2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2018 ANNUAL REPORT
March 2019
1
2018 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 information,
misleading statements or material omissions. And they shall be jointly and severally liable for that.
All directors attended the board meeting for reviewing this Report.
The Company’s profit distribution preplan upon review and approval of this board meeting: Based
on the total 185,391,680 shares, a cash dividend of RMB0.4 (tax included) will be distributed for
every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be
turned into share capital.
Pan Zhirong, company principal, and 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.
Any forward-looking statement such as those involving the future operational plans in this Report
shall not be considered as virtual promises of the Company to investors. And investors are kindly
reminded to pay attention to possible risks.
This Report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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2018 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...................................................................................9
Section IV. Performance Discussion & Analysis......................................................11
Section V. Significant Events......................................................................................27
Section VI. Change in Shares & Shareholders........................................................ 39
Section VII. Preference Shares.................................................................................. 44
Section VIII. Directors, Supervisors, Senior Management Staff & Employees...44
Section IX. Corporate Governance...........................................................................52
Section X. Corporate Bonds.......................................................................................58
Section XI. Financial Report..................................................................................... 59
Section XII. Documents Available for Reference.................................................... 59
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Content
Xiamen Tsann Kuen, MCKB,
Refers to Tsann Kuen (China) Enterprise Co., Ltd.
Company, the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics
South Port Electronics, TKN Refers to
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
TKEI 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.
Yuan Refers to RMB Yuan
Major Risk Warning
Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn are designated by the Company as the
media for information disclosure. All information of the Company shall be subject to what is
disclosed by the Company on the said media. And Investors are kindly reminded to pay attention to
possible investment risks.
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information of the Company
Stock name TKC-B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Company name in
厦门灿坤实业股份有限公司
Chinese
Abbr. 闽灿坤
Company name in
TSANNKUEN(CHINA) ENTERPRISE CO. ,LTD.
English
Abbr. TKC
Legal representative Pan Zhirong
Registered address No.88 Xinglong Road, Huli Industrial Park, Xiamen, Fujian Province, P.R. China
Zip code 361006
TSANN KUEN Industrial Park, Taiwanese Investment Zone, Zhangzhou, Fujian
Office address
Province
Zip code 363107
Internet website www.eupa.com
Email address mm_sun@tkl.tsannkuen.com
II. Contact us
Board Secretary Securities Representative
Name Sun Meimei Dong Yuanyuan
TSANN KUEN Industrial Park, TSANN KUEN Industrial Park,
Contact address Taiwanese Investment Zone, Zhangzhou, Taiwanese Investment Zone,
Fujian Province Zhangzhou, Fujian Province
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail address mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com
III. About information disclosure and where this Report is placed
Securities Times (domestic), Ta Kung
Newspapers designated by the Company for information disclosure
Pao (HK) (overseas)
Internet website designated by CSRC for disclosing this Report www.cninfo.com.cn
TSANN KUEN Industrial Park,
Where this Report is placed Taiwanese Investment Zone,
Zhangzhou, Fujian Province
IV. Changes in the registered information
Credibility code 91350200612002170L
Changes of the main business since listing No changes
Changes of the controlling shareholder No changes
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
V. Other information
The CPAs firm hired by the Company:
Name Ruihua Certified Public Accountants LLP
9/F, West Tower of China Overseas Property Plaza, Building 7,
Office address
NO.8,Yongdingmen Xibinhe Road, Dongcheng District, Beijing
Signing accountants Ou Changxian and Ren Xiaochao
Sponsor engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate accounting data of previous years?
√ Yes □ No
Unit: RMB Yuan
2017 Increase/decre
ase of current
Item 2018 2016
year over last
Original Restated year (%)
Operating revenue 1,790,062,803.08 1,872,746,942.25 1,872,746,942.25 -4.42 1,813,281,222.42
Net profit attributable to shareholders of
11,831,622.78 26,077,139.64 65,759,896.04 -82.01 48,229,497.36
the Company
Net profit attributable to shareholders of
the Company before extraordinary gains -968,285.11 6,817,000.41 6,817,000.41 -114.20 36,456,289.17
and losses
Net cash flows from operating activities 106,076,060.82 69,715,253.63 97,869,204.63 8.39 108,167,920.06
Basic EPS (RMB Yuan/share) 0.06 0.14 0.35 -82.86 0.26
Diluted EPS (RMB Yuan/share) 0.06 0.14 0.35 -82.86 0.26
Weighted average ROE (%) 1.82 4.29 10.46 -8.64 7.95
Increase/decre
ase of current
As at 31 Dec. As at 31 Dec. 2017 As at 31 Dec.
Item year-end than
2018 2016
last year-end
Original Restated (%)
Total assets 1,842,514,750.64 1,778,825,153.51 1,781,628,366.79 3.42 1,697,533,004.99
Net assets attributable to shareholders of
648,801,684.35 610,814,327.77 650,497,084.17 -0.26 610,856,271.31
the Company
Notes to the retrospective adjustments to the 2017 annual consolidated financial statements:
The compensation for government-required relocation received in 2017 by the Company’s controlled
sub-subsidiary Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (TKS) were originally accounted for as per the
relevant rules in Item 4 of Interpretation No. 3 of the Accounting Standards for Business Enterprises. For further
information, please refer to the Announcement on Controlled Sub-Subsidiary TKS Signing Land Expropriation
Compensation Agreement dated 14 September 2017 and the Announcements on Progress on Controlled
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Sub-Subsidiary TKS Signing Land Expropriation Compensation Agreement dated 1 November, 17 November and
30 December 2017 on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn.
The said case should be accounted for as a disposal of non-current assets according to the application guidelines
for the Accounting Standards No. 16 for Business Enterprises—Government Subsidies issued by the Ministry of
Finance in July 2018. Since this was an accounting policy change, the comparative financial data of 2017 should
be retrospectively restated. For further information, please refer to the Announcement on Proposal on Accounting
Policy Change dated 20 December 2018 and the Announcement on Resolutions of the First Extraordinary General
Meeting of 2019 dated 12 January 2019 on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn.
Total shares of the Company as at closure of the last trading day before the disclosure of this Report:
Total shares of the Company as at closure of the last trading day before the disclosure of this
185,391,680
Report (share)
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.06
VII. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference in the Reporting Period.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference in the Reporting Period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Inapplicable
VIII. Financial highlights by quarter
Unit: RMB Yuan
Item Q1 Q2 Q3 Q4
Operating revenue 319,364,654.64 372,145,850.59 598,301,806.56 500,250,491.29
Net profit attributable to shareholders of the
-21,878,234.79 -6,463,451.98 23,423,865.70 16,749,443.85
Company
Net profit attributable to shareholders of the
-27,785,628.47 -3,423,416.56 21,282,856.64 8,957,903.28
Company before extraordinary gains and losses
Net cash flows from operating activities -8,842,593.74 -110,978,976.75 54,338,701.73 171,558,929.58
Any material difference between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports?
□ Yes √ No
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2018 2017 2016 Note
Gain/loss on the disposal of non-current assets (including
975,770.89 82,171,778.72 313,735.43
the offset part of the asset impairment provisions)
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
4,903,720.34 35,799,249.27 3,768,118.00
business or granted at certain quotas or amounts
according to the government’s unified standards
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
Gain/loss on 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 -2,204,397.97
period-begin to combination date
Gain/loss on contingent events irrelevant to the
Company’s normal business
Gains on sale
of forward
Gains and losses on change in fair value from tradable exchange
financial assets and tradable financial liabilities, as well contracts, fair
as investment income from disposal of tradable financial value changes,
10,464,696.66 23,997,400.35 11,149,556.06
assets and tradable financial liabilities and financial wealth
assets available for sales except for effective hedging management
related with normal businesses of the Company products and
other current
assets
Impairment provision reversal of accounts receivable on
which the impairment test is carried out separately
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
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2018 2017 2016 Note
regulations
Custody fee income when entrusted with operation
Non-operating income and expense other than the above 3,563,106.86 -2,584,301.97 5,317,651.16
Other gain and loss items that meet the definition of an
extraordinary gain/loss
Less: Income tax effects 3,099,747.35 28,968,380.43 2,724,991.75
Minority interests effects (after tax) 4,007,639.51 51,472,850.31 3,846,462.74
Total 12,799,907.89 58,942,895.63 11,773,208.19
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
Financial assets measured
by fair value with changes Down 63.30% from the opening amount of the year, mainly because of smaller
in fair value recognised in assessed gains on forward forex contracts
profit or loss
Down 75.60% from the opening amount of the year, mainly because last year saw a
Advances to suppliers prepayment for aluminum ingots, while there was no such prepayment in the current
year
Fixed assets No material change
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Main assets Material change
Down 56.51% from the opening amount of the year, mainly because of the
Construction in progress
acceptance of the site preparation and building repair work in the current year
Intangible assets No material change
Up 83.65% from the opening amount of the year, mainly because of more building
Long-term deferred charge
repair work in the current year
Down 83.53% from the opening amount of the year, mainly because of the
Other non-current assets acceptance in the current year of the die-casting equipment that had been prepaid for
before the year
2. Main assets overseas
√ Applicable □ Inapplicable
Unit: RMB Yuan
Any
Measures In the
major
taken to Compan
Operatio impair
Asset Nature Value Location protect Earnings y’s net
n status ment
asset assets
risk or
safety (%)
not
Pt.Star
Periodic
Comgistic Investment 131,945,515.79 Indonesia Normal -21,639,003.36 20.34 No
review
Indonesia
Tsannkuen
Edge Equity Periodic
22,125,346.21 Taiwan Normal -5,348,092.34 3.41 No
Intelligence acquisition review
Co., Ltd.
Other
N/A
information
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 55 patents in R&D, including 13 invention patents, 8 utility model patents
and 34 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.
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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. In view of the rising consumer needs 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 make
use of external advanced design resources and platforms as a way to build our own unique innovative industrial
eco-system.
Section IV. Performance Discussion & Analysis
I. Business review for the reporting period
For the reporting period, we achieved operating revenues of RMB1.790 billion, down 4.42% over RMB1.873
billion of last year, and net profit of RMB12 million, down 82.01% over RMB66 million of last year. The net
profit decreased mainly because operating revenues and gross profit were affected by factors such as the
weakening American and European markets, customers’ stock control, product transitions, rising costs of raw
materials and labor, as well as allowances for inventory and fixed asset valuation loss. Another reason is that the
compensation for a government-required relocation received in 2017 is retrospectively restated due to accounting
policy changes, while there is no such case in the year under review.
II. Main business analysis
1. Overview
We will carry on with the simplification and transformation strategies. We are checking the structures and
functions of our departments of development, procurement, manufacturing and marketing to make sure the
implementation of lean production. Meanwhile, new raw materials, techniques and manufacturing equipment are
being brought in to increase our yield rate and production efficiency. Upholding the strategy of innovation-driven
transformation and strengthening execution in innovation, output and differentiation to deal with competition, we
aim to provide products with multi-functions, high added value and high quality for customers.
As the smart control technology grows more mature and is being used more widely and people’s living standards
are improving, they are looking for better home appliances, which makes the rapid development of smart
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
appliances a must. Consumers are no longer looking for merely the functions of the appliances, but also a quality
in the appliances to improve their living standards. The household appliance industry is all about how to help
people live a better life. Only by providing convenient, smart, health-improving and delicious-food-cooking
solutions, can a household appliance manufacture keeps on developing.
Additionally, the continuous recovery of the overseas markets and the rapid growth in the domestic market are
expected to boost demand for small home appliances. Through being more intimate with customers and creating
more cost efficiency, we create market demand by developing smart-home and low-carbon products, which
effectively expands our market share and strengthens our operating revenue and profitability.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2018 2017
Item In total In total +/-%
Amount operating Amount operating
revenues (%) revenues (%)
By segments
Small home appliance
1,718,490,228.47 96.00 1,809,802,201.43 96.64 -5.05
manufacturing
Other services 71,572,574.61 4.00 62,944,740.82 3.36 13.71
Total 1,790,062,803.08 100.00 1,872,746,942.25 100.00 -4.42
By products
Cooking utensils 1,052,786,500.79 58.81 1,161,125,429.84 62.00 -9.33
Everyday home appliances 403,539,698.93 22.54 461,813,961.36 24.66 -12.62
Tea and coffee makers 244,127,431.45 13.64 176,410,642.73 9.42 38.39
Other products 18,036,597.30 1.01 10,452,167.50 0.56 72.56
Other services 71,572,574.61 4.00 62,944,740.82 3.36 13.71
Total 1,790,062,803.08 100.00 1,872,746,942.25 100.00 -4.42
By areas
Australia 90,256,702.79 5.04 101,639,152.71 5.43 -11.20
Africa 17,546,205.71 0.98 19,130,388.79 1.02 -8.28
America 725,862,556.23 40.55 719,844,144.74 38.44 0.84
Europe 481,253,682.92 26.89 553,273,795.67 29.54 -13.02
Asia 475,143,655.43 26.54 478,859,460.34 25.57 -0.78
Total 1,790,062,803.08 100.00 1,872,746,942.25 100.00 -4.42
(2) Segments, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Is the Company subject to the disclosure requirements for special industries?
No
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Operating Cost of
Gross profit
Gross profit revenue: sales: +/-%
Item Operating revenue Cost of sales margin: +/-%
margin (%) +/-% from from last
from last year
last year year
By segments
Small home appliance
1,718,490,228.47 1,530,715,289.56 10.93 -5.05 -2.48 -2.34
manufacturing
Other services 71,572,574.61 32,869,228.63 54.08 13.71 -5.02 9.06
Total 1,790,062,803.08 1,563,584,518.19 12.65 -4.42 -2.54 -1.68
By products
Cooking utensils 1,052,786,500.79 939,379,669.10 10.77 -9.33 -5.84 -3.31
Everyday home appliances 403,539,698.93 369,906,874.98 8.33 -12.62 -11.03 -1.64
Tea and Coffee makers 244,127,431.45 210,594,137.63 13.74 38.39 41.59 -1.95
Other products 18,036,597.30 10,834,607.85 39.93 72.56 42.72 12.56
Other services 71,572,574.61 32,869,228.63 54.08 13.71 -5.02 9.06
Total 1,790,062,803.08 1,563,584,518.19 12.65 -4.42 -2.54 -1.68
By areas
Australia 90,256,702.79 76,657,318.46 15.07 -11.20 -8.38 -2.61
Africa 17,546,205.71 15,000,882.37 14.51 -8.28 -5.04 -2.91
America 725,862,556.23 647,040,779.11 10.86 0.84 0.82 0.01
Europe 481,253,682.92 429,505,550.95 10.75 -13.02 -11.12 -1.91
Asia 475,143,655.43 395,379,987.30 16.79 -0.78 4.09 -3.88
Total 1,790,062,803.08 1,563,584,518.19 12.65 -4.42 -2.54 -1.68
(3) Are the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No
Unit: Unit
Industry Item 2018 2017 YoY +/-%
Sales volume 16,709,835 17,075,853 -2.14
Small home appliance manufacturing Output 17,349,834 16,776,964 3.41
Stock 1,610,971 970,972 65.91
Reasons for any over-30% YoY movement of the data above:
√ Applicable □ Inapplicable
It is because of customers’ order plans.
(4) Execution of signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Breakdown of cost of sales
Unit: RMB Yuan
2018 2017
Item In total YoY +/-%
In total cost
Amount Amount cost of
of sales (%)
sales (%)
By segments
Small home appliance manufacturing 1,530,715,289.56 97.90 1,569,714,013.29 97.84 -2.48
Other services 32,869,228.63 2.10 34,607,522.09 2.16 -5.02
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total 1,563,584,518.19 100.00 1,604,321,535.38 100.00 -2.54
By products
Cooking utensils 939,379,669.10 60.08 997,633,196.79 62.19 -5.84
Everyday home appliances 369,906,874.98 23.66 415,750,737.97 25.91 -11.03
Tea and Coffee makers 210,594,137.63 13.47 148,738,310.04 9.27 41.59
Other products 10,834,607.85 0.69 7,591,768.49 0.47 42.72
Other services 32,869,228.63 2.10 34,607,522.09 2.16 -5.02
Total 1,563,584,518.19 100.00 1,604,321,535.38 100.00 -2.54
(6) Whether there were changes of the consolidation scope during the reporting period
√ Yes □ No
Subsidiary Xiamen Tsannkuen Home Appliance Design Co., Ltd. (“TKCD”) was officially de-registered in
December 2018 and has been excluded from the Company’s consolidated financial statements since the
de-registration day. TKCD’s revenues, costs and expenses, as well as profit before the de-registration day are
included into the consolidated income statement, and its cash flows before that day into the consolidated cash flow
statement.
Tsann Kuen (Zhangzhou) Investment Co., Ltd. (“TKI”) was incorporated by the Company’s controlled subsidiary,
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. in June 2018 and has been included in the Company’s consolidated
financial statements since the incorporation day (capital not paid-in as of 31 December 2018).
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
□ Applicable √ Inapplicable
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Unit: RMB Yuan
Total sales of the top 5 customers 842,993,643.21
Ratio of the total sales of the top 5 customers to the annual total sales (%) 47.09
Ratio of the total sales of related parties among the top 5 customers to the annual total
0.00
sales (%)
Information of the top 5 customers of the Company
Unit: RMB Yuan
Serial No. Name of customer Sales amount Proportion in annual total sales
1 No. 1 233,249,066.54 13.03
2 No. 2 220,911,246.54 12.34
3 No. 3 156,746,864.89 8.76
4 No. 4 137,473,365.59 7.68
5 No. 5 94,613,099.65 5.28
Total 842,993,643.21 47.09
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
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2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Total purchase from the top 5 suppliers 202,659,251.76
Ratio of the total purchase from the top 5 suppliers to the annual total purchase (%) 14.98
Ratio of the total purchase from related parties among the top 5 suppliers to the annual total
2.50
purchase (%)
Information of the top 5 suppliers of the Company
Unit: RMB Yuan
Ratio to the annual purchase
No. Name of supplier Purchase amount
amount (%)
1 No. 1 65,508,216.84 4.84
2 No. 2 51,367,558.21 3.80
3 No. 3 33,879,904.28 2.50
4 No. 4 26,868,066.44 1.99
5 No. 5 25,035,505.99 1.85
Total 202,659,251.76 14.98
Notes of the other situation of the major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB Yuan
YoY +/-
Item 2018 2017 Notes of the significant changes
(%)
Taxes and
9,755,620.72 11,269,791.37 -13.44
surcharges
Selling expenses 62,065,999.35 69,553,841.59 -10.77
Administrative
84,670,918.17 85,495,214.63 -0.96
expenses
R&D expenses 68,706,795.36 71,125,828.45 -3.40
-11,779,703.1 Mainly due to the gains on the current
Finance costs 22,622,958.63 -152.07
8 unimplemented exchange evaluation.
Loss on asset Mainly due to the provisions made for
21,499,075.27 10,915,961.18 96.95
impairment inventory falling price
Mainly due to the increase of government
Other income 4,601,286.14 2,809,085.33 63.80
subsidy in the Reporting Period.
Mainly due to the increase of the delivered
Investment income 12,949,846.66 20,071,550.35 -35.48
forward forex losses.
Mainly due to the decrease of the evaluation
Gain from changes
-2,485,150.00 3,925,850.00 -163.30 income on the current forward exchange’s
in fair value
contract.
Mainly due to the assets disposals for the
Gain on disposal of
975,770.89 82,171,778.72 -98.81 policy relocation of Shanghai Tsann Kuen of
non-current assets
last year.
Mainly due to the assets disposals for the
Non-operating
4,027,812.46 36,663,710.87 -89.01 policy relocation of Shanghai Tsann Kuen of
income
last year.
15
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
YoY +/-
Item 2018 2017 Notes of the significant changes
(%)
Mainly due to the assets disposals for the
Non-operating
162,271.40 6,257,848.90 -97.41 policy relocation of Shanghai Tsann Kuen of
expenses
last year.
Mainly due to the assets disposals for the
Income tax policy relocation of Shanghai Tsann Kuen of
-1,278,631.37 23,062,799.31 -105.54
expenses last year, and the recognition of deferred
income tax liabilities.
4. R&D investment
√ Applicable □ Inapplicable
The Company has always been adhering to the mission to create a world-class life industry that taking design
integration as core. The Company focuses on its products on the rigid demands of customers and cooperates with
external excellent design resources, industry-academy cooperation and expert advisors, to build a highly
competitive industrial ecological chain. At the same time, with continuously increasing investment in innovation
and research & development and based on consideration to the existing traditional domestic appliance life industry,
the company gradually develops and applies advanced innovative technologies such as IOT/AI, to lead a new
lifestyle with convenient consumption mode and intellectualization.
R&D investment of the Company
Item 2018 2017 +/- (%)
Number of the R&D personnel (person) 351 438 -19.86
Ratio to the R&D personnel (%) 7.96 10.45 -2.49
Investment amount of the R&D (RMB Yuan) 68,706,795.36 71,125,828.45 -3.40
Ratio of the R&D investment to the operating
3.84 3.80 0.04
income (%)
Amount of the capitalized R&D investment (RMB
0.00 0.00 0.00
Yuan)
Ratio of the capitalized R&D investment to the
0.00 0.00 0.00
R&D investment
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
income
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation
□ Applicable √ Inapplicable
16
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Cash flow
Unit: RMB Yuan
Item 2018 2017 +/- (%)
Subtotal of cash inflows from operating activities 2,009,487,767.54 2,157,541,365.15 -6.86
Subtotal of Cash outflows for operating activities 1,903,411,706.72 2,059,672,160.52 -7.59
Net cash flows from operating activities 106,076,060.82 97,869,204.63 8.39
Subtotal of cash inflows from investing activities 1,152,917,713.28 1,154,268,254.04 -0.12
Subtotal of cash outflows from investing activities 1,326,181,779.11 1,389,159,886.10 -4.53
Net cash flows from investing activities -173,264,065.83 -234,891,632.06 26.24
Subtotal of cash inflows from financing activities 115,283,816.25 225,281,982.59 -48.83
Subtotal of cash outflows from financing activities 164,904,882.95 243,470,305.41 -32.27
Net cash flows from financing activities -49,621,066.70 -18,188,322.82 -172.82
Net increase of cash and cash equivalents -115,889,665.41 -173,813,768.65 33.33
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
Net cash flows from financing activities decreased by 172.82% from last year mainly due to the decrease of
short-term borrowings inflow.
Reason for any big difference between the net operating cash flow and the net profit for the reporting period
√ Applicable □ Inapplicable
Mainly due to the influences of listing items, such as assets impairment losses and depreciation, on the financial
statement,
III. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the total
Recurring
Items Amount profits amount Notes of the causes
or not
(%)
Investment gains from finance
Investment income 12,949,846.66 112.93 Yes
products
Assessment losses of the
Gain from changes in
-2,485,150.00 -21.67 undelivered forward forex of Yes
fair value
investment derivatives.
Loss on asset
21,499,075.27 187.49 Inventory falling price loss Yes
impairment
Gain on disposal of
975,770.89 8.51 Fixed assets’ disposal income Yes
non-current assets
Other income 4,601,286.14 40.13 Government subsidy Yes
Money from the compensation for
Non-operating income 4,027,812.46 35.13 Yes
materials by customers
Non-operating
162,271.40 1.42 Donation Yes
expenses
17
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
December 31, 2018 December 31, 2017
Reason for
Change in
any
Item As a As a percentage
significant
percentag percentage (%)
Amount Amount change
e of total of total
assets (%) assets (%)
Monetary funds 469,692,295.47 25.49 564,381,960.88 31.68 -6.19 No
Accounts
280,596,130.89 15.23 270,052,420.89 15.16 0.07 No
receivable
Inventories 243,262,500.58 13.20 195,711,505.29 10.98 2.22 No
Investment
25,014,648.31 1.36 32,125,408.51 1.80 -0.44 No
properties
Fixed assets 191,073,302.46 10.37 173,361,312.05 9.73 0.64 No
Construction in
895,756.17 0.05 2,059,623.18 0.12 -0.07 No
progress
Short-term
10,432,044.21 0.57 10,832,951.89 0.61 -0.04 No
borrowings
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Profit/loss on Cumulative Impairment
fair value fair value provided in Purchased in Sold in this
Opening Closing
Item changes in changes this this reporting reporting
balance balance
this reporting charged to reporting period period
period equity period
Financial assets
1. Financial assets at fair value
through profit/loss (excluding 0.00 0.00 0.00 0.00 0.00 0.00 0.00
derivative financial assets)
2. Derivative financial assets 3,925,850.00 -2,485,150.00 0.00 0.00 337,256,650.00 296,102,150.00 1,440,700.00
3. Available-for-sale financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00
assets
Subtotal of financial assets 3,925,850.00 -2,485,150.00 0.00 0.00 337,256,650.00 296,102,150.00 1,440,700.00
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 3,925,850.00 -2,485,150.00 0.00 0.00 337,256,650.00 296,102,150.00 1,440,700.00
Financial liabilities 0.00 0.00 0.00 0.00 258,753,100.00 258,753,100.00 0.00
18
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Any significant changes in the major assets’ measurement attributes of the Company in the Reporting Period?
□ Yes √ No
3. Restricted asset rights as of the end of this reporting period
□ Applicable √ Inapplicable
V. Investments made
1. Total investments made
√ Applicable □ Inapplicable
Unit: RMB Yuan
Investments made in this reporting
Investments made in the prior year +/-%
period
44,632,189.00 10,977,497.80 306.58
2. Significant equity investments made in this reporting period
□ Applicable √ Inapplicable
3. Significant non-equity investments ongoing in this reporting period
□ Applicable √ Inapplicable
4. Financial investments
(1) Securities investments
□ Applicable √ Inapplicable
19
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
√ Applicable □ Inapplicable
Unit: RMB’0,000
Ratio of
investment
amount at
Type of Investment
Investment the end of
investment amount at Pursed in Sold in Amount Actual
Related-party Initial amount the period to
Operating in Commencement Termination the this this provided profit/loss
Relation transaction investment at the end the
party derivative date date beginning reporting reporting for for the
or not amount of the Company's
financial of the period period impairment period
period net asset at
instruments period
the end of
the period
(%)
Forward
Bank Non-related No 78,263.77 01/01/2018 12/31/2018 18,662.79 59,600.98 55,485.53 22,778.24 35.11 -466.36
forex
Total 78,263.77 18,662.79 59,600.98 55,485.53 22,778.24 35.11 -466.36
Source of investment funds All from the Company's own funds
Lawsuits No lawsuits
Disclosure date of the announcement about the board’s
03/12/2013
consent for the investment
Disclosure date of the announcement about the general
05/18/2013
meeting’s consent for the 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
Risk analysis and risk control measures for positions held operation of the Company in the coming year.
in derivatives in this reporting period (including but not (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute the
limited to market risk, liquidity risk, credit risk, business operation and risk management mechanisms for derivative investment.
operational risk, legal risk, etc.) (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel for
investment decision-making, business operation, risk control, etc. It shall also inquire and compare among various markets and products.
Besides, it shall strictly control the variety and size of derivative investment and try to choose derivative trading on exchange as much as
possible.
(4) Periodic evaluation: Derivative investments shall be evaluated at least twice for a month and the evaluation report shall be sent to a
high-ranking executive authorized by the Board of Directors. And a derivative investment report shall be sent to the Board of Directors annually.
The Company and its subsidiaries only need to submit to the Board of Directors of the subsidiaries.
(5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment amount.
20
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Ratio of
investment
amount at
Type of Investment
Investment the end of
investment amount at Pursed in Sold in Amount Actual
Related-party Initial amount the period to
Operating in Commencement Termination the this this provided profit/loss
Relation transaction investment at the end the
party derivative date date beginning reporting reporting for for the
or not amount of the Company's
financial of the period period impairment period
period net asset at
instruments period
the end of
the period
(%)
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
(1) Losses on delivered derivatives in the Reporting Period were RMB2.1785 million, and assessed losses on those undelivered were
Changes in market price or fair value of derivatives RMB2.4851 million, among which assessed gains on those undelivered forward forex of derivatives were RMB3.9259 million last year.
invested in this reporting period (specific methods used (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last
and relevant assumption and parameter settings shall be trading day of the month.
disclosed for analysis of fair value of derivatives) (3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount undue
by the month*the estimated exchange rate and the currency amount when bought in.
Significant changes in the Company’s accounting policies
and specific accounting principles for derivatives in this No significant changes
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
concerning the Company’s derivatives investment and risk mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation and
control is in compliance with relevant laws and regulations, with the risks controllable.
5. Use of funds raised
□ Applicable √ Inapplicable
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Inapplicable
2. Sale of major equity interests
□ Applicable √ Inapplicable
21
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VII. Main controlled and joint stock companies
√ Applicable □ Inapplicable
Main subsidiaries and joint stock companies with over 10% effect on the Company’s net profit
Unit: RMB Yuan
Relationship
Main business scope Operating
Company name with the Registered capital Total assets Net assets Operating profit Net profit
revenues
Company
Tsann Kuen (Zhangzhou) Enterprise Co., Small home appliance
Subsidiary USD160 million 2,035,670,423.03 1,281,779,150.22 1,673,115,731.37 35,324,016.33 37,693,864.99
Ltd. manufacturing
Tsann Kuen China (Shanghai) Enterprise Small home appliance
Sub-subsidiary USD40 million 192,689,888.67 162,812,406.17 880,007.16 -3,392,227.72 -2,709,070.17
Co., Ltd. manufacturing
Small home appliance
Pt.Star Comgistic Indonesia Sub-subsidiary USD30 million 131,945,515.79 92,013,043.57 120,588,666.38 -22,320,596.70 -21,639,003.36
manufacturing
Products R&D and
Tsannkuen Edge Intelligence Co., Ltd. Sub-subsidiary NTD300 million 22,125,346.21 17,858,937.66 10,234,356.91 -5,380,972.84 -5,348,092.34
design
Subsidiaries obtained or disposed in this reporting period
√ Applicable □ Inapplicable
Name Method Impacts on overall production and performance
Xiamen Tsannkuen Home Appliance Design Co.,
Cancelled Net profits of the Company in this Reporting Period was RMB15,303.99.
Ltd.
Tsann Kuen (Zhangzhou) Investment Co., Ltd. New established No impacts on net profits of the Company in this Reporting Period
VIII. Structured bodies controlled by the Company
□ Applicable √ Inapplicable
22
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Outlook of the Company’s future development
(I) Strategies for future development
1. Strategy upgrading for main customers, and expansion for new strategic customers
To construct a sound platform of sales service and offer the structured solution plan to the customers standing in
their position, to make real gene modification; cost leadership is not the core strategy of an enterprise, is the
foundation of an enterprise. The true core strategy for an enterprise is to create more intimacy with customers,
provide products that satisfy customers’ needs and build up differentiate competitive edges.
2. Lean factory management meeting the demands of strategic customers
Manufacture will be service-oriented to create value to serve consumers, promote new management models for
plants and regions, and focus on professional services, thus to win satisfactions of consumers. At the same time,
strategic partnerships in the supply chain will be built and advanced automation equipment will be introduced.
More important, a manufacturing management information system will be introduced based on big data and the
Internet of Things.
3. Strengthen of overseas manufacturing deployment and enhancement of manufacturing competitiveness
In view of the rapid growth of emerging market economies and the rise of the peripheral economies in Southeast
Asia, the Company is accelerating the integration of its supply chain in 2018 through the cost advantages of its
overseas production bases, laying an overseas manufacturing base in Indonesia and a new field for transformation.
This police is highly integrated with the "One Belt, One Road" strategic area, taking the lead in seizing
opportunities for overseas market development and deepening international operations. In the future, the
Company will continue to actively expand overseas markets, focus on key international regions, products and
resources so as to achieve greater and stronger growth.
4. Strategy of domestic market development
Owing to the reforming of the strategy of domestic market development, the development main spindle of the
future products will aim at China, which is the world largest home appliances market as the springboard; and will
spread out the brand planning and marketing which focuses on coffee makers, home helpers and green energy
saving. Strengthen the China brand strategy.
With the core of innovation and years of R&D achievements, the Company possesses the world's largest R&D
team. Two main series of EUPA brand will be launched: the first one is the professional black series of small
western appliances. This market-challenging innovation small appliance with innovative technology and
intelligent manufacturing process will bring real experience of new wisdom of home life to consumers through the
use of big data and IOT (Internet of Things) links. The other one is the cost-effective user-friendly yellow series
focusing on experiences of fast, convenient, high-quality products, which will bring consumers cooking passions
and happiness.
(II) Industry development trend and outlook of the market
As the wireless, IT and intelligent era comes, the trend of intelligent home appliances boosts intelligence,
healthiness, fashion, combination and culture and technology, cross-field integration of design, innovation and
23
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
marketing modes and brand concepts, and to count in the business development of e-commerce. The market that
the Company will face in 2019 has the following features:
1. In terms of the main export markets, China exports more household appliances to developed countries than
emerging economies and the US is still the biggest market for China’s export of household appliances. In 2019,
the global economy will continue to grow, as well as the developed economies in America and Europe, which will
provide bigger export markets for China. The export growth potential brought by the new demand from emerging
economies will become a hotspot for the growth of the small household appliance market in the future.
2. China is still considered a strong market. The home appliance industry of China has entered an era featuring
brand as the winning trump. Different from the traditional home appliances, the small home appliances are still in
a developing stage in terms of sale. As the way of spending changes, more new products enter the market and old
appliances are being renewed, domestic demand for small home appliances will soar and the industry will enjoy
good prospects. Actually, it is expected that the coming few years will be a golden period for the development of
the small home appliance market of China.
3. New urbanization gives us a fresh view about China’s city pattern and direction of future development.
Growing, positive cities at the second and third tiers with strong purchasing power are becoming high-end
markets in an unprecedented speed. We believe the “new first-tier markets” growing from the markets at the
second and third tiers will make a strong engine for China’s economic growth in the future.
4. Due to the impact of e-commerce, the physical stores of household appliances are experiencing declining
revenue with a falling consumer demand. What’s more, considerately growing rent and labor cost put more
pressure on these offline stores. Therefore, e-commerce has become an important strategy for home appliance
makers and sellers. Stimulated by the e-commerce strategy, online stores have home appliances in more varieties
to offer, with improving logistics and after-sales services. Meanwhile, with an increasingly mature online
shopping concept of consumers, the online market of home appliances expands quickly.
5. As more and more strong as well as large appliance brands and international brands are stepping into the small
home appliance industry, competition will become fiercer. The small home appliance business will step in the
operation of professional, systematic and branding, in order to fight for more market shares. Depending on its
capital and R&D advantages, it will gradually eliminate a batch of small brand enterprises which are
comparatively feeble, lack of research and cost advantage and the market networks management advantage. It is
noteworthy that, under the dual demand stimulus of the improvement of the consumers’ consciousness of energy
conservation and environmental protection as well as the purchasing of the living quality, the consumption of old
for new service of the future urban market will put more emphasis on the higher technical content and better
quality high-end home appliances, which will offer powerfully market power to the industrial upgrading of the
electric utility of our nation.
6. Intelligent and green small household appliances will enter serialization and mass production. Considering the
stricter international environmental standards, China has launched a set of energy efficiency standards, strongly
promoting the popularization of energy-saving products through tough measures including price reform and
taxation. Small household appliances with energy-saving characteristic will become the mainstream in the sector
sooner or later. And the Company also focuses its efforts on healthy, energy-saving and green appliances.
(III) Future risk analysis
24
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1. International
Influenced by Sino-US Trade War, parts of the countries began to adopt trade protectionism and 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.
Influenced by the slowly recovery of the global economy, the enlarge of the exchange rate fluctuation, the enhance
of the domestic comprehensive cost, and with global inflation pressure that cannot be eased in the short run and
more and more non-economic obstacles from western countries in their trading with China, foreign trade of China
will face, without doubt, a more complicated environment and more serious conflicts in 2019.
As for the risks of the culture difference: the culture difference between China and other countries affect the
difference process of the sales process of the electrical home appliances at different degrees and different aspects,
while the fusion of the culture and the adaptation of the products are the two key elements of the success of the
enterprises and to blend in the cultural environment of different regions as well as to reduce the cost expenses
brought by the unsteady elements as much as possible is the important content of the overseas expansion of the
enterprises.
2. Domestic
Y2019 will be the key year of the entirely promotion of the domestic great reform and adjustment and the year
that the new normalcy of domestic economy entirely step into the Crucial Period. The domestic and oversea
environment in 2019 is still of anfractuosity as well as the economy development is still facing with many
difficulties and challenges. However, the basic conditions of the domestic economy development is still
comparative good that will still provide favorable market environment and development space for the electrical
home appliances.
In recent years, the domestic per capita income grew steadily with the rise range of the price of commodities
declined, and at the same time influenced by the internal and external force factors such as the Chinese shopping
spree, which stimulated the consuming intention boosted constantly; as the constantly deepen of the domestic
economy transformation, the future economy will realize healthy and sustainable growth, which will depend on
the consumption demands of each Chinese customers as the consumption driving force of the domestic economy
has been strengthening.
Through the path of expanding domestic demand and the adjustment of the overall economic system, the domestic
competition will become fiercer. As the development of the domestic production, the domestic home appliance is
now facing the significant industrial consolidation phrase, which could only win in the competition and become
the industry integrator with powerful financial strength and the ability to drive the domestic home appliance
innovation enterprise. So the small home appliance enterprises are facing with serious competition and challenge.
Faced with the quick changes of the domestic environment, the Company will be close to the customers’
requirements, to promote the brand image by taking the technology innovation as core, to build up self-own brand,
and to develop green, intelligent home appliances to increase the occupation portion of the domestic market.
3. Exchange rate fluctuation
The Company’s products were export-oriented, so the influence of the exchange rate fluctuation on the Company
was rather big. Facing with the negative influences of the appreciation of the RMB, the main methods are: to
25
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Factors such as increase of local minimum wage standard, decrease of labor supply and the seasonal human
resource demand of surrounding enterprises, have resulted in increase of labor costs of the Company year by year.
The Company reduces operation staff on site by promoting procurement modularization and lean automation to
improve compensation & benefits of the employees to reduce employee turnover rate. Performance-orientated
retention policy has been adopted to enhance retention rate of the employees.
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, and with the introduce of the new environmental protection materials, the input of the
automation and the technical promotion of the environmental manufacture processing, the environment protection
of products of the Company will be continuously promoted.
X. Visits paid to the Company for purposes of research, communication, interview, etc.
1. In this reporting period
√ Applicable □ Inapplicable
Date of visit Way of visit Type of visitor Index to main inquiry information
01/08/2018 By phone Individual Inquiry about the operation of the Company
01/16/2018 By phone Individual Inquiry about the operation of the Company
Inquiry about the forecast losses of annual report and the first
03/20/2018 By phone Individual
quarter report, and B-share reform.
03/20/2018 By phone Individual Inquiry about the operation of the Company
03/22/2018 By phone Individual Inquiry about the operation of the Company and B-share reform.
05/10/2018 By phone Individual Inquiry about the operation of the Company
07/20/2018 By phone Individual Inquiry about the operation of the Company and B-share reform.
Inquiry about the operation of the Company and influences of
08/09/2018 By phone Individual
Sino-US Trade War on the Company
08/14/2018 By phone Individual Inquiry about the operation of the Company and B-share reform.
Inquiry about the operation of the Company and influences of
08/16/2018 By phone Individual
Sino-US Trade War on the Company
Inquiry about the operation, social security of the Company and
12/27/2018 By phone Individual influences of Sino-US Trade War on the Company, the plant of the
Company, and the conditions of land acquisition in Shanghai.
2. From the end of this Reporting Period to the disclosure date of this Report
Times of visit 11
Number of visiting institutions 0
Number of visiting individuals 11
Number of other visitors 0
Significant undisclosed information disclosed, revealed or leaked No
26
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common shares,
especially the cash dividend policies
√ Applicable □ Inapplicable
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of association or the requirements of the
Yes
resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper function: Yes
Whether the medium and small shareholders had the chances to fully express their suggestions
Yes
and appeals, of which their legal interest had gained fully protection:
Whether the conditions and the process met the regulations and was transparent of the
Yes
adjustment or altered of the cash dividend policy:
List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning
capital reserve into share capital of the Company of the recent 3 years (the reporting period inclusive)
For 2016, the Company distributed a cash dividend of RMB1.2 (tax included) for every 10 shares held by its
shareholders and there was no turn from capital reserve to share capital. For 2017, the Company distributed a cash
dividend of RMB0.8 (tax included) for every 10 shares held by its shareholders and there was no turn from capital
reserve to share capital. For 2018, the Company intended to distribute a cash dividend of RMB0.4 (tax included)
for every 10 shares held by its shareholders, and the estimated distributable profits of the Company was
RMB7,415,667.20 with the retained profits of RMB168,594,793.08 for carry-forward to the next year. There was
no turn from capital reserve to share capital for the year.
Unit: RMB Yuan
The ratio
accounting in
Net profit belonging net profit which
Amount of Ratio of the
to shareholders of the belongs to Amount of the
cash dividend cash dividend
Dividend year listed company in shareholders of cash dividend by
(including by other
consolidated statement the listed other methods
tax) methods
of dividend year company in
consolidated
statement
2018 7,415,667.20 11,831,622.78 62.68% 0 0.00%
2017 14,831,334.40 65,759,896.04 22.55% 0 0.00%
2016 22,247,001.60 48,229,497.36 46.13% 0 0.00%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
□ Applicable √ Inapplicable
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
√ Applicable □ Inapplicable
27
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax included) 0.4
Turning capital reserve into share capital for every 10
0
shares (share)
Total shares as the basis for the allocation preplan (share) 185,391,680
Total cash dividends (RMB Yuan) (tax included) 7,415,667.20
Distributable profit (RMB Yuan) 176,010,460.28
Percentage of the cash bonus of the total profits 100%
dividends
Cash dividend situation
If the development stage of the Company belongs to the mature period without any significant assets expenditure
arrangement, when executing the profits distribution, the ratio of the cash dividend to the profits distribution of
the reporting period should at least reach 80%.
Details about the profit allocation or turning capital reserve into share capital
For 2018, the Company intended to distribute a cash dividend of RMB0.4 (tax included) for every 10 shares held
by its shareholders, and the estimated distributable profits of the Company was RMB7,415,667.20 (tax included)
with the retained profits of RMB168,594,793.08 for carry-forward to the next year. There was no turn from capital
reserve to share capital for the year.
III. Performance of commitments
1. 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 □ Inapplicable
Time
of Period of
Commitmen Commitm
Commitment Contents making commit Fulfillment
t maker ent type
commit ment
ment
Commitment on share reform
Commitment in the acquisition
report or the report on equity
changes
Commitments made upon the
assets replacement
Commitments made upon first
issuance or refinance
Commitment on equity incentive
Based on the confidence The Company’s stocks
on the continuous and resumed trading on 31
stable development of the Dec. 2012, but the
Company, it committed to Company’s stock price
Commitm increase the shareholding hasn’t met the
FILLMAN
ent on if the Company’s stock Long-ter condition (closing
Other commitments made to INVESTME 12/28/2
shareholdi price lower than m price was lower than
minority shareholders NTS 012
ng HKD2.40 per share after effective HKD2.40) for
LIMITED
increase the implementation of the shareholding increase
shares contraction and since the date of
trading resumption, and it trading resumption,
would increase no more FILLMAN Investment
than 2% shares (i.e. Limited hasn’t
28
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time
of Period of
Commitmen Commitm
Commitment Contents making commit Fulfillment
t maker ent type
commit ment
ment
3.7078 million shares) of implemented the
the total shares issued by shareholding increase
the Company within one plan.
year since the date of
initial shareholding
increase. If the plan on
increasing holding 2%
shares of the total shares
is completed within 12
months, and the stock
price has also 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 Yes
During the Reporting Period, there were no 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.
2. Where there had been an earnings forecast for an asset or project and this reporting period was still
within the forecast period, explain why the forecast has been reached for this reporting period.
□ Applicable √ Inapplicable
IV. Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
V. Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “auditor’s non-standard report” issued by the CPAs firm for
this reporting period
□ Applicable √ Inapplicable
VI. YoY changes in accounting policies, estimations and methods
√ Applicable □ Inapplicable
Changes in accounting policies
①Changes in accounting policies due to the implementation of the new Accounting Standards for Business
Enterprises
The Notice on Revision and Issue of the 2018 Annual General Corporate Financial Statement Format(Caikuai
〔2018〕 No. 15) released by the Ministry of Finance on June 15th, 2018, revised the financial statement format of
29
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
general corporate, merged part of the balance sheet items and split part of the income statement items; The
Ministry of Finance also issued the Interpretation for Relevant Questions of the 2018 Annual General Corporate
Financial Statement Format on September 7th, 2018. The company has been preparing financial statement
according to new requirements for the corporate financial statement format. Where the items listed and reported in
the financial statements had been changed as a result, the comparative data of the comparable period had been
adjusted in accordance with relevant provisions of the documents such as the ASBE (Accounting Standards for
Business Enterprises, No. 30——Presentation of Financial Statement).
The 2018 6th board meeting and the 2018 5th meeting of the board of supervisors held by the Company on
December 7th, 2018, had approved the Proposal for Change of Accounting Policy, the independent directors and
supervisors of the Company announced their independent comment of approval.
In July 2018, the Ministry of Finance released the application guide for the ASBE N0. 16——Governmental
Subsidy, the relocation compensation received by the company, after deducting relevant costs and business
expenses in the disposal year, shall be included in relevant items such as income from asset disposal,
The 2018 4th interim board meeting, the 2018 6th meeting of the board of supervisors held by the Company on
December 19th, 2018, and the 2019 first extraordinary general meeting held by the Company on January 11th,
2019, had approved the Proposal for Change of Accounting Policy, the independent directors and supervisors of
the Company announced their independent comment of approval.
The above-mentioned accounting policy change requires retroactive adjustment of the 2017 annual comparable
financial data of TKC, and the retroactive adjustment has the following specific impact on the Company’s 2017
annual consolidated financial statement:
(Unit: RMB Yuan)
Affected financial statements items Before retrospection Adjustment amount After retrospection
Notes receivable 0.00 0.00 0.00
Accounts receivable 270,052,420.89 -270,052,420.89 0.00
Notes receivable and accounts receivable 270,052,420.89 270,052,420.89
Notes payable 20,024,149.15 -20,024,149.15 0.00
Accounts payable 583,540,229.36 -583,540,229.36 0.00
Notes payable and accounts payable 603,564,378.51 603,564,378.51
Interests payable 1,448.76 -1,448.76 0.00
Other payables 51,138,758.51 1,448.76 51,140,207.27
Administrative expenses 156,621,043.08 -71,125,828.45 85,495,214.63
Research and development expenses 71,125,828.45 71,125,828.45
Deferred tax assets 22,682,483.17 2,803,213.28 25,485,696.45
Designated payables 109,137,778.28 -109,137,778.28 0.00
Deferred tax liabilities 1,431,505.08 27,284,444.57 28,715,949.65
Retained earnings 90,105,224.21 39,682,756.40 129,787,980.61
Equity attributable to shareholders of the Parent 610,814,327.77 39,682,756.40 650,497,084.17
Minority interests 332,457,266.32 44,973,790.59 377,431,056.91
Gain on disposal of non-current assets 773,823.55 81,397,955.17 82,171,778.72
Non-operating income 8,923,887.76 27,739,823.11 36,663,710.87
Income tax expenses -1,418,431.98 24,481,231.29 23,062,799.31
Net profit 29,106,591.09 84,656,546.99 113,763,138.08
Net profit attributable to shareholders of the
26,077,139.64 39,682,756.40 65,759,896.04
Parent
30
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VII. Retroactive restatement due to correction of material accounting errors in this reporting
period
□ Applicable √ Inapplicable
VIII. YoY changes in the scope of the consolidated financial statements
√ Applicable □ Inapplicable
Subsidiary Xiamen Tsannkuen Home Appliance Design Co., Ltd. (“TKCD”) was officially de-registered in
December 2018 and has been excluded from the Company’s consolidated financial statements since the
de-registration day. TKCD’s revenues, costs and expenses, as well as profit before the de-registration day are
included into the consolidated income statement, and its cash flows before that day into the consolidated cash flow
statement.
Tsann Kuen (Zhangzhou) Investment Co., Ltd. (“TKI”) was incorporated by the Company’s controlled subsidiary,
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. in June 2018 and has been included in the Company’s consolidated
financial statements since the incorporation day (capital not paid-in as of 31 December 2018).
IX. Engagement and disengagement of CPAs firm
Current CPAs firm
Ruihua Certified Public Accountants
Name of the domestic CPAs firm
(LLP)
The Company’s payment for the domestic CPAs firm (RMB’0,000) 122
Consecutive years of the audit service provided by the domestic
6
CPAs firm
Names of the certified public accountants from the domestic CPAs
Ou Changxian, Ren Xiaochao
firm
Indicate by tick mark whether the CPAs firm was changed in this reporting period
□ Yes √ No
Indicate by tick mark whether the CPAs firm was changed during the audit
□ Yes √ No
Indicate by tick mark whether the change of CPAs firm perform the procedure for examination and approval
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Inapplicable
For the reporting period, the Company engaged Ruihua Certified Public Accountants (LLP) as the internal control
auditor and did not hire any financial advisor or sponsor.
X. Possibility of listing suspension or termination after disclosure of this Report
□ Applicable √ Inapplicable
XI. Bankruptcy and restructuring
□ Applicable √ Inapplicable
XII. Significant litigations and arbitrations
□ Applicable √ Inapplicable
31
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIII. Punishments and rectifications
□ Applicable √ Inapplicable
XIV. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Inapplicable
XV. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Inapplicable
32
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Unit: RMB’0,000
Content of Pricing Settlement
Proportion Whether
Type of the the principle of Trans Approve method of
Transa in same exceeded Similar
Related related-part related-par the actio d the Disclosu Disclosur
Relationship ction kind of the market
party y ty related-part n transacti related-part re date e index
amount transactions approved price
transaction transactio y price on quota y
(%) quota
n transaction transaction
Company
directly
Thermaster controlled by Purchase of
Purchase Based on
Electronic actual commoditie 3,387.9
of raw the market 2.5 4,000.00
(Xiamen) controller and s from the 9 Settled
parts price and
Ltd. their close related party according to www.cni
both parties 03/20/20
family N/A No the contract N/A nfo.com.c
abide by 18
members signed by n
the fair and
Sale of both parties
Star reasonable
Ultimate Sale of componen
Comgistic principle 1,318.4
controlling commoditie ts and 0.77 1,716.00
Trading 3
company s finished
Co., Ltd.
products
4706.4
Total 5,716.00
2
Details of large amount of sales returns N/A
As for the prediction on the total amount of routine N/A
related-party transactions to be occurred in the reporting
period by relevant types, the actual performance in the
reporting period
Reason for significant difference between the transaction N/A
price and the market price
33
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Related-party transactions regarding purchase or sales of assets or equity interests
□ Applicable √ Inapplicable
3. Related-party transitions regarding joint investments
□ Applicable √ Inapplicable
4. Credits and liabilities with related parties
√ Applicable □ Inapplicable
Whether was any contract related to the non-operating credits and liabilities with related parties?
□ Yes √ No
5. Other significant related-party transactions
□ Applicable √ Inapplicable
XVII. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Inapplicable
No such cases in this reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such cases in this reporting period.
(3) Leasing
√ Applicable □ Inapplicable
Explanation of leasing
The Proposal on Lease of Property was reviewed and approved on the 1th Special Session of the Board of
Directors for 2013 dated June 26, 2013, and the Company rented part of the properties to Tianyuan (Xiamen)
Assets management Co., Ltd on July 1, 2013 with the expiration date of September 30, 2018. For details, please
refer to the Announcement on Lease of Property and Announcement on Resolutions Made at the 1th Special
Session of the Board of Directors for 2013 dated June 28, 2013 disclosed on Securities Times, Hong Kong Ta
Kung Pao and http://www.cninfo.com.cn. The Company didn’t sign a contract extension for the rental agreement
when it expired.
The lease whose profits reaching more than 10% of the total profits of the Company in the reporting period
√ Applicable □ Inapplicable
34
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
The Relate
Recognit Influenc Relations
amount of d
Name of Lease Beginning Terminati ion basis e to the hip with
Lessor leased Income transac
leasee assets date on date of lease Compan the
assets tion or
income y Company
involved not
Tianyuan
Tsann
(Xiamen) Accordi
Kuen Houses
Assets 07/01/201 09/30/201 ng to the
(China) and 1,575.49 742.13 62.72% No Naught
manageme 3 8 contract
Enterprise land
nt Co., signed
Co., Ltd.
Ltd.
2. Significant guarantees
√ Applicable □ Inapplicable
(1) Guarantees
Unit: RMB’0,000
Guarantees subsidiaries
Actual
Disclosure date
occurrence Actual Term of Guarantee for a
of the guarantee Line of Due or
Guaranteed party date (date of guarantee Type of guarantee guarante related party or
line guarantee not
agreement amount e not
announcement
signing)
Tsann Kuen Edge
08/08/2018 514.74 08/07/2018 0 Pledged 1 year No No
Intelligence
PT.STAR COMGISTIC
08/08/2018 2,058.96 08/07/2018 782.40 Pledged 1 year No No
INDONESIA
Total actual guarantee amount for
Total guarantee line for subsidiaries approved
2,573.70 subsidiaries during this Reporting 964.93
during this Reporting Period (C1)
Period (C2)
Total actual guarantee balance for
Total approved guarantee line for subsidiaries at
2,573.70 subsidiaries at the end of this 782.40
the end of this Reporting Period (C3)
Reporting Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during this Reporting Period Total actual guarantee amount during this Reporting Period
2,573.70 964.93
(A1+B1+C1) (A2+B2+C2)
Total approved guarantee line at the end of this Reporting Total actual guarantee balance at the end of this Reporting
2,573.70 782.40
Period (A3+B3+C3) Period (A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets of the
1.21%
Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and their
0
related parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a
0
liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total amount of the three kinds of guarantees above (D+E+F) 0
Explanation on undue guarantee or possible joint liquidated liability undertaken
None
(if any)
Explanation on providing external guarantee violating established procedures (if
None
any)
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Inapplicable
35
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Entrusted cash management
(1) Entrusted asset management
√ Applicable □ Inapplicable
Overview of entrusted assets management in Reporting Period.
Unit: RMB’0,000
Type Resource of funds Amount incurred Undue balance Amount overdue
Bank financial product Self-owned fund 56,000.00 52,000.00 0.00
Total 56,000.00 52,000.00 0.00
Unit: RMB’0,000
Whether
there is
Break- Actual Amount Whether Overview
Type wealth
even Annual Amount of recovery of withdraw go of the item
of Resour managemen
Type of the Amoun Use of floatin yield for Estimate actual profits or profits or n through and the
Name of the trustee the ce of Initial date Ended Date t
product t fund g referenc profit losses in losses in impairme stator related
trust funds entrustment
procee e reporting period reporting nt procedure index for
ee plan in
ds period provision s inquiring
future or
not
China Everbright
Break-even
Bank-Xiamen 4,000 2017/9/29 2018/3/29 4.40% 88.00 88.00
proceeds
Branch
Bank of East Break-even
Asia-Xiamen floating 3,000 2017/12/27 2018/6/27 4.90% 74.32 74.32
Branch proceeds
China Everbright
Break-even Structural
Bank-Xiamen 8,000 2017/12/27 2018/7/27 Payme 4.60% 214.67 214.67
proceeds deposit
Branch nt of Subject to
Break-even interest the future
Xiamen Self-o Recovered http://www
floating 10,000 2017/8/28 2018/8/29 and 4.60% 467.66 467.66 market
International Bank Bank wned upon N/A Yes .cninfo.co
proceeds princip yield and
fund maturity m.cn
China Everbright al at fund
Break-even maturit condition
Bank-Xiamen 4,000 2018/3/29 2018/9/29 4.67% 93.40 93.40
proceeds y
Branch
Deposit
taking of
Break-even interbank,
Xiamen
floating 15,000 2017/12/27 2018/12/24 National 5.30% 799.42 799.42
International Bank
proceeds debt,
central
bank bill
36
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
there is
Break- Actual Amount Whether Overview
Type wealth
even Annual Amount of recovery of withdraw go of the item
of Resour managemen
Type of the Amoun Use of floatin yield for Estimate actual profits or profits or n through and the
Name of the trustee the ce of Initial date Ended Date t
product t fund g referenc profit losses in losses in impairme stator related
trust funds entrustment
procee e reporting period reporting nt procedure index for
ee plan in
ds period provision s inquiring
future or
not
China Everbright
Break-even
Bank-Xiamen 8,000 2018/7/27 2019/1/27 4.70% 188.00
proceeds
Branch
Xiamen
Break-even 5,000 2018/8/29 2019/8/29 4.49% 224.50
International Bank Structural
floating
BANK OF deposit
proceeds 8,000 2018/8/31 2019/8/30 4.90% 392.00
QUANZHOU
China Everbright
Break-even
Bank-Xiamen 4,000 2018/10/9 2019/4/9 4.00% 80.00
proceeds
Branch
Deposit
taking of Undue
interbank,
Xiamen
10,000 2018/12/10 2019/12/10 National 4.65% 465.00
International Bank
debt,
Break-even central
floating bank bill
proceeds
Xiamen Bank 5,000 2018/12/26 2019/12/26 4.70% 235.00
CHINA Structural
MINSHENG deposit
12,000 2018/8/9 2019/8/9 4.60% 552.00
BANK-Xiamen
Branch
Total 96,000 3,873.97 1,737.47
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
□ Applicable √ Inapplicable
(2) Entrusted loans
□ Applicable √ Inapplicable
No such cases in this reporting period.
37
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Other significant contracts
□ Applicable √ Inapplicable
No such cases in this reporting period
XVIII. Social responsibilities
1. Social responsibilities taken
□ Applicable √ Inapplicable
2. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Inapplicable
3. Details related to environment protection
□ Applicable √ Inapplicable
XIX. Other significant events
□ Applicable √ Inapplicable
XX. Significant events of subsidiaries
√ Applicable □ Inapplicable
The first interim board meeting held by the Company on 1 February 2018 approved the proposal that the
controlling subsidiary Tsann Kuen Zhangzhou would increase its investment to its subsidiary company, the
Tsannkuen Edge Intelligence Co., Ltd. (hereinafter referred to as “Edge Intelligence”). Tsann Kuen Zhangzhou
intended to invest an additional capital of US$3 million in its wholly-owned subsidiary company, Orient Star
Investments Limited (hereinafter referred to as “Orient Star Investment”) located in Hong Kong, and then Orient
Star Investment would invest the additional capital of US$3 million to its wholly-owned subsidiary, Tsannkuen
Edge Intelligence. For details, see the Announcement on the Increase of Capital by the Holding Subsidiary Tsann
Kuen Zhangzhou to Its Subsidiary Company Tsannkuen Edge Intelligence released on 2 February 2018 by the
Company on the website of CNINFO (http://www.cninfo.com.cn), in the Securities Times and the Ta Kung Pao of
Hong Kong.
The 2018 first interim board meeting held by the Company on 1 February 2018 approved the proposal that the
controlling subsidiary, Tsann Kuen Zhangzhou, would change the purpose of part of its original increase capital to
its subsidiary company SCI, and now intends to adjust the purpose of the cash capital of US$3.41 million, which
Tsann Kuen Zhangzhou additionally invests in SCI and shifts investment to establish SCPDI and SCPDI operation
that hasn’t been paid in, to supplement SCI domestic appliance manufacturing capital base, among which
US$1.46 million will be used to pay back bank loan and it’s expected that the costs of capital can be reduced for
US$37,000/year. The remaining US$1.95 million will be used to enrich the working capital. For details, see the
Announcement that the Holding subsidiary Tsann Kuen Zhangzhou Changes the Purpose of Part of Its Original
Increase Capital to Its subsidiary company SCI released on 2 February 2018 by the Company on the website of
CNINFO (http://www.cninfo.com.cn), in the Securities Times and the Ta Kung Pao of Hong Kong.
The 2018 fourth interim board meeting held by the Company on December 19th, 2018 approved the proposal that
the controlling subsidiary company, Tsann Kuen China (Shanghai) Enterprise Co., Ltd would sign the
Expropriation Compensation Agreement (second phase of the factory). Tsann Kuen China (Shanghai) Enterprise
Co., Ltd signed the Expropriation Compensation Agreement with People’s Government of Shanghai Jiading
District Anting Town on December 19th, 2018. The total costs for expropriation compensation of the target site
was RMB88,344,133 (says eighty-eight million three hundred and forty-four thousand one hundred and
38
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
thirty-three only). This proposal had been approved by the 2019 first extraordinary general meeting held by the
Company on 11 January 2019. For details, see the Announcement for the 2018 Fourth Interim Board Meeting
Resolution and the Announcement that the Controlling Subsidiary Tsann Kuen China (Shanghai) Enterprise Co.,
Lt Signs the Expropriation Compensation Agreement (Second Phase of the Factory) released by the Company on
the website of CNINFO (http://www.cninfo.com.cn), in the Securities Times and the Ta Kung Pao of Hong Kong
on 20 December 2018; The Announcement for the 2019 First Extraordinary General Meeting Resolution released
on the website of CNINFO (http://www.cninfo.com.cn), in the Securities Times and the Ta Kung Pao of Hong
Kong on 12 January 2019.
Section VI. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
1. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.1 Shares held by the State
1.2 Shares held by state-owned
corporations
1.3 Shares held by other
domestic investors
Among which: Shares held by
domestic corporations
Shares held by domestic
individuals
1.4 Shares held by foreign
investors
Among which: Shares held by
foreign corporations
Shares held by foreign
individuals
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
2. Non-restricted shares
2.1 RMB common shares
2.2 Domestically listed foreign
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
2.3 Overseas listed foreign
shares
2.4 Other
3. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for the share changes
□ Applicable √ Inapplicable
Approval of share changes
□ Applicable √ Inapplicable
Transfer of share ownership
□ Applicable √ Inapplicable
39
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Changes in restricted shares
□ Applicable √ Inapplicable
II. Issuance and listing of securities
1. Securities (excluding preference shares) issued in this reporting period
□ Applicable √ Inapplicable
2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability
structures
□ Applicable √ Inapplicable
3. Existing staff-held shares
□ Applicable √ Inapplicable
III. Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total number of
Total number of
Total number of preference
common
preference shareholders with
Total number of shareholders at
shareholders with resumed voting
common shareholders 16,207 the prior 16,078 0 0
resumed voting rights at the prior
at the period-end month-end before
rights at the month-end before
the disclosure of
period-end the disclosure of
this Report
this Report
5% or greater shareholders or the top 10 shareholders
Increase/de Numbe Pledged or frozen
Shareh Total
crease r of Number of shares
Nature of olding shares held
Name of shareholder during this private public
shareholder percent at the Num
reporting shares shares held Status
age (%) period-end ber
period held
FORDCHEE
Foreign
DEVELOPMENT 29.10% 53,940,530 Unchanged 0 53,940,530 N/A 0
corporation
LIMITED
EUPA INDUSTRY
Foreign
CORPORATION 13.09% 24,268,840 Unchanged 0 24,268,840 N/A 0
corporation
LIMITED
GUOTAI JUNAN
Foreign
SECURITIES(HONG 4.96% 9,196,449 Unchanged 0 9,196,449 N/A 0
corporation
KONG) LIMITED
FILLMAN
Foreign
INVESTMENTS 2.49% 4,621,596 Unchanged 0 4,621,596 N/A 0
corporation
LIMITED
SHENWAN
HONGYUAN Foreign
1.06% 1,956,752 Unchanged 0 1,956,752 N/A 0
SECURITIES (HK) corporation
LIMITED
40
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Domestic
CHEN YONGQUAN 1.03% 1,900,776 3,433 0 1,900,776 N/A 0
individual
Foreign
CHEN YONGQING 0.83% 1,538,949 50,000 0 1,538,949 N/A 0
individual
Domestic
CHEN LIJUAN 0.75% 1,381,334 50,900 0 1,381,334 N/A 0
individual
Domestic
DING XIAOLUN 0.62% 1,148,000 45,000 0 1,148,000 N/A 0
individual
Domestic
XU QIANMING 0.33% 618,259 Unchanged 0 618,259 N/A 0
individual
The first, the second and the fourth shareholders are the Company’s corporate
controlling shareholders. It is unknown whether the other public shareholders are
Related or acting-in-concert parties among
related parties or acting-in-concert parties as prescribed in the Administrative
the shareholders above
Methods for Disclosure of the Shareholding Changes of the Listed Company’s
Shareholders.
Shareholdings of the top ten public shareholders
Number of public shares Type of shares
Name of shareholder
held at the period-end
Type Number
Domestically listed foreign
FORDCHEE DEVELOPMENT LIMITED 53,940,530 53,940,530
share
EUPA INDUSTRY CORPORATION Domestically listed foreign
24,268,840 24,268,840
LIMITED share
GUOTAI JUNAN Domestically listed foreign
9,196,449 9,196,449
SECURITIES(HONGKONG) LIMITED share
Domestically listed foreign
FILLMAN INVESTMENTS LIMITED 4,621,596 4,621,596
share
SHENWAN HONGYUAN SECURITIES Domestically listed foreign
1,956,752 1,956,752
(HK) LIMITED share
Domestically listed foreign
CHEN YONGQUAN 1,900,776 1,900,776
share
Domestically listed foreign
CHEN YONGQING 1,538,949 1,538,949
share
Domestically listed foreign
CHEN LIJUAN 1,381,334 1,381,334
share
Domestically listed foreign
DING XIAOLUN 1,148,000 1,148,000
share
Domestically listed foreign
XU QIANMING 618,259 618,259
share
The first, the second and the fourth shareholders are the Company’s corporate
Related or acting-in-concert parties among
controlling shareholders. It is unknown whether the other public shareholders are
the top ten unrestricted public shareholders
related parties or acting-in-concert parties as prescribed in the Administrative
and between the top ten unrestricted public
Methods for Disclosure of the Shareholding Changes of the Listed Company’s
shareholders and the top ten shareholders
Shareholders.
Top ten common shareholders conducting
None
securities margin trading
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during this reporting period.
□ Yea √ No
No such cases in this reporting period.
41
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Information about the controlling shareholder
Nature of controlling shareholder: foreign investment holding
Type of controlling shareholder: corporation
Legal
representative / Date of Business
Name of controlling shareholder Organization code
company establishment scope
principal
Fordchee Development Limited He Zongyuan 3 Jan. 1990 14676920-000-01-18-9 Investment
EUPA Industry Corporation
He Zongyuan 21 Jul. 1989 12959659-000-07-18-4 Investment
Limited
Fillman Investments Limited He Zongyuan 21 Jul. 1992 16269694-000-07-18-8 Investment
Shareholdings of the controlling
shareholder in other listed
None
companies at home or abroad in
this reporting period
Change of the controlling shareholder during this reporting period
□ Applicable √ Inapplicable
No such cases in this reporting period.
3. Information about the actual controller and its acting-in-concert party
Nature of actual controller: foreign individual
Type of actual controller: individual
Right of residence in other countries or
Name of actual controller Nationality
regions
Wu Tsann Kuen Taiwan, China None
Main occupation and duty Promoter of TSANN KUEN Group in China and Taiwan
Used-to-be-holding listed companies Actual controller of Tsann Kuen (Taiwan) Enterprise Co., Ltd. STAR
at home and abroad in the last ten COMGISTIC CAPITAL (Taiwan) CO., LTD. and Star International
years Travel Service (Taiwan) Co., Ltd.
Change of the actual controller during this reporting period
□ Applicable √ Inapplicable
No such cases in this reporting period.
Ownership and control relations between the actual controller and the Company
42
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Inapplicable
4. 10% or greater corporate shareholders
□ Applicable √ Inapplicable
5. Limited shareholding decrease by the Company’s controlling shareholder, actual controller, reorganizer
and other commitment makers
□ Applicable √ Inapplicable
43
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VII. Preference Shares
□ Applicable √ Inapplicable
No preference shares in this reporting period.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholdings of directors, supervisors and executive officers
□ Applicable √ Inapplicable
II. Changes in directors, supervisors and executive officers
√ Applicable □ Inapplicable
Name Office title Type of change Date Reason
Chen Yanjun Director Left 2018-08-15 Personal reasons
Zhuang Xing Director Left 2018-08-15 Personal reasons
44
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. Brief biographies
Main working experience of current directors, supervisors and senior management staff
Name Position Educational Main working experience and chief responsibilities in the Company
background
Pan Chairman Graduated 1990.09-2003.06 TECO Electric & Machinery Co., Ltd.(Taiwan) R&D and Business manager
Zhirong of the from 2003.08-2006.01 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Manager of research institute
Board Machinery 2006.02-2008.09 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Assistant manager of research institute
Division of 2008.10-2010.07.25 TsannKuen (Zhangzhou) Enterprise Co., Ltd. Vice GM of Trade Department
ILMJ 2010.07.26-2014.5.20 Tsann Kuen (China) Enterprise Co., Ltd. General manager
2010.07.07-2014.5.27 TsannKuen (Zhangzhou) Enterprise Co., Ltd. Managing director
2011.5.21-2014.5.19 Tsann Kuen (China) Enterprise Co., Ltd. Director
2014.03.05-now East Sino Development Limited (HK) Director
2014.05.20-now Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
2014.05.27-now TsannKuen (Zhangzhou) Enterprise Co., Ltd. Chairman of the Board
2014.06.11-now PT.STAR COMGISTIC INDONESIA Chairman of the Board
2015.01.21-now Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director
2015.02.25-now Tsannkuen Edge Intelligence Co., Ltd. (Taiwan) Chairman of the Board
2015.05.20-now Orient Star Investments Limited (HK) Director
2016.03.02-2018.10.30 Xiamen Tsannkuen Home Appliance Design Co., Ltd. Chairman of the Board
2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board and General manager as his
2018.12.14- now Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd. Chairment of the Board
2018.06.15-now Tsann Kuen (Zhangzhou) Investment Co., Ltd. Director
2019.01.02- now Shanghai Canxing Trading Co., Ltd. Chairment of the Board
Chairment of the Board
Cai Director Graduated 1993.02.16-2002.05.21 Tsann Kuen (China) Enterprise Co., Ltd. Managing director
Yuansong from Manche 2002.07.24-2008.07.25 TsannKuen (Zhangzhou) Enterprise Co., Ltd. Chairman of the Board
State 2002.05.22-2008.05.24 Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
University, 2011.06- now Sekond Creative Design Co., Ltd. (Taiwan) Chairman of the Board
Minnesota 2017.04.06- now Tsann Kuen (China) Enterprise Co., Ltd. Director
with a degree 2017.04.21- now TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director
in Business
Administration
He Director Graduated 1979.10-1988.07 Taiwan Johnson & Johnson Co., Ltd. (Taiwan) Business manager
Zongyuan from 1988.08-1992.03 Qunce Marketing Co., Ltd. (Taiwan) Partner
Department of 1992.04-2015.02 Johnson & Johnson China limited (Taiwan) Business director
Cooperative 2015.03-2016.02 Lucky Internet Technology Co., Ltd. (Taiwan) Senior partner
Economics, 2016.03-2016.12 Rili E-commerce Co., Ltd. (Taiwan) CEO
TKU 2018.06.28-now Tsann Kuen Enterprise Co., Ltd.(Taiwan) Chairman of the Board
2018.08.14-now Star Marketing Co., Ltd. (Taiwan) Chairman of the Board
2018.08.14-now TsannKuen Japan Co., Ltd. Director
2018.08.14-now Star International Travel Co., Ltd.(Taiwan) Chairman of the Board
45
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2018.08.14-now Star Travel Co., Ltd. Chairman of the Board
2018.08.14-now Gold Mine Chain Enterprise Co., Ltd. Chairman of the Board
2018.08.14-now Huilong Real Estate Co., Ltd. Director
2018.08.14-now Weiji Real Estate Co., Ltd. Director
2018.08.15-now Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director
2018.08.15-now TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director
2018.08.17-now Guanteng International Investment Co., Ltd. (Taiwan) Director
2018.08.17-now Kuaisan Electric Business Service Co., Ltd. (Taiwan) Chairman of the Board
2018.09.01-now STARCOMGISTIC SINGAPORE PTE.LTD. Director
2018.09.10-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2018.09.17-now STARCOMGISTIC AUSTRALIA PTY LTD Director
Yang Director Graduated 1991.07.15-1992.02.28 SANYANG MOTOR CO., LTD (Taiwan) Head of Product Development Section
Shunlong from National 1994.11.15-2000.04.30 Yuanfu Aluminum Co., Ltd. (Taiwan) Vice plant manager/vice manager of R&D Department
Chiao Tung 2000.05.01-2001.01.31 Walsin Technology Corporation (Taiwan) Head of Process Technology Section
University 2001.02.22-2002.01.31 AU Optronics Corp. (Taiwan) Head of Quality Service
with a degree 2002.02.01-2005.01.31 AU Optronics Corp. (Suzhou) Manager of Quality Assurance Department
in EMBA 2005.02.01-2009.08.31 AU Optronics Corp. (Taiwan) Senior manager
2009.09.01-2011.06.30 AU Optronics Corp. (Xiamen) Head of Quality Assurance
2015.07.01-2018.05.31 Intelligent Design Supplier Inc. (Taiwan) Purchaser/business executive
2018.08.01-now TsannKuen (Zhangzhou) Enterprise Co., Ltd. GM of Manufacturing&Purchase Centre
2018.08.17-now Tsannkuen Edge Intelligence Co., Ltd. (Taiwan) Director
2018.09.10-now Tsann Kuen (China) Enterprise Co., Ltd. Director
Tang Independent Graduated 1988.07-1994.06 Xiamen Municipal Bureau of Finance Clerk
Jinmu director from Xiamen 1994.06-1998.12 Xiamen CPA Vice director
University 1996.07-1998.12 Xiamen Asset Evaluation Institute Head of the institute
with a doctor 1999.01-2001.12 PCCPA Director 、Partner
degree in 2002.01-now Xiamen Asset Evaluation Association Secretary-general
Fiscal Finance, 2002.09-now Xiamen Association of Certified Public Accountants Secretary-general
senior 2014.05.20-now Tsann Kuen (China) Enterprise Co., Ltd. independent director
accountant 2015.01.15-now Xingye Technology Co., Ltd. independent director
2016.02-now GOPRO independent director
2017.11.13 -now Xiamen Red Phase Instruments Inc. independent director
Bai Independent Graduated 1994.07.01-1995.09.30 Xiamen TENET Law Office (original name of Fujian TENET & PARTNERS Law Full-time lawyer
Shaoxiang director from Xiamen 1995.10.01-1997.06.30 Office) Full-time lawyer
University 1997.07.01-2001.07.31 Xiamen Jinzhao Law Office Partner
with a master 2001.08.01-2008.12.31 Xiamen TENET Law Office (original name of Fujian TENET & PARTNERS Law Partner
degree in Law 2005.05-2008.05 Office) independent director
2008.3-now Fujian TENET& PARTNERS Law Office Arbitrator
2008.06-2014.06 Xiamen King Long Motor Group independent director
2009.04-2013.03 Xiamen Arbitration Commission independent director
2009.01.01-now Fujian Shengtun Mining Group Co., Ltd. Partner、executive director
2010.5-now Shanghai Xingye Energy Holding Co., Ltd. Part-time associate professor
2013.9-now Fujian TENET& PARTNERS Law Office
46
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2014.05.20-now Xiamen University Tan Kah Kee College Part-time master tutor
2016.12-now School of Law in Xiamen University independent director
Tsann Kuen (China) Enterprise Co., Ltd. independent director
Fujian Torch Electron Technology Co., Ltd.
Ge Independent Graduated 1980.12-1986.11 Hubei Electric Accountant
Xiaoping director from 1986.11-1989.06 Fuzhou Camera Co., Ltd. Internal auditor
Zhongnan 1989.06-1997.01 PLA Military Academy of Finance and Economics Teacher
University of 1997.01-2000.09 Fujian Mindu CPA Department manager
Economics 2000.09-2007.03 Xiamen Andexin CPA Chief accountant
and Law with 2007.03-2010.03 Fujian Mindu BDO CPA and vice director accountant
a degree in 2008.05-2014.05 Tsann Kuen (China) Enterprise Co., Ltd. independent director
Finance and 2014.06- 2018.06.29 China Shengmu Organic Milk Limited independent director
Accounting 2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. independent director
2017.2.10-2019.01.16 Fujian Xunxing Zipper Science & Technology Co., Ltd. independent director
2010.03-now BDO-Xiamen Branch Partner and the head of Xiamen Branch
Luo Supervisory Graduated 1989.06-2000.07 Taiwan Polaris Securities, WATERLAND SECURITIES, PACIFIC SECURITIES Deputy GM
Qingxing Board from 2001.11-2002.09 Youth Dakang Cultural Enterprises Co., Ltd. Deputy Financial GM
chairman Department of 2003.01.07-2011.04.23 Tsann Kuen (China) Enterprise Co., Ltd. Board Secretary
Politics, 2010.10.26-2015.01.20 Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director
National 2011.05.21-now Tsann Kuen (China) Enterprise Co., Ltd. Supervisory Board Chairman
Taiwan 2011.04.24- 2012.9.17 Thermaster Electronic (Xiamen) Ltd. Deputy GM
University 2012.09.18-2018.08.30 TsannKuen (Zhangzhou) Enterprise Co., Ltd. Deputy GM
2015.01.21-now Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Chairman of the Board
2016.03.02-2018.10.30 Xiamen Tsannkuen Home Appliance Design Co., Ltd. Director
Yang Supervisor Graduated 1996.07-2003.06 Taiwan Zhongxin CPA Audit Service Manager
Yongquan from 2003.06-2003.10 (Taiwan) Deloitte & Touche Audit Service Manager
Department of 2003.10-2005.02 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Accounting manager
Accounting, 2005.03-2006.07 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Senior Accounting Manager
National 2006.08-2007.10 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Accounting Department Assistant
Taiwan 2007.11-2009.12 Tsann Kuen Enterprise Co., Ltd.(Taiwan) Senior Accounting Department Assistant
University 2009.12.4-now Tsann Kuen Enterprise Co., Ltd.(Taiwan) Vice GM of Accounting Department
2012.07.24-now Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
2014.06.11-now PT.STAR COMGISTIC INDONESIA Supervisor
2014.07.08-now Shanghai Canxing Trading Co., Ltd. Director
2015.01.21-now Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director
2016.04.07-now Tsannkuen Edge Intelligence Co., Ltd. (Taiwan) Supervisor
2017.05.28- now Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co., Ltd. Director
2018.06.15-now Tsann Kuen (Zhangzhou) Investment Co., Ltd. Director
2018.08.15-now TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director
Zheng Supervisor Graduated 2016.06-now Tsann Kuen (China) Enterprise Co., Ltd. Staff-representative Supervisor
Caiyun from School of 2011.06- now Tsann Kuen (China) Enterprise Co., Ltd. Financial manager
Economics 2008.07-2011.05 Tsann Kuen (China) Enterprise Co., Ltd. Vice Financial Manager
47
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
and 1998.08-2008.06 Tsann Kuen (China) Enterprise Co., Ltd. Account Specialist
Management, 2014.03.05-now East Sino Development Limited (HK) Director
Fujian 2017.04.28-now Orient Star Investments Limited (HK) Director
Forestry 2016.03.02-now Xiamen Tsannkuen Home Appliance Design Co., Ltd. Supervisor
College
Sun Board China Institute 2011.04-now Tsann Kuen (China) Enterprise Co., Ltd. Board Secretary
Meimei Secretary of Information 2005.07-2011.04 Tsann Kuen (China) Enterprise Co., Ltd. Securities Representative
Management
with a degree
in Business
Administration
Feng Financial Graduated 2016.03-now Tsann Kuen (China) Enterprise Co., Ltd. Financial Chief
Zhiqing chief from 2014.09-2016.3 Tsann Kuen (China) Enterprise Co., Ltd. Audit Manager
Department of 2011.04-2014.01 Fortech Co., Ltd. Administrative Manager
Accounting, 2009.04-2011.02 Elitegroup Computer Systems Co., Ltd. Assistant Audit Manager
TKU 2004.10-2009.01 Uniplus Electronics Co., Ltd. Assistant Administrative Manager
2002.12-2003.07 KPMG Audit Manager
2001.10-2002.11 Chain Chon Industrial Co., Ltd. Financial Manager
Posts concurrently held in shareholding entities
√ Applicable □ Inapplicable
Allowance from the
Name Shareholding entity Post Starting date of tenure Ending date of tenure
shareholding entity
Chairman of the
He Zongyuan Star Comgistic Capital Co., Ltd. (Taiwan) 2018-06-28 now Yes
Board
He Zongyuan Sion Global Development Limited Director 2018-08-14 now No
He Zongyuan FORDCHEE Development Limited (HK) Director 2018-10-29 now No
He Zongyuan EUPA Industry Corporation Limited (HK) Director 2018-10-29 now No
He Zongyuan FILLMAN Investment Limited (HK) Director 2018-10-29 now No
Cai Yuansong EUPA Industry Corporation Limited (HK) Director 2018-10-29 now No
Cai Yuansong FILLMAN Investment Limited (HK) Director 2018-10-29 now No
Cai Yuansong FORDCHEE Development Limited (HK) Director 2018-10-29 now No
Remark N/A
Posts held concurrently in other entities
√ Applicable □ Inapplicable
Allowance
Ending date of
Name Other entity Post Starting date of tenure from other
tenure
entity
Pan Zhirong East Sino Development Limited (HK) Director 2014-03-05 now No
Pan Zhirong TsannKuen (Zhangzhou) Enterprise Co., Ltd. Chairman of the Board 2014-05-27 now No
48
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowance
Ending date of
Name Other entity Post Starting date of tenure from other
tenure
entity
Pan Zhirong PT.STAR COMGISTIC INDONESIA Chairman of the Board 2014-06-11 now No
Pan Zhirong Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director 2015-01-21 now No
Pan Zhirong Tsannkuen Edge Intelligence Co., Ltd. (Taiwan) Chairman of the Board 2015-02-25 now No
Pan Zhirong Orient Star Investments Limited (HK) Director 2015-05-20 now No
Pan Zhirong Xiamen Tsannkuen Home Appliance Design Co., Ltd. Chairman of the Board 2016-03-02 2018-10-30 No
Pan Zhirong Tsann Kuen (Zhangzhou) Investment Co., Ltd. Chairman of the Board 2018-06-15 now No
Cai Yuansong Sekond Creative Design Co., Ltd. (Taiwan) Chairman of the Board 2011-06-01 now No
Cai Yuansong TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director 2017-04-21 now No
He Zongyuan Star Marketing Co., Ltd. (Taiwan) Chairman of the Board 2018-08-14 now No
He Zongyuan TsannKuen Japan Co., Ltd. Director 2018-08-14 now No
He Zongyuan Star International Travel Service Co., Ltd. (Taiwan) Chairman of the Board 2018-08-14 now No
He Zongyuan Star Travel Service Co., Ltd. Chairman of the Board 2018-08-14 now No
He Zongyuan Gold Mine Chain Enterprise Co., Ltd. Chairman of the Board 2018-08-14 now No
He Zongyuan Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director 2018-08-15 now No
He Zongyuan TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director 2018-08-15 now No
He Zongyuan Guanteng International Investment Co., Ltd. (Taiwan) Director 2018-08-17 now No
He Zongyuan Kuaisan Electric Business Service Co., Ltd. (Taiwan) Chairman of the Board 2018-08-17 now No
Yang Shunlong Tsannkuen Edge Intelligence Co., Ltd. (Taiwan) Director 2018-08-17 now No
GM of Manufacturing&Purchase
Yang Shunlong TsannKuen (Zhangzhou) Enterprise Co., Ltd. 2018-08-01 now Yes
Centre
Tang Jinmu Xiamen Association of Certified Public Accountants Secretary-general 2002-09-01 now Yes
Tang Jinmu Xiamen Asset Evaluation Association Secretary-general 2002-09-01 now Yes
Tang Jinmu Xingye Technology Co., Ltd. Independent director 2015-01-15 now Yes
Tang Jinmu GOPRO Independent director 2016-02-01 now Yes
Tang Jinmu Xiamen Red Phase Instruments Inc. Independent director 2017-11-13 now Yes
Bai Shaoxiang Xiamen Arbitration Commission Arbitrator 2008-03-01 now Yes
Bai Shaoxiang Xiamen University Tan Kah Kee College Part-time associate professor 2010-05-01 now No
Bai Shaoxiang School of Law in Xiamen University Part-time master tutor 2013-09-01 now No
Bai Shaoxiang Fujian Torch Electron Technology Co., Ltd. Independent director 2016-12-29 now Yes
Bai Shaoxiang Fujian TENET& PARTNERS Law Office Partner and executive director 2009-01-01 now Yes
Ge Xiaoping China Shengmu Organic Milk Limited Independent director 2014-06-01 2018-06-29 Yes
Ge Xiaoping Fujian Xunxing Zipper Science & Technology Co., Ltd. Independent director 2019-01-16 2019-01-16 Yes
Ge Xiaoping BDO-Xiamen Branch Partner and head of an institute 2010-03-15 now Yes
Luo Qingxing TsannKuen (Zhangzhou) Enterprise Co., Ltd. Vice GM 2012-09-18 2018-08-30 No
Luo Qingxing Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Chairman of the Board 2015-01-21 now No
49
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowance
Ending date of
Name Other entity Post Starting date of tenure from other
tenure
entity
Luo Qingxing Xiamen Tsannkuen Home Appliance Design Co., Ltd. Director 2016-03-02 2018-10-30 No
Vice GM of Accounting
Yang Yongquan Tsann Kuen Enterprise Co., Ltd.(Taiwan) 2009-12-04 now Yes
Department
Yang Yongquan PT.STAR COMGISTIC INDONESIA Supervisor 2014-06-11 now No
Yang Yongquan Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Director 2015-01-21 now No
Yang Yongquan Tsannkuen Edge Intelligence Co., Ltd. (Taiwan)） Supervisor 2016-04-07 now No
Yang Yongquan TsannKuen (Zhangzhou) Enterprise Co., Ltd. Director 2018-8-15 now No
Zheng Caiyun Xiamen Tsannkuen Home Appliance Design Co., Ltd. Supervisor 2016-03-02 2018-10-30 No
Zheng Caiyun East Sino Development Limited (HK) Director 2014-03-05 now No
Zheng Caiyun Orient Star Investments Limited (HK) Director 2017-04-28 now No
Remark N/A
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors and executive officers as well as those who left in
this reporting period
Applicable √ Inapplicable
IV. Remuneration of directors, supervisors and executive officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and executive officers
According to the Company Law, the Securities Law and other laws and regulations, the remuneration of the directors and supervisors shall be decided by the
Shareholders’ General Meeting, while the remuneration of the senior management staffs shall be decided by the Board of Directors. And the remuneration of the
directors, supervisors and senior management staffs is decided by referring the market level and according to the Company’s human resource management system.
Remuneration of directors, supervisors and executive officers in this reporting period
Unit: RMB’0,000
Total before-tax Remuneration from
Name Office title Gender Age Incumbent/former remuneration from the related parties of the
Company Company
Chairman of the Board &
Pan Zhirong Male 52 Incumbent 94.88 No
GM
Zhuang Xing Director Male 64 Former 4.05 No
Chen Yanjun Director Male 57 Former 4.95 Yes
Cai Yuansong Director Male 62 Incumbent 3.6 No
He Zongyuan Director Male 64 Incumbent 1.11 Yes
50
2018 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total before-tax Remuneration from
Name Office title Gender Age Incumbent/former remuneration from the related parties of the
Company Company
Yang Shunlong Director Male 52 Incumbent 32.11 No
Bai Shaoxiang Independent director Male 46 Incumbent 12 No
Tang Jinmu Independent director Male 52 Incumbent 15 No
Ge Xiaoping Independent director Female 49 Incumbent 12 No
Luo Qingxing Supervisor Male 64 Incumbent 29.8 No
Yang Yongquan Supervisor Male 54 Incumbent 2.4 Yes
Zheng Caiyun Supervisor Female 43 Incumbent 24.06 No
Feng Zhiqing Financial Chief Male 49 Incumbent 29.8 No
Sun Meimei Board Secretary Female 45 Incumbent 18.38 No
Total 284.14
Equity incentives for directors, supervisors and executive officers in this reporting period
□ Applicable √ Inapplicable
V. Employees
1. Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 185
Number of in-service employees of main subsidiaries 4,225
Total number of in-service employees 4,410
Total number of employees with remuneration in this reporting period 4,905
Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension 0
Educational background Number of employees Function Number of employees
Doctor 1 Sales 108
Master 34 Financial 59
Bachelor 260 Technical 433
College graduates 306 Administrative 489
Below college 3,809 Production 3,321
Total 4,410 Total 4,410
51
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
2. Employee remuneration policy
The Company has established its remuneration system and formulated Remuneration Management
Measures and Performance Appraisal Management Rules based position division according to the Labor
Law, the internal HR Administrative Rules and relevant laws and regulations in line with the Company’s
strategic planning, the HR allocation on the market, the talent demand, job responsibilities and job
qualifications. The staff’s remuneration level has comprehensively taken the Company’s operating
conditions, profitability and internal fairness into consideration based on the position’s value, job
performance and personal ability.
3. Employee training plans
1. New Staff Training (On-site Staff/Cadre/Manager/Fresh Graduate Training Camp);
2. Management Cadre Cultivation and Building;
3. Job Qualification Promotion Training;
4. General Curriculum will be held to improve the staff’s comprehensive quality;
5. 3T Internal Lecturer Training Team Building and Management.
4. Labor outsourcing
√Applicable □Inapplicable
Total man-hours (hour) 433,522
Total remuneration paid (RMB) 5,656,696
Section IX. Corporate Governance
I. Basic details of corporate governance
During the reporting period, the Company standardize its operations strictly in accordance with
requirements of relevant law and rules of Company Law, Securities Law, Code of Corporate Governance
for Listed Companies in China, Rules for Listing Shares at Shenzhen Stock Exchange and so on, and
endlessly amplified and perfected administration structure and corporate system of the Company as well
as established relatively accomplished corporate governance structure. According to relevant
regulations of CSRC, the Company completed the establishment of Accountability System for Material
Error in Annual Report Information Disclosure, and strictly in line with relevant regulations in the
process of disclosing this annual report. Currently, the situation of corporate governance structure
basically accorded with regulations stipulated in regulatory documents on governance of listed companies
reported by CSRC. There were no governance problems remained unsolved. The governance of the
Company is as follows:
1. Shareholders and Shareholders’ General Meeting
The Company convened Shareholders’ General Meeting in line with Articles of Association of the
Company and Rules of Procedures for Shareholders’ General Meeting, treated all shareholders with
equity, guaranteed middle and small shareholders enjoy equal status and ensured all shareholders be able
to exercise their rights.
2. Controlling shareholders and the Company
Controlling shareholders were strictly in accordance with requirements to exercise rights of promoters
and assumed responsibilities. The Company realized independence between controlling shareholder and
listed companies in business, assets, agencies and finance; and independent operation between the Board
52
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
of Directors of the Company, the Supervisory Board and internal agency which ensured independence in
accounting, assuming responsibility and bearing risks, so as to ensure legal rights and interests of
investors.
3. Directors and the Board of Directors
The Company strictly in accordance with election procedure of directors in Articles of Association of the
Company to elect directors that the number of directors and the structure of the Board of Directors were
in line with requirements of laws and regulations. The Board of Directors earnestly executed Rules of
Procedure for the Board of Directors so as to guaranteed efficient operation and scientific strategic
decision. All directors of the Company performed their responsibilities honestly, sincerely and
assiduously, presented the Board of Directors, the Shareholders’ General Meeting seriously, and
participated in relevant trains actively.
4. Supervisors and the Supervisory Board
The Supervisory Board of the Company strictly in line with relevant provisions of Company Law and the
Articles of Association of the Company that the number of supervisors and the structure of the
Supervisory Board were in accordance with requirements of laws and regulations. All supervisors
exercised the Rules of Procedure for the Supervisory Board, earnestly performed their responsibilities. In
light of the responsibility for shareholders, all supervisors conducted inspection and supervision to the
legitimacy corporate finance of the Company and other significant decisions, legally performed
responsibilities to directors of the Company and senior management and supervised the implement of
resolutions of the Board of Directors and Shareholders’ General Meeting.
5. Information disclosure and transparency
The Company strictly in accordance with requirements of relevant provisions and regulatory documents
such as Rules for Listing Shares at Shenzhen Stock Exchange, Guidelines on Fair Information Disclosure
of Listed Companies, performed responsibilities of information disclosure of the Company truthfully,
accurately, timely and completely, and then guaranteed the equal opportunity of all shareholders of the
Company to gain relevant information of the Company.
6. There isn’t any problem on horizontal competition of the Company
In the reporting period, the Company continuing and strictly in accordance with Company Law,
Securities Law, Basic Standards for Enterprise Internal Control, Supporting Guidelines for Corporate
Internal Control as well as requirements of regulated documents of corporate governance for listed
companies published by CSRC, endlessly accomplished corporate governance structure, actively
enforced corporate governance work, and gradually perfected corporate governance and internal control
system, intensified supervision of internal control, promoted operation efficiency, operation regulation
and corporate governance level, endeavor to seek optimized profit and earnestly protected legal profit
of minority shareholders.
Any significant incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies
□ Yes √ No
No such cases in this reporting period.
II. Independence of businesses, personnel, asset, organizations and finance which are
separate from the controlling shareholder
The Company is completely separated from its controlling shareholder in aspects such as business,
personnel, assets, institutions and finance.
III. Horizontal competition
□ Applicable √ Inapplicable
53
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
IV. Annual and special meetings of shareholders convened during this reporting
period
1. Meetings of shareholders convened during this reporting period
Investor Index to the
Convened Disclosure
Meeting Type participation disclosed
date date
ratio information
2017 Annual Meeting of Shareholders Annual 44.90% 2018-05-18 2018-05-19 www.cninfo.com.cn
The First Special Meeting of
Special 45.35% 2018-06-15 2018-06-16 www.cninfo.com.cn
Shareholders in 2018
The Second Special Meeting of
Special 44.83% 2018-09-10 2018-09-11 www.cninfo.com.cn
Shareholders in 2018
2. Special meetings of shareholders convened at the request of preference shareholders with
resumed voting rights
□ Applicable √ Inapplicable
V. Performance of independent directors in this reporting period
1. Attendance of independent directors in board meetings and meetings of shareholders
Attendance of independent directors in board meetings and meetings of shareholders
Board meeting Attendance Absence
independent Attendance Attendance at at board Absence from board Shareholders’
Independent director should at board board meeting by meeting from board meeting for meeting
director attend in this meeting on telecommunication through a meeting two attended
Reporting site (times) (times) proxy (times) consecutive (times)
Period (times) (times) times
Tang Jinmu 10 10 0 0 0 No 2
Ge
10 7 1 2 0 No 2
Xiaoping
Bai
10 7 2 1 0 No 3
Shaoxiang
2. Objections raised by independent directors on issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
3. Other details about the performance of duties by independent directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
The independent director of the Company focused on the Company’s operation and executed
responsibilities independently and at the same issued independent fair advice on the related transaction,
trust management, etc., which played a positive role of improving the Company’s governance structure,
54
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
promoting the scientificity and objectivity of the policy of the Board of Directors as well as protecting the
Company’s and the whole shareholders’ interests. See details of the performance of independent directors
on the Work Report on 2018 Independent Director disclosed on http://www.cninfo.com.cn.
VI. Performance of duties by specialized committees under the Board during this
reporting period
The Board of Directors of the Company consists of three special committees, respectively is Strategy
Committee, Audit Committee, Nomination, Remuneration and Appraisal Committee. Each special
committee’s responsibilities are clear, according to execution rules of duty issued by the Company's
board of directors, the special committee perform his duty, study on professional events, put forward
opinions and suggestions as a reference for the decision-making of the Board.
(1) Performance of the Board of Directors' Strategy Committee
During the reporting period, three meetings were held:
1. The motion on capital increase in grandchildren company Tsannkuen Edge Intelligence Co., Ltd.
(Taiwan) by controlling subsidiary TsannKuen (Zhangzhou) Enterprise Co., Ltd. and the motion on
changes in usage of partial increased capital invested to its grandchildren company SCI by controlling
subsidiary TsannKuen (Zhangzhou) Enterprise Co., Ltd. were reviewed and approved on the First
Meeting of the Board of Directors’s Strategy Committee for 2018 held on 1 February 2018.
2. The motion on incorporation of wholly-owned subsidiary by controlling subsidiary TsannKuen
(Zhangzhou) Enterprise Co., Ltd. was reviewed and approved on the Second Meeting of the Board of
Directors’s Strategy Committee for 2018 held on 27 April 2018.
3. The motion on signing expropriation compensation agreement (second phase of plants) by the
Company’s grandchildren company Shanghai Tsann Kuen Enterprise Co., Ltd. was reviewed and
approved on the Third Meeting of the Board of Directors’ Strategy Committee held on 19 December
2018.
The Board of Directors’ Strategy Committee played an important role in enhancing the company’s core
competitiveness, strengthening the scientific decision-making and improving decision-making efficiency
and quality through discussing and analyzing the above motions and bringing forward opinions and
suggestions.
(2) Performance of the Board of Directors' Audit Committee
During the reporting period, seven meetings were held:
1. The First Meeting of the Board of Directors’ Audit Committee for 2018 was held on 17 March 2018,
on which the following proposals were reviewed and approved: internal self-evaluation report, changes in
accounting policies, annual report for 2017 and the abstract, annual financial statements for 2017, annual
profit distribution planning for 2017, annual estimated daily related transactions for year 2018, the final
report for 2017 on the audit working of the Company made by Ruihua CPA, and the motion on the asset
management of the company-owned fund by the controlling subsidiary Zhangzhou Tsann Kuen
Enterprise Co., Ltd.
In terms of the annual financial report auditing, the company’s board of directors audit committee fully
performed its supervisory responsibilities and maintained the independence of such audit based on such
principle as diligence and conscientiousness:
① Before the CPA participated in the annual audit, all financial statements formulated by the company
were carefully reviewed, and relevant review opinions were also issued in written form.
②The audit committee communicated with the accountant in charge of the annual audit of the Company,
55
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Ruihua CPA, and confirmed the schedule for the execution of 2017 auditing works. During such annual
audit, the audit committee fully communicated with the responsible CAP, and urged the execution of such
annual audit as scheduled.
③After Ruihua CPA issued its opinions on primary audit, the audit committee reviewed the company’s
financial statements again, and issued written review comments.
④ After Ruihua Certified Public Accountants issued annual auditing report, objective evaluated the
auditing work in the Company this year.
⑤ The proposal on continued hiring Ruihua CPA was put forward based on the understanding and
evaluation of the working of Ruihua CPA.
2. The Second Meeting of the Board of Directors’ Audit Committee for 2018 held on 27 April 2018
reviewed and approved the First Quarter Report for 2018 and the Abstract.
3. The Third Meeting of the Board of Directors’ Audit Committee for 2018 held on 29 May 2018
reviewed and approved the annual estimated daily related transactions for year 2018.
4. The Fourth Meeting of the Board of Directors’ Audit Committee for 2018 held on 7 August 2018
reviewed and approved the motion on semi-annual provision for assets impairment for 2018, semi-annual
report for 2018 and the abstract and the motion on the asset management of the company-owned fund by
the grandchildren company Shanghai Tsann Kuen Enterprise Co., Ltd.
5. The Fifth Meeting of the Board of Directors’ Audit Committee for 2018 held on 26 October 2018
reviewed and approved the motion on third quarter provision for assets impairment for 2018 and the
Third Quarter Report and the Abstract.
6. The Sixth Meeting of the Board of Director’s Audit Committee for 2018 held on 7 December 2018
reviewed and approved the Audit Scheme for 2019 and the motion on changes in accounting policies.
7. The Seventh Meeting of the Board of Directors’ Audit Committee for 2018 held on 19 December 2018
reviewed and approved the motion on changes in accounting policies.
(3) Particulars about Nomination, Remuneration and Appraisal Committee of the Board
During reporting period, there were two meetings held by the Nomination, Remuneration and Appraisal
Committee of the Board:
1. The First Meeting of the Nomination, Remuneration and Appraisal Committee of the Board for 2018
held on 17 March 2018 reviewed and approved the summary report on the performance of duties by the
Nomination, Remuneration and Appraisal Committee of the Board for 2017.
2. The Second Meeting of the Nomination, Remuneration and Appraisal Committee of the Board for
2018 held on 24 August 2018 reviewed and approved the motion on initial examination on candidates for
by-election directors of the Board.
VII. Performance of duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this reporting period?
□ Yes √ No
The Supervisory Board raised no objections in this reporting period
VIII. Appraisal and incentive for executive officers
The Company regularly appraised the performance of Senior Management Staffs strictly in accordance
with the relevant laws and regulations as well as existing performance appraisal system. The Board of
Directors was divided into nomination, remuneration and appraise committee, of which conducted
appraise and encouragement to senior management and relevant personnel. The Company also placed
56
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
limitation to resumption behavior, authority and responsibility of senior management in line with Articles
of Association and internal control system.
IX. Internal control
1. Serious internal control defects found in this reporting period
□ Yes √ No
2. Internal control self-evaluation report
Disclosure date of the internal control self-evaluation report 2019-03-19
Index to the disclosed internal control self-evaluation report www.cninfo.com.cn
Total assets of the evaluated entities as a percentage in the consolidated total assets 100.00%
Operating revenues of the evaluated entities as a percentage in the consolidated operating
100.00%
revenues
Defect identification standards
Type Financial-report related Non-financial-report related
Serious defect:
Safety-a number of employee fatalities
Company reputation- negative news
spread around, the government or
Serious defect:
regulators investigated which lead to
Refer to one or several controlling defects
public attention, and cause huge loss of
groups in the enterprise which lead to the
customers, or need be report.
enterprise's serious deviation from controlling
Important defect:
target.
Safety-lead to a employ or citizen
Important defect:
disability or fatality
Refer to one or several controlling defects
Nature standard Company reputation- negative news
groups, its severity and economic results
spread around the state, had complained
lower than great defect which may lead to the
the media or lead to the contract will be
enterprise’s deviation from controlling target.
cancelled by the customers.
Common defect:
Common defect:
Refer to any financial-report related internal
Has occurred or is about to cause harm to
control defect that does not constitute serious
the health of workers or citizens
defect or important defect.
Company reputation-negative news spread
around certain region damaging the
Company’s reputation to some extent
Serious defect:
>5% of total profits of consolidated
statements in recent period
>1% of total assets of consolidated statements
in recent period Serious defect::RMB5 million (including
>2% of total operation revenue of RMB5 million) or above.
consolidated statements in recent period Important defect: Within RMB1 million
A serious violation of laws, regulations and (including RMB1 million) to RMB5
Quantitative standard
rules and the government's policy, was million (including RMB5 million)
restricted enter industry, suspended business Common defect: less than RMB1 million
licenses, forced to shut down.
Important defect:
Within 3%~5% of total profits of consolidated
statements in recent period
Within 0.5%~1% of total assets of
consolidated statements in recent period
57
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Within1%~2% of total operation revenue of
consolidated statements in recent period
Common defect:
＜ 3% of total profits of consolidated
statements in recent period ＜ 0.5% of total
assets of consolidated statements in recent
period ＜ 1%of total operation revenue of
consolidated statements in recent period
A serious violation of laws, regulations and
rules and the government's policy, lead to
fines and penalty
Number of serious
financial-report-related 0
defects
Number of serious
non-financial-report-rel 0
ated defects
Number of important
financial-report-related 0
defects
Number of important
non-financial-report-rel 0
ated defects
X. Auditor’s report on internal control
√ Applicable □ Inapplicable
Opinion paragraph in the auditor’s report on internal control
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. has maintained effective internal control on
financial report in all significant respects according to the Basic Rules for Enterprise Internal Control and
relevant regulations on 31 Dec. 2018.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 2019-03-19
Index to the disclosed auditor’s report on internal control http://www.cninfo.com.cn/
Type of the auditor’s opinion Standard unqualified opinion
Serious non-financial-report-related defects None
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s
report on the Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs
firm is consistent with the self-evaluation report of the Board.
√ Yes □ No
Section X. 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
58
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Section XI. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 2019-03-16
Name of audit institution Ruihua Certified Public Accountants (LLP)
No. of audit report Rui hua Shen Zi [2019] NO.48440001
Name of CPA Ou Changxian, Ren Xiaochao
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
Section XII. Documents Available for Reference
1. This Annual Report carrying the signature and seal of the Board Chairman;
2. The financial statements signed and sealed by the legal representative, the accounting head for this
Report and the accounting head of the Company; and
3. The originals of all the Company’s documents and announcements which were disclosed on Securities
Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn/ in the reporting period) designated by
the CSRC.
Board Chairman: Pan Zhirong
The Board of Directors of Tsann Kuen (China) Enterprise Co., Ltd.
16 March 2019
59
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
通讯地址：北京市东城区永定门西滨河路 8 号院 7 号楼中海地产广场西塔 9 层
Postal Address:9/F,West Tower of China Overseas Property Plaza, Building 7,NO.8,Yongdingmen Xibinhe Road,
Dongcheng District, Beijing
邮政编码（Post Code）：100077
电话（Tel）：+86(10)88095588 传真（Fax）：+86(10)88091199
Independent Auditors' Report
Rui hua Shen Zi [2019] NO.48440001
To the Shareholders of TsannKuen (China) Enterprise Co., Ltd.
I. Audit Opinion
We have audited the accompanying financial statements of TsannKuen (China)
Enterprise Co., Ltd., (hereafter, the Company), which include the Consolidated and
Separate Statements of Financial Position as of 31 December 2018, the
Consolidated and Separate Statements of Comprehensive Income, the
Consolidated and Separate Statements of Cash Flows and the Consolidated and
Separate Statements of Changes in Shareholders' Equity for the year then ended
and the notes to the financial statements.
In our opinion, the financial statements have been prepared in accordance with the
requirements of the Enterprises Accounting Standards of China and presented fairly,
in all material respects, the consolidated and separate financial position of
TsannKuen (China) Enterprise Co., Ltd. as at 31 December 2018, and the
Company’s consolidated and separate results of operations and consolidated and
separate cash flows for the year then ended.
II. Basis of Forming the Audit Opinion
We conducted our audit in accordance with the Chinese Certified Public Accountant
Auditing Standards. The section “Auditors’ Responsibility for the Financial
Statements” in the audit report further describes our responsibilities in accordance
with these standards. According to the Code of Ethics for Chinese Certified Public
Accountants, we are independent of the Company and fulfilled other responsibilities
of code of ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
60
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
III. Key Audit Items
Key audit items are the items which we believe, based on our professional judgment,
to be significant in the audit of financial statements for the current period. Audit
response to these items has been designed and implemented in the context of
auditing the financial statements as a whole for the purpose of expressing an audit
opinion on the financial statements; and we do not express an opinion on each of
these items individually. We believe that the following items are the key audit items
which warrant disclosure in the audit report.
1. Impairment allowance for inventories
1.1 Description
Please refer to Note 6.6 in Notes to the Financial Statements for relevant disclosure.
As of 31 December 2018, the closing balance of inventories in the Company’s
consolidated statement is CNY 286,029,319.34, and impairment allowance for
inventories is CNY 42,766,818.76. At the balance sheet date, impairment test is
carried out by management and impairment allowance for inventories is made if the
cost is higher than their net realizable value. Net realizable value is determined by
the estimated selling prices minus the estimated costs of completion, the estimated
selling expense and related taxes. Management needs to make significant
judgments and assumptions in the forecast, especially for future selling prices,
production costs, operating expenses and related taxes and fees. Due to the
complexity of the impairment test, the annual inventory impairment test involves key
judgments and estimates. therefore, we listed the inventory impairment allowance
as a key audit item.
1.2 Audit Response
In response to the Company’s net realizable value of inventories, we have
implemented the following audit procedures:
1.2.1 We reviewed the age and turnover of the inventories;
1.2.2 For products that were able to obtain open market sales prices, we
independently looked up the open market price information and compare it to the
estimated selling prices;
1.2.3 For products that were not able to obtain open market sales prices, we
selected samples to compare the estimated selling prices with the actual selling
prices in the near future or subsequent period;
1.2.4 We selected samples to compare costs of completion with similar raw
materials and work in process in the current year, and assessed the rationality of the
costs of completion estimated by the Company.
61
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
2. Recognition of export revenues cut-off
2.1 Description
Please refer to Note 6.29 in Notes to the Financial Statements for relevant
disclosure.
As of 31 December 2018, the amount of operating revenues in the Company’s
consolidated statement is CNY 1,790,062,803.08. Revenue from sales of goods is
recognized when significant risks and rewards attached to the ownership of the
goods sold are passed to the buyer. For the export product sales is mainly used the
FOB ports settlement, and the realization of the sales revenue is confirmed after the
products are shipped and the export declaration and export procedures are
completed.
The export sales revenue will be recognized after the export declaration is
completed. Due to the large volume of transactions, the high frequency of statistical
shipments, and revenue recognition processes usually involve more manual
controls, it is more likely that sales revenue recognition will be included in an
inappropriate accounting period. Therefore, whether export revenues are recorded
in the appropriate accounting period and whether there are material misstatements
are listed as key audit issues.
2.2 Audit Response
In response to the Company’s recognition of revenues, we have implemented the
following audit procedures:
2.2.1 We understood and assessed the effectiveness of design and operations of
critical internal control associated with revenues cut-off;
2.2.2 For revenues recognized before and after the balance sheet date, we selected
samples to check out the outbound orders, export declarations and other supporting
documents to assess whether the revenues were included in the appropriate
accounting period.
IV. Other Information
The management of the Company is responsible for other information, which
includes the information contained in the Company’s 2018 annual report except for
the financial statements and our auditor report.
Our audit opinion on the financial statements does not cover other information, and
we do not express assurance opinion in any form on the other information.
In parallel to our audit of the financial statements, our responsibilities include reading
other information and to assess if the information included in other information is
62
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
significantly inconsistent with the financial statements or information obtained during
the audit, and if there is possible material misstatement in other information.
Where we identify material misstatement in other information on the basis of our
work, we shall report such fact. Based on our work, we have no such matter to be
reported.
V. Responsibilities of Management and Those Charged with Governance for
the Financial Statements
Management of the Company (hereafter, the management) is responsible for
preparing and presenting the financial statements in accordance with Enterprise
Accounting Standards of China and for the purpose of fair presentation and
designing, implementing and maintaining internal control necessary to the
preparation of financial statements that are free from material misstatements,
whether due to fraud or error.
During the preparation of the financial statements, the management is responsible
for assessing the Company’s going-concern capability; disclosing, where applicable,
matters in relation to the going-concern status; and applying the going-concern
assumption for preparation of the financial statements, unless the management
plans to liquidate the Company, terminates operation of the Company or has no
other practical alternative choice.
Those charged with governance are responsible for monitoring the Company’s
financial reporting process.
VI. Auditors’ Responsibility for the Financial Statements
Our objective is to obtain reasonable assurance as to whether the financial
statements are free from material misstatement, whether due to frauds or errors,
and issue an audit report with audit opinion. Reasonable assurance is a high level
assurance, but there is no guarantee that a material misstatement will always be
found in the audit performed in accordance with the auditing standards.
Misstatements may be caused by fraud or error. Misstatements are considered to be
material if they, individually or in aggregate, could reasonably be expected to
influence the economic decisions of users based on the financial statements.
During the performance of our audit in accordance with the auditing standards, we
use professional judgment and maintain professional skepticism. We also perform
the following procedures:
63
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
A. Identify and assess the risks of material misstatement of the financial statements
due to fraud and error, design and implement audit procedures to address these
risks, and obtain sufficient and appropriate audit evidence as a basis for forming the
audit opinion. As fraud may involve collusion, forgery, willful omission,
misrepresentation or override of internal control, the risk of not discovering a
material misstatement due to fraud is higher than the risk of failing to detect a
material misstatement resulting from a mistake.
B. Understand the internal controls related to auditing in order to design appropriate
audit procedures.
C. Evaluate the appropriateness of accounting policies adopted by the management
and the reasonableness of accounting estimates and relevant disclosures made by
management.
D. Conclude on the appropriateness of management’s application of the going
concern assumption. Meanwhile, based on the audit evidence obtained, conclude
whether there is material uncertainty about the Company’s ability to continue as a
going-concern. If we conclude that there is material uncertainty, the auditing
standards require us to draw attention of the users of the financial statements to the
relevant disclosures in the financial statements. If the disclosure is inadequate, we
shall express a qualified opinion. Our conclusion is based on information available
as of the date of the audit report. However, future events or circumstances may
cause the Company not being able to continue as a going-concern.
E. Evaluate the overall presentation, structure and content of financial statements
(including disclosures), and evaluate whether the financial statements present fairly
the relevant transactions and events.
F. Obtain sufficient and appropriate audit evidence regarding to the Company’s
financial information of the entities or business activities in order to express opinion
on the financial statements. We are responsible for the guidance, supervision and
execution of the group audit. We take full responsibility for the audit opinion.
We communicate with those charged with governance on the scope and time
schedule of the audit, and significant audit findings, etc., including deficiency of
internal control that we identified during the audit which warrants attention.
We also provide a statement to those charged with governance regarding the fact
that we comply with the requirements of professional ethics relating to
independence, and also communicate with them about all relationships and other
matters that may be reasonably deemed to affect our independence ， as well as,
where applicable, the relevant precautions.
64
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Through the matters we communicate with those charged with governance, we
identify matters that are significant in the audit of the financial statements for the
current period, which therefore become the key audit items. We disclose these items
in the audit report, unless public disclosure of such items is prohibited by laws and
regulations; in exceptional circumstances, where the benefit arising from public
disclosure of certain matters is outweighed by the negative consequence brought by
such disclosure in consideration of public interest, we do not disclosure such items
in the audit report.
Ruihua Certified Public Certified Public Accountants: Chang Xian OU
Accountants
Beijing. China Certified Public Accountants: Xiao Chao Ren
16 March 2019
65
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Financial Position
as of 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 31 December 2018 31 December 2017
Current assets
Monetary funds 6.1 469,692,295.47 564,381,960.88
Financial assets measured by fair value
with changes in fair value recognised in profit 6.2 1,440,700.00 3,925,850.00
or loss
Derivative financial assets
Notes receivable and accounts receivable: 6.3 280,796,130.89 270,052,420.89
Including: Notes receivable 200,000.00
Accounts receivable 280,596,130.89 270,052,420.89
Advances to suppliers 6.4 2,668,796.33 10,939,777.79
Other receivables 6.5 29,944,042.47 35,318,724.60
Including: Interests receivable
Dividends receivable
Inventories 6.6 243,262,500.58 195,711,505.29
Held-for-sale assets 6.7 4,311,436.92
Non-current assets due within one year
Other current assets 6.8 527,497,484.82 413,119,671.14
Total current assets 1,559,613,387.48 1,493,449,910.59
Non-current assets
Available-for-sale financial assets 6.9 40,000.00 40,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment properties 6.10 25,014,648.31 32,125,408.51
Fixed assets 6.11 191,073,302.46 173,361,312.05
Construction in progress 6.12 895,756.17 2,059,623.18
Biological assets held for production
Oil and gas assets
Intangible assets 6.13 27,771,236.03 29,501,389.01
Development expenditure
Goodwill
Long-term deferred charge 6.14 8,058,867.12 4,388,248.42
Deferred tax assets 6.15 26,552,328.43 25,485,696.45
Other non-current assets 6.16 3,495,224.64 21,216,778.58
Total non-current assets 282,901,363.16 288,178,456.20
Total asset 1,842,514,750.64 1,781,628,366.79
(Continued in next page)
66
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Financial Position (Continued)
as of 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 31 December 2018 31 December 2017
Current liabilities
Short-term borrowings 6.17 10,432,044.21 10,832,951.89
Financial liabilities measured by fair value with changes in
fair value recognised in profit or loss
Derivative financial liabilities
Notes payable and accounts payable 6.18 672,895,647.66 603,564,378.51
Advances from customers 6.19 9,747,158.90 11,661,974.88
Employment benefits payable 6.20 48,587,140.78 44,803,501.77
Taxes and fees payable 6.21 3,768,531.07 2,824,721.65
Other payables 6.22 52,818,204.91 51,140,207.27
Including: Interests payable 23,919.09 1,448.76
Dividends payable
Held-for-sale liabilities
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 798,248,727.53 724,827,735.97
Non-current liabilities
Long-term borrowings
Debt instruments payable
Including: Preferred shares
Sustainable debts
Long-term payables
Long-term employee benefits payable 6.23 361,923.23 156,540.09
Provisions
Deferred income
Deferred tax liabilities 6.15 27,505,224.10 28,715,949.65
Other non-current liabilities
Total non-current liabilities 27,867,147.33 28,872,489.74
Total liabilities 826,115,874.86 753,700,225.71
Shareholders' equity
Share capital 6.24 185,391,680.00 185,391,680.00
Other equity instruments
Including: Preferred shares
Sustainable debts
Capital reserves 6.25 296,808,965.79 296,808,965.79
Less: Treasury shares
Other comprehensive income 6.26 5,924,132.67 4,619,820.87
Designated reserves
Surplus reserves 6.27 37,804,354.59 33,888,636.90
Provision for General risks
Retained earnings 6.28 122,872,551.30 129,787,980.61
Equity attributable to shareholders of the Parent 648,801,684.35 650,497,084.17
Minority interests 367,597,191.43 377,431,056.91
Total shareholders' equity 1,016,398,875.78 1,027,928,141.08
Total liabilities and shareholders' equity 1,842,514,750.64 1,781,628,366.79
Legal Representative Person in Charge of Accounting Work Person in Charge of
Financial Department
67
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Comprehensive Income
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 2018 2017
Total revenue 6.29 1,790,062,803.08 1,872,746,942.25
Including: Revenue from operation 6.29 1,790,062,803.08 1,872,746,942.25
Total operating costs 1,798,503,223.88 1,875,305,131.23
Including: Cost for operation 6.29 1,563,584,518.19 1,604,321,535.38
Taxes and surcharges 6.30 9,755,620.72 11,269,791.37
Selling expenses 6.31 62,065,999.35 69,553,841.59
Administrative expenses 6.32 84,670,918.17 85,495,214.63
R&D expenses 6.33 68,706,795.36 71,125,828.45
Financial costs 6.34 -11,779,703.18 22,622,958.63
Including: Interests expenses 1,102,100.88 1,003,531.25
Interests incomes 7,491,747.10 6,408,196.50
Loss on asset impairment 6.35 21,499,075.27 10,915,961.18
Add: Other income 6.36 4,601,286.14 2,809,085.33
Investment income (loss presented with "-" prefix) 6.37 12,949,846.66 20,071,550.35
Including: Investment income from associates and joint ventures
Gain from changes in fair value (loss presented with "-" prefix) 6.38 -2,485,150.00 3,925,850.00
Gain on disposal of non-current assets (loss presented by "-" prefix) 6.39 975,770.89 82,171,778.72
Profit from operation (loss presented with "-" prefex) 7,601,332.89 106,420,075.42
Add: Non-operating income 6.40 4,027,812.46 36,663,710.87
Less: Non-operating expenses 6.41 162,271.40 6,257,848.90
Profit before taxation (loss presented with "-" prefix) 11,466,873.95 136,825,937.39
Less: Income tax expenses 6.42 -1,278,631.37 23,062,799.31
Net profit (loss presented with "-" prefix) 12,745,505.32 113,763,138.08
A. Classified by business continuity
1. Net profit from continued operations (loss presented with "-" prefix)
2. Net profit from discontinued operations (loss presented with "-" prefix)
B. Classified by ownership
1. Net profit attributable to minority interests (loss presented with "-" prefix) 913,882.54 48,003,242.04
2. Net profit attributable to shareholders of the Parent (loss presented with "-" prefix) 11,831,622.78 65,759,896.04
After-tax other comprehensive income 6.43 1,739,082.39 -5,162,775.47
After-tax other comprehensive income attributable to shareholders of the parent 1,304,311.80 -3,872,081.58
A. Other comprehensive income not reclassifiable to profit or loss in subsequent
-100,859.20 38,206.89
periods
1. Remeasurement of net assets or net liabilities of defined benefit plans -100,859.20 38,206.89
2. Other comprehensive income measured by the equity method not reclassifiable to
profit or loss
B. Other comprehensive income reclassifiable to profit or loss in subsequent periods 1,405,171.00 -3,910,288.47
1. Other comprehensive income measured by the equity method reclassifiable to
profit or loss
2. Gain or loss on changes in fair value of financial assets available for sale
3. Gain or loss on reclassification of held-to-maturity investments to financial assets
available for sale
4. Effective elements of gain or loss of cash flow hedges
5. Exchange difference on translation of foreign financial statements 1,405,171.00 -3,910,288.47
6. Others
After-tax other comprehensive income attributable to minority interests 434,770.59 -1,290,693.89
Total comprehensive income 14,484,587.71 108,600,362.61
Total comprehensive income attributable to shareholders of the Parent 13,135,934.58 61,887,814.46
Total comprehensive income attributable to minority interests 1,348,653.13 46,712,548.15
Earning per share
A. Basic earning per share 0.06 0.35
B. Diluted earning per share 0.06 0.35
Legal Representative Person in Charge of Accounting Work
Person in Charge of Financial Department
68
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Cash Flows
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 2018 2017
Cash flows from operating activities
Cash received for sales of goods and rendering of services 1,776,146,683.86 1,861,049,475.99
Tax refund received 172,342,600.95 199,281,889.19
Other cash receipts relating to operating activities 6.44.1 60,998,482.73 97,209,999.97
Cash inflows from operating activities 2,009,487,767.54 2,157,541,365.15
Cash payments for purchase of goods and services 1,504,050,714.36 1,609,032,230.92
Cash paid to or on behalf of employees 255,089,740.09 255,327,498.20
Taxes and fees paid 15,183,113.18 33,350,596.54
Other cash payments relating to operating activities 6.44.2 129,088,139.09 161,961,834.86
Cash outflows for operating activities 1,903,411,706.72 2,059,672,160.52
Net cash flows from operating activities 106,076,060.82 97,869,204.63
Cash flows from investing activities
Cash received from investment withdrawal 437,821,540.00 437,912,190.00
Cash investment income received 15,128,306.66 12,159,360.35
Net cash received from disposal of fixed assets, intangible
3,275,366.62 91,734,420.04
assets or other non-current assets
Net cash received from disposal of subsidiaries or other
invested entities
Other cash receipts relating to investing activities 6.44.3 696,692,500.00 612,462,283.65
Cash inflows from investing activities 1,152,917,713.28 1,154,268,254.04
Cash paid for purchase or construction of fixed assets,
69,489,279.11 87,998,988.25
intangibles assets or other non-current assets
Cash paid for investment 560,000,000.00 700,000,000.00
Net cash paid for acquisition of subsidiaries and other
invested entities
Other cash payments relating to investing activities 6.44.4 696,692,500.00 601,160,897.85
Cash outflows for investing activities 1,326,181,779.11 1,389,159,886.10
Net cash flows from investing activities -173,264,065.83 -234,891,632.06
Cash flows from financing activities
Cash received from investors
Including: Cash received from minority shareholders of
subsidiaries
Cash received from loans raised 109,563,901.81 218,541,982.59
Cash received from debt instruments issued
Other cash receipts relating to financing activities 6.44.5 5,719,914.44 6,740,000.00
Cash inflows from financing activities 115,283,816.25 225,281,982.59
Cash paid for debt repayment 110,890,680.00 203,377,836.44
Cash paid for dividends, profit distribution and interests 27,094,288.51 33,352,468.97
Including: Cash dividends and profit distribution paid to
11,182,518.61 10,103,416.93
minority shareholers of subsidiaries
Other cash payments relating to financing activities 6.44.6 26,919,914.44 6,740,000.00
Cash outflows for financing activities 164,904,882.95 243,470,305.41
Net cash flows from financing activities -49,621,066.70 -18,188,322.82
Impact of change of foreign exchange rates on cash and
919,406.30 -18,603,018.40
cash equivalents
Net increase of cash and cash equivalents -115,889,665.41 -173,813,768.65
Add: cash and cash equivalents brought forward 564,381,960.88 738,195,729.53
Cash and cash equivalents carried forward 448,492,295.47 564,381,960.88
Legal Representative Person in Charge of Accounting Work
Person in Charge of Financial Department
69
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Changes in Shareholders' Equity
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
2018
Equity attributable to shareholders of the Parent
Other equity instruments Total
Item Less: Other Designa Provision
Capital Surplus Retained Minority interest shareholders'
Share capital Preferred Sustaina Treasur comprehensi ted for general
reserves reserves earnings equity
shares ble debts Others y stock ve income reserves risks
Balance brought forward 185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 129,787,980.61 377,431,056.91 1,027,928,141.08
Add: Changes of accounting policies
Correction of prior period errors
Business combination under common control
Others
Balance as at 1 January 185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 129,787,980.61 377,431,056.91 1,027,928,141.08
Changes for the period (decrease presented
1,304,311.80 3,915,717.69 -6,915,429.31 -9,833,865.48 -11,529,265.30
by "-" prefix)
1. Total comprehensive income 1,304,311.80 11,831,622.78 1,348,653.13 14,484,587.71
2. Changes in shareholders' contribution
a. Capital contributed
b. Contribution by holders of other equity
instruments
c. Share-based payments directly recognised in equity
d. Others
3. Profit distribution 3,915,717.69 -18,747,052.09 -11,182,518.61 -26,013,853.01
a. Recognition of surplus reserves 3,915,717.69 -3,915,717.69
b. Recognition of provision for general risks
c. Distribution to shareholders -14,831,334.40 -11,182,518.61 -26,013,853.01
d. Others
4. Movements within equity
a. Capital reserves transferred to share capital
b. Surplus reserves transferred to share capital
c. Loss set-off by surplus reserves
d. Change amount of defined
benefit plans that carry forward retained earnings
e. Others
5. Designated reserves
a. Recognition during the current period
b. Withdrawal during the current period
6. Others
Balance carried forward 185,391,680.00 296,808,965.79 5,924,132.67 37,804,354.59 122,872,551.30 367,597,191.43 1,016,398,875.78
Legal Representative Person in Charge of Accounting Work Person in Charge of Financial Department (Continued in next page)
70
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Consolidated Statement of Changes in Shareholders' Equity(Continued)
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
2017
Equity attributable to shareholders of the Parent
Total
Item Other equity instruments Less: Other Provision Minority
Surplus Retained shareholders'
Share capital Preferred Sustaina Other Capital reserves Treasury comprehensiv Designated for general interest
reserves earnings equity
shares ble debts s stock e income reserves risks
Balance brought forward 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00
Add: Changes of accounting policies
Correction of prior period errors
Business combination under common control
Others
Balance as at 1 January 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
Changes for the period (decrease presented by "-"
-3,872,081.58 3,942,418.73 39,570,475.71 36,609,131.22 76,249,944.08
prefix)
1. Total comprehensive income -3,872,081.58 65,759,896.04 46,712,548.15 108,600,362.61
2. Changes in shareholders' contribution
a. Capital contributed
b. Contribution by holders of other equity instruments
c. Share-based payments directly recognised in equity
d. Others
3. Profit distribution 3,942,418.73 -26,189,420.33 -10,103,416.93 -32,350,418.53
a. Recognition of surplus reserves 3,942,418.73 -3,942,418.73
b. Recognition of provision for general risks
c. Distribution to shareholders -22,247,001.60 -10,103,416.93 -32,350,418.53
d. Others
4. Movements within equity
a. Capital reserves transferred to share capital
b. Surplus reserves transferred to share capital
c. Loss set-off by surplus reserves
d. Change amount of defined benefit plans that carry
forward retained earnings
e. Others
5. Designated reserves
a. Recognition during the current period
b. Withdrawal during the current period
6. Others
Balance carried forward 185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 129,787,980.61 377,431,056.91 1,027,928,141.08
Legal Representative Person in Charge of Accounting Work Person in Charge of Financial Department
71
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Financial Position
as of 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 31 December 2018 31 December 2017
Current assets
Monetary funds 6,985,345.44 5,342,389.95
Financial assets measured by fair value with
changes in fair value recognised in profit or loss
Derivative financial assets
Notes receivable and accounts receivable: 14.1 16,443,882.91 20,741,059.08
Including: Notes receivable 200,000.00
Accounts receivable 16,243,882.91 20,741,059.08
Advances to suppliers 260,472.55 443,847.00
Other receivables 14.2 2,213,373.51 472,467.07
Including: Interests receivable
Dividends receivable
Inventories 9,339,180.06 16,130,234.05
Held-for-sale assets
Non-current assets due within one year
Other current assets 381,431.15 1,023,556.88
Total current assets 35,623,685.62 44,153,554.03
Non-current assets
Available-for-sale financial assets 40,000.00 40,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments 14.3 921,914,701.56 922,914,701.56
Investment properties 29,863,349.12 32,598,504.60
Fixed assets 1,189,309.65 1,568,125.72
Construction in progress
Biological assets held for production
Oil and gas assets
Intangible assets 29,249.99 56,249.99
Development expenditure
Goodwill
Long-term deferred charge 18,932.97
Deferred tax assets 10,946,860.01 10,492,468.50
Other non-current assets 53,879.31
Total non-current assets 964,037,349.64 967,688,983.34
Total asset 999,661,035.26 1,011,842,537.37
(Continued in next page)
72
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Financial Position (Continued)
as of 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 31 December 2018 31 December 2017
Current liabilities
Short-term borrowings
Financial liabilities measured by fair value with
changes in fair value recognised in profit or loss
Derivative financial liabilities
Notes payable and accounts payable 58,463,830.39 71,274,018.34
Advances from customers 1,708,795.17 1,664,602.93
Employment benefits payable 5,338,618.00 2,981,548.19
Taxes and fees payable 666,695.14 894,510.08
Other payables 262,786,311.87 288,656,915.61
Including: Interests payable
Dividends payable
Held-for-sale liabilities
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 328,964,250.57 365,471,595.15
Non-current liabilities
Long-term borrowings
Debt instruments payable
Including: Preferred shares
Sustainable debts
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 328,964,250.57 365,471,595.15
Shareholders' equity
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Including: Preferred shares
Sustainable debts
Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury shares
Other comprehensive income
Designated reserves
Surplus reserves 37,804,354.59 33,888,636.90
Provision for General risks
Retained earnings 176,010,460.28 155,600,335.50
Total shareholders' equity 670,696,784.69 646,370,942.22
Total liabilities and shareholders' equity 999,661,035.26 1,011,842,537.37
Legal Representative Person in Charge of Accounting Work
Person in Charge of Financial Department
73
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Comprehensive Income
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 31 December 2018 31 December 2017
Revenue from operation 14.4 105,978,000.19 82,967,902.95
Less: Cost for operation 14.4 86,058,017.91 60,386,772.14
Taxes and surcharges 2,022,994.78 2,560,140.37
Selling expenses 6,587,546.11 8,752,327.66
Administrative expenses 3,856,945.48 11,779,434.50
R&D expenses
Financial costs 123,947.26 -95,410.25
Including: Interests expenses
Interests incomes 97,600.81 137,268.10
Loss on asset impairment 3,268,944.12 -325,585.84
Add: Other income and gain 126,494.05 470,234.44
Investment income (loss presented with "-" prefix) 14.5 33,564,036.62 30,310,250.78
Including: Investment income from associates and
joint ventures
Gain from changes in fair value (loss presented with
"-" prefix)
Gain on disposal of non-current assets (loss
28,555.94
presented by "-" prefix)
Profit from operation (loss presented with "-" prefex) 37,750,135.20 30,719,265.53
Add: Non-operating income 1,059,666.16 123,360.29
Less: Non-operating expenses 107,016.00
Profit before taxation (loss presented with "-" prefix) 38,702,785.36 30,842,625.82
Less: Income tax expenses -454,391.51 -8,581,561.52
Net profit (loss presented with "-" prefix) 39,157,176.87 39,424,187.34
A. Net profit from continued operations (loss presented with
39,157,176.87 39,424,187.34
"-" prefix)
B. Net profit from discontinued operations (loss presented
with "-" prefix)
After-tax other comprehensive income
A. Other comprehensive income not reclassifiable to profit
or loss in subsequent periods
1. Remeasurement of net assets or net liabilities of defined
benefit plans
2. Other comprehensive income measured by the equity
method not reclassifiable to profit or loss
B. Other comprehensive income reclassifiable to profit or
loss in subsequent periods
1. Other comprehensive income measured by the equity
method reclassifiable to profit or loss
2. Gain or loss on changes in fair value of financial assets
available for sale
3. Gain or loss on reclassification of held-to-maturity
investments to financial assets available for sale
4. Effective elements of gain or loss of cash flow hedges
5. Exchange difference on translation of foreign financial
statements
6. Others
Total comprehensive income 39,157,176.87 39,424,187.34
Legal Representative Person in Charge of Accounting Work
Person in Charge of Financial Department
74
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Cash Flows
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 2018 2017
Cash flows from operating activities
Cash received for sales of goods and rendering of services 109,353,929.84 93,007,736.74
Tax refund received
Other cash receipts relating to operating activities 12,937,881.83 15,100,752.12
Cash inflows from operating activities 122,291,811.67 108,108,488.86
Cash payments for purchase of goods and services 90,290,565.29 84,256,135.93
Cash paid to or on behalf of employees -2,429,332.64 11,965,904.89
Taxes and fees paid 5,517,428.87 4,186,634.34
Other cash payments relating to operating activities 46,935,776.40 17,137,881.34
Cash outflows for operating activities 140,314,437.92 117,546,556.50
Net cash flows from operating activities -18,022,626.25 -9,438,067.64
Cash flows from investing activities
Cash received from investment withdrawal
Cash investment income received 33,547,555.83 30,310,250.78
Net cash received from disposal of fixed assets, intangible assets
53,200.00
or other non-current assets
Other cash receipts relating to investing activities 1,016,480.79
Cash inflows from investing activities 34,564,036.62 30,363,450.78
Cash paid for purchase or construction of fixed assets, intangibles
67,120.48 4,210.83
assets or other non-current assets
Cash paid for investment
Other cash payments relating to investing activities
Cash outflows for investing activities 67,120.48 4,210.83
Net cash flows from investing activities 34,496,916.14 30,359,239.95
Cash flows from financing activities
Cash received from investors
Cash received from loans raised
Cash received from debt instruments issued
Other cash receipts relating to financing activities
Cash inflows from financing activities
Cash paid for debt repayment
Cash paid for dividends, profit distribution and interests 14,831,334.40 22,247,001.60
Other cash payments relating to financing activities
Cash outflows for financing activities 14,831,334.40 22,247,001.60
Net cash flows from financing activities -14,831,334.40 -22,247,001.60
Impact of change of foreign exchange rates on cash and cash
equivalents
Net increase of cash and cash equivalents 1,642,955.49 -1,325,829.29
Add: cash and cash equivalents brought forward 5,342,389.95 6,668,219.24
Cash and cash equivalents carried forward 6,985,345.44 5,342,389.95
Legal Representative Person in Charge of Accounting Work
Person in Charge of Financial Department
75
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Changes in Shareholders' Equity
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
2018
Other equity instruments Other Total
Item Capital Less: Treasury Designated Surplus Provision for Retained
Share capital Preferred Sustainable comprehensive shareholders'
Others reserves stock reserves reserves general risks earnings
shares debts income equity
Balance brought forward 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
Add: Changes of accounting policies
Correction of prior period errors
Others
Balance as at 1 January 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
Changes for the period (decrease presented by "-" prefix) 3,915,717.69 20,410,124.78 24,325,842.47
1. Total comprehensive income 39,157,176.87 39,157,176.87
2. Changes in shareholders' contribution
a. Capital contributed
b. Contribution by holders of other equity instruments
c. Share-based payments directly recognised in equity
d. Others
3. Profit distribution 3,915,717.69 -18,747,052.09 -14,831,334.40
a. Recognition of surplus reserves 3,915,717.69 -3,915,717.69
b. Recognition of provision for general risks
c. Distribution to shareholders -14,831,334.40 -14,831,334.40
d. Others
4. Movements within equity
a. Capital reserves transferred to share capital
b. Surplus reserves transferred to share capital
c. Loss set-off by surplus reserves
d. Change amount of defined
benefit plans that carry forward retained earnings
e. Others
5. Designated reserves
a. Recognition during the current period
b. Withdrawal during the current period
6. Others
Balance carried forward 185,391,680.00 271,490,289.82 37,804,354.59 176,010,460.28 670,696,784.69
Legal Representative Person in Charge of Accounting Work Person in Charge of Financial Department
(Continued in next page)
76
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Statement of Changes in Shareholders' Equity (Continued)
for the Year ended 31 December 2018
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
2017
Other equity instruments Less: Other Provision Total
Item Designated Surplus Retained
Share capital Preferred Sustainable Capital reserves Treasury comprehensive for general shareholders'
Others reserves reserves earnings
shares debts stock income risks equity
Balance brought forward 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48
Add: Changes of accounting policies
Correction of prior period errors
Others
Balance as at 1 January 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48
Changes for the period (decrease presented by "-" prefix) 3,942,418.73 13,234,767.01 17,177,185.74
1. Total comprehensive income 39,424,187.34 39,424,187.34
2. Changes in shareholders' contribution
a. Capital contributed
b. Contribution by holders of other equity instruments
c. Share-based payments directly recognised in equity
d. Others
3. Profit distribution 3,942,418.73 -26,189,420.33 -22,247,001.60
a. Recognition of surplus reserves 3,942,418.73 -3,942,418.73
b. Recognition of provision for general risks
c. Distribution to shareholders -22,247,001.60 -22,247,001.60
d. Others
4. Movements within equity
a. Capital reserves transferred to share capital
b. Surplus reserves transferred to share capital
c. Loss set-off by surplus reserves
d. Change amount of defined
benefit plans that carry forward retained earnings
e. Others
5. Designated reserves
a. Recognition during the current period
b. Withdrawal during the current period
6. Others
Balance carried forward 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
Legal Representative Person in Charge of Accounting Work Person in Charge of Financial Department
77
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
TsannKuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2018
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
Note 1: Company Profile
TsannKuen (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 TsannKuen
China (Xiamen) Ltd., firstly, invested by the Fordchee (Hongkong) Co., Ltd., EUPA Industry Corporation Limited and
Hong Kong Fillman investment Co.,Ltd. . On 16 February 1993, with the approval of the Ministry of Foreign Trade
and Economic Co-operation, the Company was reorganized into an incorporated company and was renamed as
TsannKuen (China) Enterprise Co., Ltd. In June 1993, the Company issued 40,000,000 new shares pursuant to an
international placing and public offer and these new shares (“B shares”) were then listed on the Shenzhen Stock
Exchange on 30 June 1993. According to the “Intended Implementation of Share Reducing Proposal” of the 5th
extraordinary board of director of 2012 and the 3rd extraordinary shareholders’ general meeting of 2012, obtained
the consent from the Investment Promotion Bureau of Xiamen which is authorized by the Ministry of Commerce and
the approval documents ”The Approval by Investment Promotion Bureau of Xiamen to Consent the Capital
Reduction of TsannKuen (China) Enterprise Co., Ltd”(IPB audit [2012] NO. 698), as the base 1,112,350,077 shares
of the total original share capital, for implementation of share reducing model that all registered shareholders who
was recorded on 28 December 2012 with the proportion 6:1 to reduce the shares. After the implementation of share
reducing model, total share capital was reduced from 1,112,350,077 shares to 185,391,680 shares of the company.
Until 31 December 2018, the Company’s share capital is CNY 185,391,680.
Follow The Ministry of Commerce of the People’s Republic of China approved (The No. [2005]3107 “Agreed in
Principle to the Ministry of Commerce on TsannKuen (China) Enterprise Co., Ltd. Shares Traded Sponsor of the
Approval”）, On 6 December 2006, the Company received the [2006] No.266 file “The notice of TsannKuen (China)
Enterprise Co., Ltd, concerning the Approval of non-listed Foreign Shares Traded” from China Securities Regulatory
Commission. The China Securities Regulatory Commission agreed 700,476,830 unlisted shares (account for 62.97%
of the share capital) hold by the Company’s shareholders, EUPA Industry Corporation Limited, Fordchee
Development Limited and Fillman Investment Limited to transfer into B shares. On 29 November 2007 these B
shares could be listed and exercised on Shenzhen Stock Exchange. Up to 31 December 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 after the implementation of share reducing model. (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
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
The parent: STAR COMGISTIC CAPITAL CO.,LTD.
The Company operates within the electrical machinery and equipment manufacturing industry.
The industry of the company: electrical machinery and equipment manufacturing.
The approved business scope: the main business is to develop, manufacture household appliances, electronics, light
industrial products, modern office supplies. Design and manufacture of molds associated with these products in
domestic and international sales of the company's products and after-sales service. Wholesale and retail household
appliances, electronic products, electrical equipment, office supplies, kitchen utensils, pre-packaged food (limited to
branches), import and export related business and provide after-sales service (the above description do not involve
state trading commodity goods, involving quota license management products are according to the relevant
provisions of the State for the regulations application).
The financial statements approved by the resolution of the Board of Directors on 16 March 2019, in accordance with
the Articles of Association, the financial statements will be submitted to the shareholders meeting for consideration
Conference.
The 2018 annual consolidated scope of company are 11 subsidiaries, please see Note 8 “The equity in other main
entities”. The consolidated scope are increasing 1 subsidiary and reducing 1 subsidiary than previous year, please
see Note 7 “Change of consolidated scope”.
Note 2: 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) on15 February 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 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.
Note 3: Statement of Compliance with Enterprise Accounting Standards
The financial statements of the company are recognised 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 31 December 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.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note 4: 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 4.23 “Revenue” for the description. For description of
significant accounting judgments and estimates made by management, see Note 4.28 “Significant accounting
judgments and estimates”.
4.1 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.
4.2 Operating cycle
Normal business cycle is realised 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.
4.3 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 prepare its
functional statements.
4.4 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.
4.4.1 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
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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 recognised as an expense through profit or loss for the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in which all of the
combining enterprises are not ultimately controlled by the same party or parties both before and after the business
combination.
For a business combination not involving enterprises under common control, the party that, on the acquisition date,
obtains control of another enterprise participating in the combination is the acquirer, while that other enterprise
participating in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains
control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost including the sum
of fair value, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued
by the acquirer. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation
and consultancy services etc and other associated administrative expenses attributable to the business combination
are recognised in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially recognised 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
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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 of the Ministry of Finance on the issuance of Accounting
Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article55 of “Accounting Standards for Business
Enterprises No.33 - Consolidated Financial Statements” on the “package deal” criterion (see Note 4.5.2), to judge
the multiple exchange transactions whether they are the "package deal". If it belong to the “package deal” in
reference to the preceding paragraphs of this section and the Notes described in 4.13 “long-term investment”
accounting treatment, if it does not belong to the “package deal” to distinguish the individual financial statements and
the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree's equity investment before the
acquisition date and the cost of new investment at the acquisition date, as the initial cost of the investment, the
acquiree's equity investment before the acquisition date involved in other comprehensive income, in the disposal of
the investment will be in other comprehensive income associated with the use of infrastructure and the acquiree
directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in accordance
with the equity method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or
liabilities other than in the corresponding share of the lead, and the rest into the current investment income).
In the combination financial statements, the equity interest in the acquiree previously held before the acquisition date
re-assessed at the fair value at the acquisition date, with any difference between its fair value and its carrying
amount is recorded as investment income. The previously-held equity interest in the acquiree involved in other
comprehensive income and other comprehensive income associated with the purchase of the foundation should be
used party directly related to the disposal 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).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control. Control is
the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating
activities. The scope of consolidation includes the Company and all of the subsidiaries. Subsidiary is an enterprise or
entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant elements involved
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
in the control of the change, the company will be re-evaluated.
4.5.2 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 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
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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 4.13 Long-term equity
investments and Note 4.9 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 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 4.13.2.4)) 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.
4.6 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 4.13.2.2 for details.
The company, a joint operator, recognises in relation to its interest in a joint operation: (a) its assets, including its
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
share of any assets held jointly; (b) its liabilities, including its share of any liabilities incurred jointly ;(c) its revenue
from the sale of its share of the output arising from the joint operation ;(d) its share of the revenue from the sale of
the output by the joint operation; and (e) its expenses, including its share of any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint operator, such as a sale or
contribution of assets, the Company, prior to disposal of the assets to a third party, recognises gains and losses
resulting from such a transaction only to the extent of the other parties' interests in the joint operation. When such
transactions provide evidence of a reduction in the net realizable value of the assets to be sold or contributed to the
joint operation, which is in line with provision stipulated by CAS 8 - Assets Impairment, those losses shall be
recognised fully by the Company. When there is evidence of a reduction in the net realizable value of the assets to
be purchased from the joint operation, the Company shall recognise its share of the losses.
4.7 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.
4.8 Foreign exchange
4.8.1 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.
4.8.2 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, ③ available-for-trade is recorded into profit or loss
except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate
prevailing on the transaction date, and the amount denominated in the functional currency is not changed.
Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing at
the date when the fair values are determined. The exchange difference thus resulted are recognised in profit or loss
for the current period or as capital reserve.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.8.3 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 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.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.9 Financial instruments
4.9.1 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction. For a financial instrument which has an active market, the Company uses
quoted price in the active market to establish its fair value. The quoted price in the active market refers to the price
that can be regularly obtained from exchange market, agencies, industry associations, pricing authorities; it
represents the fair market trading price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value by using a
valuation technique. Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same,
discounted cash flow analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value of a
competitor’s interest rate swap quoted by a recognised financial institution as at the Company’s balance sheet date
in accordance with the principle of consistency.
4.9.2 Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognised and derecognised 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 recognised 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 recognised.
1) Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and
there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term
profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a
financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity
instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such
kind of financial assets, fair values are adopted for subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the
following conditions:
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant
gains or losses that would otherwise arise from measuring the financial instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is
reported to the enterprise’s key management personnels. Formal documentation regarding risk management or
investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or losses
arising from changes in the fair value and any dividends or interest income earned on the financial assets are
recognised 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 recognised in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the
financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial
asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow considering all contractual
terms of the financial asset or financial liability without considering future credit losses, and also consider all fees
paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an
integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an
active market. Financial assets classified as loans and receivables by the Company include note receivables,
account receivables, interest receivable dividends receivable and other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or
loss arising from derecognition, impairment or amortization is recognised 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.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from
changes in the fair value are recognised 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 recognised in profit or loss, until the financial assets are derecognised, at
which time the gains or losses are released and recognised in profit or loss.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Interests obtained and dividends declared by the investee during the period in which the financial assets
available-for-trade are held, are recognised in investment gains.
4.9.3 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.
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 recognised in capital reserve shall be removed and recognised in profit or loss. The amount of the
cumulative loss that is removed shall be difference between the acquisition cost with deduction of recoverable
amount less amortized cost, current fair value and any impairment loss on that financial asset previously recognised
in profit or loss.
If, after an impairment loss has been recognised, 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 recognised, 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.
4.9.4 Recognition and measurement of financial assets transfer
The Group derecognises 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
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Notes to the Financial Statements for the Year ended 31 December 2018
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the
asset is recognised according to the extent it exists as financial asset, and correspondent liability is recognised. 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 recognised in other comprehensive income, is recognised 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 recognised and the part that is derecognised, based on the
relative fair value of those parts. The difference between (a) the carrying amount allocated to the part derecognised;
and (b) the sum of the consideration received for the part derecognised and any cumulative gain or loss allocated to
the part derecognised which has been previously recognised in other comprehensive income, is recognised in profit
or loss.
4.9.5 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 recognised 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 recognised in profit or loss for the current period.
2) Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market
and their fair value cannot be measured reliably, is subsequently measured by cost Other financial liabilities are
subsequently measured at amortized cost using the effective interest method. Gains or losses arising from
derecognition or amortization is recognised in profit or loss for the current period.
3) Other financial liabilities
Derivative financial liabilities are linked to equity instruments that are not quoted in an active market and whose fair
value cannot be reliably measured and that must be settled by delivery of the equity instrument, whose subsequent
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Notes to the Financial Statements for the Year ended 31 December 2018
measurement is based on cost. Other financial liabilities are measured at amortized cost using the effective interest
method. Gains or losses arising from derecognition or amortization is recognised in current period profit or loss.
4.9.6 Derecognition of financial liabilities
The Group derecognises 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 derecognises a financial liability or a part of it, it recognises the difference between the carrying
amount of the financial liability (or part of the financial liability) derecognised the consideration paid (including any
non-cash assets transferred or new financial liabilities assumed) in profit or loss.
4.9.7 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 recognised
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.
4.9.8 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognised financial assets and
financial liabilities, and intends either to settle on a net basis, or to realise 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.
4.9.9 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 recognise any changes in the fair value of
equity instruments.
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Notes to the Financial Statements for the Year ended 31 December 2018
4.10 Receivables
The receivables by the Company include account receivables, and other receivables.
4.10.1 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.
4.10.2 Method for bad debts provision
1) Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 10% of total 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 recognised at the difference between the present value of future cash flow less the carrying
amount, and provision is made accordingly.
2) Provisions of bad debts in account receivables that individually insignificant item 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
Related party portfolios The companies which are in the scope of the consolidation.
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:
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Notes to the Financial Statements for the Year ended 31 December 2018
Item Provision
Age portfolios Age analysis method
Related party portfolios No allowance for bad debt, Unless the related party is insolvent
a. Portfolio by age analysis
Category % for accounts receivable % for other receivable
1 to 90 days 0.00 0.00
91 to 180 days 10.00 10.00
181 to 270 days 30.00 30.00
271 to 365 days 50.00 50.00
Over 365 days 100.00 100.00
b. Adopt other methods for recognition of impairment allowances:
Group name % for accounts receivable % for other receivable
Related party group 0.00 0.00
3) Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account receivables individually
for impairment when are of following characteristics: if there is objective evidence indicating the impairment, the
impairment loss is recognised at the difference between the present value of future cash flow less the carrying
amount, and provision is made accordingly. For examples: receivables of individual insignificance bears differing
credit risk characteristics to other receivables of individual insignificance account receivables with related parties;
account receivables under litigations or arbitrations, or account receivables with obvious indication that debtor
cannot fulfill the obligation of repayment.
4.10.3 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 recognised, the previously recognised impairment loss is reversed and
recognised 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 recognised at the date the impairment is
reversed.
4.11 Inventories
4.11.1 Classification of inventory
Inventories include finished goods and merchandises held for sale, work-in-progress and materials and supplies to
be consumed in the course of production of goods or rendering of services. Inventories are classified into materials
in transit, raw materials, work-in-progress, finished goods, materials and goods of consignment and revolving
materials etc.
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Notes to the Financial Statements for the Year ended 31 December 2018
4.11.2 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.
4.11.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined
on the basis of clear evidence obtained, and takes into consideration the purpose of holding inventories and effect of
post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The provision
for inventories decline in value is determined normally by the difference of the cost of individual item less its
realizable value. For large quantity and low value items of inventories,
Provision for decline in value is made based on categories of inventories. For items of inventories relating to a
product line that are produced and marketed in the same geographical area, have the same or similar end users or
purposes, and cannot be practicably evaluated separately from other items in that product line provision for decline
in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories
to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost,
the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.
4.11.4 The perpetual inventory system is maintained for stock system.
4.11.5 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 methods.
4.12 Non-current Assets Held for Sale and Discontinued Operations
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 year from 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.
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Notes to the Financial Statements for the Year ended 31 December 2018
The company measure a non-current asset or disposal group classified as held for sale at 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 are 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.
4.13 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
4.9 “financial instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant stipulations are common,
related activities and the arrangement must be after sharing control participants agreed to the decision-making.
Significant influence is the Company s financial and operating policies of the entity has the right to participate in
decision-making, but cannot control or with other parties joint control over those policies.
4.13.1 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
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Notes to the Financial Statements for the Year ended 31 December 2018
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 cost 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 acquistions
shall be viewed as one single transaction. If the multiple acquistions shall be viewed as one single transaction, the
multiple acquistions 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 acquistions shall be viewed as one single
transaction. If the multiple acquistions shall be viewed as one single transaction, the multiple acquistions shall be
accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one single
transaction, the cost of combination is measured at the sum of book value of the investment in the acquiree
immediately before the combination and cost of acquisition of additional shareholding. If the investment prior to the
combination is measured by fair value, cumulative other comprehensive income associated with the investment prior
to the combination is not affected by the combination. If the investment prior to the combination is measured as an
available-for-sale financial asset, the difference between the fair value and the book value of the investment
immediately before the combination and the associated cumulative other comprehensive income recognised prior to
the combination are carried to profit or loss.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure of audit, legal
services, valuation and consultancy and other administrative expenses, are recognised in profit or loss for the period
during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on initial recognition.
Depending on the way of acquisition, the cost of acquisition can be the total cash paid, the fair value of equity
instrument issued, the contract price, the fair value or book value of the assets given away in the case of
non-monetary asset exchange, or the fair value of the relevant long-term equity investments. The cost of acquisition
of a long-term equity investment acquired not through business combination also includes all directly associated
expenses, applicable taxes and fees, and other necessary expenses. The cost of a long-term equity investment,
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Notes to the Financial Statements for the Year ended 31 December 2018
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.
4.13.2 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 recognised in the period in accordance with the
attributable share of cash dividends or profit distributions declared by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the
fair values of the investee’s identifiable net assets at the time of acquisition, no adjustment shall be made to the
initial investment cost.
The carrying amount of a long-term equity investment measured using the equity method is adjusted by the
Company's share of the investee's net profit and other comprehensive income, which is recognised 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 acquistion. 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 unrealised profit or loss arising from
related party transactions between the Company and an associate or joint venture is deducted from investment
income. Unrealised 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 recognised 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 recognised 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 reocgnised in profit or loss.
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Notes to the Financial Statements for the Year ended 31 December 2018
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. The Company has obligation to share additional
net loss of the investee, the estimated share of loss recognised as accrued liabilities and investment loss. Where the
Company has unrecognised share of loss of the investee when the investee generates net profit, the Company's
unrecognised share of loss is reduced by the Company's share of net profit and when the Company's unrecognised
share or loss is eliminated in full, the Company's share of net profit, if any, is recognised 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 recognised 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
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 4.5.2 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 recognised in profit or loss.
The 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 acquistion is
treated in the same manner that the investee disposes the relevant assets or liabilities proportionate to the disposal.
The investee's equity movement other than net profit, other comprehensive income and profit distribution is
reocgnised in profit or loss proportionate to the disposal.
The 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
reocgnised in profit or loss proportionate to the disposal.
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; 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
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Notes to the Financial Statements for the Year ended 31 December 2018
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
recognised 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
reocgnised 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.
The Company's joint control or significant influence over an investee is lost due to partial disposal of investment in
the investee, the remaining investment in the investee is measured in accordance with the recognition and
measurement principles applicable to financial instruments, the difference between the fair value and the book value
of the remaining investment at the date of loss of joint control or significant influence is recognised 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 reocgnised in profit or loss when joint control or
significant influence is lost.
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 is accounted for one single transaction which result in the
Company's loss of control over the investee. Each difference between the consideration received and the book value
of the investment disposed is recognised in other comprehensive income and reclassified in full to profit or loss at
the time when control over the investee is lost.
4.14 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 expenditure is record in to the profit or loss when it
incurred.
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Notes to the Financial Statements for the Year ended 31 December 2018
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 4.20 “Non-current
and non-financial assets impairment ".
Occupied real estate for investment property or investment property is transferred to owner-occupied real estate or
stock conversion as the recorded value after the conversion, according to the book value before the conversion.
When an investment property is changed for personal use, since the change of date, the investment property is
transferred to fixed assets or intangible assets. Owner-occupied property is changed to earn rentals or for capital
appreciation, change the date, will be converted to fixed assets or intangible investment property. When the
transition occurs, the conversion to the use of investment property cost model, the carrying value before conversion
as the book value after conversion, convert to investment property measured at fair value model, the fair value of the
conversion date as the conversion after the recorded value.
When the investment property is disposed of or permanently withdrawn from use and no future economic benefits
are expected from the disposal, derecognition of the investment property. Investment property is sold, transferred,
retired or damaged, the disposal income after deducting the book value and related taxes and profit or loss.
4.15 Fixed assets
4.15.1 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.
4.15.2 The method for depreciation
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement.
From the following month of state of intended use, depreciation method of the straight-line method is used for
different categories of fixed assets to take depreciation. The recognition of the classification, useful life and estimated
residual rate are as follows:
Category Estimated residual value(%) Expected useful life Depreciation(%)
Houses and building 7.00-10.00 20 4.50-4.65
Machineries 0.00 5-15 6.67-20.00
Electronic device、furniture and modules 0.00 5-6 16.67-20.00
Vehicles 0.00 6 16.67
Improvement expense of leased fixed assets 0.00 the shorter of lease term and beneficial lives
Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of the
asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the expected
service life in the end.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.15.3 Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note 4.20 “Impairment of long-term assets”.
4.15.4 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.
4.15.5 Others
A fixed asset is recognised 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 derecognised. Otherwise, such expenditure shall be
recognised 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.
4.16 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 4.20 “Impairment of long-term assets”..
4.17 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.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds
before being used on the asset or any investment income on the temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is
determined by applying a weighted average interest rate to the weighted average of the excess amounts of
accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in
foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are
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.
4.18 Intangible assets
4.18.1 Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or
controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be
measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in
the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as
plants that are developed and constructed by the Company, and relevant land use rights and buildings, are
accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are
allocated between the land use rights and the buildings; if they cannot be reasonably allocated, all of the land use
rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and
any accumulate impairment losses is amortized over its estimated useful life using the straight-line method. An
intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the
end of the period, and makes adjustment when necessary. An additional review is also carried out for useful life of
the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period of economic
benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortize according to
the policy of intangible assets with definite useful life.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.18.2 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 recognised 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 recognised in the profit or loss in the
period in which it is incurred:
1) it is technically feasible to complete the intangible asset so as to use it or sell it;
2) it is clearly invented to complete the intangible asset in order to use it or sell it;
3) it is probable that the intangible asset is capable of generating future economic benefit, such as the market for the
product produced by the intangible asset or the intangible asset itself, it is objectively evidential that the intangible
asset is economically usable if it is going to be used internally;
4) there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell it;
5) the cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognised in the profit or
loss for the period in which it is incurred.
4.18.3 Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.20 “Impairment of long-term assets”.
4.19 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 recognised at the actual amount of the expense
incurred and allocated in each month of the beneficial period using the straight line method.
4.20 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.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense for the
asset to be ready for sale. When calculating the present value of expected future cash flows from an asset or asset
Group, the management shall estimate the expected future cash flows from the asset or asset Group and choose a
suitable discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual
asset is hard to estimate, the recoverable amount can be determined by the asset Group where subject asset
belongs. Asset Group is the smallest set of assets that can have cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
the present value of the future expected cash flows from the asset Groups or sets of asset Groups to which the
goodwill is allocated. Estimating the present value requires the Company to make an estimate of the expected future
cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order to
calculate the present value of those cash flows.
Once the loss from above asset impairment is recognised, the recoverable part cannot be reserved in the
subsequent periods.
4.21 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 recognised 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 insurance and annuities.
Post-employment benefits include defined contribution plans and defined benefit plans. Relevant contribution
amount in the defined contribution plan shall be recognised as cost of related assets or profit or loss during the year.
The defined benefit plan in the company is old-age insurance. Projected unit credit cost method (“PUC”) was used
by independent actuaries engaged by the Company to determine the present value of the defined benefit obligations
with unbiased and consistent actuarial assumptions regarding population variables and financial variables. Defined
benefit obligation was presented with the present value and the related current service cost was accounted
into current profit or loss.
When the Company terminates the labor relationship with employees prior to the employment contracts, or
encourages employees to accept voluntary redundancy compensation proposals in this company, a provision shall
be recognised for the compensation arising from the termination of employment relationship with employees at the
time when the Company can not unilaterally withdraw layoff proposal termination benefits provided due to
termination of employment, or the company ensures the costs related to the payment for termination benefits related
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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 retirement shall be recognised in profit or
loss (termination benefits) when satisfying the requirements of a provision.
Other long-term employee benefits provided by the company to employees that is in line with defined contribution
plans shall adopt the accounting treatment in accordance with defined contribution plans, otherwise the accounting
treatment of defined benefit plans.
4.22 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 determine as liabilities:
①This obligation is current obligation of the Company; and,
②The performance of this obligation will probably cause economic benefits outflow of the Company; and,
③The amount of this obligation can be reliably measured.
On balance sheet date the Company performs relate obligation that consider risk, incertitude, time value of currency
of contingency factor. According to the best estimate of the expenditure required to settle the present obligation for
estimated liabilities measured.
If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, to
determine the amount of compensation will be received at the basic, separately recognised as an asset, and is
recognised in the amount of compensation does not exceed the carrying value of estimated liabilities.
4.23 Revenue
4.23.1 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 the export product sales is mainly used the
FOB ports settlement, and the realization of the sales revenue is confirmed after the products are shipped and the
export declaration and export procedures are completed.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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 recognised for the events, but the amount shall be recognised 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 recognise the claim
indemnity expense.
4.23.2 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 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.
4.23.3 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: ①
total 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.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
When the outcome of a construction contract cannot be estimated reliably, but revenue should be recognised only to
the extent of contract costs incurred that it is probable will be recoverable; and If the cost cannot be recovered,
contract costs should be recognised as an expense in the period in which they are incurred and the contract revenue
cannot be recognised. When the uncertainty that makes the outcome of the construction unable to be estimated
reliably disappears, the revenue and cost are recognised according to the percentage of completion.
An expected loss on the construction contract should be recognised as an expense during the year when the total
contract cost is expected to be higher than the total contract revenue.
The incurred cost and accumulated gross profit (loss) and the settled price of the construction contract are disclosed
as a net amount in the balance sheet. The excess amount of the incurred cost and accumulated gross profit (loss)
over the settled price of the construction contract is disclosed as inventory, while the excess amount of the settled
price over the incurred cost and accumulated gross profit (loss) of the construction contract is disclosed as advance
from customers.
4.23.4 Royalty Revenue
According to the contract or agreement, the revenue is recognised on an accrual basis.
4.23.5 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.
4.24 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 as grant related to the assets; the others will be defined as grants related to the
income. If the files have not clearly defined government grants objects, it will be divided in the following manner
compartmentalize the grants related to the assets and grants related to the income: (1) government documents
defined specific projects targets, according to the relative proportion of the budgets of specific items included the
expenditure of to form assets and the expenditure will be charged into expense to be divided, the division ratio
required at each balance sheet date for review and make changes if necessary; (2) government documents to make
a general presentation purposes only, does not specify a particular project, as grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value
cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal
amount is recognised immediately in profit or loss for the period.
When received the government grants actually, 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
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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)grants
receivable 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 asset in 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 subsidies as 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.
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.
4.25 Deferred tax assets and deferred tax liabilities
4.25.1 Income tax for the current period
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply
to the period when the asset is realised or the liability is settled, according to the requirements of tax laws. The
measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from
the manner in which the Company expects at the balance sheet date, to recover the assets or settle the liabilities.
At the balance sheet date, current income tax liabilities or assets for the current and prior period, are measured at
the amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation for income
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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.
4.25.2 Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between
the nil carrying amount of those items that are not recognised as assets or liabilities and their tax base that can be
determined according to tax laws, deferred tax assets and liabilities are recognised using the balance sheet liability
method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or
liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable
profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognised.
For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint
ventures, no deferred income tax liability related is recognised except where the Company is able to control the
timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are
recognised.
For temporary deductible differences associated with the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible
losses) at the time of transaction, no deferred tax asset is recognised.
For taxable temporary deductible differences associated with investments in subsidiaries and associates, and
interests in joint ventures, no deferred income tax asset related is recognised if it is impossible to reversal the
temporary difference in the foreseeable future, or it is not probable to obtain taxable income which can be used for
the deduction of the temporary difference in the future.
Except mentioned above, the Company recognises other deferred income tax assets that can deduct temporary
differences to the extent that it is probable that taxable profits will be available against which the deductible
temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary
differences are recognised to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax law, that
are expected to apply in the period in which the asset is realised or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer
probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax assets
to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction is
reversed when it becomes probable that sufficient taxable profit will be available.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.25.3 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.
4.25.4 Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount, or through the asset
acquisition and liability fulfillment simultaneously, the Company shall present the net value from the offset between
current income tax asset and current income tax liability in the financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and current income
tax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxable
subject under the same tax payer, or related to different taxable subject, but the intension of net value settlement in
regard of the current income tax asset and current income tax liability, the Company shall present net value after the
offset of deferred income tax asset and deferred income tax liability.
4.26 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.
4.26.1 The Company as Lessee under operating Lease
Lease payments under an operating lease are recognised 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.
4.26.2 The Company as Leasor under operating Lease
Lease income from operating leases shall be recognised by the leasor in profit or loss on a straight-line basis over
the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis is more
systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period in which
they actually arise.
4.26.3 Financial lease to which the Company is the leasee
At the commencement of a financial lease to which the Company is the Leasee, the lower of the
lease-commencement-date fair value of the leased asset and the present value of the minimum lease payment is
recognised as the cost of the leased asset; the minimum lease payment is recognised as a long-term payable; and
the excess of the long-term payable over the amount recognised as the cost of the leased asset is recognised as
unrecognised lease expenditure. Expenses incurred during the negotiation and signing of the lease contract for
activities directly attributable to the lease are recognised as part of the cost of the leased asset. The residual amount
after deducting the unrecognised lease expenditure from the long-term payable is divided into non-current liability
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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.
4.26.4 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.
4.27 Significant changes in accounting policies and accounting estimates
4.27.1 Changes in accounting policies
4.27.1.1 Changes in accounting policies due to the implementation of the new Accounting Standards for Business
Enterprises
On 15 June 2018, the Ministry of Finance issued “CaiKuai [2018] No.15-Notice on Amending the 2018 Annual
General Financial Statement Format”, which merged part of the balance sheet items, and split some of the income
statement items, and on 7 September 2018, the Ministry of Finance issued the "Interpretation of Issues Related the
2018 Annual General Financial Statement Format ". The Company has prepared financial statements according to
the new format of enterprise financial statements. If the items of financial statements have changed, the comparative
data of comparable periods have been adjusted in accordance with the relevant provisions of “CAS 30 - Presentation
of Financial Statements”.
On 7 December 2018, the 6th Board Meeting of 2018 and the 5th Supervisory Board Meeting held by the Company
reviewed and approved "Proposal on Changes in Accounting Policies". Independent directors and supervisors of the
Company expressed independent opinions of consent.
In July 2018, the Ministry of Finance issued application guide of CAS 16 – Government Subsidies. The
compensation amount received by the Company shall be recognised in gain on disposal of non-current assets after
deducting relevant costs and expenses in the disposal year.
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TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
The 4th extraordinary Board Meeting of 2018 and the 6th Supervisory Board Meeting of 2018 held on 19 December
2018, and the 1st extraordinary shareholders’ general meeting of 2019 held on 1 January 2019, reviewed and
approved "Proposal on Changes in Accounting Policies". Independent directors and supervisors of the Company
expressed independent opinions of consent.
The above changes in accounting polices require retroactive adjustment of the 2017 comparable financial data. The
impact on the Company is as follows: Unit: CNY
Affected financial statements items Before retrospection Adjustment amount After retrospection
Notes receivable 0.00 0.00 0.00
Accounts receivable 270,052,420.89 -270,052,420.89 0.00
Notes receivable and accounts receivable 270,052,420.89 270,052,420.89
Notes payable 20,024,149.15 -20,024,149.15 0.00
Accounts payable 583,540,229.36 -583,540,229.36 0.00
Notes payable and accounts payable 603,564,378.51 603,564,378.51
Interests payable 1,448.76 -1,448.76 0.00
Other payables 51,138,758.51 1,448.76 51,140,207.27
Administrative expenses 156,621,043.08 -71,125,828.45 85,495,214.63
Research and development expenses 71,125,828.45 71,125,828.45
Deferred tax assets 22,682,483.17 2,803,213.28 25,485,696.45
Designated payables 109,137,778.28 -109,137,778.28 0.00
Deferred tax liabilities 1,431,505.08 27,284,444.57 28,715,949.65
Retained earnings 90,105,224.21 39,682,756.40 129,787,980.61
Equity attributable to shareholders of the Parent 610,814,327.77 39,682,756.40 650,497,084.17
Minority interests 332,457,266.32 44,973,790.59 377,431,056.91
Gain on disposal of non-current assets 773,823.55 81,397,955.17 82,171,778.72
Non-operating income 8,923,887.76 27,739,823.11 36,663,710.87
Income tax expenses -1,418,431.98 24,481,231.29 23,062,799.31
Net profit 29,106,591.09 84,656,546.99 113,763,138.08
Net profit attributable to shareholders of the Parent 26,077,139.64 39,682,756.40 65,759,896.04
4.27.2 Change of accounting estimates
No change of accounting estimates need to be disclosed for the current period.
4.28 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
112
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
as well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affect
value of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead significant
adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.
Where the changes in accounting estimates only affect the period when changes occurred, and they are 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:
4.28.1 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.
4.28.2 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.
4.28.3 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 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.
4.28.4 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.
113
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.28.5 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.
4.28.6 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 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.
4.28.7 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.
114
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
4.28.8 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.
4.28.9 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 the income tax and deferred income tax of the current period during
the final determination.
4.28.10 Accrued liabilities
According with the terms of the contract, the existing knowledge and historical experience, product quality assurance
and expected contract losses, delay in delivery of liquidated damages are estimated and 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.
4.28.11 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 value
cannot be obtained, the company will hire third-party qualified appraisers to perform the valuation. See Note 10 for
disclosure of the valuation techniques and input values used in determining the fair value of various types of assets
and liabilities.
115
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note 5: Taxation
5.1 Taxes and surcharges applicable to the Company
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and use 5、6、10、11、
Value added tax
the balance after deduct the deductible input tax to pay the VAT 16、17
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable
7
and construction surcharge for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Education surcharge 3
for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Local education surcharge 2
for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
5.2 Taxes and surcharges applicable to the primary subsidiaries
5.2.1 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and use 0、5、6、10、
Value added tax
the balance after deduct the deductible input tax to pay the VAT 11、16、17
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable
5
and construction surcharge for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Education surcharge 3
for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Local education surcharge 2
for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 15
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT, the rate is 0%.
5.2.2 TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and use 5、10、11、
Value added tax
the balance after deduct the deductible input tax to pay the VAT 16、17
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable
1
and construction surcharge for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Education surcharge 3
for the reporting period, and exempt and deductible tax
Sum of VAT payable, consumption duty payable and business tax payable
Local education surcharge 2
for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 25
116
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
5.2.3 Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and use the
Value added tax 5
balance after deduct the deductible input tax to pay the VAT
Corporate income tax Taxable profits 20
5.2.4 Pt.Star Comgistic Indonesia (hereafter, SCI)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and use the
Value added tax 10
balance after deduct the deductible input tax to pay the VAT
Corporate income tax Taxable profits 25
5.3 Tax concessions and government approvals
According to the principle of “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%.
Note 6: Notes to significant elements of the financial statements
Unless otherwise stated (incl. notes to significant elements of the financial statements is), the current year is 2018,
prior year is 2017 respectively.
6.1 Monetary funds
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Cash in hand 729,204.57 800,792.90
Bank deposit 447,763,090.90 563,581,167.98
Other monetary fund 21,200,000.00
Total 469,692,295.47 564,381,960.88
Including: The total amount of deposit abroad 20,593,490.50 8,996,831.17
Note: The amount of restricted cash of the company is CNY 21,200,000.00. which is the bank deposit pledged by the
company for the purpose of obtaining US loan and the period is one year.
6.2 Financial asset measured by fair value and which change is recorded in current incomes
6.2.1 Classification
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Transactional financial assets 1,440,700.00 3,925,850.00
Including: Derivative financial assets 1,440,700.00 3,925,850.00
Total 1,440,700.00 3,925,850.00
6.2.2 Explanation
The derivative financial asset is forward foreign exchange contract signed with financial institutions.
117
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.3 Notes receivable and accounts receivable
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Notes receivable 200,000.00 0.00
Accounts receivable 280,596,130.89 270,052,420.89
Total 280,796,130.89 270,052,420.89
6.3.1 Notes receivable
6.3.1.1 Disclosure by classification
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Bank acceptance 200,000.00 0.00
Total 200,000.00 0.00
6.3.2 Accounts receivable
6.3.2.1 Disclosure by classification
Balance as at 31/12/2018
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
significance subject to individually
assessment for impairment
Accounts receivable portfolio subject to 292,969,212.46 100.00 12,373,081.57 4.22 280,596,130.89
impairment by credit risk:
Portfolio by age 289,329,935.10 98.76 12,373,081.57 4.28 276,956,853.53
Portfolio by related parties 3,639,277.36 1.24 3,639,277.36
Accounts receivable of individually
insignificance subject to individually
assessment for impairment
Total 292,969,212.46 100.00 12,373,081.57 4.22 280,596,130.89
(Continued)
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
significance subject to individually
assessment for impairment
118
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable portfolio subject to
282,211,379.57 100.00 12,158,958.68 4.31 270,052,420.89
impairment by credit risk:
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 subject to individually
assessment for impairment
Total 282,211,379.57 100.00 12,158,958.68 4.31 270,052,420.89
6.3.2.1.1 Accounts receivable using age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2018
Age
Accounts receivable Allowance for bad debt % of total
Within 1 year 280,908,001.98 3,951,148.45 1.41
Including: 1-90 days 249,872,411.61 0.00 0.00
91-180 days 27,907,322.92 2,790,732.30 10.00
181-270days 2,018,587.92 605,576.38 30.00
271-365 days 1,109,679.53 554,839.77 50.00
1 to 2 years 542,096.77 542,096.77 100.00
2 to 3 years 449,020.41 449,020.41 100.00
Over 3 years 7,430,815.94 7,430,815.94 100.00
Total 289,329,935.10 12,373,081.57 4.28
6.3.2.1.2 Accounts receivable using related party group method for measurement of allowance for bad debt
Balance as at 31/12/2018
Items
Accounts receivable Allowance for bad debt % of total
Related parties 3,639,277.36 - -
Total 3,639,277.36 - -
6.3.2.2 Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY 981,952.95. The amount of recovered or
reversed allowance for bad debts during the year is CNY 710,110.49, the effect of exchange rate on bad debt
provision is CNY 21,173.37.
119
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.3.2.3 Accounts receivable written off during the current year
Items Written off amount
Sporadic accounts receivable written off 78,892.94
6.3.2.4 Details of top five accounts receivable
The total amount of top five accounts receivables summarized by debtors as at the end of current year is CNY
167,678,792.97, accounting for 57.23% of the total accounts receivable as at the end of current year, the total
corresponding allowance for bad debts is CNY 1,510,397.64.
6.4 Advances to suppliers
6.4.1 Disclosure by age
Balance as at 31/12/2018 Balance as at 31/12/2017
Age
Amount % of total Amount % of total
Within 1 year 2,569,822.31 96.29 10,747,472.71 98.24
1 to 2 years 98,974.02 3.71 192,305.08 1.76
Total 2,668,796.33 100.00 10,939,777.79 100.00
6.4.2 Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of current year is CNY 1,624,550.10, accounting
for 60.87% of the total advance to suppliers.
6.5 Other receivables
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Interests receivable 0.00 0.00
Dividends receivable 0.00 0.00
Other receivables 29,944,042.47 35,318,724.60
Total 29,944,042.47 35,318,724.60
6.5.1 Other receivables
6.5.1.1 Disclosure by classification
Balance as at 31/12/2018
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Other receivable portfolio subject to
29,643,450.77 93.38 1,799,236.50 6.07 27,844,214.27
impairment by credit risk:
Portfolio by age 29,434,784.85 92.72 1,799,236.50 6.11 27,635,548.35
120
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Balance as at 31/12/2018
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Portfolio by related parties 208,665.92 0.66 208,665.92
Other receivable of individually
insignificance subject to individually 2,099,828.20 6.62 2,099,828.20
assessment for impairment
Total 31,743,278.97 100.00 1,799,236.50 5.67 29,944,042.47
(Continued)
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Other receivable portfolio subject to
34,239,603.90 92.55 1,677,945.42 4.90 32,561,658.48
impairment by credit risk:
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 receivable of individually
insignificance subject to individually 2,757,066.12 7.45 2,757,066.12
assessment for impairment
Total 36,996,670.02 100.00 1,677,945.42 4.54 35,318,724.60
6.5.1.1.1 Other receivables with insignificant individual year-end amount but have provision for bad debt
Balance as at 31/12/2018
Other receivables (By company) Allowance for
Other receivables % of total Reasons for allowance
bad debt
China Export & Credit Insurance
648,450.00 Deposit, there is no impairment
Corporation (Fujian Branch)
Zhangzhou Intermediate People's Court 565,000.00 Deposit, there is no impairment
PT. PLN (PERSERO) 425,113.83 Deposit, there is no impairment
Longhai People's Court 200,000.00 Deposit, there is no impairment
Alipay (China) Network Technology Co. Ltd. 160,000.00 Deposit, there is no impairment
Niuhai E-commerce (Shanghai) Co., Ltd. 30,000.00 Deposit, there is no impairment
121
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Balance as at 31/12/2018
Other receivables (By company) Allowance for
Other receivables % of total Reasons for allowance
bad debt
Jiangsu Suning E-Commerce Co., Ltd. 30,000.00 Deposit, there is no impairment
GOME online e-commerce Co., Ltd. 10,000.00 Deposit, there is no impairment
Dashang Company Limited 5,000.00 Deposit, there is no impairment
Others 26,264.37 Deposit, there is no impairment
Total 2,099,828.20
6.5.1.1.2 Accounts receivable using the age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2018
Items
Carrying amount Allowance for bad debt % of total
Within 1 year 27,871,261.23 235,712.88 0.85
Including: 1-90 days 26,952,992.90
91-180 days 386,727.90 38,672.79 10.00
181-270days 343,650.63 103,095.19 30.00
271-365 days 187,889.80 93,944.90 50.00
1 to 2 years 439,141.63 439,141.63 100.00
2 to 3 years
Over 3 years 1,124,381.99 1,124,381.99 100.00
Total 29,434,784.85 1,799,236.50 6.11
6.5.1.1.3 Other receivable using related party group method for measurement of allowance for bad debt
Balance as at 31/12/2018
Items
Accounts receivable Allowance for bad debt % of total
Related parties 208,665.92 - -
Total 208,665.92 - -
6.5.1.2 Recognisation, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the current year is CNY 123,917.28, other
receivables written off during the current year is CNY 2,626.20.
6.5.1.3 Other receivable written off during the current year
Items Amount written off
Other receivable written off 0.00
122
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.5.1.4 Details of top five other receivables
Allowance for
Carrying amount
Debtors Nature of OR Age % of total bad debt as at
as at 31/12/2018
31/12/2018
Zhangzhou Longchi Development zone State
Export tax rebate 20,000,000.00 0-90 days 63.01
Administration of Taxation
Rent fee, electricity
Shanghai Tanghai Investment Co., Ltd. 1,238,148.47 Over 1 year 3.90 1,238,148.47
and water bill
Zhangzhou Hongyuan Group Material
Others 828,647.96 0-90 days 2.61
Recycling Co., Ltd.
China Export & Credit Insurance Corporation
Deposit 648,450.00 Over 1 year 2.04
Fujian Branch
State Grid Fujian Longhai Power Supply Co.,
Others 646,520.68 0-90 days 2.04
Ltd.
Total 23,361,767.11 73.60 1,238,148.47
6.6 Inventories
6.6.1 Disclosure by classification
Balance as at 31/12/2018
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 120,531,455.44 31,555,886.94 88,975,568.50
Work in progress 1,535,640.55 0.00 1,535,640.55
Self-manufactured semi-finished goods 26,783,292.38 1,680,377.22 25,102,915.16
Finished goods 134,736,708.94 9,530,554.60 125,206,154.34
Low-value consumables 1,083,138.58 0.00 1,083,138.58
Materials in transit 1,359,083.45 0.00 1,359,083.45
Total 286,029,319.34 42,766,818.76 243,262,500.58
(Continued)
Balance as at 31/12/2017
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 91,556,442.22 29,307,728.29 62,248,713.93
Work in progress 17,139,369.83 17,139,369.83
123
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Balance as at 31/12/2017
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Self-manufactured semi-finished goods 16,901,263.40 1,246,838.74 15,654,424.66
Finished goods 100,634,151.65 5,608,126.31 95,026,025.34
Low-value consumables 1,872,537.93 1,872,537.93
Materials in transit 3,770,433.60 3,770,433.60
Total 231,874,198.63 36,162,693.34 195,711,505.29
6.6.2 Impairment allowance for inventories
Increase in current year Decrease in current year
Impact of
Balance as at Balance as at
Items changes in
31/12/2017 Accrual Recovered or Written off Other 31/12/2018
exchange
rates
Raw material 29,307,728.29 10,219,758.30 53,619.41 8,025,219.06 0.00 31,555,886.94
Self-manufactured
1,246,838.74 1,498,297.01 0.00 1,064,758.53 0.00 1,680,377.22
semi-finished goods
Finished goods 5,608,126.31 5,121,779.99 85,603.42 1,284,955.12 0.00 9,530,554.60
Total 36,162,693.34 16,839,835.30 139,222.83 10,374,932.71 0.00 42,766,818.76
6.6.3 The basis of recognizing impairment allowance and the reason of recovering or writing off the impairment
allowance for inventories
The reason of
The reasons for
The basis of recognition of impairment allowance recovering impairment
Items inventory impairment
for inventories allowance for
write-off at current year
inventories
Market prices decrease, and resulting in raw
Raw material Sale or disposal
material’s net realizable value lower than cost
Market prices decrease, and resulting in
Self-manufactured
self-manufactured semi-finished goods’ net Sale or disposal
semi-finished goods
realizable value lower than cost
Market prices decrease, and resulting in Finished
Finished goods Sale or disposal
goods’ net realizable value lower than cost
124
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.7 Held-for-sale assets
Book value as at Estimated sale
Items Fair value Estimated time of sale
31/12/2018 expenses
Non-current Assets Held for Sale： —— —— —— ——
Including: Fixed assets 0.00 0.00 Year 2019
Investment property 4,311,436.92 67,181,957.00 Year 2019
Total 4,311,436.92 67,181,957.00 ——
On 19 December 2018, TKS, a subsidiary of the Company, signed the second phase plant expropriation
compensation agreement with the People's Government of Anting Town, Jiading District, Shanghai, and made an
announcement to supplement the second phase of land, house and related assets of TKS. The handover was
completed on 23 January 2019. The total compensation cost was CNY 88,344,133.00.
The Company transferred fixed assets with a book value of CNY 0.00 (book balance was CNY 754,361.67,
accumulated depreciation was CNY 612,535.53 and impairment allowance was CNY 141,826.14) and investment
property with a book value of CNY 4,311,436.92 (book balance was CNY 25,813,672.22 and accumulated
depreciation was CNY 21,502,235.30) to Held-for-sale assets. According to the evaluation results of Shanghai
Tongxin Land Real Estate Appraisal Investment Consulting Co., Ltd. (report number was Hu TX [2018] JZ0142), the
fair value of the above assets was CNY 67,181,957.00.
6.8 Other current assets
Items Carrying amounts as at 31/12/2018 Carrying amounts as at 31/12/2017
Input tax to be deducted 7,497,484.82 11,205,884.70
Financial products 520,000,000.00 400,000,000.00
Prepaid income tax 1,913,786.44
Total 527,497,484.82 413,119,671.14
6.9 Available-for-sale financial assets
6.9.1 The situation of available-for-sale financial assets
Carrying amounts as at 31/12/2018 Carrying amounts as at 31/12/2017
Items Net carrying Net carrying
Carrying amounts Impairment Carrying amounts Impairment
amounts amounts
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
125
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.9.2 The measurement of the cost of available for sale financial assets at the end of current year
Carrying amounts as at 31/12/2018 Impairment
Cash
Carrying Carrying
Increase Decre Increase Decreas dividend
Carrying Carrying amounts amounts % of
Investee in ase in in e in for
amounts as at amounts as at as at as at total
current current current current current
31/12/2017 31/12/2018 31/12/20 31/12/20
year year year year year
17 18
Xiamen
Association of
Enterprises with 40,000.00 40,000.00 1.48
Foreign
Investment
Total 40,000.00 40,000.00 1.48
6.10 Investment property
6.10.1 Investment property measured using the historical cost convention
Items Houses and buildings Land use rights Total
1. Cost:
1.1 Balance as at 31/12/2017 97,887,590.91 29,260,577.51 127,148,168.42
1.2 Increased in current year 11,835.30 11,835.30
1.2.1 Purchase 11,835.30 11,835.30
1.2.2 Transferred from inventory/fixed assets/construction in process
1.2.3 Increased due to merger
1.3 Decreased in current year 25,823,731.21 25,823,731.21
1.3.1 Disposal 10,058.99 10,058.99
1.3.2 Other transferd out 25,813,672.22 25,813,672.22
1.4 Balance as at 31/12/2018 72,075,695.00 29,260,577.51 101,336,272.51
2. Accumulated Depreciation and accumulated amortization
2.1 Balance as at 31/12/2017 81,364,789.99 13,657,969.92 95,022,759.91
2.2 Increased in current year 2,186,738.07 622,111.82 2,808,849.89
2.2.1 Accrual or amortization 2,186,738.07 622,111.82 2,808,849.89
2.3 Decreased in current year 21,509,985.60 21,509,985.60
2.3.1 Disposal 7,750.30 7,750.30
2.3.2 Other transferd out 21,502,235.30 21,502,235.30
2.4 Balance as at 31/12/2018 62,041,542.46 14,280,081.74 76,321,624.20
3. Carrying amount
3.1 Carrying amount as at 31/12/2018 10,034,152.54 14,980,495.77 25,014,648.31
3.2 Carrying amount as at 31/12/2017 16,522,800.92 15,602,607.59 32,125,408.51
126
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.10.2 Investment property with pending ownership registration
Items Carrying amount Reason for pending
Lvyuan three country villa 718,658.70
Note: Lvyuan three country villa is the houses with limited property rights and it is bought by the TsannKuen China
(Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company from Shanghai Lvsheng Real State
Development Co., Ltd. in year 1999, and there has no land expropriation. Shanghai Lvsheng Real State
Development Co., Ltd. and Shanghai Jiading district, Huangdu town Lvyuan community residents' committees
issued Certificate jointly to prove the right of this property belongs to TsannKuen China (Shanghai) Enterprise Co.,
Ltd. in January 2006.
6.10.3 Transfer of investment property
On 19 December 2018, TKS, a subsidiary of the Company, signed the second phase plant expropriation
compensation agreement with the People's Government of Anting Town, Jiading District, Shanghai, and made an
announcement. The handover was completed on 23 January 2019. The Company transferred investment property
with a book value of CNY 4,311,436.92 (book balance was CNY 25,813,672.22 and accumulated depreciation was
CNY 21,502,235.30) to Held-for-sale assets.
6.11 Fixed assets
6.11.1 Circumstance of fixed assets
Electronic Improvement
Houses and device, expense of
Items Machineries Vehicles Total
buildings modules and leased fixed
others assets
1. Cost:
1.1 Balance as at 31/12/2017 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
1.2 Increased in current year 4,582,567.62 27,590,879.47 33,755,159.78 1,584,067.51 385,640.92 67,898,315.30
1.2.1 Purchase 3,019,708.99 26,040,539.39 32,567,147.46 1,558,205.85 63,185,601.69
1.2.2 Impact of changes in exchange
1,562,858.63 1,550,340.08 1,188,012.32 25,861.66 385,640.92 4,712,713.61
rates
1.3 Decreased in current year 39,842.12 9,121,112.40 109,217,489.07 215,974.51 118,594,418.10
1.3.1Disposal or scrap 8,609,136.88 108,975,102.92 178,931.83 117,763,171.63
1.3.2 Other reduction 511,975.52 242,386.15 754,361.67
1.3.3 Impact of changes in exchange
39,842.12 37,042.68 76,884.80
rates
1.4 Balance as at 31/12/2018 96,522,040.15 156,735,004.25 900,180,280.19 19,456,238.19 66,386,732.06 1,239,280,294.84
2. Accumulated Depreciation
127
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Electronic Improvement
Houses and device, expense of
Items Machineries Vehicles Total
buildings modules and leased fixed
others assets
2.1 Balance as at 31/12/2017 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
2.2 Increased in current year 4,440,356.93 7,583,879.84 29,354,501.68 983,688.88 1,748,874.37 44,111,301.70
2.2.1 Accrual 3,982,730.63 6,870,671.44 28,592,385.11 961,316.36 1,425,706.30 41,832,809.84
2.2.2 Impact of changes in exchange 457,626.30 713,208.40 762,116.57 22,372.52 323,168.07 2,278,491.86
rates
2.3 Decreased in current year 7,141.47 7,302,317.39 104,482,593.65 178,931.83 111,970,984.34
2.3.1 Disposal or scrap 6,932,168.01 104,240,207.50 178,931.83 111,351,307.34
2.3.2 Other reduction 370,149.38 242,386.15 612,535.53
2.3.3 Impact of changes in exchange
7,141.47 7,141.47
rates
2.4 Balance as at 31/12/2018 52,380,702.19 83,608,930.62 795,600,297.86 14,848,074.77 64,057,357.58 1,010,495,363.02
3. Impairment allowance
3.1Balance as at 31/12/2017 18,704,200.64 19,523,524.20 4,933.21 27,381.88 38,260,039.93
3.2 Increased in current year 1,572,499.73 2,815,801.90 38,484.69 4,426,786.32
3.2.1 Accrual 1,455,626.87 2,772,985.39 37,494.17 4,266,106.43
3.2.2 Impact of changes in exchange 116,872.86 42,816.51 990.52 160,679.89
rates
3.3 Decreased in current year 548,194.72 4,427,002.17 4,975,196.89
3.3.1 Disposal or scrap 406,368.58 4,427,002.17 4,833,370.75
3.3.2 Other reduction 141,826.14 141,826.14
3.3.3 Impact of changes in exchange
rates
3.4 Balance as at 31/12/2018 19,728,505.65 17,912,323.93 43,417.90 27,381.88 37,711,629.36
4. Carrying amount
4.1 Carrying amount as at 31/12/2018 44,141,337.96 53,397,567.98 86,667,658.40 4,564,745.52 2,301,992.60 191,073,302.46
4.2 Carrying amount as at 31/12/2017 44,031,827.92 36,233,668.37 85,390,695.45 4,039,894.26 3,665,226.05 173,361,312.05
6.11.2 Fixed assets with pending ownership registration
Items Carrying amount Reason forpending
Lvyuan three country villa 215,597.61
Qingying garden 157,902.62 Legal procedures in process
128
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note: Lvyuan three country villa is the houses with limited property rights and it is bought by the TsannKuen China
(Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company from Shanghai Lvsheng Real State
Development Co., Ltd. in year 1999, and there has no land expropriation. Shanghai Lvsheng Real State
Development Co., Ltd. and Shanghai Jiading district, Huangdu town Lvyuan community residents' committees
issued Certificate jointly to prove the right of this property belongs to TsannKuen China (Shanghai) Enterprise Co.,
Ltd. in January 2003.
6.11.3 Transfer of fixed assets
On 19 December 2018, TKS, a subsidiary of the Company, signed the second phase plant expropriation
compensation agreement with the People's Government of Anting Town, Jiading District, Shanghai, and made an
announcement. The handover was completed on 23 January 2019. The Company transferred fixed assets with a
book value of CNY 0.00 (book balance was CNY 754,361.67, accumulated depreciation was CNY 612,535.53 and
impairment allowance was CNY 141,826.14) to Held-for-sale assets.
6.12 Construction in progress
Items Carrying amounts as at 31/12/2018 Carrying amounts as at 31/12/2017
Construction in progress 895,756.17 2,059,623.18
Material holds for construction of fixed assets
Total 895,756.17 2,059,623.18
6.12.1 Construction in progress
Carrying amounts as at 31/12/2018 Carrying amounts as at 31/12/2017
Items
Carrying amounts Impairment Net carrying amounts Carrying amounts Impairment Net carrying amounts
Sporadic project 895,756.17 895,756.17 2,059,623.18 2,059,623.18
Total 895,756.17 895,756.17 2,059,623.18 2,059,623.18
6.13 Intangible assets
Items Land rights Software Total
1. Cost:
1.1 Balance as at 31/12/2017 17,799,360.56 33,444,519.90 51,243,880.46
1.2 Increased in current year 803,270.37 2,812,305.80 3,615,576.17
1.2.1 Purchase 287,216.82 2,798,506.22 3,085,723.04
1.2.2 Impact of changes in exchange rates 516,053.55 13,799.58 529,853.13
1.3 Decreased in current year 301,671.89 301,671.89
1.3.1 Disposal
1.3.2 Impact of changes in exchange rates 301,671.89 301,671.89
1.4 Balance as at 31/12/2018 18,300,959.04 36,256,825.70 54,557,784.74
2. Accumulated amortization
129
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Items Land rights Software Total
2.1 Balance as at 31/12/2017 2,969,634.08 18,772,857.37 21,742,491.45
2.2 Increased in current year 709,104.42 4,336,027.13 5,045,131.55
2.2.1 Accrual 559,776.85 4,322,620.37 4,882,397.22
2.2.2 Impact of changes in exchange rates 149,327.57 13,406.76 162,734.33
2.3 Decreased in current year 1,074.29 1,074.29
2.3.1 Accrual
2.3.2 Impact of changes in exchange rates 1,074.29 1,074.29
2.4 Balance as at 31/12/2018 3,677,664.21 23,108,884.50 26,786,548.71
3. Carrying amount
3.1 Carrying amount as at 31/12/2018 14,623,294.83 13,147,941.20 27,771,236.03
3.2 Carrying amount as at 31/12/2017 14,829,726.48 14,671,662.53 29,501,389.01
6.14 Long-term deferred charge
Increase Other decrease
Carrying amount Amortisation Carrying amount
Items during the current during the current
as at 31/12/2017 for the current year as at 31/12/2018
year year
Telecommunications
18,932.97 18,932.97
engineering
Houses and buildings
4,077,187.92 6,076,651.97 2,320,602.16 7,833,237.73
renovation expenses
Wall projects of 3 phases 292,127.53 63,030.61 3,467.53 225,629.39
Total 4,388,248.42 6,076,651.97 2,402,565.74 3,467.53 8,058,867.12
6.15 Deferred tax assets and deferred tax liabilities
6.15.1 Without offsetting deferred tax assets
Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Items Deductible temporary Deferred Deductible temporary
Deferred tax assets
difference tax assets difference
Impairment allowance 78,308,350.30 12,413,175.96 75,021,501.16 11,604,071.98
Accrued expenses 9,125,886.93 1,505,944.87 10,687,842.77 1,859,681.61
Unrealised profits from
736,143.60 184,035.90 812,548.04 203,137.01
intragroup transactions
Payroll liability 321,335.06 64,267.00 236,457.93 40,197.85
Undistributed deficit 49,539,618.81 12,384,904.70 47,109,207.14 11,777,301.79
Others 7,683.59 1,306.21
Total 138,031,334.70 26,552,328.43 133,875,240.63 25,485,696.45
130
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.15.2 Without offsetting deferred tax liabilities
Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Items Taxable temporary Deferred tax Taxable temporary Deferred tax
difference assets difference assets
policy relocation 109,137,778.28 27,284,444.57 109,137,778.28 27,284,444.57
Depreciation of fixed assets 3,311,438.01 827,859.50
Held for trading financial assets 1,440,700.00 216,105.00 3,925,850.00 588,877.50
Others 23,372.70 4,674.53 86,871.08 14,768.08
Total 110,601,850.98 27,505,224.10 116,461,937.37 28,715,949.65
6.15.3 Details of unrecognised deferred tax assets
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Impairment allowance for assets 16,342,415.89 13,238,136.21
Accrued expenses 19,164,421.53 20,520,490.27
Payroll liability 9,751,674.95 1,842,179.97
Undistributed deficit 108,813,092.06 107,346,322.72
Total 154,071,604.43 142,947,129.17
Note: Due to whether the availability of future to obtain sufficient taxable income is uncertain that is list in above, and
therefore no deferred tax assets are recognised as deductible temporary differences and recoverable losses.
6.15.4 The deductible losses of unrecognised deferred tax assets shall be matured in the following years
Carrying amount as at Carrying amount as at
Year Note
31/12/2018 31/12/2017
Year 2018 19,455,971.53
Year 2019 7,616,045.12 7,616,045.12
Year 2020 10,341,578.00 10,341,578.00
Year 2021 42,160,374.19 42,160,374.19
Year 2022 4,828,378.89 4,828,378.89
Year 2023 15,495,274.18
Year 2024-2028 28,371,441.68 22,943,974.99
Total 108,813,092.06 107,346,322.72
Note: The annual loss of Tsannkuen Edge Intelligence Co., Ltd. continued to make up for a maximum period of 10
years.
131
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.16 Other non-current assets
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Prepaid mold fee 1,332,192.80 877,801.58
Prepaid facilities etc. 2,163,031.84 20,338,977.00
Total 3,495,224.64 21,216,778.58
6.17 Short-term loan
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Pledged loan 10,432,044.21 0.00
Credit loan 0.00 10,832,951.89
Total 10,432,044.21 10,832,951.89
For the types of mortgage assets and the amount of the pledge loan, please see Note 6.46 Restricted assets of
ownership or usage rights.
6.18 Notes payable and accounts payable
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Notes payable 17,120,079.05 20,024,149.15
Accounts payable 655,775,568.61 583,540,229.36
Total 672,895,647.66 603,564,378.51
6.18.1 Notes payable
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Bank acceptance 15,490,917.98 12,222,252.77
Commercial acceptance 1,629,161.07 7,801,896.38
Total 17,120,079.05 20,024,149.15
Note: There are no expired notes payable that have not been paid as at the end of current year.
6.18.2 Accounts payable
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Within 1 year 651,780,435.83 580,224,062.25
Over 1 year 3,995,132.78 3,316,167.11
Total 655,775,568.61 583,540,229.36
Details of significant accounts payable remaining unsettled for more than one year
Creditors Amounts outstanding as at 31/12/2018 Reason(s) for unsettlement
Ningbo Chaochao Electrical Equipment Co., Ltd. 500,237.01 Quality disputes
Total 500,237.01
132
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.19 Advances from customers
6.19.1 Disclosure by classification
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Within 1 year 6,077,948.25 6,124,044.24
Over 1 year 3,669,210.65 5,537,930.64
Total 9,747,158.90 11,661,974.88
6.20 Employee benefits payable
6.20.1 Disclosure by classification
Carrying amount as at Increase during the Decrease during the Carrying amount as
Items
31/12/2017 current year current year at 31/12/2018
1. Short-term employee benefits 43,979,234.64 251,435,290.47 253,701,520.66 41,713,004.45
2. Post-employment benefits 824,267.13 12,796,545.38 12,897,162.18 723,650.33
3. Termination benefits 6,947,825.77 797,339.77 6,150,486.00
Total 44,803,501.77 271,179,661.62 267,396,022.61 48,587,140.78
6.20.2 Disclosure by classification of short-term employee benefits
Carrying amount as at Increase during the Decrease during the Carrying amount as
Items
31/12/2017 current year current year at 31/12/2018
1. Wages, salaries and subsidies 31,332,745.77 224,410,312.83 226,556,450.80 29,186,607.80
2. Employee welfare 1,441.58 11,983,837.28 11,983,060.81 2,218.05
3. Social insurance: 1,160,387.42 9,126,649.63 9,562,516.91 724,520.14
Including: Medical insurance 973,989.23 6,832,212.47 7,339,553.35 466,648.35
Employment injury insurance 136,753.13 1,876,332.60 1,756,009.44 257,076.29
Maternity insurance 49,645.06 418,104.56 466,954.12 795.50
4.Housing provident fund 9,273,252.85 5,466,180.46 4,981,540.36 9,757,892.95
5.Labour union fee and employee
430,926.83 430,926.83
education fee
6. Short-term paid absences 2,211,407.02 -58,926.08 110,715.43 2,041,765.51
7.Other short-term employee benefits 76,309.52 76,309.52
Total 43,979,234.64 251,435,290.47 253,701,520.66 41,713,004.45
133
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.20.3 Disclosure by defined contribution plan
Carrying amount as at Increase during the Decrease during the Carrying amount as
Items
31/12/2017 current year current year at 31/12/2018
1. Basic pension 823,119.93 12,470,024.09 12,569,911.09 723,232.93
2. Unemployment insurance 1,147.20 326,521.29 327,251.09 417.40
Total 824,267.13 12,796,545.38 12,897,162.18 723,650.33
The company participates 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.
6.21 Taxes payable
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Corporate income tax 1,314,697.77
Personal income tax 518,057.12 516,590.25
Education surcharge 668,997.40 692,945.25
Urban maintenance and construction surcharge 653,751.41 677,699.31
Others 613,027.37 937,486.84
Total 3,768,531.07 2,824,721.65
6.22 Other payables
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Interest payables 23,919.09 1,448.76
Dividends payable 0.00 0.00
Other payables 52,794,285.82 51,138,758.51
Total 52,818,204.91 51,140,207.27
6.22.1 Interest payables
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Interest payables for short-term loan 23,919.09 1,448.76
Total 23,919.09 1,448.76
6.22.2 Other payables
6.22.2.1 Detail for other payables
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Within 1 year 41,912,027.59 42,618,980.95
Over 1 year 10,882,258.23 8,519,777.56
Total 52,794,285.82 51,138,758.51
134
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.22.2.2 Details of significant other payables remaining unsettled for more than one year
Items Carrying amount as at 31/12/2018 Reason(s)for unsettlement
Deposit 9,700,688.00 Return upon termination of contract
Total 9,700,688.00
6.23 Long-term employee benefits payable
6.23.1 Disclosure by classification
Carrying amount as at Carrying amount as at
Items
31/12/2018 31/12/2017
1. Post-employment benefits - net liabilities of defined benefit plans 361,923.23 156,540.09
Total 361,923.23 156,540.09
6.23.2 Movement of defined benefit plan
Carrying amount as at Carrying amount as
Items
31/12/2018 at 31/12/2017
1. Balance as at 31/12/2017 156,540.09 187,928.74
2. Defined benefit cost recognised in profit or loss in the current period 56,036.04 53,493.47
3. Defined benefit cost recognised in other comprehensive income 164,825.72 -61,376.52
4. Other movements -15,478.62 -23,505.60
4.1 Consideration payment at the time of settlement
4.2 Benefit paid -21,812.47 -26,585.76
4.3 Contribution by employees
4.4 Others 6,333.85 3,080.16
5. Balance as at 31/12/2018 361,923.23 156,540.09
6.24 Share capital
Movements during the current reporting period (+、－)
Carrying amount as at Carrying amount as at
Items Bonus Conversion
31/12/2017 Share issue Others Subtotal 31/12/2018
issue from reserves
Total amount of
185,391,680.00 185,391,680.00
floating shares
6.25 Capital reserves
Carrying amount as at Increase during the Decrease during the Carrying amount as at
Items
31/12/2017 current year current year 31/12/2018
Share premium 210,045,659.80 210,045,659.80
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 296,808,965.79
135
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.26 Other comprehensive income
Total amount in current year
Less: previously
recognised in
Carrying After tax After tax Carrying
other Less:
Items amount as at Amount for the attributable to attributable to amount as at
comprehensive Income tax
31/12/2017 year before tax the parent minority 31/12/2018
income expense
company shareholders
transferred into
profit or loss
1. Other comprehensive
income not
reclassifiable to profit or 53,821.50 -168,098.66 -33,619.73 -100,859.20 -33,619.73 -47,037.70
loss in subsequent
periods
Including: Movements
from re-measurement
53,821.50 -168,098.66 -33,619.73 -100,859.20 -33,619.73 -47,037.70
of net liabilities(assets)
of defined benefit plan
The share of other
comprehensive income
that cannot be
reclassified into profit or
loss under the equity
method
2. Other comprehensive
Income reclassifiable to
4,565,999.37 1,873,561.32 1,405,171.00 468,390.32 5,971,170.37
profit or loss in
subsequent periods
Including:
The share of other
comprehensive income
that can be reclassified
into profit or loss under
136
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Total amount in current year
Less: previously
recognised in
Carrying After tax After tax Carrying
other Less:
Items amount as at Amount for the attributable to attributable to amount as at
comprehensive Income tax
31/12/2017 year before tax the parent minority 31/12/2018
income expense
company shareholders
transferred into
profit or loss
the equity method
Gains and losses from
changes in fair value of
available-for-sale
financial assets
Gains and losses from
available-for-sale
financial assets that is
reclassified from
held-to-maturity
investments
Effective portion of cash
flow hedge gaint and
losses
Foreign exchange
difference on translation 4,565,999.37 1,873,561.32 1,405,171.00 468,390.32 5,971,170.37
of financial Statements
Total 4,619,820.87 1,705,462.66 - -33,619.73 1,304,311.80 434,770.59 5,924,132.67
6.27 Surplus reserves
Carrying amount as at Increase Decrease Carrying amount as at
Items
31/12/2017 during the current year during the current year 31/12/2018
Statutory surplus
33,888,636.90 3,915,717.69 37,804,354.59
reserve
Total 33,888,636.90 3,915,717.69 37,804,354.59
137
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note: According to the provisions of the Company Law and the Articles of Association of the Company to accrual
statutory surplus reserve of 10 % of net profit, and no longer to accrual the statutory surplus reserve has reached
more than 50% of the registered capital of the company.
After the Company has accrual the statutory surplus reserve, the Company can accrual any surplus reserve fund.
Upon approval, the discretionary surplus reserve fund may be used to cover future losses or increase in share
capital.
6.28 Retained earnings
Items Current year Prior year
Pre-adjustment balance brought forward 90,105,224.21 90,217,504.90
Total adjustment to retained earnings b/f (+, -) 39,682,756.40
Retained earnings b/f after adjustment 129,787,980.61 90,217,504.90
Add: Net profit attributable to shareholders of the parent 11,831,622.78 65,759,896.04
Less: Appropriation to statutory surplus reserve 3,915,717.69 3,942,418.73
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared 14,831,334.40 22,247,001.60
Bonus issue
Balance carrying forward 122,872,551.30 129,787,980.61
Due to changes in accounting policies, the Company adjusted retained earnings of prior year by CNY 39,682,756.40.
6.29 Operating revenues and costs
6.29.1 General information
Items Current year Prior year
Principal operating income 1,718,490,228.47 1,809,802,201.43
Other operating income 71,572,574.61 62,944,740.82
Total 1,790,062,803.08 1,872,746,942.25
Principal operating cost 1,530,715,289.56 1,569,714,013.29
Other operating cost 32,869,228.63 34,607,522.09
Total 1,563,584,518.19 1,604,321,535.38
6.29.2 Revenues from principal operating activities by business
Current year Prior year
Industry
Operating revenues Operating costs Operating revenues Operating costs
Household appliances industry 1,718,490,228.47 1,530,715,289.56 1,809,802,201.43 1,569,714,013.29
Total 1,718,490,228.47 1,530,715,289.56 1,809,802,201.43 1,569,714,013.29
138
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.29.3 Revenues from principal operating activities by products
Current year Prior year
Products
Operating revenues Operating costs Operating revenues Operating costs
Catering and Cooking 1,052,786,500.79 939,379,669.10 1,161,125,429.84 997,633,196.79
Home helper 403,539,698.93 369,906,874.98 461,813,961.36 415,750,737.97
Tea/Coffee makers 244,127,431.45 210,594,137.63 176,410,642.73 148,738,310.04
Others 18,036,597.30 10,834,607.85 10,452,167.50 7,591,768.49
Total 1,718,490,228.47 1,530,715,289.56 1,809,802,201.43 1,569,714,013.29
6.29.4 Revenues from principal operating activities by regions
Current year Prior year
Area
Operating revenues Operating costs Operating revenues Operating costs
Australia 90,256,702.79 76,657,318.46 101,639,152.71 83,665,542.87
Africa 17,546,205.71 15,000,882.37 19,130,388.79 15,797,378.56
America 725,862,556.23 647,040,779.11 719,844,144.74 641,758,924.89
Europe 481,253,682.92 429,505,550.95 553,273,795.67 483,241,649.98
Asia 403,571,080.82 362,510,758.67 415,914,719.52 345,250,516.99
Total 1,718,490,228.47 1,530,715,289.56 1,809,802,201.43 1,569,714,013.29
6.29.5 Details of operating revenues from top five clients
Period Total amount of operating revenues from top five clients % of operating revenues in the same period
Year 2018 842,993,643.21 47.09
Year 2017 987,058,142.55 52.71
6.30 Business tax and surcharges
Items Current year Prior year
Education surcharge 3,185,390.35 3,242,973.79
Urban maintenance and construction tax 3,246,262.70 3,305,623.83
Property tax 1,610,252.80 2,450,459.09
Land holding tax 770,025.18 1,074,052.10
Stamp duty 943,618.82 1,195,176.07
Others 70.87 1,506.49
Total 9,755,620.72 11,269,791.37
Note: the recognition criteria for taxes and surcharges refer to Note 5 Taxation.
139
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.31 Sales expenses
Items Current year Prior year
Export expanses 28,537,682.06 33,161,716.76
Employee remunerations 16,921,890.91 18,338,471.17
Advertisements charges and sales promotion 4,516,913.35 5,308,303.88
Claims experiment expenses 4,058,248.12 3,721,341.24
Sales commission and after sales service fees 3,128,248.98 3,791,233.21
Travel expenses 2,557,317.64 2,253,795.54
Transportation charges 622,714.73 1,237,919.49
Assets lease expenses 399,535.83 389,144.26
Administrative expenses 279,671.91 932,845.98
Others 1,043,775.82 419,070.06
Total 62,065,999.35 69,553,841.59
6.32 General and administrative expenses
Items Current year Prior year
Employee remunerations 37,278,881.09 33,618,670.19
Rental expenses 13,285,686.78 14,230,834.54
Depreciation and amortization of assets 8,533,612.55 11,029,283.22
Others 7,927,689.64 8,867,316.91
Maintenance expenses 5,208,204.43 5,860,663.41
Travel expenses 4,315,168.49 3,468,420.36
Consultant fees 4,152,679.07 3,955,838.01
Insurance expenses 2,177,717.70 2,234,327.55
Administrative expenses 1,791,278.42 2,229,860.44
Total 84,670,918.17 85,495,214.63
6.33 Research and development expenses
Items Current year Prior year
Employee remunerations 39,945,903.03 41,694,740.11
Text expenses 8,209,555.59 9,453,052.15
Depreciation and amortization of assets 6,011,500.58 4,961,017.52
Certification expenses 3,175,341.35 2,867,932.57
Rental expenses 2,794,707.36 2,732,842.27
Patent expenses 2,467,608.49 2,620,525.97
Travel expenses 2,006,549.70 1,906,059.07
140
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Items Current year Prior year
Maintenance expenses 937,632.89 734,660.33
Consultant fees 653,903.27 1,247,318.28
Others 2,504,093.10 2,907,680.18
Total 68,706,795.36 71,125,828.45
6.34 Financial costs
Items Current year Prior year
Interest expenses 1,102,100.88 1,003,531.25
Less: Interest income 7,491,747.10 6,408,196.50
Exchange gain or loss -6,340,830.84 26,583,156.56
Bank charges 950,773.88 1,444,467.32
Total -11,779,703.18 22,622,958.63
6.35 Impairment loss on assets
Items Current year Prior year
Impairment loss on receivables 393,133.54 504,234.07
Impairment loss on inventories 16,839,835.30 10,411,727.11
Impairment loss on fixed assets 4,266,106.43
Total 21,499,075.27 10,915,961.18
6.36 Other income
Included in current year
Items Current year Prior year
non-recurring profit and loss
Export credit insurance subsidies 1,534,628.53 978,862.00 1,534,628.53
Policy-based relocation subsidies 414,127.89
Patent subsidies 378,900.00 713,600.00 378,900.00
Technology innovation subsidies 425,000.00 300,000.00 425,000.00
Exhibition subsidies 45,000.00 119,700.00 45,000.00
Employment stabilization subsidies 315,957.61 117,234.44 315,957.61
Technology insurance subsidy funds 112,037.00
Increasing production&efficiency reward 53,524.00
Special subsidies for online technology trading projects 108,800.00 108,800.00
Enterprise R&D investment subsidies 693,000.00 693,000.00
Foreign trade support funds 1,000,000.00 1,000,000.00
Excellent Taiwan talent awards 100,000.00 100,000.00
Total 4,601,286.14 2,809,085.33 4,601,286.14
141
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.37 Investment income
Items Current year Prior year
Investment income from disposal of financial assets measured by fair value
with changes in fair value recognised in profit or loss -2,178,460.00 7,912,190.00
Investment income from financial products 15,128,306.66 12,159,360.35
Total 12,949,846.66 20,071,550.35
6.38 Gain from changes in fair value
Source of fair value change Current year Prior year
Financial assets measured by fair value with changes in fair value recognised in profit or loss -2,485,150.00 3,925,850.00
Including: Derivative financial assets -2,485,150.00 3,925,850.00
Total -2,485,150.00 3,925,850.00
6.39 Income from asset disposal
Items Current year Prior year Included in current year non-recurring profit and loss
Income from fixed asset disposal 975,770.89 82,171,778.72 975,770.89
Total 975,770.89 82,171,778.72 975,770.89
6.40 Non-operating income
Included in current year
Items Current year Prior year
non-recurring profit and loss
Income from indemnities 436,996.40
Government grants (see the following table for detail:
302,434.20 32,990,163.94 302,434.20
Details for government grants)
Unable to pay overdue accounts payable 979,964.67
Others 3,725,378.26 2,256,585.86 3,725,378.26
Total 4,027,812.46 36,663,710.87 4,027,812.46
Details of government grants which are recognised into profit or loss during current year
Government assistance Current year Prior year Related with assets/income
Government relocation compensation 32,988,963.94 Related with income
Others 302,434.20 1,200.00 Related with income
Total 302,434.20 32,990,163.94
142
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.41 Non-operating expenses
Included in current year
Items Current year Prior year
non-recurring profit and loss
Loss on scrapping of non-current assets 17,043.22 326,291.88 17,043.22
Fines 11,295.00 25,538.41 11,295.00
External donations 131,549.18 656,877.78 131,549.18
Losses from relocation 5,249,140.83
Others 2,384.00 2,384.00
Total 162,271.40 6,257,848.90 162,271.40
6.42 Income tax expenses
6.42.1 General information
Items Current year Prior year
Current income tax calculated in accordance with relevant tax law 979,950.64 3,449,807.46
Deferred tax -2,258,582.01 19,612,991.85
Total -1,278,631.37 23,062,799.31
6.42.2 Reconciliation of account profit and income tax expenses
Items Current year
Profit before tax 11,466,873.95
Income tax computed in accordance with the applicable tax rate 2,866,718.49
Impact of differing tax rates applicable to subsidiaries -3,548,587.85
Impact of adjustment for prior period tax expenses -311,961.31
Impact of non-taxable income -106,425.17
Impact of non-deductible costs, expenses and losses -659,984.64
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 fo which no 5,867,047.67
deferred tax asset has been recognised
Changes in balance of prior year deferred tax asset/liabilities due to tax rate adjustment
Impact of additional deduction for R&D expenses -5,385,438.56
Income tax expenses -1,278,631.37
6.43 Other comprehensive income
Please see Note 6.26 for details.
143
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.44 Notes to the statement of cash flows
6.44.1 Other cash received relating to operating activities
Items Current year Prior year
Government grants 4,903,720.34 30,964,236.33
Interests income 7,491,747.10 6,408,184.07
Rent income 39,624,272.24 36,914,752.13
Funds in current account and others 8,978,743.05 22,922,827.44
Total 60,998,482.73 97,209,999.97
6.44.2 Other cash payments relating to operating activities
Items Current year Prior year
Penalties and donations paid 142,844.18 82,416.19
Bank charges paid by cash 950,773.88 1,412,114.51
Sales expenses and general and administrative expenses paid by cash 115,905,891.22 125,476,175.58
Current accounts and others 12,088,629.81 34,991,128.58
Total 129,088,139.09 161,961,834.86
6.44.3 Other cash received relating to investing activities
Items Current year Prior year
To recover the maturity time deposits that for purpose to earn interest income
696,692,500.00 612,462,283.65
in financial institutions
Total 696,692,500.00 612,462,283.65
6.44.4 Other cash payments relating to investing activities
Items Current year Prior year
Deposits in financial institutions for the purpose of earning interest income 696,692,500.00 601,160,897.85
Total 696,692,500.00 601,160,897.85
6.44.5 Other cash received relating to financing activities
Items Current year Prior year
Capital absorbed and loan between related parties 5,719,914.44 6,740,000.00
Total 5,719,914.44 6,740,000.00
6.44.6 Other cash payments relating to financing activities
Items Current year Prior year
Security deposit of pledged loan 21,200,000.00
Capital absorbed and loan between related parties 5,719,914.44 6,740,000.00
Total 26,919,914.44 6,740,000.00
144
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.45 Supplementary information to the statement of cash flows
6.45.1 Supplementary information to the statement of cash flows
Items Current year Prior year
① Reconciliation of cash flows from operating activities to net profit:
Net profit 12,745,505.32 113,763,138.08
Add: Loss on asset impairment 21,499,075.27 10,915,961.18
Depreciation of fixed assets, oil and gas assets, biological assets held for
44,641,659.73 43,860,463.47
production
Amortisation of intangible assets 4,882,397.22 3,820,516.92
Amortisation of Long-term deferred expenditure 2,402,565.74 1,379,028.79
Loss on non-current assets disposal (gain presented by "-" prefix) -975,770.89 -82,171,778.72
Loss on scrap of fixed assets (gain presented by "-" prefix) 17,043.22 326,291.88
Loss on fair value changes (gain presented by "-" prefix) 2,485,150.00 -3,925,850.00
Financial costs (gain presented by "-" prefix) 2,921,113.57 13,534,089.63
Investment loss (gain presented by "-" prefix) -12,949,846.66 -20,071,550.35
Decrease of deferred tax assets (increase presented by "-" prefix) -1,253,065.42 -8,380,842.88
Increase of deferred tax liabilities (increase presented by "-" prefix) -1,208,649.49 27,954,488.22
Decrease of inventories (increase presented by "-" prefix) -64,530,050.49 17,576,250.53
Decrease of operating receivables (increase presented by "-" prefix) 8,188,725.94 1,694,639.29
Increase of operating payables (decrease presented by "-" prefix) 87,210,207.76 -22,405,641.41
Others
Net cash flows generated from operating activities 106,076,060.82 97,869,204.63
②Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
③Movement of cash and cash equivalents:
Cash as at 31/12/2018 448,492,295.47 564,381,960.88
Less: Cash as at 31/12/2017 564,381,960.88 738,195,729.53
Add: Cash equivalents as at 31/12/2018
Less: Cash equivalents as at 31/12/2017
Net increase of cash and cash equivalents -115,889,665.41 -173,813,768.65
145
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.45.2 Composition of cash and cash equivalents
Items Current year Prior year
①Cash 448,492,295.47 564,381,960.88
Including: Cash at hand 729,204.57 800,792.90
Demand bank deposit 447,763,090.90 563,581,167.98
Demand other monetary funds
Demand deposit in the Central Bank
Deposit in peer firms
Loan to peer firms
②Cash equivalents
Including: Debt instrument matured within three months
③Cash and cash equivalents as at 31/12/2018 448,492,295.47 564,381,960.88
Including: restricted cash and cash equivalents in parent company or subsidiary
Note 1: Cash and cash equivalents excluding restricted cash and cash equivalents in parent company or subsidiary.
Note 2: On 31 December 2018, the amount of cash and cash equivalents of statement of cash flows was CNY
448,492,295.47, the balance of monetary funds of balance sheet was CNY 469,692,295.47, and the difference was
CNY 21,200,000.00. Because the amount of cash and cash equivalents of statement of cash flows was deducted
from the pledge loan guarantee of CNY 21,200,000.00, which does not meet the cash and cash equivalent standard.
6.46 Restricted assets of ownership or usage rights
Items Carrying amount as at 31/12/2018 Reason for restriction
Monetary funds 21,200,000.00 Pledged loan
合 计 21,200,000.00
6.47 Foreign currency monetary items
6.47.1 Foreign currency monetary items
Original amount as at Translated amount as at
Items Foreign exchange rate
31/12/2018 31/12/2018
Monetary funds
Including: -HKD 365,960.04 0.876200 320,654.19
-USD 23,729,545.50 6.863200 162,860,616.68
-JPY 13,950,036.47 0.061887 863,325.91
-EUR 14,123.90 7.847300 110,834.49
-FRF 7.00 6.958600 48.71
-GBP 9,519.60 8.676200 82,593.95
146
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Original amount as at Translated amount as at
Items Foreign exchange rate
31/12/2018 31/12/2018
-IDR 1,469,924,556.98 0.000471 692,334.47
-HUF 81,016.00 0.024000 1,944.38
-NTD 59,274,341.26 0.223456 13,245,207.20
Total 178,177,559.98
Accounts receivable
Including: -USD 39,161,319.80 6.863200 268,771,970.05
-JPY 29,161,780.00 0.061887 1,804,735.08
-EUR 365.82 7.847300 2,870.70
-IDR 7,183,861.00 0.000471 3,387.14
-Total 270,582,962.97
Accounts payable
Including: -USD 10,002,257.46 6.8632 68,647,493.40
-EUR 126,295.00 7.847300 991,074.75
-HKD 651,354.68 0.876200 570,716.97
-JPY 44,316,334.06 0.061887 2,742,604.97
-IDR 1,448,903,489.37 0.000471 682,433.54
-NTD 7,719,500.00 0.223456 1,724,968.59
Total 75,359,292.22
Other receivables
Including: -USD 53,103.57 6.8632 364,460.43
-JPY 797,324.96 0.061887 49,344.05
-NTD 1,073,598.02 0.223456 239,901.92
-IDR 1,185,307,919.32 0.000471 558,280.03
Total 1,211,986.43
Other payables
Including: -USD 244,685.80 6.8632 1,679,327.58
-HKD 2,515.50 0.876200 2,204.08
-NTD 811,833.00 0.223456 181,408.95
-IDR 1,897,080,230.43 0.000471 899,112.01
Total 2,762,052.62
147
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
6.47.2 Description of overseas operating entities
The Company's holding sub-subsidiaries company Pt. Star Comgistic Indonesia locates at West Java province in
Indonesia, due to Pt. Star Comgistic Indonesia is mostly settled in US dollars by usual purchases and sales, so that
it adopts the US dollar as its functional currency.
The Company's holding sub-subsidiaries company SCPDI locates at West Java province in Indonesia, due to SCPDI
is mostly settled in IDR by usual purchases and sales, so that it adopts the IDR as its functional currency.
The Company's holding sub-subsidiaries company Tsannkuen Edge Intelligence Co., Ltd. locates at Taiwan, due to
Tsannkuen Edge Intelligence Co., Ltd. is mostly settled in NTD by usual purchases and sales, so that it adopts the
NTD as its functional currency.
The Company's holding sub-subsidiaries company East Sino Development Limited locates at HongKong, due to
East Sino Development Limited is mostly settled in HKD by usual purchases and sales, so that it adoptsthe HKD as
its functional currency.
The Company's holding sub-subsidiaries company Orient Star Investments Limited locates at HongKong, due to
Orient Star Investments Limited is mostly settled in USD by usual purchases and sales, so that it adopts the USD as
its functional currency.
Note 7: Change of consolidated scope
In December 2018, the Company cancelled the subsidiary Xiamen Tsannkuen Home Appliance Design Co., Ltd
(hereafter “TKCD”). Since the completion of the cancellation, TKCD was no longer included in the consolidated
statement. The income, expenses and profits of TKCD before the completion of the cancellation were included in the
consolidated income statement. The cash flow before the completion of the cancellation was included in the
consolidated cash flow statement.
In June 2018, TsannKuen (Zhangzhou) Enterprise Co., Ltd. (TKL), a subsidiary of the Company, established
TsannKuen (Zhangzhou) Investment Co., Ltd. Since the date of incorporation, TsannKuen (Zhangzhou) Investment
Co., Ltd. has been included in the consolidated financial statements (as of 31 December 2018, the investment funds
have not been paid).
Note 8: The equity in other main entities
8.1 The equity in subsidiaries
8.1.1 The construction of the group
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Directly
Manufacture
TsannKuen (Zhangzhou) Acquired through
Zhangzhou Zhangzhou home electronic 75.00 75.00
Enterprise Co., Ltd.(TKL) establishment
appliance
148
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Directly
Manufacture Acquired through business
TsannKuen China (Shanghai)
Shanghai Shanghai home electronic 46.875 62.50 combination under common
Enterprise Co., Ltd. (TKS)
appliance control
TsannKuen (Zhangzhou) South Manufacture
Acquired through
Port Electronics Enterprise Co., Zhangzhou Zhangzhou home electronic 56.25 75.00
establishment
Ltd. (TKN) appliance
Shanghai Canxing Trading Sales of home Acquired through
Shanghai Shanghai 56.25 100.00
Co.,Ltd (STD) electronic establishment
Xiamen Tsannkuen Home Home appliance Acquired through
Xiamen Xiamen 100.00 100.00
Appliance Design Co., Ltd. design establishment
Acquired through business
East Sino Development Limited. Investment,
Hong Kong Hong Kong 75.00 100.00 combination under common
(East Sino) Trading
control
Manufacture Acquired through business
Pt.Star Comgistic Indonesia.
Indonesia Indonesia home electronic 75.00 100.00 combination under common
(SCI)
appliance control
Pt.Star Comgistic Property
Real estate Acquired through
Development Indonesia Indonesia Indonesia 75.00 100.00
development establishment
( SCPDI）
Acquired through business
Orient Star Investments Limited Investment,
Hong Kong Hong Kong 75.00 100.00 combination under
(OSI) Trading
uncommon control
Acquired through business
Tsannkuen Edge Intelligence
Taiwan Taiwan Industrial design 75.00 100.00 combination under common
Co., Ltd.
control
TsannKuen (Zhangzhou) Investment, Acquired through
Zhangzhou Zhangzhou 75.00 100.00
Investment Co., Ltd. Trading establishment
8.1.2 Important non-wholly-owned subsidiary
Profit and loss attributable Total amount of minority
Holding proportion of Dividends attributable to
Subsidiaries to minority equity during equity at the end of current
minority shareholders (%) minority shareholders
current year year
TKL 25.00 9,423,466.25 11,182,518.61 320,444,787.56
TKS 53.125 -1,439,193.53 86,494,090.78
SCI 25.00 -5,409,750.84 23,003,260.89
TKEI 25.00 -1,337,023.09 4,464,734.42
149
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
8.1.3 The main financial information of important non-wholly-owned subsidiary
Balance as at 31/12/2018
Subsidiaries Non-current Non-current
Current assets Total Current liabilities Total
assets liabilities
TKL 1,588,030,596.55 447,639,826.48 2,035,670,423.03 753,675,167.81 216,105.00 753,891,272.81
TKS 180,423,244.43 12,266,644.24 192,689,888.67 2,593,037.93 27,284,444.57 29,877,482.50
SCI 59,497,377.87 72,448,137.92 131,945,515.79 39,932,472.21 0.00 39,932,472.21
TKEI 18,139,521.40 3,985,824.81 22,125,346.21 3,899,810.79 366,597.76 4,266,408.55
(Continued)
Balance as at 31/12/2017
Subsidiaries Non-current Non-current
Current assets Total Current liabilities Total
assets liabilities
TKL 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
TKS 180,634,383.82 14,741,869.96 195,376,253.78 2,570,332.87 27,284,444.57 29,854,777.44
SCI 62,295,711.26 72,303,711.81 134,599,423.07 47,136,417.88 827,859.50 47,964,277.38
TKEI 4,755,678.58 4,784,549.74 9,540,228.32 6,683,867.35 171,308.17 6,855,175.52
(Continued)
Total amount during current year
Subsidiaries Total amount of Cash flow relating to
Revenues Net profit
comprehensive income operating activities
TKL 1,673,115,731.37 37,693,864.99 154,928,203.41
TKS 880,007.16 -2,709,070.17 -1,670,577.00
SCI 120,588,666.38 -21,639,003.36 -22,922,887.07
TKEI 10,234,356.91 -5,348,092.34 -6,129,051.57
(Continued)
Total amount during prior year
Subsidiaries Total amount of Cash flow relating to
Revenues Net profit
comprehensive income operating activities
TKL 1,758,251,614.69 49,700,082.70 98,541,067.11
TKS 889,026.45 78,031,788.23 22,500,719.57
SCI 122,351,454.31 -7,141,839.01 -1,963,774.64
TKEI 9,813,541.51 -12,162,192.24 -11,595,100.18
150
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
8.2 The equity in joint ventures or associates
8.2.1 Insignificant enterprise information of associates
Place Nature Paid Shareholding （%）
Company name Registered capital Acquired method
of registration of business capital Direct Indirect
Xiamen travel canxing（Xiamen） Leasing and
Acquired through
International Travel Service Co., Xiamen business CNY10,000,000.00 0.00 22.00 0.00
establishment
Ltd. services
Note: Xiamen travel canxing（Xiamen）International Travel Service Co., Ltd has no actual operation, and completed
cancellation on 6 February 2018.
Note 9: The risk associated with financial instruments
The main financial instruments of the Company including equity investments, loans, accounts receivable, accounts
payable and etc., please see Note 6 for detail of related items. The risk associated with financial instruments, and
risk management policies which the company use to reduce these risks as described below. The management of the
Company manages and supervises the risks to ensure that the risks can be controlled within a limited range.
9.1 The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to reduce the
negative impact that caused by the risk of the Company to the lowest level, and to maximize the benefits of
shareholders and other equity investors. Based on the targets of risk management, the basic strategy of the
Company’s risk management is to identify and analyze the risks which are faced by the Company, establish suitable
risk tolerance baseline and proceed the risk management, and supervise a variety of risks timely and reliably, and
control the risk within a limited range.
9.1.1 Market Risk
9.1.1.1 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 NTD, in addition to the Company's
subsidiary SCI purchases and sales used by USD, SCPDI purchases and sales used by IDR, TKEI purchases and
sales used by NTD, the other main business activities of the Company used by CNY. On 31 December 2018, except
the following assets or liabilities are recorded in foreign currency, the others are recorded in CNY. Foreign exchange
risk of the assets and liabilities in foreign currencies may have an impact on the Company's performance of
operation.
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Monetary funds 178,177,559.98 212,200,290.58
Accounts receivable 270,582,962.97 256,438,317.51
Other receivables 1,211,986.43 2,715,037.60
Accounts payable 75,359,292.22 61,995,745.86
Other payables 2,762,052.62 4,038,251.32
151
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
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.
9.1.2. 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 31 December 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 recognised fully provision for bad debts for the money cannot be recovered. So that the Company's
management believes the Company’s credit risk has been greatly reduced.
The Company's circulating funds deposited in banks which with high credit ratings, so that the lower credit risk of
circulating funds.
9.1.3 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.
Note 10: Disclosure of fair value
10.1 Year-end fair value of assets & liabilities that are measured by fair value
Fair value as of 31/12/2018
First level Second level Third level
Items
measurement of Fair measurement of measurement of Total
Value Fair Value Fair Value
1.Continuous measurement of Fair Value
1.1 Financial assets measured by fair value
whose movement included in current 1,440,700.00 1,440,700.00
period
1.1.1Transactional financial asset 1,440,700.00 1,440,700.00
1.1.1.1 Liabilities investment
1.1.1.2 Equity investment
1.1.1.3 Derivative financial asset 1,440,700.00 1,440,700.00
Total amount of asset that is continually
1,440,700.00 1,440,700.00
measured by fair value
1.2 Transactional financial liabilities
Of which：Issuance of transactional bonds
152
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Fair value as of 31/12/2018
First level Second level Third level
Items
measurement of Fair measurement of measurement of Total
Value Fair Value Fair Value
Derivative financial liabilities
Others
Total amount of liabilities that are
continually measured by fair value
10.2 The basis for determining the market price of continuous and non-continuous fair value measurement
items of the first level
Unadjusted quotations obtained on active markets from the same assets or liabilities on the balance sheet date.
Note 11: Related parties and related party transaction
11.1 Details of the parent
Shareholding
Place of Voting right
Parents Nature of business Registered capital in the
registration in the Company %
Company %
Manufacture and
STAR COMGISTIC
Taiwan sales electrical NTD 3,000,000,000.00 42.90 44.68
CAPITAL CO.,LTD.
equipment
11.2 Subsidiaries
See Note 8.1 “The equity in subsidiaries”.
11.3 Details of other related parties
Other related parties 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
Xiamen Wuhuama Restaurant Management Co., Ltd. Ultimate holding company have equity
TsannKuen Enterprise Co., Ltd. Same actual controller
Kuaisan Electric Business Services Limited Same actual controller
Gold mine chain enterprise Co., Ltd Same actual controller
Canxing International Travel Service Co., Ltd Same ultimate holding company
Sino Global Development Limited Same actual controller
Australia Star Comgistic Co.,Ltd. Same ultimate holding company
153
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
11.4 Transactions with related parties
11.4.1 Transactions through purchase or sell goods and accept or supply services
11.4.1.1 The situation of purchases goods or accepts services
Content
Related parties Total amount during current year Total amount during prior year
of transaction
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 33,879,904.28 37,057,634.04
TsannKuen Enterprise Co., Ltd. Purchase of goods 15,214.75 29,724.20
Kuaisan Electric Business Services Limited Purchase of goods 0.00 624.36
Gold mine chain enterprise Co., Ltd Purchase of goods 2,710.11 4,268.22
STAR COMGISTIC CAPITAL CO., LTD. Purchase of goods 4,964.01 21,236.60
Total 33,902,793.15 37,113,487.42
11.4.1.2 The situation of sells goods or rendering services
Content
Related parties Total amount during current year Total amount during prior year
of transaction
STAR COMGISTIC CAPITAL CO., LTD. Sale of goods 13,184,324.56 13,557,916.38
Gold mine chain enterprise Co., Ltd Sale of goods 0.00 84,968.18
Total 13,184,324.56 13,642,884.56
11.4.2 Lease between related parties
11.4.2.1 The Company is as the leasor
Lease rental recognised in Lease rental recognised in
Leasee Classification
current year prior year
Xiamen Wuhuama Restaurant Management Co., Ltd. Property 76,475.75 65,520.00
Total 76,475.75 65,520.00
11.4.2.2 The Company is as the lease
Lease rental recognised in Lease rental recognised in prior
Leasee Classification
current year year
STAR COMGISTIC CAPITAL CO., LTD. Property 1,280,449.71 1,220,501.04
Total 1,280,449.71 1,220,501.04
11.4.3 Assets transfer, Debt restructuring between related parties
Total amount Total amount during
Related parties Content of transaction
during current year prior year
Gold mine chain enterprise Co., Ltd Sale of fixed assets 0.00 9,868.54
Australia Star Comgistic Co.,Ltd. Sale of fixed assets 0.00 17,529.98
154
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
STAR COMGISTIC CAPITAL CO., LTD. Sale of fixed assets 22,881.17 3,152.82
Total 22,881.17 30,551.34
Thermaster Electronic (Xiamen) Ltd. Purchase of fixed assets 12,820.51 12,820.51
TsannKuen Enterprise Co., Ltd. Purchase of fixed assets 0.00 175,868.44
Kuaisan Electric Business Services Limited Purchase of fixed assets 0.00 36,100.90
Total 12,820.51 224,789.85
11.4.4 Other transactions with related parties
Total amount during current
Related parties Content of transaction Total amount during prior year
year
Canxing International Travel Service Co., Ltd Accept service 659,234.47 895,603.06
Kuaisan Electric Business Services Limited Accept service 1,185.79 44,925.76
TsannKuen Enterprise Co., Ltd. Provide service 27,680.39 65,706.96
Sino Global Development Limited Money lending 0.00 6,740,000.00
Sino Global Development Limited Money lending interest 0.00 138,656.02
STAR COMGISTIC CAPITAL CO., LTD. Money lending 5,719,914.44 0.00
STAR COMGISTIC CAPITAL CO., LTD. Money lending interest 17,966.72 0.00
Total 6,425,981.81 7,884,891.80
11.4.5 Remunerations of key management personals Unit: CNY ten thousands
Items Total amount during current year Total amount during prior year
Remunerations of key management personnels 284.14 297.25
11.5 The balance of payables and receivables among related parties
11.5.1 Receivables owed by related parties
Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Related party Carrying amount Allowance for Carrying amount Allowance for bad
bad debt debt
Accounts receivable:
STAR COMGISTIC CAPITAL CO., LTD. 3,639,277.36 1,265,582.41
Total 3,639,277.36 1,265,582.41
Other receivables:
TsannKuen Enterprise Co., Ltd. 0.00 5,723.50
STAR COMGISTIC CAPITAL CO., LTD. 208,665.92 204,484.13
Gold mine chain enterprise Co., Ltd 0.00 29,828.69
Total 208,665.92 240,036.32
155
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
11.5.2 Payables owed to related parties
Related party Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Accounts payable:
Thermaster Electronic (Xiamen) Ltd. 7,417,343.11 9,004,478.45
Total 7,417,343.11 9,004,478.45
Advances from customers
Xiamen Wuhuama Restaurant Management Co., Ltd. 4,026.00 0.00
Total 4,026.00 0.00
Other payables:
Xiamen Wuhuama Restaurant Management Co., Ltd. 18,376.60 23,776.60
TsannKuen Enterprise Co., Ltd. 927.36 915.96
STAR COMGISTIC CAPITAL CO., LTD. 17,596.97 29,259.30
Canxing International Travel Service Co., Ltd 16,487.05 0.00
Kuaisan Electric Business Services Limited 65.89 0.00
Total 53,453.87 53,951.86
Note 12: Commitments and contingencies
12.1 Important commitments
Irrevocable lease contracts under performance and their financial effects as at the end of current year.
*Unit: CNY ten thousands
Items Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
The minimum lease payments of irrevocable operating lease
contracts:
1st year after the balance sheet date 3,638.00 3,638.00
2nd year after the balance sheet date 3,638.00 3,638.00
3rd year after the balance sheet date 3,638.00 3,638.00
Subsequent years 116,409.00 120,047.00
Total 127,323.00 130,961.00
12.2 Contingencies
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 2016 to sue MTN / WSL for payment of USD 707,522.92 and USD 1,402,940.00 for reserve losses,
totaling USD 2,110,462.92. As of the reporting date, the case is still pending.
156
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note 13: Post reporting date events
13.1 Profit distribution
On March 16, 2019, the 2rd Board Meeting of 2019 held by the Company reviewed and approved the profit
distribution plan for 2019. Based on the total share capital of 185,391,680 shares as at the end of 2019, cash
dividend of CNY 0.4 per 10 shares will be distributed to all shareholders of the Company (Tax included). The profit
for distribution of the Company was CNY 7,415,667.20. The proposal still needs to be approved by the shareholders'
general meeting of the Company.
13.2 Impact of the new accounting standards from 1 January 2019
On 31 March 2017, the Ministry of Finance issued CAS 22 - Recognition and Measurement of Financial Instruments
(Revised in 2017) (Caikuai [2017] No.7), CAS 23 - Transfer of Financial Assets (Revised in 2017) (Caikuai [2017] No.
8) and CAS 24 - Hedge Accounting (Revised in 2017) (Caikuai [2017] No. 9), and on 2 May 2017, the Ministry of
Finance issued CAS 37 - Financial Instruments Presentation (Revised in 2017) (Caikuai [2017] No.14), and required
domestic company to implement them from 1 January 2019. The second board meeting and the first board of
supervisors meeting which were held on 16 March 2019, approved that the Company will implement the above new
financial instruments accounting standards from 1 January 2019 and change the relevant accounting policies.
The main changes of accounting policies are as follows:
All recognised financial assets are subsequently measured at amortised cost or fair value.
On the date of implementation of the new financial instruments accounting standards, the business model for
managing the financial assets is evaluated on the basis of the existing facts and circumstances of the Company on
that day, and the contractual cash flow characteristics of the financial assets are evaluated on the basis of facts and
circumstances at the time of initial recognition of financial assets. The Company classify financial assets as
subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit
or loss based on the Company’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial assets. For the financial assets measured at fair value through other comprehensive
income, when they are derecognised, the accumulated gains or losses are transferred from other comprehensive
income to retained earnings, instead of recognising in profit or loss.
An company shall recognise a loss allowance for expected credit losses on a financial asset that is measured at
amortization cost, an investment instruments of liabilities measured at fair value through other comprehensive
income, a lease receivable, a contract asset and a loan commitment and a financial guarantee contract to which the
impairment requirements apply.
157
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note 14: Notes to the main elements of the separate financial statement of the Company
14.1 Notes receivable and accounts receivable
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Notes receivable 200,000.00 0.00
Accounts receivable 16,243,882.91 20,741,059.08
Total 16,443,882.91 20,741,059.08
14.1.1 Notes receivable
14.1.1.1 Disclosure by classification
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Bank acceptance 200,000.00 0.00
Commercial acceptance
Total 200,000.00 0.00
14.1.2 Accounts receivable
14.1.2.1 Disclosure by classification
Balance as at 31/12/2018
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
significance subject to individually
assessment for impairment
Accounts receivable portfolio subject to
18,235,745.59 100.00 1,991,862.68 10.92 16,243,882.91
impairment by credit risk:
Portfolio by age 18,211,345.83 99.87 1,991,862.68 10.94 16,219,483.15
Portfolio by related parties 24,399.76 0.13 0.00 0.00 24,399.76
Accounts receivable of individually
insignificance subject to individually
assessment for impairment
Total 18,235,745.59 100.00 1,991,862.68 10.92 16,243,882.91
(Continued)
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual
158
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
significance subject to individually
assessment for impairment
Accounts receivable portfolio subject to
21,753,323.81 100.00 1,012,264.73 4.69 20,741,059.08
impairment by credit risk:
Portfolio by age 21,581,665.45 99.21 1,012,264.73 4.69 20,569,400.72
Portfolio by related parties 171,658.36 0.79 171,658.36
Accounts receivable of individually
insignificance subject to individually
assessment for impairment
Total 21,753,323.81 100.00 1,012,264.73 4.65 20,741,059.08
14.1.2.1.1 Accounts receivable using the age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2018
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 17,657,356.21 1,437,873.06 8.14
Include：1 to 90 days 9,274,707.25 0.00 0.00
91 to 180 days 6,493,430.65 649,343.07 10.00
181 to 270 days 780,395.85 234,118.76 30.00
271 to 365 days 1,108,822.46 554,411.23 50.00
1 to 2 years 537,744.13 537,744.13 100.00
2 to 3 years 11,245.49 11,245.49 100.00
Over 3 years 5,000.00 5,000.00 100.00
Total 18,211,345.83 1,991,862.68 10.94
14.1.2.1.2 Accounts receivable using the related party method for measurement of allowance for bad debt
Balance as at 31/12/2018
Related parties
Carrying amount Allowance for bad debt % of total
Related parties 24,399.76 0.00 0.00
Total 24,399.76 0.00 0.00
14.1.2.2 Recognisation, recovery and reversal of allowance for bad debt
Recovery and reversal of allowance for bad debts is CNY 979,597.95 during current year.
159
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
14.1.2.3 Accounts receivable written off during the current year
Items Total amount of written off
Accounts receivable written off during the current year 0.00
14.1.2.4 Details of top five accounts receivable
The total amount of top five accounts receivables which are summarized by the balance as at the end of current year
is CNY 17,998,628.91, accounting for the proportion of the total accounts receivable balance as at the end of current
year is 98.70%, the total amount of corresponding allowance for bad debts is CNY 1,970,141.20.
14.2 Other receivable
Items Balance as at 31/12/2018 Balance as at 31/12/2017
Interests receivable
Dividends receivable
Other receivables 2,213,373.51 472,467.07
Total 2,213,373.51 472,467.07
14.2.1 Other receivable
14.2.1.1 Disclosure by classification
Balance as at 31/21/2018
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for
impairment
Other receivable portfolio subject to
impairment by credit risk:
Portfolio by age 245,227.44 10.86 43,914.90 17.91 201,312.54
Portfolio by related parties 1,777,060.97 78.73 1,777,060.97
Subtotal 2,022,288.41 89.59 43,914.90 2.17 1,978,373.51
Other receivable of individually
insignificance subject to individually 235,000.00 10.41 235,000.00
assessment for impairment
Total 2,257,288.41 100.00 43,914.90 1.95 2,213,373.51
160
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
(Continued)
Balance as at 31/21/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for
impairment
Other receivable portfolio subject to impairment
by credit risk:
Portfolio by age 388,868.17 74.95 46,401.10 11.93 342,467.07
Portfolio by related parties
Subtotal 388,868.17 74.95 46,401.10 11.93 342,467.07
Other receivable of individually insignificance
subject to individually assessment for 130,000.00 25.05 130,000.00
impairment
Total 518,868.17 100.00 46,401.10 8.94 472,467.07
14.2.1.1.1 Other receivables with insignificant individual year-end amount but have provision for bad debt
Balance as at 31/12/2018
Other receivables (By company) Allowance for
Other receivables % of total Reasons for allowance
bad debt
Alipay (China) Network Technology Co. Ltd. 160,000.00 Deposit, there is no impairment
Niuhai E-commerce (Shanghai) Co., Ltd. 30,000.00 Deposit, there is no impairment
Jiangsu Suning E-Commerce Co., Ltd. 30,000.00 Deposit, there is no impairment
GOME online e-commerce Co., Ltd. 10,000.00 Deposit, there is no impairment
Dashang Company Limited 5,000.00 Deposit, there is no impairment
Total 235,000.00 — —
14.2.1.1.2 Other receivables using the age analysis method for measurement of allowance for bad debt
Balance as at 31/12/2018
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 216,143.34 14,830.80 6.86
Include：1 to 90 days 167,523.34
91 to 180 days 17,576.00 1,757.60 10.00
181 to 270 days 12,244.00 3,673.20 30.00
271 to 365 days 18,800.00 9,400.00 50.00
1 to 2 years 29,084.10 29,084.10 100.00
Total 245,227.44 43,914.90 17.91
161
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
14.2.1.2 Recognition, recovery and reversal of allowance for bad debt
Recovery of allowance for bad debts is CNY 2,486.20 during current year.
14.3 Long-term equity investments
14.3.1 Disclosure by classification
Carrying amount as at 31/12/2018 Carrying amount as at 31/12/2017
Items Carrying allowance for Net carrying allowance for Net carrying
Carrying amount
amount bad debts amount bad debts amount
Invest to
921,914,701.56 921,914,701.56 922,914,701.56 922,914,701.56
subsidiaries
Total 921,914,701.56 921,914,701.56 922,914,701.56 922,914,701.56
14.3.2 Investment for subsidiaries
Carrying
Increase
Carrying Decrease Carrying amount of
during Impairment
Items amount as at during current amount as at impairment
current allowance
31/12/2017 year 31/12/2018 allowance as
year
at 31/12/2018
TKL 921,914,701.56 921,914,701.56
TKCD 1,000,000.00 1,000,000.00 0.00
Total 922,914,701.56 1,000,000.00 921,914,701.56
14.4 Operating revenues and costs
Current year Prior year
Items
Revenue Costs Revenue Costs
Revenue from principal operating activities 61,669,712.11 56,799,853.11 64,570,494.00 58,045,866.61
Revenue from other operating activities 44,308,288.08 29,258,164.80 18,397,408.95 2,340,905.53
Total operating revenue 105,978,000.19 86,058,017.91 82,967,902.95 60,386,772.14
14.5 Investment income
Items Current year Prior year
Long-term equity investment income under cost method 33,547,555.83 30,310,250.78
Disposal of long-term equity investment generated investment income 16,480.79
Total 33,564,036.62 30,310,250.78
162
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Note 15: Supplementary information
15.1 Extraordinary gains or losses for current year
Supplemental information Total amount Explanation
Gains or losses arising from disposal of non-current assets 975,770.89
Tax repayments or waiving of taxes not officially authorized or not with proper authorization
Government grants accounted for through profit or loss for the current reporting period (excl.
4,903,720.34
grants directly associated with the Company’s operations and subject to national quotas)
Cost of monetary funds charged on non-financial institutions accounted for through profit or
loss for the current reporting period
Gains from the investment costs paid less than the acquirer’s interest in the fair value of the
bargainor’s identifiable net assets( During acquire subsidiary、joint venture and associates)
Gains or losses arising from non-monetary assets exchange
Gains or losses arising from entrusted assets and investments
Impairment allowances arising from force majeure, such as natural disasters
Gain or loss arising from debt restructuring
Restructuring expenses, such as employee settlement and relocation costs and costs of
integration
Gains or losses arising from transactions of which the prices are deemed unfair (the difference
between the price and the fair value)
Net profit or loss of subsidiaries acquired through business combination under common control
from the beginning of the current reporting period to the combination dates.
Gains or losses arising from contingent events not associated with the Company’s operating
activities
Gains or losses arising from changes in the fair values of financial instruments held for trading
(excl. effective hedging instruments associated with the Company’s operating activities) or
10,464,696.66
disposal of financial instruments held for trading and available-for-sale financial assets (excl.
effective hedging instruments associated with the Company’s operating activities)
Recovery of impairment allowance for receivables subject to individual assessment for
impairment
Gains or losses arising from entrusted borrowings
Gains or losses arising from changes in the fair values of investment property measured at fair
value
Impact of one-off adjustment required by tax laws, accounting standards and relevant
regulations on the profit or loss for the current reporting period
163
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Supplemental information Total amount Explanation
Revenue arising from entrusted operation
Other non-operating revenue and non-operating expenses not listed above 3,563,106.86
Other gains or losses satisfying the definition of extraordinary gains or losses
Subtotal 19,907,294.75
Less: Effect of corporate income tax 3,099,747.35
Less: Net amount attributable to minority interests (after tax) 4,007,639.51
Total 12,799,907.89
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).
15.2 Yield Rate of Net Assets and Earnings Per Share
Weighted average yield rate Earnings Per Share(Yuan per share)
Profits for the reporting period
of net assets% Basic EPS Diluted EPS
Net profits attributable to ordinary shareholders 1.82% 0.06 0.06
Net profits attributable to ordinary shareholders
-0.15% -0.01 -0.01
(excl. extraordinary gains or losses)
15.3 Supplementary information of changes in accounting policies and correction of major prior errors
As stated in Note 4.27 – Significant changes in accounting policies and accounting estimates, the Company changed
accounting policies related to government subsidies and other matters in 2018, and made retrospective adjustments
to comparative financial statements. The consolidated balance sheet as of 1 January 2017 and 31 December 2017
after retrospective adjustment and retrospective restatement is as follows:
164
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Retrospective restatement of consolidated balance sheet
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item 2018.12.31 2017.12.31 2017.1.1
Current assets
Monetary funds 469,692,295.47 564,381,960.88 749,497,115.33
Financial assets measured by fair value with
1,440,700.00 3,925,850.00
changes in fair value recognised in profit or loss
Derivative financial assets
Notes receivable and accounts receivable: 280,796,130.89 270,052,420.89 274,427,693.08
Advances to suppliers 2,668,796.33 10,939,777.79 6,964,904.97
Other receivables 29,944,042.47 35,318,724.60 40,387,275.64
Inventories 243,262,500.58 195,711,505.29 223,569,121.90
Held-for-sale assets 4,311,436.92
Non-current assets due within one year
Other current assets 527,497,484.82 413,119,671.14 139,354,484.01
Total current assets 1,559,613,387.48 1,493,449,910.59 1,434,200,594.93
Non-current assets
Available-for-sale financial assets 40,000.00 40,000.00 40,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment properties 25,014,648.31 32,125,408.51 42,158,120.51
Fixed assets 191,073,302.46 173,361,312.05 174,529,010.36
Construction in progress 895,756.17 2,059,623.18 269,633.08
Biological assets held for production
Oil and gas assets
Intangible assets 27,771,236.03 29,501,389.01 23,840,277.12
Development expenditure
Goodwill
Long-term deferred charge 8,058,867.12 4,388,248.42 4,142,242.19
Deferred tax assets 26,552,328.43 25,485,696.45 17,104,853.57
Other non-current assets 3,495,224.64 21,216,778.58 1,248,273.23
Total non-current assets 282,901,363.16 288,178,456.20 263,332,410.06
Total asset 1,842,514,750.64 1,781,628,366.79 1,697,533,004.99
165
TsannKuen (China) Enterprise Co.,Ltd.
Notes to the Financial Statements for the Year ended 31 December 2018
Retrospective restatement of consolidated balance sheet (Continued)
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item 2018.12.31 2017.12.31 2017.1.1
Current liabilities
Short-term borrowings 10,432,044.21 10,832,951.89
Financial liabilities measured by fair value with
changes in fair value recognised in profit or loss
Derivative financial liabilities
Notes payable and accounts payable 672,895,647.66 603,564,378.51 612,670,163.86
Advances from customers 9,747,158.90 11,661,974.88 11,187,023.96
Employment benefits payable 48,587,140.78 44,803,501.77 45,671,498.70
Taxes and fees payable 3,768,531.07 2,824,721.65 16,965,068.11
Other payables 52,818,204.91 51,140,207.27 58,411,663.19
Held-for-sale liabilities
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 798,248,727.53 724,827,735.97 744,905,417.82
Non-current liabilities
Long-term borrowings
Debt instruments payable
Including: Preferred shares
Sustainable debts
Long-term payables
Long-term employee benefits payable 361,923.23 156,540.09 187,928.74
Provisions
Deferred income
Deferred tax liabilities 27,505,224.10 28,715,949.65 761,461.43
Other non-current liabilities
Total non-current liabilities 27,867,147.33 28,872,489.74 949,390.17
Total liabilities 826,115,874.86 753,700,225.71 745,854,807.99
Shareholders' equity
Share capital 185,391,680.00 185,391,680.00 185,391,680.00
Other equity instruments
Including: Preferred shares
Sustainable debts
Capital reserves 296,808,965.79 296,808,965.79 296,808,965.79
Less: Treasury shares
Other comprehensive income 5,924,132.67 4,619,820.87 8,491,902.45
Designated reserves
Surplus reserves 37,804,354.59 33,888,636.90 29,946,218.17
Provision for General risks
Retained earnings 122,872,551.30 129,787,980.61 90,217,504.90
Equity attributable to shareholders of the Parent 648,801,684.35 650,497,084.17 610,856,271.31
Minority interests 367,597,191.43 377,431,056.91 340,821,925.69
Total shareholders' equity 1,016,398,875.78 1,027,928,141.08 951,678,197.00
Total liabilities and shareholders' equity 1,842,514,750.64 1,781,628,366.79 1,697,533,004.99
166
