2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2017 SEMI-ANNUAL REPORT
(Unaudited)
August 2017
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Tsann Kuen (China) Enterprise Co., Ltd. (hereinafter referred to as “the
Company”) warrant that this Report is factual, accurate and complete without any false 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.
Investors are kindly reminded to read the full text of this Report carefully and pay special attention
to the risks mentioned in “X. Risks facing the Company and countermeasures” under “Section IV.
Performance Discussion & Analysis”.
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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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Contents
Section I. Important Statements, Contents & Terms......................................................... 2
Section II. Company Profile & Financial Highlights.......................................................... 5
Section III. Business Highlights............................................................................................ 8
Section IV. Performance Discussion & Analysis............................................................... 10
Section V. Significant Events...............................................................................................22
Section VI. Change in Shares & Shareholders.................................................................. 34
Section VII. Preference Shares............................................................................................37
Section VIII. Directors, Supervisors, Senior Management Staff & Employees............. 37
Section IX. Corporate Bonds...............................................................................................38
Section X. Financial Report.................................................................................................38
Section XI. Documents Available for Reference................................................................39
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Contents
Xiamen Tsann Kuen, TKC B,
Refers to TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Company, 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.
South Port Electronics, TKN Refers to Tsann Kuen (Zhangzhou) South Port Electronics Enterprise 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
Orient Star Investments Refers to Orient Star Investments Limited
Tsannkuen Edge Intelligence Refers to Tsannkuen Edge Intelligence Co., Ltd.
TKCD Refers to Xiamen Tsannkuen Home Appliance Design Co., Ltd.
SCPDI Refers to Pt.Star Comgistic Property Development Indonesia
RMB Refers to RMB Yuan
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information about the Company
Stock name TKC B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Chinese name of the Company 厦门灿坤实业股份有限公司
Abbr. of the Chinese name of the Company 闽灿坤
English name of the Company TSANNKUEN(CHINA) ENTERPRISE CO. LTD
Abbr. of the English name of the Company TKC
Legal representative of the Company Pan Zhirong
II. Contact information
Board Secretary Securities Representative
Name Sun Meimei Dong Yuanyuan
TSANN KUEN Industrial Park, Taiwanese TSANN KUEN Industrial Park, Taiwanese
Contact address Investment Zone, Zhangzhou, Fujian Province, Investment Zone, Zhangzhou, Fujian Province,
P.R.China P.R.China
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail mm_sun@tkl.tsannkuen.com yy_dong@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. Other relevant information
Did any change occur to other relevant information during the Reporting Period?
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Applicable √ Not applicable
IV. Accounting and financial highlights
Does the Company need to adjust retrospectively or restate accounting data of previous periods?
□ Yes √ No
Unit: RMB Yuan
Item Reporting Period Same period of last year YoY +/-（％）
Operating revenues 869,683,758.68 798,108,689.27 8.97
Net profit attributable to shareholders of the Company 11,066,574.11 17,789,801.36 -37.79
Net profit attributable to shareholders of the Company after
6,803,673.06 15,944,852.56 -57.33
excluding non-recurring gains and losses
Net cash flow from operating activities -57,511,295.96 -60,172,006.29 4.42
Basic EPS (RMB Yuan/share) 0.06 0.10 -40.00
Diluted EPS (RMB Yuan/share) 0.06 0.10 -40.00
Weighted average ROE (%) 1.79 3.11 -1.32
As at the end of the
Item As at the end of last year +/- (%)
Reporting Period
Total assets 1,655,926,939.85 1,697,533,004.99 -2.45
Net assets attributable to shareholders of the Company 598,409,580.98 610,856,271.31 -2.04
Total shares of the Company as at closure of the last trading day before the disclosure of this Report:
Total shares of the Company as at closure of the last trading day before the
185,391,680
disclosure of this Report (share)
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.06
V. 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.
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Not applicable
VI. 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
131,250.15
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
888,232.00
of 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
Current gains and losses of subsidies acquired from business combination under the same control as
from period-begin to combination date
Gain/loss on contingent events irrelevant to the Company’s normal business
Gains on sale of forward
Gains and losses on change in fair value from tradable financial assets and tradable financial liabilities,
exchange contracts, fair
as well as investment income from disposal of tradable financial assets and tradable financial liabilities
3,606,480.14 value changes and other
and financial assets available for sales except for effective hedging related with normal businesses of
current assets (wealth
the Company
management instruments)
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 2,035,200.67
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 960,213.95
Minority interests effects (after tax) 1,438,047.96
Total 4,262,901.05
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Section III. Business Highlights
I. Main business during the Reporting Period
Development and manufacture of household appliances, electronics, light industrial products, modern office supplies; design and
manufacture of molds for those products; Sale of the Company’s products in China and to other countries and regions as well as
provision of relevant after-sales service; wholesale, retail (only in the Company’s own shops), import & export and relevant
supporting business of household appliances, electronic products, electrical equipment, office supplies, kitchen utensils and
pre-packaged food as well as provision of relevant after-sales service (the aforesaid business scope of the Company does not involve
state trading commodities; where quota permission or a license is required, it shall be obtained according to the regulations of the
country before operation). No material changes occurred to the business model of the Company in the Reporting Period.
Is the Company subject to any disclosure requirements for special industries?
No.
II. Material changes in main assets
1. Material changes in main assets
Main assets Material change
Up 100% from the opening amount of the year, mainly because of assessed
Financial assets at fair value through profit/loss
gains on forward forex contracts
Up 255.85% from the opening amount of the year, mainly because of
Prepayments
increased rent prepayments for plants
Up 18719.94% from the opening amount of the year, mainly because of
Interest receivable
increased accrued interest on term deposits
Up 101.99% from the opening amount of the year, mainly because of
Other current assets
increased wealth management instruments
Up 83.94% from the opening amount of the year, mainly because of
Construction in progress
unaccepted land preparation work
Up 144.54% from the opening amount of the year, mainly because of
Other non-current assets
increased prepayments for equipment
2. Main assets overseas
√ Applicable □ Not applicable
Unit: RMB Yuan
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Any
Measures In the
major
Operatio taken to Company’
Asset Nature Value Location Earnings impairme
n status protect asset s net
nt risk or
safety assets (%)
not
Pt.Star Comgistic Periodic
Investment Indonesia Normal -3,823,567.47 22.63 No
Indonesia 135,424,919.89 review
Tsannkuen Edge
Equity Periodic
Intelligence Co., Taiwan Normal -7,849,662.99 2.04 No
acquisition 12,201,898.36 review
Ltd.
Other information N/A
III. Core competitiveness analysis
Is the Company subject to any disclosure requirements for special industries?
No.
As a manufacturer of small home appliances, most of our products are exported and we also work on the domestic market as well.
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, our differentiated ability in design and resource integration, and a relatively high market
position due to our good relationship with customers with globally famous brands.
In the Reporting Period, we obtained 57 patents in R&D, including 12 invention patents and 45 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”), one of our subsidiaries, 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 (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 mainland China, and improve our smart home appliance division to cope with the rapid changes
in the market.
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section IV. Performance Discussion & Analysis
I. Overview
For the Reporting Period, the Company achieved operating revenues of RMB870 million, up 8.97% over RMB798 million of the
same period of last year, and net profit of RMB11 million, down 37.79% over RMB18 million of the same period of last year. This is
mainly because the prices of raw materials went up, which offset the gross profit margin on the increased operating revenues, and the
foreign exchange gains dropped.
II. Main business analysis
1. Overview
We carried on with our simplification and transformation strategies. We divided R&D tasks for our teams in mainland China and
Taiwan and built research institutions at three levels of resource allocation. We also checked 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 have been brought in to increase our yield rate and
production efficiency. Upholding the strategy of innovation-driven transformation, we asked 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 global small home appliance markets and the fast growing domestic market are 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.
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. YoY changes in major financial data
Unit: RMB Yuan
Same period of last
Item Reporting Period +/-% Main reasons for changes
year
Operating revenues 869,683,758.68 798,108,689.27 8.97
Operating costs 739,507,468.93 662,817,165.10 11.57
Reclassification due to the policy of replacing
Taxes and surtaxes 5,695,363.61 2,975,879.16 91.38
business tax with value added tax
Selling expenses 30,129,026.59 40,742,161.54 -26.05
Administrative expenses 74,782,758.93 80,750,640.07 -7.39
Financial costs 9,184,381.52 -9,966,312.52 192.15 Unrealized assessed exchange losses
Reversal of bad-debt provision due to recovery
Asset impairment losses 64,439.57 -760,811.14 108.47
of rent in the same period of last year
Gains on fair value Decreased assessed gains on forward forex
1,881,750.00 5,645,050.00 -66.67
changes contracts
Increased gains on delivered forward forex
Investment gains 1,724,730.14 -4,434,437.95 138.89
deals and wealth management instruments
Non-business income 3,353,082.90 4,349,049.40 -22.90 Decrease in governmental subsidy
Non-business expenses 298,400.08 61,724.97 383.44 Losses on retirement of fixed assets increased
Income tax expenses 3,416,067.76 2,757,325.93 23.89
R&D input 36,181,239.58 36,526,821.94 -0.95
The prices of raw materials went up, which
offset the gross profit margin on the increased
Net profit 13,565,414.73 24,290,577.61 -44.15
operating revenues, and the foreign exchange
gains dropped
Net cash flows from
-57,511,295.96 -60,172,006.29 4.42
operating activities
Net cash flows from
-508,940,750.86 -279,556,638.97 -82.05 Increased outflows of restricted term deposits
investing activities
Net cash flows from Increased export invoice financing for wealth
100,706,644.87 37,283,764.50 170.11
financing activities management purposes
Net increase in cash and
-474,256,524.44 -295,890,034.04 -60.28 Increased outflows of restricted term deposits
cash equivalents
Major changes to the profit structure or sources of the Company during the Reporting Period:
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Applicable √ Not applicable
No such cases.
3. Breakdown of main business
Unit: RMB Yuan
Increase/decrease
Increase/decrease Increase/decrease
Gross of operating
Operating of operating costs of gross profit rate
Item Operating costs profit revenues over
revenues over same period over same period
rate (%) same period of
of last year (%) of last year (%)
last year (%)
Classified by industry
Small home appliance
840,312,489.24 723,287,830.92 13.93% 9.04% 10.73% -1.31%
manufacture
Total 840,312,489.24 723,287,830.92 13.93% 9.04% 10.73% -1.31%
Classified by product
Cooking tools 540,344,218.91 447,620,553.66 17.16% 7.70% 7.69% 0.01%
Housework helpers 224,015,274.54 210,893,707.03 5.86% 17.04% 23.28% -4.77%
Tea/Coffee makers 73,801,696.03 63,193,074.09 14.37% 15.26% 18.88% -2.61%
Others 2,151,299.76 1,580,496.14 26.53% -84.06% -88.13% 25.21%
Total 840,312,489.24 723,287,830.92 13.93% 9.04% 10.73% -1.31%
Classified by region
America 302,346,479.45 258,816,457.63 14.40% 9.72% 8.91% 0.64%
Asia 180,411,171.53 154,430,965.58 14.40% -13.62% -12.60% -1.00%
Europe 290,524,069.58 256,421,924.47 11.74% 23.09% 29.43% -4.32%
Australia 57,656,779.71 46,215,616.95 19.84% 27.88% 26.85% 0.65%
Africa 9,373,988.97 7,402,866.29 21.03% 82.65% 71.50% 5.13%
Total 840,312,489.24 723,287,830.92 13.93% 9.04% 10.73% -1.31%
III. Analysis of non-core business
√ Applicable □ Not applicable
Unit: RMB Yuan
Ratio to the total profits Recurring
Items Amount Notes of the causes
amount (%) or not
Asset impairment losses 64,439.57 0.38 No
Gains on fair value changes 1,881,750.00 11.08 Forward forex contracts No
Forward forex contracts and wealth
Investment income 1,724,730.14 10.16 No
management instruments
Asset disposal and government
Non-business income 3,353,082.90 19.75 No
subsidies
Non-business expenses 298,400.08 1.76 No
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
At end of same period of last
At end of Reporting Period
year
Change in
As a As a
Item percentage Reason for any significant change
percentag percentag
Amount Amount (%)
e of total e of total
assets (%) assets (%)
Monetary funds 610,480,711.93 36.87 554,281,467.86 36.75 0.12
Financial assets at fair Assessed gains on forward forex
1,881,750.00 0.11 27,300.00 0.00 0.11
value through profit/loss contracts
Maturity of notes receivable at
Notes receivable 990,000.00 0.06 3,388,917.00 0.22 -0.16
beginning of the year
Accounts receivable 242,579,524.63 14.65 212,505,897.39 14.09 0.56
Increased rent prepayments for
Prepayments 24,784,622.14 1.50 12,002,139.01 0.80 0.70
plants
Increased export tax rebates
Other receivables 37,688,979.32 2.28 25,608,750.65 1.70 0.58
receivable
Inventories 190,784,550.61 11.52 201,107,063.72 13.34 -1.82
Long-term equity
0.00 0.00 0.00 0.00 0.00
investments
Investment property 39,431,574.89 2.38 43,851,356.22 2.91 -0.53
Fixed assets 175,644,211.63 10.61 179,319,453.10 11.89 -1.28
Construction in progress 495,974.59 0.03 396,547.71 0.03 0.00
Increased input to software
Intangible assets 28,363,603.13 1.71 16,522,261.34 1.10 0.61
products
Increased prepayments for
Other non-current assets 3,052,537.50 0.18 1,991,186.65 0.13 0.05
equipment
Increased export invoice
Short-term borrowings 125,326,400.00 7.57 70,831,265.19 4.70 2.87 financing for wealth management
purposes
Long-term borrowings 0.00 0.00 0.00 0.00 0.00
Assessed losses on forward forex
Financial liabilities at fair
0.00 0.00 2,844,750.00 0.19 -0.19 contracts in same period of last
value through profit/loss
year
Maturity of banker’s acceptance
Notes payable 10,517,009.49 0.64 19,566,032.81 1.30 -0.66
bills at beginning of the year
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
At end of same period of last
At end of Reporting Period
year
Change in
As a As a
Item percentage Reason for any significant change
percentag percentag
Amount Amount (%)
e of total e of total
assets (%) assets (%)
Long-term payroll
250,205.83 0.02 0.00 0.00 0.02 Increased staff
payable
Deferred income tax Increase in recognized assessed
1,026,173.00 0.06 251,973.01 0.02 0.04
liabilities gains on forward forex contracts
Increased income from
Other comprehensive
7,225,639.61 0.44 4,773,167.33 0.32 0.12 foreign-currency translation
income
differences
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
Cumulati
Profit/loss on Impairment
ve fair
fair value provided in Purchased in Sold in this
Opening value
Item changes in this this Reporting Reporting Closing balance
balance changes
this Reporting Reporting Period Period
charged
Period Period
to equity
Financial assets
1. Financial assets at fair
value through profit/loss
0.00 0.00 0.00 0.00 0.00 0.00 0.00
(excluding derivative
financial assets)
2. Derivative financial
0.00 1,881,750.00 0.00 0.00 436,602,800.00 281,728,600.00 154,874,200.00
assets
3. Available-for-sale
40,000.00 0.00 0.00 0.00 0.00 0.00 40,000.00
financial assets
Subtotal of financial
40,000.00 1,881,750.00 0.00 0.00 436,602,800.00 281,728,600.00 154,914,200.00
assets
Investment property 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Productive living assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total of the above 40,000.00 1,881,750.00 0.00 0.00 436,602,800.00 281,728,600.00 154,914,200.00
Financial liabilities 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Did any significant changes occur to the measurement attributes of the Company’s main assets in the Reporting Period?
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Yes √ No
3. Restricted asset rights as of the end of this Reporting Period
□ Applicable √ Not applicable
V. Investments made
1. Total investments made
√ Applicable □ Not applicable
Unit: RMB Yuan
Investments made in Reporting Period Investments made in same period of last year +/-%
11,422,960.00 6,278,499.22 81.94
2. Significant equity investments made in this Reporting Period
□ Applicable √ Not applicable
3. Significant non-equity investments ongoing in this Reporting Period
□ Applicable √ Not applicable
4. Financial investments
(1) Securities investments
□ Applicable √ Not applicable
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Purchased Proportion of the closing Actual
Related-party Type of Initial Opening Sold amount in Impairme Closing
Relat Beginning amount in the investment amount in the gain/loss in the
Operator transaction or derivative investment Ending date investment the Reporting nt investment
ion date Reporting Company’s closing net Reporting
not investment amount amount Period provision amount
Period assets (%) Period
Forward
Bank No No 43,660.28 2017-01-01 2017-06-30 0.00 43,660.28 28,172.86 0.00 15,487.42 25.88 245.79
forex
Total 43,660.28 0.00 43,660.28 28,172.86 0.00 15,487.42 25.88 245.79
Capital source for derivative investment Self-owned funds
Lawsuits N/A
Disclosure date of the board announcement approving
2013-3-12
the derivative Investment
Disclosure date of the general meeting announcement
2013-5-18
approving the derivative Investment
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Purchased Proportion of the closing Actual
Related-party Type of Initial Opening Sold amount in Impairme Closing
Relat Beginning amount in the investment amount in the gain/loss in the
Operator transaction or derivative investment Ending date investment the Reporting nt investment
ion date Reporting Company’s closing net Reporting
not investment amount amount Period provision amount
Period assets (%) Period
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 operation of the Company in the coming year.
Risk analysis and risk control measures for positions (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute the business operation and risk
held in derivatives in this Reporting Period (including management mechanisms for derivative investment.
but not limited to market risk, liquidity risk, credit risk, (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel for investment decision-making,
operational risk, legal risk, etc.) business operation, risk control, etc. It shall also inquire and compare among various markets and products. Besides, it shall strictly control the variety and size of derivative
investment and try to choose derivative trading on exchange as much as possible.
(4) Periodic evaluation: Derivative investments shall be evaluated at least twice for a month and the evaluation report shall be sent to a high-ranking executive authorized by the
Board of Directors. And a derivative investment report shall be sent to the Board of Directors annually. The Company and its subsidiaries only need to submit to the Board of
Directors of the subsidiaries.
(5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment amount.
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
Changes in market price or fair value of derivatives (1) Gains on delivered derivatives in the Reporting Period were RMB0.5761 million, and assessed gains on on those undelivered were RMB1.8818 million.
invested in this Reporting Period (specific methods used (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last trading day of the month.
and relevant assumption and parameter settings shall be (3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount undue by the month*the estimated
disclosed for analysis of fair value of derivatives) exchange rate and the currency amount when bought in.
Significant changes in the Company’s accounting
policies and specific accounting principles for
No significant changes
derivatives in this Reporting Period as compared to the
prior period
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Purchased Proportion of the closing Actual
Related-party Type of Initial Opening Sold amount in Impairme Closing
Relat Beginning amount in the investment amount in the gain/loss in the
Operator transaction or derivative investment Ending date investment the Reporting nt investment
ion date Reporting Company’s closing net Reporting
not investment amount amount Period provision amount
Period assets (%) Period
Special opinions expressed by independent directors The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision mechanism. We are of the opinion
concerning the Company’s derivatives investment and that the financial derivative business conducted by the Company is fairly necessary in its routine operation and is in compliance with relevant laws and regulations, with the risks
risk control controllable.
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Not applicable
2. Sale of major equity interests
□ Applicable √ Not applicable
VII. Main controlled and joint stock companies
Main subsidiaries and joint stock companies
Unit: RMB Yuan
Relationship with the Operating
Company name Main business scope Registered capital Total assets Net assets Operating profit Net profit
Company revenues
Tsann Kuen (Zhangzhou) Enterprise Co., Small home appliance
Controlled subsidiary USD160 million 1,947,654,218.11 1,270,264,176.96 819,506,110.82 31,402,575.92 31,148,900.00
Ltd. manufacturing
Tsann Kuen China (Shanghai) Enterprise Subsidiary of a controlled Small home appliance
USD40 million 87,707,717.31 84,433,859.35 429,020.81 -3,353,119.16 -3,055,828.76
Co., Ltd. subsidiary manufacturing
18
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Relationship with the Operating
Company name Main business scope Registered capital Total assets Net assets Operating profit Net profit
Company revenues
Subsidiary of a controlled Small home appliance
Pt.Star Comgistic Indonesia USD30 million 135,424,919.89 93,219,272.20 49,326,459.51 -6,766,090.41 -3,823,567.47
subsidiary manufacturing
Subsidiary of a controlled
Tsannkuen Edge Intelligence Co., Ltd. Industrial design NTD200 million 12,201,898.36 7,079,147.28 3,528,954.02 -7,888,834.34 -7,849,662.99
subsidiary
Subsidiaries obtained or disposed in this Reporting Period
□ Applicable √ Not applicable
VIII. Structured bodies controlled by the Company
□ Applicable √ Not applicable
IX. Predict the operating results of January-September 2017
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
19
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
X. Risks facing the Company and countermeasures
1. International
Influenced by the slowly recovery of the global economy, the enlarge of the exchange rate fluctuation, the enhance of the domestic
comprehensive cost, and with global inflation pressure that cannot be eased in the short run and more and more non-economic
obstacles from western countries in their trading with China, foreign trade of China will face, without doubt, a more complicated
environment and more serious conflicts in 2017.
For protecting the domestic newly-developing electrical home appliances manufacturing enterprises, parts of the countries began to
adopt trade protectionism and began to suppress the domestic electrical home appliances for the methods such as improve the import
tariff. The outburst of the global financial crisis led to the rise of the international trade protection, the aggravation of the tariff barrier
and the non-tariff barrier especially such as the technology standard, Intellectual property right protection and anti-dumping etc., as
well as the export of the domestic electrical home appliance encountered more and more threatens tariff an non-tariff barrier with the
more complicated international environment faced with the electrical home appliances.
As for the risks of the culture difference: the overseas expansion of the electrical home appliances desiderate the adjustment of
culture and products; the culture difference between China and other countries affect the difference process of the sales process of the
electrical home appliances at different degrees and different aspects, while the fusion of the culture and the adaptation of the products
are the two key elements of the success of the enterprises and to blend in the cultural environment of different regions as well as to
reduce the cost expenses brought by the unsteady elements as much as possible is the important content of the overseas expansion of
the enterprises.
2. Domestic
Y2017 will be the key year of the entirely promotion of the domestic great reform and adjustment and the year that the new normalcy
of domestic economy entirely step into the Crucial Period. The domestic and oversea environment is still of anfractuosity as well as
the economy development is still facing with many difficulties and challenges. However, the basic conditions of the domestic
economy development is still comparative good that will still provide favorable market environment and development space for the
electrical home appliances.
In recent years, the domestic per capita income grew steadily with the rise range of the price of commodities declined, and at the
same time influenced by the internal and external force factors such as the Chinese shopping spree, which stimulated the consuming
intention boosted constantly; as the constantly deepen of the domestic economy transformation, the future economy will realize
healthy and sustainable growth, which will depend on the consumption demands of each Chinese customers as the consumption
driving force of the domestic economy has been strengthening.
Through the path of expanding domestic demand and the adjustment of the overall economic system, the domestic competition will
become fiercer. As the development of the domestic production, the domestic home appliance is now facing the significant industrial
consolidation phrase, which could only win in the competition and become the industry integrator with powerful financial strength
and the ability to drive the domestic home appliance innovation enterprise. So the small home appliance enterprises are facing with
serious competition and challenge. Faced with the quick changes of the domestic environment, the Company will be close to the
customers’ requirements, to promote the brand image by taking the technology innovation as core, to build up self-own brand, and to
develop green, intelligent home appliances to increase the occupation portion of the domestic market.
Meanwhile, the rising costs of raw materials has also posed challenges for enterprises’ development in China.
3. Exchange rate fluctuation
The Company’s products were export-oriented, so the influence of the exchange rate fluctuation on the Company was rather big.
20
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Facing with the negative influences of the appreciation of the RMB, the main methods are: to avoid the exchange risks by the
financial tools and to fully considerate the influences of the exchange risks when receiving an order, thus to transfer the exchange
risks.
4. Increase of the labor costs and the labor shortage
Influenced by the constantly rise of the labor cost, the Company reduced the employee turnover rate by improving the labor character
and perfecting the benefits, promoted the purchasing modularization as well as lean automation, and improved the output per head
through continuous employee training to deal with the labor shortage problem.
5. Environmental protection low-carbon
As the execution of the Environmental Protection Act, to prevent and remedy pollution and other public nuisance as well as to ensure
the environmental and public health become the development tendency that the production processes of the enterprises must active
deal with; the Company put the lean manufacturing into the core goal of the enterprises of this year, with the introduce of the new
environmental protection materials, the input of the automation and the promotion of the environmental protection manufacturing
that promoted the products of the Company developed orientated to the direction of environmental protection and the environment
protection work.
21
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section V. Significant Events
I. List of the Annual Meeting of Shareholders and Special Meeting of Shareholders held
during the Reporting Period
1. List of Meeting of Shareholders during the Reporting Period
Time Type Participation ratio Date of meeting Date of disclosure Disclosure index
The 2016 Annual
Annual Meeting of
Meeting of 44.82% 04/06/2017 04/07/2017 www.cninfo.com.cn
Shareholders
Shareholders
2. Preferred shareholders with the restoration of voting rights made a request for the Special Meeting of
Shareholders
□ Applicable √ Not applicable
II. Pre-plan for profit allocation and turning capital reserve into share capital during the
Reporting period
□ Applicable √ Not applicable
The Company planned not to distribute cash dividend and bonus share, and not to convert capital reserves into share capital in half
year.
III. Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the Company and other commitment makers, fulfilled in this reporting
period or ongoing at the period-end
√ Applicable □ Not applicable
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Commitment on
share reform
Commitment in the
acquisition report
or the report on
equity changes
Commitments made
upon the assets
22
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
replacement
Commitments made
upon first issuance
or refinance
Commitment on
equity incentive
The
Company’s
stocks
Based on the confidence on the resumed
continuous and stable development trading on
of the Company, it committed to December
increase the shareholding if the 31, 2012,
Company’s stock price lower than but the
HKD2.40 per share after the Company’s
implementation of the shares stock price
contraction and trading resumption, hasn’t met
and it would increase no more than the
Commitment 2% shares (i.e. 3.7078 million condition for
Other commitments FILLMAN
on shares) of the total shares issued by Long-term shareholding
made to minority INVESTMENTS 12/28/2012
shareholding the Company within one year since effective increase
shareholders LIMITED
increase the date of initial shareholding since the
increase. If the plan on increasing date of
holding 2% shares of the total shares trading
is completed, if the stock price hasn’t resumption,
reached the target price, it will FILLMAN
perform relevant approval Investment
procedures, and propose to CSRC on Limited
continuous implementation of hasn’t
shareholding increase by exemption implemented
of offering. the
shareholding
increase
plan.
Executed on time or
Yes
not
IV. Engagement and disengagement of CPAs firm
23
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual financial report of the Company has noit been audited
V. Notes for “unstandard audit reports” of CPAs firm during the Reporting Period by board
of directors and supervisory board
□ Applicable √ Not applicable
VI. Notes for the related information of “unstandard audit reports” last year by board of
directors
□ Applicable √ Not applicable
VII. Bankruptcy and restructuring
□ Applicable √ Not applicable
VIII. Litigations and arbitrations
Significant litigations and arbitrations
□ Applicable √ Not applicable
Other lawsuits
√ Applicable □ Not applicable
Unit: RMB’0,000
Situation
Whether
of
form
execution
Lawsuit into
Basic situation of lawsuit Process of lawsuit Trial results and influences of of Disclosu Disclosu
amount (RMB estimate
(arbitration) (arbitration) lawsuit (arbitration) judgment re date re index
Ten thousand) d
of lawsuit
liabilitie
(arbitratio
s
n)
Zhangzhou Tsann Ken
The case of the controlling
had submitted the
subsidiary Zhangzhou Tsann
indictment to the local
Kuen Enterprise Co., Ltd. sued 1,770.26 No Had no result No No No
judicatory in Kobe, Japan
Japan UCC Ueshima Coffee
on May 9, 2014; recently
Co., Ltd. (contract disputes)
is in the trial
The lease contract default case Xiamen Huli People’s Xiamen Huli People’s Court
of the Company sued Xiamen Court had put on record in combined these four cases for
29.43 No No No No
Tianyuan Assets Management October 13, 2014. The trial on December 29, 2015.
Co., Ltd. about the arrears of Court made the first the first instance of
24
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Situation
Whether
of
form
execution
Lawsuit into
Basic situation of lawsuit Process of lawsuit Trial results and influences of of Disclosu Disclosu
amount (RMB estimate
(arbitration) (arbitration) lawsuit (arbitration) judgment re date re index
Ten thousand) d
of lawsuit
liabilitie
(arbitratio
s
n)
rent (No. 23 of Huarong Rd, instance of judgement on judgement of Xiamen Huli
Huli District, Xiamen) Feburary 2, 2015, but People’ s Court was made on
both two parties refused May 30, 2017: Tianyuan
to the decision and lodged (Xiamen) Assets Management
an appeal. Xiamen Co., Ltd. should pay the late
Intermediate People’s payment penalty. Whether
Court cancelled the both parties to appeal has not
original judgement and confirmed yet.
remanded for new trial on
October 13, 2015.
The lease contract default case
of the Company sued Xiamen
Tianyuan Assets Management Xiamen Huli People’s
Co., Ltd. about the arrears of 58.46 Court had put on record
rent (North Building of the on April 28, 2015
Factory, No. 88 of Xinglong
Rd, Huli District, Xiamen)
The lease contract default case
of the Company sued Xiamen
Tianyuan Assets Management Xiamen Huli People’s
Co., Ltd. about the arrears of 8.32 Court had put on record
rent (Southeast Corner, No. 88 on April 28, 2015
of Xinglong Rd, Huli District,
Xiamen)
The lease contract default case
of the Company sued Xiamen
Tianyuan Assets Management Xiamen Huli People’s
Co., Ltd. about the arrears of 18.61 Court had put on record
rent (Northwest Corner, No. 88 on April 28, 2015.
of Xinglong Rd, Huli District,
Xiamen)
The eliminating nuisance case
Shanghai Jiading People’s The first instance of
of the controlling subsidiary
0 No Court had put on record judgement from Shanghai No No No
Tsann Kuen China (Shanghai)
on October 28, 2015.
Enterprise Co., Ltd sued Jiading People’s Court was
25
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Situation
Whether
of
form
execution
Lawsuit into
Basic situation of lawsuit Process of lawsuit Trial results and influences of of Disclosu Disclosu
amount (RMB estimate
(arbitration) (arbitration) lawsuit (arbitration) judgment re date re index
Ten thousand) d
of lawsuit
liabilitie
(arbitratio
s
n)
Shanghai Lujia Fruit sales Co.,
received on November 23,
Ltd.
2016: supporting the appeal
of Shanghai Tsann Kuen,
Lujia Fruit sales Co., Ltd
should stop the acts of
infringement at once within
10 days from the date of the
judgment come into effect
and stop the construction ,
restore the original site.
Court judgement from
Shanghai the Second
Intermediate People’s Court
was received on July 4, 2017:
upheld the judgement.
The default on a loan disputes
case of the controlling SUPERIOR COURT OF
subsidiary Tsann Kuen China CALIFORNIA COUNTY
(Zhangzhou) Enterprise Co., 1,429.40 No OF LOS ANGELES had Had no result No No No
Ltd sued MTN Products, Inc./ put on record on
Water Solutions （Hong Kong） November 23, 2016.
Ltd.
The contract disputes case of
the controlling subsidiary Tsann
Longhai People’s Court
Kuen China (Zhangzhou)
250 No had put on record on Had no result No No No
Enterprise Co., Ltd sued Philips
November 23, 2016.
lighting (China) investment Co.
Ltd.
26
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Situation
Whether
of
form
execution
Lawsuit into
Basic situation of lawsuit Process of lawsuit Trial results and influences of of Disclosu Disclosu
amount (RMB estimate
(arbitration) (arbitration) lawsuit (arbitration) judgment re date re index
Ten thousand) d
of lawsuit
liabilitie
(arbitratio
s
n)
The contract disputes case of
the controlling subsidiary Tsann
Zhangzhou Intermediate
Kuen China (Zhangzhou)
People’s Court had put on
Enterprise Co., Ltd sued Xinda 333 No Had no result No No No
record on January 18,
Motor Co., Ltd and Boluo
2017.
County Lianyuan Industrial
Technology Co., Ltd.
The lease contract disputes case
of the controlling subsidiary
Longhai People’s Court
Tsann Kuen China (Zhangzhou)
46 No had put on record on April Had no result No No No
Enterprise Co., Ltd sued
13, 2017.
Xiamen Sanyili Energy-saving
Materials Co., Ltd.
The total 7 patent infringement
cases of the controlling
subsidiary Tsann Kuen China
(Zhangzhou) Enterprise Co.,
Ltd sued Xiamen Fukun
Household Appliance
Xiamen Intermediate
Technology Co., Ltd (patent
70 No People’s Court had put on Had no result No No No
number: ZL200710009700.7、
record on May 4. 2017.
ZL200820102024.8、
ZL200920137778.1、
ZL201320822528.8、
ZL200920308936.5、
ZL201030287767.X、
ZL201330112310.9)
The contract disputes case of
Xiamen Yixin Industrial and
Trade Co., Ltd sued the Holding a hearing on May
95.6 Had no result No No No
controlling subsidiary Tsann 19, 2017
Kuen China (Zhangzhou)
Enterprise Co., Ltd.
27
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Punishments and rectifications
√ Applicable □ Not applicable
Type of Investigation and Disclosure Disclosure
Name Type Reasons Conclusion
Punishment Date Index
Rectification Works
On March 15, 2016, the
Environment-protection were completed
“3.15”evening party held by
Bureau, Safety Supervision without any dispute in
TsannKuen CCTV that reported a product
Department, Tax Department relevant
(Zhangzhou Corpo of the Company on the www.cnin
and other administrative administrative 01/20/2017
) Enterprise ration unqualified situation among fo.com.cn
departments have rendered penalties; no hearing
Co., Ltd. the state administration of
significant administrative was requested and
quality supervision and spot
penalties. such penalty was
check.
accepted.
Details about rectification:
√ Applicable □ Not applicable
On March 15, 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 March 16, 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. Please see 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 March 17, 2016.
On January 18, 2017, the company’s controlling subsidiary---Zhangzhou Tsann Kuen received Administrative Penalty Notice
(ZT)ZJFG [2017] NO. 1 issued by Zhangzhou Bureau of Quality and Technical Supervision, and the following administrative
penalties shall be executed: 1. Unqualified electric ovens and toasters (Model: TSK-2131GPN Love Teppanyaki) shall not be
produced and sold; 2. 989 pieces ofuUnqualified electric ovens and toasters (Model: TSK-2131GPN Love Teppanyaki) illegally
manufactured and sold shall all be confiscated; 3. The penalty doubling the value of goods (RMB 183,200) shall be paid; 4. Illegal
gains amounting to RMB 804.83 shall be confiscated. However, the total fines shall be RMB ONE HUNDRED AND EIGHTY
FOUR THOUSAND AND FOUR YUAN EIGHT JIAO AND TREE FEN (184,004.83). Zhanzhou Tsann Kuen had no dispute in
relevant administrative penalties executed by Zhangzhou Bureau of Quality and Technical Supervision, requested no hearing and
accepted all penalties. Please see details disclosed by the company on the Announcement on the Subsidiary’s Receiving of
Administrative Penalty Notice issued by Zhangzhou Bureau of Quality and Technical Supervision on Securities Times, Hong Kong
Ta Kung Pao and www.cninfo.com.cn on January 20, 2017.
X. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Not applicable
XI. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Not applicable
28
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XII. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Not applicable
Unit: RMB
Pricing
principl Proportion Whether Settlement
Content of
Type of the e of the Transac in same kind Approved exceede method of Similar Disclo Discl
the Transaction
Related party Relationship related-party related- tion of transaction d the the market sure osure
related-party amount
transaction party price transactions quota approve related-party price date index
transaction
transacti (%) d quota transaction
on
Company directly
Purchase of
Thermaster controlled by actual
commodities Purchase of
Electronic controller and their 16,738,518.44 2.85% 40,000,000 No
from the raw parts
(Xiamen) Ltd. close family
related party
members
Purchase of
Tsann Kuen Under the control of
commodities Purchase of
Enterprise Co., the same actual Based 19,035.91 0.00% 100,000 No
from the raw parts
Ltd. controller on the
related party
market
Purchase of price
Under the control of
Gold Mining commodities and both Settled www.
the same actual Meal ticket 392.98 0.00% 0.00 Yes
Chain Co., Ltd from the parties according to cninf
controller 03/14/
related party abide N/A the contract N/A o.com
2017
Purchase of by the signed by .cn
Star Comgistic Ultimate controlling commodities Purchase of fair and both parties
reasona 2,876.99 0.00% 40,000 No
Capital Co., Ltd company from the raw parts
related party ble
principl
Sales of e
Sales of parts
Star Comgistic Ultimate controlling commodities
and finished 7,922,076.14 0.91% 16,320,000 No
Capital Co., Ltd company to the related
products
party
Sales of
Tsann Kuen Under the control of Sales of parts
commodities
Enterprise Co., the same actual and finished 570.82 0.00% 50,000.00 No
to the related
Ltd. controller products
party
29
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Pricing
principl Proportion Whether Settlement
Content of
Type of the e of the Transac in same kind Approved exceede method of Similar Disclo Discl
the Transaction
Related party Relationship related-party related- tion of transaction d the the market sure osure
related-party amount
transaction party price transactions quota approve related-party price date index
transaction
transacti (%) d quota transaction
on
Sales of
Under the control of Sales of parts
Gold Mining commodities
the same actual and finished 85,749.96 0.01% 500,000.00 No
Chain Co., Ltd to the related
controller products
party
Wu Wha Ma
Investee of the Provision of
Restaurant
ultimate controlling service for the Rent 32,760.00 0.13% 70,000.00 No
Management Co.,
company related party
Ltd. in Xiamen
Acceptance of
Star Comgistic Ultimate controlling labor service
Rent 691,394.42 2.77% 1,320,000.00 No
Capital Co., Ltd company for the related
party
Star International Acceptance of
Under the same Plane ticket
Traval Agency service for the 419,093.08 31.99% 950,000.00 No
ultimate controller fee
Co., Ltd. related party
Acceptance of
Kuaisan Electric Under the control of
labor service Service
Business Service the same actual 34,565.61 46.76% 50,000.00 No
for the related income
Co., Ltd controller
party
Acceptance of Personnel
Star Comgistic Ultimate controlling
service for the recruitment 6,211.35 8.40% 0.00 Yes
Capital Co., Ltd company
related party fee
Provision of
Tsann Kuen Under the control of Management
labor service
Enterprise Co., the same actual service 33,151.76 44.84% 100,000.00 No
for the related
Ltd. controller income
party
Total 25,986,397.46 59,500,000
Details of large amount of sales returns N/A
Transaction amount was the estimated amount on the Announcement about Estimated Routine Related-party Transactions in
As for the prediction on the total amount of routine related-party
2017 simultaneously disclosed on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn on March 14, 2017.
transactions to be occurred in the reporting period by relevant types, the
Announcement about Estimated Routine Related-party Transactions in 2017 was not revised due to the business needs and no
actual performance in the reporting period
disclosure of related-party transactions with insignificant amounts.
Reason for significant difference between the transaction price and the
N/A
market price
30
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Related-party transactions regarding purchase and sales of assets or equity
□ Applicable √ Not applicable
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
4. Significant credits and liabilities with related parties
√ Applicable □ Not applicable
Whether exists non-operating credits and liabilities with related parties?
□ Yes √ No
5. Other significant related-party transactions
√ Applicable □ Not applicable
In order to enrich the holding sub-subsidiary PT.STAR COMGISTIC INDONESIA[referred to as “SCI”, the wholly-owned sub-subsidiary of the holding subsidiary TsannKuen (Zhangzhou)
Enterprise Co., Ltd(the Company holds 75%) of the Company, SCI planned to borrow foreign debt less than 2million USD in total from the Compnay’s overseas controlling shareholder Sion
Global Co., Ltd.(referred to as “ZGQQ”). The Company convened Board of Directors Resolution that agreed to borrowed foreign debt less than 2million USD in total from overseas related
party ZGQQ by SCI on March 12, 2017.
Related party transactions interim report disclosure website
Name of interim report Disclosure dare Name of the website
Announcement about Holding Sub-subsidiary borrowing Foreign Debt and
03/14/2017 www.cninfo.com.cn
related-party transactions
The Company had not other significant related-party transactions during the Reporting period.
XIII. Occupation of the Company’s funds for non-operating purposes by the controlling shareholder and its related parties
□ Applicable √ Not applicable
XIV. Significant contracts and execution
1. Particulars about trusteeship, contract and lease
31
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(1) Trust
□ Applicable √ Not applicable
(2) Contract
□ Applicable √ Not applicable
(3) Lease
√ Applicable □ Not applicable
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 August 13, 2011 and the First
Special Shareholders’ General Meeting for 2011 dated September 16, 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 June
30, 2012 and the Second Special Shareholders’ General Meeting for 2012 dated July 24, 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 June 26, 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’ 0,000
Influences of Related-pa
Involved Recognition
Name of contract-out Status of leased Ending date of Rental rental income rty Relationsh
Name of leasee amount of the Initial date of leasing basis of
party assets leasing income on the transaction ip
leased assets rental income
Company or not
Xiamen Tsann Kun Tianyuan(Xiamen) According to
Buildings and
(China) Enterprise Assets Management 1,700.40 07/01/2013 09/30/2018 443.56 the contract 40.08% No N/A
land
Co., Ltd. Co., Ltd. price
2. Significant guarantees
□ Applicable √ Not applicable
32
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Other significant contracts
□ Applicable √ Not applicable
XV. Social responsibilities
1. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Not applicable
XVI. Other significant events
□ Applicable √ Not applicable
There was no such situation during the Reporting period.
XVII. Significant events of subsidiaries
□ Applicable √ Not applicable
33
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VI. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before the change Increase/decrease in the change (+,-) After the change
Capitali
Issuan zation
Proportio ce of Bonus of
Number Other Subtotal Number Proportion
n new shares public
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
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
foreign 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
34
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
II. Issuance and listing of securities
□ Applicable √ Not applicable
III. Total number of shareholders and their shareholdings
Unit: share
Total number of preference
Total number of common shareholders at the
17,233 shareholders with resumed voting 0
period-end
rights at the period-end
Particulars about shares held by common shareholders with a shareholding percentage over 5% or by the top ten common shareholders holding shares
Pledged or frozen
Increase/decr shares
Total shares Number of Number of
Nature of Shareholding ease during
Name of shareholder held at the restricted non-restricted Status Numbe
shareholder percentage the reporting
period-end shares held shares held of r of
period
shares shares
FORDCHEE DEVELOPMENT Foreign
29.10% 53,940,530 No change 0 53,940,530 N/A 0
LIMITED corporation
EUPA INDUSTRY Foreign
13.09% 24,268,840 No change 0 24,268,840 N/A 0
CORPORATION LIMITED corporation
GUOTAI JUNAN
Foreign
SECURITIES(HONGKONG) 5.03% 9,320,780 -1,889,147 0 9,320,780 N/A 0
corporation
LIMITED
FILLMAN INVESTMENTS Foreign
2.49% 4,621,596 No change 0 4,621,596 N/A 0
LIMITED corporation
SHENWAN HONGYUAN Foreign
2.39% 4,437,015 3,266,964 0 4,437,015 N/A 0
SECURITIES (H.K.) LIMITED corporation
CHINA MERCHANTS State-owned
1.16% 2,144,050 125,300 0 2,144,050 N/A 0
SECURITIES (HK) CO., LTD. corporation
Domestic
CHEN YONGQUAN 1.02% 1,896,843 No change 0 1,896,843 N/A 0
individual
Foreign
CHEN YONGQING 0.79% 1,458,349 No change 0 1,458,349 N/A 0
individual
Foreign
CHEN LIJUAN 0.71% 1,308,017 No change 0 1,308,017 N/A 0
individual
Domestic
DING XIAOLUN 0.59% 1,100,000 17,700 0 1,100,000 N/A 0
individual
Strategic investor or general corporation becoming
N/A
a top ten shareholder due to placing of new shares
The first, the second and the fourth shareholders are the Company’s corporate controlling shareholders. It
Related parties or acting-in-concert parties among is unknown whether the other shareholders of tradable shares are related parties or acting-in-concert parties
the shareholders above as prescribed in the Administrative Methods for Disclosure of the Shareholding Changes of the Listed
Company’s Shareholders.
Shareholdings of the top ten non-restricted common shareholders
Number of non-restricted shares Type of shares
Name of shareholder
held at the period-end Type Number
FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign shares 53,940,530
EUPA INDUSTRY CORPORATION LIMITED 24,268,840 Domestically listed foreign shares 24,268,840
GUOTAI JUNAN SECURITIES(HONGKONG)
9,320,780 Domestically listed foreign shares 9,320,780
LIMITED
35
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign shares 4,621,596
SHENWAN HONGYUAN SECURITIES (H.K.)
4,437,015 Domestically listed foreign shares 4,437,015
LIMITED
CHINA MERCHANTS SECURITIES (HK) CO.,
2,144,050 Domestically listed foreign shares 2,144,050
LTD.
CHEN YONGQUAN 1,896,843 Domestically listed foreign shares 1,896,843
CHEN YONGQING 1,458,349 Domestically listed foreign shares 1,458,349
CHEN LIJUAN 1,308,017 Domestically listed foreign shares 1,308,017
DING XIAOLUN 1,100,000 Domestically listed foreign shares 1,100,000
Explanation on associated relationship or/and
The first, the second and the fourth shareholders are the Company’s corporate controlling shareholders. It
persons acting in concert among the top ten common
is unknown whether the other shareholders of tradable shares are related parties or acting-in-concert
tradable shareholders and between the top ten
parties as prescribed in the Administrative Methods for Disclosure of the Shareholding Changes of the
tradable shareholders and the top ten common
Listed Company’s Shareholders.
shareholders
Explanation on the top 10 common shareholders
N/A
participating in the margin trading business
Whether the shareholders of a company conducted the transaction of repurchase under the agreement during the Reporting Period
□ Yea √ No
No such situation of the Company during the Reporting Period.
IV. 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
36
2017 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 2016 Annual Report.
II. Change of directors, supervisors and senior management staff
√ Applicable □ Not applicable
Name Position Type Date Reason
Tan Zichang Managing The director left, the position of general manager
Director Left 04/06/2017 term was to expire and apply for resignation
leaveing
Pan Zhirong Chairman of
Elected 04/06/2017 Election
the Board
The board of directors employed Chairman of the
General
Pan Zhirong Employment 04/06/2017 Board Pan Zhirong to serve concurrently as the
manager
general manager
Chen Yanjun Director Elected 04/06/2017 Election
Zhuang Xing Director Elected 04/06/2017 Election
Cai Yuansong Director Elected 04/06/2017 Election
Tu Liandong Independent
Left 04/06/2017 The term expires and left
Director
Independent
Tang Jinmu Elected 04/06/2017 Election
Director
Independent
Bai Shaoxiang Elected 04/06/2017 Election
Director
Independent
Ge Xiaoping Elected 04/06/2017 Election
Director
Shareholder
Luo Qingxing representative Elected 04/06/2017 Election
supervisor
Shareholder
Yang Yongquan representative Elected 04/06/2017 Election
supervisor
Shareholder
Zheng Caiyun representative Elected 04/06/2017 Election
supervisor
37
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section IX. Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No
Section X. Financial Report
I. Auditor’s Report
Whether the semi-annual report has been audited?
□Yes √No
The semi-annual report of the Company has not been audited.
II. Financial statements (attached)
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
38
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section XI. Documents Available for Reference
1. This Report carrying the signature and seal of the Board Chairman;
2. The financial statements signed and sealed by the legal representative, the accounting head for this Report and the accounting head
of the Company; and
3. The originals of all the Company’s documents and announcements which were disclosed on Securities Times, Hong Kong Ta
Kung Pao and http://www.cninfo.com.cn/ in the reporting period) designated by the CSRC.
The Board of Directors of Tsann Kuen (China) Enterprise Co., Ltd.
Board Chairman: Pan Zhirong
August 4, 2017
39
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1. Consolidated balance sheet
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Closing balance Opening balance
Current Assets:
Monetary funds 610,480,711.93 749,497,115.33
Settlement reserves
Intra-group lendings
Financial assets measured at fair value of which changes
1,881,750.00
are recorded in current profits and losses
Derivative financial assets
Notes receivable 990,000.00 1,341,076.70
Accounts receivable 242,579,524.63 273,086,616.38
Accounts paid in advance 24,784,622.14 6,964,904.97
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable 1,038,777.61 5,519.56
Dividend receivable
Other accounts receivable 37,688,979.32 40,381,756.08
Financial assets purchased under agreements to resell
Inventories 190,784,550.61 223,569,121.90
Assets held for sale
Non-current assets due within 1 year
Other current assets 281,488,319.23 139,354,484.01
Total current assets 1,391,717,235.47 1,434,200,594.93
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 39,431,574.89 42,158,120.51
Fixed assets 175,644,211.63 174,529,010.36
Construction in progress 495,974.59 269,633.08
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 28,363,603.13 23,840,277.12
R&D expense
Goodwill
Long-term deferred expenses 3,446,437.48 4,142,242.19
Deferred income tax assets 13,735,365.16 17,104,853.57
Other non-current assets 3,052,537.50 1,248,273.23
Total of non-current assets 264,209,704.38 263,332,410.06
Total assets 1,655,926,939.85 1,697,533,004.99
40
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Closing balance Opening balance
Current liabilities:
Short-term borrowings 125,326,400.00
Borrowings from Central Bank
Customer bank deposits and due to banks and other
financial institutions
Intra-group borrowings
Financial liabilities measured at fair value of which
changes are recorded in current profits and losses
Derivative financial liabilities
Notes payable 10,517,009.49 23,251,704.93
Accounts payable 473,690,790.92 589,418,458.93
Accounts received in advance 14,843,333.11 11,187,023.96
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 39,070,453.37 45,671,498.70
Tax payable 3,384,970.78 16,965,068.11
Interest payable 170,592.29
Dividend payable
Other accounts payable 56,442,168.31 58,411,663.19
Reinsurance premiums payable
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 723,445,718.27 744,905,417.82
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables 250,205.83 187,928.74
Specific payables
Estimated liabilities
Deferred income
Deferred income tax liabilities 1,026,173.00 761,461.43
Other non-current liabilities
Total non-current liabilities 1,276,378.83 949,390.17
Total liabilities 724,722,097.10 745,854,807.99
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income 7,225,639.61 8,491,902.45
41
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Specific reserves
Surplus reserves 29,946,218.17 29,946,218.17
Provisions for general risks
Retained profits 79,037,077.41 90,217,504.90
Total equity attributable to owners of the Company 598,409,580.98 610,856,271.31
Minority interests 332,795,261.77 340,821,925.69
Total owners’ equity 931,204,842.75 951,678,197.00
Total liabilities and owners’ equity 1,655,926,939.85 1,697,533,004.99
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
42
2017 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
Item Closing balance Opening balance
Current Assets:
Monetary funds 7,375,082.84 6,668,219.24
Financial assets measured at fair value of which changes are
recorded in current profits and losses
Derivative financial assets
Notes receivable 990,000.00 1,341,076.70
Accounts receivable 11,171,289.00 30,084,632.38
Accounts paid in advance 449,724.00 224,212.39
Interest receivable
Dividend receivable
Other accounts receivable 875,121.08 539,684.23
Inventories 12,043,765.15 13,862,241.50
Assets held for sale
Non-current assets due within 1 year
Other current assets 553,190.76 404,776.38
Total current assets 33,458,172.83 53,124,842.82
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 922,914,701.56 922,914,701.56
Investing real estate 34,160,766.05 35,720,961.41
Fixed assets 1,759,189.75 1,985,546.98
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 69,749.99 83,249.99
R&D expense
Goodwill
Long-term deferred expenses 43,866.37 69,866.41
Deferred income tax assets 1,606,942.52 1,910,906.98
Other non-current assets
Total of non-current assets 960,595,216.24 962,725,233.33
Total assets 994,053,389.07 1,015,850,076.15
43
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Closing balance Opening balance
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair value of which changes
are recorded in current profits and losses
Derivative financial liabilities
Notes payable
Accounts payable 59,092,653.96 83,598,309.18
Accounts received in advance 2,053,293.49 930,623.95
Payroll payable 1,851,697.45 2,912,637.07
Tax payable 462,224.08 647,392.73
Interest payable
Dividend payable
Other accounts payable 293,315,878.21 298,567,356.74
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 356,775,747.19 386,656,319.67
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 0.00 0.00
Total liabilities 356,775,747.19 386,656,319.67
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 29,946,218.17 29,946,218.17
Retained profits 150,449,453.89 142,365,568.49
Total owners’ equity 637,277,641.88 629,193,756.48
Total liabilities and owners’ equity 994,053,389.07 1,015,850,076.15
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
44
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Consolidated income statement
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB
Item Reporting period Same period of last year
I. Total operating revenues 869,683,758.68 798,108,689.27
Including: Sales income 869,683,758.68 798,108,689.27
II. Total operating costs 859,363,439.15 776,558,722.21
Including: Cost of sales 739,507,468.93 662,817,165.10
Taxes and associate charges 5,695,363.61 2,975,879.16
Selling and distribution expenses 30,129,026.59 40,742,161.54
Administrative expenses 74,782,758.93 80,750,640.07
Financial expenses 9,184,381.52 -9,966,312.52
Asset impairment loss 64,439.57 -760,811.14
Add: Gain/(loss) from change in fair value (“-” means loss) 1,881,750.00 5,645,050.00
Gain/(loss) from investment (“-” means loss) 1,724,730.14 -4,434,437.95
Including: share of profits in associates and joint ventures 8,474.00
Foreign exchange gains (“-” means loss)
Other gains
III. Business profit (“-” means loss) 13,926,799.67 22,760,579.11
Add: non-operating income 3,353,082.90 4,349,049.40
Including: Gains on disposal of non-current assets 336,752.14 542,527.01
Less: non-operating expense 298,400.08 61,724.97
Including: Losses on disposal of non-current assets 205,501.99 17,353.82
IV. Total profit (“-” means loss) 16,981,482.49 27,047,903.54
Less: Income tax expense 3,416,067.76 2,757,325.93
V. Net profit (“-” means loss) 13,565,414.73 24,290,577.61
Net profit attributable to owners of the Company 11,066,574.11 17,789,801.36
Minority shareholders’ income 2,498,840.62 6,500,776.25
VI. After-tax net amount of other comprehensive incomes -1,688,350.45 2,056,156.39
After-tax net amount of other comprehensive incomes
-1,266,262.84 1,542,117.29
attributable to owners of the Company
(I) Other comprehensive incomes that will not be
15,614.61
reclassified into gains and losses
1. Changes in net liabilities or assets with a defined
15,614.61
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
-1,281,877.45 1,542,117.29
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
-1,281,877.45 1,542,117.29
difference
6. Other
45
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Reporting period Same period of last year
After-tax net amount of other comprehensive incomes
-422,087.61 514,039.10
attributable to minority shareholders
VII. Total comprehensive incomes 11,877,064.28 26,346,734.00
Attributable to owners of the Company 9,800,311.27 19,331,918.65
Attributable to minority shareholders 2,076,753.01 7,014,815.35
VIII. Earnings per share
(I) Basic earnings per share 0.06 0.10
(II) Diluted earnings per share 0.06 0.10
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 RMB0, with the corresponding amount for the last period being RMB -2,204,397.97.
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
46
2017 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
Item Reporting period Same period of last year
I. Total sales 37,935,863.38 64,284,182.16
Less: cost of sales 26,745,263.79 51,411,479.65
Business taxes and surcharges 1,034,131.00 376,508.47
Distribution expenses 4,655,640.49 4,712,679.84
Administrative expenses 6,256,545.30 6,407,301.54
Financial costs -77,973.23 9,027.92
Impairment loss -890,712.11 904,000.92
Add: gain/(loss) from change in fair value (“-” means loss)
Gain/(loss) from investment (“-” means loss) 30,310,250.78 107,582,142.80
Including: income from investment on associates and joint ventures 8,474.00
Other gains
II. Business profit (“-” means loss) 30,523,218.92 108,045,326.62
Add: non-operating income 111,632.54 173,232.50
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) 30,634,851.46 108,218,559.12
Less: Income tax expense 303,964.46 16,204,107.07
IV. Net profit (“-” means loss) 30,330,887.00 92,014,452.05
V. After-tax net amount of other comprehensive incomes
(I) Other comprehensive incomes that will not be reclassified into gains
and losses
1. Changes in net liabilities or assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other comprehensive incomes in investees
that cannot be reclassified into gains and losses under the equity method
(II) Other comprehensive incomes that will be reclassified into gains
and losses
1. Enjoyable shares in other comprehensive incomes in investees
that will be reclassified into gains and losses under the equity method
2. Gains and losses on fair value changes of available-for-sale
financial assets
3. Gains and losses on reclassifying held-to-maturity investments
into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation difference
6. Other
VI. Total comprehensive incomes 30,330,887.00 92,014,452.05
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
47
2017 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
Same period of last
Item Reporting period
year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 880,124,770.86 799,779,397.11
Tax refunds received 98,954,676.31 107,484,793.44
Other cash received relating to operating activities 31,713,946.31 34,806,311.83
Subtotal of cash inflows from operating activities 1,010,793,393.48 942,070,502.38
Cash paid for goods and services 774,245,705.02 764,993,901.10
Cash paid to and for employees 133,551,803.87 123,885,869.23
Various taxes paid 24,040,423.11 12,713,941.82
Other cash payment relating to operating activities 136,466,757.44 100,648,796.52
Subtotal of cash outflows from operating activities 1,068,304,689.44 1,002,242,508.67
Net cash flows from operating activities -57,511,295.96 -60,172,006.29
II. Cash flows from investing activities:
Cash received from withdrawal of investments 365,334,812.92 214,290,235.67
Cash received from return on investments 236,201.06
Net cash received from disposal of fixed assets, intangible assets and other
2,112,841.63 5,830,678.69
long-term assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities 42,313,208.55 75,400,000.00
Subtotal of cash inflows from investing activities 409,997,064.16 295,520,914.36
Cash paid to acquire fixed assets, intangible assets and other long-term
38,298,093.66 30,738,906.49
assets
Cash paid for investment 503,252,795.01 375,011,646.84
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities 377,386,926.35 169,327,000.00
Subtotal of cash outflows from investing activities 918,937,815.02 575,077,553.33
Net cash flows from investing activities -508,940,750.86 -279,556,638.97
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Including: Cash received from minority shareholder investments by
subsidiaries
Cash received from borrowings 151,183,998.00 65,128,000.00
Cash received from issuance of bonds
Other cash received relating to financing activities 6,774,375.98 4,519,265.19
Subtotal of cash inflows from financing activities 157,958,373.98 69,647,265.19
Repayment of borrowings 24,730,160.00
Cash paid for interest expenses and distribution of dividends or profit 32,521,569.11 32,363,500.69
Including: dividends or profit paid by subsidiaries to minority
15,707,954.97 13,824,332.69
shareholders
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 57,251,729.11 32,363,500.69
48
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Reporting period
year
Net cash flows from financing activities 100,706,644.87 37,283,764.50
IV. Effect of foreign exchange rate changes on cash and cash equivalents -8,511,122.49 6,554,846.72
V. Net increase in cash and cash equivalents -474,256,524.44 -295,890,034.04
Add: Opening balance of cash and cash equivalents 738,195,729.53 675,824,861.29
VI. Closing balance of cash and cash equivalents 263,939,205.09 379,934,827.25
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
49
2017 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
Item Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 55,674,286.26 54,541,061.46
Tax refunds received
Other cash received relating to operating activities 21,418,487.10 21,305,861.45
Subtotal of cash inflows from operating activities 77,092,773.36 75,846,922.91
Cash paid for goods and services 53,556,689.27 69,402,417.98
Cash paid to and for employees 7,189,494.06 7,241,953.89
Various taxes paid 2,292,808.84 2,112,861.45
Other cash payment relating to operating activities 21,465,798.37 147,433,841.45
Subtotal of cash outflows from operating activities 84,504,790.54 226,191,074.77
Net cash flows from operating activities -7,412,017.18 -150,344,151.86
II. Cash flows from investing activities:
Cash received from retraction of investments 130,000,000.00
Cash received from return on investments
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 0.00 130,000,000.00
Cash paid to acquire fixed assets, intangible assets and other long-term
25,500.00 13,798.00
assets
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 25,500.00 1,013,798.00
Net cash flows from investing activities -25,500.00 128,986,202.00
III. Cash Flows from Financing Activities:
Cash received from capital contributions 30,310,250.78 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 30,310,250.78 41,472,998.07
Repayment of borrowings
Cash paid for interest expenses and distribution of dividends or profit 22,247,001.60 18,539,168.00
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 22,247,001.60 18,539,168.00
Net cash flows from financing activities 8,063,249.18 22,933,830.07
IV. Effect of foreign exchange rate changes on cash and cash equivalents 81,131.60 -6,803.16
V. Net increase in cash and cash equivalents 706,863.60 1,569,077.05
Add: Opening balance of cash and cash equivalents 6,668,219.24 7,750,025.58
VI. Closing balance of cash and cash equivalents 7,375,082.84 9,319,102.63
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
50
2017 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
Reporting period
Equity attributable to owners of the Company
Item
Other equity instruments Minority interests Total owners’ equity
Less: Other
Specific General risk
Share capital Preferred Perpetual Capital reserve treasur comprehensive Surplus reserve Retained profit
Other reserve reserve
shares bonds y stock incomes
I. Balance at the end of the previous year 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00
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 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00
III. Increase/ decrease in the period (“-” means decrease) -1,266,262.84 -11,180,427.49 -8,026,663.92 -20,473,354.25
(I) Total comprehensive incomes -1,266,262.84 11,066,574.11 2,076,753.01 11,877,064.28
(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 -22,247,001.60 -10,103,416.93 -32,350,418.53
1. Appropriations to surplus reserves
2. Appropriations to general risk provisions
3. Appropriations to owners (or shareholders) -22,247,001.60 -10,103,416.93 -32,350,418.53
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
IV. Closing balance 185,391,680.00 296,808,965.79 7,225,639.61 29,946,218.17 79,037,077.41 332,795,261.77 931,204,842.75
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
51
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued) Unit: RMB
Same period of last year
Equity attributable to owners of the Company
Item Other equity instruments
Less: General Minority interests Total owners’ equity
Other comprehensive Specific
Share capital Preferred Perpetual Capital reserve treasury Surplus reserve risk Retained profit
Other incomes reserve
shares bonds stock reserve
I. Balance at the end of the previous year 185,391,680.00 282,916,698.67 3,247,335.35 20,962,521.51 69,510,872.20 358,467,426.11 920,496,533.84
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 3,247,335.35 20,962,521.51 69,510,872.20 358,467,426.11 920,496,533.84
III. Increase/ decrease in the period (“-” means
13,892,267.12 5,244,567.10 8,983,696.66 20,706,632.70 -17,645,500.42 31,181,663.16
decrease)
(I) Total comprehensive incomes 5,244,567.10 48,229,497.36 16,469,280.00 69,943,344.46
(II) Capital increased and reduced by owners 13,892,267.12 -20,290,447.73 -6,398,180.61
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 13,892,267.12 -20,290,447.73 -6,398,180.61
(III) Profit distribution 8,983,696.66 -27,522,864.66 -13,824,332.69 -32,363,500.69
1. Appropriations to surplus reserves 8,983,696.66 -8,983,696.66
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
IV. Closing balance 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
52
2017 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
Reporting period
Other equity instruments Less: Other
Item Specific
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit Total owners’ equity
Other reserve
shares bonds stock incomes
I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48
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 29,946,218.17 142,365,568.49 629,193,756.48
III. Increase/ decrease in the period (“-” means decrease) 8,083,885.40 8,083,885.40
(I) Total comprehensive incomes 30,330,887.00 30,330,887.00
(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 -22,247,001.60 -22,247,001.60
1. Appropriations to surplus reserves
2. Appropriations to owners (or shareholders) -22,247,001.60 -22,247,001.60
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 29,946,218.17 150,449,453.89 637,277,641.88
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
53
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued) Unit: RMB
Same period of last year
Other equity instruments
Item Less: Other
Specific
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit Total owners’ equity
Other reserve
shares bonds stock incomes
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) 8,983,696.66 62,314,101.94 71,297,798.60
(I) Total comprehensive incomes 89,836,966.60 89,836,966.60
(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 8,983,696.66 -27,522,864.66 -18,539,168.00
1. Appropriations to surplus reserves 8,983,696.66 -8,983,696.66
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 29,946,218.17 142,365,568.49 629,193,756.48
Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing
54
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to Financial Statements as of June 30, 2017
(All currency amounts herein are expressed, unless otherwise stated, in RMB.)
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 February 16, 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 June 30, 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 December 28, 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 June
30, 2017, 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 June 30,
2017, 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 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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2017 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
August 4, 2017.
There were 10 subsidiaries be included in 2017 of the Company with the details in Notes VIII
“Equities among other entities”. There was no change of consolidated scope during the Reporting
Period.
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 February 15, 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 June 30,
2017. 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. 22 “Revenue” for the description. For description of significant
accounting judgments and estimates made by management, see Note IV. 26 “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.
3. Monetary Unit
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Yuan (RMB) 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 RMB
as their functional currency, the overseas subsidiaries decide the HKD, USD, NTD or Indonesian
Rupiah as their functional currency in accordance with the business in which currency of the
primary economic environment. The Company adopts RMB to prepare its functional statements.
4. Accounting treatments of business combination under common control and under not the
common control
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 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
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 51 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 IV. 12 “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).
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.
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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. 12
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Long-term equity investments and Note IV. 9 Financial instruments for details.
The company through multiple transactions step deals with disposal of the subsidiary’ s equity
investment until the loss of control, need to distinguish between equity until the disposal of a
subsidiary’s loss of control over whether the transaction is package deal. Terms of the transaction
disposition of equity investment in a subsidiary, subject to the following conditions and the
economic impact of one or more of cases, usually indicates that several transactions should be
accounted for as a package deal: ① these transactions are considered simultaneously, or in the case
of mutual influence made, ② these transactions as a whole in order to achieve a complete business
results; ③ the occurrence of a transaction depends on occurs at least one other transaction; ④ a
transaction look alone is not economical, but when considered together with other transaction is
economical. If they does not belong to the package deal, each of them separately, as the case of a
transaction in accordance with “without losing control over the disposal of a subsidiary part of a
long-term equity investments“ (see Note IV. 12. (2), ④) and “due to the disposal of certain equity
investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)
principles applicable accounting treatment. Until the disposal of the equity investment loss of
control of a subsidiary of the transactions belonging to the package deal, the transaction will be
used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing
control of the price of each disposal entitled to share in the net assets of the subsidiary’ s investment
corresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the
loss of control or loss in the period.
6. Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. A joint
arrangement is either a joint operation or a joint venture, depending on the rights and obligation of
the Company in the joint arrangement. A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the assets, and obligations for the liabilities,
relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the arrangement.
The Company accounts for joint ventures using the equity method, see Note IV. 12. (2), ② for
details.
The company, a joint operator, recognises in relation to its interest in a jointoperation: (a) its assets,
including its share of any assets held jointly; (b) its liabilities, including its share of any liabilities
incurred jointly ;(c) its revenue from the sale of its share of the output arising from thejoint
operation ;(d) its share of the revenue from the sale of the output by the jointoperation; and (e) its
expenses, including its share of any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint operator,
such as a sale or contribution of assets, the Company, prior to disposal of the assets to a third party,
recognises gains and losses resulting from such a transaction only to the extent of the other parties'
interests in the joint operation.When such transactions provide evidence of a reduction in the net
realizable value of the assets to be sold or contributed to the joint operation, which is in line with
provision stipulated by CAS 8 - Assets Impairment, those losses shall be recognised fully by the
Company. When there is evidence of a reduction in the net realizablevalue of the assets to be
purchased from the joint operation, the Company shall recognise its share of the losses.
7. 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.
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8. Foreign exchange
(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
At 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 ①those 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, ②hedging accounting, the exchange difference related to hedging
instruments for the purpose of net oversea operating investment is recorded in the comprehensive
income till the date of disposal and recognized in profit or loss of the period; exchange difference
from changes of other account balance of foreign currency monetary items, ③available-for-trade is
recorded into profit or loss except for amortized cost.
When prepared the consolidated financial statement involving in overseas business, if there was
foreign currency monetary program virtually constituting overseas business net investment, the
exchange difference caused from interests change should be recorded into other comprehensive
income. When an enterprise disposes of an overseas business, it should be converted into the profits
and losses of the current period.
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 RMB 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.
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The opening and actual amount of last year are presented in the financial statement after translation.
At the disposal of all of the company's ownership interest in a foreign operation, or due to the
disposal of part of the equity investment or other reasons, the loss of control over a foreign
operation, the project owner's equity in the balance sheet listed under the relevant overseas
operations attributable to statements of the parent company's shareholders' equity of foreign
currency translation differences, all transferred to the disposal of the income statement.
At the disposal of part of the equity investment or other causes lower hold percentage overseas
business interests, but does not lose control over a foreign operation, and disposal of the foreign
operation section related to foreign currency translation differences attributable to minority interests,
is not transferred to the income statement. At the disposal of a foreign operation as part of the equity
joint venture or joint ventures, foreign currency financial statements of the foreign operation and the
associated translation difference in proportion to dispose of the foreign operation into the disposal
of the income statement.
9. Financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or
financial liability. The financial assets and financial liabilities initially recognized by the Company
shall be measured at their fair values. For the financial assets and liabilities measured at their fair
values and of which the variation is recorded into the profits and losses of the current period, the
transaction expenses thereof shall be directly recorded into the profits and losses of the current
period and for other categories of financial assets and financial liabilities, the transaction expenses
thereof shall be included into the initially recognized amount.
(1) Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has
an active market, the Company uses quoted price in the active market to establish its fair value. The
quoted price in the active market refers to the price that can be regularly obtained from exchange
market, agencies, industry associations, pricing authorities; it represents the fair market trading
price in the actual transaction. For a financial instrument which does not have an active market, the
Company establishes fair value by using a valuation technique. Valuation techniques include using
recent arm’s length market transactions between knowledgeable, willing parties, reference to the
current fair value of another instrument that is substantially the same, discounted cash flow analysis
and option pricing models.
(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
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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 assets at fair value through profit or loss are subsequently measured at the fair value. Any
gains or losses arising from changes in the fair value and any dividends or interest income earned
on the financial assets are recognized in the profit or loss.
② Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.
Such kind of financial assets are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition, impairment or amortization are
recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the
expected life of the financial asset or financial liability or, where appropriate, a shorter period to the
net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow
considering all contractual terms of the financial asset or financial liability without considering
future credit losses, and also consider all fees paid or received between the parties to the contract
giving rise to the financial asset and financial liability that are an integral part of the effective
interest rate, transaction costs, and premiums or discounts, etc.
③ Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are
not quoted in an active market. Financial assets classified as loans and receivables by the Company
include note receivables, account receivables, interest receivable dividends receivable and other
receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit
or loss.
④ Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on
initial recognition as available for trade, and financial assets that are not classified as financial
assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.
The closing cost from sellable debt instruments investment was confirmed by post-amortization
costs, that is initial confirmed amount deducting the paid prinpical, add or minus the accumulative
amount of amortization incurred from amortizing the balance between the initially recognized
amount and the amount of the maturity date by adopting the actual interest rate method, and
deducting the impairment losses that have actually incurred. The closing cost from sellable debt
instruments investment was its initial received cost.
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 Group 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.
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An impairment test shall be made on the financial assets with significant single amounts. If any
objective evidence shows that it has been impaired, the impairment-related losses shall be
recognized and shall be recorded into the profits and losses of the current period. With regard to the
financial assets with insignificant single amounts, an independent impairment test may be carried
out, or they may be included in a combination of financial assets with similar credit risk features so
as to carry out an impairment-related test. Where, upon independent test, the financial asset
(including those financial assets with significant single amounts and those with insignificant
amounts) has not been impaired, it shall be included in a combination of financial assets with
similar risk features so as to conduct another impairment test. The financial assets which have
suffered from an impairment loss in any single amount shall not be included in any combination of
financial assets with similar risk features for any impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the
estimated present value of future cash flow. The difference is recorded as impairment loss. If there
is objective evidence to indicate the recovery of value of financial assets after impairment, and it is
related with subsequent event after recognition of loss, the impairment loss recorded originally can
be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed
the amortized cost of the financial assets without provisions of impairment loss on the reserving
date.
② Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily
according to the integrated relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining
in fair value that had been recognized in capital reserve shall be removed and recognized in profit or
loss. The amount of the cumulative loss that is removed shall be difference between the acquisition
cost with deduction of recoverable amount less amortized cost, current fair value and any
impairment loss on that financial asset previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of the
financial asset is recovered, and it is objectively related to an event occurring after the impairment
loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on
available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss
on available-for-trade debt instrument is recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value
cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be
settled by delivery of such an unquoted equity instrument shall not be reversed.
(4) Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
① the rights to receive cash flows from the asset have expired;
② the enterprise has transferred its rights to receive cash flows from the asset to a third party under
a pass-through arrangement; or
③ the enterprise has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred
norretained 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
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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.
If the Company endorses the financial assets sold by right of recourse and holding financial assets,
it needs to confirm that whether almost all risks and remuneration in the ownership of financial
assets have been transferred or not. Where an enterprise has transferred nearly all of the risks and
rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the
financial asset ； If it retained nearly all of the risks and rewards related to the ownership of the
financial asset, it shall not stop recognizing the financial asset. If the Company does not transfer or
retain nearly all of the risks and rewards related to the ownership of the financial asset, then it
continuously judges that whether the Company retain the control of the assets, and conducts
accounting treatment according to the principles described in former paragraphs.
(5) Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair
value through profit or loss and other financial liabilities. For financial liabilities at fair value
through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the
current period, and transaction costs relating to other financial liabilities are included in the initial
recognition amounts.
① Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at
the initial recognition to be measured by the fair value follows the same criteria as the classification
by which financial assets held-for-trade and financial assets designed at the initial recognition to be
measured by the fair value and their changes are recorded in the current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair
values are adopted for subsequent measurement. All the gains or losses on the change of fair value
and the expenses on dividends or interests related to these financial liabilities are recognized in
profit or loss for the current period.
② Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price
in an active market and their fair value cannot be measured reliably, is subsequently measured by
cost Other financial liabilities are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition or amortization is recognized in profit
or loss for the current period.
③ Financial guarantee contract
For the financial guarantee contracts which are not designated as a financial liability measured at its
fair value and the variation thereof is recorded into the profits and losses of the current period, they
should be initially recognized by fair value. a subsequent measurement shall be made after they are
initially recognized according to the higher one between the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies and the surplus after accumulative
amortization as determined according to the principles of the Accounting Standards for Enterprises
No. 14 - Revenues is subtracted from the initially recognized amount.
(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
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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.
10. 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;
④ Other objective evidences showing the impairment of the receivables.
(2) Method for bad debts provision
① Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 10Proportion receivables are classified as receivables
of individual significance.
For an account receivable that is individually significant, the asset is individually assessed for
impairment, the impairment loss is recognized at the difference between the present value of future
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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
271－365 days 50.00 50.00
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.
The reason: if there is objective evidence indicating that the accountable receivable is individually
insignificant, and the credit risk does not conform to other accounts receivable’s credit risk, the
impairment test should be conducted.
The withdrawal method: the difference between the present value of future cash flow is less than the
carrying amount, the impairment test should be conducted and provision is made accordingly.
The Company conducted the impairment test for margin and deposit. If there is no objective
evidence indicating mpairmnet, then bad debts provision is not made.
(3) The reversal of bad debts provision
If there is objective evidence of recovery in value of account receivables, and the recovery can be
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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.
The Company transfer the accounts receivables to financial institutions by right of no recourse, the
difference between the book value that the transaction amount deduct the written off accounts
receivables and related taxes should be recorded into current profit or loss
11. Inventories
(1) Classification of inventory
Inventories are classified into materials in transit, raw materials, work-in-progress, finished goods,
materials and goods of consignment and revolving materials etc.
(2) Valuation method of inventories
Inventories are initially carried at the planed cost, to record the difference between planned cost and
actual cost through the cost variances account, and carryover the cost variances of issued inventory
on schedule, to adjust the planned cost to actual cost. Cost of issue is measured using the weighted
average method.
(3) Basis for determining net realizable value of inventories and provision methods for decline in
value of inventoriesNet realizable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion, the estimated costs necessary to make the sale and
relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes
into consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
If the net realizable value is below the cost of inventories, a provision for decline in value of
inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value
items of inventories, Provision for decline in value is made based on categories of inventories. For
items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably
evaluated separately from other items in that product line provision for decline in value is
determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously
caused inventories to be written down below cost no longer exist so that the net realizable value of
inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method for low cost and short-lived consumable items and packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method,
packaging materials are amortized using immediate write-off method.
12. Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has
control, joint control or significant influence over the long-term equity investments. The Company
invested does not have control, joint control or significant influence over the long-term equity
investments as financial assets available for sale or at fair value and the changes included financial
assets through profit or loss, which refer to the accounting policies in Note IV. 9 “financial
Instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant
stipulations are common, related activities and the arrangement must be after sharing control
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participants agreed to the decision-making. Significant influence is the Company s financial and
operating policies of the entity has the right to participate in decision-making, but can not control or
with other parties joint control over those policies.
(1) Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common
control is measured at the acquirer’s share of the combination date book value of the acquiree’s net
equity in the ultimate controller’s consolidated financial statements. The difference between the cost
and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to
capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is
transferred by way of issuing equity instruments, the face value of the equity instruments issued is
recognised in share capital and the difference between the costs of the face value of the equity
instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is
insufficient. Where a business combination under common control is achieved by multiple
acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to determine
whether the multiple acquisitions shall be viewed as one single transaction. If the multiple
acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be accounted
for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one
single transaction, the difference between the cost of combination and the sum of the book value of
the investment in the acquiree immediately before the combination and the book value of the
consideration transferred to acquire additional shareholding is adjusted to capital reserves, and to
retained earnings if capital reserves is insufficient. Cumulative other comprehensive income
associated with the investment recognised as a result of the treatment of equity method or
available-for-sale financial assets prior to the combination is not affected by the combination.
The cost of a long-term equity investment acquired through business combination not under
common control is the fair value of the assets transferred, liabilities incurred or assumed and equity
instruments issued. Where a business combination not under common control is achieved by
multiple acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to
determine whether the multiple acquisitions shall be viewed as one single transaction. If the
multiple acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be
accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed
as one single transaction, the cost of combination is measured at the sum of book value of the
investment in the acquiree immediately before the combination and cost of acquisition of additional
shareholding. If the investment prior to the combination is measured by fair value, cumulative other
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
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additional investment, is measured as the fair value determined in accordance with CAS 22 -
Financial Instruments: Recognition and Measurement plus the cost of additional investment.
(2) Subsequent measurement
To be invested joint control (except constitute common operator) or long-term equity investments
significant influence are accounted for using the equity method. In addition, the Company’s
financial statements using the cost method of accounting for long-term equity can exercise control
over the investee.
① Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except
for cash dividends or profits declared but not yet paid that are included in the price or consideration
actually paid upon acquisition of the long-term equity investment, investment income is recognized
in the period in accordance with the attributable share of cash dividends or profit distributions
declared by the investee.
② Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing
enterprise’s interest in the fair values of the investee’s identifiable net assets at the time of
acquisition, no adjustment shall be made to the initial investment cost.
The carrying amount of a long-term equity investment measured using the equity method is
adjusted by the Company’s share of the investee’s net profit and other comprehensive income,
which is recognized as investment income and other comprehensive income respectively. The
carrying amount of a long-term equity investment measured using the equity method is reduced by
profit distribution or cash dividends announced by the investee. The carrying amount of a long-term
equity investment measured using the equity method is also adjusted by the investee’s equity
movement other than net profit, other comprehensive income and profit distribution, which is
adjusted to capital reserves. The net profit of the investee is adjusted by the fair value of the
investee’s identifiable assets as at acquisition. The financial statements and hence the net profit and
other comprehensive income of an investee which does not adopt accounting policies or accounting
period uniform with the Company is adjusted by the Company’s accounting policies and accounting
period. The Company’s share of unrealized profit or loss arising from related party transactions
between the Company and an associate or joint venture is deducted from investment income.
Unrealized loss arising from related party transactions between the Company and an associate or
joint venture which is associated with asset impairment is not adjusted. Where assets transferred to
an associate or joint venture which form part of the Company’s investment in the investee but which
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.
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For long-term equity investments in associates and joint ventures which had been held by the
Company before its first time adoption of Accounting Standards for Business Enterprises, where the
initial investment cost of a long-term equity investment exceeds the Company’s interest in the
investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or
loss on a straight line basis over the original remaining life.
③ Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests
and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital
reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted
against returned earnings.
④ Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a change in
control, the difference in the net asset between the amount of disposed long-term investment and the
amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of
long-term investment in a subsidiary involves loss of control over the subsidiary, the related
accounting policies in Note IV. 5. (2) applies. For disposal of long-term equity investments in any
situation other than the fore-mentioned situation, the difference between the book value of the
investment disposed and the consideration received is recognized in profit or loss.
For the disposal of long-term equity investments in other cases, the difference between the book
value of the disposed equity and its actual acquisition price is charged to the current profits and
losses.
Where a long-term equity investment is measured by the equity method both before and after part
disposal of the investment, cumulative other comprehensive income relevant to the investment
recognised prior to the acquisition is treated in the same manner that the investee disposes the
relevant assets or liabilities proportionate to the disposal. The investee’s equity movement other
than net profit, other comprehensive income and profit distribution is recognised in profit or loss
proportionate to the disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the
investment, cumulative other comprehensive income relevant to the investment recognised, as a
result of accounting by equity method or recognition and measurement principles applicable to
financial instruments, prior to the Company’s acquisition of control over the investee is treated in
the same manner that the investee disposes the relevant assets or liabilities and recognised in profit
or loss proportionate to the disposal. The investee’s equity movement other than net profit, other
comprehensive income and profit distribution, as a result of accounting by equity method, is
recognised in profit or loss proportionate to the disposal.
Where the Company’s control over an investee is lost due to partial disposal of investment in the
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
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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.
13. Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings. In addition, the Company holds for future operating lease vacant buildings, if the board
of directors (or similar body) to make a written resolution, made it clear that their intention for
rent and shall not occur in the short term change, but also as an investment real estate
presentation .Investment property is initially measured at cost. Subsequent expenditures related to
an investment real estate are likely to flow about the economic benefits of the asset and its cost can
be measured reliably, is included in the cost of investment real estate. Other subsequent
expenditures should be recorded in the current profits or losses when incurred.
The Group uses the cost model for subsequent measurement of investment property, and in
accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note IV.
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
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book value and related taxes and profit or loss.
14. 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. 19 Impairment of non-current
and non-financial assets.
(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership
of an asset. Title may or may not eventually be transferred. Fixed assets that are held under finance
leases shall be depreciated by applying the same policy as that for the fixed assets owned by the
Company. If it can be reasonably determined that the ownership of the leased assets can be obtained
at the end of the lease period, the leased assets are depreciated over their useful lives; otherwise, the
leased assets are depreciated over the shorter of the lease terms and the useful lives of the leased
assets.
(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
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accounting estimates.
15. 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. 19.
16. Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings,
ancillary costs incurred in connection with the arrangement of borrowings, and exchange
differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an
expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,
investment property and inventories, etc.) that necessarily take a substantial period of time for
acquisition, construction or production to get ready for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the
actual interest expense incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the
temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such
borrowings is determined by applying a weighted average interest rate to the weighted average of
the excess amounts of accumulated expenditure on the asset over and above the amounts of
specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing
denominating in foreign currency are all capitalized. Exchange differences in connection with
general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which
need a long time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted by activities other than those necessary to prepare
the asset for its intended use or sale, when the interruption is for a continuous period of more than 3
months. Borrowing costs incurred during these periods recognized as an expense for the current
period until the acquisition, construction or production is resumed.
17. 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
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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:
It is technically feasible to complete the intangible asset so as to use it or sell it;
It is clearly invented to complete the intangible asset in order to use it or sell it;
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;
There are sufficient technical, financial and other resources to complete the intangible asset and
to use it or sell it;
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 IV.19.
18. Long-term deferred expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a
beneficial period (a period during which an expense is expected to bring economic benefits to an
entity) which is longer than one year and which includes at least part of the reporting period during
which the expense was incurred and subsequent reporting periods. An item of long-term deferred
expenses is recognized at the actual amount of the expense incurred and allocated in each month of
the beneficial period using the straight line method.
19. 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
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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.
After the asset impairment loss is determined, recoverable value amounts would not be returned in
future
20. 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 mainly include basic old-age insurance, unemployment insuranceand
annuities. Post-employment benefits includedefined contribution plans and defined benefit plans.
Relevant contribution amount in the defined contribution plan shall be recognised as cost of related
assets or profit or loss during the year. The defined benefit plan in the company is old-age insurance.
Projected unit credit cost method (“PUC”) was used by independent actuaries engaged by the
Company to determine the present value of the defined benefit obligations with unbiased and
consistent actuarial assumptions regarding population variables and financial variables. Defined
benefit obligation was presented with the present value and the related current service cost was
accounted into current profit or loss.
When the Company terminates the labor relationship with employees prior to the employment
contracts, or encourages employees to accept voluntary redundancy compensation proposals in
this company, a provision shall be recognised for the compensation arising from the termination of
employment relationship with employees at the time when the Company can not unilaterally
withdraw layoff proposal termination benefits provided due to termination of employment, or the
company ensures the costs related to the payment for termination benefits related to the
restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or
loss. However, if termination benefits can not be fully paid after twelve months of the reporting
date,the liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits. The salaries and insurance
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to be paid from the date when employees stop providing services to the date of normal
retirementshall be recognised in profit or loss (termination benefits) when satisfying the
requirements of a provision.
Other long-term employee benefits provided by the company to employees that is in line with
defined contribution plans shall adopt the accounting treatment in accordance with defined
contribution plans, otherwise the accounting treatment of defined benefit plans.
21. 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:
(1) This obligation is current obligation of the Company; and,
(2) The performance of this obligation will probably cause economic benefits outflow of the
Company; and,
(3) The 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.
22. Revenue
(1) Revenue from sales of goods
Revenue from sales of goods is recognised when significant risks and rewards attached to the
ownership of the goods sold are passed to the buyer, when neither continual involvement in the
rights normally associated with the ownership of the goods sold nor effective control over the goods
controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow
of future economic benefits is probable, and when cost incurred or to be incurred associated with
the goods sold is reliably measurable.
For the export sales of the products of the Company, no matter what the sales pattern adopt,
recognition of revenue according to the sales contract or conventions listed in the orders, for those
product sales employ the FOB domestic ports settlement, revenue recognition upon the bill of
lading acquired from the shipping company and conducted the export declaration; for those product
sales employ the FOB oversea ports settlement, revenue recognition upon the export declaration
finished and shipment at the buyer’s receiving dock, as well as acquired the bill of lading from the
shipping company.
Accounting treatment for sales return: in accordance with the international trade prevailing rules,
the FOB settlement employed, indicate to the buyer has inspected and accepted those purchased
commodities at the shipment dock, after acceptance and shipping the relevant risks has been
transferred to buyer, therefore the Company has no individually recognized for the events, but the
amount shall be recognized when incurred and accounted through in profit and loss in current
period. Accounting treatment for product claims: calculate the claim indemnity rate, according to
the proportion of actually payment for those product claims during recently two years account for
the corresponding period sales revenue, at the end of period, on the basis of current period sales
revenue and the claim indemnity rate to recognize the claim indemnity expense.
(2) Revenue from rendering of service
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Revenue arising from rendering of services is recognised 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 recognised as
cost reimbursement received or to be received, if any, and cost incurred is recognised in profit or
loss for the period in which the cost is incurred. No revenue is recognised if cost reimbursement is
not probable.
When a contract between the group and another entity involves both sales of goods and rendering
for services, the sales of goods and rendering of services are accounted for separately if they are
distinguishable and separately measurable; the contract is accounted for as if it is a contract
involves only sales of goods if the sales of goods and rendering of services are either
indistinguishable or distinguishable but not separately measurable.
(3) Revenue from construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract should be recognised as revenue and
expenses according to the percentage of completion.at the balance sheet date.
The outcome of a construction contract can be estimated reliably when all the following conditions
are satisfied: ①total contract revenue can be measured reliably; ②it is probable that the economic
benefits associated with the contract will flow to the enterprise; ③the contract costs attributable to
the contract can be clearly identified and measured reliably so that actual contract costs incurred can
be compared with prior estimates; and, ④both the contract costs to complete the contract and the
stage of contract completion at the balance sheet date can be measured reliably.
When the outcome of a construction contract cannot be estimated reliably, but revenue should be
recognised only to the extent of contract costs incurred that it is probable will be recoverable; and If
the cost cannot be recovered, contract costs should be recognised as an expense in the period in
which they are incurred and the contract revenue cannot be recognised. When the uncertainty that
makes the outcome of the construction unable to be estimated reliably disappears, the revenue and
cost are recognised according to the percentage of completion.
An expected loss on the construction contract should be recognised as an expense during the year
when the total contract cost is expected to be higher than the total contract revenue.
The incurred cost and accumulated gross profit (loss) and the settled price of the construction
contract are disclosed as a net amount in the balance sheet. The excess amount of the incurred cost
and accumulated gross profit (loss) over the settled price of the construction contract is disclosed as
inventory, while the excess amount of the settled price over the incurred cost and accumulated gross
profit (loss) of the construction contract is disclosed as advance from customers.
(4) Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
(5) Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of
time for which the enterprise's cash is used by others and the actual interest rate.
23. Government Grants
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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 asgrant related to the assets; the others will be
defined asgrants related to the income. If the fileshave not clearly defined government grants
objects, it will be divided in the following manner compartmentalize the grantsrelated to the
assetsandgrants related to the income: (1) government documents defined specific projects targets,
according to the relative proportion of the budgets of specific items included the expenditure of to
form assets and the expenditure will be charged into expense to be divided, the division ratio
required at each balance sheet date for review and make changes if necessary; (2) government
documents to make a general presentation purposes only, does not specify a particular project, as
grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount
received or receivable. If a government grant is in the form of a non-monetary asset, it is measured
at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A
government grant measured at a nominal amount is recognized immediately in profit or loss for the
period.
When received the government grantsactually, 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 are 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.
24. Deferred tax assets and deferred tax liabilities
(1) Income tax for the current period
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
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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
The difference between the book value of some assets and liabilities and their tax basis, and the
temporary difference which is not recognized as assets and liabilities but can be recognized by the
difference between the book value of tax basis items and their tax basis according to taxation
regulation, will be recognized as deferred income tax assets and deferred income tax liabilities by
adopting liabilities method of balance sheet.
Related to the initial recognition of goodwill, taxable temporary difference related to the initial
recognition of assets and liabilities produced from the transaction that is not business merger also
will not influence accounting profit and taxable income(or deductible loss) when incurred, will not
be recognized as the related deferred income tax liabilities. In addition, the taxable temporary
difference related to subsidiaries, associated company, and joint venture will also be not recognized
as the related deferred income tax liabilities if the Company can control the time of temporary
difference reverse and the temporary difference may not be reversed in the foreseeable future.
Except the aboved exceptional examples, the Company recognizes deferred income tax liabilities
from all other taxable temporary difference.
Deductible temporary difference related to the initial recognition of assets and liabilities produced
from the transaction that is not business merger also will not influence accounting profit and taxable
income(or deductible loss) when incurred, will not be recognized as the related deferred income tax
assets. In addition, the deductible temporary difference related to subsidiaries, associated company,
and joint venture will also be not recognized as the related deferred income tax assets if the
temporary difference may not be reversed in the foreseeable future or taxable income of deductible
temporary difference used for deduction may not be gained in the future. Except the aboved
exceptional examples, the Company recognizes deferred income tax assets from other deductible
temporary difference with the limit that the Company probably gain taxable income used for
deducting deductible temporary difference.
The deductible loss tax deduction that can be carried forward to subsequent years, will be
recognized as deferred income tax assets with the limit that the Company probably gain future
taxable income used for deducting deductible loss tax deduction.
Deferred income tax assets and deferred income tax liabilities will be measured on the balance sheet
date by applicable tax rate during the period of receiving related assets and paying related liabilities
according to taxation regulation.
The Company rechecks the carrying amount of deferred tax asset at the balance sheet date. If it’s
probable that sufficient taxable profit will not be available against which the deductible temporary
difference can be utilized, the Company shall write down the carrying amount of deferred tax asset,
or reverse the amount written down later when it’s 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
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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.
25 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 Leasorunder operating Lease
Lease income from operating leases shall be recognized by the leasorin profit or loss on a
straight-line basis over the lease term. Initial direct cost of significance in amount shall be
capitalized when incurred. If another basis is more systematic and rational, that basis may be used.
Contingent rents are credited to profit or loss in the period in which they actually arise.
(3) Financial lease to which the Company is the leasee
At the commencement of a financial lease to which the Company is the Leasee, the lower of the
lease-commencement-date fair value of the leased asset and the present value of the minimum lease
payment is recognised as the cost of the leased asset; the minimum lease payment is recognised as a
long-term payable; and the excess of the long-term payable over the amount recognised as the cost
of the leased asset is recognised as unrecognised lease expenditure. Expenses incurred during the
negotiation and signing of the lease contract for activities directly attributable to the lease are
recognised as part of the cost of the leased asset. The residual amount after deducting the
unrecognised lease expenditure from the long-term payable is divided into non-current liability and
non-current liability due within one year depending on maturity and presented on (consolidated)
financial statements separately.
The unrecognised lease expenditure is amortised over the lease term using the effective interest rate
method and the amortisation is recognised as lease expense in profit or loss for the relevant period.
Contingency lease rental is recognised in profit or loss when it is incurred.
(4) Financial lease to which the Company is the leasor
At the commencement of a financial lease to which the Company is the leasor, the sum of the
minimum lease rental receivable and the initial expenses incurred for activities directly attributable
to the lease is recognised as the initial amount of the respective financial lease rental receivable;
unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the
minimum lease rental receivable, the initial expenses incurred for activities directly attributable to
the lease and the unguaranteed residual value over the sum itself is recognised as unrecognised
lease income. The residual amount after deducting the unrecognised lease income from the financial
lease rental receivable is divided into non-current receivable and non-current receivable due within
one year depending on maturity and presented on (consolidated) financial statements separately.
The unrecognised lease income is amortised over the lease term using the effective interest rate
method and the amortisation is recognised as lease income in profit or loss for the relevant period.
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Contingency lease rental income is recognised in profit or loss when it is received or becomes
receivable.
26. Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying
amounts of items in the financial statements that cannot be measured accurately, due to the internal
uncertainties of operation activities. These judgments, estimates and assumptions are based on
historical experiences of the Company’s management as well as other factors that are considered to
be relevant. These judgments, estimates and assumptions may affect value of the financial
statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead
significant adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going
concern. Where the changes in accounting estimates only affect the period when changes occurred,
and they are recognized within the same period. Where the changes in accounting estimates affect
both current period and future period, the changes are recognized within the period of change and
future period.
At balance sheet date, the followings are the significant areas where the Company needs to make
judgment, estimates and assumptions over the value of items in the financial statements:
(1) Revenue recognition of construction in progress
When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract should be recognised as revenue according
to the percentage of completion at the balance sheet date. The percentage of completion is
recognisedbased on the method in Notes IV.22 and is calculated accumulatively in the years when
the construction contract is executed.
There would be a great amount of judgement in thedetermination of the percentage of completion,
the incurred construction cost, the expected total construction revenue and total construction cost,
and the recoverability of the contract. The management of the project make the judgement based on
previous experience. The change of expected total contract revenue and total cost, and the change of
the estimated result of the contract may have huge impact on the revenue and cost of the current
period or the period afterwards
(2) Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule
stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The management
shall make analysis and judgment on whether the risks and rewards related to the title of leased
assets has been transferred to the leaser, or whether the Company has substantially held the risks
and rewards related to the ownership of leased assets.
(3) Allowance for bad debts
According to the relevant accounting policies of the Company in receivables, allowance method is
used for bad debt’s calculation. The impairment of receivables is calculated based on the assessment
of recoverable of receivables. Assurance of receivable impairment needs judgments and estimations
from the management. The difference between actual results and original estimates shall have
impact on the carrying amount of receivables and receivable bad debt provisions or the reverse
during the change of estimation.
(4) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the
accounting policies in regard of inventories and provisions for decline in value of inventories is
made if the cost is higher than their net realizable value, and obsolete and slow-movement
inventories. Inventories decline in value to net realizable value is the estimated selling price in the
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ordinary course of business. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purposes of holding inventories and effect of post balance
sheet events. The difference between the actual result and the original estimates shall have impact
on reverse of the carrying amount of the inventories and their decline in value or provisions during
the period of change.
(5) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using
various valuation methods, including of discounted cash flow analysis model. The Company needs
to estimate future cash flow, credit risk, volatility and relationship during the valuation and choose
appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact
on the fair value of financial instruments.
(6) Held-to-maturity investment
The non-derivative financial assets which meet the conditions of fixed or determinable repayment
amount and fixed maturity date and the company has a clear intention and ability to hold to maturity
classified as held-to-maturity investments. A large amount of judgmentis required to carry out this
classification. In the course of the judgment, the Company will evaluate the willingness and ability
to hold such investment to maturity. Unless the specific situation (For example, an investment that
is insignificant in the amount close to the due date), if the Company fails to hold the investment
until maturity, all such investments shall be reclassified to the available-for-sale financial assets,
And the financial assets shall not be divided into held-to-maturity investments within the two full
fiscal years of the current fiscal year and thereafter. In the event of such a situation, it may have a
material impact on the value of the underlying financial assets presented in the financial statements
and may affect the Company's financial instrument risk management strategy.
(7) Impairment of held-to maturity investment
Whether the impairment of held-to-maturity investments to a large extent depends on management's
judgment. The objective evidence of impairment includes the issuer's serious financial difficulties
that prevent the financial asset from continuing to be traded in an active market and is unable to
perform the terms of the contract (for example, to pay interest or default). In the course of the
judgment, the Company shall assess the impact of the objective evidence of impairment on the
expected future cash flow of the investment.
(8) Impairment of available-for-sale assets
Whether the impairment of available-for-sale financial assets to a large extent dependson the
judgment and assumptions of the management, in order to determine whether it is necessary to
recognise its impairment losses in the income statement. In the course of judging and making
assumptions, the Company shall assess the extent and duration of the fair value of the investment
and the financial position and short-term business outlook of the investee, including the industry
status, technological change, credit rating, The default rate and the risk of opponents.
(9) Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets
other than financial assets at the balance sheet date. For an intangible asset that has indefinite useful
life, impairment test is made in addition to the annual impairment test if there is any indication of
impairment. For non-current assets other than financial assets, impairment test is made when there
is any indication that its account balance cannot be recovered.
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.
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When estimating the present value of future cash flow, significant judgments are made over the
asset’s production, selling price and relevant operating expenses, and discount rate used to calculate
present value. All available materials that are considered to be relevant shall be used in the
estimation of recoverable value. These materials include estimations of production, selling price and
operating expenses based on reasonable and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an
estimation of present value of future cash flow of the assets or assets group where goodwill has
been allocated. The Company shall makes estimation on the future cash flow derived from assets or
assets group and determine an appropriate discount rate for the present value of future cash flow
when the estimation of present value of future cash flow is made.
(10) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the
straight-line method over their useful lives after taking into account residual value. The useful lives
are regularly reviewed to determine the depreciation and amortization costs charged in each
reporting period. The useful lives are determined based on historical experience of similar assets
and the estimated technical changes. If there is an indication that there has been a change in the
factor used to determine the depreciation or amortization, the rate of depreciation or amortization is
revised.
(11) 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.
(12) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the
Company’s everyday operation. Whether there are 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 theincome tax and deferred income tax of the current period during the final determination.
(13) 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 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.
(14) Fair value measurement
Some of the Company's assets and liabilities are measured at fair value in the financial
statements. In estimating the fair value of an asset or liability, the Company adopts available
observable market data. If you can not get the first level of input value, the company will hire
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third-party qualified appraisers to perform the valuation.
V. Taxation
1. Taxes and surcharges applicable to the Company
Taxes and surcharges Tax base Tax rate (%)
According to the revenues from sales to calculate the output tax, and use the
Value added tax 5、6、11、13、17
balance afterdeduct the deductible input tax to pay the VAT
Urban maintenance and Sum of VAT payable, consumption duty payable and business tax payable for the
construction surcharge reporting period, and exempt and deductible tax 7
Sum of VAT payable, consumption duty payable and business tax payable for the
Education surcharge 3
reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for the
Local education surcharge 2
reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
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 (%)
According to the revenues from sales to calculate the output tax, and use the 0、5、6、11、13、
Value added tax
balance after deduct the deductible input tax to pay the VAT 17
Business tax Business tax taxable revenue 5
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the
5
and construction surcharge reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for the
Education surcharge 3
reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable for the
Local education surcharge 2
reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 15
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT,
the rate is 0%.
(2) Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Taxes and surcharges Tax base Tax rate (%)
According to the revenues from sales to calculate the output tax, and use the
Value added tax 5、11、13、17
balance after deduct the deductible input tax to pay the VAT
Business tax Business tax taxable revenue 5
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Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable
1
and construction surcharge for the reporting period, and exempt and deductible tax
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
(3) Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)
Taxes and surcharges Tax base Tax rate (%)
According to the revenues from sales to calculate the output tax, and use the
Value added tax 5
balance after deduct the deductible input tax to pay the VAT
Corporate income tax Taxable profits 17
(4) Pt.Star Comgistic Indonesia
Taxes and surcharges Tax base Tax rate (%)
According to the revenues from sales to calculate the output tax, and use the
Value added tax
balance after deduct the deductible input tax to pay the VAT 10
Corporate income tax Taxable profits 25
VI. Notes on major items in consolidated financial statements of the Company
1. Monetary funds
Item 2017.06.30 2016.12.31
Cash on hand 890,072.87 703,668.78
Bank deposits 609,590,639.06 748,793,446.55
Total 610,480,711.93 749,497,115.33
Of which: total amount deposited in overseas 15,048,762.42 19,034,720.76
Notes: the balance of fixed time deposit at financial institution for interest in the bank deposits at period-end was
RMB346,541,506.84.
2. Financial assets measured by fair value with changes in fair value recognised in profit or loss
Item 2017.06.30 2016.12.31
Trading financial assets 1,881,750.00 0.00
Including: Derivative financial assets 1,881,750.00 0.00
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Total 1,881,750.00 0.00
(2) Explanation
The derivative financial asset is forward foreign exchange contract signed with financial institutions.
3. Notes receivable
(1) Disclosure by classification
Item 2017.06.30 2016.12.31
Bank acceptance bill 990,000.00 1,341,076.70
Total 990,000.00 1,341,076.70
(2) There is no notes receivable whice had pledged by the Company
(3) There is no notes receivable which had endorsed by the Company or had discounted and had not due on
the balance sheet date at the period-end
(4) There is no notes transferred to accounts receivable because drawer of the notes fails to executed the
contract or agreement
4. Accounts receivable
(1) Disclosure by classification
2017.06.30
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal proportion (%)
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 252,843,881.35 100.00 10,264,356.72 4.06 242,579,524.63
impairment by credit risk:
Including: Portfolio by age 250,427,706.55 99.04 10,264,356.72 4.10 240,163,349.83
Portfolio by related parties 2,416,174.80 0.96 0.00 0.00 2,416,174.80
Accounts receivable of
individually insignificance
0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Total 252,843,881.35 100.00 10,264,356.72 4.06 242,579,524.63
2016.12.31
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal proportion (%)
Accounts receivable of
individual significance
subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for
impairment
Accounts receivable
portfolio subject to
285,221,438.01 100.00 12,134,821.63 4.25 273,086,616.38
impairment by credit
risk:
Including: Portfolio by
282,541,651.92 99.06 12,134,821.63 4.29 270,406,830.29
age
Portfolio by related
2,679,786.09 0.94 0.00 0.00 2,679,786.09
parties
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Accounts receivable of
individually
insignificance subject
0.00 0.00 0.00 0.00 0.00
to individually
assessment for
impairment
Total 285,221,438.01 100.00 12,134,821.63 4.25 273,086,616.38
①In the groups, accounts receivable adopting aging analysis method for measurement of allowance for bad debt:
2017.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 241,927,778.05 1,764,428.22 0.73
Including: 1-90 days 227,669,455.35 0.00 0.00
91-180 days 13,003,560.80 1,300,356.08 10.00
181-270 days 816,544.05 244,963.22 30.00
271-365 days 438,217.85 219,108.92 50.00
1-2years 8,359,638.64 8,359,638.64 100.00
2-3years 140,289.86 140,289.86 100.00
Total 250,427,706.55 10,264,356.72 4.10
②In the groups, accounts receivable using related party group method for measurement of allowance for bad debt
2017.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 2,416,174.80 0.00 0.00
Total 2,416,174.80 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 RMB14,447.09; the amount of recovered or
reversed allowance for bad debts during the Reporting Period is of RMB1,494,519.39.
(3) Accounts receivable written off during the Reporting Period
Item Amount
Sporadic accounts receivable written off 375,945.52
(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
RMB144,581,493.74, accounting for 57.19% of the total accounts receivable as at the end of the Reporting Period,
the total corresponding allowance for bad debts is RMB413,034.06.
5. Advances to suppliers
(1) Disclosure by age
2017.06.30 2016.12.31
Item
Amount Proportion (%) Amount Proportion (%)
Within 1 year 24,784,622.14 100.00 6,964,904.97 100.00
Total 24,784,622.14 100.00 6,964,904.97 100.00
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(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 RMB23,582,222.49,
accounting for 95.14% of the total advance to suppliers.
6. Interest receivable
(1) Disclosure by classification
Item 2017.06.30 2016.12.31
Fixed deposit receipt 1,038,777.61 5,519.56
Total 1,038,777.61 5,519.56
7. Other receivable
(1) Disclosure by classification
2017.06.30
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal proportion (%)
Other accounts receivable of
individual significance
0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Other accounts receivable
portfolio subject to 38,254,366.21 97.24 1,652,453.93 4.32 36,601,912.28
impairment by credit risk:
Including: Portfolio by age 38,010,355.12 96.62 1,652,453.93 4.35 36,357,901.19
Portfolio by related parties 244,011.09 0.62 0.00 0.00 244,011.09
Other accounts receivable of
individually insignificance
1,087,067.04 2.76 0.00 0.00 1,087,067.04
subject to individually
assessment for impairment
Total 39,341,433.25 100.00 1,652,453.93 4.20 37,688,979.32
2016.12.31
Item Book balance Bad debt provision
Book value
Amount Proportion (%) Amount Withdrawal proportion (%)
Other accounts receivable of
individual significance
0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Other accounts receivable
portfolio subject to 40,404,849.01 96.02 1,698,478.04 4.20 38,706,370.97
impairment by credit risk:
Including: Portfolio by age 40,156,836.65 95.43 1,698,478.04 4.23 38,458,358.61
Portfolio by related parties 248,012.36 0.59 0.00 0.00 248,012.36
Other accounts receivable of
individually insignificance
1,675,385.11 3.98 0.00 0.00 1,675,385.11
subject to individually
assessment for impairment
Total 42,080,234.12 100.00 1,698,478.04 4.04 40,381,756.08
①In the groups, other accounts receivable adopting aging analysis method for measurement of allowance for bad
89
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
debt:
2017.06.30
Aging
Other accounts receivable Bad debt provision Proportion (%)
Within 1 year 36,600,680.76 242,779.57 0.66
Including: 1-90 days 35,207,976.15 0.00 0.00
91-180 days 1,026,997.38 102,698.77 10.00
181-270 days 213,864.10 64,159.23 30.00
271-365 days 151,843.13 75,921.57 50.00
1-2years 1,404,674.36 1,404,674.36 100.00
Over 3 years 5,000.00 5,000.00 100.00
Total 38,010,355.12 1,652,453.93 4.35
② Other receivable of individually insignificance subject to individually assessment for impairment
Withdrawal Bad debt
Items Book balance Withdrawal reason
proportion (%) provision
China Export & Credit Insurance Guaranteed deposits, absence of
648,450.00
Corporation, Fujian Branch impairment
Guaranteed deposits, absence of
onghai People's Court 200,000.00
impairment
Alipay (China) Network Technology Guaranteed deposits, absence of
103,000.00
Co., Ltd. impairment
Guaranteed deposits, absence of
Shunhe Trading Co., Ltd. 35,617.04
impairment
Niuhai E-commerce ( Shanghai ) Co., Guaranteed deposits, absence of
30,000.00
Ltd. impairment
Guaranteed deposits, absence of
Jiangsu Suning E-Commerce Co., Ltd. 30,000.00
impairment
Beijing Dangdangkewen E-Commerce Guaranteed deposits, absence of
20,000.00
Co., Ltd. impairment
Shanghai Feiniujida E-commerce Co., Guaranteed deposits, absence of
10,000.00
Ltd. impairment
Guaranteed deposits, absence of
Gome Online E-Commerce Co., Ltd. 10,000.00
impairment
Total 1,087,067.04
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the Reporting Period is RMB8,948.70; the amount of recovered or
reversed allowance for bad debts during the Reporting Period is of RMB54,972.81.
(3) Other accounts receivable written off during the Reporting Period
There was no actual write-off other accounts receivable.
(4)Disclosure by account nature
Nature 2017.06.30 2016.12.31
Non-related party 39,097,422.16 41,832,221.76
Related 244,011.09 248,012.36
Total 39,341,433.25 42,080,234.12
(5) Details of top five other receivables
Closing balance
Items Nature of OR Closing balance Aging % of total of bad debt
provision
90
2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
No.1 Export tax refunds 18,000,000.00 Within 1 year 45.75
No.2 Electricity fees 4,399,636.31 Within 1 year 11.18
No. 3 Rental & water & electricity fees 1,761,289.95 Within 1 year 4.48
No. 4 Rental & water & electricity fees 1,701,287.13 Within 1 year 4.32
No. 5 Rental & water & electricity fees 1,145,124.46 Over 1 year 2.91 1,145,124.46
27,007,337.85 68.64 1,145,124.46
8. Inventory
(1) Disclosure by classification
2017.06.30 2016.12.31
Item Impairment Impairment
Book balance Book value Book balance Book value
allowance allowance
Raw materials 77,901,293.89 18,400,947.63 59,500,346.26 91,666,560.32 28,867,144.56 62,799,415.76
Goods in process 9,215,822.53 0.00 9,215,822.53 15,235,243.63 0.00 15,235,243.63
Self-manufacture
d semi-finished 19,971,102.69 1,572,057.26 18,399,045.43 14,871,592.53 1,572,057.26 13,299,535.27
goods
Finished goods 114,556,816.85 16,771,287.15 97,785,529.70 141,540,287.35 16,689,572.67 124,850,714.68
Low-value
2,671,053.19 0.00 2,671,053.19 5,214,202.94 0.00 5,214,202.94
consumables
Materials in
3,212,753.50 0.00 3,212,753.50 2,170,009.62 0.00 2,170,009.62
transit
Total 227,528,842.65 36,744,292.04 190,784,550.61 270,697,896.39 47,128,774.49 223,569,121.90
(2) Impairment allowance for inventories
Increased amount Decrease
Item 2016.12.31 2017.06.30
Withdrawal Others Reverse or write-off Others
Raw materials 28,867,144.56 1,423,925.33 0.00 11,890,122.26 0.00 18,400,947.63
Self-manufactured
1,572,057.26 0.00 0.00 0.00 0.00 1,572,057.26
semi-finished goods
Finished goods 16,689,572.67 181,057.74 0.00 99,343.26 0.00 16,771,287.15
Total 47,128,774.49 1,604,983.07 0.00 11,989,465.52 0.00 36,744,292.04
(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 impairment The reasons for inventory
Item impairment allowance for
allowance for inventories impairment write-off
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 2017.06.30 2016.12.31
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Input tax to be deducted 11,488,319.23 8,708,135.99
Financial products 270,000,000.00 130,646,348.02
Total 281,488,319.23 139,354,484.01
10. Available-for-sale financial assets
(1) The situation of available-for-sale financial assets
2017.06.30 2016.12.31
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) Available-for-sale financial assets measured at cost at the period-end
Shareho
Book balance Depreciation reserves lding Cash
proporti bonus
on of the
Investee
Increa Decre Increa Decr among Report
2016.12.31 2017.06.30 2016.12.31 2017.06.30 the ing
se ase se ease
investee Period
s(%)
Xiamen
Association of
Enterprises with 40,000.00 40,000.00 1.48
Foreign
Investment
Total 40,000.00 40,000.00 1.48
11. Investment property
(1) Investment property adopted the cost measurement mode
Construction in
Item Houses and buildings Land use right Total
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
3. Decreased amount of the period 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 105,016,148.68 13,033,549.71 0.00 118,049,698.39
2. Increased amount of the period 2,989,875.78 311,055.90 0.00 3,300,931.68
(1) Withdrawal or amortization 1,456,707.81 311,055.90 0.00 1,767,763.71
(2) Transferred from fixed assets 1,533,167.97 0.00 0.00 1,533,167.97
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
574,386.06 0.00 0.00 574,386.06
assets
4. Closing balance 107,431,638.40 13,344,605.61 0.00 120,776,244.01
III. Depreciation reserves
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Construction in
Item Houses and buildings Land use right Total
progress
1.Opening balance 0.00 0.00 0.00 0.00
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 23,515,602.99 15,915,971.90 0.00 39,431,574.89
2. Opening book value 25,931,092.71 16,227,027.80 0.00 42,158,120.51
(2) Investment property with pending ownership registration
Item Book value Reason for pending
Lvyuan three country villa 1,656,969.66 Notes
Notes: Lvyuan three country villa is a limited property house purchased by the Company’s subsidiary TKS in 1999 from Shanghai
Lvsheng Real Estate Development Co., Ltd. without expropriating and transferring the land. In January of 2006, the property was
certified to belong to TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and residents
committee of Lvyuan community of Huangdu Town in Jiading District.
12. Fixed assets
(1) List of fixed assets
Improvement
Houses and Machinery Electronic device, Transportation expense of
Item Total
buildings equipment modules and others equipment leased fixed
assets
I. Original book value
1.Opening balance 93,887,488.58 162,550,581.94 1,120,150,534.38 16,572,864.54 68,159,024.27 1,461,320,493.71
2. Increased amount
-818,017.63 609,420.67 17,894,470.30 2,318,418.51 94,944.84 20,099,236.69
of the period
(1) Purchase 0.00 324,902.53 14,998,691.95 2,287,222.90 238,507.11 17,849,324.49
(2)Transfered from
project under 0.00 981,600.00 3,299,419.24 50,000.00 0.00 4,331,019.24
construction
(3)Transfer from
0.00 0.00 0.00 0.00 0.00 0.00
investment property
(4) Impact of changes
-818,017.63 -697,081.86 -403,640.89 -18,804.39 -143,562.27 -2,081,107.04
in exchange rates
(5) Other 0.00 0.00 0.00 0.00 0.00 0.00
3.Decreased amount
0.00 10,743,991.27 33,189,532.30 721,666.39 1,371,246.15 46,026,436.11
of the period
(1) Disposal or Scrap 0.00 10,743,991.27 33,189,532.30 721,666.39 1,371,246.15 46,026,436.11
(2)Transferred from
0.00 0.00 0.00 0.00 0.00 0.00
investment property
4. Closing balance 93,069,470.95 152,416,011.34 1,104,855,472.38 18,169,616.66 66,882,722.96 1,435,393,294.29
II.Accumulative
depreciation
1.Opening balance 45,297,112.71 102,936,654.31 1,017,384,276.21 15,606,000.14 61,616,747.83 1,242,840,791.20
2. Increased amount
2,562,836.21 2,757,703.68 12,347,529.89 211,567.89 1,446,461.62 19,326,099.29
of the period
(1) Withdrawal 2,151,862.77 3,002,089.10 12,600,877.15 222,333.46 1,561,918.05 19,539,080.53
(2) Transfered from
574,386.06 0.00 0.00 0.00 0.00 574,386.06
investment property
(3) Impact of changes
-163,412.62 -244,385.42 -253,347.26 -10,765.57 -115,456.43 -787,367.30
in exchange rates
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Improvement
Houses and Machinery Electronic device, Transportation expense of
Item Total
buildings equipment modules and others equipment leased fixed
assets
3.Decreased amount
1,533,167.97 8,045,698.59 31,060,381.66 656,730.17 1,276,974.32 42,572,952.71
of the period
(1) Disposal or Scrap 0.00 8,045,698.59 31,060,381.66 656,730.17 1,276,974.32 41,039,784.74
(2) Transfer from
1,533,167.97 0.00 0.00 0.00 0.00 1,533,167.97
investment property
4. Closing balance 46,326,780.95 97,648,659.40 998,671,424.44 15,160,837.86 61,786,235.13 1,219,593,937.78
III.Depreciation
reserves
1.Opening balance 0.00 22,351,922.28 21,410,291.72 5,594.19 182,883.96 43,950,692.15
2. Increased amount
0.00 -38,206.90 -6,315.84 -122.79 0.00 -44,645.53
of the period
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00
(2) Impact of changes
0.00 -38,206.90 -6,315.84 -122.79 0.00 -44,645.53
in exchange rates
3.Decreased amount
0.00 2,577,072.01 1,094,216.31 142.18 79,471.24 3,750,901.74
of the period
(1) Disposal or Scrap 0.00 2,577,072.01 1,094,216.31 142.18 79,471.24 3,750,901.74
4. Closing balance 0.00 19,736,643.37 20,309,759.57 5,329.22 103,412.72 40,155,144.88
IV. Book value
1. Closing book value 46,742,690.00 35,030,708.57 85,874,288.37 3,003,449.58 4,993,075.11 175,644,211.63
2. Opening book
48,590,375.87 37,262,005.35 81,355,966.45 961,270.21 6,359,392.48 174,529,010.36
value
(2) Fixed assets with pending ownership registration
Item Book value Reason for pending
Lvyuan three country villa 589,019.02 Notes
Jingying garden 181,073.90 Under processing
Notes: Lvyuan three country villa is a limited property house purchased by the Company’s subsidiary TKS in 1999 from Shanghai
Lvsheng Real Estate Development Co., Ltd. without expropriating and transferring the land. In January of 2006, the property was
certified to belong to TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and residents
committee of Lvyuan community of Huangdu Town in Jiading District.
13. Construction in progress
2017.06.30 2016.12.31
Item
Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value
Sporadic project 495,974.59 0.00 495,974.59 269,633.08 0.00 269,633.08
Total 495,974.59 0.00 495,974.59 269,633.08 0.00 269,633.08
14. Intangible assets
Item Land use right Software Total
I. Original book value
1.Opening balance 18,402,842.68 23,523,906.41 41,926,749.09
2. Increased amount of the period 192,552.72 5,923,067.49 6,115,620.21
(1) Purchase 578,709.67 5,902,000.00 6,480,709.67
(2) Impact of changes in exchange rates -386,156.95 21,067.49 -365,089.46
3.Decreased amount of the period 0.00 9,191,967.69 9,191,967.69
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Land use right Software Total
(1) Disposal 0.00 9,191,967.69 9,191,967.69
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4.Closing balance 18,595,395.40 20,255,006.21 38,850,401.61
II. Accumulated amortization
1.Opening balance 2,548,872.23 15,537,599.74 18,086,471.97
2. Increased amount of the period 235,616.25 1,356,677.95 1,592,294.20
(1) Withdrawal 295,133.07 1,346,167.67 1,641,300.74
(2) Impact of changes in exchange rates -59,516.82 10,510.28 -49,006.54
3.Decreased amount of the period 0.00 9,191,967.69 9,191,967.69
(1) Disposal 0.00 9,191,967.69 9,191,967.69
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4.Closing balance 2,784,488.48 7,702,310.00 10,486,798.48
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 15,810,906.92 12,552,696.21 28,363,603.13
2. Opening book value 15,853,970.45 7,986,306.67 23,840,277.12
15. Long-term deferred charge
Item 2016.12.31 Increased amount Amortization amount Decrease 2017.06.30
Telecommunications engineering 69,866.41 0.00 26,000.04 0.00 43,866.37
Houses and buildings renovation expenses 4,072,375.78 0.00 669,804.67 0.00 3,402,571.11
Total 4,142,242.19 0.00 695,804.71 0.00 3,446,437.48
16. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
2017.06.30 2016.12.31
Item Deductible Deductible
Deferred income Deferred income
temporary temporary
tax assets tax assets
difference difference
Assets impairment provision 75,723,996.75 11,682,236.37 90,927,159.61 14,054,185.03
Accrued expenses 10,322,333.77 1,867,490.22 16,244,337.85 2,785,902.38
Transaction financial liabilities 0.00 0.00
Payroll liability 538,310.35 91,512.76 521,002.29 88,570.39
Depreciation of fixed assets 15,156.88 2,576.67 14,669.59 2,493.83
Unrealized profits from intragroup transactions 488,262.07 91,549.14 694,807.76 173,701.94
Undistributed deficit 0.00 0.00 0.00 0.00
Other 0.00 0.00 0.00 0.00
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total 87,088,059.82 13,735,365.16 108,401,977.10 17,104,853.57
(2) Deferred income tax liabilities had not been off-set
2017.06.30 2016.12.31
Item
Deductible Deferred income tax Deductible temporary Deferred income
temporary difference liabilities difference tax liabilities
Depreciation of fixed assets 2,953,648.52 738,412.13 3,024,559.40 756,139.85
Trading financial assets 1,881,750.00 282,262.50 0.00 0.00
Other 32,343.35 5,498.37 31,303.41 5,321.58
Total 4,867,741.87 1,026,173.00 3,055,862.81 761,461.43
(3) List of unrecognized deferred income tax assets
Item 2017.06.30 2016.12.31
Impairment provision of the fixed assets 9,648,297.45 10,161,743.82
Bad debt provision 1,227,923.67 1,580,473.40
Accrued expenses 14,763,561.91 21,476,401.95
Impairment of inventories 2,216,029.70 2,243,389.48
Payroll liability 1,344,224.86 1,946,095.13
Undistributed deficit 101,374,634.02 98,961,110.41
Total 130,574,671.62 136,369,214.19
(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following years
Year 2017.06.30 2016.12.31
Year 2017 12,981,405.81 15,169,401.17
Year 2018 21,156,026.72 15,995,805.21
Year 2019 8,344,201.75 12,504,247.51
Year 2020 11,293,904.22 14,123,000.61
Year 2021 84,304,491.63 32,619,175.26
Year 2022 7,093,216.05 0.00
Year 2023 0.00 0.00
Year 2024 0.00 0.00
Year 2025 3,770,671.54 0.00
Year 2026 9,069,767.26 0.00
Year 2027 7,771,261.60 0.00
Total 165,784,946.58 90,411,629.76
17. Other non-current assets
Item 2017.06.30 2016.12.31
Prepaid mold fee 1,033,480.93 735,106.87
Prepayment for equipment 2,019,056.57 513,166.36
Total 3,052,537.50 1,248,273.23
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
18. Short-term borrowings
(1) Disclosure by classification
Item 2017.06.30 2016.12.31
Loan for export invoice financing 125,326,400.00 0.00
Total 125,326,400.00 0.00
19. Notes payable
Item 2017.06.30 2016.12.31
Bank acceptance bill 0.00 6,500,000.00
Trade acceptance 10,517,009.49 16,751,704.93
Total 10,517,009.49 23,251,704.93
There was no amount of the due but not pay notes payable at the period-end.
20. Accounts payable
(1) List of accounts payable
Item 2017.06.30 2016.12.31
Within 1 year 470,126,093.51 584,203,266.68
Over 1 years 3,564,697.41 5,215,192.25
Total 473,690,790.92 589,418,458.93
(2) Details of significant accounts payable remaining unsettled for more than one year
Unpaid/ Un-carry-over Repaid or not after balance sheet
Item 2017.06.30
reason date
Ningbo Chaochao Electrical Equipment Co.,
500,237.01 Quality disputes No
Ltd.
Ningbo Jiesiluo Electrical Equipment Co.,
979,964.67 Quality disputes No
Ltd.
Total 1,480,201.68
21. Advance from customers
(1) List of advance from customers
Item 2017.06.30 2016.12.31
Within 1 year 12,468,575.93 6,763,325.48
Over 1 years 2,374,757.18 4,423,698.48
Total 14,843,333.11 11,187,023.96
(2) Details of significant advance from customers aging over one year
Item Amount Unpaid/ Un-carry-over reason
Whirlpool EMEAS.p.A. 468,917.45 Receive in advance
BRITANIA 401,214.79 Receive in advance
Boost Vitality Asia Pte. Ltd. 272,563.32 Receive in advance
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Amount Unpaid/ Un-carry-over reason
ZO JIRUSHI 156,472.83 Receive in advance
Philip (China) Investment Co., Ltd. 138,171.29 Receive in advance
Total 1,437,339.68
22. Employee benefits payable
(1) List of employee benefits payable
Item 2016.12.31 Increase Decrease 2017.06.30
I. Short-term salary 45,457,345.85 120,358,630.78 127,418,051.40 38,397,925.23
II. Post-employment benefit-defined contribution plans 161,027.85 5,651,046.50 5,157,364.21 654,710.14
III. Termination benefits 53,125.00 1,171,146.67 1,206,453.67 17,818.00
Total 45,671,498.70 127,180,823.95 133,781,869.28 39,070,453.37
(2) List of Short-term employee benefits
Item 2016.12.31 Increase Decrease 2017.06.30
1. Salary, bonus, allowance, subsidy 33,840,441.21 107,270,197.78 116,215,870.34 24,894,768.65
2. Employee welfare 1,890.16 6,214,574.88 4,348,233.51 1,868,231.53
3. Social insurance 524,878.81 4,408,652.37 4,110,514.36 823,016.82
Including: Medical insurance 479,652.00 3,309,652.92 3,079,916.22 709,388.70
Employment injury insurance 407.65 875,735.94 809,165.93 66,977.66
Maternity insurance 44,819.16 223,263.51 221,432.21 46,650.46
4. Housing fund 9,090,565.22 2,563,412.76 2,576,753.99 9,077,223.99
5. Labor union budget and employee education budget 0.00 174,209.18 174,209.18 0.00
6.Short-term absence with payment 1,999,570.45 -272,416.19 -7,529.98 1,734,684.24
Total 45,457,345.85 120,358,630.78 127,418,051.40 38,397,925.23
(3) List of defined contribution plan
Item 2016.12.31 Increase Decrease 2017.06.30
1. Basic pension benefits 160,408.63 5,450,834.00 4,956,822.69 654,419.94
2. Unemployment insurance 619.22 200,212.50 200,541.52 290.20
Total 161,027.85 5,651,046.50 5,157,364.21 654,710.14
23. Taxes payable
Category of taxes 2017.06.30 2016.12.31
Business tax 0.00 784,938.20
Corporate income tax 234.87 12,621,020.07
VAT 818,869.41 0.00
Personal income tax 404,127.26 463,263.27
Education Surcharge 644,824.83 1,008,596.50
Urban maintenance and construction tax 628,929.62 966,427.13
Real estare tax 801,166.71 0.00
Stamp duty 86,818.08 1,120,822.94
Total 3,384,970.78 16,965,068.11
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24. Interest payable
Item 2017.06.30 2016.12.31
Interests on short-term borrowings 170,592.29 0.00
Total 170,592.29 0.00
25. Other accounts payable
(1) Other accounts payable listed by nature of the account
Item 2017.06.30 2016.12.31
Within 1 year 49,567,165.77 50,629,928.01
Over 1 years 6,875,002.54 7,781,735.18
Total 56,442,168.31 58,411,663.19
(2) Other significant accounts payable with aging over one year
Item 2017.06.30 Unpaid/ Un-carry-over reason
Cash pledge 5,765,388.00 Repaid at the termination of contract
Payment of mold fee 670,841.53 Payment on behalf, unpaid
Total 6,436,229.53
26. Long-term payroll payable
Item 2017.06.30 2016.12.31
I. Post-employment benefit-net liability of defined benefit
250,205.83 187,928.74
plans
II. Termination benefits 0.00 0.00
III. Other long-term benefits 0.00 0.00
Total 250,205.83 187,928.74
27. Share capital
Increase/decrease
Item Opening balance Capitalization Closing balance
Issuing new Share
of public Other Subtotal
shares donation
reserves
Total shares 185,391,680.00 185,391,680.00
28. Capital reserves
Item 2016.12.31 Increase Decrease 2017.06.30
Share premium 210,045,659.80 0.00 0.00 210,045,659.80
Other capital reserves 86,763,305.99 0.00 0.00 86,763,305.99
Total 296,808,965.79 0.00 0.00 296,808,965.79
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
29. Other comprehensive income
Reporting Period
Less: recorded
in other
Item 2016.12.31 Amount comprehensive 2017.06.30
Less: Attributable Attributable
before income in
Income to owners of to minority
income tax in prior period
tax the Company shareholders
current and transferred
expense after tax after tax
period to profit or
loss in current
period
I. Other
comprehensive
income that will not
be reclassified into
profit/loss
Including: changes in
net liabilities or assets
with a defined benefit 15,614.61 0.00 15,614.61
plan upon
remeasurement
Share of other
comprehensive
income of investees
that cannot be
reclassified into
profit/loss under the
equity method
II. Other
comprehensive
income to be
subsequently
reclassified into
profit/loss
Including: shares of
other comprehensive
income of investees
that will be
reclassified into
profit/loss under the
equity method
Balance from the
translation of foreign
8,476,287.84 -1,688,350.45 -1,266,262.84 -422,087.61 7,210,025.00
currency financial
statements
Total 8,491,902.45 -1,688,350.45 0.00 0.00 -1,266,262.84 -422,087.61 7,225,639.61
30. Surplus reserves
Item 2016.12.31 Increase Decrease 2017.06.30
Statutory surplus reserves 29,946,218.17 0.00 0.00 29,946,218.17
Total 29,946,218.17 0.00 0.00 29,946,218.17
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31. Retained earnings
Item 2017.06.30 2016.12.31
Opening balance of retained profits before adjustments 90,217,504.90 69,510,872.20
Total opening balance of retained profits before adjustments (Increase+，decrease-)
Opening balance of retained profits after adjustments 90,217,504.90 69,510,872.20
Add: Net profit attributable to owners of the Company 11,066,574.11 48,229,497.36
Less: Withdrawal of statutory surplus reserves 0.00 8,983,696.66
Withdrawal of discretionary surplus reserves 0.00 0.00
Withdrawal of generic risk reserve 0.00 0.00
Dividend of common stock payable 22,247,001.60 18,539,168.00
Dividend of common stock transfer into share capital 0.00 0.00
Closing retained profits 79,037,077.41 90,217,504.90
32. Revenue and Cost of Sales
Item Reporting Period Same period of last year
Revenue from main operations 840,312,489.24 770,647,435.81
Revenue from other operations 29,371,269.44 27,461,253.46
Total 869,683,758.68 798,108,689.27
Costs of main operations 723,287,830.92 653,194,377.94
Cost of other operations 16,219,638.01 9,622,787.16
Total 739,507,468.93 662,817,165.10
33. Business tax and surcharges
Item Reporting Period Same period of last year
Business tax 0.00 968,527.44
Education Surcharge 1,642,018.73 1,000,327.29
Urban maintenance and construction tax 1,657,297.65 1,006,737.00
Real estate tax 1,475,222.72 0.00
Land use tax 348,464.92 0.00
Stamp duty 572,220.24 0.00
Other 139.35 287.43
Total 5,695,363.61 2,975,879.16
34. Sales expenses
Item Reporting Period Same period of last year
Export fees 15,649,265.39 14,112,135.80
Employee remunerations 9,644,113.99 10,567,113.82
Claims for sales promotional expenses 992,673.57 10,541,659.04
Sales commission and after sales service fees 1,189,343.37 1,942,157.66
Assets lease expenses 192,646.13 465,396.72
Business travel charges 1,059,897.57 1,589,854.17
Office expenses 329,126.35 363,891.34
Transport fees 658,337.56 740,092.37
Others 413,622.66 419,860.62
Total 30,129,026.59 40,742,161.54
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
35. Administration expenses
Item Reporting Period Same period of last year
R&D expenses 36,181,239.58 36,526,821.94
Employee remuneration 16,404,001.41 15,003,011.98
Depreciation and amortization 5,736,884.90 6,319,391.07
Rental charges 8,178,777.89 9,747,380.98
Insurance expenses 1,149,100.21 574,767.94
Office expenses 1,093,362.53 1,456,109.90
Travel expenses 1,540,597.10 1,874,034.60
Consultant fees 910,423.05 1,657,306.91
Maintenance expenses 2,378,906.44 2,222,064.47
Taxes and surcharges 0.00 2,069,710.13
Others 1,209,465.82 3,300,040.15
Total 74,782,758.93 80,750,640.07
36. Financial costs
Item Reporting Period Same period of last year
Interest expenses 410,091.63 142,611.32
Less: interest income 3,529,133.78 3,684,238.09
Exchange gains and losses 11,511,175.66 -7,477,904.70
Bank charges 792,248.01 1,053,218.95
Total 9,184,381.52 -9,966,312.52
37. Impairment loss on assets
Item Reporting Period Same period of last year
Bad debt loss -1,540,543.50 -1,541,116.89
Impairment loss on inventories 1,604,983.07 780,305.75
Total 64,439.57 -760,811.14
38. Gains from changes in fair value
Reporting Same period of last
Source of fair value change
Period year
Financial assets measured by fair value and the changes be included in the current profits
1,881,750.00 27,300.00
and losses
Of which, gains on the changes in the fair value of derivative financial instruments 1,881,750.00 27,300.00
Financial liabilities measured by fair value and the changes included in the current gains
0.00 5,617,750.00
and losses
Total 1,881,750.00 5,645,050.00
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 during 0.00 0.00
holding period
Investment income received from disposal of financial assets measured
by fair value and the changes be included in the current profits and 576,100.00 -4,442,911.95
losses during holding period
Investment income from financial products 1,148,630.14 0.00
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Item Reporting Period Same period of last year
Others 0.00 8,474.00
Total 1,724,730.14 -4,434,437.95
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 336,752.14 542,527.01 336,752.14
Including: Gains from disposal of fixed assets 336,752.14 542,527.01 336,752.14
Unpayable overdue accounts payable 844,169.97 357,502.62 844,169.97
Government subsidies 888,232.00 2,627,972.00 888,232.00
Other 1,283,928.79 821,047.77 1,283,928.79
Total 3,353,082.90 4,349,049.40 3,353,082.90
Of which, government subsidies recorded into current profits and losses:
Reporting Same period of Related to Whether non-current gains or
Item
Period last year assets/related income losses or not
Patents subsidies 40,600.00 0.00 Related to the income Yes
Award for improvement in Yes
0.00 100,000.00 Related to the income
production and efficiency
Transformation and upgrading of Yes
0.00 836,053.00 Related to the income
export industry
Government subsidy in export credit Yes
537,632.00 179,419.00 Related to the income
insurance
Award to municipal-level industries 0.00 1,000,000.00 Related to the income Yes
Subsidies for technological Yes
300,000.00 0.00 Related to the income
innovation
Fund subsidy for intelligent Yes
0.00 507,500.00 Related to the income
manufacturing items
Other 10,000.00 5,000.00 Related to the income Yes
Total 888,232.00 2,627,972.00
41. Non-operating expenses
Recorded in the amount
Item Reporting Period Same period of last year of the non-recurring
gains and losses
Loss on disposal of non-current assets 229,400.08 17,353.82 229,400.08
Including: Loss on disposal of fixed assets 18,235.42 0.00 18,235.42
Loss on scraped fixed assets 190,452.01 16,717.75 190,452.01
Fixed assets inventory loss 20,712.65 636.07 20,712.65
Fines 19,000.00 3,448.44 19,000.00
Donation 50,000.00 0.00 50,000.00
Other 0.00 40,922.71 0.00
Total 298,400.08 61,724.97 298,400.08
42. Income tax expense
(1) Lists of income tax expense
Item Reporting Period Same period of last year
Current income tax expense -238,708.37 2,015,929.23
Deferred income tax expense 3,654,776.13 741,396.70
Total 3,416,067.76 2,757,325.93
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Reconciliation of account profit and income tax expenses:
Item Reporting Period
Total profits 16,981,482.49
Current income tax expense accounted by tax and relevant regulations 4,245,370.62
Impact of differing tax rates applicable to subsidiaries -2,788,992.50
Impact of adjustment for prior period tax expenses 0.00
Impact of non-taxable income 0.00
Impact of non-deductible costs, expenses and losses 73,481.75
Impact of utilisation of prior period deductible temporary differences and taxable temporary
0.00
differences for which no deferred tax asset has been recognised
Impact of current period deductible temporary differences and taxable temporary differences for
3,448,534.19
which no deferred tax asset has been recognised
Adjustment of deferred tax assets and deferred tax liabilities brought forward due to changes in tax
0.00
rates
Impact of additional deduction for R&D expenses -1,562,326.30
Income tax expense 3,416,067.76
43. Other comprehensive income
See Note VI 29 for more details.
44. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities:
Item Reporting Period Same period of last year
Government subsidies 888,232.00 2,627,972.00
Interest income 2,128,069.08 3,375,534.00
Rent income 15,875,926.97 13,693,655.65
Funds in current account and others 12,821,718.26 15,109,150.18
Total 31,713,946.31 34,806,311.83
(2) Other cash payments relating to operating activities
Item Reporting Period Same period of last year
Penalties and donations paid 69,000.00 448.44
Bank charges 791,760.75 1,043,931.11
Sales expenses and general and administrative expenses paid by cash 84,375,936.83 57,843,445.56
Funds in current account and others 51,230,059.86 41,760,971.41
Total 136,466,757.44 100,648,796.52
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(3) Other cash received relevant to investment activities
Item Reporting Period Same period of last year
To recover the maturity time deposits that for purpose to
42,313,208.55 75,400,000.00
earn interest income in financial institutions
Total 42,313,208.55 75,400,000.00
(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 377,386,926.35 169,327,000.00
Total 377,386,926.35 169,327,000.00
(5) Other cash received relevant to financing activities
Item Reporting Period Same period of last year
Inter-bank lending of capital of related parties 6,774,375.98 4,519,265.19
Total 6,774,375.98 4,519,265.19
45. 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 13,565,414.73 24,290,577.61
Add: Provision for impairment of assets 64,439.57 -760,811.14
Depreciation of fixed assets, of oil-gas assets, of productive biological assets 21,306,844.24 24,386,736.40
Amortization of intangible assets 1,641,300.74 898,579.42
Long-term unamortized expenses 695,804.71 780,533.53
Losses on disposal of fixed assets, intangible assets and other long-term assets (gains:
-318,516.72 -542,527.01
negative)
Loss on retirement of fixed assets (gain presented by "-" prefix) 211,164.66 17,353.82
Losses from variation of fair value (gain presented by "-" prefix) -1,881,750.00 -5,645,050.00
Financial cost (gain presented by "-" prefix)) 8,316,196.20 7,938,507.95
Investment loss (gain presented by "-" prefix) -1,724,730.14 4,434,437.95
Decrease in deferred income tax assets ((gain presented by "-" prefix) 3,369,488.41 732,126.64
Increase in deferred income tax liabilities
264,711.57 9,270.06
(“-” means decrease)
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Decrease in inventory (gain presented by "-" prefix) 31,179,588.22 68,280,511.94
Decrease in accounts receivable from operating activities (gain presented by "-" prefix) 14,697,969.99 34,939,749.18
Increase in payables from operating activities (“-” means decrease) -148,899,222.14 -219,932,002.64
Others
Net cash flows generated from operating activities -57,511,295.96 -60,172,006.29
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 263,939,205.09 379,934,827.25
Less: cash at the beginning of the period 738,195,729.53 675,824,861.29
Add: Closing balance of cash equivalents
Less: Cash at the beginning of the period
Net increase in cash and cash equivalents -474,256,524.44 -295,890,034.04
(2) Net Cash paid for obtaining the subsidiary
□Applicable√Not applicable
(3) Net Cash receive from disposal of the subsidiary
□Applicable√Not applicable
(4) Cash and cash equivalents
Item Reporting Period Same period of last year
I. Cash 263,939,205.09 379,934,827.25
Including: Cash on hand 890,072.87 733,184.57
Bank deposit on demand 263,049,132.22 379,201,642.68
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 263,939,205.09 379,934,827.25
Of which, 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.
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Note2: Time deposits for the purpose of earning interest income in financial institutions is RMB346,541,506.84. Cash served as
payment relating to investing activities shall be listed and deducted from the balance of cash and cash equivalents at the end of
current year.
46. The assets with the ownership or use right restricted
Item 2017.6.30 Restricted reason
Time deposits for the purpose of earning interest income in financial
Monetary capital 346,541,506.84
institutions
Total 346,541,506.84
47. 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 53,064,417.83 6.7744 359,479,592.15
JPY 30,522,187.07 0.0605 1,846,134.48
IDR 4,937,289,376.13 0.0005 2,508,138.70
EUR 17,312.86 7.7496 134,167.74
GBP 9,519.60 8.8144 83,909.56
HKD 423,127.52 0.8679 367,240.84
HUF 81,016.00 0.0250 2,025.40
FRF 7.00 7.0886 49.62
TWD 5,606,394.00 0.2226 1,248,028.16
Total 365,669,286.65
Short-term loans
Including: USD 18,500,000.00 6.7744 125,326,400.00
Total 125,326,400.00
Account receivable
Including: USD 36,495,204.28 6.7744 247,233,111.78
IDR 24,308,640.00 0.0005 12,348.79
EUR 365,535.32 7.7496 2,832,752.51
JPY 37,273,971.00 0.0605 2,254,516.14
TWD 798,000.00 0.2226 177,641.18
Total 252,510,370.40
Account payable
Including: USD 7,912,250.89 6.7744 53,600,752.43
EUR 217,794.19 7.7496 1,687,817.85
HKD 920,031.98 0.8679 798,514.16
JPY 7,811,200.00 0.0605 472,460.43
IDR 1,040,790,881.85 0.0005 528,721.77
TWD 4,729,224.00 0.2226 1,052,763.10
Total 58,141,029.74
Other accounts receivable
Including: JPY 462,290.00 0.0605 27,961.61
USD 182,689.49 6.7744 1,237,611.68
IDR 1,048,137,849.00 0.0005 532,454.03
TWD 1,256,197.00 0.2226 279,639.50
Total 2,077,666.82
Other account payable
including: HKD 131,390.80 0.8679 114,036.71
JPY 102,246.00 0.0605 6,184.35
USD 1,520,800.17 6.7744 10,302,508.67
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Item Closing foreign currency balance Exchange rate Closing convert to RMB balance
IDR 832,934,040.00 0.0005 423,130.49
TWD 1,318,266.00 0.2226 293,456.56
Total 11,139,316.78
(2) Description of overseas operating entities including the disclosure of main overseas places of business,
recording currency and selection basis of significant overseas operating entities and disclosure reason for
the entity whose recording currency changes.
The Company's holding sub-subsidiaries company Pt.Star Comgistic Indonesia is located 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.
The Company's holding sub-subsidiaries company SCPDI is located at West Java province in Indonesia, due to SCPDI are mostly
settled in IDR by usual purchases and sales, so that it adopt the IDR as its functional currency.
The Company's holding sub-subsidiaries company TKEI is located at Taiwan, due to TKEI are mostly settled in TWD by usual
purchases and sales, so that it adopt the TWD as its functional currency.
The Company's holding sub-subsidiaries company East Sino is located at Hongkong, due to East Sino are mostly settled in HKD by
usual purchases and sales, so that it adopt the HKD as its functional currency.
The Company's holding sub-subsidiaries company ORIENT STAR INVESTMENTS LIMITED is located at Hongkong, due to
ORIENT STAR INVESTMENTS LIMITED are mostly settled in US dollas by usual purchases and sales, so that it adopt the US
dollas 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: naught
VIII. Equity in other main entities
1. The equity in subsidiaries
(1) The structure of the enterprise group
Holding percentage
Main operating Registration (%)
Name Nature of business Acquired method
place place Directl
Indirectly
y
Manufacture home
TsannKuen (Zhangzhou) Acquired through
Zhangzhou Zhangzhou electronic 75 75
Enterprise Co., Ltd. incorporation
appliance
Acquired through
Manufacture home business
TsannKuen (Shangha)
Shanghai Shanghai electronic 46.875 62.5 combination under
Enterprise Co., Ltd.
appliance common
control
TsannKuen (Zhangzhou) South Manufacture home
Acquired through
Port Electronics Enterprise Co., Zhangzhou Zhangzhou electronic 56.25 75
incorporation
Ltd. (TKN) appliance
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Holding percentage
Main operating Registration (%)
Name Nature of business Acquired method
place place Directl
Indirectly
y
Shanghai Canxing Trading Sale of home Acquired through
Shanghai Shanghai 56.25 75
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 home business
Pt.Star Comgistic
Indonesia Indonesia electronic 75 100 combination under
Indonesia(SCI)
appliance common
control
Pt.Star Comgistic Property
Development Indonesia Real estate Acquired through
Indonesia Indonesia 75 100
development incorporation
（“SCPDI”）
Acquired through
Orient Star Investments Limited Investment, business
Hong Kong Hong Kong 75 100
(Orient Star Investments) Trading combination under
uncommon control
Acquired through
Design Industry. business
Tsann Kuen Edge Intelligence
Taiwan Taiwan R&D Development 75 100 combination under
Co., Ltd.
Service Business common
control
Xiamen Tsannkuen Home
Professional design Acquired through
Appliance Design Co., Ltd. Xiamen Xiamen 100 100
services incorporation
(“TKCD”)
(2) Significant not wholly owned subsidiary
Holding proportion Profit and loss Dividends Total amount of
of minority attributable to attributable to minority equity at
Name
shareholders (%) minority equity minority the end of current
during current year shareholders year
TsannKuen (Zhangzhou) Enterprise Co., Ltd. 25 7,787,225.00 10,103,416.93 317,566,044.24
TsannKuen (Shangha) Enterprise Co., Ltd. 53.125 -1,623,409.03 44,855,487.78
Tsann Kuen Edge Intelligence Co., Ltd. 25 -1,962,415.75 1,769,786.82
Pt.Star Comgistic Indonesia(SCI) 25 -955,891.87 23,304,818.05
(3) The main financial information of significant not wholly owned subsidiary
Closing balance
Name of
subsidiaries Current Non-current
Current assets Non-current assets Total assets Total liabilities
liabilities liability
TsannKuen
(Zhangzhou) 1,575,965,099.85 371,689,118.26 1,947,654,218.11 677,107,778.65 282,262.50 677,390,041.15
Enterprise Co., Ltd.
TsannKuen
(Shangha) 70,363,652.02 17,344,065.29 87,707,717.31 3,273,857.96 3,273,857.96
Enterprise Co., Ltd.
Tsann Kuen Edge
Intelligence Co., 6,876,251.66 5,325,646.70 12,201,898.36 4,867,046.90 255,704.18 5,122,751.08
Ltd.
Pt.Star Comgistic
58,766,882.75 76,658,037.14 135,424,919.89 41,467,235.57 738,412.13 42,205,647.70
Indonesia(SCI)
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Opening balance
Name of
subsidiaries Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
TsannKuen
(Zhangzhou)
1,624,051,073.12 364,451,512.20 1,988,502,585.32 708,973,640.65 708,973,640.65
Enterprise Co.,
Ltd.
TsannKuen
(Shangha)
72,271,032.35 18,580,465.06 90,851,497.41 3,361,809.30 3,361,809.30
Enterprise Co.,
Ltd.
Tsann Kuen
Edge
13,840,007.66 4,808,941.09 18,648,948.75 4,270,700.85 5321.58 4,276,022.43
Intelligence
Co., Ltd.
Pt.Star
Comgistic 50,276,296.04 76,114,006.87 126,390,302.91 26,310,784.21 756,139.85 27,066,924.06
Indonesia(SCI)
(Continued)
Reporting Period
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
TsannKuen (Zhangzhou)
819,506,110.82 31,148,900.00 -41,034,228.98
Enterprise Co., Ltd.
TsannKuen (Shangha)
429,020.81 -3,055,828.76 -2,883,754.57
Enterprise Co., Ltd.
Tsann Kuen Edge
3,528,954.02 -7,849,662.99 -7,771,230.43
Intelligence Co., Ltd.
Pt.Star Comgistic
49,326,459.51 -3,823,567.47 1,806,173.69
Indonesia(SCI)
(Continued)
Same period of last year
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
TsannKuen (Zhangzhou)
757,339,909.16 36,328,907.41 94,566,449.14
Enterprise Co., Ltd.
TsannKuen (Shangha)
1,319,683.80 1,615,462.46 2,516,500.80
Enterprise Co., Ltd.
Tsann Kuen Edge
2,322,933.29 -3,929,651.24 -4,130,727.32
Intelligence Co., Ltd.
Pt.Star Comgistic
30,021,531.63 -10,158,628.72 -2,690,472.42
Indonesia(SCI)
2. The transactions which change the owner’s equity of subsidiaries, and through the transactions that the
owner still control the subsidiaries
□Applicable√Not applicable
IX. The risk related financial instruments
The main financial instruments of the Company includes equity investments, debt investments,
loans, accounts receivable, accounts payable, convertible bond and so on. For more details about all
financial instruments, please see the relevant items in NoteVI. The risk associated with financial
instruments, and risk management policies which the company uses to reduce these risks are
described as follows. The management of the Company manages and supervises the risks to ensure
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
that the risks can be controlled within a limited range.
The Company analyzes the rationality of risk variables and possible impacts of possible changes on
current gain and loss or shareholders’ equity through sensivity analysis. All risk variables rarely can
change in isolation, and the correlation between variables has great influence on the ultimate
amount generated from the change of some risk variable. Thus, the following is done on the
assumption that each variable changes in isolation.
(I) The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to
reduce the negative impact that caused by the risk of the Company to the lowest level, and to
maximize the benefits of shareholders and other equity investors. Based on the targets of risk
management, the basic strategy of the Company’s risk management is to identify and analyze the
risks which are faced by the Company, establish suitable risk tolerance baseline and precede the risk
management, and supervise a variety of risks timely and reliably, and control the risk within a
limited range.
1. Market risk
(1) Foreign exchange risk
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, HKD and
TWD, in addition to the Company's subsidiary SCI purchases and sales used by USD, SCPDI by
IDR, TKEI by TWD, East Sino by HKD and Orient Star Investments by USD, the other main business
activities of the Company used by RMB. On 30 June 2017, except the following assets or liabilities
are recorded in foreign currency, the others are recorded in RMB. Foreign exchange risk of the
assets and liabilities in foreign currencies may have an impact on the Company's performance of
operation.
Item 2017.6.30 2016.12.31
Monetary capital 365,669,286.65 373,034,883.47
Account receivable 252,510,370.40 247,566,867.43
Other accounts receivable 2,077,666.82 991,675.55
Accounts payable 58,141,029.74 52,464,873.92
Other account payable 11,139,316.78 2,965,091.63
Short-term loans 125,326,400.00 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
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 2017.
In order to reduce credit risk, the Company set up a team responsible for determination of credit
limits, credit approvals and other monitoring procedures to ensure that the necessary measures be
taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each
individual trade debt at each balance sheet date to ensure recognized fully provision for bad debts
for the money cannot be recovered. So that the Company's management believes the Company’s
credit risk has been greatly reduced.
The Company's circulating funds deposited in banks which with high credit ratings, so that the
lower credit risk of circulating funds.
3. Liquidity Risk
When managing 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 Total
items at level 1 items at level 2 items 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 1,881,750.00 1,881,750.00
Total assets of consistent fair value measurement 1,881,750.00 1,881,750.00
II. Trading financial liabilities
Including: tradable bond issued
Derivative financial liabilities
Others
Total liabilities of consistent fair value
measurement
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 Legal
Name of parent company Registration place Nature of business
transaction incorporation Representative:
STAR COMGISTIC Manufacture and sales
Final control company INC Taiwan Chen Yanjun
CAPITAL CO.,LTD. electrical equipment
（Continued）
Proportion of share
Proportion of voting rights The ultimate
held by parent Organization
Name of parent company Registered capital owned by parent company controller of the
company against the code
against the Company (%) enterprise
Company (%)
STAR COMGISTIC TWD
42.90 44.68 Wu Cankun 28986660
CAPITAL CO.,LTD. 3,000,000,000.00
2. Subsidiaries of the Company
See Note VIII.1 “The equity in subsidiaries”.
3. Details of other related parties
Name Relationship
Sino Global Development Ltd. Under same actual controller
The company directly controlled by the key management and closed family
Xiamen Shengming Electronics Co., Ltd.
members
WU WHA MA RESTAURANT MANAGEMENT
Ultimate holding company have equity
CO., LTD. IN XIAMEN
TsannKuen Enterprise Co., Ltd. Under same actual controller
Fast Three E-commerce Service Co., Ltd. Under same actual controller
Gold Mine Chain Enterprise Co., Ltd. Under same actual controller
Star International Travel Co., Ltd. Same ultimate holding company
Starcomgistic Australia Pty Ltd Under same actual controller
4. 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
16,738,518.44 40,000,000.00 No 14,355,901.32
Co., Ltd. of goods
Purchase
TsannKuen Enterprise Co., Ltd. 19,035.91 100,000.00 No 12,265.48
of goods
Gold Mine Chain Enterprise Co., Purchase
392.98 Yes
Ltd. of goods
STAR COMGISTIC CAPITAL Purchase
2,876.99 40,000.00 No
CO.,LTD. of goods
Total 16,760,824.32 14,368,166.80
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
②The situation of sells goods or rendering services
Related party Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO.,LTD. Sale of goods 7,922,076.14 7,864,689.34
TsannKuen Enterprise Co., Ltd. Sale of goods 570.82
Gold Mine Chain Enterprise Co., Ltd. Sale of goods 85,749.96
Total 8,008,396.92 7,864,689.34
(2) Information of related lease
① The Company is as the leasor
Category of leased Reporting Same period
Name of lessee
assets Period of last year
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN XIAMEN House property 32,760.00 32,760.00
Total 32,760.00 32,760.00
②The Company is as the lessee
Name of lessor Category of leased assets Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO.,LTD. House property 691,394.42 78,672.13
Total 691,394.42 78,672.13
(3) Assets transfer, Debt restructuring between related parties
Related party Content Reporting Period Same period of last year
Starcomgistic Australia Pty Ltd Sale of fixed assets 17,664.40
TsannKuen Enterprise Co., Ltd. Sale of fixed assets 6,882.63
Total 17,664.40 6,882.63
TsannKuen Enterprise Co., Ltd. Purchase of fixed assets 177,486.58
Fast Three E-commerce Service Co., Ltd. Purchase of fixed assets 36,433.06
Total 213,919.64
(4) Inter-bank lending of capital of related parties
Related party Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL
Borrowing capital 4,519,265.19
CO.,LTD.
Sino Global Development Ltd. Borrowing capital 6,774,375.98
Interest from inter-bank
Sino Global Development Ltd. 115,259.48
borrowing and lending
Total 6,889,635.46 4,519,265.19
(5) Other related-party transactions
Related party Content Reporting Period Same period of last year
Star International Travel Co., Ltd. Receiving service 419,093.08
Fast Three E-commerce Service Co.,
Receiving labor service 34,565.61
Ltd.
STAR COMGISTIC CAPITAL CO.,
Receiving service 6,211.35
LTD.
TsannKuen Enterprise Co., Ltd. Offering labor service 33,151.76
Total 493,021.80
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Receivables and payables of related parties
(1) Receivables
Closing balance Opening balance
Name of item Bad debt
Book balance Bad debt provision Book balance
provision
Accounts receivable:
STAR COMGISTIC CAPITAL CO., LTD. 2,416,174.80 2,658,068.80
Gold Mine Chain Enterprise Co., Ltd. 21,717.29
Total 2,416,174.80 2,679,786.09
Other accounts receivable:
TsannKuen Enterprise Co., Ltd. 5,818.27 17,478.11
STAR COMGISTIC CAPITAL CO., LTD. 207,870.22 201,186.60
Gold Mine Chain Enterprise Co., Ltd. 30,322.61 29,347.65
Total 244,011.10 248,012.36
(2) Payables
Name of item Closing balance Opening balance
Accounts payable:
Xiamen Shengming Electronics Co., Ltd. 9,966,993.00 11,632,531.94
Total 9,966,993.00 11,632,531.94
Prepayment:
WU WHA MA RESTAURANT MANAGEMENT CO., LTD.
IN XIAMEN 609.59
Total 609.59
Other account payable:
Xiamen Shengming Electronics Co., Ltd. 55,000.00
WU WHA MA RESTAURANT MANAGEMENT CO., LTD.
IN XIAMEN 23,776.60 23,776.60
TsannKuen Enterprise Co., Ltd. 1,914.91
STAR COMGISTIC CAPITAL CO., LTD. 38,812.61 15,423.37
Fast Three E-commerce Service Co., Ltd. 2,171.23
Sino Global Development Ltd. 6,831,280.73
Total 6,893,869.94 98,286.11
XII. Stock payment
No such cases in Reporting Period.
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: RMB ten thousands
Item 2017.06.30 2016.12.31
Minimum lease payments of irrevocable operating lease
1 year after balance date 3,638 3,638
2 year after balance date 3,638 3,638
3 year after balance date 3,638 3,638
Future years 116,409 123,685
Total 127,323 134,599
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2.Contingency
(1) 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.
On November 20, 2016, on the dispute between TKS and Hujia Fruit Co., Ltd., Shanghai Jiading District People's Court made ((2015)
Jia Min Er (Commerce) the first word No. 2661) civil judgment: the decision supports the claims of TKS and Hujia Fruit Co., Ltd.
shall immediately stop the infringement within 10 days after the court's judgment takes effect, cease construction and restore the
original appearance of the site.
Hujia Fruit Co., Ltd was not satisfied with the first instance verdict and appealed to the Shanghai Second Intermediate People’s
Court.. On June 23, 2017, Shanghai Second Intermediate People’s Court made ((2017) H 02 Civil Final Judgement No. 3007) and
rejected the appeal of Hujia Fruit Co., Ltd.
(2) As MTN Products, Inc./ Water Solutions （Hong Kong）Ltd.（“MTN/WSL”）didn’t pay relevant payment in time and fulfill the
order in accordance with the contract, on November 23, 2016, the subsidiary of the Company TKL submitted petition to SUPERIOR
COURT OF CALIFORNIA COUNTY OF LOS ANGELES suing MTN/WSL for payment of US $ 707,522.92 and US $ 1,402,940
for reserve losses, totaling US $ 2,110,462.92. As of the date of this report, the case is still pending.
(3) As Philips Lighting (China) Investment Co., Ltd. ("Philips Lighting") did not pay the relevant payment in accordance with the
relevant agreement, the company's subsidiary TKL submitted petition to Longhai People’s Court requesting Philips Lighting’s
payment of RMB2,499,658.4. As of the date of this report, the case is still pending.
(4) TsannKuen (Xiamen) Enterprise Co., Ltd. ("Xiamen Tsann Kuen") and Tianyuan (Xiamen) Assets management Co., Ltd.
("Tianyuan Company") signed the "Land Lease Contract (Northwest Corner)" and Housing Lease Contract (North Building) "on
June 26, 2013, the " Venue Lease Contract (Southeast Corner) " and " Housing Lease Contract (Huarong Road No.23) "(part of the
house) on July 29, 2013. Xiamen Tsann Kuen will lease part of ground and housing in plant located at Xinglong Road No.88. to
Tianyuan Company for business activities.
As Tian Yuan Company did not pay the rent in accordance with the contract in time and unauthorized use of the lease, the Company
filed a lawsuit to the Xiamen Huli District People's Court of to pay the relevant rent. On December 29, 2015, the Huli District
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
People's Court of Xiamen ruled to combine the four cases and hear them. On May 30, 2017, Xiamen Huli District People’s Court
made the first instance judgement: Tianyuan Company shall pay Xiamen Tsann Kuen the penalty due to overdue payment. Whether
the two sides have reached an agreement has not decided yet.
XIV. Events after balance sheet date
□ Applicable √ Not applicable
XV. Other significant events
□ Applicable √ Not applicable
XVI. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
2017.06.30
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 11,675,968.35 100.00 504,679.35 4.32 11,171,289.00
risks characteristics:
Portfolio by age 11,458,667.65 98.14 504,679.35 4.40 10,953,988.30
Related party group 217,300.70 1.86 0.00 0.00 217,300.70
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Total 11,675,968.35 100.00 504,679.35 4.32 11,171,289.00
(Continued)
2016.12.31
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 31,635,877.38 100.00 1,551,245.00 4.90 30,084,632.38
risks characteristics:
Portfolio by age 30,918,276.22 97.73 1,551,245.00 5.02 29,367,031.22
Related party group 717,601.16 2.27 0.00 0.00 717,601.16
Accounts receivable with
insignificant single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Total 31,635,877.38 100.00 1,551,245.00 4.90 30,084,632.38
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
①Accounts receivable using the age analysis method for measurement of allowance for bad debt
2017.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 11,453,022.16 499,033.86 4.36
Including: 1-90 days 6,793,840.13 0.00 0.00
91-180 days 4,544,282.83 454,428.28 10.00
181-270 days 64,220.12 19,266.04 30.00
271-365 days 50,679.08 25,339.54 50.00
1-2 years 5,645.49 5,645.49 100.00
Total 11,458,667.65 504,679.35 4.40
②In the groups, accounts receivable using related party method for measurement of allowance for bad debt
2017.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 217,300.70 0.00 0.00
Total 217,300.70 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 RMB0.; the amount of recovered or reversed
allowance for bad debts during the Reporting Period is of RMB1,046,565.65.
(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
RMB11,903,213.49, accounting for 101.95% of the total accounts receivable as at the end of the Reporting Period,
the total corresponding allowance for bad debts is RMB457,608.28.
2. Other accounts receivable
(1) Disclosure by classification
2017.06.30
Bad debt
Book balance
provision
Item
Withdrawal Book value
Amount Proportion (%) Amount proportion
(%)
Other accounts receivable with
insignificant single amount for which 0.00 0.00 0.00 0.00 0.00
bad debt provision separately accrued
Other accounts receivable withdrawn
bad debt provision according to credit 704,387.43 77.63 32,266.35 4.58 672,121.08
risks characteristics
Portfolio by age 704,387.43 77.63 32,266.35 4.58 672,121.08
Related party group 0.00 0.00 0.00 0.00 0.00
Other accounts receivable with
insignificant single amount for which 203,000.00 22.37 0.00 0.00 203,000.00
bad debt provision separately accrued
Total 907,387.43 100.00 32,266.35 3.56 875,121.08
(Continued)
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2016.12.31
Bad debt
Book balance
Item provision
Withdrawal Book value
Proportion
Amount Amount proportion
(%)
(%)
Other accounts receivable with
insignificant single amount for which 0.00 0.00 0.00 0.00 0.00
bad debt provision separately accrued
Other accounts receivable withdrawn
bad debt provision according to credit 331,154.78 55.46 57,470.55 17.35 273,684.23
risks characteristics
Portfolio by age 285,736.39 47.85 57,470.55 20.11 228,265.84
Related party group 45,418.39 7.61 0.00 0.00 45,418.39
Other accounts receivable with
insignificant single amount for which 266,000.00 44.54 0.00 0.00 266,000.00
bad debt provision separately accrued
Total 597,154.78 100.00 57,470.55 9.62 539,684.23
1 In the groups, other receivable using the age analysis method for measurement of allowance for bad debt
2017.06.30
Aging
Other accounts receivable Bad debt provision Proportion(%)
Within 1 year 679,903.33 7,782.25 1.14
Including: 1-90 days 659,538.83 0.00 0.00
91-180 days 0.00 0.00 0.00
181-270 days 12,000.00 3,600.00 30.00
271-365 days 8,364.50 4,182.25 50.00
1-2years 24,484.10 24,484.10 100.00
Total 704,387.43 32,266.35 4.58
(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 RMB0; the amount of the reversed or collected
part during the Reporting Period was of RMB25,204.20.
(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 2017.06.30 2016.12.31
Non-related party 907,387.43 551,736.39
Related 0.00 45,418.39
Total 907,387.43 597,154.78
(5) The top five other account receivable classified by debtor at period-end
Items Nature Closing balance Aging % of total Closing balance of bad debt provision
No.1 Central collection 595,547.02 0-30 days 65.63
No.2 Margin 103,000.00 Over 1 years 11.35
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
No. 3 Margin & annual fee 42,000.00 Over 1 years 4.63
No. 4 Margin 30,000.00 Over 1 years 3.31
No. 5 Daily suspense debit 30,000.00 0-30 days 3.31
Total 800,547.02 88.23
3. Long-term equity investment
(1) Long-term equity investment
2017.06.30 2016.12.31
Item
Depreciation Depreciatio
Book balance Book value Book balance Book value
reserves n reserves
Investment to
922,914,701.56 0.00 922,914,701.56 922,914,701.56 0.00 922,914,701.56
the subsidiary
Total 922,914,701.56 0.00 922,914,701.56 922,914,701.56 0.00 922,914,701.56
(2) Investment to the subsidiary
Withdrawn
Closing
impairment
balance of
Investee Opening balance Increase Decrease Closing balance provision in
impairment
the Reporting
provision
Period
TKL 921,914,701.56 0.00 0.00 921,914,701.56 0.00 0.00
Xiamen Tsannkuen Home
1,000,000.00 0.00 0.00 1,000,000.00 0.00 0.00
Appliance Design Co., Ltd.
Total 922,914,701.56 0.00 0.00 922,914,701.56 0.00 0.00
4.Revenues and operating costs
Item Reporting Period Same period of last year
Main operations 29,163,387.63 54,967,379.49
Other operations 8,772,475.75 9,316,802.67
Total 37,935,863.38 64,284,182.16
Costs of main operations 25,654,159.29 50,167,049.69
Other operation cost 1,091,104.50 1,244,429.96
Total 26,745,263.79 51,411,479.65
5. Investment income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost method 30,310,250.78 41,472,998.07
Investment income arising from disposal of long-term equity
0.00 66,100,670.73
investments
Others 0.00 8,474.00
Total 30,310,250.78 107,582,142.80
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
131,250.15
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
888,232.00
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
Current net gains and losses of subsidiaries acquired in business combination
under the same control from period-begin to combination date
Profit and loss from contingencies irrelative to the normal business operations
of company
Mainly was the income
from sale of forward
Gain/loss from change of fair value of transactional assets and liabilities, and foreign exchange
investment gains from disposal of transactional financial assets and liabilities contract investment,
3,606,480.14
and available-for-sale financial assets, other than valid hedging related to the change in fair value,
Company’s common businesses financial products and
other current assets
returns
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 2,035,200.67
Project confirmed with the definition of non-recurring gains and losses and
losses
Less: Income tax effects 960,213.95
Minority interests effects (after tax) 1,438,047.96
Total 4,262,901.05
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2.Yield Rate of Net Assets and Earnings Per Share
EPS (Yuan/share)
Weighted average
Profit as of Reporting Period
yield rate of net assets% EPS-basic EPS-diluted
Net profit attributable to common
1.79 0.06 0.06
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
1.11 0.04 0.04
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
122
