2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2018 SEMI-ANNUAL REPORT
(Unaudited)
August 2018
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2018 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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2018 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........................................................... 9
Section V. Significant Events........................................................................................21
Section VI. Change in Shares & Shareholders.............................................................35
Section VII. Preference Shares..................................................................................... 38
Section VIII. Directors, Supervisors & Senior Management Staff..............................38
Section IX. Corporate Bonds........................................................................................39
Section X. Financial Report..........................................................................................39
Section XI. Documents Available for Reference..........................................................40
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Contents
Xiamen Tsann Kuen, TKC B, Company,
Refers to TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
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
TKI Refers to Tsann Kuen (Zhangzhou) Investment Co., Ltd.
RMB Refers to RMB YUAN
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2018 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 TSANN KUEN (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 Investment TSANN KUEN Industrial Park, Taiwanese Investment
Contact address
Zone, Zhangzhou, Fujian Province, P.R.China Zone, Zhangzhou, Fujian Province, 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?
□ Applicable √ Not applicable
IV. Accounting and financial highlights
Does the Company need to adjust retrospectively or restate accounting data of previous periods?
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Yes √ No
Unit: RMB Yuan
Same period of last
Item Reporting Period YoY +/-（％）
year
Operating revenue 691,510,505.23 869,683,758.68 -20.49
Net profit attributable to shareholders of the Company -28,341,686.77 11,066,574.11 -356.10
Net profit attributable to shareholders of the Company before
-31,209,045.03 6,803,673.06 -558.71
extraordinary gains and losses
Net cash flows from operating activities -119,821,570.49 -57,511,295.96 -108.34
Basic EPS (RMB Yuan/share) -0.15 0.06 -350.00
Diluted EPS (RMB Yuan/share) -0.15 0.06 -350.00
Weighted average ROE (%) -4.73 1.79 -6.52
As at the end of the As at the end of last
Item +/- (%)
Reporting Period year
Total assets 1,583,091,285.43 1,778,825,153.51 -11.00
Net assets attributable to shareholders of the Company 567,601,992.34 610,814,327.77 -7.07
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
185,391,680
day before the disclosure of this Report (share)
Fully diluted EPS based on the latest total shares (RMB
-0.15
Yuan/share)
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.
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
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Item Amount Explanation
Gains/losses on the disposal of non-current assets (including the offset part of Gains/losses on the disposal
376,183.60
asset impairment provisions) of assets
Tax rebates, reductions or exemptions due to approval beyond authority or
the lack of official approval documents
Government grants recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain quotas or 1,845,853.00
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 and losses on change in fair value from tradable financial assets and Gains on sale of forward
tradable financial liabilities, as well as investment income from disposal of exchange contracts, fair value
tradable financial assets and tradable financial liabilities and financial assets -57,499.02 changes and other current
available for sales except for effective hedging related with normal assets (wealth management
businesses of the Company 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 2,146,598.18
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 745,230.24
Minority interests effects (after tax) 698,547.26
Total 2,867,358.26
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Not applicable
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Down 100% from the opening amount of the year, mainly because of assessed loss on
Financial assets at fair value through profit/loss
forward forex contracts
Up 100% from the opening amount of the year, mainly because of the opening amount
Interest receivable
of accrued interest on term deposits being zero
Equity assets No such assets
Fixed assets No material change
Up 45.49% from the opening amount of the year, mainly because site preparation and
Construction in progress
building repairs had not yet been examined for acceptance
Intangible assets No material change
Long-term deferred expenses Up 84.51% from the opening amount of the year, mainly because of building repairs
2. Main assets overseas
√ Applicable □ Not applicable
Unit: RMB Yuan
Measures
In the Any major
Operation taken to
Asset Nature Value Location Earnings Company’s impairment
status protect asset
net assets (%) risk or not
safety
Pt.Star
Periodic
Comgistic Investment 135,486,222.64 Indonesia Normal -8,160,647.89 23.87 No
review
Indonesia
Tsannkuen
Edge Equity Periodic
9,565,442.49 Taiwan Normal -4,085,170.16 1.69 No
Intelligence acquisition review
Co., Ltd.
Other
N/A
information
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 our core competitive edges mainly lie in the
capability to develop new products in a timely manner according to market needs due to our strength in technology and R&D as well
as a relatively high market position due to our good relationship with some customers with globally famous brands.
In the reporting period, we obtained 19 patents in R&D, including 2 invention patents, 3 utility model patents and 14 design patents.
There are also dozens of patents being applied for. These patents can help better protect our intellectual property rights, give play to
our competitive edge in independent property rights, keep a leading position in technology and increase our core competitiveness.
In addition, Tsannkuen Edge Intelligence Co., Ltd. (“Edge Intelligence”), a sub-subsidiary, owns the Arduino open control platform
technology, which will be a great help in our medium and long-term strategy for IOT (Internet of Things), ICT (Information and
Communication Tech) and AI (Artificial Intelligence). We always focus on R&D and human resources as the main driving forces for
development, just as we always focus on integrated design as a primary means of developing everyday appliances for customers. As
the world embraces smart appliances, we will increase our investment in R&D, improve our design system covering Mainland China
and Taiwan to promote synergies, and join strong business alliances in the two regions to upgrade our management on smart
appliances.
Section IV. Performance Discussion & Analysis
I. Overview
For the reporting period, we achieved operating revenue of RMB692 million, down 20.49% from RMB870 million of the same
period of last year, and net profit of RMB-28 million, down 356.10% from RMB11 million of the same period of last year. Operating
revenue and gross profit were mainly affected by the weakening American and European markets, customers’ stock control and the
rising raw material prices. And profits were also dragged down by assessed impairments of inventories. To boost operating revenue
and profits, we will continue to promote innovation in R&D and modularized development and design, utilize components in an
economic manner, increase product prices and added value, cut down procurement cost in the supply chain, increase automation in
manufacturing, properly adjust product prices through friendly communication, and try to attract more orders.
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
II. Main business analysis
1. Overview
The Company belongs to the subsector of small household appliance design, manufacturing and marketing. Its business scope
primarily includes: 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. No material changes occurred to the business model of the
Company in the reporting period.
The subsector of small household appliances in which the Company competes is mature and growing. The Company’s main products
include grills, irons, coffee makers, juicers, ovens, electric tea kettles and toasters, most of which are exported. As the age of
intelligent machines comes, small household appliances are gaining more popularity on the international market. And as people’s
living standards are improving in China, a development trend towards smart, healthy and modern products integrating humanities and
science is being seen in the subsector of small household appliances.
The Company vigorously explores the domestic market while also working on the American and European markets. Supported by
stable domestic demand, the Company promotes more innovation in R&D under its brand name to create a better future for the
Company and maintain a leading position in the industry. Meanwhile, the Company promotes transformation and upgrade in its
household appliance business through branding efforts.
2. YoY changes in major financial data
Unit: RMB Yuan
Same period of last
Item Reporting Period +/-% Main reasons for changes
year
Operating revenue 691,510,505.23 869,683,758.68 -20.49
Operating costs 625,449,017.39 739,507,468.93 -15.42
Taxes and surtaxes 5,691,534.94 5,695,363.61 -0.07
Selling expenses 27,581,504.82 30,129,026.59 -8.46
Administrative expenses 74,639,753.64 74,782,758.93 -0.19
Decrease in unrealized assessed exchange
Financial costs -1,231,441.78 9,184,381.52 -113.41
losses
Inventory valuation allowances made for
Asset impairment losses 4,823,333.42 64,439.57 7,385.05
the current period
Assessed loss on forward forex contracts in
Gains on fair value changes -9,934,400.00 1,881,750.00 -627.93
the current period
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Reporting Period +/-% Main reasons for changes
year
Increased gains on settled forward forex
Investment income 9,876,900.98 1,724,730.14 472.66
deals
Assets disposal income 376,183.60 318,516.72 18.10
Other income 1,562,092.00 888,232.00 75.87 Increase in governmental subsidy
Non-business revenue 2,467,573.87 2,128,098.76 15.95
Non-business expenses 37,214.69 280,164.66 -86.72 Decreased loss on asset retirement
Decrease in recognized deferred income
Income tax expenses -1,038,509.51 3,416,067.76 -130.40
tax expenses
R&D expense 34,122,824.80 36,181,239.58 -5.69
Decreased operating revenue, rising raw
Net profit -40,093,551.93 13,565,414.73 -395.56 material prices and inventory valuation
allowances made
Net cash flows from operating
-119,821,570.49 -57,511,295.96 -108.34 Decreased operating revenue
activities
Net cash flows from investing Decreased outflows of restricted term
-171,845,120.19 -508,940,750.86 66.23
activities deposits
Increased export invoice financing for
Net cash flows from financing
-19,294,734.68 100,706,644.87 -119.16 wealth management purposes in the same
activities period of last year
Net increase in cash and cash Decreased outflows of restricted term
-315,846,864.07 -474,256,524.44 33.40
equivalents deposits
Major changes to the profit structure or sources of the Company during the Reporting Period:
□ Applicable √ Not applicable
No such cases.
3. Breakdown of main business
Unit: RMB Yuan
Increase/decrease
Gross Increase/decrease Increase/decrease
of operating
Operating profit of operating costs of gross profit rate
Item Operating costs revenue over same
revenue rate over same period of over same period of
period of last year
(%) last year (%) last year (%)
(%)
Classified by industry
Small home
appliance 658,944,365.34 613,781,412.65 6.85% -21.58% -15.14% -7.08%
manufacturing
Total 658,944,365.34 613,781,412.65 6.85% -21.58% -15.14% -7.08%
Classified by product
Cooking
400,273,785.96 371,762,439.06 7.12% -25.92% -16.95% -10.04%
utensils
Everyday home
164,940,858.72 159,587,268.54 3.25% -26.37% -24.33% -2.61%
appliances
Tea and coffee
84,387,695.78 79,103,482.40 6.26% 14.34% 25.18% -8.11%
makers
Other 9,342,024.88 3,328,222.65 64.37% 334.25% 110.58% 37.84%
Total 658,944,365.34 613,781,412.65 6.85% -21.58% -15.14% -7.08%
Classified by region
Americas 246,999,976.03 233,192,853.00 5.59% -18.31% -9.90% -8.81%
Europe 200,874,235.23 191,285,145.74 4.77% -30.86% -25.40% -6.97%
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Increase/decrease
Gross Increase/decrease Increase/decrease
of operating
Operating profit of operating costs of gross profit rate
Item Operating costs revenue over same
revenue rate over same period of over same period of
period of last year
(%) last year (%) last year (%)
(%)
Asia 161,948,690.59 145,155,496.92 10.37% -10.23% -6.01% -4.03%
Australia 38,371,062.48 34,606,394.52 9.81% -33.45% -25.12% -10.03%
Africa 10,750,401.01 9,541,522.47 11.24% 14.68% 28.89% -9.79%
Total 658,944,365.34 613,781,412.65 6.85% -21.58% -15.14% -7.08%
III. Analysis of non-core business
√ Applicable □ Not applicable
Unit: RMB Yuan
Ratio to the total
Items Amount profits amount Notes of the causes Recurring or not
(%)
Inventory valuation allowances made and
Asset impairment losses 4,823,333.42 -11.73 reversal of certain allowances for doubtful No
accounts receivable
Gains on fair value changes -9,934,400.00 24.15 Assessed losses on forward forex contracts No
Income from settled forward forex contracts
Investment income 9,876,900.98 -24.01 No
and wealth management instruments
Assets disposal income 376,183.60 -0.91 Asset disposal No
Government subsidy in relation to
Other income 1,562,092.00 -3.80 No
production and operation
Late interest payment received, B2B
Non-business revenue 2,467,573.87 -6.00 revenue, reclassification of overdue payable No
with no-longer-existing payee
Non-business expenses 37,214.69 -0.09 Donation expenses and asset retirement loss No
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 Reason for any significant
Item percentage
percentage percentage change
Amount Amount (%)
of total of total
assets (%) assets (%)
Monetary funds 438,035,096.81 27.67 610,480,711.93 36.87 -9.20
Financial assets at fair
Assessed losses on forward
value through 0.00 0.00 1,881,750.00 0.11 -0.11
forex contracts
profit/loss
No notes receivable in the
Notes receivable 0.00 0.00 990,000.00 0.06 -0.06
current period
Accounts receivable 208,402,211.03 13.16 242,579,524.63 14.65 -1.49
Rent prepayments for plants
Prepayments 12,683,301.03 0.80 24,784,622.14 1.50 -0.70
in the same period of last year
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2018 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 Reason for any significant
Item percentage
percentage percentage change
Amount Amount (%)
of total of total
assets (%) assets (%)
Interest receivable 1,695,898.95 0.11 1,038,777.61 0.06 0.05 Increase in term deposits
Other receivables 27,051,950.24 1.71 37,688,979.32 2.28 -0.57 Decreased export tax rebates
Inventories 228,857,043.21 14.46 190,784,550.61 11.52 2.94
Increase in wealth
Other current assets 377,710,035.73 23.86 281,488,319.23 17.00 6.86
management instruments
Investment property 30,415,709.80 1.92 39,431,574.89 2.38 -0.46
Fixed assets 173,586,284.79 10.97 175,644,211.63 10.61 0.36
Site preparation and building
Construction in
2,996,491.22 0.19 495,974.59 0.03 0.16 repairs had not yet been
progress
examined for acceptance
Intangible assets 28,124,283.40 1.78 28,363,603.13 1.71 0.07
Long-term deferred
8,096,749.00 0.51 3,446,437.48 0.21 0.30 More building repairs
expenses
Deferred income tax assets
Deferred income tax recognized on operating loss
22,867,553.35 1.44 13,735,365.16 0.83 0.61
assets carryforwards recognized at
the end of last year
Increased prepayments for
Other non-current assets 22,528,676.87 1.42 3,052,537.50 0.18 1.24
equipment
Increased export invoice
financing for wealth
Short-term borrowings 17,909,899.30 1.13 125,326,400.00 7.57 -6.44
management purposes in the
same period of last year
Financial liabilities at Assessed losses on forward
fair value through 6,008,550.00 0.38 0.00 0.00 0.38 forex contracts in the current
profit/loss period
Increase in banker’s
Notes payable 19,942,447.13 1.26 10,517,009.49 0.64 0.62
acceptance bills in payment
Accounts payable 432,489,623.92 27.32 473,690,790.92 28.61 -1.29
Accounts received in
11,941,937.58 0.75 14,843,333.11 0.90 -0.15
advance
Payroll payable 39,119,018.68 2.47 39,070,453.37 2.36 0.11
Increase in value added tax
Tax payable 4,674,769.16 0.30 3,384,970.78 0.20 0.10 payable and withheld tax on
dividend
Decreased interest on
Interest payable 9,957.32 0.00 170,592.29 0.01 -0.01
short-term borrowings
Other accounts payable 63,597,000.58 4.02 56,442,168.31 3.41 0.61
Long-term payroll
178,526.85 0.01 250,205.83 0.02 -0.01
payables
Compensation for the
Specific payables 109,137,778.28 6.89 0.00 0.00 6.89 relocation of TKS at the end
of last year
Deferred income tax
970,006.50 0.06 1,026,173.00 0.06 0.00
liabilities
Decreased income from
Other comprehensive
4,580,506.61 0.29 7,225,639.61 0.44 -0.15 foreign-currency translation
income
differences
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
Profit/loss
Cumulative Impairment
on fair value
fair value provided in Purchased in Sold in this
Opening changes in Closing
Item changes this this Reporting Reporting
balance this balance
charged to Reporting Period Period
Reporting
equity Period
Period
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
186,627,900.00 0.00 0.00 0.00 102,610,050.00 289,237,950.00 0.00
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 assets 186,667,900.00 0.00 0.00 0.00 102,610,050.00 289,237,950.00 40,000.00
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 186,667,900.00 0.00 0.00 0.00 102,610,050.00 289,237,950.00 40,000.00
Financial liabilities 0.00 6,008,550.00 0.00 0.00 204,241,350.00 38,032,400.00 166,208,950.00
Did any significant changes occur to the measurement attributes of the Company’s main assets in the Reporting Period?
□ 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 same period of last
Investments made in Reporting Period +/-%
year
0.00 11,422,960.00 -100.00
2. Significant equity investments made in this Reporting Period
□ Applicable √ Not applicable
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Proportion of
Purchased Sold the closing Actual
Related-p
Type of Initial Opening amount in amount in Impairme Closing investment gain/loss in
Relatio arty
Operator derivative investment Beginning date Ending date investment the the nt investment amount in the the
n transactio
investment amount amount Reporting Reporting provision amount Company’s Reporting
n or not
Period Period closing net Period
assets (%)
Forward
Bank No No 49,347.93 1 January 2018 30 June 2018 18,662.79 30,685.14 32,727.04 16,620.90 29.28 -32.59
forex
Total 49,347.93 18,662.79 30,685.14 32,727.04 16,620.90 29.28 -32.59
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
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) The effect of settled derivatives on profit in the Reporting Period was RMB9.6085 million, and assessed loss on those unsettled was RMB9.9344 million, including an
invested in this Reporting Period (specific methods RMB3.9259 million reversal of the assessed gains on unsettled forward forex contracts of last year.
used and relevant assumption and parameter settings (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.
shall be disclosed for analysis of fair value of (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
derivatives) exchange rate and the currency amount when bought in.
16
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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
concerning the Company’s derivatives investment and opinion 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,
risk control with the risks 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
17
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VII. Main controlled and joint stock companies
Main subsidiaries and joint stock companies
Unit: RMB Yuan
Relationshi
Main business scope Operating Operating
Company name p with the Registered capital Total assets Net assets Net profit
revenues profit
Company
Small home appliance
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. Subsidiary USD160 million 1,752,426,307.49 1,212,262,895.56 633,712,855.58 -34,475,349.72 -31,822,389.67
manufacturing
Small home appliance
Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Subsidiary USD40 million 191,149,181.31 79,626,388.90 460,356.27 -1,237,495.29 -1,238,540.45
manufacturing
Small home appliance
Pt.Star Comgistic Indonesia Subsidiary USD30 million 135,486,222.64 79,272,790.79 57,156,180.74 -8,010,270.44 -8,160,647.89
manufacturing
Tsannkuen Edge Intelligence Co., Ltd. Subsidiary Industrial design NTD200 million 9,565,442.49 -1,446,987.03 5,186,214.49 -4,113,815.35 -4,085,170.16
Subsidiaries obtained or disposed in this Reporting Period
√ Applicable □ Not applicable
1. Tsann Kuen (Zhangzhou) Investment Co., Ltd. (“TKI”) was incorporated by the Company’s controlled subsidiary, Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. on 15 June 2018 and has
been included in the Company’s consolidated financial statements since that day.
2. Xiamen Travel Canxing (Xiamen) International Travel Service Co., Ltd. was officially dissolved on 6 February 2018 for it had no actual operations.
VIII. Structured bodies controlled by the Company
□ Applicable √ Not applicable
18
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Predict the operating results of January-September 2018
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
X. Risks facing the Company and countermeasures
1. International
The global economy has recovered overall, and the anti-globalization and the trend of trade protectionism are on the rise with
increasing uncertainty of spillover effects from the developed economies policy.
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 and non-tariff barrier with
the more complicated international environment faced with the electrical home appliances.
Meanwhile, in the OEM market, the supply and demand of the industry gradually varies with the supply exceeding the demand,
where the horizontal competition is quite fierce. The cost competition and innovation research are gradually no more accessible to the
business opportunities. In addition, along with the development of the new life, the restructuring of industrial leading brand
intensifies the competition of the OEM market.
2. Domestic
Though there are still a lot of difficulties, like domestic excess capacity, inadequate endogenous power of economic growth, and
increasingly accumulated financial risks, etc, the domestic economy has overall remained a steady and rapid growth with continuous
optimization of economic structure and steady employment.
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 cost of raw materials has also posed challenges for enterprises’ development in China.
3. Exchange rate fluctuation
19
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The Company’s products were export-oriented, so the influence of the exchange rate fluctuation on the Company was rather big.
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.
20
2018 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 2017 Annual
Annual Meeting of
Meeting of 44.90% 05/18/2018 05/19/2018 www.cninfo.com.cn
Shareholders
Shareholders
The 1st
Extraordinary Extraordinary
45.35% 06/15/2018 06/16/2018 www.cninfo.com.cn
General Meeting of General Meeting
2018
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 replacement
Commitments made upon
first issuance or refinance
Commitment on equity
incentive
FILLMAN Commitment Based on the confidence The
Other commitments made Long-term
INVESTMENTS on on the continuous and 12/28/2012 Company’s
to minority shareholders effective
LIMITED shareholding stable development of stocks resumed
21
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
increase the Company, it trading on
committed to increase December 31,
the shareholding if the 2012, but the
Company’s stock price Company’s
lower than HKD2.40 per stock price
share after the hasn’t met the
implementation of the condition for
shares contraction and shareholding
trading resumption, and increase since
it would increase no the date of
more than 2% shares (i.e. trading
3.7078 million shares) of resumption,
the total shares issued by FILLMAN
the Company within one Investment
year since the date of Limited hasn’t
initial shareholding implemented
increase. If the plan on the
increasing holding 2% shareholding
shares of the total shares increase plan.
is completed, if the stock
price hasn’t reached the
target price, it will
perform relevant
approval procedures, and
propose to CSRC on
continuous
implementation of
shareholding increase by
exemption of offering.
Executed on time or not No
IV. Engagement and disengagement of CPAs firm
Whether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual financial report of the Company has not been audited
V. Notes for “non-standard audit report” of CPAs firm during the Reporting Period by board
of directors and supervisory board
□ Applicable √ Not applicable
VI. Notes for the related information of “non-standard audit reports” last year by board of
directors
□ Applicable √ Not applicable
VII. Bankruptcy and restructuring
□ Applicable √ Not applicable
22
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VIII. Litigations and arbitrations
Significant litigations and arbitrations
□ Applicable √ Not applicable
Other lawsuits
√ Applicable □ Not applicable
Unit: RMB’0,000
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
The case of the controlling Zhangzhou Tsann Ken had
subsidiary Tsann Kuen China submitted the indictment to the
(Zhangzhou) Enterprise Co., Ltd. 1,770.26 No local judicatory in Kobe, Japan Had no result No No No
sued Japan UCC Ueshima Coffee on May 9, 2014; recently is in
Co., Ltd. (contract disputes) the trial
Xiamen Huli People’s Court
had put on record on October
13, 2014. The Court made the
The lease contract default case of
first instance of judgment on
the Company sued Xiamen
February 2, 2015, but both two Xiamen Huli
Tianyuan Assets Management Co.,
29.43 No parties refused to the decision People’s Court
Ltd. about the arrears of rent (No. combined these
and lodged an appeal. Xiamen
23 of Huarong Rd, Huli District, four cases for
Intermediate People’s Court
Xiamen)
cancelled the original judgment trial on
and remanded for new trial on December 29,
2015. The first
October 13, 2015.
instance of
The lease contract default case of
judgment of
the Company sued Xiamen
Xiamen Huli
Tianyuan Assets Management Co., Xiamen Huli People’s Court
People’s Court
Ltd. about the arrears of rent (North 58.46 had put on record on April 28,
was made on
Building of the Factory, No. 88 of 2015
May 30, 2017: No No No
Xinglong Rd, Huli District,
Tianyuan
Xiamen)
(Xiamen) Assets
The lease contract default case of
Management
the Company sued Xiamen
Co., Ltd. should
Tianyuan Assets Management Co., Xiamen Huli People’s Court
pay the late
Ltd. about the arrears of rent 8.32 had put on record on April 28,
payment
(Southeast Corner, No. 88 of 2015
penalty.
Xinglong Rd, Huli District,
Whether both
Xiamen)
parties to appeal
The lease contract default case of has not
the Company sued Xiamen confirmed yet.
Tianyuan Assets Management Co., Xiamen Huli People’s Court
Ltd. about the arrears of rent 18.61 had put on record on April 28,
(Northwest Corner, No. 88 of 2015.
Xinglong Rd, Huli District,
Xiamen)
The case of the controlling
subsidiary Tsann Kuen China SUPERIOR COURT OF
(Zhangzhou) Enterprise Co., Ltd. CALIFORNIA COUNTY OF
sued MTN Products, Inc./ Water 1,429.40 No Had no result No No No
LOS ANGELES had put on
Solutions （Hong Kong）Ltd. record on November 23, 2016.
(disputes of defaulting on loans)
23
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
The first
instance of
judgment from
Longhai
People’s Court
was received on
November 12,
2017: Philips
shall return the
The contract disputes case of the payment for
controlling subsidiary Tsann Kuen Zhangzhou Intermediate goods of RMB
China (Zhangzhou) Enterprise Co., 250 No People’s Court opened the 423,345.63 and No No No
Ltd sued Philips lighting (China) second trial on May 8, 2018.。 the interests of
investment Co. Ltd. overdue
payment to
Tsann Kuen
China
(Zhangzhou),
who had
instituted an
appeal with no
result in second
trial.
The first
instance of
judgment from
Zhangzhou
Intermediate
People’s Court
was received on
June 11, 2018:
1. Defendants of
Sanda and
Lianyuan
returned
payments for
80,603 motors
The contract disputes case of the of RMB
controlling subsidiary Tsann Kuen 2,435,368.34 to
Zhangzhou Intermediate Tsann Kuen
China (Zhangzhou) Enterprise Co.,
People’s Court made the China
Ltd sued Sanda Electric Machinery 333 No No No No
judgment on June 11, 2018, and (Zhangzhou); 2.
Co., Ltd. and Boluo County
Sanda instituted an appeal. Defendants of
Lianyuan Industrial Technology
Co., Ltd. Sanda and
Lianyuan
returned total
RMB895,062.3
for labor cost of
checking,
dismantling, and
sorting out the
defective
motors, material
fees for
evidence
preservation and
cost of
photography.
Sanda had
24
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
instituted an
appeal with no
result in second
trial.
The first
instance of
judgment from
Longhai
People’s Court
was received on
October 13,
2017: 1.
Releasing the
lease contract
and
supplementary
agreement
signed by both
parties; 2.
Sanyili shall
return the eased
property to
Tsann Kuen
China
Applying to
(Zhangzhou)
Longhai
The lease contract disputes case of within a month
People’s
the controlling subsidiary Tsann Longhai People’s Court had put from the date of Court for
Kuen China (Zhangzhou) Enterprise 46 No the judgment No No
compulsory
Co., Ltd sued Xiamen Sanyili on record on April 13, 2017. coming into
execution
Energy-saving Materials Co., Ltd. effect; 3. Sanyili
on January
shall pay Tsann
2, 2018.
Kuen China
(Zhangzhou) the
rent
RMB384,036
and the penalty
within 10 days
from the date of
the judgment
coming into
effect; 4. Sanyili
shall pay the
money from
May, 2017 to
the date of
returning the
plant with
RMB71,604
every month.
This trial has
ended.
25
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
The first
instance of
judgment of
Case No. 329,
Min 02,
Minchu, 2017
from Xiamen
Intermediate
People’s Court
The total 7 patent infringement was received on
cases of the controlling subsidiary March 13, 2018:
Tsann Kuen China (Zhangzhou) turned down the
Enterprise Co., Ltd sued Xiamen
Fukun Household Appliance Xiamen Intermediate People’s claims of Tsann
Kuen China
Technology Co., Ltd (patent
number: ZL200710009700.7、 Court opened the court session (Zhangzhou).
70 No The second No No No
ZL200820102024.8、 from June 27, 2017 to June 29, instance of
ZL200920137778.1、 judgment of
ZL201320822528.8、 2017. Case No. 329
ZL200920308936.5、 from Fujian
ZL201030287767.X、 Superior
ZL201330112310.9) People’s Court
was received on
June 21, 2018:
upheld the
verdict, and
turned down the
claims. The
other 6 cases
still had no
results.
The first
instance of
judgment from
Longhai
People’s Court
was received on
October 9, 2017:
Yixin
1. Paying Yixin
applied for
the payment for
compulsory
mould of
execution on
RMB339,772.93
June 13,
and penalty of
The contract disputes case of 2018, and
overdue
Xiamen Yixin Industrial and Trade Opening the court session on paid
payment; 2.
Co., Ltd sued the controlling 95.6 Longhai No No
Paying Yixin the
subsidiary Tsann Kuen China December 26, 2017 Court total
payment for
(Zhangzhou) Enterprise Co., Ltd. RMB
goods of RMB
425,513 in
49,126.69 and
the
penalty of
afternoon on
overdue
June 15,
payment;
2018.
The second
instance of
judgment from
Zhangzhou
Intermediate
People’s Court
was received on
26
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
March 21, 2018:
upheld the
verdict
The patent infringement cases of the Ningbo Intermediate People’s
Company sued Huayu Electrical
Appliance Group Co., Ltd. 100 No Court opened the court session Had no result No No No
on March 19, 2018
The first
instance of
judgment of
Case No. 376,
Yue 03, Minchu,
2017 from
Guangzhou
Intellectual
Property Court
was received on
October 31,
2017: iCare
stopped
producing,
selling, and
promising to sell
infringing
products within
the effective
The total 3 patent infringement date of the
cases of the controlling subsidiary written
Tsann Kuen China (Zhangzhou) judgment, and
Enterprise Co., Ltd. sued Shenzhen Shenzhen Intermediate People’s compensated
iCare Intelligent Lighting Co., Ltd Tsann Kuen
20 No Court opened the court session China No No No
(patent No: ZL201030580030.7、
(Zhangzhou) for
ZL201120033670.5、 on May 17, 2018 financial losses
ZL201030562160.8) and the
instigation fees
of RMB 80,000.
ICare has
instituted an
appeal, and the
case is still at
the trial.
The first
instance of
judgment of
Case No. 377,
Yue 03, Minchu,
2017 from
Guangzhou
Intellectual
Property Court
was received on
October 31,
2017: turned
down all claims
27
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
form Situation of
Trial results and
Lawsuit into execution of Disclo
Basic situation of lawsuit influences of Disclosu
amount (RMB estimate Process of lawsuit (arbitration) judgment of sure
(arbitration) lawsuit re index
Ten thousand) d lawsuit date
(arbitration)
liabilitie (arbitration)
s
of Tsann Kuen
China
(Zhangzhou).
Tsann Kuen
China
(Zhangzhou) has
instituted an
appeal, and the
case is still at
the trial.
The Case No.
151, Yue 03,
Minchu, 2018
was held by
Shenzhen
Intermediate
People’s Court
on May 17,
2018 with no
results yet.
The patent infringement case of the
controlling subsidiary Tsann Kuen Shenzhen Intermediate People’s
China (Zhangzhou) Enterprise Co.,
20 No Court had put on record on Had no result No No No
Ltd. sued Shenzhen Kang
Mingsheng Science and Technology
Industrial Co., Ltd January 11, 2018
The patent infringement case of the Guangzhou Intellectual
controlling subsidiary Tsann Kuen
20 No Property Court had put on Had no result No No No
China (Zhangzhou) Enterprise Co.,
Ltd. sued Guangdong DP Co., Ltd.
record on December 15, 2017.
The contract disputes case of the Xiamen Huli People’s Court
Company sued Zhongshan Jalja
34 No had put on record on January Had no result No No No
Electric Appliance Technology Co.,
Ltd.
23, 2018.
Free Trade Zone Court, Huli
The malicious prosecution case of
the Company sued Getty Images 10 No Court opened the court session Had no result No No No
(Beijing) Technology Co., Ltd.
on June 27, 2018
IX. Punishments and rectifications
□ Applicable √ Inapplicable
No such cases in the Reporting Period.
28
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
29
2018 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’0,000
Pricin
g
princi Settlement
Type of Proportion Whether
ple of method of
the Content of the Transac Transacti in same kind Approved exceeded Similar
the the Disclosu Disclosu
Related party Relationship related-par related-party tion on of transaction the market
relate related-part re date re index
ty transaction price amount transactions quota approved price
d-part y
transaction (%) quota
y transaction
transa
ction
Purchase
Company directly of
Thermaster Electronic controlled by actual commoditi Purchase of
(Xiamen) Ltd. controller and their es from raw parts
1,384.71 2.50% 4,000.00 No
close family members the related Base
party d on
the
Purchase
mark
of
Under the control of et
Tsann Kuen commoditi Purchase of
Enterprise Co., Ltd.
the same actual
es from raw parts
price 1.03 0.00% 10.00 No
controller and
the related
both Settled
party www.cn
partie according to
Purchase 05/30/2 info.co
s N/A the contract N/A
of 018 m.cn
Under the control of abide signed by
Gold Mining Chain commoditi Purchase of
Co., Ltd.
the same actual
es from raw parts
by 0.15 0.00% 5.00 No both parties
controller the
the related
fair
party
and
Purchase
reaso
of
nable
Star Comgistic Ultimate controlling commoditi Purchase of
Capital Co., Ltd. company es from raw parts
princi 0.50 0.00% 10.00 No
ple
the related
party
Kuaisan Electric Under the control of Purchase Purchase of
Business Service Co., the same actual of raw parts
0.06 0.00% 3.00 No
30
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Pricin
g
princi Settlement
Type of Proportion Whether
ple of method of
the Content of the Transac Transacti in same kind Approved exceeded Similar
the the Disclosu Disclosu
Related party Relationship related-par related-party tion on of transaction the market
relate related-part re date re index
ty transaction price amount transactions quota approved price
d-part y
transaction (%) quota
y transaction
transa
ction
Ltd. controller commoditi
es from
the related
party
Sales of
commoditi Sales of parts
Star Comgistic Ultimate controlling
Capital Co., Ltd. company
es to the and finished 576.28 0.83% 1,716.00 No
related products
party
Sales of
Under the control of commoditi Sales of parts
Gold Mining Chain
Co., Ltd.
the same actual es to the and finished 0.00 0.00% 10.00 No
controller related products
party
Total 1,962.73 5,754.00
Details of large amount of sales returns N/A
As for the prediction on the total amount of routine related-party transactions to N/A
be occurred in the reporting period by relevant types, the actual performance in
the reporting period
Reason for significant difference between the transaction price and the market N/A
price
31
2018 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 exist non-operating credits and liabilities with related parties?
□ Yes √ No
5. Other significant related-party transactions
□ Applicable √ Not applicable
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
(1) Trust
□ Applicable √ Not applicable
(2) Contract
□ Applicable √ Not applicable
(3) Lease
√ Applicable □ Not applicable
Notes of the leasing
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 on
June 28, 2013.
The lease whose profits reaching more than 10% of the total profits of the Company in the Reporting Period.
√ Applicable □ Not applicable
32
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Influenc
Relate
Recogni es of
Involved d-part
Name of Status of Ending tion rental
amount of Initial date Rental y Relati
contract-out Name of leasee leased date of basis of income
the leased of leasing income transa onship
party assets leasing rental on the
assets ction
income Compan
or not
y
Xiamen Tsann Tianyuan(Xiam Accordi
Building
Kun (China) en) Assets 07/01/201 09/30/201 ng to the
s and 1,616.01 525.11 18.53% No N/A
Enterprise Management 3 8 contract
land
Co., Ltd. Co., Ltd. price
2. Significant guarantees
√ Applicable □ Not applicable
Unit: RMB’0,000
Guarantees subsidiaries
Actual
Disclosure date
occurrence Actual Guarantee
of the guarantee Line of Type of Term of Due or
Guaranteed party date (date of guarantee for a related
line guarantee guarantee guarantee not
agreement amount party or not
announcement
signing)
Tsann Kuen Edge
08/04/2017 496.25 2017-08-04 457.31 Pledged 1 year No No
Intelligence
PT.STAR
COMGISTIC 08/04/2017 1,984.98 2017-08-04 853.39 Pledged 1 year No No
INDONESIA
Total actual guarantee
Total guarantee line for subsidiaries
amount for subsidiaries
approved during this Reporting Period 0 518.34
during this Reporting
(C1)
Period (C2)
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries at
subsidiaries at the end of this Reporting 2,481.23 1,310.70
the end of this Reporting
Period (C3)
Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved during amount during this
0 518.34
this Reporting Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total actual guarantee
Total approved guarantee line at the end balance at the end of this
2,481.23 1,310.70
of this Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net
2.31%
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller
0
and their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities
457.31
with a liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net assets
0
(F)
Total amount of the three kinds of guarantees above (D+E+F) 457.31
Explanation on undue guarantee or possible joint liquidated liability N/A
undertaken (if any)
Explanation on providing external guarantee violating established N/A
procedures (if any)
33
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Other significant contracts
□ Applicable √ Not applicable
XV. Social responsibilities
1. Significant environmental protection
□ Applicable √ Not applicable
2. 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
34
2018 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
Issuance Capitalization
Bonus
Number Proportion of new of public Other Subtotal Number Proportion
shares
shares reserve fund
I. Unlisted
0 0.00% 0 0 0 0 0 0 0.00%
tradable shares
1. Founders’
shares
Among which:
shares held by
State
Shares held by
domestic
corporation
Shares held by
foreign
corporations
Other
2. Raised
corporation
shares
3. Staff shares
4. Preferred
shares or other
II. Listed
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
tradable shares
1. RMB ordinary
shares
2. Domestically
listed foreign 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
3. Foreign
capital stocks
listed abroad
4. Other
III. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for change in share capital
□ Applicable √ Not applicable
Particulars about the approval of the change in share capital
□ Applicable √ Not applicable
The transfer of change in share capital
35
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Applicable √ Not applicable
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and net assets per share attributed to
equity shareholder and financial index etc.
□ Applicable √ Not applicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Not applicable
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
16,429 shareholders with resumed voting 0
the period-end
rights at the period-end
Greater than 5% or top 10 common shareholders
Number Pledged or frozen
Total Increase/d
of Number of shares
Shareholdi common ecrease
Nature of non-trad tradable
Name of shareholder ng shares held during the Status Number
shareholder able common
percentage at the reporting of of
common shares
period-end period shares shares
shares
FORDCHEE
Foreign No chang
DEVELOPMENT 29.10% 53,940,530 0 53,940,530 N/A 0
corporation e
LIMITED
EUPA INDUSTRY Foreign No
13.09% 24,268,840 0 24,268,840 N/A 0
CORPORATION LIMITED corporation change
GUOTAI JUNAN
Foreign No chang
SECURITIES(HONGKON 4.96% 9,196,449 0 9,196,449 N/A 0
corporation e
G) LIMITED
FILLMAN Foreign No
2.49% 4,621,596 0 4,621,596 N/A 0
INVESTMENTS LIMITED corporation change
CHIAN EVERBRIGHT
Foreign
SECURITIES (HK) CO., 1.26% 2,335,823 213,723 0 2,335,823 N/A 0
corporation
LTD
SHENWAN HONGYUAN
Foreign No chang
SECURITIES (H.K.) 1.06% 1,956,752 0 1,956,752 N/A 0
corporation e
LIMITED
Domestic
CHEN YONGQUAN 1.03% 1,900,376 3,033 0 1,900,376 N/A 0
individual
Foreign No chang
CHEN YONGQING 0.80% 1,488,949 0 1,488,949 N/A 0
individual e
Foreign No
CHEN LIJUAN 0.72% 1,339,434 0 1,339,434 N/A 0
individual change
Domestic
DING XIAOLUN 0.61% 1,135,000 32,000 0 1,135,000 N/A 0
individual
Strategic investor or general corporation
becoming a top ten shareholder due to N/A
placing of new shares
Related parties or acting-in-concert parties The first, the second and the fourth shareholders are the Company’s corporate controlling
36
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
among the shareholders above shareholders. It is unknown whether the other shareholders of tradable shares are related
parties or acting-in-concert parties as prescribed in the Administrative Methods for
Disclosure of the Shareholding Changes of the Listed Company’s Shareholders.
Top 10 tradable common share holders
Number of tradable Type of shares
Name of shareholder common shares held at
the period-end Type Number
FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign shares 53,940,530
EUPA INDUSTRY CORPORATION
24,268,840 Domestically listed foreign shares 24,268,840
LIMITED
GUOTAI JUNAN
9,196,449 Domestically listed foreign shares 9,196,449
SECURITIES(HONGKONG) LIMITED
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign shares 4,621,596
CHIAN EVERBRIGHT SECURITIES (HK)
2,335,823 Domestically listed foreign shares 2,335,823
CO., LTD
SHENWAN HONGYUAN
1,956,752 Domestically listed foreign shares 1,956,752
SECURITIES (H.K.) LIMITED
CHEN YONGQUAN 1,900,376 Domestically listed foreign shares 1,900,376
CHEN YONGQING 1,488,949 Domestically listed foreign shares 1,488,949
CHEN LIJUAN 1,339,434 Domestically listed foreign shares 1,339,434
DING XIAOLUN 1,135,000 Domestically listed foreign shares 1,135,000
Explanation on associated relationship or/and
The first, the second and the fourth shareholders are the Company’s corporate controlling
persons acting in concert among the top ten
shareholders. It is unknown whether the other shareholders of tradable shares are related
common tradable shareholders and between
parties or acting-in-concert parties as prescribed in the Administrative Methods for
the top ten tradable shareholders and the top
Disclosure of the Shareholding Changes of the Listed Company’s Shareholders.
ten common shareholders
Explanation on the top 10 common
shareholders participating in the margin N/A
trading business
Whether the shareholders of a company conducted the transaction of repurchase under the agreement during the Reporting Period
□ Yea √ No
No such situation of the Company during the Reporting Period.
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
37
2018 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 2017 Annual Report.
II. Change 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 2017 Annual Report.
38
2018 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
39
2018 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.
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 7, 2018
40
2018 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 Note Closing balance Opening balance
Current Assets:
Monetary funds VI. 1 438,035,096.81 564,381,960.88
Settlement reserves
Intra-group lendings
Financial assets measured at fair value of which
VI. 2 3,925,850.00
changes are recorded in current profits and losses
Derivative financial assets
Notes receivable
Accounts receivable VI. 3 208,402,211.03 270,052,420.89
Accounts paid in advance VI. 4 12,683,301.03 10,939,777.79
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable VI. 5 1,695,898.95
Dividend receivable
Other accounts receivable VI. 6 27,051,950.24 35,318,724.60
Financial assets purchased under agreements to resell
Inventories VI. 7 228,857,043.21 195,711,505.29
Assets held for sale
Non-current assets due within 1 year
Other current assets VI. 8 377,710,035.73 413,119,671.14
Total current assets 1,294,435,537.00 1,493,449,910.59
Non-current assets:
Entrusted loans by mandate and advances granted
Available-for-sale financial assets VI. 9 40,000.00 40,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing real estate VI. 10 30,415,709.80 32,125,408.51
Fixed assets VI. 11 173,586,284.79 173,361,312.05
Construction in progress VI. 12 2,996,491.22 2,059,623.18
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets VI. 13 28,124,283.40 29,501,389.01
R&D expense
Goodwill
Long-term deferred expenses VI. 14 8,096,749.00 4,388,248.42
Deferred income tax assets VI. 15 22,867,553.35 22,682,483.17
Other non-current assets VI. 16 22,528,676.87 21,216,778.58
Total of non-current assets 288,655,748.43 285,375,242.92
Total assets 1,583,091,285.43 1,778,825,153.51
41
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note Closing balance Opening balance
Current liabilities:
Short-term borrowings VI. 17 17,909,899.30 10,832,951.89
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 VI. 18 6,008,550.00
current profits and losses
Derivative financial liabilities
Notes payable VI. 19 19,942,447.13 20,024,149.15
Accounts payable VI. 20 432,489,623.92 583,540,229.36
Accounts received in advance VI. 21 11,941,937.58 11,661,974.88
Financial assets sold for repurchase
Handling charges and commissions
payable
Payroll payable VI. 22 39,119,018.68 44,803,501.77
Tax payable VI. 23 4,674,769.16 2,824,721.65
Interest payable VI. 24 9,957.32 1,448.76
Dividend payable
Other accounts payable VI. 25 63,597,000.58 51,138,758.51
Reinsurance premiums payable
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 595,693,203.67 724,827,735.97
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables VI. 26 178,526.85 156,540.09
Specific payables VI. 27 109,137,778.28 109,137,778.28
Estimated liabilities
Deferred income
Deferred income tax liabilities VI. 15 970,006.50 1,431,505.08
Other non-current liabilities
Total non-current liabilities 110,286,311.63 110,725,823.45
Total liabilities 705,979,515.30 835,553,559.42
Shareholders' equity
Share capital VI. 28 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
42
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note Closing balance Opening balance
Perpetual bonds
Capital reserves VI. 29 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income VI. 30 4,580,506.61 4,619,820.87
Specific reserves
Surplus reserves VI. 31 33,888,636.90 33,888,636.90
Provisions for general risks
Retained profits VI. 32 46,932,203.04 90,105,224.21
Total equity attributable to shareholders of
567,601,992.34 610,814,327.77
the Company
Minority interests 309,509,777.79 332,457,266.32
Total shareholders' equity 877,111,770.13 943,271,594.09
Total liabilities and shareholders' equity 1,583,091,285.43 1,778,825,153.51
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
43
2018 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 Note Closing balance Opening balance
Current Assets:
Monetary funds XIII. 1 6,629,136.10 5,342,389.95
Financial assets measured at fair value
of which changes are recorded in current
profits and losses
Derivative financial assets
Notes receivable
Accounts receivable XIII. 2 17,656,481.89 20,741,059.08
Accounts paid in advance 443,847.00
Interest receivable
Dividend receivable
Other accounts receivable XIII. 3 2,442,972.59 472,467.07
Inventories 13,038,173.84 16,130,234.05
Assets held for sale
Non-current assets due within 1 year
Other current assets 1,023,556.88
Total current assets 39,766,764.42 44,153,554.03
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 31,038,377.44 32,598,504.60
Fixed assets 1,373,412.88 1,568,125.72
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 42,749.99 56,249.99
R&D expense
Goodwill
Long-term deferred expenses 4,399.81 18,932.97
Deferred income tax assets 10,422,098.93 10,492,468.50
Other non-current assets
Total of non-current assets 965,835,740.61 967,688,983.34
Total assets 1,005,602,505.03 1,011,842,537.37
44
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note 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 55,526,323.32 71,274,018.34
Accounts received in advance 3,685,527.58 1,664,602.93
Payroll payable 4,862,285.91 2,981,548.19
Tax payable 1,923,789.30 894,510.08
Interest payable
Dividend payable
Other accounts payable 269,176,533.66 288,656,915.61
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 335,174,459.77 365,471,595.15
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 335,174,459.77 365,471,595.15
Shareholders' 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 33,888,636.90 33,888,636.90
Provisions for general risks
Retained profits 179,657,438.54 155,600,335.50
Total shareholders' equity 670,428,045.26 646,370,942.22
Total liabilities and shareholders' equity 1,005,602,505.03 1,011,842,537.37
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
45
2018 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 Note Reporting period Same period of last year
I. Total operating revenues 691,510,505.23 869,683,758.68
Including: Sales income VI. 33 691,510,505.23 869,683,758.68
II. Total operating costs 736,953,702.43 859,363,439.15
Including: Cost of sales VI. 33 625,449,017.39 739,507,468.93
Taxes and associate charges VI. 34 5,691,534.94 5,695,363.61
Selling and distribution expenses VI. 35 27,581,504.82 30,129,026.59
Administrative expenses VI. 36 74,639,753.64 74,782,758.93
Financial expenses VI. 37 -1,231,441.78 9,184,381.52
Asset impairment loss VI. 38 4,823,333.42 64,439.57
Add: Gain/(loss) from change in fair value (“-” means loss) VI. 39 -9,934,400.00 1,881,750.00
Gain/(loss) from investment (“-” means loss) VI. 40 9,876,900.98 1,724,730.14
Including: share of profits in associates and joint ventures
Foreign exchange gains (“-” means loss)
Gains on disposal of assets (“-” means loss) VI. 41 376,183.60 318,516.72
Other gains VI. 42 1,562,092.00 888,232.00
III. Business profit (“-” means loss) -43,562,420.62 15,133,548.39
Add: non-operating income VI. 43 2,467,573.87 2,128,098.76
Including: Gain on scrapping of non-current assets
Less: non-operating expense VI. 44 37,214.69 280,164.66
Including: Loss on scrapping of non-current assets 12,582.69 211,164.66
IV. Total profit (“-” means loss) -41,132,061.44 16,981,482.49
Less: Income tax expense VI. 45 -1,038,509.51 3,416,067.76
V. Net profit (“-” means loss) -40,093,551.93 13,565,414.73
(I) Classified by business continuity
1. Net profit from continued operations (“-” means loss) -40,093,551.93 13,565,414.73
2. Net profit from discontinued operations (“-” means loss)
(II) Classified by ownership
1. Minority shareholders’ income (“-” means loss) -11,751,865.16 2,498,840.62
2. Net profit attributable to shareholder of the Company (“-”
-28,341,686.77 11,066,574.11
means loss)
VI. After-tax net amount of other comprehensive incomes VI. 46 -52,419.01 -1,688,350.45
After-tax net amount of other comprehensive incomes
-39,314.26 -1,266,262.84
attributable to shareholders of the Company
(I) Other comprehensive incomes that will not be
reclassified into gains and losses
1. Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes
in investees that cannot be reclassified into gains and losses
under the equity method
(II) Other comprehensive incomes that will be
-39,314.26 -1,266,262.84
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
-39,314.26 -1,266,262.84
difference
6. Other
After-tax net amount of other comprehensive incomes
-13,104.75 -422,087.61
attributable to minority shareholders
46
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note Reporting period Same period of last year
VII. Total comprehensive incomes -40,145,970.94 11,877,064.28
Attributable to shareholders of the Company -28,381,001.03 9,800,311.27
Attributable to minority shareholders -11,764,969.91 2,076,753.01
VIII. Earnings per share
(I) Basic earnings per share -0.15 0.06
(II) Diluted earnings per share -0.15 0.06
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 0.
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
47
2018 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 Note Reporting period Same period of last year
I. Total sales XIII. 4 57,021,722.96 37,935,863.38
Less: cost of sales XIII. 4 45,432,601.10 26,745,263.79
Business taxes and surcharges 1,143,445.76 1,034,131.00
Distribution expenses 3,658,807.44 4,655,640.49
Administrative expenses 2,058,893.07 6,256,545.30
Financial costs 163,280.68 -77,973.23
Impairment loss 180,831.29 -890,712.11
Add: gain/(loss) from change in fair value (“-” means
loss)
Gain/(loss) from investment (“-” means loss) XIII. 5 33,547,555.83 30,310,250.78
Including: income from investment on associates
and joint ventures
Gains on disposal of assets (“-” means loss)
Other gains
II. Business profit (“-” means loss) 37,931,419.45 30,523,218.92
Add: non-operating income 1,032,019.56 111,632.54
Including: Gain on scrapping of non-current
assets
Less: non-operating expense 4,632.00
Including: Loss on scrapping of non-current
assets
III. Total profit (“-” means loss) 38,958,807.01 30,634,851.46
Less: Income tax expense 70,369.57 303,964.46
IV. Net profit (“-” means loss) 38,888,437.44 30,330,887.00
(I) Net profit from continued operations (“-” means loss)
(II) Net profit from discontinued operations (“-” means
loss)
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 38,888,437.44 30,330,887.00
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
48
2018 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 Note Reporting period
year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
741,100,978.85 880,124,770.86
service
Tax refunds received 84,150,245.73 98,954,676.31
Other cash received relating to operating activities VI. 47 (1) 30,549,731.71 31,713,946.31
Subtotal of cash inflows from operating activities 855,800,956.29 1,010,793,393.48
Cash paid for goods and services 765,631,339.82 774,245,705.02
Cash paid to and for employees 130,024,671.94 133,551,803.87
Various taxes paid 10,123,845.80 24,040,423.11
Other cash payment relating to operating activities VI. 47 (2) 69,842,669.22 136,466,757.44
Subtotal of cash outflows from operating activities 975,622,526.78 1,068,304,689.44
Net cash flows from operating activities -119,821,570.49 -57,511,295.96
II. Cash flows from investing activities:
Cash received from withdrawal of investments 79,608,500.00 365,334,812.92
Cash received from return on investments 2,945,209.34 236,201.06
Net cash received from disposal of fixed assets, intangible
463,696.00 2,112,841.63
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investing activities VI. 47 (3) 246,417,500.00 42,313,208.55
Subtotal of cash inflows from investing activities 329,434,905.34 409,997,064.16
Cash paid to acquire fixed assets, intangible assets and other
25,362,525.53 38,298,093.66
long-term assets
Cash paid for investment 40,000,000.00 503,252,795.01
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities VI. 47 (4) 435,917,500.00 377,386,926.35
Subtotal of cash outflows from investing activities 501,280,025.53 918,937,815.02
Net cash flows from investing activities -171,845,120.19 -508,940,750.86
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Including: Cash received from minority shareholder
investments by subsidiaries
Cash received from borrowings 18,881,758.13 151,183,998.00
Cash received from issuance of bonds
Other cash received relating to financing activities VI. 47 (5) 6,774,375.98
Subtotal of cash inflows from financing activities 18,881,758.13 157,958,373.98
Repayment of borrowings 11,912,827.70 24,730,160.00
Cash paid for interest expenses and distribution of
26,263,665.11 32,521,569.11
dividends or profit
Including: dividends or profit paid by subsidiaries to
11,182,518.60 15,707,954.97
minority shareholders
Other cash payments relating to financing activities VI. 47 (6)
Sub-total of cash outflows from financing activities 38,176,492.81 57,251,729.11
Net cash flows from financing activities -19,294,734.68 100,706,644.87
49
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Note Reporting period
year
IV. Effect of foreign exchange rate changes on cash and cash
-4,885,438.71 -8,511,122.49
equivalents
V. Net increase in cash and cash equivalents -315,846,864.07 -474,256,524.44
Add: Opening balance of cash and cash equivalents 564,381,960.88 738,195,729.53
VI. Closing balance of cash and cash equivalents 248,535,096.81 263,939,205.09
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
50
2018 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 Note Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities
41,028,955.45 55,674,286.26
and rendering of service
Tax refunds received
Other cash received relating to operating
27,809,810.32 21,418,487.10
activities
Subtotal of cash inflows from operating
68,838,765.77 77,092,773.36
activities
Cash paid for goods and services 47,257,580.90 53,556,689.27
Cash paid to and for employees 3,011,754.07 7,189,494.06
Various taxes paid 2,342,544.65 2,292,808.84
Other cash payment relating to operating
33,484,456.62 21,465,798.37
activities
Subtotal of cash outflows from operating
86,096,336.24 84,504,790.54
activities
Net cash flows from operating activities -17,257,570.47 -7,412,017.18
II. Cash flows from investing activities:
Cash received from retraction of
investments
Cash received from return on
33,547,555.83 30,310,250.78
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
33,547,555.83 30,310,250.78
activities
Cash paid to acquire fixed assets,
25,500.00
intangible assets and other long-term assets
Cash paid for investment
Net cash paid to acquire subsidiaries and
other business units
Other cash payments relating to investing
activities
Subtotal of cash outflows from investing
0.00 25,500.00
activities
Net cash flows from investing activities 33,547,555.83 30,284,750.78
III. Cash Flows from Financing Activities:
Cash received from capital
contributions
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
0.00 0.00
activities
Repayment of borrowings
Cash paid for interest expenses and
14,831,334.40 22,247,001.60
distribution of dividends or profit
Other cash payments relating to
financing activities
Sub-total of cash outflows from financing
14,831,334.40 22,247,001.60
activities
51
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note Reporting period Same period of last year
Net cash flows from financing activities -14,831,334.40 -22,247,001.60
IV. Effect of foreign exchange rate changes
-171,904.81 81,131.60
on cash and cash equivalents
V. Net increase in cash and cash
1,286,746.15 706,863.60
equivalents
Add: Opening balance of cash and
5,342,389.95 6,668,219.24
cash equivalents
VI. Closing balance of cash and cash
6,629,136.10 7,375,082.84
equivalents
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
52
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
7. Consolidated statement of changes in shareholders’ equity
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Reporting period
Equity attributable to owners of the Company
Item Other equity instruments Less: Other General Minority Total owners’
Specific Surplus interests equity
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve
shares bonds stock incomes reserve
I. Balance at the end of the
185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 90,105,224.21 332,457,266.32 943,271,594.09
previous year
Add: change of
accounting policy
Correction of errors
in previous periods
Business mergers
under the same control
Other
II. Balance at the
185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 90,105,224.21 332,457,266.32 943,271,594.09
beginning of the year
III. Increase/ decrease in
the period (“-” means -39,314.26 -43,173,021.17 -22,947,488.53 -66,159,823.96
decrease)
(I) Total comprehensive
-39,314.26 -28,341,686.77 -11,764,969.91 -40,145,970.94
incomes
(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 -14,831,334.40 -11,182,518.60 -26,013,853.00
1. Appropriations to
surplus reserves
2. Appropriations to
53
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting period
Equity attributable to owners of the Company
Item Other equity instruments Less: Other General Minority Total owners’
Specific Surplus interests equity
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve
shares bonds stock incomes reserve
general risk provisions
3. Appropriations to
-14,831,334.40 -11,182,518.60 -26,013,853.00
owners (or shareholders)
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 -0.02 -0.02
IV. Closing balance 185,391,680.00 296,808,965.79 4,580,506.61 33,888,636.90 46,932,203.04 309,509,777.79 877,111,770.13
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
54
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued) Unit: RMB
Same period of last year
Equity attributable to shareholders of the Company
Other equity instruments Total
Item Less: Minority
Other Genera shareholders’
Perpetu treas Specific interests
Share capital Preferred Othe Capital reserve comprehensiv Surplus reserve l risk Retained profit equity
al ury reserve
shares r e incomes reserve
bonds stock
I. Balance at the end of the
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
previous year
Add: change of accounting
policy
Correction of errors in
previous periods
Business mergers under
the same control
Other
II. Balance at the beginning
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
of the year
III. Increase/ decrease in the
-3,872,081.58 3,942,418.73 -112,280.69 -8,364,659.37 -8,406,602.91
period (“-” means decrease)
(I) Total comprehensive
-3,872,081.58 26,077,139.64 1,738,757.56 23,943,815.62
incomes
(II) Capital increased and
reduced by shareholders
1. Common shares
increased by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of
share-based payments
recognized in shareholders’
equity
4. Other
(III) Profit distribution 3,942,418.73 -26,189,420.33 -10,103,416.93 -32,350,418.53
1. Appropriations to
3,942,418.73 -3,942,418.73
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
-22,247,001.60 -10,103,416.93 -32,350,418.53
shareholders
4. Other
(IV) Internal carry-forward
of shareholders’ equity
1. New increase of
capital (or share capital) from
55
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last year
Equity attributable to shareholders of the Company
Other equity instruments Total
Item Less: Minority
Other Genera shareholders’
Perpetu treas Specific interests
Share capital Preferred Othe Capital reserve comprehensiv Surplus reserve l risk Retained profit equity
al ury reserve
shares r e incomes reserve
bonds stock
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 4,619,820.87 33,888,636.90 90,105,224.21 332,457,266.32 943,271,594.09
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
56
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
8. Statement of changes in shareholders’ equity of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Reporting period
Item Other equity instruments Less: Other General
Specific Surplus Total shareholders’
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve equity
shares bonds stock incomes reserve
I. Balance at the end
185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
of the previous year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the
beginning of the 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
year
III. Increase/
decrease in the
24,057,103.04 24,057,103.04
period (“-” means
decrease)
(I) Total
comprehensive 38,888,437.44 38,888,437.44
incomes
(II) Capital
increased and
reduced by
shareholders
1. Common
shares increased by
shareholders
2. Capital
increased by holders
of other equity
instruments
3. Amounts of
share-based
payments
recognized in
shareholders’ equity
4. Other
(III) Profit
-14,831,334.40 -14,831,334.40
distribution
57
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting period
Item Other equity instruments Less: Other General
Specific Surplus Total shareholders’
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve equity
shares bonds stock incomes reserve
1.
Appropriations to
surplus reserves
2.
Appropriations to
general risk
provisions
3.
Appropriations to -14,831,334.40 -14,831,334.40
shareholders
4. Other
(IV) Internal
carry-forward of
shareholders’ 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 33,888,636.90 179,657,438.54 670,428,045.26
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
58
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued) Unit: RMB
Same period of last year
Other equity instruments Less: Other General
Item Specific Surplus Total shareholders’
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve equity
shares bonds stock incomes reserve
I. Balance at the end of the previous
185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48
year
Add: change of accounting policy
Correction of errors in previous
periods
Other
II. Balance at the beginning of the
185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48
year
III. Increase/ decrease in the period
3,942,418.73 13,234,767.01 17,177,185.74
(“-” means decrease)
(I) Total comprehensive incomes 39,424,187.34 39,424,187.34
(II) Capital increased and reduced
by shareholders
1. Common shares increased by
shareholders
2. Capital increased by holders
of other equity instruments
3. Amounts of share-based
payments recognized in shareholders’
equity
4. Other
(III) Profit distribution 3,942,418.73 -26,189,420.33 -22,247,001.60
1. Appropriations to surplus
3,942,418.73 -3,942,418.73
reserves
2. Appropriations to general risk
provisions
3. Appropriations to
-22,247,001.60 -22,247,001.60
shareholders
4. Other
(IV) Internal carry-forward of
shareholders’ equity
1. New increase of capital (or
share capital) from capital public
reserves
2. New increase of capital (or
share capital) from surplus reserves
59
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last year
Other equity instruments Less: Other General
Item Specific Surplus Total shareholders’
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit
Other reserve reserve equity
shares bonds stock incomes reserve
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 33,888,636.90 155,600,335.50 646,370,942.22
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Feng Zhiqing Person in Charge of Financial Department: Feng Zhiqing
60
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to Financial Statements as of June 30, 2018
(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, 2018, 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
60
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
these B shares could be listed and exercised on Shenzhen Stock Exchange. Up to June 30,
2018, 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).
The Financial Report approved by the Board of the Directors of the Company and
disclosed on August 7, 2018
There were 11 subsidiaries be included on June 30, 2018 of the Company with the details
in Notes VII “Equities among other entities”. There was one more subsidiary during the
Reporting Period than that in last year.
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 42 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
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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, allowances 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, 2018. 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. 23 “Revenue” for the description. For description of
significant accounting judgments and estimates made by management, see Note IV.
28 “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
Yuan (CNY) is the currency of the primary economic environment in which the
Company and its domestic subsidiaries operate. Therefore, the Company and its domestic
subsidiaries choose CNY as their functional currency, the overseas subsidiaries decide
the HKD, USD, NTD or IDR as their functional currency in accordance with the business
in which currency of the primary economic environment. The Company adopts CNY to
62
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
prepare its functional statements.
4. Business combination
A business combination is a transaction or event that brings together two or more
separate entities into one reporting entity. Business combinations are classified into
business combinations involving enterprises under common control and business
combinations not involving enterprises under common control.
(1) Business combination involving entities under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the
same party or parties both before and after the combination, and that control is not
transitory. For a business combination involving enterprises under common control, the
party that, on the combination date, obtains control of another enterprise participating in
the combination is the absorbing party, while that other enterprise participating in the
combination is a party being absorbed. Combination date is the date on which the
absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by
the enterprise being combined at the combination date. The difference between the
carrying amount of the net assets obtained and the carrying amount of consideration paid
for the combination (or the total face value of shares issued) is adjusted to the capital
premium (or share premium) in the capital reserve. If the balance of the capital premium
(or share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly
attributable to the combination shall be recognized as an expense through profit or loss
for the current period when incurred.
(2) Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by
the same party or parties both before and after the business combination. For a business
combination not involving enterprises under common control, the party that, on the
acquisition date, obtains control of another enterprise participating in the combination is
the acquirer, while that other enterprise participating in the combination is the acquiree.
Acquisition date is the date on which the acquirer effectively obtains control of the
acquiree.
For a business combination not involving enterprise under common control, the
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 fair value of the acquiree’s
identifiable net assets, the difference shall be recognised 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 recognise the remaining difference immediately in profit or loss for the
current period.
Where the temporary difference obtained by the acquirer was not recognised 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 recognised, and goodwill offset. If the
goodwill is not sufficient, the difference shall be recognised 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
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of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5”
(CaiKuai [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 Note IV.13 “long-term investment”
accounting treatment, if it does not belong to the “package deal” to distinguish the
individual financial statements and the consolidated financial statements related to the
accounting treatment:
In the individual financial statements, the total value of the book valueoftheacquiree'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
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consolidation includes the Company and all of the subsidiaries. Subsidiary is an
enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the
relevant elements involved in the control of the change, the company will be
re-evaluated.
(2) Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from
the date when the control over the net assets and business decisions of the subsidiary is
effectively obtained, and excluded from the date when the control ceases. For a
subsidiary disposed of by the Company, the operating results and cash flows before the
date of disposal (the date when control is lost) are included in the consolidated income
statement and consolidated statement of cash flows, as appropriate. For a subsidiary
disposed during the period, no adjustment is made to the opening balance of the
consolidated financial statements. For a subsidiary acquired through a business
combination not under common control, the operating results and cash flows from the
acquisition (the date when the control is obtained) are included in the consolidated
income statement and consolidated statement of cash flows, as appropriated; no
adjustment is made to the opening balance and comparative figures in the consolidated
financial statements. Where a subsidiary was acquired during the reporting period,
through a business combination involving enterprises under common control, the
financial statements of the subsidiary are included in the consolidated financial
statements. The results of operations and cash flow are included in the consolidated
balance sheet and the consolidated income statement, respectively, based on their
carrying amounts, from the date that common control was established, and the opening
balances and the comparative figures of the consolidated financial statements are
restated.
When the accounting period or accounting policies of a subsidiary are different from
those of the Company, the Company makes necessary adjustments to the financial
statements of the subsidiary based on the Company’s own accounting period or
accounting policies. Where a subsidiary was acquired during the reporting period through
a business combination not under common control, the financial statements was
reconciliated on the basis of the fair value of identifiable net assets at the date of
acquisition.
Intra-Group balances and transactions, and any unrealised profit or loss arising from
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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 recognised
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 (ie, in addition to the former subsidiary is remeasured at the net
defined benefit plan or changes in net assets and liabilities resulting from, the rest are
transferred to the current investment income). The retained interest is subsequently
measured according to the rules stipulated in the - “Chinese Accounting Standards for
Business Enterprises No.2 - Long-term equity investment” or “Chinese Accounting
Standards for Business Enterprises No. 22 - Determination and measurement of financial
instruments”. See Note IV.13 Long-term equity investments and Note IV. 9 Financial
instruments for details.
The company get through multiple transactions step deal 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:①these transactions
are considered simultaneously, or in the case of mutual influence made, ②these
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transactions as a whole in order to achieve a complete business results; ③the occurrence
of a transaction depends on occurs at least one other transaction; ④a 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.13. (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 disposals, recognised 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.13 (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 the joint 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
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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.
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 recognised 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
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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 recognised 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 recognised as “exchange
differences arising on translation of financial statements denominated in foreign
currencies” in owner’s equity, and in profit or loss for the period upon disposal of the
foreign operation.
The Group translates the financial statements of its foreign operations into CNY by
following rules. Assets and liabilities in the balance sheet are translated at the spot
exchange rate prevailing at the balance sheet date; all equity items except for retained
earnings are translated at the spot exchange rates at the dates on which such items occur;
income and expenses in income statement are translated at the spot exchange rates at the
date of transaction; the opening retained earnings is the closing retained earnings of the
last period after translation; the closing balance of retained earnings is calculates and
presented in the basis of each translated income statements and profit distribution item;
the difference arising between the assets and liabilities and shareholders’ equity shall be
booked as translation difference of foreign currency statements, and shall be presented as
a separate component of equity in the balance sheet. On a loss of control over Group’s
oversea operation due to disposal, the Company transfers the accumulated or
proportionate share of the accumulated exchange difference arising on translation of
financial statements of this oversea operation attributable to the owners’ equity of the
Company and presented under shareholders’ equity, to profit or loss in the period in
which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the
spot exchange rates on the date of cash flows.The effect of exchange rate changes on
cash is separately presented as an adjustment item in the cash flow statement.
The opening and actual amount of last year are presented in the financial statement after
translation.
At the disposal of all of the company's ownership interest in a foreign operation, or due
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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
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All regular way purchases or sales of financial assets are recognized and derecognized on
a trade date basis. On initial recognition, the Company’s financial assets are classified
into one of the four categories, including financial assets at fair value though profit or
loss, held-to maturity investments, loans and receivables and available-for-trade financial
assets. A financial asset is recognized initially at fair value. In the case of financial assets
at fair value through profit or loss, relevant transaction costs are immediately charged to
the profit and loss of the current period; transaction costs relating to financial assets of
other categories are included in the amount initially recognized.
① Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value
through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following
conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are
collectively managed, and there is objective evidence indicating that the enterprise
recently manages this portfolio for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and
effective hedging instrument, or a financial guarantee contract, or a derivative that is
linked to and must be settled by delivery of an unquoted equity instrument (without a
quoted price from an active market) whose fair value cannot be reliably measured. For
such kind of financial assets, fair values are adopted for subsequent measurement.
Financial 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,
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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
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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.
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
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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 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
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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
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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 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.
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(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 cash flow less the carrying amount, and provision is made
accordingly.
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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
No allowance for bad debt, Unless the related
Related party portfolios
party is insolvent
a. Portfolio by age analysis
Proportion for accounts Proportion for other receivable
Category
receivable (%) (%)
1－90 days 0.00 0.00
91－180 days 10.00 10.00
181－270 days 30.00 30.00
271－365 days 50.00 50.00
Over 365 days 100.00 100.00
b. Adopt other methods for recognition of impairment allowances
Proportion for accounts Proportion for other receivable
Group name
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
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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 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, consignment goods 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
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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.
12. Assets held for sale and disposal group
The company classifies a non-current asset or disposal group as held for sale if its
carrying amount will be recovered principally through a sale transaction rather than
through continuing use. For this to be the case, the following conditions shall be met: a)
the asset (or disposal group) must be available for immediate sale in its present condition
subject to terms that are usual and customary for sales of such assets or disposal groups;
b) the company has made the resolution on the disposal plan and must be committed to a
plan to sell the asset (or disposal group); c) the sale is expected to be completed within
one yearfrom the date of classification. A disposal group is a group of assets to be
disposed of, by sale or otherwise, together as a group in a single transaction, and
liabilities directly associated with those assets that will be transferred in the transaction.
The group shall include goodwill acquired in a business combination if the group is a
cash-generating unit to which goodwill has been allocated in accordance with the
requirements of Accounting Standard for Business Enterprises No. 8 – Impairment of
assets.
The company measure a non-current asset or disposal group classified as held for sale at
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the lower of its carrying amount and fair value less costs to sell on initial recognition and
subsequent remeasuremnt on the balance sheet date. An impairment loss is recognised
when the carrying amount is higher than the fair value less costs to sell, and allowance
for impairment is recognised accordingly. For the disposal group, the recognised
impairment loss on assets is offset against the carrying amount of the goodwill in the
disposal group, and then reduced in proportion of the book value of the non-current
assets applicable to "Accounting Standard for Business Enterprises No. 42 - Non-current
Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter referred
to as "held for sale accounting principle") measurement requirements. The company shall
recognise a gain during the period for any subsequent increase in fair value less costs to
sell of an asset, but not in excess of the cumulative impairment loss that has been
recognised after the reclassification to non-current assets held for sale. The book value of
assets in the disposal group is increased proportionately according to the proportion of
the book value of each non-current asset except for goodwill. Impairment loss recognised
before the reclassification to non-current assets held for sell shall not be recovered.
Non-current asset or non-current asset in the disposal group classified as held for sale is
not subject to depreciation or amortization. The interest and other expenses on liabilities
held in the disposal group for sale are continuously recognised.
Non-current assets or disposal group that no longer meet the conditions of non-current
asset held for sell shall be removed from the category, and shall be measured at the lower
of the following: (a) The carrying amount before classification as held for sale after
adjustment of depreciation, amortization or impairment that should be recognised if it is
not classified as non-current assets held for sell; (b) recoverable amount.
13. Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested
entity has control, joint control or significant influence over the long-term equity
investments. The Company invested does not have control, joint control or significant
influence over the long-term equity investments as financial assets available for sale or at
fair value and the changes included financial assets through profit or loss, which refer to
the accounting policies in Note IV. 9 “financial Instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant
stipulations are common, related activities and the arrangement must be after sharing
control participants agreed to the decision-making. Significant influence is the Company
s financial and operating policies of the entity has the right to participate in
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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
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investment in the acquiree immediately before the combination and cost of acquisition of
additional shareholding. If the investment prior to the combination is measured by fair
value, cumulative other comprehensive income associated with the investment prior to
the combination is not affected by the combination. If the investment prior to the
combination is measured as an available-for-sale financial asset, the difference between
the fair value and the book value of the investment immediately before the combination
and the associated cumulative other comprehensive income recognised prior to the
combination are carried to profit or loss.
All expenses incurred directly associated with the acquisition by the acquirer, including
expenditure of audit, legal services, valuation and consultancy and other administrative
expenses, are recognised in profit or loss for the period during which the acquisition
occurs.
Long-term equity investments acquired not through business combination are measured
at cost on initial recognition. Depending on the way of acquisition, the cost of acquisition
can be the total cash paid, the fair value of equity instrument issued, the contract price,
the fair value or book value of the assets given away in the case of non-monetary asset
exchange, or the fair value of the relevant long-term equity investments. The cost of
acquisition of a long-term equity investment acquired not through business combination
also includes all directly associated expenses, applicable taxes and fees, and other
necessary expenses. The cost of a long-term equity investment, which enables the
Company, has significant influence or joint control over the acquiree which is achieved
through additional investment, is measured as the fair value determined in accordance
with CAS 22 - Financial Instruments: Recognition and Measurement plus the cost of
additional investment.
(2) Subsequent measurement
To be invested joint control (except constitute common operator) or long-term equity
investments significant influence are accounted for using the equity method. In addition,
the Company’s financial statements using the cost method of accounting for long-term
equity can exercise control over the investee.
① Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment
cost. Except for cash dividends or profits declared but not yet paid that are included in
the price or consideration actually paid upon acquisition of the long-term equity
investment, investment income is recognized in the period in accordance with the
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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.
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Where the Company has obligation to share additional net loss of the investee, the
estimated share of loss would be recognized as accrued liabilities and investment loss.
Where the Company has unrecognized share of loss of the investee when the investee
generates net profit, the Company’s unrecognized share of loss is reduced by the
Company’s share of net profit and when the Company’s unrecognized share or loss is
eliminated in full, the Company’s share of net profit, if any, is recognized as investment
income.
For long-term equity investments in associates and joint ventures which had been held by
the Company before its first time adoption of Accounting Standards for Business
Enterprises, where the initial investment cost of a long-term equity investment exceeds
the Company’s interest in the investee’s net assets at the time of acquisition, the excess is
amortized and is recognized in profit or loss on a straight line basis over the original
remaining life.
③ Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority
interests and portion of net asset cumulatively calculated from the acquisition date is
adjusted as capital reserve. If the capital reserve is not sufficient to absorb the difference,
the excess are adjusted against returned earnings.
④ Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a
change in control, the difference in the net asset between the amount of disposed
long-term investment and the amount of the consideration paid or received is adjusted to
the owner’s equity. If the disposal of long-term investment in a subsidiary involves loss
of control over the subsidiary, the related accounting policies in Note IV. 5. (2) applies.
For disposal of long-term equity investments in any situation other than the
fore-mentioned situation, the difference between the book value of the investment
disposed and the consideration received is recognized in profit or loss.
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
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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 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
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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.
14. Investment property
Investment property is held to earn rentals or for capital appreciation or for both.
Investment property includes leased or ready to transfer after capital appreciation land
use rights and leased buildings. In addition, the Company holds for future operating lease
vacant buildings, if the board of directors (or similar body) to make a written resolution,
made it clear that their intention for rent and shall not occur in the short term change,
but also as an investment real estate presentation.
Investment property is initially measured at cost. Subsequent expenditures related to an
investment real estate are likely to flow about the economic benefits of the asset and its
cost can be measured reliably, is included in the cost of investment real estate. Other
subsequent expenditures should be recorded in the current profits or losses when
incurred.
The Group uses the cost model for subsequent measurement of investment property, and
in accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in
Note IV. 20 “Non-current and non-financial assets impairment”.
Occupied real estate for investment property or investment property is transferred to
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owner-occupied real estate or stock conversion as the recorded value after the conversion,
according to the book value before the conversion.
When an investment property is changed for personal use, since the change of date, the
investment property is transferred to fixed assets or intangible assets. Owner-occupied
property is changed to earn rentals or for capital appreciation, change the date, will be
converted to fixed assets or intangible investment property. When the transition occurs,
the conversion to the use of investment property cost model, the carrying value before
conversion as the book value after conversion, convert to investment property measured
at fair value model, the fair value of the conversion date as the conversion after the
recorded value.
When the investment property is disposed of or permanently withdrawn from use and no
future economic benefits are expected from the disposal, derecognition of the investment
property. Investment property is sold, transferred, retired or damaged, the disposal
income after deducting the book value and related taxes and profit or loss.
15. Fixed assets
(1) The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing
commodities, rendering labor service, renting or business management and their useful
life is in excess of one fiscal year. Fixed assets only in the economic benefits associated
with it will flow to the company and the cost can be measured reliably only are
confirmed. Fixed assets are stated at cost and considering the expected costs of
abandoning the initial measurement.
(2) The method for depreciation
From the following month of state of intended use, depreciation method of the
straight-line method is used for different categories of fixed assets to take depreciation.
The recognition of the classification, useful life and estimated residual rate are as
follows:
Estimated residual
Category Expected useful life Depreciation (%)
value (%)
Houses and building 7.00-10.00 20 4.50-4.65
Machineries 0.00 11-18 5.56-9.09
Electronic device、furniture
0.00 5-6 16.67-20.00
and modules
Vehicles 0.00 6 16.67
Improvement expense of
leased fixed assets 0.00 the shorter of lease term and
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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. 20 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 accounting estimates.
16. Construction in progress
Construction in progress is measured at its actual cost. The actual costs include various
construction expenditures during the construction period, borrowing costs capitalized
before it is ready for intended use and other relevant costs. Construction in progress is
transferred to a fixed asset when it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method
for provision impairment please refer to Note IV. 20.
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17. Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to
borrowings, ancillary costs incurred in connection with the arrangement of borrowings,
and exchange differences arising from foreign currency borrowings. The borrowing costs
that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized. The amounts of other borrowing costs incurred are recognised 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
borrowingdenominating in foreign currency are all capitalized. Exchange differences in
connection with general-purpose borrowings are recognised 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 recognised as an expense for the current period until the acquisition, construction
or production is resumed.
18. Intangible assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without
physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible
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assets, if the economic benefits related to intangible assets are likely to flow into the
enterprise and the cost of intangible assets can be measured reliably, shall be recorded as
cost of intangible assets. The expenses other than this shall be booked in the profit or loss
when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets.
Buildings, such as plants that are developed and constructed by the Company, and
relevant land use rights and buildings, are accounted for as intangible assets and fixed
assets, respectively. Payments for the land and buildings purchased are allocated between
the land use rights and the buildings; if they cannot be reasonably allocated all of the land
use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost
less net residual value and any accumulate impairment losses is amortized over its
estimated useful life using the straight-line method. An intangible asset with an indefinite
useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life
and amortization method at the end of the period, and makes adjustment when necessary.
An additional review is also carried out for useful life of the intangible assets with
indefinite useful life. If there is evidence showing the foreseeable limit period of
economic benefits generated to the enterprise by the intangible assets, then estimate its
useful life and amortize according to the policy of intangible assets with definite useful
life.
(2) Research and development cost
Cost of research and development is distinguished into the research phase and the
development phases.
Cost of the research phase is recognized in the profit or loss in the period in which it is
incurred.
Unless the following conditions are satisfied, cost of the development phase is
recognized in the profit or loss in the period in which it is incurred:
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;
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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. 20.
19. Long-term deferred expenditure
An item long-term deferred expenses is an expense which has been incurred and which
has a beneficial period (a period during which an expense is expected to bring economic
benefits to an entity) which is longer than one year and which includes at least part of the
reporting period during which the expense was incurred and subsequent reporting periods.
An item of long-term deferred expenses is recognized at the actual amount of the expense
incurred and allocated in each month of the beneficial period using the straight line
method.
20. Impairment of long-term assets
Non-financial assets with non-current nature include fixed assets, construction in
progress, intangible assets with definite useful lives, investment properties measured by
cost methods and long-term equity investment on subsidiaries, jointly operations. The
Company assesses whether there are any indicators of impairment for all non-financial
assets at the balance sheet date, and impairment test is carried out and recoverable value
is estimated if such an indicator exits. Goodwill and intangible assets with indefinite
useful lives, as well as intangible assets not ready for use, are tested for impairment
annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable
value of the assets is lower than the book value. The recoverable value is the higher of
estimated present value of the future expected cash flows from the asset and net fair
value of the asset less disposed cost. The fair value of asset is determined by the sales
agreement price within an arm’s length transaction. In case there is no sales agreement,
but there is active market of assets, the fair value can be determined by the selling price.
If there is neither sales agreement nor active market, the fair value of the asset can be
estimated based on the best information obtained. Disposal expenses include expenses
related to the legislation, taxes, transportations and the direct expense for the asset to be
ready for sale. When calculating the present value of expected future cash flows from an
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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
21. Employee Benefits
The employee benefits of the company include short-term employee benefits,
post-employment benefits, termination benefits and other long-term employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies,
welfare, health insurance , maternity insurance, work injury insurance, housing funds,
labor union funds, employee education funds, non-monetary benefits and etc. The
company provides services accounting period in which an employee of the company will
be short-term employee benefits are recognized as liabilities actually incurred and loss
account or the costs associated with the asset. The non -monetary benefits are measured
at fair value.
Post-employment benefits 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
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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 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 are 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.
22. Accrued liabilities
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in
dispute, guarantee on quality of product, cut-down plan, loss of contract, recombine
obligation, obligation on abandon fixed asset, and meet the follow condition
simultaneously would determined as liabilities:
(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
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measured.
If the expenditure required to settle the liability is expected to be fully or partly
compensated by a third party, to determine the amount of compensation will be received
at the basic, separately recognized as an asset, and is recognized in the amount of
compensation does not exceed the carrying value of estimated liabilities.
23. 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 settlement, revenue recognition upon
from the shipment of goods and conducted the export declaration.
Accounting treatment for sales return: in accordance with the international trade
prevailing rules, the FOB settlement employed, indicate to the buyer has inspected and
accepted those purchased commodities at the shipment dock, after acceptance and
shipping the relevant risks has been transferred to buyer, therefore the Company has no
individually recognized for the events, but the amount shall be recognized when incurred
and accounted through in profit and loss in current period. Accounting treatment for
product claims: calculate the claim indemnity rate, according to the proportion of actually
payment for those product claims during recently two years account for the
corresponding period sales revenue, at the end of period, on the basis of current period
sales revenue and the claim indemnity rate to recognize the claim indemnity expense.
(2) Revenue from rendering of service
Revenue arising from rendering of services is 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
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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
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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.
24. Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the
government to the Company at no consideration, excluding the capital invested by the
government as equity owner. Government grant can be classified as grant related to the
assets and grants related to the income. The government grants which were acquired by
the Company will be used to purchase or otherwise form become long-term assets will be
defined 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
recognised immediately in profit or loss for the period.
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When received the government grantsactually, recognised 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 recognised as deferred income, and evenly
amortized to profit or loss over the useful life of the related assetin a reasonable and
systematic manner. 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 recognised as deferred income, and recognised in profit or loss over the periods in
which the related costs are recognised. If the grant is a compensation for related expenses
or losses already incurred, the grant is recognised immediately in profit or loss for the
period.
Government subsidies including both assets-related parts and income-related parts should
be treated separately. If it is difficult to seperate, the government subsidiesas a whole will
be classified as income-related government grants.
The government grants related to the daily activities of the Company are included in
other income or offset the related costs according to the essence of the economic business.
The government grants unrelated to the daily activities are included in the non-operating
income and expenses.
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When government subsidy needs to be returned, if the related deferred income balance
exists, the book value of related deferred income shall be offset and the excess part shall
be included in the current profit or loss; if it is other cases, it shall be directly carried to
the current profits and losses.
The compensation amount received from the government by the Company for relocation
due to the public interest in overall urban planning, reservoir construction, shantytowns
reconstruction and settlement of subsidence areas, is recognised as designated payables.
Among them, the compensation for the loss of fixed assets and intangible assets, related
expenses, stoppage losses and new assets rebuilding after relocation occurred during
relocation and reconstruction of the Company, shall be transferred from designated
payables to deferred income, and treated as government grants related to assets or the
government grants related to income according to the nature. The excess of relocation
compensation amount over the amount transferred to deferred income is recognised as
capital reserve.
25. 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 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
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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
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When we have the legal right, and have intended to, to make settlement with net amount,
or through the asset acquisition and liability fulfillment simultaneously, the Company
shall present the net value from the offset between current income tax asset and current
income tax liability in the financial statement.
When the Company has the legal right to make a settlement with the current income tax
asset and current income tax liability, and the deferred income tax asset and deferred
income tax liability are related to the same taxable subject under the same tax payer, or
related to different taxable subject, but the intension of net value settlement in regard of
the current income tax asset and current income tax liability, the Company shall present
net value after the offset of deferred income tax asset and deferred income tax liability.
26. 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
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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. Contingency lease rental income is recognised in profit or loss
when it is received or becomes receivable.
27. Significant changes in accounting policies andaccounting estimates
(1) Changes in accounting policies
No changes in accounting policies need to be disclosed for the current period.
(2) Changes in accounting estimates
No changes in accounting estimates need to be disclosed for the current period.
28. 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
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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 recognised within the same period. Where the
changes in accounting estimates affect both current period and future period, the changes
are recognised within the period of change and future period.
At balance sheet date, the followings are the significant areas where the Company needs
to make judgment, estimates and assumptions over the value of items in the financial
statements:
(1) Classification of lease
The Company classifies leases as operating lease and financing lease according to the
rule stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The
management shall make analysis and judgment on whether the risks and rewards related
to the title of leased assets has been transferred to the leaser, or whether the Company has
substantially held the risks and rewards related to the ownership of leased assets.
(2) Allowance for bad 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.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value
according to the accounting policies in regard of inventories and provisions for decline in
value of inventories is made if the cost is higher than their net realizable value, and
obsolete and slow-movement inventories. Inventories decline in value to net realizable
value is the estimated selling price in the ordinary course of business. Net realizable
value is determined on the basis of clear evidence obtained, and takes into consideration
the purposes of holding inventories and effect of post balance sheet events. The
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difference between the actual result and the original estimates shall have impact on
reverse of the carrying amount of the inventories and their decline in value or provisions
during the period of change.
(4) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair
value by using various valuation methods, including of discounted cash flow analysis
model. The Company needs to estimate future cash flow, credit risk, volatility and
relationship during the valuation and choose appropriate discount rate. Such assumptions
have uncertainties and their changes shall have impact on the fair value of financial
instruments.
(5) Impairment of available-for-sale assets
Whether the impairment of available-for-sale financial assets to a large extent depends on
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.
(6) Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current
assets other than financial assets at the balance sheet date. For an intangible asset that has
indefinite useful life, impairment test is made in addition to the annual impairment test if
there is any indication of impairment. For non-current assets other than financial assets,
impairment test is made when there is any indication that its account balance cannot be
recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value
less cost of disposal and present value of the future cash flows expected to be derived
from the asset.
Net value between the difference of fair value and disposal cost is determined by
reference of the price of similar product in a sale agreement in an arm’s length
transaction or an observable market price less the additional cost directly attributable to
the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made
over the asset’s production, selling price and relevant operating expenses, and discount
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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.
(7) 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.
(8) Deferred tax assets
The group shall recognise 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.
(9) 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.
(10) Accrued liabilities
According with the terms of the contract, the existing knowledge and historical
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experience, product quality assurance and expected contract losses, delay in delivery of
liquidated damages are estimated and recognised 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 recognised 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.
(11) 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 first level of input valuecannot be obtained, the
company will hire third-party qualified appraisers to perform the valuation. See Note 9
for disclosure of the valuation techniques and input values used in determining the fair
value of various types of assets and liabilities.
V. Taxation
1. Taxes and surcharges applicable to the Company
Taxes and
Tax base Tax rate (%)
surcharges
According to the revenues from sales to calculate the
Value added tax output tax, and use the balance afterdeduct the 5, 6, 10, 16
deductible input tax to pay the VAT
Urban
Sum of VAT payable, consumption duty payable and
maintenance and
business tax payable for the reporting period, and 7
construction
exempt and deductible tax
surcharge
Sum of VAT payable, consumption duty payable and
Education
business tax payable for the reporting period, and 3
surcharge
exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Local education
business tax payable for the reporting period, and 2
surcharge
exempt and deductible tax
Corporate income
Taxable profits 25
tax
107
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Value added tax tax, and use the balance after deduct the deductible input tax 0, 5, 6, 10, 16
to pay the VAT
Urban maintenance Sum of VAT payable, consumption duty payable and business
and construction tax payable for the reporting period, and exempt and 5
surcharge deductible tax
Sum of VAT payable, consumption duty payable and business
Education surcharge tax payable for the reporting period, and exempt and 3
deductible tax
Sum of VAT payable, consumption duty payable and business
Local education
tax payable for the reporting period, and exempt and 2
surcharge
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
Value added tax tax, and use the balance after deduct the deductible input tax 5, 10, 16
to pay the VAT
Urban maintenance Sum of VAT payable, consumption duty payable and business
and construction tax payable for the reporting period, and exempt and 1
surcharge deductible tax
Sum of VAT payable, consumption duty payable and business
Education surcharge tax payable for the reporting period, and exempt and 3
deductible tax
Sum of VAT payable, consumption duty payable and business
Local education
tax payable for the reporting period, and exempt and 2
surcharge
deductible tax
Corporate income tax Taxable profits 25
108
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(3) Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)
Taxes and surcharges Tax base Tax rate (%)
According to the revenues from sales to calculate the
Value added tax output tax, and use the balance after deduct the deductible 5
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
Value added tax output tax, and use the balance after deduct the deductible 10
input tax to pay the VAT
Corporate income tax Taxable profits 25
3. Tax concessions and government approvals
In accordance with the “The Notice Regarding to Fujian Province 2017 Second Group of
High Technology Enterprise Review” (Mingkegao No. [2018]1), TKL was identified as
Fujian Province High Technology Enterprise (The certification No. GR201735000565),
the validity is from the year 2017 to 2019. The current income tax is 15%.
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Notes on major items in consolidated financial statements of the Company
For the following items noted (including notes on major items in financial statements of the
Company), unless otherwise indicated, the “period-begin” refers to 1 January 2018, the “period-end”
refers to 30 June 2018, the “Reporting Period” refers to the period from January of 2018 to June of
2018, and the “same period of last year” refers to the period from January of 2017 to June of 2017.
1. Monetary funds
Item 2018.06.30 2017.12.31
Cash on hand 675,029.35 800,792.90
Bank deposits 437,360,067.46 563,581,167.98
Other monetary funds 0.00 0.00
Total 438,035,096.81 564,381,960.88
2. Financial assets measured by fair value with changes in fair value recognised in
profit or loss
(1) Category
Item 2018.06.30 2017.12.31
Trading financial assets 0.00 3,925,850.00
Of which: Derivative financial assets 0.00 3,925,850.00
Total 0.00 3,925,850.00
(2) Explanation
The derivative financial asset is forward foreign exchange contract signed with financial institutions.
3. Accounts receivable
(1) Disclosure by classification
2018.06.30
Item Book balance Bad debt provision
Proportion Withdrawal Book value
Amount Amount
(%) proportion (%)
Accounts receivable of
individual significance
subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for
impairment
Accounts receivable
portfolio subject to
218,435,925.10 100.00 10,033,714.07 4.59 208,402,211.03
impairment by credit
risk:
Including: Portfolio by
215,386,054.74 98.60 10,033,714.07 4.66 205,352,340.67
age
Portfolio by related
3,049,870.36 1.40 0.00 0.00 3,049,870.36
parties
Accounts receivable of
individually
insignificance subject
0.00 0.00 0.00 0.00 0.00
to individually
assessment for
impairment
Total 218,435,925.10 100.00 10,033,714.07 4.59 208,402,211.03
110
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
2017.12.31
Item Book balance Bad debt provision
Proportion Withdrawal Book value
Amount Amount
(%) proportion (%)
Accounts receivable of
individual significance
subject to individually
assessment for impairment
Accounts receivable portfolio
subject to impairment by 282,211,379.57 100.00 12,158,958.68 4.31 270,052,420.89
credit risk:
Including: Portfolio by age 280,945,797.16 99.55 12,158,958.68 4.33 268,786,838.48
Portfolio by related parties 1,265,582.41 0.45 1,265,582.41
Accounts receivable of
individually insignificance 0.00 0.00 0.00 0.00 0.00
subject to individually
assessment for impairment
Total 282,211,379.57 100.00 12,158,958.68 4.31 270,052,420.89
①In the groups, accounts receivable adopting aging analysis method for measurement of allowance
for bad debt:
2018.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 206,959,704.22 1,607,363.55 0.78
Including: 1-90 days 194,669,752.71 0.00 0.00
91-180 days 10,607,619.82 1,060,761.99 10.00
181-270 days 1,472,821.39 441,846.41 30.00
271-365 days 209,510.30 104,755.15 50.00
1-2years 76,801.40 76,801.40 100.00
2-3years 8,264,466.79 8,264,466.79 100.00
Over 3 years 85,082.33 85,082.33 100.00
Total 215,386,054.74 10,033,714.07 4.66
②In the groups, accounts receivable using related party group method for measurement of allowance
for bad debt
2018.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 3,049,870.36 0.00 0.00
Total 3,049,870.36 0.00 0.00
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance of bad debts recognized during the Reporting Period is RMB0.00, the amount of recovered
allowance for bad debts during the Reporting Period is RMB2,038,870.18, among which, the amount of allowance of
bad debts affected by exchange rate is RMB10,417.80.
(3) Accounts receivable written off during the Reporting Period
Item Amount
Accounts receivable written off 75,956.63
111
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(4) Details of top five accounts receivable in closing balance
The total amount of top five accounts receivables in accounts receivable summarized by debtors
as at the end of the Reporting Period is RMB105,247,912.27, accounting for 48.18% of the total
accounts receivable as at the end of the Reporting Period, the total corresponding allowance for
bad debts is RMB228,946.52.
4. Advances to suppliers
(1) Disclosure by age
2018.06.30 2017.12.31
Item
Amount Proportion (%) Amount Proportion (%)
Within 1 year 12,594,334.71 99.30 10,747,472.71 98.24
1 to 2 years 88,966.32 0.70 192,305.08 1.76
Total 12,683,301.03 100.00 10,939,777.79 100.00
(2) Details of top five advance to suppliers in closing balance
The total amount of top five advance to suppliers in closing balance as at the end of Reporting Period
is RMB11,336,927.79, accounting for 89.39% of the total closing balance of advance to suppliers.
5. Interest receivable
Item 2018.06.30 2017.12.31
Fixed deposit receipt 1,695,898.95 0.00
Total 1,695,898.95 0.00
6. Other receivable
(1) Disclosure by classification
2018.06.30
Book balance Bad debt provision
Item
Withdrawal Book value
Proporti
Amount Amount proportion
on (%)
(%)
Other accounts receivable of
individual significance subject 0.00 0.00 0.00 0.00 0.00
to individually assessment for
impairment
Other accounts receivable
portfolio subject to impairment 26,625,955.10 92.25 1,812,325.16 6.81 24,813,629.94
by credit risk:
Including: Portfolio by age 26,423,328.53 91.55 1,812,325.16 6.86 24,611,003.37
Portfolio by related parties 202,626.57 0.70 0.00 0.00 202,626.57
Other accounts receivable of
individually insignificance 2,238,320.30 7.75 0.00 0.00 2,238,320.30
subject to individually
assessment for impairment
Total 28,864,275.40 100.00 1,812,325.16 6.28 27,051,950.24
112
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
2017.12.31
Item Book balance Bad debt provision
Withdrawal Book value
Proportion
Amount Amount proportion
(%)
(%)
Other accounts receivable of
individual significance subject to
individually assessment for
impairment
Other accounts receivable
portfolio subject to impairment by 34,239,603.90 92.55 1,677,945.42 4.90 32,561,658.48
credit risk:
Including: Portfolio by age 33,999,567.58 91.90 1,677,945.42 4.94 32,321,622.16
Portfolio by related parties 240,036.32 0.65 240,036.32
Other accounts receivable of
individually insignificance subject 2,757,066.12 7.45 0.00 0.00 2,757,066.12
to individually assessment for
impairment
Total 36,996,670.02 100.00 1,677,945.42 4.54 35,318,724.60
① Other receivable of individually insignificance subject to individually assessment for impairment
at the period-end
Withdrawal
Bad debt
Items Book balance proportion Withdrawal reason
provision
(%)
China Export & Credit Insurance 648,450.00 Guaranteed deposits, absence
Corporation, Fujian Branch of impairment
625,513.00 Guaranteed deposits, absence
Longhai People's Court
of impairment
Zhangzhou Intermediate People’s Court 565,000.00 Guaranteed deposits, absence
of impairment
Guangzhou Intellectual Property Court 200,000.00 Guaranteed deposits, absence
of impairment
Alipay (China) Network Technology Co.,
50,000.00 Guaranteed deposits, absence
Ltd. of impairment
Alipay of Flagship Store of Xiamen
50,000.00 Guaranteed deposits, absence
Tsannkuen of impairment
Niuhai E-commerce ( Shanghai ) Co.,
30,000.00 Guaranteed deposits, absence
Ltd. of impairment
Jiangsu Suning E-Commerce Co., Ltd. 30,000.00 Guaranteed deposits, absence
of impairment
Shunhe Trading Co., Ltd. 19,095.24 Guaranteed deposits, absence
of impairment
Gome Online E-Commerce Co., Ltd. 10,000.00 Guaranteed deposits, absence
of impairment
Others 10,262.06 Guaranteed deposits, absence
of impairment
Total 2,238,320.30 0.00 0.00
②In the groups, other accounts receivable adopting aging analysis method for measurement of
allowance for bad debt:
113
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2018.06.30
Aging
Other accounts receivable Bad debt provision Proportion (%)
Within 1 year 24,745,301.12 134,297.75 0.54
Including: 1-90 days 24,098,949.38 0.00 0.00
91-180 days 383,634.54 38,363.45 10.00
181-270 days 177,121.52 53,136.46 30.00
271-365 days 85,595.68 42,797.84 50.00
1-2years 1,673,027.41 1,673,027.41 100.00
2 to 3 years 5,000.00 5,000.00 100.00
Over 3 years 0.00 0.00 0.00
Total 26,423,328.53 1,812,325.16 6.86
(2) Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the Reporting Period is RMB147,581.74;
the amount of recovered allowance for bad debts during the Reporting Period is of RMB13,202.
(3) There was no actual write-off other accounts receivable
(4) Details of top five other receivables
Closing
% of balance of
Items Nature of OR Closing balance Aging
total bad debt
provision
State Administration of Taxation of
Export tax
Zhangzhou Longchi Development 14,119,516.57 0-90 days 48.92 0.00
refunds
Zone, Fujian
Zhangzhou Xincheng Metal
Rental & water & 1,269,443.28 0-90 days 4.40 0.00
Products Co., Ltd. electricity fees
Shanghai Tanghai Investment Co.,
Rental & water & 1,238,148.47 Over 1 years 4.29 1,238,148.47
Ltd. electricity fees
Longhai People’s Court Attachment 891,043.00 0-over 1years 3.09 0.00
State Grid Fujian Longhai Power
Electricity fees 717,327.44 0-90 days 2.48 0.00
Supply Co., Ltd.
Total 18,235,478.76 63.18 1,238,148.47
7. Inventory
(1) Disclosure by classification
2018.06.30
Item
Book balance Impairment allowance Book value
Raw materials 119,382,752.55 27,848,923.82 91,533,828.73
Goods in process 22,739,841.76 0.00 22,739,841.76
Entrusted processing
6,034,840.27 0.00 6,034,840.27
materials
Self-manufactured
17,431,323.36 1,133,845.14 16,297,478.22
semi-finished goods
Finished goods 87,474,433.53 8,290,670.42 79,183,763.11
Consigned finished goods 8,612,349.72 0.00 8,612,349.72
Low-value consumables 1,579,308.20 0.00 1,579,308.20
114
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2018.06.30
Item
Book balance Impairment allowance Book value
Materials in transit 2,875,633.20 0.00 2,875,633.20
Total 266,130,482.59 37,273,439.38 228,857,043.21
(Continued)
2017.12.31
Item
Book balance Impairment allowance Book value
Raw materials 91,556,442.22 29,307,728.29 62,248,713.93
Goods in process 14,542,696.83 0.00 14,542,696.83
Entrusted processing
2,596,673.00 0.00 2,596,673.00
materials
Self-manufactured
16,901,263.40 1,246,838.74 15,654,424.66
semi-finished goods
Finished goods 86,380,339.44 5,608,126.31 80,772,213.13
Consigned finished goods 14,253,812.21 0.00 14,253,812.21
Low-value consumables 1,872,537.93 0.00 1,872,537.93
Materials in transit 3,770,433.60 0.00 3,770,433.60
Total 231,874,198.63 36,162,693.34 195,711,505.29
(2) Impairment allowance for inventories
Increased amount Decrease
Item 2017.12.31 Affected by Reverse or Affected by 2018.06.30
Withdrawal
exchange rate write-off exchange rate
Raw materials 29,307,728.29 2,662,955.21 0.00 4,135,149.16 -13,389.48 27,848,923.82
Self-manufactured
1,246,838.74 269,239.24 0.00 382,232.84 0.00 1,133,845.14
semi-finished goods
Finished goods 5,608,126.31 3,795,629.41 0.00 1,113,085.30 0.00 8,290,670.42
Total 36,162,693.34 6,727,823.86 0.00 5,630,467.30 -13,389.48 37,273,439.38
(3)The basis of recognizing impairment allowance and the reason of recovering or writing off
the impairment allowance for inventories
The reason of recovering
The basis of recognition of impairment The reasons for inventory
Item impairment allowance
allowance for inventories impairment write-off
for inventories
Market prices decrease, and resulting in
Raw materials raw material’s net realizable value lower Sale or disposal
than cost
Self-manufactured Market prices decrease, and resulting in
semi-finished Self-manufactured semi-finished goods' Sale or disposal
goods net realizable value lower than cost
Market prices decrease, and resulting in
Finished goods finished goods' net realizable value Sale or disposal
lower than cost
8. Other current assets
115
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2018.06.30 2017.12.31
Input tax to be deducted 7,710,035.73 11,205,884.70
Financial products 370,000,000.00 400,000,000.00
Advance payment of income tax 0.00 1,913,786.44
Total 377,710,035.73 413,119,671.14
9. Available-for-sale financial assets
(1) The situation of available-for-sale financial assets
2018.06.30 2017.12.31
Item
Depreciation Book Depreciation Book
Book balance Book balance
reserves value reserves value
Available for sale equity instruments 40,000.00 40,000.00 40,000.00 40,000.00
Including: measured by cost 40,000.00 40,000.00 40,000.00 40,000.00
Total 40,000.00 40,000.00 40,000.00 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
among Report
Decre Increa Decr
2018.01.01 Increase 2018.06.30 2018.01.01 2018.06.30 the ing
ase se ease
investee Period
s(%)
Xiamen
Association of
40,000.00 40,000.00 1.48
Enterprises with
Foreign Investment
Total 40,000.00 40,000.00 1.48
10. Investment property
(1) Investment property adopted the cost measurement mode
Houses and Construction in
Item Land use right Total
buildings progress
I. Original book value
1.Opening balance 97,887,590.91 29,260,577.51 0.00 127,148,168.42
2. Increased amount of the period 0.00 0.00 0.00 0.00
(1) Outsourcing 0.00 0.00 0.00 0.00
(2) Transferred from inventories/fixed
0.00 0.00 0.00 0.00
assets/construction in progress
(3) Proceeds from business combinations 0.00 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred into fixed 0.00 0.00 0.00 0.00
assets
4. Closing balance 97,887,590.91 29,260,577.51 0.00 127,148,168.42
II. Accumulated Depreciation and accumulated
amortization
1.Opening balance 81,364,789.99 13,657,969.92 0.00 95,022,759.91
2. Increased amount of the period 1,433,386.35 276,312.36 0.00 1,709,698.71
(1) Withdrawal or amortization 1,433,386.35 276,312.36 0.00 1,709,698.71
(2) Transferred from fixed assets 0.00 0.00 0.00 0.00
3.Decreased amount of the period 0.00 0.00 0.00 0.00
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Houses and Construction in
Item Land use right Total
buildings progress
(1) Disposal 0.00 0.00 0.00 0.00
(2) Investment property transferred into fixed 0.00 0.00 0.00 0.00
assets
4. Closing balance 82,798,176.34 13,934,282.28 0.00 96,732,458.62
III. Depreciation reserves
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 15,089,414.57 15,326,295.23 0.00 30,415,709.80
2. Opening book value 16,522,800.92 15,602,607.59 0.00 32,125,408.51
(2) Investment property with pending ownership registration
Item Book value Reason for pending
Lvyuan three country villa 1,416,505.44
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.
11. Fixed assets
(1) List of fixed assets
Electronic Improvement
Transportati
Houses and Machinery device, expense of
Item on Total
buildings equipment modules and leased fixed
equipment
others assets
I. Original book
value
1.Opening 91,979,314.65 138,265,237.18 975,642,609.48 18,088,145.19 66,001,091.14 1,289,976,397.64
balance
2. Increased
amount of the 320,672.68 4,392,661.66 15,559,456.69 1,037,022.22 76,046.94 21,385,860.19
period
(1) Purchase 0.00 4,035,733.48 15,296,836.49 1,106,611.64 0.00 20,439,181.61
(2)Transferred
from project 0.00 0.00 0.00 0.00 0.00 0.00
under
construction
(3)Transfer
from 0.00 0.00 0.00 0.00 0.00 0.00
investment
property
(4) Impact of
changes in 320,672.68 356,928.18 262,620.20 -69,589.42 76,046.94 946,678.58
exchange rates
(5) Other 0.00 0.00 0.00 0.00 0.00 0.00
3.Decreased 8,795.46 2,839,599.92 26,117,107.24 19,578.19 0.00 28,985,080.81
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Electronic Improvement
Transportati
Houses and Machinery device, expense of
Item on Total
buildings equipment modules and leased fixed
equipment
others assets
amount of the
period
(1) Disposal or 8,795.46 2,839,599.92 26,117,107.24 19,578.19 0.00 28,985,080.81
Scrap
(2)Transferred
from 0.00 0.00 0.00 0.00 0.00 0.00
investment
property
4. Closing 92,291,191.87 139,818,298.92 965,084,958.93 19,105,589.22 66,077,138.08 1,282,377,177.02
balance
II.Accumulative
depreciation
1.Opening 47,947,486.73 83,327,368.17 870,728,389.83 14,043,317.72 62,308,483.21 1,078,355,045.66
balance
2. Increased
amount of the 1,971,886.60 3,059,078.07 14,027,826.29 452,551.70 992,122.93 20,503,465.59
period
(1) Withdrawal 1,874,561.11 2,906,832.64 13,865,647.85 463,574.39 920,365.98 20,030,981.97
(2) Transferred
from 0.00 0.00 0.00 0.00 0.00 0.00
investment
property
(3) Impact of
changes in 97,325.49 152,245.43 162,178.44 -11,022.69 71,756.95 472,483.62
exchange rates
3.Decreased
amount of the 0.00 2,442,542.82 23,103,743.17 19,578.19 0.00 25,565,864.18
period
(1) Disposal or 0.00 2,442,542.82 23,103,743.17 19,578.19 0.00 25,565,864.18
Scrap
(2) Transfer
from 0.00 0.00 0.00 0.00 0.00 0.00
investment
property
4. Closing 49,919,373.33 83,943,903.42 861,652,472.95 14,476,291.23 63,300,606.14 1,073,292,647.07
balance
III.Depreciation
reserves
1.Opening 0.00 18,704,200.64 19,523,524.20 4,933.21 27,381.88 38,260,039.93
balance
2. Increased
amount of the 0.00 19,343.14 3,197.55 62.17 0.00 22,602.86
period
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00
(2) Impact of
changes in 0.00 19,343.14 3,197.55 62.17 0.00 22,602.86
exchange rates
3.Decreased
amount of the 0.00 100,132.68 2,684,264.95 0.00 0.00 2,784,397.63
period
(1) Disposal or 0.00 100,132.68 2,684,264.95 0.00 0.00 2,784,397.63
Scrap
4. Closing 0.00 18,623,411.10 16,842,456.80 4,995.38 27,381.88 35,498,245.16
balance
IV. Book value
1. Closing book 42,371,818.54 37,250,984.40 86,590,029.18 4,624,302.61 2,749,150.06 173,586,284.79
value
2. Opening 44,031,827.92 36,233,668.37 85,390,695.45 4,039,894.26 3,665,226.05 173,361,312.05
book value
(2) Fixed assets with pending ownership registration
118
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Book value Reason for pending
Lvyuan three country villa 424,951.63
Jingying garden 165,626.24 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.
(3) Temporarily idle fixed assets
Accumulated depreciat Depreciation reser
Item Book value Book value
ion ves
Machinery equipment 44,375,783.65 27,391,883.37 16,865,668.87 118,231.41
Electronic device modules and
224,774,496.29 214,412,244.05 10,324,755.88 37,496.36
others
Transportation equipment 208,800.00 208,800.00 0.00 0.00
Improvement expense of leased
999,659.75 972,277.87 27,381.88 0.00
fixed assets
Total 270,358,739.69 242,985,205.29 27,217,806.63 155,727.77
12. Construction in progress
2018.06.30 2017.12.31
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Sporadic
2,899,399.16 0.00 2,899,399.16 2,059,623.18 0.00 2,059,623.18
project
Others 97,092.06 0.00 97,092.06 0.00 0.00 0.00
Total 2,996,491.22 0.00 2,996,491.22 2,059,623.18 0.00 2,059,623.18
13. Intangible assets
Item Land use right Software Total
I. Original book value
1.Opening balance 17,799,360.55 33,444,519.91 51,243,880.46
2. Increased amount of the period 0.00 1,313,815.02 1,313,815.02
(1) Purchase 0.00 1,313,815.02 1,313,815.02
(2) Impact of changes in exchange rates 0.00 0.00 0.00
3.Decreased amount of the period 295,108.59 0.00 295,108.59
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 295,108.59 0.00 295,108.59
4.Closing balance 17,504,251.96 34,758,334.93 52,262,586.89
II. Accumulated amortization
1.Opening balance 2,969,634.07 18,772,857.38 21,742,491.45
2. Increased amount of the period 336,691.09 2,090,932.90 2,427,623.99
(1) Withdrawal 279,655.12 2,090,932.90 2,370,588.02
(2) Impact of changes in exchange rates 57,035.97 0.00 57,035.97
3.Decreased amount of the period 31,811.95 0.00 31,811.95
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 31,811.95 0.00 31,811.95
119
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Land use right Software Total
4.Closing balance 3,274,513.21 20,863,790.28 24,138,303.49
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 14,229,738.75 13,894,544.65 28,124,283.40
2. Opening book value 14,829,726.48 14,671,662.53 29,501,389.01
14. Long-term deferred charge
Item 2017.12.31 Amortization 2018.06.30
Increased amount Decrease
amount
Telecommunications 18,932.97 0.00 14,533.16 0.00 4,399.81
engineering
Houses and buildings 4,077,187.92 4,715,601.69 1,014,785.71 0.00 7,778,003.90
renovation expenses
Phase III Wall Project 292,127.53 0.00 35,014.94 0.00 257,112.59
Software 0.00 58,867.92 1,635.22 0.00 57,232.70
Total 4,388,248.42 4,774,469.61 1,065,969.03 0.00 8,096,749.00
15. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
2018.06.30 2017.12.31
Item Deductible Deductible
Deferred income Deferred income
temporary temporary
tax assets tax assets
difference difference
Assets impairment provision 72,098,480.87 11,182,632.91 75,021,501.16 11,604,071.98
Accrued expenses 9,108,087.10 1,577,556.47 10,687,842.77 1,859,681.61
Transaction financial liabilities 6,008,550.00 901,282.50
Payroll liability 236,457.93 40,197.85
Unrealized profits from intergroup 763,463.84 190,865.96 812,548.04 203,137.01
transactions
Undistributed deficit 35,896,354.04 8,974,088.51 35,896,354.02 8,974,088.51
Other 241,923.53 41,127.00 7,683.59 1,306.21
Total 124,116,859.38 22,867,553.35 122,662,387.51 22,682,483.17
(2) Deferred income tax liabilities had not been off-set
2018.06.30 2017.12.31
Item Deductible Deductible
Deferred income Deferred income tax
temporary temporary
tax liabilities liabilities
difference difference
Trading financial 3,925,850.00 588,877.50
assets
Depreciation of
3,821,490.52 955,372.63 3,311,438.01 827,859.50
fixed assets
Other 86,081.59 14,633.87 86,871.08 14,768.08
Total 3,907,572.11 970,006.50 7,324,159.09 1,431,505.08
(3) List of unrecognized deferred income tax assets
120
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2018.06.30 2017.12.31
Assets impairment provision 12,307,606.32 13,238,136.21
Accrued expenses 31,515,237.37 20,520,490.27
Payroll liability 1,658,362.49 1,842,179.97
Undistributed deficit 122,029,314.49 96,571,791.11
Total 167,510,520.67 132,172,597.56
Notes: For the uncertainty of sufficient taxable income obtained in the future, the above was not
recognized as deductible temporary difference and deductible loss of deferred income tax assets.
(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following
years
Year 2018.06.30 2017.12.31
Year 2018 5,695,586.47 15,995,805.21
Year 2019 526,972.07 12,504,247.51
Year 2020 3,140,105.62 14,123,000.61
Year 2021 42,927,755.28 21,145,780.79
Year 2022 12,844,701.98 8,186,639.77
Year 2023-2029 56,894,193.07 24,616,317.22
Total 122,029,314.49 96,571,791.11
Notes: The period for covering the annual loss generated by Tsannkuen Edge Intelligence Co., Ltd.
(hereafter, TKEI) can be extended for no more than ten years.
16. Other non-current assets
Item 2018.06.30 2017.12.31
Prepaid mold fee 1,596,234.94 877,801.58
Prepayment for equipment 20,932,441.93 20,338,977.00
Total 22,528,676.87 21,216,778.58
17. Short-term borrowings
Item 2018.06.30 2017.12.31
Borrowings on security 17,909,899.30 0.00
Borrowings on credit 0.00 10,832,951.89
Total 17,909,899.30 10,832,951.89
18. Financial liabilities measured by fair value with changes in fair value recognised
in profit or loss
Item 2018.06.30 2017.12.31
Trading financial liabilities 6,008,550.00 0.00
Including: derivative financial liabilities 6,008,550.00 0.00
Total 6,008,550.00 0.00
19. Notes payable
121
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2018.06.30 2017.12.31
Bank acceptance bill 8,588,180.81 12,222,252.77
Trade acceptance 11,354,266.32 7,801,896.38
Total 19,942,447.13 20,024,149.15
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 2018.06.30 2017.12.31
Within 1 year 430,495,104.76 580,224,062.25
Over 1 years 1,994,519.16 3,316,167.11
Total 432,489,623.92 583,540,229.36
(2) There were no significant accounts payable remaining unsettled for more than one year
21. Advance from customers
Item 2018.06.30 2017.12.31
Within 1 year 7,792,828.50 6,124,044.24
Over 1 years 4,149,109.08 5,537,930.64
Total 11,941,937.58 11,661,974.88
22. Employee benefits payable
(1) List of employee benefits payable
Item 2017.12.31 Increase Decrease 2018.06.30
43,979,234.64 117,500,919.56 123,226,554.35 38,253,599.85
I. Short-term salary
824,267.13 6,735,451.99 6,694,300.29 865,418.83
II. Post-employment benefit-defined contribution plans
45,003.00 45,003.00 0.00
III. Termination benefits
IV. Other benefits at maturity with one year 0.00 0.00 0.00 0.00
Total 44,803,501.77 124,281,374.55 129,965,857.64 39,119,018.68
(2) List of Short-term employee benefits
Item 2017.12.31 Increase Decrease 2018.06.30
31,332,745.77 104,179,621.33 110,918,340.24 24,594,026.86
1. Salary, bonus, allowance, subsidy
1,441.58 5,348,545.11 4,053,411.77 1,296,574.92
2. Employee welfare
1,160,387.42 5,264,813.48 5,329,310.28 1,095,890.62
3. Social insurance
973,989.23 3,992,168.03 4,066,113.31 900,043.95
Including: Medical insurance
136,753.13 1,028,332.00 1,016,696.82 148,388.31
Employment injury insurance
49,645.06 244,313.45 246,500.15 47,458.36
Maternity insurance
9,273,252.85 2,759,429.48 2,551,693.32 9,480,989.01
4. Housing fund
192,195.04 192,195.04 0.00
5. Labor union budget and employee education budget
2,211,407.02 -243,684.88 181,603.70 1,786,118.44
6.Short-term absence with payment
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00
Total 43,979,234.64 117,500,919.56 123,226,554.35 38,253,599.85
(3) List of defined contribution plan
122
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2017.12.31 Increase Decrease 2018.06.30
823,119.93 6,562,305.07 6,521,074.09 864,350.91
1. Basic pension benefits
1,147.20 173,146.92 173,226.20 1,067.92
2. Unemployment insurance
3. Enterprise annuity payment 0.00 0.00 0.00 0.00
Total 824,267.13 6,735,451.99 6,694,300.29 865,418.83
The Company participates in the endowment insurance and unemployment insurance plan established
by the government, according to these plans, the Company pays planed fees to the company location.
In addition to the monthly fee deposit, the Company no longer bears further payment obligations.
Corresponding expenses are expensed as incurred or costs related assets.
23. Taxes payable
Category of taxes 2018.06.30 2017.12.31
Real estate tax 741,854.33 833,651.47
Corporate income tax 175,869.56
VAT 890,243.91
Personal income tax 650,033.34 516,590.25
Education Surcharge 658,546.93 692,945.25
Urban maintenance and construction tax 643,322.80 677,699.31
Others 914,898.29 103,835.37
Total 4,674,769.16 2,824,721.65
24. Interest payable
Item 2018.06.30 2017.12.31
Interests on short-term borrowings 9,957.32 1,448.76
Total 9,957.32 1,448.76
25. Other accounts payable
(1) Other accounts payable listed by nature of the account
Item 2018.06.30 2017.12.31
Within 1 year 51,852,645.18 42,618,980.95
Over 1 years 11,744,355.40 8,519,777.56
Total 63,597,000.58 51,138,758.51
(2) Other significant accounts payable with aging over one year
Item 2018.06.30 Unpaid/ Un-carry-over reason
Repaid at the termination of
Cash pledge 10,463,608.00
contract
Total 10,463,608.00
26. Long-term payroll payable
(1) List of long-term payroll payable
Item 2018.06.30 2017.12.31
I. Post-employment benefit-net liability of defined benefit 178,526.85 156,540.09
Total 178,526.85 156,540.09
27. Specific Payables
123
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2017.12.31 Increase Decrease 2018.06.30
Phase I removal compensation money of Shanghai TKS 109,137,778.28 0.00 0.00 109,137,778.28
Total 109,137,778.28 0.00 0.00 109,137,778.28
28. Share capital
Increase/decrease
Item 2017.12.31 Issuing Capitalization 2018.06.30
Share
new of public Other Subtotal
donation
shares reserves
Total shares 185,391,680.00 185,391,680.00
29. Capital reserves
Item 2017.12.31 Increase Decrease 2018.06.30
Share premium 210,045,659.80 210,045,659.80
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 0.00 0.00 296,808,965.79
124
2018 Interim Report of Tsann Kuen (China) Enterprise Co., Ltd
30. Other comprehensive income
Reporting Period
Less: recorded in
other
Item 2017.12.31 Amount comprehensive 2018.06.30
Attributable to
before income income in prior Less: Income Attributable to minority
owners of the
tax in current period and tax expense shareholders after tax
Company after tax
period transferred to
profit or loss in
current period
I. Other comprehensive income that will not
53,821.50 53,821.50
be reclassified into profit/loss
Including: changes in net liabilities or assets
with a defined benefit plan upon 53,821.50 53,821.50
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
4,565,999.37 -52,419.01 -39,314.26 -13,104.75 4,526,685.11
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
4,565,999.37 -52,419.01 -39,314.26 -13,104.75 4,526,685.11
currency financial statements
Total 4,619,820.87 -52,419.01 -39,314.26 -13,104.75 4,580,506.61
125
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31. Surplus reserves
Item 2017.12.31 Increase Decrease 2018.06.30
Statutory surplus reserves 33,888,636.90 0.00 0.00 33,888,636.90
Total 33,888,636.90 0.00 0.00 33,888,636.90
32. Retained earnings
Item 2018.06.30 2017.12.31
Opening balance of retained profits before adjustments 90,105,224.21 90,217,504.90
Total opening balance of retained profits before adjustments (Increase+，decrease-)
Opening balance of retained profits after adjustments 90,105,224.21 90,217,504.90
Add: Net profit attributable to owners of the Company -28,341,686.77 26,077,139.64
Less: Withdrawal of statutory surplus reserves 0.00 3,942,418.73
Withdrawal of discretionary surplus reserves 0.00 0.00
Withdrawal of generic risk reserve 0.00 0.00
Dividend of common stock payable 14,831,334.40 22,247,001.60
Dividend of common stock transfer into share capital 0.00 0.00
Closing retained profits 46,932,203.04 90,105,224.21
33. Revenue and cost of sales
(1) Revenue and cost of sales
Item Reporting Period Same period of last year
Revenue from main operations 658,944,365.34 840,312,489.24
Revenue from other operations 32,566,139.89 29,371,269.44
Total 691,510,505.23 869,683,758.68
Costs of main operations 613,781,412.65 723,287,830.92
Cost of other operations 11,667,604.74 16,219,638.01
Total 625,449,017.39 739,507,468.93
(2) Main operations (by industry)
Reporting Period Same period of last year
Item
Revenue Cost of sales Revenue Cost of sales
Manufacture home electronic appliance 658,944,365.34 613,781,412.65 840,312,489.24 723,287,830.92
Total 658,944,365.34 613,781,412.65 840,312,489.24 723,287,830.92
(3) Main operations (by product)
Reporting Period Same period of last year
Item
Revenue Cost of sales Revenue Cost of sales
Cooking 400,273,785.96 371,762,439.06 540,344,218.91 447,620,553.66
Household helper 164,940,858.72 159,587,268.54 224,015,274.54 210,893,707.03
Tea/coffee 84,387,695.78 79,103,482.40 73,801,696.03 63,193,074.09
Others 9,342,024.88 3,328,222.65 2,151,299.76 1,580,496.14
Total 658,944,365.34 613,781,412.65 840,312,489.24 723,287,830.92
(4) Main operations (by area)
126
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting Period Same period of last year
Area
Revenue Cost of sales Revenue Cost of sales
America 246,999,976.03 233,192,853.00 302,346,479.45 258,816,457.63
Europe 200,874,235.23 191,285,145.74 290,524,069.58 256,421,924.47
Asia 161,948,690.59 145,155,496.92 180,411,171.53 154,430,965.58
Australia 38,371,062.48 34,606,394.52 57,656,779.71 46,215,616.95
Africa 10,750,401.01 9,541,522.47 9,373,988.97 7,402,866.29
Total 658,944,365.34 613,781,412.65 840,312,489.24 723,287,830.92
(5) Revenues from the top 5 customers
Period Revenues from the top 5 customers Proportion to the total revenues(%)
Reporting Period 316,048,452.50 45.70
Same period of last year 423,578,219.72 48.70
34. Business tax and surcharges
Item Reporting Period Same period of last year
Education Surcharge 1,947,014.86 1,642,018.73
Urban maintenance and construction tax 1,969,352.57 1,657,297.65
Real estate tax 1,011,074.55 1,475,222.72
Land use tax 388,653.42 348,464.92
Stamp duty 375,368.80 572,220.24
Other 70.74 139.35
Total 5,691,534.94 5,695,363.61
Notes: The detailed payment standards for various business tax and surcharges were presented in NoteV.
Taxation.
35. Sales expenses
Item Reporting Period Same period of last year
Export fees 12,445,365.51 15,649,265.39
Employee remunerations 8,730,635.97 9,644,113.99
Claims for sales promotional expenses -843,486.81 -3,212,402.85
Sales commission and after sales service fees 938,142.65 1,189,343.37
Assets lease expenses 193,079.70 192,646.13
Business travel charges 1,126,786.43 1,059,897.57
Advertising expenses for promotion 3,899,934.81 4,205,076.42
Office expenses 162,720.93 329,126.35
Transport fees 419,913.34 658,337.56
Others 508,412.29 413,622.66
Total 27,581,504.82 30,129,026.59
36. Administration expenses
Item Reporting Period Same period of last year
R&D expenses 34,122,824.80 36,181,239.58
Employee remuneration 16,339,628.35 14,434,994.86
Depreciation and amortization 4,716,020.57 5,736,884.90
Rental charges 6,682,219.28 7,085,380.79
Insurance expenses 926,369.87 1,149,100.21
127
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Reporting Period Same period of last year
Office expenses 742,909.31 1,093,362.53
Travel expenses 1,956,806.91 1,540,597.10
Consultant fees 1,742,392.73 2,003,820.15
Maintenance expenses 2,995,650.24 2,378,906.44
Others 4,414,931.58 3,178,472.37
Total 74,639,753.64 74,782,758.93
37. Financial costs
Item Reporting Period Same period of last year
Interest expenses 287,648.29 410,091.63
Less: interest income 4,483,457.96 3,529,133.78
Exchange gains and losses 2,505,899.01 11,511,175.66
Bank charges 458,468.88 792,248.01
Total -1,231,441.78 9,184,381.52
38. Impairment loss on assets
Item Reporting Period Same period of last year
Bad debt loss -1,904,490.44 -1,540,543.50
Impairment loss on inventories 6,727,823.86 1,604,983.07
Impairment loss on fixed assets 0.00 0.00
Total 4,823,333.42 64,439.57
39. 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 0.00 1,881,750.00
profits and losses
Of which, gains on the changes in the fair value of derivative financial instruments 0.00 1,881,750.00
Financial liabilities measured by fair value and the changes included in the current -9,934,400.00 0.00
gains and losses
Of which, gains on the changes in the fair value of derivative financial instruments -9,934,400.00 0.00
Total -9,934,400.00 1,881,750.00
40. Investment income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by equity method 0.00 0.00
Investment income arising from disposal of long-term equity 0.00 0.00
investments
Investment income received from financial assets measured by fair
value and the changes be included in the current profits and losses 0.00 0.00
during holding period
Investment income received from disposal of financial assets
measured by fair value and the changes be included in the current 9,608,500.00 576,100.00
profits and losses during holding period
Investment income from financial products 268,400.98 1,148,630.14
Others 0.00 0.00
Total 9,876,900.98 1,724,730.14
41. Gains from disposal of assets
128
2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Amount included in the current non-recurring gains
Reporting Same period of
Item
Period last year and losses
Gains from disposal of
376,183.60 318,516.72 376,183.60
fixed assets
Total 376,183.60 318,516.72 376,183.60
42. Other income
Amount included in the current non-recurri
Reporting Same period of last
Item
Period year ng gains and losses
Subsidy for export credit
702,892.00 537,632.00 702,892.00
insurance
Patents subsidies 32,400.00 40,600.00 32,400.00
Subsidies for technological
0.00 300,000.00 0.00
innovation
Subsidy for exhibition 25,000.00 10,000.00 25,000.00
Subsidy for online transactions
108,800.00 0.00 108,800.00
in technology
Subsidy for R & D 693,000.00 0.00 693,000.00
Total 1,562,092.00 888,232.00 1,562,092.00
43. Non-operating income
Amount included in the
Item Reporting Period Same period of last year current non-recurring g
ains and losses
Government subsidies 283,761.00 0.00 283,761.00
Unpayable overdue accounts payable 676,788.07 0.00 676,788.07
Income from B2B 379,395.43 307,800.00 379,395.43
Income transferred from advances for three years 0.00 844,169.97 0.00
Insurance claims 0.00 232,783.88 0.00
Others 1,127,629.37 743,344.91 1,127,629.37
Total 2,467,573.87 2,128,098.76 2,467,573.87
Of which, government subsidies included into the current gains and losses:
Same Period of
Item Reporting Period Related to assets/related income
last year
Awards as government subsidies substituted
283,761.00 0.00 Related to the income
for removal
Total 283,761.00 0.00
44. Non-operating expenses
Amount included in the current
Item Reporting Period Same period of last year
non-recurring gains and losses
Losses caused by damage and
12,582.69 211,164.66 12,582.69
scrap of non-current assets
Fines 4,632.00 19,000.00 4,632.00
Donation 20,000.00 50,000.00 20,000.00
Total 37,214.69 280,164.66 37,214.69
129
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45. Income tax expense
(1) Lists of income tax expense
Item Reporting Period Same period of last year
Current income tax expense -377,202.20 -238,708.37
Deferred income tax expense -661,307.31 3,654,776.13
Total -1,038,509.51 3,416,067.76
(2) Reconciliation of account profit and income tax expenses
Reporting Per
Item
iod
Total profits -41,132,061.44
Current income tax expense accounted by tax and relevant regulations -10,283,015.36
Impact of differing tax rates applicable to subsidiaries 3,970,255.26
Impact of adjustment for prior period tax expenses -311,961.31
Impact of non-taxable income -108,661.78
Impact of non-deductible costs, expenses and losses 332,317.41
Impact of utilisation of prior period deductible temporary differences and taxable temporary differences
for which no deferred tax asset has been recognised
Impact of current period deductible temporary differences and taxable temporary differences for which no 6,912,313.44
deferred tax asset has been recognised
Adjustment of deferred tax assets and deferred tax liabilities brought forward due to changes in tax rates
Impact of additional deduction for R&D expenses -1,549,757.17
Income tax expense -1,038,509.51
46. Other comprehensive income
See NoteVI 30 for more details.
47. Cash flow statement
(1) Other cash received relevant to operating activities:
Item Reporting Period Same period of last year
Government subsidies 1,845,853.00 888,232.00
Interest income 1,153,304.46 2,128,069.08
Rent income 27,398,244.83 25,168,728.17
Funds in current account and others 152,329.42 3,528,917.06
Total 30,549,731.71 31,713,946.31
(2) Other cash payments relating to operating activities
Item Reporting Period Same period of last year
Penalties and donations paid 0.00 69,000.00
Bank charges 429,816.67 791,760.75
Sales expenses and general and administrative expenses paid by cash 43,057,620.24 65,470,580.33
Fees for rent, water and electricity 26,355,232.31 70,135,416.36
Total 69,842,669.22 136,466,757.44
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(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 earn
246,417,500.00 42,313,208.55
interest income in financial institutions
Total 246,417,500.00 42,313,208.55
(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 435,917,500.00 377,386,926.35
Total 435,917,500.00 377,386,926.35
(5) Other cash received relevant to financing activities
Item Reporting Period Same period of last year
Inter-bank lending of capital of related parties 0.00 6,774,375.98
Total 0.00 6,774,375.98
(6) There was no other cash paid relevant to financing activities
48. Supplementary information to the statement of cash flows
(1) Supplementary information to the statement of cash flows
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net profit -40,093,551.93 13,565,414.73
Add: Provision for impairment of assets 4,823,333.42 64,439.57
Depreciation of fixed assets, of oil-gas assets, of productive
21,740,680.68 21,306,844.24
biological assets
Amortization of intangible assets 2,370,588.02 1,641,300.74
Long-term unamortized expenses 1,065,969.03 695,804.71
Losses on disposal of fixed assets, intangible assets and other
-376,183.60 -318,516.72
long-term assets (gains: negative)
Loss on retirement of fixed assets (gain presented by "-" prefix) 12,582.69 211,164.66
Losses from variation of fair value (gain presented by "-" prefix) 9,934,400.00 -1,881,750.00
Financial cost (gain presented by "-" prefix)) 454,499.85 8,316,196.20
Investment loss (gain presented by "-" prefix) -9,876,900.98 -1,724,730.14
Decrease in deferred income tax assets ((gain presented by "-"
-185,070.18 3,369,488.41
prefix)
Increase in deferred income tax liabilities
-461,498.58 264,711.57
(“-” means decrease)
Decrease in inventory (gain presented by "-" prefix) -34,785,431.30 31,179,588.22
Decrease in accounts receivable from operating activities (gain
70,275,283.97 14,697,969.99
presented by "-" prefix)
Increase in payables from operating activities (“-” means decrease) -144,720,271.58 -148,899,222.14
Others
Net cash flows generated from operating activities -119,821,570.49 -57,511,295.96
2. Significant investing and financing activities involve no cash:
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Supplemental information Reporting Period Same period of last year
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 248,535,096.81 263,939,205.09
Less: cash at the beginning of the period 564,381,960.88 738,195,729.53
Add: Closing balance of cash equivalents
Less: Cash at the beginning of the period
Net increase in cash and cash equivalents -315,846,864.07 -474,256,524.44
(2) Cash and cash equivalents
Item Reporting Period Same period of last year
I. Cash 248,535,096.81 263,939,205.09
Including: Cash on hand 675,029.35 890,072.87
Bank deposit on demand 247,860,067.46 263,049,132.22
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 248,535,096.81 263,939,205.09
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.
Note2: Time deposits for the purpose of earning interest income in financial institutions is RMB189,500,000. Cash served as
payment relating to investing activities in 2018 shall be listed and deducted from the balance of cash and cash equivalents at
the period-end.
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49. 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 12,507,859.10 6.6166 82,759,500.53
JPY 32,694,369.18 0.0599 1,958,850.43
IDR 2,548,755,894.76 0.0005 1,180,345.56
EUR 16,510.86 7.6515 126,332.84
GBP 9,519.60 8.6551 82,393.09
HKD 391,518.44 0.8431 330,089.20
HUF 81,016.00 0.0232 1,879.57
FRF 7.00 6.6546 46.58
TWD 740,854.00 0.2170 160,757.91
Total 86,600,195.71
Short-term loans
Including: USD 1,719,692.79 6.6166 11,378,458.25
TWD 30,100,000.00 0.2170 6,531,399.00
Total 17,909,857.25
Account receivable
Including: USD 33,534,668.11 6.6166 221,885,485.02
IDR 364,717,289.00 0.0005 168,568.48
EUR 45,634.84 7.6515 349,174.98
JPY 32,571,705.00 0.0599 1,951,501.13
Total 224,354,729.61
Account payable
Including: USD 11,636,161.90 6.6166 76,991,828.83
EUR 472,249.76 7.6515 3,613,419.04
HKD 579,212.94 0.8431 488,334.43
JPY 7,672,600.66 0.0599 459,696.20
IDR 1,181,987,641.32 0.0005 546,302.20
TWD 6,517,284.00 0.2170 1,414,185.46
Total 83,513,766.16
Other account receivable
Including: USD 99,672.65 6.6166 659,494.06
IDR 1,293,852,917.00 0.0005 598,005.15
TWD 1,267,017.00 0.2170 274,930.02
Total 1,532,429.23
Other account payable
Including: HKD 75,736.07 0.8431 63,853.08
JPY 540,300.00 0.0599 32,371.53
USD 845,515.80 6.6166 5,594,439.84
EUR 1,180.00 7.6515 9,028.77
IDR 837,872,704.42 0.0005 387,255.90
TWD 1,248,736.00 0.2170 270,963.22
Total 6,357,912.34
(2) Description of overseas operating entities
The Company's holding sub-subsidiaries company Pt.Star Comgistic Indonesia is located at West Java province in Indonesia,
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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 dollars by usual purchases and sales, so that it adopt
the US dollars as its functional currency.
50. Changes of scope of consolidation financial statements
1. Changes of scope of consolidation financial statements for other reasons
On 15 June 2018, the Company’s majority-owned subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
newly set up a sub-subsidiary Tsann Kuen (Zhangzhou) Investment Co., Ltd. From the date of
establishment on, Tsann Kuen (Zhangzhou) Investment Co., Ltd. has been included in the scope of
consolidation financial statements.
VII. Equity in other main entities
1. The equity in subsidiaries
(1) The structure of the enterprise group
Main Holding percentage (%)
Registration Nature of
Name operating Acquired method
place business Directly Indirectly
place
Manufacture
TsannKuen (Zhangzhou) Acquired through
Zhangzhou Zhangzhou home electronic 75.00 75.00 incorporation
Enterprise Co., Ltd.
appliance
Acquired through
Manufacture business
TsannKuen (Shanghai)
Shanghai Shanghai home electronic 46.875 62.50 combination under
Enterprise Co., Ltd.
appliance common
control
TsannKuen (Zhangzhou) Manufacture
Acquired through
South Port Electronics Zhangzhou Zhangzhou home electronic 56.25 75.00 incorporation
Enterprise Co., Ltd. (TKN) appliance
Shanghai Canxing Trading Sale of home Acquired through
Shanghai Shanghai 56.25 100.00 incorporation
Co., Ltd (STD) appliance
Xiamen Tsannkuen Home
Design of home Acquired through
Appliance Design Co., Ltd. Xiamen Xiamen 100.00 100.00 incorporation
appliance
(“TKCD”)
Acquired through
East Sino Development business
Investment,
Limited. Hong Kong Hong Kong 75.00 100.00 combination under
Trading
(East Sino) common
control
Acquired through
Manufacture
Pt.Star Comgistic business
Indonesia Indonesia home electronic 75.00 100.00 combination under
Indonesia(SCI)
appliance
common
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Main Holding percentage (%)
Registration Nature of
Name operating Acquired method
place business Directly Indirectly
place
control
Pt.Star Comgistic Property
Development Indonesia Indonesia Real estate Acquired through
Indonesia 75.00 100.00 incorporation
development
（“SCPDI”）
Acquired through
Orient Star Investments
Investment, business
Limited (Orient Star Hong Kong Hong Kong 75.00 100.00 combination under
Trading
Investments)
uncommon control
Acquired through
business
Tsann Kuen Edge
Taiwan Taiwan Industrial design 75.00 100.00 combination under
Intelligence Co., Ltd.
common
control
Tsann Kuen (Zhangzhou) Acquired through
Zhangzhou Zhangzhou Investment 75.00 100.00 incorporation
Investment Co., Ltd.
(2) Significant not wholly owned subsidiary
Holding
Dividends
proportion of Profit and loss attributable Total amount of
attributable to
Name minority to minority equity during minority equity at
minority
shareholders current year period-end
shareholders
(%)
TsannKuen (Zhangzhou) 25 -7,955,597.42 11,182,518.60 303,065,723.89
Enterprise Co., Ltd.
TsannKuen (Shanghai) Enterprise 53.125 -657,974.61 42,301,519.10
Co., Ltd.
Tsann Kuen Edge Intelligence 25 -1,021,292.54 -361,746.76
Co., Ltd.
Pt.Star Comgistic Indonesia(SCI) 25 -2,040,161.98 19,818,197.70
(3) The main financial information of significant not wholly owned subsidiary
2018.6.30
Name of
Non-current Current Non-current
subsidiaries Current assets Total assets Total liabilities
assets liabilities liability
TsannKuen
(Zhangzhou) 1,349,355,182.27 403,071,125.22 1,752,426,307.49 540,163,411.93 0.00 540,163,411.93
Enterprise Co., Ltd.
TsannKuen
(Shanghai) 177,954,770.92 13,194,410.39 191,149,181.31 2,385,014.13 109,137,778.28 111,522,792.41
Enterprise Co., Ltd.
Tsann Kuen Edge
Intelligence Co., 5,249,698.64 4,315,743.85 9,565,442.49 193,160.72 11,012,429.52
10,819,268.80
Ltd.
Pt.Star Comgistic
64,921,939.99 70,564,282.65 135,486,222.64 55,258,059.23 955,372.63 56,213,431.86
Indonesia(SCI)
(Continued)
2017.12.31
Name of subsidiaries Non-current Non-current
Current assets Total assets Current liabilities Total liabilities
assets liability
TsannKuen (Zhangzhou)
Enterprise Co., Ltd. 1,569,688,493.26 396,137,339.10 1,965,825,832.36 676,421,595.20 588,877.50 677,010,472.70
TsannKuen (Shanghai)
Enterprise Co., Ltd. 180,634,383.82 11,938,656.68 192,573,040.50 2,570,332.87 109,137,778.28 111,708,111.15
Pt.Star Comgistic
Indonesia(SCI) 62,295,711.26 72,303,711.81 134,599,423.07 47,136,417.88 827,859.50 47,964,277.38
Tsann Kuen Edge 4,755,678.58 4,784,549.74 9,540,228.32 6,683,867.35 171,308.17 6,855,175.52
Intelligence Co., Ltd.
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Reporting Period
Name Total
Operating cash
Operation revenue Net profit comprehensive
flow
income
TsannKuen (Zhangzhou)
633,712,855.58 -31,822,389.67 -99,054,381.42
Enterprise Co., Ltd.
TsannKuen (Shanghai)
460,356.27 -1,238,540.45 -2,584,983.96
Enterprise Co., Ltd.
Tsann Kuen Edge Intelligence
5,186,214.49 -4,085,170.16 -6,159,899.06
Co., Ltd.
Pt.Star Comgistic
57,156,180.74 -8,160,647.89 5,372,765.23
Indonesia(SCI)
Same period of last year
Name Total
Operating cash
Operation revenue Net profit comprehensive
flow
income
TsannKuen (Zhangzhou)
819,506,110.82 31,148,900.00 -41,034,228.98
Enterprise Co., Ltd.
TsannKuen (Shanghai)
429,020.81 -3,055,828.76 -2,883,754.57
Enterprise Co., Ltd.
Tsann Kuen Edge Intelligence
3,528,954.02 -7,849,662.99 -7,771,230.43
Co., Ltd.
Pt.Star Comgistic
49,326,459.51 -3,823,567.47 1,806,173.69
Indonesia(SCI)
2. The equity in joint ventures or associates
(1) Insignificant enterprise information of associates
Place Shareholding （%）
Nature Registered Acquired
Company name of Paid capital
of business capital Direct Indirect method
registration
Xiamen travel canxing（Xiamen） Leasing RMB10
Acquired
International Travel Service Co., Xiamen and million
0.00 22.00 0.00 through
Ltd. business
incorporation
services
Note: Xiamen travel canxing（Xiamen）International Travel Service Co., Ltd., with no actual operation, has
completed the cancellation process on 6 February 2018.
VIII. 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 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 sensitivity 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,
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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, the other main business activities of the Company
used by RMB. On 30 June 2018, 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 2018.06.30 2017.12.31
Monetary capital 86,600,195.71 212,200,290.58
Account receivable 224,354,729.61 256,438,317.51
Other accounts receivable 1,532,429.23 2,715,037.60
Accounts payable 83,513,766.16 61,995,745.86
Other account payable 6,357,912.34 4,038,251.32
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. 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 2018.
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.
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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.
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IX. Disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Closing fair value
Fair value Fair value Fair value
Item
measurement items measurement measurement Total
at level 1 items at level 2 items at level 3
I. Consistent fair value measurement
(I) 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
Total assets of consistent fair value
measurement
(II) Trading financial liabilities
Including: tradable bond issued
Derivative financial liabilities
6,008,550.00 6,008,550.00
Others
Total liabilities of consistent fair
value measurement 6,008,550.00 6,008,550.00
2. Market price recognition basis for consistent and inconsistent fair value measurement items at
level 1
Based on the identical assets or liabilities acquired on unadjusted quoted in an active market at balance
sheet day.
XI. Related party and related transaction
1. Details of the parent
Proportion of voting
Proportion of share
Registration Nature of rights owned by
held by parent
Name of parent company Registered capital company against the parent company
place business against the Company
Company (%)
(%)
Manufacture
STAR COMGISTIC and sales TWD
Taiwan 42.90 44.68
CAPITAL CO.,LTD. electrical 3,000,000,000.00
equipment
2. Subsidiaries of the Company
See Note VII.1 “The equity in subsidiaries”.
3. Details of the Company’s joint ventures and associates
See Note VII.3 Equity in joint ventures and associates.
4. Details of other related parties
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Name Relationship
Fillman Investment Limited Shareholder
TsannKuen Japan Co., Ltd. Same ultimate holding company
The company directly controlled by the key management and closed
Thermaster Electronic (Xiamen) Ltd.
family members
WU WHA MA RESTAURANT MANAGEMENT
Ultimate holding company have equity
CO., LTD. IN XIAMEN
TsannKuen Enterprise Co., Ltd. Under same actual controller
Kuaisan Electric Business 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
Sino Global Development Ltd. Under same actual controller
Starcomgistic Australia Pty Ltd Same ultimate holding company
5. Transactions with related parties
(1) Transactions through purchase or sell goods and accept or supply services
① The situation of purchases goods
Reporting The approval trade Whether exceed Same period of
Related party Content
Period credit trade credit or not last year
Thermaster Electronic 13,847,118.67 40,000,000.00 16,738,518.44
Purchase of goods No
(Xiamen) Ltd.
TsannKuen Enterprise 10,290.50 100,000.00 19,035.91
Purchase of goods No
Co., Ltd.
Gold Mine Chain 1,513.82 50,000.00 392.98
Purchase of goods No
Enterprise Co., Ltd.
STAR COMGISTIC 4,964.08 100,000.00 2,876.99
Purchase of goods No
CAPITAL CO.,LTD.
Kuaisan Electric
Business Service Co., Purchase of goods 643.50 30,000.00 No 0.00
Ltd..
Total 13,864,530.57 16,760,824.32
②The situation of sells goods
Related party Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO.,LTD. Sale of goods 5,762,835.97 7,922,076.14
TsannKuen Enterprise Co., Ltd. Sale of goods 0.00 570.82
Gold Mine Chain Enterprise Co., Ltd. Sale of goods 0.00 85,749.96
Total 5,762,835.97 8,008,396.92
(2) Information of related lease
① The Company is as the leasor
Name of lessee Category of leased assets Reporting Period Same period of last year
WU WHA MA RESTAURANT House property 23,700.00 32,760.00
MANAGEMENT CO., LTD. IN XIAMEN
Total 23,700.00 32,760.00
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②The Company is as the lessee
Category of leased
Name of lessor Reporting Period Same period of last year
assets
STAR COMGISTIC CAPITAL CO.,LTD. House property 684,104.52 691,394.42
Total 684,104.52 691,394.42
(3) Assets transfer, Debt restructuring between related parties
Same period of last
Related party Content Reporting Period
year
Starcomgistic Australia Pty Ltd Sale of fixed assets 0.00 17,664.40
TsannKuen Enterprise Co., Ltd. Sale of fixed assets 0.00 0.00
STAR COMGISTIC CAPITAL CO.,LTD. Sale of fixed assets 8,844.00 0.00
Total 8,844.00 17,664.40
TsannKuen Enterprise Co., Ltd. Purchase of fixed assets 0.00 177,486.58
Kuaisan Electric Business Service Co., Ltd. Purchase of fixed assets 0.00 36,433.06
Thermaster Electronic (Xiamen) Ltd. Purchase of fixed assets 12,820.51 12,820.51
Total 12,820.51 226,740.15
(4) Inter-bank lending of capital of related parties
Reporting Same period
Related party Content
Period of last year
STAR COMGISTIC CAPITAL CO.,LTD. Borrowing capital 440,000.00 0.00
STAR COMGISTIC CAPITAL CO.,LTD. Interest from inter-bank borrowing and lending 1,661.22 0.00
Sino Global Development Ltd. Borrowing capital 0.00 6,774,375.98
Sino Global Development Ltd. Interest from inter-bank borrowing and lending 0.00 115,259.48
Total 441,661.22 6,889,635.46
(5) Other related-party transactions
Related party Content Reporting Period Same period of last year
Star International Travel Co., Ltd. Receiving service 425,218.20 419,093.08
Kuaisan Electric Business Service Co., Ltd. Receiving labor service 480.48 34,565.61
STAR COMGISTIC CAPITAL CO., LTD. Receiving service 0.00 6,211.35
TsannKuen Enterprise Co., Ltd. Offering labor service 27,680.84 33,151.76
Total 453,379.52 493,021.80
(6) Remunerations of key management personnel
Unit: RMB’0,000
Item Reporting Period Same period of last year
Remunerations of key management
102.62 109.65
personnel
Total 102.62 109.65
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6. Receivables and payables of related parties
(1) Receivables
2018.06.30 2017.12.31
Name of item Bad debt Bad debt
Book balance Book balance
provision provision
Accounts receivable:
STAR COMGISTIC CAPITAL CO., LTD. 3,049,870.36 1,265,582.41
Gold Mine Chain Enterprise Co., Ltd. 0.00 0.00
Total 3,049,870.36 0.00 1,265,582.41 0.00
Other accounts receivable:
TsannKuen Enterprise Co., Ltd. 0.00 5,723.50
STAR COMGISTIC CAPITAL CO., LTD. 202,626.57 204,484.13
Gold Mine Chain Enterprise Co., Ltd. 0.00 29,828.69
Total 202,626.57 0.00 240,036.32 0.00
(2) Payables
Name of item 2018.06.30 2017.12.31
Accounts payable:
Thermaster Electronic (Xiamen) Ltd. 6,492,182.34 9,004,478.45
Total 6,492,182.34 9,004,478.45
Other account payable:
WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN XIAMEN 23,776.60 23,776.60
TsannKuen Enterprise Co., Ltd. 71.61 915.96
STAR COMGISTIC CAPITAL CO., LTD. 468,710.10 29,259.30
Kuaisan Electric Business Service Co., Ltd. 497.56 0.00
Star International Travel Co., Ltd. 51,962.06 0.00
Total 545,017.93 53,951.86
XI. Commitments and contingency
1. Significant commitments
(1) Operating lease commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the Company signed were as followed:
Unit: RMB’0,000
Item 2018.06.30 2017.12.31
Minimum lease payments of irrevocable operating
lease
1 year after balance date 3,638.00 3,638.00
2 year after balance date 3,638.00 3,638.00
3 year after balance date 3,638.00 3,638.00
Future years 118,228.00 120,047.00
Total 129,142.00 130,961.00
2. Contingency
(1) As MTN Products, Inc. / Water Solutions (Hong Kong) Ltd ("MTN / WSL") did not pay the relevant payment in time
and fulfill the order according to the contract, the subsidiary of the Company, TsannKuen (Zhangzhou) Enterprise Co., Ltd.
submitted the indictment to the SUPERIOR COURT OF CALIFORNIA COUNTY OF LOS ANGELES on 23 November
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2016 to sue MTN / WSL for payment of USD707,522.92 and USD1,402,940 for reserve losses, totaling USD2,110,462.92.
As of the reporting date, the case is still pending.
(2) 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 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL),
submitted the indictment on 23 November 2016 to Longhai City People's Court, requesting the payment of RMB2,499,658.4.
On 12 January 2018, TKL received the first instance judgment from the court that Philips should pay RMB423,345.63 and
overdue interest to TKL. TKL has filed an appeal. As of the reporting date, the case is still pending.
(3) TSANN KUEN (CHINA) ENTERPRISE CO., LTD. (therefore "TKC") and Tian Yuan (Xiamen) Asset Management Co.,
Ltd. (therefore "Tianyuan") signed the "Land Lease Contract (Northwest Corner)" and “Housing Lease Contract (North
Building) "on 26 June 2013, signed the "Land Lease Contract (southeast corner) "," Housing Lease Contract (Huarong Road
23) "(part of the house) on 29 July 2013. TKC leased the part of the land and house on Xinglong Road 88 to Tianyuan for
business activities, part of the site and housing leased to Tian Yuan company for business activities.
As Tianyuan did not pay the rent in accordance with the contract in time and unauthorized use of the leased property, TKC
filed a lawsuit in Xiamen Huli District People's Court to pay the relevant rent. On 29 December 2015, People's Court of Huli
District of Xiamen City ruled that the four cases will be merged. On 30 May 2017 People's Court of Huli District of Xiamen
City made a ruling of first instance: It ruled that Tianyuan Company paid liquidated damages of overdue payment of the
Company. Tianyuan company filed an appeal. As of the reporting date, the case is still pending.
(4) The subsidiary of the Company - TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL) signed the < Product
Supply Agreement> with Xinda Electro mechanics Co., Ltd. (hereafter, Xinda) on 20 July 2009. The validity of the contract
is from 1 July 2009 to 30 June 2012. Furthermore, on 1 January 2011, they signed the and relevant , and other agreements. According
to those agreements, TKL should purchase products from Xinda. TKL rejected to pay for the purchase and terminated those
agreements due to the poor quality products from Xinda. On 23 December 2011, Xinda lodged petition for civil litigation to
the Intermediate People’s Court of Zhangzhou for the order of Intermediate People’s Court of Zhangzhou that TKL pay for
purchase from Xinda amounting to USD 479,089.06 (RMB3,071,535.78) immediately together with the liquidated damages
for delay payment and resume performance of the agreement (the value of the unperformed agreement amounting to USD
189,423.25).
On 8 January 2012, TKL lodged counterclaim to the Court claiming that due to unsatisfactory quality of goods supplied by
Xinda, goods supplied by TKL had been returned from clients and orders cancelled, resulting in substantial financial loss
and reputation damage suffered by the TKL. TKL therefore petitioned for the court order for relief of agreement and that
Xinda shall pay to TKL liquidated damage amounting to RMB1 million together with financial loss amounting to
RMB7.6216 million.
Intermediate People’s Court of Zhangzhou made the judgment ([2012] ZMCZ No.8) on 15 August 2013 as follow:
a. TKL should pay goods payments amount USD479,089.06 to plaintiff Xinda within 15 days from the date on which the
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
judgment becomes effective, equivalent to RMB3,071,535.78.
b. Plaintiff Xinda and the third party BoLuo Lianyuan industry Co., Ltd. (hereafter Lianyuan) should jointly pay the
liquidated damage for RMB1,233,399.70 to TKL within 15 days from the date on which the judgment becomes effective.
c. Unperformed 10 orders entered into by TKL, Xinda and Lianyuan are declared cancelled.
d. Reject other claims partitioned by the plaintiff Xinda.
e. Reject other claims partitioned by TKL. After the first judgment, both parties appealed against the judgment.
Higher People's Court of Fujian Province made the final judgment on 15 December 2016 with the following verdict:
a.Verdict c,d,e from the first judgment remains unchanged.
b.Verdict a from the first judgment changed as: TKL should pay goods payments amount RMB2,375,547.92 Xinda within
15 days from the date on which the judgment becomes effective.
c.Verdict b from the first judgment changed as: Xinda and BoLuo Lianyuan industry Co., Ltd. Should jointly pay TKL the
liquidated damage for RMB537,411.84 within 15 days from the date on which the judgment becomes effective.
The flawed motor supplied by Xinda and Lianyuan totaled 103,638, 23,035 of them was picked out in (2012)Zhangminchuzi
Case No.8, the Company conducted another notary pick out on the remaining flawed motors during the second instance,
totaled 80,603. TKL lodged petition for civil litigation on 18 January 2017, based on the judgments from
(2012)Zhangminchuzi Case No.8, TKL asks for the order of that Xinda and Lianyuan return the corresponding goods
payments of the 80,603 flawed motors, along with compensation for other losses caused by this.
Intermediate People’s Court of Zhangzhou made the judgment (2017M06MC No. 110) on 11 June 2018 as follow:
a. The defendant Xinda and Lianyuan should jointly return the goods payments of 80603 motors amounting to
RMB2,435,368.34 to the plaintiff TKL within 15 days from the date on which the judgment becomes effective.
b. The defendant Xinda and Lianyuan should jointly pay the labor cost of RMB873,107.3 generated from checking,
disassembly and sorting of flawed motors and fees of RMB21,955 for preservation and notary of evidence and for
photography and video recording, which totals RMB895,062.3. The litigation fee of RMB33,443 shall be jointly born by the
two defendants. Xinda has filed an appeal. As of the Reporting Period, the case is still pending.
XII. Events after balance sheet date: None
XIII. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
2018.06.30
Item Book balance Bad debt provision
Withdrawal Book value
Amount Proportion(%) Amount
proportion(%)
Accounts receivable
with significant single
amount for which bad 0.00 0.00 0.00 0.00 0.00
debt provision
separately accrued
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2018.06.30
Item Book balance Bad debt provision
Withdrawal Book value
Amount Proportion(%) Amount
proportion(%)
Accounts receivable
withdrawal of bad debt
18,184,974.05 100.00 528,492.16 2.91 17,656,481.89
provision of by credit
risks characteristics:
Portfolio by age 18,093,176.15 99.50 528,492.16 2.92 17,564,683.99
Related party group 91,797.90 0.50 0.00 91,797.90
Accounts receivable
with insignificant
single amount for
0.00 0.00 0.00 0.00 0.00
which bad debt
provision separately
accrued
Total 18,184,974.05 100.00 528,492.16 2.91 17,656,481.89
(Continued)
2018.01.01
Book balance Bad debt provision
Item
Withdrawal Book value
Amount Proportion(%) Amount proportion(
%)
Accounts receivable with
significant single amount for
which bad debt provision
separately accrued
Accounts receivable withdrawal
of bad debt provision of by 21,753,323.81 100.00 1,012,264.73 4.65 20,741,059.08
credit risks characteristics:
Portfolio by age 21,581,665.45 99.21 1,012,264.73 4.69 20,569,400.72
Related party group 171,658.36 0.79 0.00 171,658.36
Accounts receivable with
insignificant single amount for 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Total 21,753,323.81 100.00 1,012,264.73 4.65 20,741,059.08
(Continued)
①Accounts receivable using the age analysis method for measurement of allowance for bad debt
2018.06.30
Aging
Amount Bad debt provision Proportion (%)
Within 1 year 18,076,930.66 512,246.67 2.83
Including: 1-90 days 14,248,138.33 0.00
91-180 days 3,287,253.11 328,725.31 10.00
181-270 days 436,241.22 130,872.36 30.00
271-365 days 105,298.00 52,649.00 50.00
1-2 years 10,600.00 10,600.00 100.00
2-3 years 5,645.49 5,645.49 100.00
Total 18,093,176.15 528,492.16 2.92
②In the groups, accounts receivable using related party method for measurement of allowance for bad debt
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2018.06.30
Item
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 91,797.90 0.00 0.00
Total 91,797.90 0.00 0.00
(2) Bad debt provision withdrawal, reversed or recovered in the Reporting Period
The amount of bad debt provision recoved in the Reporting Period was RMB483,772.57.
(3) Particulars of accounts receivable without actual verification during the Reporting Period
(4) Details of top five accounts receivable in closing balance
The total amount of top five accounts receivables in closing balance summarized by debtors as at the end
of the Reporting Period is RMB18,092,331.15, accounting for 99.49% of the total closing balance of
accounts receivable as at the end of the Reporting Period, the total corresponding closing balance of
allowance for bad debts is RMB528,492.16.
2. Other accounts receivable
(1) Disclosure by classification
2018.06.30
Book balance Bad debt provision
Item Withdrawa
Book value
Proportion l
Amount Amount
(%) proportion
(%)
Other accounts receivable with
significant single amount for 0.00 0.00 0.00 0.00 0.00
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision 2,301,311.69 92.93 33,339.10 1.45 2,267,972.59
according to credit risks
characteristics
Portfolio by age 414,095.53 16.72 33,339.10 8.05 380,756.43
Related party group 1,887,216.16 76.21 0.00 0.00 1,887,216.16
Other accounts receivable with
insignificant single amount for 175,000.00 7.07 0.00 0.00 175,000.00
which bad debt provision
separately accrued
Total 2,476,311.69 100.00 33,339.10 1.35 2,442,972.59
(Continued)
2017.12.31
Item Book balance Bad debt provision
Book value
Proportion Withdrawal
Amount Amount
(%) proportion (%)
Other accounts receivable with
significant single amount for which
bad debt provision separately accrued
Other accounts receivable withdrawn
bad debt provision according to credit
risks characteristics
Portfolio by age 388,868.17 74.95 46,401.10 11.93 342,467.07
Related party group
Other accounts receivable with 130,000.00 25.05 0.00 0.00 130,000.00
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2017.12.31
Item Book balance Bad debt provision
Book value
Proportion Withdrawal
Amount Amount
(%) proportion (%)
insignificant single amount for which
bad debt provision separately accrued
Total 518,868.17 100.00 46,401.10 8.94 472,467.07
(Continued)
①In the groups, other receivable using the age analysis method for measurement of allowance for bad debt
2018.06.30
Aging
Other accounts receivable Bad debt provision Proportion (%)
Within 1 year 382,711.43 1,955.00 0.51
Including: 1-90 days 363,761.43 0.00
91-180 days 18,800.00 1,880.00 10.00
181-270 days 0.00 0.00 0.00
271-365 days 150.00 75.00 50.00
1-2years 31,384.10 31,384.10 100.00
Total 414,095.53 33,339.10 8.05
(2) Bad debt provision withdrawal, reversed or recovered in the Reporting Period
The amount of recovered bad debt provision during the Reporting period was RMB13,062.00.
3. Long-term equity investment
(1) Long-term equity investment
2018.06.30 2017.12.31
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment to the
922,914,701.56 922,914,701.56 922,914,701.56 922,914,701.56
subsidiary
Total 922,914,701.56 922,914,701.56 922,914,701.56 922,914,701.56
(2) Investment to the subsidiary
Withdrawn
Closing
impairment
Investee 2017.12.31 2018.06.30 balance of
Increase Decrease provision in the
impairment
Reporting
provision
Period
TKL 921,914,701.56 921,914,701.56
Xiamen Tsannkuen
Home Appliance 1,000,000.00 1,000,000.00
Design Co., Ltd.
Total 922,914,701.56 0.00 0.00 922,914,701.56
4. Revenues and operating costs
Reporting Period Same period of last year
Item
Revenues Operating costs Revenues Operating costs
Main operations 32,269,461.73 29,744,013.84 29,163,387.63 25,654,159.29
Other operations 24,752,261.23 15,688,587.26 8,772,475.75 1,091,104.50
Total 57,021,722.96 45,432,601.10 37,935,863.38 26,745,263.79
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Investment income
Item Reporting Period Same period of last year
Long-term equity investment income
33,547,555.83 30,310,250.78
accounted by cost method
Total 33,547,555.83 30,310,250.78
XIV. Supplementary materials
1. Items and amounts of extraordinary gains and losses
Item Amount Explanation
Mainly was gains from
Gains or losses arising from disposal of non-current assets(including assets 376,183.60
impairment withdrawn had been offset) disposal of 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 1,845,853.00
the 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
foreign exchange
Gain/loss from change of fair value of transactional assets and liabilities, and
contract investment,
investment gains from disposal of transactional financial assets and liabilities -57,499.02
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 2,146,598.18
Project confirmed with the definition of non-recurring gains and losses and
losses
Less: Income tax effects 745,230.24
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2018 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Amount Explanation
Minority interests effects (after tax) 698,547.26
Total 2,867,358.26
Note: Extraordinary gains or losses event use “+”express revenue and income, “-” express loss and
expenditure.
The Company recognised non-recurring categories of activities in accordance with the Explanatory
Announcement regarding Information Disclosure by Publicly Listed Company No. 1 - Non-recurring
Profit and Loss (Zhengjianhui Gonggao [2008] No.43).
2. Yield rate of net assets and earnings per share
Weighted average EPS (Yuan/share)
Profit as of Reporting Period
yield rate of net assets% EPS-basic EPS-diluted
Net profit attributable to common shareholders of the -4.73 -0.15 -0.15
Company
Net profit attributable to common shareholders of the -5.22 -0.17 -0.17
Company after deduction of non-recurring profit and loss
149
