less: treasury Other comprehensive Specific General risk interests equity
Share capital Preferred Perpetual Capital reserve Surplus reserve Retained profit
Other stock incomes reserve reserve
shares 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) 4,457,836.12 4,130,430.24 4,562,478.24 2,299,256.38 3,031,737.34 18,481,738.32
(I) Total comprehensive incomes 4,130,430.24 34,670,486.62 11,219,804.63 50,020,721.49
(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 4,562,478.24 -32,371,230.24 -9,439,680.90 -37,248,432.90
1. Appropriations to surplus reserves 4,562,478.24 -4,562,478.24
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 4,457,836.12 1,251,613.61 5,709,449.73
IV. Closing balance 185,391,680.00 282,916,698.67 3,231,050.04 20,962,521.51 69,522,460.31 358,465,860.37 920,490,270.90
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
49
2016 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
Share capital Capital reserve Less: treasury stock Other comprehensive incomes Specific reserve Surplus reserve Retained profit Total owners’ equity
Preferred shares Perpetual bonds Other
I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 20,962,521.51 80,051,466.55 557,895,957.88
Add: change of accounting policy
Correction of errors in previous periods
Other
II. Balance at the beginning of the year 185,391,680.00 271,490,289.82 20,962,521.51 80,051,466.55 557,895,957.88
III. Increase/ decrease in the period (“-” means decrease) 73,475,284.05 73,475,284.05
(I) Total comprehensive incomes 92,014,452.05 92,014,452.05
(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 -18,539,168.00 -18,539,168.00
1. Appropriations to surplus reserves
2. Appropriations to owners (or shareholders) -18,539,168.00 -18,539,168.00
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
IV. Closing balance 185,391,680.00 271,490,289.82 20,962,521.51 153,526,750.60 631,371,241.93
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Same period of last year
Item Other equity instruments
Share capital Capital reserve Less: treasury stock Other comprehensive incomes Specific reserve Surplus reserve Retained profit Total owners’ equity
Preferred shares Perpetual bonds Other
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) 692.94 4,562,478.24 13,253,552.15 17,816,723.33
(I) Total comprehensive incomes 45,624,782.39 45,624,782.39
(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 4,562,478.24 -32,371,230.24 -27,808,752.00
1. Appropriations to surplus reserves 4,562,478.24 -4,562,478.24
2. Appropriations to owners (or shareholders) -27,808,752.00 -27,808,752.00
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 692.94 692.94
IV. Closing balance 185,391,680.00 271,490,289.82 20,962,521.51 80,051,466.55 557,895,957.88
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
51
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Tsann Kuen (China) Enterprise Co., Ltd.
Annotation of 30 Jun. 2016
(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 2016, the registered capital of the Company decreased to RMB185,391,680.
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
2016, total B shares hold by the three legal shareholders (EUPA Industry Corporation Limited,
Fordchee Development Limited and Fillman Investment Limited) are 82,830,966 shares. (account
for 44.68% of the share capital).
Legal representative: Pan, Zhirong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province
The parent: Star Comgistic Capital Co. Ltd.
The Company operates within the electrical machinery and equipment manufacturing industry.
The industry of the company: electrical machinery and equipment manufacturing.
The approved business scope: the main business is to develop, manufacture household appliances,
electronics, light industrial products, modern office supplies. Design and manufacture of molds
associated with these products in domestic and international sales of the company’s products and
after-sales service. Wholesale and retail household appliances, electronic products, electrical
equipment, office supplies, kitchen utensils, pre-packaged food (limited to branches), import and
export related business and provide after-sales service (the above description do not involve state
trading commodity goods, involving quota license management products are according to the
relevant provisions of the State for the regulations application).
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The Financial Report approved by the Board of the Directors of the Company and disclosed on 11
August 2016.
There were 9 subsidiaries be included in 2016 of the Company with the details in Notes VIII
“Equities among other entities”. The consolidated scope of the Reporting Period increase 2
subsidiaries of the Company without any decrease, as for the details, please refer to Notes VII
“Changes of scope of consolidation financial statements”.
II. Basis for preparation of the financial statements
The financial statements of company have been prepared on basis of going concern in conformity
with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for
Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
Finance issued order No. 33, the Ministry of Finance revised order No. 76) 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.
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 June 2016.
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. 21 “Revenue” for the description. For description of significant
accounting judgments and estimates made by management, see Note IV. 25 “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.
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.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
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
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 4.11 “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
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).
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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
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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. 11
Long-term equity investments and Note IV. 8 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; ③ 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. 11. 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. 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.
7. 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,
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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
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.
8. 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
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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
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.
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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.
③ 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
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
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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.
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
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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
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.
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9. Receivables
The receivables by the Company include 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;
③ 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.
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
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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.
10. 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
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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.
11. 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. 8 “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
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
as one single transaction, the cost of combination is measured at the sum of book value of the
investment in the acquiree immediately before the combination and cost of acquisition of additional
shareholding. If the investment prior to the combination is measured by fair value, cumulative other
comprehensive income associated with the investment prior to the combination is not affected by
the combination. If the investment prior to the combination is measured as an available-for-sale
financial asset, the difference between the fair value and the book value of the investment
immediately before the combination and the associated cumulative other comprehensive income
recognised prior to the combination are carried to profit or loss.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure
of audit, legal services, valuation and consultancy and other administrative expenses, are recognised
in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on
initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash
paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the
assets given away in the case of non-monetary asset exchange, or the fair value of the relevant
long-term equity investments. The cost of acquisition of a long-term equity investment acquired not
through business combination also includes all directly associated expenses, applicable taxes and
fees, and other necessary expenses. The cost of a long-term equity investment, which enables the
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.
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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
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.
③ 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
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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
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 recognized in
other comprehensive income and reclassified in full to profit or loss at the time when control over
the investee is lost.
12. 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
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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.
18 “Non-current and non-financial assets impairment”.
Occupied real estate for investment property or investment property is transferred to
owner-occupied real estate or stock conversion as the recorded value after the conversion, according
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.
13. 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 7.00-10.00 20 4.50-4.65
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. 18 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.
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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.
(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.
14. 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. 18.
15. 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
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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.
16. 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 4.18.
17. Long-term deferred expenditure
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An item long-term deferred expenses is an expense which has been incurred and which has a
beneficial period (a period during which an expense is expected to bring economic benefits to an
entity) which is longer than one year and which includes at least part of the reporting period during
which the expense was incurred and subsequent reporting periods. An item of long-term deferred
expenses is recognized at the actual amount of the expense incurred and allocated in each month of
the beneficial period using the straight line method.
18. 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.
19. 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
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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
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.
20. 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.
21. 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
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
(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) Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
(4) 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.
22. Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to
the Company at no consideration, excluding the capital invested by the government as equity owner.
Government grant can be classified as grant related to the assets and grants related to the income.
The government grants which were acquired by the Company will be used to purchase or otherwise
form become long-term assets will be defined as grant related to the assets; the others will be
defined as grants related to the income. If the files have not clearly defined government grants
objects, it will be divided in the following manner compartmentalize the grants related to the assets
and grants related to the income: (1) government documents defined specific projects targets,
according to the relative proportion of the budgets of specific items included the expenditure of to
form assets and the expenditure will be charged into expense to be divided, the division ratio
required at each balance sheet date for review and make changes if necessary; (2) government
documents to make a general presentation purposes only, does not specify a particular project, as
grants related to the income.
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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.
23. 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.
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.
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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
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.
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24. 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.
25. 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) 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.
(2) 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.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the
accounting policies in regard of inventories and provisions for decline in value of inventories is
made if the cost is higher than their net realizable value, and obsolete and slow-movement
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
inventories. Inventories decline in value to net realizable value is the estimated selling price in the
ordinary course of business. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purposes of holding inventories and effect of post balance
sheet events. The difference between the actual result and the original estimates shall have impact
on reverse of the carrying amount of the inventories and their decline in value or provisions during
the period of change.
(4)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.
(5) 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.
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.
(6) 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.
(7) 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.
(8) Income tax
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
(9) 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 an 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.
(10) Fair value measurement
Some assets and liabilities of the Company are measured by fair value in the financial statements.
The company use available market date when to make an estimate of the fair value of an asset or
liability. The company will hire the third party qualified appraiser to perform the appraisal if cannot
get the value of same assets or liabilities without adjustment in the active market at measurement
day. The valuation techniques and the value of the information which are used to determine all
kinds of the fair value of assets and liabilities in the process are disclosed in Notes 10.
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 5,6,11,17
Business tax Business tax taxable revenue 5
Urban maintenance and Sum of VAT payable, consumption duty payable and business tax payable for
construction surcharge the reporting period, and exempt and deductible tax 7
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
Notes: CS [2016] No. 36, which was about the Notice on the Comprehensively Launched Pilot for
Replacing Business Tax by VAT that be executed on 1 May 2016.
2 Taxes and surcharges applicable to the primary subsidiaries
(1) TsannKuen (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, 5, 6, 11, 13, 17
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Taxes and surcharges Tax base Tax rate (%)
Business tax Business tax taxable revenue 5
Urban maintenance and Sum of VAT payable, consumption duty payable and business tax payable
construction surcharge for the reporting period, and exempt and deductible tax 5
Sum of VAT payable, consumption duty payable and business tax payable
Education surcharge 3
for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Local education surcharge 2
for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 15
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT,
the rate is 0%.
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 5, 11, 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable
and construction surcharge for the reporting period, and exempt and deductible tax 1
Sum of VAT payable, consumption duty payable and business tax payable
Education surcharge 3
for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Local education surcharge 2
for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
VI. Notes on major items in consolidated financial statements of the Company
1. Monetary funds
Item 2016.06.30 2015.12.31
Cash on hand 733,184.57 675,221.95
Bank deposits 553,548,283.29 755,548,322.77
Other monetary funds 0.00 0.00
Total 554,281,467.86 756,223,544.72
Of which: total amount deposited in overseas 11,591,740.55 9,697,534.15
Notes: the balance of fixed time deposit at financial institution for interest in the bank deposits at period-end was
RMB174, 327,000 and pledge of bank RMB19, 640.61.
2. Financial assets measured by fair value with changes in fair value recognised in profit or loss
(1)Disclosure by classification
Item 2016.06.30 2015.12.31
Trading financial assets 27,300.00 0.00
Including: Derivative financial assets 27,300.00 0.00
Total 27,300.00 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Explanation
The derivative financial asset is forward foreign exchange contract signed with financial institutions.
3. Notes receivable
(1) Disclosure by classification
Item 2016.06.30 2015.12.31
Bank acceptance bill 3,388,917.00 1,483,710.00
Total 3,388,917.00 1,483,710.00
(2) Notes receivable which had endorsed by the Company or had discounted and had not due on the
balance sheet date at the period-end
(3) Notes transferred to accounts receivable because drawer of the notes fails to executed the contract or
agreement
4. Accounts receivable
(1) Disclosure by classification
2016.06.30
Item Book balance Bad debt provision
Amount Proportion (%) Amount Withdrawal proportion (%)
Book value
Accounts receivable of
individual significance
0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Accounts receivable portfolio
subject to impairment by
credit risk:
Portfolio by age 214,751,675.86 98.23 6,123,975.88 2.85 208,627,699.98
Portfolio by related parties 3,878,197.41 1.77 0.00 0.00 3,878,197.41
Subtotal 218,629,873.27 100.00 6,123,975.88 2.80 212,505,897.39
Accounts receivable of
individually insignificance
0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Total 218,629,873.27 100.00 6,123,975.88 2.80 212,505,897.39
(Continued)
2015.12.31
Item Book balance Bad debt provision
Amount Proportion (%) Amount Withdrawal proportion (%)
Book value
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Portfolio by age 219,650,502.21 98.15 4,173,924.76 1.90 215,476,577.45
Related party group 4,132,689.95 1.85 0.00 4,132,689.95
Subtotal 223,783,192.16 100.00 4,173,924.76 1.87 219,609,267.40
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Total 223,783,192.16 100.00 4,173,924.76 1.87 219,609,267.40
① In the groups, accounts receivable adopting aging analysis method for measurement of allowance for bad debt:
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2016.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 214,129,192.40 5,501,492.42 2.57
Including: 1-90 days 191,743,004.66 0.00 0.00
91-180 days 10,866,551.45 1,086,655.15 10.00
181-270 days 6,724,904.36 2,017,471.30 30.00
271-365 days 4,794,731.93 2,397,365.97 50.00
1-2years 574,965.50 574,965.50 100.00
2-3years 10,017.96 10,017.96 100.00
Over 3 years 37,500.00 37,500.00 100.00
Total 214,751,675.86 6,123,975.88 2.85
②In the groups, accounts receivable using related party group method for measurement of allowance for bad debt
2016.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 3,878,197.41 0.00 0.00
Total 3,878,197.41 0.00 0.00
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the Reporting Period is CNY2,302,024.24; the amount of recovered or
reversed allowance for bad debts during the Reporting Period is of CNY0.
(3) Accounts receivable written off during the Reporting Period
Item Amount
Sporadic accounts receivable written off 362,911.29
(4) Details of top five accounts receivable
The total amount of top five accounts receivables summarized by debtors as at the end of the Reporting Period is
CNY129,965,156.04, accounting for 59.44% of the total accounts receivable as at the end of the Reporting Period,
the total corresponding allowance for bad debts is CNY589,960.00.
5. Advances to suppliers
(1) Disclosure by age
2016.06.30 2015.12.31
Item
Amount Proportion (%) Amount Proportion (%)
Within 1 year 11,696,437.27 97.45 16,916,279.78 99.98
1-2years 305,701.74 2.55 3,087.09 0.02
Total 12,002,139.01 100.00 16,919,366.87 100.00
(2) Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of Reporting Period is CNY9, 355,646.67,
accounting for 77.95% of the total advance to suppliers.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
6. Interest receivable
(1) Disclosure by classification
Item 2016.06.30 2015.12.31
Fixed deposit receipt 1,010,711.98 1,135,305.55
Total 1,010,711.98 1,135,305.55
7. Other receivable
(1) Disclosure by classification
2016.06.30
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal 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 25,089,343.57 91.96 528,042.92 2.10 24,561,300.65
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 25,089,343.57 91.96 528,042.92 2.10 24,561,300.65
Other receivable of individually
insignificance subject to
2,192,574.47 8.04 1,145,124.47 52.23 1,047,450.00
individually assessment for
impairment
Total 27,281,918.04 100.00 1,673,167.39 6.13 25,608,750.65
(Continued)
2015.12.31
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal 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 53,630,629.44 96.07 4,371,184.05 8.15 49,259,445.39
Portfolio by related parties 0.00 0.00 0.00 0.00 0.00
Subtotal 53,630,629.44 96.07 4,371,184.05 8.15 49,259,445.39
Other receivable of individually
insignificance subject to
2,194,194.47 3.93 1,145,124.47 52.19 1,049,070.00
individually assessment for
impairment
Total 55,824,823.91 100.00 5,516,308.52 9.88 50,308,515.39
In the groups, other receivable using the age analysis method for measurement of allowance for bad debt
2016.06.30
Aging
Other accounts receivable Bad debt provision Proportion (%)
Within 1 year 24,624,238.17 62,937.52 0.26
Including: 1-90 days 24,266,125.51 0.00 0.00
91-180 days 273,513.40 27,351.34 10.00
181-270 days 33,567.26 10,070.18 30.00
271-365 days 51,032.00 25,516.00 50.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1-2years 317,566.51 317,566.51 100.00
2-3years 142,538.89 142,538.89 100.00
Over 3 years 5,000.00 5,000.00 100.00
Total 25,089,343.57 528,042.92 2.10
② Other receivable of individually insignificance subject to individually assessment for impairment
Withdrawal
Bad debt
Items Book balance proportion Withdrawal reason
provision
(%)
Expect all other receivable
Shanghai Tanghai Investment Co., Ltd. 1,145,124.47 100.00 1,145,124.47
will not be repaid
China Export & Credit Insurance Corporation, Guaranteed deposits, absence
648,450.00
Fujian Branch of impairment
Guaranteed deposits, absence
Longhai People's Court 200,000.00
of impairment
Guaranteed deposits, absence
Alipay (China) Network Technology Co., Ltd. 109,000.00
of impairment
Guaranteed deposits, absence
Li Jinhe 30,000.00
of impairment
Guaranteed deposits, absence
NiuhaiE-commerce ( Shanghai ) Co., Ltd. 30,000.00
of impairment
Guaranteed deposits, absence
Beijing Dangdangkewen E-Commerce Co., Ltd. 20,000.00
of impairment
Guaranteed deposits, absence
Gome Online E-Commerce Co., Ltd. 10,000.00
of impairment
Total 2,192,574.47 100.00 1,145,124.47
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the Reporting Period is CNY35,713.36; the amount of recovered or
reversed allowance for bad debts during the Reporting Period is of CNY3,878,854.49.
(3) There was no actual write-off other accounts receivable
(4)Disclosure by account nature
Nature 2016.06.30 2015.12.31
Non-related party 27,281,918.04 55,824,823.91
Related 0.00 0.00
Total 27,281,918.04 55,824,823.91
(5) Details of top five other receivables
Closing balance of bad
Items Nature of OR Amount Aging % of total
debt provision
No.1 Export tax refunds 12,767,833.37 0-30 days 46.80
No.2 Water & electricity fees 1,184,833.75 0-30 days 4.34
No. 3 Water & electricity fees 1,117,460.51 0-30 days 4.10
No. 4 Energy charge 692,786.30 0-30 days 2.54
No. 5 Margin 648,450.00 Over 1 years 2.38
16,411,363.93 60.15 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
8. Inventory
(1) Disclosure by classification
2016.06.30 2015.12.31
Item
Book balance Impairment allowance Book value Book balance Impairment allowance Book value
Raw materials 86,186,338.07 13,775,429.17 72,410,908.90 91,395,798.53 18,521,377.30 72,874,421.23
Goods in process 4,353,615.08 0.00 4,353,615.08 12,536,811.29 0.00 12,536,811.29
Self-manufactured
20,625,255.08 1,858,837.76 18,766,417.32 18,983,995.05 1,858,837.76 17,125,157.29
semi-finished goods
Finished goods 115,894,184.64 17,990,838.27 97,903,346.37 169,996,603.19 17,464,104.93 152,532,498.26
Low-value consumables 6,541,890.14 0.00 6,541,890.14 5,087,609.94 0.00 5,087,609.94
Materials in transit 1,130,885.91 0.00 1,130,885.91 4,221,289.94 0.00 4,221,289.94
Total 234,732,168.92 33,625,105.20 201,107,063.72 302,222,107.94 37,844,319.99 264,377,787.95
(2) Impairment allowance for inventories
Increased amount Decrease
Item 2015.12.31 2016.06.30
Withdrawal Others Reverse or write-off Others
Raw materials 18,521,377.30 189,110.13 7,241.57 4,942,299.82 0.00 13,775,429.18
Self-manufactured
1,858,837.76 0.00 0.00 0.00 0.00 1,858,837.76
semi-finished goods
Finished goods 17,464,104.93 591,195.62 3,025.60 67,487.89 0.00 17,990,838.26
Total 37,844,319.99 780,305.75 10,267.17 5,009,787.71 0.00 33,625,105.20
(3)The basis of recognizing impairment allowance and the reason of recovering or writing off the
impairment allowance for inventories
The basis of recognition of The reason of recovering
The reasons for inventory
Item impairment allowance for impairment allowance for
impairment write-off
inventories inventories
Market prices decrease, and
Raw materials resulting in raw material’s net Sale or disposal
realizable value lower than cost
Market prices decrease, and
Finished goods resulting in finished goods' net Sale or disposal
realizable value lower than cost
(4)Closing balance of the inventory which includes capitalized borrowing expenses was RMB0.
9. Other current assets
Item 2016.06.30 2015.12.31
Input tax to be deducted 8,495,735.19 9,858,232.99
Financial products 230,000,000.00 80,000,000.00
Total 238,495,735.19 89,858,232.99
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
10. Available-for-sale financial assets
(1) The situation of available-for-sale financial assets
2016.06.30 2015.12.31
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available for sale equity instruments 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Including: measured by cost 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Total 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
(2) The measurement of the cost of available for sale financial assets at the period-end
Cash
Book balance Depreciation reserves Shareholding
bonus of
proportion
Investee the
among the
2015.12.31 Increase Decrease 2016.06.30 2015.12.31 Increase Decrease 2016.06.30 Reporting
investees(%)
Period
Xiamen
Association
of
Enterprises 40,000.00 40,000.00 1.48 8,474
with
Foreign
Investment
Total 40,000.00 40,000.00 1.48 8,474
11. Investment property
(1) Investment property adopted the cost measurement mode
Construction
Item Houses and buildings Land use right Total
in progress
I. Original book value
1.Opening balance 130,947,241.39 29,260,577.51 0.00 160,207,818.90
2. Increased amount of the period 0.00 0.00 0.00 0.00
(1) Outsourcing 0.00 0.00 0.00 0.00
(2) Transfer of inventory\fixed assets\project under
0.00 0.00 0.00 0.00
construction
(3) Increased by business combination 0.00 0.00 0.00 0.00
3.Decreased amount of the period 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred into fixed assets 0.00 0.00 0.00 0.00
4. Closing balance 130,947,241.39 29,260,577.51 0.00 160,207,818.90
II. Accumulated Depreciation and accumulated amortization
1.Opening balance 101,611,164.31 12,411,437.91 0.00 114,022,602.22
2. Increased amount of the period 2,597,190.62 311,055.90 0.00 2,908,246.52
(1) Withdrawal or amortization 2,597,190.62 311,055.90 0.00 2,908,246.52
2. Investment property transferred from fixed assets 0.00 0.00 0.00 0.00
3.Decreased amount of the period 574,386.06 0.00 0.00 574,386.06
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred into fixed assets 574,386.06 0.00 0.00 574,386.06
4. Closing balance 103,633,968.87 12,722,493.81 0.00 116,356,462.68
III. Depreciation reserves
1.Opening balance 0.00 0.00 0.00 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Increased amount of the period 0.00 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00 0.00
3.Decreased amount of the period 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Other transferred out 0.00 0.00 0.00 0.00
4. Closing balance 0.00 0.00 0.00 0.00
IV. Book value
1. Closing book value 27,313,272.52 16,538,083.70 0.00 43,851,356.22
2. Opening book value 29,336,077.08 16,849,139.60 0.00 46,185,216.68
(2) Investment property with pending ownership registration
Item Book value Reason for pending
Lvyuan three country villa 2,411,522.89 Under processing
12. Fixed assets
(1) List of fixed assets
Improvement
Electronic
Houses and Machinery Transportation expense of
Item device, modules Total
buildings equipment equipment leased fixed
and others
assets
I. Original book value
1.Opening balance 91,674,356.13 155,626,011.03 1,149,407,678.51 16,875,123.73 67,082,341.35 1,480,665,510.75
2. Increased amount of the period 0.00 5,931,513.47 21,063,351.73 37,003.33 263,756.33 27,295,624.86
(1) Purchase 0.00 5,850,739.17 21,020,140.88 37,003.33 205,519.12 27,113,402.50
(2) Transfer from project under
0.00 0.00 0.00 0.00 0.00 0.00
construction
3. Transfer from investment property 0.00 0.00 0.00 0.00 0.00 0.00
Impact of changes in exchange rates 0.00 80,774.30 43,210.85 0.00 58,237.21 182,222.36
(5) Other 0.00 0.00 0.00 0.00 0.00 0.00
3.Decreased amount of the period 0.00 908,156.75 31,292,678.70 17,036.80 0.00 32,217,872.25
(1) Disposal or Scrap 0.00 908,156.75 31,292,678.70 17,036.80 0.00 32,217,872.25
2. Investment property 0.00 0.00 0.00 0.00 0.00 0.00
4. Closing balance 91,674,356.13 160,649,367.75 1,139,178,351.54 16,895,090.26 67,346,097.68 1,475,743,263.36
II. Accumulative depreciation
1.Opening balance 41,096,327.95 98,376,768.15 1,052,718,137.33 15,597,893.01 57,144,383.73 1,264,933,510.17
2. Increased amount of the period 2,120,903.02 2,973,575.33 14,866,693.40 205,776.88 2,401,214.67 22,568,163.30
(1) Withdrawal 1,345,149.23 2,797,112.34 14,777,449.82 199,686.13 2,359,092.36 21,478,489.88
2. Transfer from investment property 574,386.06 0.00 0.00 0.00 0.00 574,386.06
(3) Impact of changes in exchange
201,367.73 176,462.99 89,243.58 6,090.75 42,122.31 515,287.36
rates
3.Decreased amount of the period 123,929.70 711,533.10 26,815,665.36 17,327.84 0.00 27,668,456.00
(1) Disposal or Scrap 123,929.70 711,533.10 26,815,665.36 17,327.84 0.00 27,668,456.00
2. Transfer from investment property 0.00 0.00 0.00 0.00 0.00 0.00
4. Closing balance 43,093,301.27 100,638,810.38 1,040,769,165.37 15,786,342.05 59,545,598.40 1,259,833,217.47
III. Depreciation reserves
1.Opening balance 0.00 20,322,787.11 18,175,791.88 1,339.62 182,883.96 38,682,802.57
2. Increased amount of the period 2,567.74 2,204.60 1,113.61 77.67 504.27 6,467.89
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Impact of changes in exchange
2,567.74 2,204.60 1,113.61 77.67 504.27 6,467.89
rates
3.Decreased amount of the period 0.00 3,216.71 2,095,460.96 0.00 0.00 2,098,677.67
(1) Disposal or Scrap 0.00 3,216.71 2,095,460.96 0.00 0.00 2,098,677.67
4. Closing balance 2,567.74 20,321,775.00 16,081,444.53 1,417.29 183,388.23 36,590,592.79
IV. Book value
1. Closing book value 48,578,487.12 39,688,782.37 82,327,741.64 1,107,330.92 7,617,111.05 179,319,453.10
2. Opening book value 50,578,028.19 36,926,455.77 78,513,749.30 1,275,891.10 9,755,073.66 177,049,198.02
(2) Fixed assets with pending ownership registration
Item Book value Reason for pending
Qingying garden 201,245.67 Under processing
Lvyuan three country villa 855,276.24 Under processing
13. Construction in progress
(1) List of construction in progress
2016.06.30 2015.12.31
Item
Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value
Sporadic project 396,547.71 0.00 396,547.71 210,796.20 0.00 210,796.20
Total 396,547.71 0.00 396,547.71 210,796.20 0.00 210,796.20
(2) Changes of significant construction in progress
Amount that
transferred to
Item Estimated number 2015.12.31 Increased amount Decrease 2016.06.30
fixed assets of
the period
Workshop project 57,200.00 57,200.00 0.00 0.00 0.00 57,200.00
Others 648,053.19 153,596.20 494,456.99 0.00 308,705.48 339,347.71
Total 705,253.19 210,796.20 494,456.99 0.00 308,705.48 396,547.71
(Continued)
Of which: the
Proportion(%) of Accumulative Capitalization
Project amount of the
project amount of rate of the
Item progress capitalized Capital resources
investment in capitalized interests of the
(%) interests of the
buget interests period %） （
period
Workshop project 100 90 0.00 0.00 0.00 Self-owned
Others 100 85 0.00 0.00 0.00 Self-owned
Total 100 0.00 0.00 0.00
14. Intangible assets
Item Land use right Software Total
I. Original book value
1.Opening balance 13,711,137.38 16,326,065.37 30,037,202.75
2. Increased amount of the period 290,525.37 3,034,422.97 3,324,948.34
(1) Purchase 290,525.37 3,034,422.97 3,324,948.34
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Impact of changes in exchange rates 0.00 0.00 0.00
3.Decreased amount of the period 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4.Closing balance 14,001,662.75 19,360,488.34 33,362,151.09
II. Accumulated amortization
1.Opening balance 1,903,870.49 13,997,098.71 15,900,969.20
2. Increased amount of the period 275,164.07 663,756.48 938,920.55
(1) Withdrawal 234,822.94 663,756.48 898,579.42
(2) Impact of changes in exchange rates 40,341.13 0.00 40,341.13
3.Decreased amount of the period 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4.Closing balance 2,179,034.56 14,660,855.19 16,839,889.75
III. Depreciation reserves
1.Opening balance 0.00
2. Increased amount of the period 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
3.Decreased amount of the period 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4.Closing balance 0.00 0.00 0.00
IV. Book value
1. Closing book value 11,822,628.19 4,699,633.15 16,522,261.34
2. Opening book value 11,807,266.89 2,328,966.66 14,136,233.55
15. Long-term deferred charge
Item 2015.12.31 Increased amount Amortization amount Decrease 2016.06.30
Telecommunications engineering 797,041.77 0.00 168,000.06 0.00 629,041.71
Houses and buildings renovation expenses 3,077,597.22 611,460.21 612,533.47 391,175.44 2,685,348.52
Total 3,874,638.99 611,460.21 780,533.53 391,175.44 3,314,390.23
16. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
2016.06.30 2015.12.31
Item Deductible temporary Deferred income Deductible temporary Deferred income
difference tax assets difference tax assets
Assets impairment provision 67,027,929.94 10,339,377.19 70,226,882.23 10,735,568.74
Accrued expenses 14,735,450.48 2,680,574.29 11,934,848.95 2,200,171.07
Transaction financial liabilities 2,844,750.00 426,712.50 8,462,500.00 1,269,375.00
Unrealized profits from intragroup
810,452.20 202,613.05 810,452.20 202,613.05
transactions
Others 3,528,470.47 599,839.98 3,373,622.29 573,515.79
Total 88,947,053.09 14,249,117.01 94,808,305.67 14,981,243.65
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Deferred income tax liabilities had not been off-set
2016.06.30 2015.12.31
Item Deductible temporary Deferred income Deductible Deferred income
difference tax liabilities temporary difference tax liabilities
Depreciation of fixed assets 986,026.44 246,506.61 965,567.04 241,391.76
Trading financial assets 27,300.00 4,095.00 0.00 0.00
Others 8,067.06 1,371.40 7,712.88 1,311.19
Total 1,021,393.50 251,973.01 973,279.92 242,702.95
(3) List of unrecognized deferred income tax assets
Item 2016.06.30 2015.12.31
Impairment provision of the fixed assets 8,569,195.09 8,562,727.20
Bad debt provision 1,731,721.84 5,716,620.52
Accrued expenses 17,723,411.92 17,993,277.12
Impairment of inventories 683,994.39 1,711,125.89
Payroll liability 1,723,118.40 1,321,984.20
Undistributed deficit 79,692,905.53 70,628,157.47
Total 110,124,347.17 105,933,892.40
(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following years
Year 2016.06.30 2015.12.31
Y2016 9,312,880.43 3,187,362.29
Y2017 11,982,038.88 17,618,598.88
Y2018 20,480,812.96 21,913,253.09
Y2019 8,019,239.76 12,334,938.20
Y2020 15,566,046.67 15,574,005.01
Y2021 14,331,886.83 0.00
Total 79,692,905.53 70,628,157.47
17. Other non-current assets
Item 2016.06.30 2015.12.31
Prepaid mold fee 1,022,801.67 1,608,236.93
Prepayment for equipment 968,384.98 4,656,534.22
Total 1,991,186.65 6,264,771.15
18. Short-term borrowings
(1) Disclosure by classification
Item 2016.06.30 2015.12.31
Credit loan 70,831,265.19 0.00
Total 70,831,265.19 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
19. Financial liabilities measured by fair value and the changes included in the current gains and losses
Item 2016.06.30 2015.12.31
Transaction financial liabilities 2,844,750.00 8,462,500.00
Including: Derivative financial liabilities 2,844,750.00 8,462,500.00
Total 2,844,750.00 8,462,500.00
The derivative financial liabilities are forward foreign exchange/sale contract signed with financial institutions.
20. Notes payable
Item 2016.06.30 2015.12.31
Bank acceptance bill 6,127,143.75 10,194,127.43
Trade acceptance 13,438,889.06 16,780,514.31
Total 19,566,032.81 26,974,641.74
There was no amount of the due but not pay notes payable at the period-end.
21. Accounts payable
(1) List of accounts payable
Item 2016.06.30 2015.12.31
Within 1 year 389,890,186.92 568,270,902.00
Over 1 years 7,530,813.90 7,659,828.06
Total 397,421,000.82 575,930,730.06
(2) Details of significant accounts payable remaining unsettled for more than one year
Item 2016.06.30 Unpaid/ Un-carry-over reason Repaid or not after balance sheet date
XingdaElectronical& Mechanical Co,. Ltd. 3,247,512.96 Quality disputes No
Ningbo Jiesiluo Electrical Equipment Co., Ltd. 1,024,264.67 Quality disputes No
Ningbo Chaochao Electrical Equipment Co.,
500,237.01 Quality disputes No
Ltd.
Total 4,772,014.64
22. Advance from customers
(1) List of advance from customers
Item 2016.06.30 2015.12.31
Within 1 year 7,629,120.08 13,784,897.40
Over 1 years 5,879,780.01 2,043,659.31
Total 13,508,900.09 15,828,556.71
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Details of significant advance from customers aging over one year
Item Amount Unpaid/ Un-carry-over reason
ZELMERS.A. 1,168,221.91 Receive in advance
Sunbeam (L.A) 1,087,053.43 Receive in advance
SEB 648,217.38 Receive in advance
BIALETTI 479,457.08 Receive in advance
Total 3,382,949.80
23. Employee benefits payable
(1) List of employee benefits payable
Item 2015.12.31 Increase Decrease 2016.06.30
I. Short-term salary 42,899,469.81 117,985,100.49 123,624,507.28 37,260,063.02
II. Post-employment benefit-defined contribution plans 170,062.03 5,058,992.83 5,033,732.20 195,322.66
III. Termination benefits 391,342.00 709,011.00 1,100,353.00 0.00
IV. Other benefits due within one year 0.00 0.00 0.00 0.00
Total 43,460,873.84 123,753,104.32 129,758,592.48 37,455,385.68
(2) List of Short-term employee benefits
Item 2015.12.31 Increase Decrease 2016.06.30
1. Salary, bonus, allowance, subsidy 31,987,641.94 105,579,480.88 112,791,894.69 24,775,228.13
2. Employee welfare 8,683.50 4,810,193.79 3,563,373.35 1,255,503.94
3. Social insurance 634,740.27 4,922,659.74 4,473,401.32 1,083,998.69
Including: Medical insurance 508,282.64 3,682,551.18 3,361,922.20 828,911.62
Employment injury insurance 82,990.86 1,018,835.57 892,161.31 209,665.12
Maternity insurance 43,466.77 221,272.99 219,317.81 45,421.95
4. Housing fund 8,581,566.90 2,664,271.84 2,357,701.63 8,888,137.11
5. Labor union budget and employee education budget 0.00 0.00 0.00 0.00
6.Short-term absence with payment 1,686,837.20 8,494.24 438,136.29 1,257,195.15
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00
Total 42,899,469.81 117,985,100.49 123,624,507.28 37,260,063.02
(3) List of defined contribution plan
Item 2015.12.31 Increase Decrease 2016.06.30
1. Basic pension benefits 131,246.47 4,700,285.07 4,637,146.37 194,385.17
2. Unemployment insurance 38,815.56 358,707.76 396,585.83 937.49
Annuity 0.00 0.00 0.00 0.00
Total 170,062.03 5,058,992.83 5,033,732.20 195,322.66
24. Taxes payable
Category of taxes 2016.06.30 2015.12.31
Business tax 785,469.03 1,175,349.15
Corporate income tax 1,314,438.34 2,126,878.13
VAT 274,141.33 222,436.51
Personal income tax 267,592.23 472,557.24
Education Surcharge 170,950.30 736,753.02
Urban maintenance and construction tax 133,740.18 698,361.21
Others 1,449,142.09 726,481.95
Total 4,395,473.50 6,158,817.21
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
25. Interest payable
Item 2016.06.30 2015.12.31
Interests on short-term borrowings 140,337.30 0.00
Total 140,337.30 0.00
26. Other accounts payable
(1) Other accounts payable listed by nature of the account
Item 2016.06.30 2015.12.31
Within 1 year 41,172,822.32 53,916,409.69
Over 1 years 12,449,030.72 11,192,326.01
Total 53,621,853.04 65,108,735.70
(2) Other significant accounts payable with aging over one year
Item 2016.06.30 Unpaid/ Un-carry-over reason
Payment of mold fee 1,095,043.80 Payment on behalf, unpaid
Cash pledge 6,927,432.40 Repaid at the termination of contract
Total 8,022,476.20
27. Share capital
2015.12.31 Increase/decrease in Reporting Period (+-) 2016.06.30
Item Newly Capitalization
Bonus Proport
Amount Proportion Others Subtotal Amount
Newly shares of public reserves ion
I. Restricted shares
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
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
entities
3. Shares held by other
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
domestic investors
Within: Held by domestic
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
legal person
Shares held by domestic
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
natural person
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 oversea legal
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
person
Shares held by oversea natural
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
person
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. Domestically listed foreign
185,391,680.00 100.00 0.00 0.00 0.00 0.00 0.00 185,391,680.00 100.00
shares
3. Oversea listed foreign
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
shares
4. Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total of restricted 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 shares 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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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
28.Capital reserves
Item 2015.12.31 Increase Decrease 2016.06.30
Share premium 210,045,659.80 0.00 296,385.42 209,749,274.38
Other capital reserves 72,871,038.87 14,188,652.53 0.00 87,059,691.40
Total 282,916,698.67 14,188,652.53 296,385.42 296,808,965.78
29. Other comprehensive income
Reporting Period
Less: recorded in
other
comprehensive Less: Attributable to Attributable to
Item 2015.12.31 Amount before 2016.06.30
income in prior Income owners of the minority
income tax in
period and tax Company after shareholders after
current period
transferred to expense tax tax
profit or loss in
current period
I. Other comprehensive
reclassified into profits
or losses
Of which: converted
difference of the
40.050,132,3 93.651,650,2 00.0 00.0 92.711,245,1 01.930,415 33.761,377,4
foreign currency
financial statement
Total 40.050,132,3 93.651,650,2 00.0 00.0 92.711,245,1 01.930,415 33.761,377,4
30. Surplus reserves
Item 2015.12.31 Increase Decrease 2016.06.30
Statutory surplus reserves 20,962,521.51 0.00 0.00 20,962,521.51
Total 20,962,521.51 0.00 0.00 20,962,521.51
31. Retained earnings
Item 2016.06.30 2015.12.31
Opening balance of retained profits before adjustments 69,522,460.31 67,223,203.93
Total opening balance of retained profits before adjustments (Increase+ decrease-) ，
Opening balance of retained profits after adjustments 69,522,460.31 67,223,203.93
Add: Net profit attributable to owners of the Company 17,789,801.36 34,670,486.62
Less: Withdrawal of statutory surplus reserves 0.00 4,562,478.24
Withdrawal of discretionary surplus reserves 0.00 0.00
Withdrawal of generic risk reserve 0.00 0.00
Dividend of common stock payable 18,539,168.00 27,808,752.00
Dividend of common stock transfer into share capital 0.00 0.00
Closing retained profits 68,773,093.67 69,522,460.31
32. Revenue and Cost of Sales
Item Reporting Period Same period of last year
Main operations 770,647,435.81 860,571,679.13
Other operations 27,461,253.46 34,622,478.94
Total 798,108,689.27 895,194,158.07
Costs of main operations 653,194,377.94 760,838,332.58
Other operations 9,622,787.16 10,644,964.43
Total 662,817,165.10 771,483,297.01
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
33. Business tax and surcharges
Item Reporting Period Same period of last year
Business tax 968,527.44 2,026,579.47
Education Surcharge 1,000,327.29 522,830.70
Urban construction tax 1,006,737.00 533,328.80
Others 287.43 1,623.21
Total 2,975,879.16 3,084,362.18
34. Sales expenses
Item Reporting Period Same period of last year
Export fees 14,112,135.80 16,949,226.08
Employee remunerations 10,567,113.82 11,070,639.29
Claims experiment expenses 7,894,247.30 2,486,199.67
Sales commission and after sales service fees 1,942,157.66 1,846,683.75
Assets lease expenses 465,396.72 1,480,366.65
Business travel charges 1,589,854.17 1,438,843.82
Advertisements charges and sales promotion 2,647,411.74 4,649,273.77
Office expenses 363,891.34 490,754.03
Transport fees 740,092.37 520,230.75
Others 419,860.62 191,911.51
Total 40,742,161.54 41,124,129.32
35. Administration expenses
Item Reporting Period Same period of last year
R&D expenses 36,526,821.94 36,886,667.23
Employee remuneration 15,003,011.98 17,469,263.60
Depreciation and amortization 6,319,391.07 5,451,979.33
Rental charges 9,747,380.98 9,674,237.24
Insurance expenses 574,767.94 876,240.01
Office expenses 1,456,109.90 1,688,863.30
Travel expenses 1,874,034.60 1,774,416.87
Consultant fees 1,657,306.91 1,360,824.10
Maintenance expenses 2,222,064.47 2,987,379.79
Taxes and surcharges 2,069,710.13 1,987,191.55
Others 3,300,040.15 3,934,059.60
Total 80,750,640.07 84,091,122.62
36. Financial costs
Item Reporting Period Same period of last year
Interest expenses 142,611.32 1,622,486.32
Less: interest income 3,355,910.83 6,378,250.18
Realized financing incomes 328,327.26 375,581.49
Exchange gains and losses -7,477,904.70 -5,073,550.77
Bank charges 1,053,218.95 999,158.69
Total -9,966,312.52 -9,205,737.43
37. Impairment loss on assets
Item Reporting Period Same period of last year
Bad debt loss -1,541,116.89 602,755.00
Impairment loss on inventories 780,305.75 500,978.79
Total -760,811.14 1,103,733.79
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
38. Gains from changes in fair value
Reporting Same period of last
Source of fair value change
Period year
2. Financial assets measured by fair value and the changes be included in the current
27,300.00 4,872,150.00
profits and losses
Of which, gains on the changes in the fair value of derivative financial instruments 27,300.00 4,872,150.00
Financial liabilities measured by fair value and the changes included in the current gains
5,617,750.00 3,928,759.85
and losses
Total 5,645,050.00 8,800,909.85
39. Investment income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by equity method 0.00 0.00
Investment income arising from disposal of long-term equity
0.00 0.00
investments
Investment income received from financial assets measured by fair
value and the changes be included in the current profits and losses 0.00 0.00
during holding period
Investment income received from disposal of financial assets
measured by fair value and the changes be included in the current -4,442,911.95 4,687,335.49
profits and losses during holding period
Investment income from financial products 0.00 1,343,333.33
Others 8,474.00 0.00
Total -4,434,437.95 6,030,668.82
40. Non-operating income
Amount recorded into the
Item Reporting Period Same period of last year non-recurring gains and
losses
Total gains from disposal of non-current assets 542,527.01 909,792.35 542,527.01
Including: Gains from disposal of fixed assets 542,527.01 909,792.35 542,527.01
Penalty income 0.00 0.00 0.00
Government subsidies 2,627,972.00 1,571,749.00 2,627,972.00
Inventory profit 0.00 0.00 0.00
Others 1,178,550.39 747,947.82 1,178,550.39
Total 4,349,049.40 3,229,489.17 4,349,049.40
Government subsidies recorded into current profits and losses:
Reporting Same period of Related to assets/related Whether non-current
Item
Period last year income gains or losses or not
Patents subsidies 0.00 63,000.00 Related to the income Yes
Technology development grants 0.00 0.00 Related to the income Yes
Enterprise development
936,053.00 0.00 Related to the income Yes
subsidies
Subsidies for export letter
179,419.00 751,749.00 Related to the income Yes
guarantees
Special subsidy of Haixi 1,000,000.00 400,000.00 Related to the income Yes
Sales exhibition subsidy 5,000.00 350,000.00 Related to the income Yes
Others 507,500.00 7,000.00 Related to the income Yes
Total 2,627,972.00 1,571,749.00
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41. Non-operating expenses
Recorded in the
amount of the
Item Reporting Period Same period of last year
non-recurring
gains and losses
Loss on disposal of non-current assets 17,353.82 117,195.62 17,353.82
Including: Loss on disposal of fixed assets 0.00 103,977.53 0.00
Loss on scraped fixed assets 16,717.75 13,218.09 16,717.75
Fixed assets inventory loss 636.07 0.00 636.07
Fines 3,448.44 1,000.00 3,448.44
Others 40,922.71 0.00 40,922.71
Total 61,724.97 118,195.62 61,724.97
42. Income tax expense
(1) Lists of income tax expense
Item Reporting Period Same period of last year
Current income tax expense 2,015,929.23 1,008,377.01
Deferred income tax expense 741,396.70 2,292,380.77
Total 2,757,325.93 3,300,757.78
(2) Reconciliation of account profit and income tax expenses:
Reporting
Item
Period
Total profits 27,047,903.54
Current income tax expense accounted by tax and relevant regulations 6,761,975.88
Impact of differing tax rates applicable to subsidiaries -3,940,643.02
Impact of adjustment for prior period tax expenses -773,057.63
Impact of non-taxable income
Impact of non-deductible costs, expenses and losses 14,748.95
Impact of utilisation of prior period deductible temporary differences and taxable temporary differences for which
0.00
no deferred tax asset has been recognised
Impact of current period deductible temporary differences and taxable temporary differences for which no deferred
2,452,403.78
tax asset has been recognised
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 -1,758,102.03
Income tax expense 2,757,325.93
43. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities:
Item Reporting Period Same period of last year
Government subsidies 2,627,972.00 1,571,749.00
Interest income 3,375,534.00 5,941,235.93
Rent income 13,693,655.65 19,349,933.72
Funds in current account and others 15,109,150.18 4,157,219.61
Total 34,806,311.83 31,020,138.26
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Other cash payments relating to operating activities
Item Reporting Period Same period of last year
Penalties and donations paid 448.44 1,000.00
Bank charges 1,043,931.11 919,501.88
Sales expenses and general and administrative expenses paid by cash 57,843,445.56 56,972,697.96
Funds in current account and others 41,760,971.41 33,984,065.62
Total 100,648,796.52 91,877,265.46
(3) Other cash received relevant to investment activities
Reporting Same period of last
Item
Period year
To recover the maturity time deposits that for purpose to earn interest income in financial
75,400,000.00 652,082,700.00
institutions
Total 75,400,000.00 652,082,700.00
(4) Other cash paid relevant to investment activities
Item Reporting Period Same period of last year
Deposits in financial institutions for the purpose of earning interest income 169,327,000.00 651,316,932.63
Total 169,327,000.00 651,316,932.63
(5) Other cash received relevant to financing activities
Item Reporting Period Same period of last year
Inter-bank lending of capital of related parties 4,519,265.19 0.00
Total 4,519,265.19 0.00
(6) Other cash paid relevant to financing activities: naught
44. Supplementary information to the statement of cash flows
(1) Supplementary information to the statement of cash flows
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated from operating activities
Net profit 24,290,577.61 18,155,365.02
Add: Provision for impairment of assets -760,811.14 1,103,733.79
Depreciation of fixed assets, of oil-gas assets, of productive biological assets 24,386,736.40 24,525,145.59
Amortization of intangible assets 898,579.42 482,087.40
Long-term unamortized expenses 780,533.53 1,313,574.47
Losses on disposal of fixed assets, intangible assets and other long-term assets (gains:
-542,527.01 -805,814.82
negative)
Loss on retirement of fixed assets (gain presented by "-" prefix) 17,353.82 13,218.09
Losses from variation of fair value (gain presented by "-" prefix) -5,645,050.00 -8,800,909.85
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Financial cost (gain presented by "-" prefix)) 7,938,507.95 -4,184,003.38
Investment loss (gain presented by "-" prefix) 4,434,437.95 -6,030,668.82
Decrease in deferred income tax assets ((gain presented by "-" prefix) 732,126.64 1,561,558.27
Increase in deferred income tax liabilities
9,270.06 730,621.48
(“-” means decrease)
Decrease in inventory (gain presented by "-" prefix) 68,280,511.94 -15,311,458.47
Decrease in accounts receivable from operating activities (gain presented by "-" prefix) 34,939,749.18 23,609,513.78
Increase in payables from operating activities (“-” means decrease) -219,932,002.64 -87,590,438.01
Others
Net cash flows generated from operating activities -60,172,006.29 -51,228,475.46
2. Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible bonds to be expired within one year
Fixed assets under finance lease
3. Movement of cash and cash equivalents:
Closing balance of cash equivalents 379,934,827.25 370,252,766.71
Less: cash at the beginning of the period 675,803,904.11 469,965,448.01
Add: Closing balance of cash equivalents
Less: Cash at the beginning of the period
Net increase in cash and cash equivalents -295,869,076.86 -99,712,681.30
(2) Net Cash paid for obtaining the subsidiary
Item Amount
Cash or cash equivalent paid for enterprise combination 6,278,499.22
Of which: purchase 100% equity of TsannKuen XianRui Intelligence& Smart Co., Ltd. 6,278,499.22
Less: cash and cash equivalents held by subsidiary on purchase date 184,957.53
Of which: --
Add: cash or cash equivalent paid for enterprise combination in previous period
Of which: --
Net Cash paid for obtaining the subsidiary 6,093,541.69
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(3) Net Cash receive from disposal of the subsidiary: naught
(4) Cash and cash equivalents
Item Reporting Period Same period of last year
I. Cash 379,934,827.25 370,252,766.71
Including: Cash on hand 733,184.57 787,002.16
Bank deposit on demand 379,201,642.68 369,465,764.55
Other monetary funds on demand 0.00 0.00
Payable of due from central bank 0.00 0.00
Deposits in other banks 0.00 0.00
Call loans to banks 0.00 0.00
II. Cash and cash equivalents 0.00 0.00
Including: Debt instrument matured within three months 0.00 0.00
III. Closing balance of cash and cash equivalents 379,934,827.25 370,252,766.71
Notes: the restricted cash and cash equivalents of the Company and the subsidiaries of the Group used
Note1: the cash and cash equivalents exclude the restricted cash and cash equivalents the Company and the
subsidiaries of the Group used.
Note2: Time deposits for the purpose of earning interest income in financial institutions is CNY174,327,000
and pledge of bank CNY19,640.61.listed as the other cash payments relating to investing activities and
deducted from the balance of cash and cash equivalents at the end of current year.
45. The assets with the ownership or use right restricted
Item 2016.06.30 Restricted reason
Time deposits for the purpose of earning interest income in financial
Monetary capital 174,346,640.61
institutions and pledge
Total 174,346,640.61
46. Foreign currency monetary items
(1) Foreign currency monetary items
Item Closing foreign currency balance Exchange rate Closing convert to RMB balance
Monetary capital
Including: USD 38,016,334.54 6.6312 252,093,917.52
JPY 18,667,195.30 0.0645 1,203,866.09
IDR 3,976,526,285.38 0.0005 1,992,236.07
EUR 16,535.65 7.3750 121,950.43
GBP 10,354.60 8.9212 92,375.46
HKD 1,625,743.43 0.8547 1,389,474.14
HUF 81,016.00 0.0229 1,852.03
FRF 7.00 6.7729 47.41
TWD 3,343,579.00 0.2054 686,841.79
Total 257,582,560.94
Short-term loans
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Including: USD 10,000,000.00 6.6312 66,312,000.00
TWD 22,000,000.00 0.2054 4,519,265.19
Total 70,831,265.19
Account receivable
Including: USD 25,713,826.91 6.6312 170,513,110.77
IDR 11,400,000.00 0.0005 5,700.00
JPY 37,003,220.00 0.0645 2,386,374.66
Total 172,905,185.43
Accounts payable
Including: USD 10,156,288.13 6.6312 67,348,377.85
EUR 631,694.34 7.3750 4,658,745.76
HKD 1,199,447.18 0.8547 1,025,167.50
JPY 2,560,522.00 0.0645 165,153.67
IDR 197,573,380.62 0.0005 98,786.69
Total 73,296,231.47
Other accounts receivable
OF which: EUR 1,344.00 7.3750 9,912.01
HKD 8,000.00 0.8547 6,837.36
JPY 460,600.00 0.0645 29,704.55
USD 21,477.05 6.6312 142,418.61
IDR 1,464,715,258.00 0.0005 732,357.63
TWD 3,226,171.00 0.2054 662,723.27
Total 1,583,953.43
Other account payable
Of which: HKD 180,727.55 0.8547 154,462.41
JPY 59,579.00 0.0645 3,842.31
USD 693,672.28 6.6312 4,599,879.70
EUR 1,030.00 7.3750 7,596.25
IDR 1,138,200,597.00 0.0005 569,927.33
TWD 1,957,304.00 0.2054 402,071.61
Total 5,737,779.61
(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 scope of consolidation financial statements
1. Business combination not under the same control: naught
2. Business combination under the same control
On 24 April 2015, the Company held the 2015 2nd Board of Directors had approved the resolutions, of which the controlling
subsidiary Zhangzhou Tsann Kuen Industrial Co., Ltd. (named “Zhangzhou Tsann Kuen” for short with the shareholding of 75%) and
firstly set up the wholly owned subsidiary Orient Star Investments Limited (named “Orient Star Investments”) then secondly Orient
Star Investments invested and purchased the 100% equities of the wholly owned subsidiary Tsannkuen Edge Intelligence Co., Ltd.
(named “Tsannkuen Edge Intelligence” for short) of STAR COMGISTIC CAPITAL CO., LTD. (named “STAR COMGISTIC
CAPITAL” for short). Orient Star Investments received the relevant letter about approving the purchase of the 100% equities of
Tsannkuen Edge Intelligence from Taiwan competent authorities on 15 March 2016 and amount that STAR COMGISTIC CAPITAL
received the purchase of the whole equities of Tsannkuen Edge Intelligence by Orient Star Investments on 21 March 2016 was of
USD968,545.48. And had completed the relevant alternation procedures of the commercial registration of the equity transfer on 19
April 2016 and with the details, 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 Tsannkuen Edge Intelligence and the Related
Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 25 April 2015, the Correcting
Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned Subsidiary
which Purchased the Equity of Tsannkuen Edge Intelligence and the Related Transactions that disclosed on Securities Times, Hong
Kong Ta Kung Pao and www.cninfo.com.cn on 28 April 2015, Announcement on the Completion of the Commercial Registration
Procedures of the Hong Kong Wholly-owned Subsidiary of Zhangzhou Tsann Kuen that disclosed on Securities Times, Hong Kong
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Ta Kung Pao and www.cninfo.com.cn on 21 May 2015, Announcement on the Controlling Subsidiary of the Company Zhangzhou
Tsann Kuen Purchased Tsannkuen Edge Intelligence and the Progress of the Related Transactions that disclosed on Securities Times,
Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 March 2016 and the Announcement on the Completion of the Commercial
Alternation Registration of the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen through the Purchase of Tsannkuen
Edge Intelligence by Hong Kong Subsidiary that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on
21 April 2016.
3. Other reasons for the changes in combination scope
On 2 March 2016, the Company established Xiamen Tsannkuen Home Appliance Design Co., Ltd. (“XTHAD”) with resgistration
capital of CNY1 million.
VIII. Equity in other main entities
1. The equity in subsidiaries
(1) The structure of the enterprise group
Main Holding percentage (%)
Registration Nature of
Name operating Acquired method
place business Directly Indirectly
place
Manufacture
TsannKuen (Zhangzhou) Acquired through
Zhangzhou Zhangzhou home electronic 75 75
Enterprise Co., Ltd. incorporation
appliance
Acquired through
Manufacture business
TsannKuen (Shangha)
Shanghai Shanghai home electronic 46.875 62.5 combination under
Enterprise Co., Ltd.
appliance common
control
TsannKuen (Zhangzhou)
Manufacture
South Port Electronics Acquired through
Zhangzhou Zhangzhou home electronic 56.25 75
Enterprise Co., Ltd. incorporation
appliance
(TKN)
Shanghai Canxing Sale of home Acquired through
Shanghai Shanghai 56.25 75
Trading Co.,Ltd (STD) appliance incorporation
Acquired through
East Sino Development business
Investment,
Limited. Hong Kong Hong Kong 75 100 combination under
Trading
(East Sino) common
control
Acquired through
Manufacture business
Pt.Star Comgistic
Indonesia Indonesia home electronic 75 100 combination under
Indonesia(SCI)
appliance common
control
Acquired through
business
Orient Star Investments Investment,
Hong Kong Hong Kong 75 100 combination under
Limited (OSI) Trading
uncommon
control
Design Industry. Acquired through
R&D business
Tsann Kuen Xianrui
Taiwan Taiwan Development 75 100 combination under
Intelligence Co., Ltd.
Service common
Business control
Xiamen Tsannkuen Home
Professional Acquired through
Appliance Design Co., Xiamen Xiamen 100 100
design services incorporation
Ltd. (“XTHAD”)
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(2) Significant not wholly owned subsidiary
Holding proportion Profit and loss Dividends
of minority attributable to attributable to Total amount of
shareholders (%) minority equity minority minority equity at
Name
during current year shareholders the end of current
year
TKL 25 9,082,226.85 13,824,332.69 260,404,632.99
TKS 53.125 858,214.43 35,042,787.82
SCI 25 -2,539,657.18 23,223,207.73
(3) The main financial information of significant not wholly owned subsidiary
Name of 2016.06.30
Non-current Current Non-current
subsidiaries Current assets Total assets Total liabilities
assets liabilities liability
TKL 1,446,629,186.39 332,182,795.49 1,778,811,981.88 557,441,913.00 4,095.00 557,446,008.00
TKS 74,397,172.80 19,893,925.53 94,291,098.33 3,146,765.94 3,146,765.94
SCI 39,045,616.21 70,075,412.67 109,121,028.88 15,981,500.89 246,506.61 16,228,007.50
(Continued)
Name of 2015.12.31
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
assets liabilities liability
TKL 1,764,872,221.80 262,407,959.13 2,027,280,180.93 712,182,173.58 712,182,173.58
TKS 71,502,200.29 21,284,942.62 92,787,142.91 3,258,272.98 3,258,272.98
SCI 46,200,836.76 70,963,481.35 117,164,318.11 22,361,305.46 241,391.76 22,602,697.22
(Continued)
Reporting Period
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKL 757,339,909.16 36,328,907.41 94,566,449.14
TKS 1,319,683.80 1,615,462.46 2,516,500.80
SCI 30,021,531.63 -10,158,628.72 -2,690,472.42
(Continued)
Same period of last year
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
TKL 849,902,598.38 21,350,785.76 -46,378,546.22
TKS 3,074,552.27 -1,726,465.40 279,283.47
SCI 35,414,003.17 -4,647,501.10 -5,114,464.46
2. The transactions which change the owner’s equity of subsidiaries, and through the transactions that the
owner still control the subsidiaries
(1) Note to owner’s equity share changed in subsidiary
The subsidiary of the Company - TKL purchased 0.31% of capital which is held by Hong KongFillman investment Co.,Ltd. of SCI
through OSI, and leading to the proportionofthe shareholding of SCI by TKL increase to 100% for East Sino. As of the reporting date,
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the equity transfer was still under processing.
In order for operation, business and investment structure integration, on 27 January 2016, the board of the Company resolved to
transfer its entire 62.5% stake in Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (“TKS”) to TsannKuen (Zhangzhou) Enterprise
Co., Ltd. (“Zhangzhou Tsann Kuen”) for RMB0.13 billion, and the formalities of share transfer and business license alteration were
completed on 24 May 2016. For details, please refer to the Announcement on Transfer of Stake in Controlled Subsidiary TKS dated
28 January 2016, the Announcement on Progress on Transfer of Stake in Controlled Subsidiary TKS dated 27 April 2016 and the
Announcement on Completion of Business License Alteration Formalities of Transfer of Stake in Controlled Subsidiary TKS dated
25 May 2016, all disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn.
(2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of
the parent company
Item TKS
Disposal consideration
-Cash 32,500,000.00
Total 32,500,000.00
Less: subsidiary net assets proportion calculated by share
13,809,097.47
proportion disposal
Difference 18,690,902.53
Including: adjustment of capital reserves 18,690,902.53
IX. The risk related 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.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The
company bears the foreign exchange risk primarily concerned with USD, 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. On 30 June 2016, except the following
assets or liabilities are recorded in foreign currency, the others are recorded in CNY. Foreign
exchange risk of the assets and liabilities in foreign currencies may have an impact on the
Company's performance of operation.
Item 2016.06.30 2015.12.31
Monetary capital 257,582,560.94 262,950,990.89
Account receivable 172,905,185.43 198,184,235.89
Other accounts receivable 1,583,953.43 1,769,024.57
Accounts payable 73,296,231.47 51,548,246.08
Other account payable 5,737,779.61 2,777,186.80
Short-term loans 70,831,265.19 0.00
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- cash flow change risk
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 could cause the Company’s maximum credit risk of financial losses mainly from the losses of
financial assets, which are resulted by the other party of contract fails to fulfill the obligations, as at
30 June 2016.
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.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Liquidity Risk
When managing liquidity risk, the Company’s management believes that maintaining adequate cash
and cash equivalents, and monitoring that at same time, in order to meet the needs of operation of
the Company, and to reduce the impact of fluctuations in cash flows. The management of the
Company monitors the use of bank borrowings and ensures to abide by loan agreements.
X. 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 items Total
items at level 1 items at level 2 at level 3
I. Consistent fair value measurement
Financial assets measured by fair value and the
changes be included in the current profits and losses
1. Trading financial assets
(1) Debt instruments investment
(2) Equity tool investment
(3) Derivative financial assets 27300.00 27300.00
Total assets of consistent fair value measurement 27300.00 27300.00
II. Trading financial liabilities
including: tradable bond issued
Derivative financial liabilities 2,844,750.00 2,844,750.00
Others
Total liabilities of consistent fair value measurement 2,844,750.00 2,844,750.00
2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1
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.Details of the parent
Whether related Type of Registration Legal
Name of parent company Nature of business
transaction incorporation place Representative:
Manufacture and
STAR COMGISTIC Final control
INC Taiwan Yang Wenfang sales electrical
CAPITAL CO.,LTD. company
equipment
(Continued)
Proportion of voting
Proportion of share
rights owned by The ultimate
held by parent Organization
Name of parent company Registered capital parent company controller of
company against code
against the the enterprise
the Company (%)
Company (%)
STAR COMGISTIC TWD
42.90 44.68 Wu Cankun 28986660
CAPITAL CO.,LTD. 1,343,000.00thousand
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Subsidiaries of the Company
See Note VIII.1 “The equity in subsidiaries”.
3. Information on the joint ventures and associated enterprises of the Company
No such case in Reporting Period.
4. Details of other related parties
Name Relationship Organization code
EUPA Industry Corporation Limited Shareholder 12959659-000-07-15-6
Hong Kong Fordchee Development Limited Shareholder 14676920-000-01-15-5
Fillman Investments Limited Shareholder 16269694-000-07-15-4
Same ultimate holding
TsannKuen Japan Co., Ltd. 0105-01-021064
company
The company directly
controlled by the key
Xiamen Shengming Electronics Co., Ltd. 61201968-5
management and closed
family members
Same ultimate holding
International Travel Co., Ltd. 80170076
company
Same ultimate holding
Star International Travel Co., Ltd. 80355209
company
Ultimate holding company
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN XIAMEN 31055232-9
have equity
Same ultimate holding
TsannKuen Enterprise Co., Ltd. 69568009
company
Same ultimate holding
Fast Three E-commerce Service Co., Ltd. 54676114
company
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
Reporting The approval Whether exceed trade Same period of
Related party Content
Period trade credit credit or not last year
Xiamen Shengming Electronics Purchase
14,355,901.32 42,000,000.00 No 16,625,490.15
Co., Ltd. of goods
STAR COMGISTIC CAPITAL Purchase
0.00 0.00 No 2,297,732.78
CO.,LTD. of goods
Purchase
TsannKuen Enterprise Co., Ltd. 12265.48 0.00 Yes 0.00
of goods
Total 14,368,166.80 42,000,000.00 18,923,222.93
Notes: The related transactions above over the approved line was because controlled sub-subsidiary Orient Star Investments Limited
acquired related party Star Comgistic Capital Co., Ltd.’s entire stake in Tsannkuen Edge Intelligence Co., Ltd. in this March, and the
formerly non-related transactions between Tsannkuen Edge Intelligence and some related parties of the Company (these transactions
had occurred before the equity transfer and are likely to continue) have become related transactions due to the equity transfer. The
Company did not disclose an announcement on these transactions after the equity transfer because they were of a small amount (not
reaching the disclosable standard).
② The situation of sells goods or rendering services
Related party Content Reporting Period Same period of last year
TsannKuen Japan Co., Ltd. Sale of goods 0.00 2,664,287.68
STAR COMGISTIC CAPITAL CO.,LTD. Sale of goods 7,864,689.34 6,763,782.24
Total 7,864,689.34 9,428,069.92
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Information of related lease
① The Company is as the leasor
Category of Reporting Same period of last
Name of lessee
leased assets Period year
Tsann Kuen Xiamen Trading Co., Ltd.
（ ） House property 0.00 750,000.00
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN XIAMEN House property 32,760.00 65,400.00
Total 32,760.00 815,400.00
② The Company is as the lessee
Category of leased
lessor Reporting Period Same period of last year
assets
STAR COMGISTIC CAPITAL CO.,LTD. House property 78,672.13 62,682.97
Total 78,672.13 62,682.97
(3) Assets transfer, Debt restructuring between related parties
Same period of last
Related party Content Reporting Period
year
TsannKuen Enterprise Co., Ltd. Sale of fixed assets 6,882.63 125,740.89
Total 6,882.63 125,740.89
PT.ShenMin Sukabumi Purchase of the fixed assets 0.00 833,976.44
Total 0.00 833,976.44
(4) Inter-bank lending of capital of related parties ：
Amount borrowed and
Related party Initial date Due date Note
loaned
Borrowed:
STAR COMGISTIC CAPITAL CO.,LTD. 12,000,000.00 2016/4/1 2017/3/27 Loan of TWD
STAR COMGISTIC CAPITAL CO.,LTD. 2,000,000.00 2016/4/7 2017/3/27 Loan of TWD
STAR COMGISTIC CAPITAL CO.,LTD. 3,000,000.00 2016/4/15 2017/3/27 Loan of TWD
STAR COMGISTIC CAPITAL CO.,LTD. 3,000,000.00 2016/5/9 2017/3/27 Loan of TWD
STAR COMGISTIC CAPITAL CO.,LTD. 2,000,000.00 2016/6/15 2017/3/27 Loan of TWD
Total 22,000,000.00
(5) Other related-party transactions
Same period of last
Related party Content Reporting Period
year
Sales revenue
TsannKuen Enterprise Co., Ltd. Render service 20,443.50 0.00
Total 20,443.50 0.00
Payment
STAR COMGISTIC CAPITAL CO.,LTD. Procurement agency fee(Note1) 0.00 108,256.44
Star International Travel Co., Ltd. Air ticket service charge 167,138.95 32,708.28
STAR COMGISTIC CAPITAL CO.,LTD. Loan interests 14,216.98 0.00
108
2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total 181,355.93 140,964.72
Notes: the Company and its subsidiary entrusted related companies with purchasing raw material, model and
equipments, the relevant agent fee(including service charge)was 110% payment of the actual operation expenses
of the agent.
6. Receivables and payables of related parties
(1) Receivables
2016.06.30 2015.12.31
Name o f item Bad debt
Book balance Bad debt provision Book balance
provision
Account receivable:
TsannKuen Japan Co., Ltd. 0.00 0.00 364,434.74 0.00
STAR COMGISTIC CAPITAL CO.,LTD. 3,878,197.41 0.00 3,768,255.21 0.00
Total 3,878,197.41 0.00 4,132,689.95 0.00
(2) Payables
Name o f item 2016.06.30 2015.12.31
Accounts payable:
Xiamen Shengming Electronics Co., Ltd. 7,768,854.04 11,011,858.28
STAR COMGISTIC CAPITAL CO.,LTD. 0.00 31,418.63
Total 7,768,854.04 11,043,276.91
Prepayment:
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN
10,056.60 9,060.00
XIAMEN
STAR COMGISTIC CAPITAL CO.,LTD. 0.00 40,749.12
Total 10,056.60 49,809.12
Other account payable:
TsannKuen Japan Co., Ltd. 0.00 3,476.28
STAR COMGISTIC CAPITAL CO.,LTD. 4,564,422.37 60,616.98
Star International Travel Co., Ltd. 0.00 26,744.02
TsannKuen Enterprise Co., Ltd. 53.20 150,084.82
Fast Three E-commerce Service Co., Ltd. 431.38 0.00
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN
13,720.00 48,200.00
XIAMEN
Total 4,578,626.95 289,122.10
XII. Stock payment
No such cases in Reporting Period.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIII. Commitments and contingency
1. Significant commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the Company
signed were as followed:
Unit: CNY ten thousands
Item 2016.06.30 2015.12.31
Minimum lease payments of irrevocable operating lease
Rental of houses
1 year after balance date 3,727 3,727
2 year after balance date 3,727 3,727
3 year after balance date 3,727 3,727
Future years 122,984 126,711
Total 134,165 137,892
2.Contingency
The subsidiary of the Company -TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL) signed the < Product Supply
Agreement> with XindaElectromechanics 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 2 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 Xindaamounting 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 cour 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:
a. TKL should pay goods payments amount USD479, 089.06 to plaintiff Xinda within 15 days from the date on which the judgement
becomes effective, equivalent to CNY3, 071,535.78.
b. Plaintiff Xinda and the third party BoLuoLianyuan industry Co., Ltd. (hereafter Lianyua) should jointly pay the liquidated damage
for CNY1,233,399.70 to TKL within 15 days from the date on which the judgement becomes effective.
c. Unperformed 10 orders entered into by TKL, Xinda and Lianyuan are declared cancelled.
d. Reject other claims partitioned by the plaintiff Xinda.
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
e. Reject other claims partitioned by TKL. After the first judgment, 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.
(2) The subsidiary of the Company - TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS) signed the Plant Leasing
contract with Shanghai Liangxin Industrial Co., Ltd. (hereafter, SHLX) at November 2007, and leased the plant (including plant
affiliated land, ground buildings and related ancillary equipment, etc) located in No. 4407 Caoan Road Jiading District, Shanghai to
SHLX. The real estate certificate of leasehold is Hu Fangdi Jia Zi (2006) No. 011945, the lease period is from November 2007 to
November 2019, the purpose to the lessee for the use of legitimate factory and storage. The provisions of contract point out if the
lessee need to build plant because of production should to obtain government and relevant authorities’ agreements. Except to
confiscate the deposit, the lessor can terminate the contract and does not have to undertake any responsibility if the lessee sublease
the leasehold, make improvement or addition to the leasehold without to obtain the written consent from lessor.
TKS submitted the civil action to Shanghai Jiading District People's Court by cause of action “the lessee SHLX decorated and
subleased the leasehold to Shanghai Hujia Fruit Sales Limited Company (hereafter, SHHJ) without to obtain the written consent from
lessor” on 28 October 2015, and required early termination of the Plant Leasing contract with SHLX, and required SHHJ to terminate
construction and to repristinate the leasehold. In July 2016, TKS appealed to Shanghai Jiading District People's Court by cause of
requiring SHXL repristinate the leasehold.
Up to the end of the reporting date, the civil action is still in process.
XIV. Events after balance sheet date
1. Significant events had not adjusted
□ Applicable √ Not applicable
2. Profit distribution
Unit: RMB Yuan
Planning allocation of profits or dividends 18539,168.00
Profits or dividends approved, reviewed and issue by the declaration 18539,168.00
XV. Other significant events
On 15 March 2016, one of the Company's product(No.TSK-2131GPN) on“3.15”Evening held by CCTV was disqualification in spot
check of national quality surveillance examination. Due to the cases, the stock of the Company suspended for one day, the Company
set up emergency project working group, and conducted the follow-up recall, rectify and reform to the product. The relevant details
please referred to Announcement on Dealing with Quality Problem of the Company and the Stock Resumption 0f Trading disclosed
on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 17 March 2016
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
As of so far, the Company and its subsidiary TsannKuen (Zhangzhou) Enterprise Co., Ltd. had completed the recall, rectify and
reform, and had submitted relevant explanation and reform report to the government quality inspection department, and wait for the
reviewing and recognizing of the punishment. The Company will disclose the relevant information after receiving the punishment
file.
XVI. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
2016.06.30
Item Book balance Bad debt provision
Book value
Amount Proportion(%) Amount Withdrawal proportion(%)
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision separately
accrued
Accounts receivable withdrawal of
bad debt provision of by credit risks 0.00 0.00 0.00 0.00 0.00
characteristics:
Portfolio by age 40,598,515.96 98.95 444,150.55 1.09 40,154,365.41
Related party group 429,673.02 1.05 0.00 0.00 429,673.02
Subtotal 41,028,188.98 100.00 444,150.55 1.08 40,584,038.43
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision separately
accrued
Total 41,028,188.98 100.00 444,150.55 1.08 40,584,038.43
(Continued)
2015.12.31
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal proportion (%)
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Accounts receivable withdrawal of
bad debt provision of by credit 0.00 0.00 0.00 0.00 0.00
risks characteristics:
Portfolio by age 23,013,044.53 95.39 128,400.47 0.56 22,884,644.06
Related party group 1,112,512.12 4.61 0.00 0.00 1,112,512.12
Subtotal 24,125,556.65 100.00 128,400.47 0.53 23,997,156.18
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Total 24,125,556.65 100.00 128,400.47 0.53 23,997,156.18
① Accounts receivable using the age analysis method for measurement of allowance for bad debt
2016.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 40,598,515.96 444,150.55 1.09
Including: 1-90 days 37,389,982.03 0.00
91-180 days 2,592,048.15 259,204.82 10.00
181-270 days 616,485.78 184,945.73 30.00
Total 40,598,515.96 444,150.55 1.09
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
② In the groups, accounts receivable using related party method for measurement of allowance for bad debt
2016.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 429,673.02 0.00 0.00
Total 429,673.02 0.00 0.00
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of allowance for bad debts recognized during the Reporting Period is CNY315, 750.08; the amount of recovered or
reversed allowance for bad debts during the Reporting Period is of CNY0.
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
(4) Details of top five accounts receivable
The total amount of top five accounts receivables summarized by debtors as at the end of the Reporting Period is
CNY40,833,005.43, accounting for 99.52% of the total accounts receivable as at the end of the Reporting Period,
the total corresponding allowance for bad debts is CNY518,355.55.
2. Other accounts receivable
(1) Disclosure by classification
2016.06.30
Book Bad debt
Item balance provision
Book value
Proportion Withdrawal
Amount Amount
(%) proportion (%)
Other accounts receivable with insignificant single amount for which bad
0.00 0.00 0.00 0.00 0.00
debt provision separately accrued
Other accounts receivable withdrawn bad debt provision according to credit
0.00 0.00 0.00 0.00 0.00
risks characteristics
Portfolio by age 566,372.26 73.19 86,304.10 15.24 480,068.16
Related party group 11,480.67 1.48 0.00 0.00 11,480.67
Subtotal 577,852.93 74.67 86,304.10 14.94 491,548.83
Other accounts receivable with insignificant single amount for which bad
196,000.00 25.33 0.00 0.00 196,000.00
debt provision separately accrued
Total 773,852.93 100.00 86,304.10 11.15 687,548.83
(Continued)
2015.12.31
Bad debt
Item Book balance
provision
Book value
Proporti Withdrawal
Amount Amount
on (%) proportion (%)
Other accounts receivable with insignificant single amount for which bad debt
0.00 0.00 0.00 0.00 0.00
provision separately accrued
Other accounts receivable withdrawn bad debt provision according to credit
0.00 0.00 0.00 0.00 0.00
risks characteristics
Portfolio by age 495,720.01 16.19 50,715.73 10.23 445,004.28
Related party group 2,339,840.30 76.43 0.00 0.00 2,339,840.30
Subtotal 2,835,560.31 92.62 50,715.73 1.79 2,784,844.58
Other accounts receivable with insignificant single amount for which bad debt
226,000.00 7.38 0.00 0.00 226,000.00
provision separately accrued
Total 3,061,560.31 100.00 50,715.73 1.66 3,010,844.58
①In the groups, other receivable using the age analysis method for measurement of allowance for bad debt
2016.06.30
Aging
Other accounts receivable Bad debt provision Proportion(%)
Within 1 year 491,888.16 11,820.00 2.40
Including: 1-90 days 452,488.16 0.00
91-180 days 17,200.00 1,720.00 10.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
181-270 days 5,000.00 1,500.00 30.00
271-365 days 17,200.00 8,600.00 50.00
1-2years 74,484.10 74,484.10 100.00
Total 566,372.26 86,304.10 15.24
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB35,588.37; the amount of the reversed or
collected part during the Reporting Period was of RMB000.
(3) Particulars of the actual verification of other accounts receivable during the Reporting Period
There was no actual write-off other accounts receivable
(4)Disclosure by account nature
Nature 2016.06.30 2015.12.31
Non-related party 762,372.26 721,720.01
Related 11,480.67 2,339,840.30
Total 773,852.93 3,061,560.31
(5) The top five other account receivable classified by debtor at period-end
Items Nature Amount Aging % of total Closing balance of bad debt provision
No.1 Water & electricity fees 245,517.79 0-30 days 31.73
No.2 Margin 156,000.00 Over 1 years 20.16
No. 3 Premium 140,000.00 0-30 days 18.09
No. 4 Litigation costs 34,400.00 120-360 days 4.45 10,320.00
No. 5 Margin 30,000.00 Over 1 years 3.88
Total 605,917.79 7831 10,320.00
3.Long-term equity investment
(1) Long-term equity investment
2016.06.30 2015.12.31
Item Depreciation
Book balance Book value Book balance Depreciation reserves Book value
reserves
Investment to the subsidiary 922,914,701.56 922,914,701.56 1,116,460,573.74 130,646,542.91 985,814,030.83
Total 922,914,701.56 0.00 922,914,701.56 1,116,460,573.74 130,646,542.91 985,814,030.83
(2) Investment to the subsidiary
Withdrawn
Closing balance
impairment
Investee Opening balance Increase Decrease Closing balance of impairment
provision in the
provision
Reporting Period
TKS 194,545,872.18 0.00 194,545,872.18 0.00 -130,646,542.91 0.00
TKL 921,914,701.56 0.00 0.00 921,914,701.56 0.00 0.00
Xiamen Tsannkuen
Home Appliance 0.00 1,000,000.00 0.00 1,000,000.00 0.00 0.00
Design Co., Ltd.
Total 1,116,460,573.74 1,000,000.00 194,545,872.18 922,914,701.56 -130,646,542.91 0.00
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4.Revenues and operating costs
Item Reporting Period Same period of last year
Main operations 54,967,379.49 69,782,827.53
Other operations 9,316,802.67 8,891,978.93
Total 64,284,182.16 78,674,806.46
Costs of main operations 50,167,049.69 61,811,239.11
Other operation cost 1,244,429.96 2,264,495.34
Total 51,411,479.65 64,075,734.45
5.Investment income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost method 41,472,998.07 28,286,287.22
Investment income arising from disposal of long-term equity
66,100,670.73
investments
Others 8,474.00 0.00
Total 107,582,142.80 28,286,287.22
XVII. Supplementary materials
1.Items and amounts of extraordinary gains and losses
Item Amount Explanation
Gains or losses arising from disposal of non-current assets(including assets Mainly was
525,173.19
impairment withdrawn had been offset) non-current assets
Tax return and relief approved ultra vires or without any official approval
documents
Tax rebates, reductions or exemptions due to approval beyond authority or the
2,627,972.00
lack of official approval documents
Capital occupation charges on non-financial enterprises that are 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
Gains and losses from debt restructuring
Expenses on business reorganization, such as expenses on staff arrangements,
integration, etc.
Gain/loss on the part over the fair value due to transactions with distinctly
unfair prices
Loss before Tsannkuen
Current net gains and losses of subsidiaries acquired in business combination
-2,224,231.59 Edge Intelligence Co.,
under the same control from period-begin to combination date
Ltd.
Profit and loss from contingencies irrelative to the normal business operations
of company
Mainly was the income
Gain/loss from change of fair value of transactional assets and liabilities, and
from sale of forward
investment gains from disposal of transactional financial assets and liabilities
1,202,138.05 foreign exchange
and available-for-sale financial assets, other than valid hedging related to the
contract investment and
Company’s common businesses
change in fair value
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Amount Explanation
Depreciation reserves returns of receivables with separate depreciation test
Gain/loss on entrustment loans
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-operating income and expenses other than the above 1,134,179.24
Project confirmed with the definition of non-recurring gains and losses and
losses
Less: Income tax effects 848,609.22
Minority interests effects (after tax) 571,672.87
Total 1,844,948.80
2.Yield Rate of Net Assets and Earnings Per Share
Weighted average EPS (Yuan/share)
Profit as of Reporting Period yield rate of net
assets% EPS-basic EPS-diluted
Net profit attributable to common
3.11 0.10 0.10
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
2.79 0.09 0.09
deduction of non-recurring profit and
loss
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: naught
(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards: naught
(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: naught
4. Reasons and details of extraordinary movement of significant items of financial statements
Unit: RMB Yuan
Opening YOY
Item Closing balance Reason of change
amount Increase
Financial assets measured by
fair value and the changes be Mainly due to the valuation of interests of forward
27,300.00 0.00 100.00
included in the current profits foreign exchange contract;
and losses
Notes receivable 3,388,917.00 1,483,710.00 128.41 Mainly due to the undue note receivable;
Other accounts receivable 25,608,750.65 50,308,515.39 -49.10 Mainly due to receiving tax refund;
Mainly due to purchasing CNY 150 million financial
Other current assets 238,495,735.19 89,858,232.99 165.41
products;
Construction in progress 396,547.71 210,796.20 88.12 Mainly due to contracting construction engineering;
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2016 Semi-annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Opening YOY
Item Closing balance Reason of change
amount Increase
Mainly due to prepayment of equipment checked and
Other non-current assets 1,991,186.65 6,264,771.15 -68.22
accepted;
Short-term loans 70,831,265.19 0.00 100.00 Mainly due to increase of bank short term loan;
Financial liabilities measured
by fair value and the changes Mainly due to the valuation of interests loss of forward
2,844,750.00 8,462,500.00 -66.38
included in the current gains foreign exchange contract;
and losses
Mainly due to the decrease of operating income and the
Accounts payable 397,421,000.82 575,930,730.06 -30.99
relevant payment purchase of material decreased;
Mainly due to withdrawal of interest of bank short term
Interest payable 140,337.30 0.00 100.00
loan;
Mainly due to the increase of converted difference of the
Other comprehensive income 4,773,167.33 3,231,050.04 47.73
foreign currency statement;
Reporting Same period of YOY
Item Reason of change
Period last year Increase
Asset impairment loss -760,811.14 1,103,733.79 -168.93 Mainly due to the receivable of bad debt provision;
Gains on the changes in the fair Mainly due to decrease of valuation of interests of
5,645,050.00 8,800,909.85 -35.86
value forward foreign exchange contract;
Mainly due to decrease of delivery income of forward
Investment income -4,434,437.95 6,030,668.82 -173.53
foreign exchange contract;
Non-operating gains 4,349,049.40 3,229,489.17 34.67 Mainly due to the increase of government subsidy;
Mainly due to the decrease of loss on scraped fixed
Non-operating expenses 61,724.97 118,195.62 -47.78
assets;
Net cash flows generated from
37,283,764.50 198,385,922.40 -81.21 Mainly due to the YOY decrease of loan;
financing activities
Net increase in cash and cash
-295,869,076.86 -99,712,681.30 -196.72 Mainly due to the YOY decrease of loan;
equivalents
117
