2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2020 SEMI-ANNUAL REPORT
(Unaudited)
August 2020
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Tsann Kuen (China) Enterprise Co., Ltd. (hereinafter referred to as “the
Company”) warrant that this Report is factual, accurate and complete without any false record,
misleading statement or material omission. And they shall be jointly and severally liable for that.
All directors attended the board session for reviewing this Report.
Investors are kindly reminded to read the full text of this Report carefully and pay special attention
to the risks mentioned in “X. Risks facing the Company and countermeasures” under “Section IV.
Performance Discussion & Analysis”.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
Mr. Pan Zhirong, company principal, and Mr. Wu Jianhua, head of the accounting work & the
accounting division (head of accounting) jointly declare that the financial statements carried in this
Report are factual, accurate and complete.
English translation is for reference only. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Contents
Section I. Important Statements, Contents & Terms ................................................... 2
Section II. Company Profile & Financial Highlights .................................................. 5
Section III. Business Highlights ................................................................................. 8
Section IV. Performance Discussion & Analysis ...................................................... 10
Section V. Significant Events ................................................................................... 22
Section VI. Change in Shares & Shareholders .......................................................... 33
Section VII. Preference Shares ................................................................................. 36
Section VIII. Directors, Supervisors & Senior Management Staff ............................ 36
Section IX. Corporate Bonds .................................................................................... 37
Section X. Financial Report...................................................................................... 37
Section XI. Documents Available for Reference ....................................................... 37
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Contents
Xiamen Tsann Kuen, TKC-B, Company,
Refers to Tsann Kuen (China) Enterprise Co., Ltd.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co.,
South Port Electronics, TKN Refers to
Ltd.
STD Refers to Shanghai Canxing Trading Co., Ltd.
East Sino 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.
SCPDI Refers to Pt.Star Comgistic Property Development Indonesia
TKW Refers to Xiamen Tsannkuen Property Services Co., Ltd.
RMB Refers to RMB YUAN
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information about the Company
Stock name TKC-B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Chinese name of the
Company 厦门灿坤实业股份有限公司
Abbr. of the Chinese name
of the Company 闽灿坤
English name of the
TSANNKUEN(CHINA) ENTERPRISE CO. LTD
Company
Abbr. of the English name
TKC
of the Company
Legal representative of the
Pan Zhirong
Company
II. Contact information
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, Zhangzhou,
Fujian Province, P.R.China Fujian Province, P.R.China
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com
III. Other information
1. Ways to contact the Company
Did any change occur to the registered address, office address and their postal codes, website address and email address of t he
Company during the Reporting Period?
□ Applicable √ Not applicable
2. About information disclosure and where this Report is placed
Did any change occur to information disclosure media and where this Report is placed during the Reporting Period?
□ Applicable √ Not applicable
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Other relevant information
Did any change occur to other relevant information during the Reporting Period?
□ Applicable √ Not applicable
IV. Accounting and financial highlights
Whether the Company performed any retrospective adjustment to or restatement of its accounting data due to change of accounting
policy, correction of accounting error, etc.
□ Yes√ No
Unit: RMB Yuan
Same period of last
Item Reporting Period YoY +/-（％）
year
Operating revenue 793,014,584.36 929,448,983.38 -14.68
Net profit attributable to shareholders of the Company 39,220,703.16 47,292,567.95 -17.07
Net profit attributable to shareholders of the Company
32,506,739.64 9,863,734.45 229.56
before extraordinary gains and losses
Net cash flows from operating activities -28,011,876.14 4,167,209.43 -772.20
Basic EPS (RMB Yuan/share) 0.21 0.26 -19.23
Diluted EPS (RMB Yuan/share) 0.21 0.26 -19.23
Weighted average ROE (%) 5.10 7.02 -1.92
As at the end of the As at the end of last
Item +/- (%)
Reporting Period year
Total assets 1,847,468,612.40 1,956,448,835.98 -5.57
Net assets attributable to shareholders of the Company 770,522,673.06 748,738,791.34 2.91
Total shares of the Company as at closure of the last trading day before the disclosure of this Report:
Total shares of the Company as at closure of the last trading day before the
185,391,680
disclosure of this Report (share)
Fully diluted EPS based on the latest total shares:
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.21
V. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Not applicable
No difference in the Reporting Period.
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Not applicable
No difference in the Reporting Period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Not applicable
VI. Items and amounts of extraordinary gains and losses
√ Applicable □ Not applicable
Unit: RMB Yuan
Item Amount Explanation
Gains/losses on the disposal of non-current assets (including the offset
279,810.12
part of 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 business or granted at certain quotas 2,260,574.12
or amounts according to the country’s unified standards
Capital occupation charges on non-financial enterprises that recorded
into current gains and losses
Gains due to that the investment costs for the Company to obtain
subsidiaries, associates and joint ventures are lower than the enjoyable
fair value of the identifiable net assets of the investees when making the
investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management
Asset impairment provisions due to acts of God such as natural disasters
Gain/loss on debt restructuring
Expenses for business reorganization, such as expenses for staffing,
reorganization etc.
Gain/loss on the part over the fair value due to transactions with
distinctly unfair prices
Current gains and losses of subsidies acquired from business
combination under the same control as from period-begin to
combination date
Gain/loss on contingent events irrelevant to the Company’s normal
business
Gains and losses on change in fair value from financial assets held for Gains on sale of forward
trading and financial liabilities held for trading, as well as investment exchange contracts, fair value
income from disposal of financial assets held for trading and financial 6,172,798.04 changes and other current
liabilities held for trading and financial assets available for sales except assets (wealth management
for effective hedging related with normal businesses of the Company instruments)
Reversal of provision for impairment that made impairment test
independently
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Amount Explanation
Gain/loss on loans obtained by entrusting others
Gain/loss on change of the fair value of investing real estate of which
the subsequent measurement is carried out adopting the fair value
method
Effect on current gains/losses when a one-off adjustment is made to
current gains/losses according to requirements of taxation, accounting
and other relevant laws and regulations
Custody fee income when entrusted with operation
Other non-operation income and expenses other than the above 2,582,737.79
Other gain/loss items that meet the definition of an extraordinary
gain/loss
Less: Income tax effects 1,898,569.93
Minority interests effects (after tax) 2,683,386.62
Total 6,713,963.52
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public —Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/los s item
□ Applicable √ Not applicable
Section III. Business Highlights
I. Main business during the Reporting Period
Development and manufacture of household appliances, electronics, light industrial products, modern office
supplies; design and manufacture of molds for those products; Sale of the Company’s products in China and to
other countries and regions as well as provision of relevant after-sales service; wholesale, retail (only in the
Company’s own shops), import & export and relevant supporting business of household appliances, electronic
products, electrical equipment, office supplies, kitchen utensils and pre-packaged food as well as provision of
relevant after-sales service (the aforesaid business scope of the Company does not involve state trading
commodities; where quota permission or a license is required, it shall be obtained according to the regulations of
the country before operation). No material changes occurred to the business model of the Company in the
Reporting Period.
II. Material changes in main assets
1. Material changes in main assets
Main assets Material change
Down 63.57% from the opening amount of the year, mainly because of smaller assessed
Financial assets held for trading gains on forward forex contracts
Up 467.98% from the opening amount of the year, mainly because of outstanding notes
Notes receivable
receivable
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Main assets Material change
Accounts receivable No material change
Advances to suppliers No material change
Down 40.29% from the opening amount of the year, mainly because of decreased export
Other receivables
tax rebates in the current period
Inventories No material change
Other current assets No material change
Equity assets No such assets
Investment properties No material change
Fixed assets No material change
Down 74.31% from the opening amount of the year, mainly because of the check and
Construction in progress
acceptance of the rebuilt component plant of SCI in the current period
Intangible assets No material change
Long-term deferred charge No material change
Deferred tax assets No material change
Down 34.91% from the opening amount of the year, mainly because of the check and
Other non-current assets
acceptance in the current period of equipment that had been prepaid for
2. Main assets overseas
√ Applicable □ Not applicable
Unit: RMB Yuan
Any major
Operation Measures taken to In the Company’s
Asset Nature Value Location Earnings impairment
status protect asset safety net assets (%)
risk or not
SCI Investment 169,100,542.93 Indonesia Normal Periodic review -1,142,763.48 21.95 No
Equity
TKEI 19,327,528.11 Taiwan Normal Periodic review -34,300.74 2.51 No
acquisition
Other information: N/A
III. Core competitiveness analysis
No material change occurred to the core competitiveness of the Company during the reporting period.
Following the corporate culture of research and development, the Company has a diversified R&D service system
and provides a well-established customer service and management platform, which are well-received among
major brand customers across the globe. Through constant close interaction with customers and innovation in
R&D, it caters to customer needs from the development to the manufacturing of differentiated products.
Focusing on smart control, the application of IoT, etc. in R&D, the Company supplies smart, quality products with
high added value to create new market demand and compete in the industry.
In the reporting period, the Company obtained 25 patents in R&D, including 15 invention patents, 9 utility model
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
patents and 1 design patent. There are also dozens of patents being applied for. These patents can help better
protect the Company’s intellectual property rights, give play to its competitive edge in independent property rights,
keep a leading position in technology and increase its core competitiveness.
Section IV. Performance Discussion & Analysis
I. Business review for the reporting period
During the reporting period, American and European countries remained the primary countries we exported our
home appliances to amid the turbulence caused by the COVID-19 pandemic, as well as the complex and
changeable economic environment at home and abroad. And currently, global economic growth remains slow with
the outbreak and spread of the pandemic overseas.
Upon constant monitoring and assessment of the impact of the pandemic on the Company, we will make timely
adjustments to various operating arrangements accordingly. Meanwhile, a variety of measures will be taken to
increase revenue and reduce expenditure, with the objective of minimizing the negative impact of the pandemic
on the Company.
We carried on with the simplification and transformation strategies. New raw materials, techniques and
manufacturing equipment were brought in, and manufacturing plants were refined to increase our yield rate and
production efficiency, simplifying and improving our production. Upholding the strategy of innovation-driven
transformation, we develop and manufacture differentiated products to compete in the industry. And 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. 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 manufacturer keeps on
developing.
Through being more intimate with customers and innovation in R&D, we create new market demand by
developing smart-home and low-carbon products, which effectively expands our market share and strengthens our
operating revenue and profitability.
II. Main business analysis
For the reporting period, we achieved a net profit attributable to shareholders of the Company of RMB39.22
million, with the corresponding amount being RMB47.29 million in the same period of last year. The change was
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
primarily driven by:
(1) The net profit attributable to shareholders of the Company of RMB47.29 million in the same period of last
year comprised the effect of RMB29.54 million of an extraordinary gain (the asset disposal gain in respect of the
relocation of controlled sub-subsidiary TKS’s phase II plant carried out according to the government policy), with
no comparable gain in the reporting period.
(2) Stringent anti-pandemic measures were adopted in the reporting period. We have resumed work/production in
a safe and orderly manner according to the overall arrangements of governments at all levels while ensuring the
safety of our employees against the pandemic. This impacted our production and sales to some degree during the
reporting period, bringing our main business revenue down by 14.68% year-on-year. We were more prudent in
purchases to control stocks and cash outflow. A hierarchical management system based on customers’ credit lines
was carried out in respect of overdue amounts, order taking and shipment, and their credit line insurance coverage
was increased. In addition, negotiations to bring down procurement costs, expense control, workforce
simplification were carried out. Meanwhile, asset impairment allowances were established upon assessment of net
realizable value of inventories and impairments of fixed assets, and financial gains increased.
1. YoY changes in major financial data
Unit: RMB Yuan
Reporting Same period of last
Item +/-% Main reasons for changes
period year
Operating revenue 793,014,584.36 929,448,983.38 -14.68
Operating costs 644,212,379.74 796,332,577.48 -19.10
Taxes and surcharges 5,631,036.08 5,679,950.02 -0.86
Decrease in operating revenue in
Selling expenses 22,695,745.52 32,613,304.09 -30.41
the current period
Administrative expenses 46,326,432.58 38,769,244.52 19.49
Increase in interest income and
Financial costs -14,459,194.20 -2,740,414.93 -427.63 assessed exchange gains in the
current period
Decrease in assessed losses on
Gains on fair value changes -1,707,089.00 -4,145,350.00 58.82 forward forex contracts in the
current period
Increase in allowances for doubtful
Credit impairment losses -1,129,743.77 -89,003.08 -1,169.33 accounts receivable in the current
period
Increase in inventory valuation
allowances and fixed asset
Asset impairment losses -8,052,144.68 -1,830,352.79 -339.92
impairment allowances in the
current period
An assets disposal income of
Assets disposal income 279,810.12 63,398,419.60 -99.56
RMB62.87 million from the
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting Same period of last
Item +/-% Main reasons for changes
period year
relocation of the phase II plant of
TKS according to the government
policy in the same period of last
year
Compensation for the relocation of
the phase II plant of TKS according
Non-operating income 2,794,509.46 26,181,811.37 -89.33
to the government policy in the
same period of last year
Transfer of unrecovered amounts to
Non-operating expenses 211,771.67 20,502.70 932.90
this item in the current period
Deferred income tax liabilities
recognized on the assets disposal
income from the relocation of the
Income tax expenses 7,827,101.86 29,820,980.12 -73.75
phase II plant of TKS according to
the government policy in the same
period of last year
R&D expenses 30,818,857.76 36,699,200.50 -16.02
Compensation for the relocation of
the phase II plant of TKS according
to the government policy in the
Net profit 52,076,256.64 86,699,969.95 -39.94
same period of last year, with no
comparable compensation in the
current period
Tax rebates decreased by
RMB30.97 million in the current
Net cash flows from operating activities -28,011,876.14 4,167,209.43 -772.20 period as compared to the same
period of last year due to the
pandemic
An increase of RMB136 million in
Net cash flows from investing activities -253,882,705.24 -150,107,116.07 -69.13 the outflow of restricted term
deposits in the current period
Increase in dividends paid and net
Net cash flows from financing activities -24,094,067.00 -9,723,111.90 -147.80 borrowing inflow in the current
period
See the above explanations on
Net increase in cash and cash
-304,800,590.47 -157,057,583.56 -94.07 changes in operating, investing and
equivalents financing activities
Major changes to the profit structure or sources of the Company during the Reporting Period:
□ Applicable √ Not applicable
No such cases.
2. Breakdown of operating revenues
（1）Breakdown of main business revenues
Unit: RMB Yuan
Reporting period Same period of last year
Item +/-%
In total operating In total operating
Amount Amount
revenues (%) revenues (%)
Total operating
793,014,584.36 100.00 929,448,983.38 100.00 -14.68
revenues
By segments
Small home
appliance 793,014,584.36 100.00 929,448,983.38 100.00 -14.68
manufacturing
By products
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting period Same period of last year
Item +/-%
In total operating In total operating
Amount Amount
revenues (%) revenues (%)
Cooking utensils 500,877,565.26 63.16 557,292,464.28 59.96 -10.12
Everyday home
184,127,407.97 23.22 200,821,213.92 21.61 -8.31
appliances
Tea and coffee
61,420,124.34 7.75 126,054,808.02 13.56 -51.28
makers
Other 46,589,486.79 5.87 45,280,497.16 4.87 2.89
Total 793,014,584.36 100.00 929,448,983.38 100.00 -14.68
By areas
Americas 356,754,688.62 44.99 389,942,699.15 41.95 -8.51
Europe 188,723,058.75 23.80 265,055,223.83 28.52 -28.80
Asia 210,674,347.81 26.56 228,917,037.15 24.63 -7.97
Australia 28,906,788.68 3.65 38,523,514.39 4.15 -24.96
Africa 7,955,700.50 1.00 7,010,508.86 0.75 13.48
Total 793,014,584.36 100.00 929,448,983.38 100.00 -14.68
(2) Segments, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating Gross profit
Cost of sales:
revenue: +/-% margin: +/-%
Operating Gross profit +/-% from the
Item Cost of sales from the same from the same
revenue margin (%) same period of
period of last period of last
last year
year year
By segments
Small home
appliance 793,014,584.36 644,212,379.74 18.76 -14.68 -19.10 4.44
manufacturing
Total 793,014,584.36 644,212,379.74 18.76 -14.68 -19.10 4.44
By products
Cooking utensils 500,877,565.26 420,064,627.39 16.13 -10.12 -14.65 4.45
Everyday home
184,127,407.97 155,260,103.89 15.68 -8.31 -13.35 4.90
appliances
Tea and coffee
61,420,124.34 49,375,486.17 19.61 -51.28 -52.53 2.12
makers
Other 46,589,486.79 19,512,162.29 58.12 2.89 -6.91 4.41
Total 793,014,584.36 644,212,379.74 18.76 -14.68 -19.10 4.44
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Operating Gross profit
Cost of sales:
revenue: +/-% margin: +/-%
Operating Gross profit +/-% from the
Item Cost of sales from the same from the same
revenue margin (%) same period of
period of last period of last
last year
year year
By areas
Americas 356,754,688.62 299,305,059.17 16.10 -8.51 -11.72 3.05
Europe 188,723,058.75 154,324,305.81 18.23 -28.80 -32.48 4.46
Asia 210,674,347.81 161,471,019.54 23.36 -7.97 -15.86 7.19
Australia 28,906,788.68 22,885,334.91 20.83 -24.96 -26.83 2.02
Africa 7,955,700.50 6,226,660.31 21.73 13.48 11.88 1.12
Total 793,014,584.36 644,212,379.74 18.76 -14.68 -19.10 4.44
III. Analysis of non-core business
√ Applicable □ Not applicable
Unit: RMB Yuan
Ratio to the
Recurring
Items Amount total profits Notes of the causes
or not
amount (%)
Other income 2,260,574.12 3.77 Government subsidy in relation to production and operation No
Investment Income from settled forward forex contracts and wealth
7,879,887.04 13.15 No
income management instruments
Gains on fair
-1,707,089.00 -2.85 Assessed losses on unsettled forward forex contracts No
value changes
Credit
-1,129,743.77 -1.89 Increase in allowances for doubtful accounts receivable No
impairment losses
Asset impairment Increase in inventory valuation allowances and fixed asset
-8,052,144.68 -13.44 No
losses impairment allowances
Assets disposal
279,810.12 0.47 Income from disposal of fixed assets No
income
Non-operating
2,794,509.46 4.67 Transfer of long-term advances from customers to this item No
income
Non-operating
211,771.67 0.35 Transfer of long-term unrecovered amounts to this item No
expenses
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
At end of Reporting Period At end of same period of last year
Change
As a in
As a
Item percent percent Reason for any significant change
percentag
age of age
Amount e of total Amount
total (%)
assets
assets
(%)
(%)
Withdrawal of investments in wealth
Monetary funds 591,354,074.68 32.01 419,946,354.54 22.50 9.51 management products upon maturity in the
current period
Outstanding notes receivable in the current
Notes receivable 1,559,385.90 0.08 50,000.00 0.00 0.08
period
Accounts
302,087,312.15 16.35 295,096,383.76 15.81 0.54
receivable
Advances to Advances to aluminu m ingots supplier at
2,268,109.33 0.12 6,233,274.10 0.33 -0.21
suppliers the end of the same period of last year
Inventories 175,072,301.31 9.48 234,449,594.86 12.56 -3.08
Investment
22,321,513.39 1.21 24,272,428.54 1.30 -0.09
properties
Fixed assets 181,817,396.06 9.84 186,656,542.39 10.00 -0.16
Check and acceptance of the rebuilt
Construction in
750,571.75 0.04 2,020,699.59 0.11 -0.07 component plant of SCI in the current
progress
period
Other
Check and acceptance in the current period
non-current 654,852.22 0.04 4,277,003.16 0.23 -0.19
of equipment that had been prepaid for
assets
Short-term
28,331,283.48 1.53 10,449,572.62 0.56 0.97 Increase in borrowings in the current period
borrowings
Increase in trade acceptance bills at the end
Notes payable 1,319,784.49 0.07 24,540,396.01 1.32 -1.25
of the same period of last year
Contract Reclassification of financial statement line
8,137,507.11 0.44 Not applicable 0.44
liab ilit ies items due to change in accounting policy
Taxes and fees Increase in corporate income tax provisions
13,367,293.66 0.72 9,893,046.00 0.53 0.19
payable in the current period
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
Profit/loss on Cumulative Impairment
fair value fair value provided in
Opening Purchased in this Sold in this Closing
Item changes in this changes this
balance Reporting Period Reporting Period balance
Reporting charged to Reporting
Period equity Period
Financial assets
1. Financial assets at fair
value through profit/loss
0.00 0.00 0.00 0.00 0.00 0.00 0.00
(excluding derivative
financial assets)
2. Derivative financial
3,620,689.00 -2,301,689.00 0.00 0.00 277,440,500.00 261,624,089.00 1,319,000.00
assets
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Profit/loss on Cumulative Impairment
fair value fair value provided in
Opening Purchased in this Sold in this Closing
Item changes in this changes this
balance Reporting Period Reporting Period balance
Reporting charged to Reporting
Period equity Period
3. Available-for-sale
0.00 0.00 0.00 0.00 0.00 0.00 0.00
financial assets
4. Investments in other
0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity instruments
Subtotal of financial assets 3,620,689.00 -2,301,689.00 0.00 0.00 277,440,500.00 261,624,089.00 1,319,000.00
Investment properties 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Biological assets held for
0.00 0.00 0.00 0.00 0.00 0.00 0.00
production
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total of the above 3,620,689.00 -2,301,689.00 0.00 0.00 277,440,500.00 261,624,089.00 1,319,000.00
Financial liabilities 638,800.00 -594,600.00 0.00 0.00 90,569,600.00 180,885,700.00 44,200.00
Did any significant changes occur to the measurement attributes of the Company’s main assets in the Reporting Period?
□ Yes √ No
3. Restricted asset rights as of the end of this Reporting Period
√ Applicable □ Not applicable
There was a difference of RMB256,531,463.17 between the closing amount of cash and cash equivalents of
RMB334,822,611.51 in the consolidated cash flow statement and the closing amount of monetary funds of
RMB591,354,074.68 in the consolidated balance sheet, because the amount of RMB6,775,024.51 in pledge for
loan that did not meet the definition of cash and cash equivalents and the term deposits held in financial
institutions for interest income were excluded from the closing amount of cash and cash equivalents in the cash
flow statement.
V. Investments made
1. Total investments made
√ Applicable □ Not applicable
Unit: RMB Yuan
Investments made in Reporting Investments made in same period of
+/-%
Period last year
0.00 1,500,000.00 -100.00
2. Significant equity investments made in this Reporting Period
□ Applicable √ Not applicable
3. Significant non-equity investments ongoing in this Reporting Period
□ Applicable √ Not applicable
16
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Financial assets measured at fair value
□ Applicable √ Not applicable
5. Financial investments
(1) Securities investments
□ Applicable √ Not applicable
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
17
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Ratio of
Type of Investment Investment investment
investment amount at Pursed in this Sold in th is Amount amount amount at the end Actual
Related-party Initial
Operating in Co mmencement Termination the reporting reporting provided at the end of the period to profit/loss
Relation transaction investment
party derivative date date beginning of period period for of the the Co mpany's net for the
or not amount
financial the period impairment period asset at the end of period
instruments the period (%)
Forward 30 June
Bank Non-related No 71,980.94 1 January 2020 35,179.93 36,801.01 44,250.98 27,729.96 35.99 -36.76
forex 2020
Total 71,980.94 35,179.93 36,801.01 44,250.98 27,729.96 35.99 -36.76
Source of investment funds Self-owned funds
Lawsuits N/A
Disclosure date of the announcement about the board’s
12 March 2013
consent for the investment
Disclosure date of the announcement about the general
18 May 2013
meet ing’s consent for the investment
1. Analysis on risks fro m holding of derivative products: gains or losses from difference between contracted exchange rate an d market exchange rate on value date.
2. Control measures:
(1) Principle: The purpose of the financial derivative operation is to avoid risks. The Co mpany shall not conduct transactional operation for other purposes than risk
avoidance. The Co mpany shall not conduct complex derivative trading above the actual operation needs and shall not speculate in derivative trading with h edging as an
excuse. The overall contractual amount for risk avoidance of the Co mpany shall not exceed the summation of the net risk expos ure of the existing assets and liabilities and
the net risk exposure of assets and liabilities arising fro m the operation of the Co mpany in the co ming year.
Risk analysis and risk control measures for positions held in (2) Staff requirements: Personnel taking part in the investment shall all fu lly understand the risks of derivative investment and strictly execute the business operation and
derivatives in this reporting period (including but not risk management mechanisms fo r derivative investment.
limited to market risk, liquidity risk, credit risk, operational (3) Operation standardization: Before making a derivative investment, the Co mpany shall rationally equip itself with professional personnel for investment
risk, legal risk, etc.) decision-making, business operation, risk control, etc. It shall also inquire and compare among various markets and products. Besides, it shall strictly control the va riety
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 executiv e authorized
by the Board of Directors. And a derivative investment report shall be sent to the Board of Directors an nually. The Co mpany 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 inve stment amount.
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
(1) Gains on delivered derivatives in the Reporting Period were RMB1.3395 million, and assessed losses on those undelivered were RM B1.7071 million, among wh ich
Changes in market price or fair value of derivatives invested
assessed gains of RMB2.9819 million on undelivered forward forex contracts last year were reversed.
in this reporting period (specific methods used and relevant
(2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last trading day of the month.
assumption and parameter settings shall be disclosed for
(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
analysis of fair value of derivatives)
estimated exchange rate and the currency amount when bought in.
Significant changes in the Co mpany’s accounting policies
and specific accounting princip les for derivatives in this No significant changes
reporting period as compared to the prior period
Special opin ions expressed by independent directors The Co mpany has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision mechanism. We are of the
concerning the Company’s derivatives investment and risk opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation and is in co mpliance with relevant laws and regulations,
control with the risks controllable.
18
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Not applicable
2. Sale of major equity interests
□ Applicable √ Not applicable
VII. Main controlled and joint stock companies
Main subsidiaries and joint stock companies
Unit: RMB Yuan
Relationship with Main business scope Registered Operating
Co mpany name Total assets Net assets Operating profit Net profit
the Co mpany capital revenues
USD160
TKL Subsidiary Small ho me appliance manufacturing 1,879,878,887.94 1,305,193,909.22 715,492,117.08 48,946,321.63 45,608,044.19
million
TKS Sub-subsidiary Small ho me appliance manufacturing USD40 million 283,052,875.55 230,639,707.14 475,388.40 4,365,351.52 3,251,209.60
SCI Sub-subsidiary Small ho me appliance manufacturing USD35 million 169,100,542.93 113,303,210.09 83,292,609.62 -1,142,003.65 -1,142,763.48
NTD300 milli
TKEI Sub-subsidiary Industrial design 19,327,528.11 16,051,505.25 5,077,370.67 -120,724.57 -34,300.74
on
Subsidiaries obtained or disposed in this Reporting Period
√ Applicable □ Not applicable
Tsann Kuen (Zhangzhou) Investment Co., Ltd. was de-registered in April 2020.
VIII. Structured bodies controlled by the Company
□ Applicable √ Not applicable
19
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Predict the operating results of January-September 2020
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next Reporting Period according to prediction, as well as explanations on the reasons:
□ Applicable √ Not applicable
X. Risks facing the Company and countermeasures
1. International
The global economy remains depressed in 2020. Exports face severe hardship due to the COVID-19 pandemic.
Certain regions in Americas and Europe have reduced or suspended certain imports from China, trying to stop the
continuing pandemic. This results in a negative impact on China’s exports. Also, quarantine, transportation,
warehousing and other costs and expenses in respect of exports increase due to the pandemic. However, as people
spend more time at home in the pandemic, they have increasing demand for kitchen and other home appliances,
which is good news for our operating revenue in the second half of the current year.
Influenced by the continuing 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 pandemic, 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 2020.
2. Domestic
Domestically, in order to contain the spread of the pandemic, there was a short period of time when our factories
were in a production halt, with no goods to supply. However, as the pandemic is gradually under control
domestically, work/production resumption proceeds in an orderly manner nationwide. Recovery is also seen in the
manufacturing sector, which is good news for the second half of the year. Meanwhile, the pandemic has given
birth to new business forms and opportunities such as the “stay-at-home” economy, disinfection and healthcare,
and cloud living based on the Internet of Things. These are new opportunities for the small domestic appliance
industry.
20
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Exchange rate fluctuation
With the RMB being included in the SDR (Special Drawing Rights), the liquidity of China's cross-border capital
is increasing, which will increase the volatility of the RMB exchange rate. The Company’s products were
export-oriented, so the influence of the exchange rate fluctuation on the Company was rather big. Facing with the
negative influences of the appreciation of the RMB, the main methods are: to avoid the exchange risks by the
financial tools and to fully considerate the influences of the exchange risks when receiving an order, thus to
transfer the exchange risks.
4. Increase of the labor costs and the labor shortage
Factors such as increase of minimum wage standard, decrease of labor supply, the seasonal human resource
demand of surrounding enterprises and global warning have resulted in increase of labor costs of the Company
year by year. In response, the Company continues to improve the working conditions for employees by offering
air conditioning in assembly workshops as part of its efforts to reduce the employee turnover rate. Meanwhile,
performance-orientated retention policy has been adopted to enhance retention rate of the employees.
21
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section V. Significant Events
I. List of the Annual Meeting of Shareholders and Special Meeting of Shareholders held
during the Reporting Period
1. List of Meeting of Shareholders during the Reporting Period
Time Type Participation ratio Date of meeting Date of disclosure Disclosure index
The 2019
Annual Annual Meeting
44.88% 24 April 2020 25 April 2020 www.cninfo.com.cn
Meeting of of Shareholders
Shareholders
2. Preferred shareholders with the restoration of voting rights made a request for the Special Meeting of
Shareholders
□ Applicable √ Inapplicable
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
□ Applicable √ Inapplicable
The Company planned not to distribute cash dividend and bonus share, and not to convert capital reserves into
share capital in half year.
III. Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the Company and other commitme nt makers, fulfilled in this reporting
period or ongoing at the period-end
√ Applicable □ Inapplicable
Time of
Commitment Commitmen Period of
Commitment Contents making Fulfillment
maker t type commitment
commitment
Commitment on share
reform
Commitment in the
acquisition report or the
report on equity changes
Commitments made upon
the assets replacement
Commitments made upon
first issuance or refinance
Commitment on equity
incentive
FILLMAN Commitmen Based on the confidence on 28 The
Other commitments made Long-term
INVESTMENT t on the continuous and stable December Company’s
to minority shareholders S LIMITED effective
shareholdin development of the Company, 2012 stocks
22
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitmen Period of
Commitment Contents making Fulfillment
maker t type commitment
commitment
g increase it committed to increase the resumed
shareholding if the trading on
Company’s stock price lower 31 Dec.
than HKD2.40 per share after 2012, but
the implementation of the the
shares contraction and trading Company’s
resumption, and it would stock price
increase no more than 2% hasn’t met
shares (i.e. 3.7078 million the
shares) of the total shares condition
issued by the Company within (closing
one year since the date of price was
initial shareholding increase. lower than
If the plan on increasing HKD2.40)
holding 2% shares of the total for
shares is completed within 12 shareholdin
months, and the stock price g increase
has also reached the target since the
price, it will perform relevant date of
approval procedures, and trading
propose to CSRC on resumption,
continuous implementation of FILLMAN
shareholding increase by Investment
exemption of offering. Limited
hasn’t
implemente
d the
shareholdin
g increase
plan.
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.
IX. Engagement and disengagement of CPAs firm
Whether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual financial report of the Company has not been audited
The Company held the 5th meeting of the Board of Directors of 2020 on 4 August 2020 and approved the Proposal
on Changing the CPAs Firm. The Company intended to engage RSM China (Special General Partnership) as the
auditor of the Company for internal control and financial report of 2020 and submitted the said proposal to the 1 st
Extraordinary General Meeting of 2020 for review.
V. Notes for “non-standard audit report” of CPAs firm during the Reporting Period by board
of directors and supervisory board
□ Applicable √ Inapplicable
23
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Notes for the related information of “non-standard audit reports” last year by board of
directors
□ Applicable √ Inapplicable
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
VIII. Litigations and arbitrations
Significant litigations and arbitrations
□ Applicable √ Inapplicable
Other lawsuits
√ Applicable □ Inapplicable
Unit: RMB’0,000
Lawsuit Trial results Situation of
Whether
amount and execution of Disclo Disclo
Basic situation of form into
(RMB Process of lawsuit (arbitration) influences judgment of sure sure
lawsuit (arbitration) estimated
Ten of lawsuit lawsuit date index
liabilities
thousand) (arbitration) (arbitration)
Tsann Kuen China (Zhangzhou)
The case of the Enterprise Co., Ltd. filed a plaint at
controlling Kobe District Court on 9 May 2014; the
subsidiary Tsann judgment of first instance that the claim
Kuen China of Tsann Kuen China (Zhangzhou)
(Zhangzhou) Enterprise Co., Ltd. was rejected was Had no
1,770.26 No No No No
Enterprise Co., Ltd. received on 1 April 2019. An appeal result
sued Japan UCC was instituted within the statutory
Ueshima Coffee period. Up to now, the appeal letter of
Co., Ltd. (contract UCC has been received and the time of
disputes) the first oral argument in the second
trial is 6 September 2019.
Zhangzhou
The contract Intermediate
disputes case of the People’s Court
controlling put on record the
subsidiary Tsann Defendants case and consent
Kuen China of Sanda to the application
(Zhangzhou) and of enforcement on
Enterprise Co., Ltd Receive the judgment of second Lianyuan 21 January 2019;
333.00 No No No
sued Sanda Electric instance on 11 December 2018 applied a the execution
Machinery Co., retrial. money of RMB
Ltd. and Boluo 1,771,541.08 was
County Lianyuan received from
Industrial Zhangzhou
Technology Co., Intermediate
Ltd. People’s Court on
21 March 2019.
Guangzhou Intellectual Property Court
opened the court session for the second
The patent time on 29 May 2019;
infringement case Guangzhou Intellectual Property Court
Had no
of the Company 50.00 No made the judgment of first instance on No No No
result
sued Ningbo Kaibo 31 October 2019;
Group Co., Ltd Ningbo Kaibo Group Co., Ltd. lodged
an appeal with the Supreme Court on 6
December 2019;
24
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Lawsuit Trial results Situation of
Whether
amount and execution of Disclo Disclo
Basic situation of form into
(RMB Process of lawsuit (arbitration) influences judgment of sure sure
lawsuit (arbitration) estimated
Ten of lawsuit lawsuit date index
liabilities
thousand) (arbitration) (arbitration)
The Supreme Court opened the court
session for the first time on 10 June
2020.
On 12 December 2018, the court judged
The patent
that the case should be transferred to
infringement cases
Shenzhen Intermediate People’s Court
of the controlling
for filing;
subsidiary Tsann
Shenzhen Intermediate People’s Court
Kuen China
opened the court session for the first
(Zhangzhou)
time on 25 April 2019;
Enterprise Co., Ltd.
Shenzhen Intermediate People’s Court
sued Zhejiang
made the judgment of first instance on Had no
Tmall Network Co., 50.00 No No No No
7 August 2019; result
Ltd., Shenzhen
Shenzhen Zhengxiang Electrical
ZhengXiang
Industrial Co., Ltd. lodged an appeal
Electrical Industrial
with the Supreme Court on 29 August
Co., Ltd and
2019;
Shenzhen Aierde
Shenzhen Aierde Household
Household
Furnishings Co., Ltd. lodged an appeal
Furnishings Co.,
with the Supreme Court on 3 September
Ltd.
2019.
The patent
infringement case Registered at Guangzhou Intellectual
of the Company Property Court on 26 March 2020;
Had no
sued Zhe jiang 50.00 No Guangzhou Intellectual Property Court No No No
result
Oubeijia opened the court session for the first
Kitchenware Co., time on 23 June 2020.
Ltd.
The patent
infringement cases
of the controlling
subsidiary Tsann
Registered at Guangzhou Intellectual
Kuen China
Property Court on 7 April 2020;
(Zhangzhou)
Guangzhou Intellectual Property Court
Enterprise Co., Ltd. Had no
50.00 No opened the court session for the first No No No
sued Zhongshan result
time on 30 June 2020.
Carmate Electrical
Appliances Co.,
Ltd. and Shenzhen
Wande Electrical
Appliances Co.,
Ltd.
IX. Doubts from Media
□ Applicable √ Inapplicable
X. Punishme nts and rectifications
□ Applicable √ Inapplicable
No such cases in the Reporting Period.
25
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XI. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Inapplicable
XII. Imple mentation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Inapplicable
26
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIII. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Unit: RMB’0,000
Pricing
Type of Settlement
principl Whether
the Proportion in method of
Content of the e of the Trans Transacti Approved exceede Similar
related-pa same kind of the Disclosure Disclosur
Related party Relationship related-party related- action on transaction d the market
rty transactions related-part date e index
transaction party price amount quota approve price
transactio (%) y
transacti d quota
n transaction
on
Purchase
Company directly
of
controlled by
Thermaster Electronic commodit Purchase of raw
actual controller 1,404.96 2.75% 3,849.30
(Xiamen) Ltd. ies from parts
and their close
the related
family members
party
Purchase
of
Under the control
Tsann Kuen Enterprise commodit Purchase of raw Based
of the same actual 0.26 0.00% 1.20
Co., Ltd. ies from parts on the
controller
the related market
party price
Purchase and both Settled
of parties according to
Under the control 17 March www.cnin
Gold Mining Chain commodit Purchase of raw abide N/A No the contract N/A
of the same actual 0.02 0.00% 1.20 2020 fo.com.cn
Co., Ltd. ies from parts by the signed by
controller
the related fair and both parties
party reasona
Purchase ble
of principl
Ultimate
Star Comgistic Capital commodit Purchase of raw e
controlling 0.02 0.00% 1.20
Co., Ltd. ies from parts
company
the related
party
Sales of
Ultimate commodit Sales of parts
Star Comgistic Capital
controlling ies to the and finished 290.10 0.37% 1,387.20
Co., Ltd.
company related products
party
27
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Pricing
Type of Settlement
principl Whether
the Proportion in method of
Content of the e of the Trans Transacti Approved exceede Similar
related-pa same kind of the Disclosure Disclosur
Related party Relationship related-party related- action on transaction d the market
rty transactions related-part date e index
transaction party price amount quota approve price
transactio (%) y
transacti d quota
n transaction
on
Total 1,695.36 5,240.10
Details of large amount of sales returns N/A
As for the prediction on the total amount of routine related-party transactions
to be occurred in the reporting period by relevant types, the actual N/A
performance in the reporting period
Reason for significant difference between the transaction price and the market
N/A
price
2. Related-party transactions regarding purchase or sales of assets or equity interests
□ Applicable √ Inapplicable
3. Related-party transitions regarding joint investments
□ Applicable √ Inapplicable
28
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
XIV. Occupation of the Company’s funds for non-operating purposes by the
controlling shareholder and its related parties
□ Applicable √ Inapplicable
XV. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Inapplicable
(2) Contracting
□ Applicable √ Inapplicable
(3) Leasing
□ Applicable √ Inapplicable
2. Significant guarantees
√ Applicable □ Inapplicable
(1) Guarantees
29
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Guarantees between subsidiaries
Disclosure
Actual
date of the
occurrence Actual Due Guarantee
Guaranteed guarantee Line of Type of Term of
date (date of guarantee or for a related
party line guarantee guarantee guarantee
agreement amount not party or not
announceme
signing)
nt
2019/8/7 2020/3/10
PT.STAR
COMGISTIC 2020/3/17 6,404.81 2020/3/27 591.51 Pledged 1 year No No
INDONESIA
2020/6/24 2020/7/8
Total actual guarantee
Total guarantee line for
amount for subsidiaries
subsidiaries approved during 6,404.81 591.51
during this Reporting
this Reporting Period (C1)
Period (C2)
Total actual guarantee
Total approved guarantee line
balance for subsidiaries at
for subsidiaries at the end of 6,404.81 591.51
the end of this Reporting
this Reporting Period (C3)
Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved Total actual guarantee
during this Reporting Period 6,404.81 amount during this 591.51
(C1) Reporting Period (C2)
Total approved guarantee line at Total actual guarantee
the end of this Reporting Period 6,404.81 balance at the end of this 591.51
(C3) Reporting Period (C4)
Proportion of the total actual guarantee amount (C4) in net
0.77%
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and their related 0
parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset
0
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
Explanation on providing external guarantee violating established procedures None
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Inapplicable
3. Entrusted cash management
√ Applicable □ Inapplicable
Unit: RMB’0,000
Type Resource of funds Amount incurred Undue balance Amount overdue
Bank financial product Self-owned fund 54,000.00 48,000.00 0.00
Total 54,000.00 48,000.00 0.00
30
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Particular information of high-risk entrusted asset management with individual significant amount or low security, poor liquidity and non breakeven
√ Applicable □ Inapplicable
Unit: RMB’0,000
Actual Amou Whether
Break- Amount recovery nt Whether there is Overview
Typ Res
even Annual of actual of withdr go wealth of the
e of Type of ourc Use
Name of the floatin yield for Estimate profits or profits awn through managemen item and
the the Amount e of Initial date Ended Date of
trustee g referenc profit losses in or losses impair stator t the related
trust product fund fund
procee e reporting in ment procedu entrustment index for
ee s
ds period reportin provis res plan in inquiring
g period ion future or not
Break-e
Bank of
ven
Communica 18 June 15 January
floating 5,000.00 4.30% 124.29 124.29
tion-Putian 2019 2020
proceed
Branch
s
China
Everbright 9 April 9 April
Break-e 5,000.00 3.90% 195.00 195.00
Bank-Xiame 2019 2020
ven Recover
n Branch
fixed ed upon
China
proceed maturity
Everbright
s 5,000.00 7 May 2019 7 May 2020 3.80% 190.00 190.00
Bank-Xiame Payme
n Branch nt of
Stru Subject to
CHINA Self- interes
ctur the future
MINSHEN Ban own t and www.cnin
18 January 17 January al N/A Yes market yield
G k 4,500.00 ed princi 4.10% 183.99 183.99 fo.com.cn
2019 2020 depo and fund
BANK-Xia fund pal at
sit condition
men Branch maturi
Xiamen ty
30 August 29 August
International Break-e 5,000.00 4.00% 202.78
2019 2020
Bank ven
Chiyu floating 11 10
Banking-Fu proceed 15,000.00 December December 4.35% 661.56
zhou Branch s 2019 2020
Undue
Chiyu
9 January 8 January
Banking-Fu 5,000.00 4.35% 220.52
2020 2021
zhou Branch
Xiamen 19
13 May
International 5,000.00 November 3.70% 92.50
2020
Bank 2020
31
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Actual Amou Whether
Break- Amount recovery nt Whether there is Overview
Typ Res
even Annual of actual of withdr go wealth of the
e of Type of ourc Use
Name of the floatin yield for Estimate profits or profits awn through managemen item and
the the Amount e of Initial date Ended Date of
trustee g referenc profit losses in or losses impair stator t the related
trust product fund fund
procee e reporting in ment procedu entrustment index for
ee s
ds period reportin provis res plan in inquiring
g period ion future or not
Xiamen
12 August 11 August
International 9,500.00 4.10% 394.91
2019 2020
Bank
Xiamen
10 March 10 March
International 8,500.00 4.00% 344.72
2020 2021
Bank
Total 67,500.00 2,610.27 693.28
32
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Other significant contracts
□ Applicable √ Inapplicable
XVI. Social responsibilities
1. Significant environmental protection
□ Applicable √ Inapplicable
2. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Inapplicable
XVII. Other significant events
√ Applicable □ Inapplicable
Currently, considering the outbreak of the epidemic abroad and a tendency to spread, the Company will
keep an close eye on and evaluate the influence of the epidemic, timely adjust all operating arrangements
and take various measures to increase income and reduce expenditure, so as to lower the negative effects
of the epidemic on the Company.
XVIII. Significant events of subsidiaries
□ Applicable √ Inapplicable
Section VI. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before Increase/decrease (+/-) After
Increase
Bonu
Percenta New from Subtot Percentag
Number s Other Number
ge (%) issues capital al e (%)
shares
reserve
1. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.1 Shares held by
state
1.2 Shares held by
state-owned
corporations
33
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Before Increase/decrease (+/-) After
Increase
Bonu
Percenta New from Subtot Percentag
Number s Other Number
ge (%) issues capital al e (%)
shares
reserve
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
2. Unrestricted shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
2.1 RMB ordinary
shares
2.2 Domestically
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
listed foreign shares
2.3 Foreign capital
stocks listed abroad
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
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and net
assets per share attributed to equity shareholder and financial index etc.
□ Applicable √ Inapplicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Inapplicable
2. Changes in restricted shares
□ Applicable √ Inapplicable
34
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
II. Issuance and listing of securities
□ Applicable √ Inapplicable
III. Total numbe r of shareholders and their shareholdings
Unit: share
Total number of preference shareholders
Total number of common shareholders at
15,759 with resumed voting rights at the 0
the period-end
period-end
Greater than 5% or top 10 common shareholders
Total Number Pledged or frozen
Number of
common Increase/decreas of shares
Nature of Shareholding unrestricted
Name of shareholder shares held e during the restricted Status
shareholder percentage common Number of
at the reporting period common of
shares shares
period-end shares shares
FORDCHEE
Foreign
DEVELOPMENT 29.10% 53,940,530 Unchanged 0 53,940,530 0
corporation
LIMITED
EUPA INDUSTRY Foreign
13.09% 24,268,840 Unchanged 0 24,268,840 0
CORPORATION LIMITED corporation
GUOTAI JUNAN
Foreign
SECURITIES(HONGKON 5.00% 9,265,899 145,717 0 9,265,899 0
corporation
G) LIMITED
FILLMAN Foreign
2.49% 4,621,596 Unchanged 0 4,621,596 0
INVESTMENTS LIMITED corporation
SHENWAN HONGYUAN
Foreign
SECURITIES (H.K.) 1.09% 2,016,752 Unchanged 0 2,016,752 0
corporation
LIMITED
Domestic
CHEN YONGQUAN 1.03% 1,900,776 Unchanged 0 1,900,776 0
individual
Foreign
CHEN YONGQING 0.87% 1,607,178 45,929 0 1,607,178 0
individual
Foreign
CHEN LIJUAN 0.76% 1,401,134 Unchanged 0 1,401,134 0
individual
Domestic
DING XIAOLUN 0.66% 1,223,400 49,900 0 1,223,400 0
individual
Domestic
XU QIANMING 0.34% 623,759 5,500 0 623,759 0
individual
Strategic investor or general corporation
becoming a top ten shareholder due to None
placing of new shares
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.
Top ten unrestricted common shareholders
Number of unrestricted Type of shares
Name of shareholder common shares held at
Type Number
the period-end
FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign share 53,940,530
EUPA INDUSTRY CORPORATION
24,268,840 Domestically listed foreign share 24,268,840
LIMITED
GUOTAI JUNAN
9,265,899 Domestically listed foreign share 9,265,899
SECURITIES(HONGKONG) LIMITED
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign share 4,621,596
SHENWAN HONGYUAN SECURITIES
2,016,752 Domestically listed foreign share 2,016,752
(HK) LIMITED
CHEN YONGQUAN 1,900,776 Domestically listed foreign share 1,900,776
CHEN YONGQING 1,607,178 Domestically listed foreign share 1,607,178
CHEN LIJUAN 1,401,134 Domestically listed foreign share 1,401,134
35
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
DINGG XIAOLUN 1,223,400 Domestically listed foreign share 1,223,400
XU QIANMING 623,759 Domestically listed foreign share 623,759
Explanation on associated relationship
The first, the second and the fourth shareholders are the Company’s corporate
or/and persons acting in concert among the
controlling shareholders. It is unknown whether the other shareholders of public
top ten unrestricted common shareholders
shares are related parties or acting-in-concert parties as prescribed in the
and between the top ten unrestricted
Administrative Methods for Disclosure of the Shareholding Changes of the Listed
common shareholders and the top ten
Company’s Shareholders.
common shareholders
Explanation on the top 10 common
shareholders participating in the margin N/A
trading business
Did any of the top ten common shareholders or the top ten unrestricted common shareholders of the
Company conduct any promissory repo during the Reporting Period?
□ Yes √ No
No such cases in the Reporting Period.
IV. Change of the controlling shareholder or the actual controller
Change of the controlling shareholder during this reporting period
□ Applicable √ Inapplicable
No such cases in this reporting period.
Change of the actual controller during this reporting period
□ Applicable √ Inapplicable
No such cases in this reporting period.
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
There was no change in shareholding of directors, supervisors and senior management staffs, for the
specific information please refer to the 2019 Annual Report.
36
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
II. Changes in directors, supervisors and executive officers
√ Applicable □ Inapplicable
Name Office title Type of change Date Reason
He Zongyuan Director Left 28 February 2020 Personal reasons
Supervisory
Xu Xiaowan Board Left 24 April 2020 Personal reasons
chairman
Left for expiration Left for expiration of his
Xu Degeng Director 24 April 2020
of his term term
Section IX. Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue
before the approval date of this Report or were due but could not be redeemed in full?
No
Section X. Financial Report
I. Auditor’s Report
Whether the semi-annual report has been audited?
□Yes √No
The semi-annual report of the Company has not been audited.
II. Financial statements (attached)
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
Section XI. Documents Available for Reference
1. This Report carrying the signature and seal of the Board Chairman;
2. The financial statements signed and sealed by the legal representative, the accounting head for this
Report and the accounting head of the Company; and
3. The originals of all the Company’s documents and announcements which were disclosed on Securities
37
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
4 August 2020
38
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1. Consolidated balance sheet
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 30 June 2020 31 December 2019
Current assets:
Monetary funds 6.1 591,354,074.68 639,623,201.98
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 6.2 1,319,000.00 3,620,689.00
Derivative financial assets
Notes receivable 6.3 1,559,385.90 274,548.00
Accounts receivable 6.4 302,087,312.15 285,995,412.05
Accounts receivable financing
Accounts paid in advance 6.5 2,268,109.33 3,112,312.06
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other accounts receivable 6.6 17,477,176.51 29,271,999.53
Of which: Interest receivable
Dividends receivable
Financial assets purchased under resale
agreements
Inventories 6.7 175,072,301.31 222,155,587.38
Contractual assets
Assets held for sale
Non-current assets due within one year
Other current assets 6.8 494,809,476.00 501,139,597.55
Total current assets 1,585,946,835.88 1,685,193,347.55
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Investments in other debt obligations
Long-term accounts receivable
Long-term equity investments
Investments in other equity instruments 6.9 40,000.00 40,000.00
Other non-current financial assets
Investment property 6.10 22,321,513.39 22,991,059.81
Fixed assets 6.11 181,817,396.06 185,749,835.56
Construction in progress 6.12 750,571.75 2,921,901.51
Productive living assets
Oil-gas assets
Use rights assets
Intangible assets 6.13 29,557,004.67 30,733,280.24
R&D expense
Goodwill
Long-term deferred expenses 6.14 7,654,594.99 7,225,915.80
Deferred income tax assets 6.15 18,725,843.44 20,587,480.85
Other non-current assets 6.16 654,852.22 1,006,014.66
Total non-current assets 261,521,776.52 271,255,488.43
Total assets 1,847,468,612.40 1,956,448,835.98
39
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Item Note 30 June 2020 31 December 2019
Current liabilities:
Short-term borrowings 6.17 28,331,283.48
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities 6.18 44,200.00 638,800.00
Derivative financial liabilities
Notes payable 6.19 1,319,784.49 16,429,247.30
Accounts payable 6.20 464,538,790.03 594,978,594.45
Accounts received in advance 6.21 4,439,418.57 13,294,285.78
Contractual liabilities 6.22 8,137,507.11
Financial assets sold under repurchase
agreements
Customer deposits and interbank deposits
Payables for acting trading of securities
Payables for acting underwriting of
securities
Payroll payable 6.23 41,761,501.70 46,433,996.56
Taxes and fares payable 6.24 13,367,293.66 19,660,673.84
Other accounts payable 6.25 60,679,281.36 48,482,744.38
Of which: Interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance premiums payable
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 622,619,060.40 739,918,342.31
Non-current liabilities:
Insurance contract reserves
Long-term borrowings
Bonds payable
Of which: Preference shares
Perpetual bonds
Lease liabilities
Long-term accounts payable
Long-term payroll payable 6.26 473,513.70 425,896.17
Estimated liabilities
Deferred income
Deferred income tax liabilities 6.15 48,495,463.60 48,835,721.94
Other non-current liabilities
Total non-current liabilities 48,968,977.30 49,261,618.11
Total liabilities 671,588,037.70 789,179,960.42
Owners’ equity:
Share capital 6.27 185,391,680.00 185,391,680.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserves 6.28 296,808,965.79 296,808,965.79
Less: Treasury stock
Other composite income 6.29 8,617,096.57 7,514,750.01
Special reserves
Surplus reserves 6.30 40,499,488.55 40,499,488.55
Provisions for general risks
40
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note 30 June 2020 31 December 2019
Retained profit 6.31 239,205,442.15 218,523,906.99
Total equity attributable to owners of the
770,522,673.06 748,738,791.34
Company
Minority interests 405,357,901.64 418,530,084.22
Total owners’ equity 1,175,880,574.70 1,167,268,875.56
Total liabilities and owners’ equity 1,847,468,612.40 1,956,448,835.98
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
41
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Balance sheet of the Company
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Item Note 30 June 2020 31 December 2019
Current assets:
Monetary funds 4,026,848.82 7,624,622.27
Held-for-trading financial assets
Derivative financial assets
Notes receivable 1,559,385.90 274,548.00
Accounts receivable 14.1 8,599,138.59 5,867,958.20
Accounts receivable financing
Accounts paid in advance 91,291.77 96,278.32
Other accounts receivable 14.2 2,042,327.50 2,622,732.62
Of which: Interest receivable
Dividends receivable
Inventories 2,447,038.17 4,155,837.12
Contractual assets
Assets held for sale
Non-current assets due within one year
Other current assets
Total current assets 18,766,030.75 20,641,976.53
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term accounts receivable
Long-term equity investments 14.3 923,414,701.56 923,414,701.56
Investments in other equity instruments 40,000.00 40,000.00
Other non-current financial assets
Investment property 26,367,819.81 27,532,926.93
Fixed assets 798,131.30 963,505.93
Construction in progress 355,339.84
Productive living assets
Oil-gas assets
Use rights assets
Intangible assets 2,249.99
R&D expense
Goodwill
Long-term deferred expenses 528,208.82 590,108.66
Deferred income tax assets 5,179,675.27 6,125,040.53
Other non-current assets
Total non-current assets 956,328,536.76 959,023,873.44
Total assets 975,094,567.51 979,665,849.97
42
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Item Note 30 June 2020 31 December 2019
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 43,615,334.56 40,632,779.54
Accounts received in advance 1,826,178.67
Contractual liabilities 2,031,704.77
Payroll payable 4,387,028.01 7,403,395.56
Taxes and fares payable 1,204,884.82 1,255,578.53
Other accounts payable 168,271,147.33 238,315,460.56
Of which: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 219,510,099.49 289,433,392.86
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: Preference shares
Perpetual bonds
Lease liabilities
Long-term accounts payable
Long-term payroll payable
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 219,510,099.49 289,433,392.86
Owners’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other composite income
Special reserves
Surplus reserves 40,499,488.55 40,499,488.55
Retained profit 258,203,009.65 192,850,998.74
Total owners’ equity 755,584,468.02 690,232,457.11
Total liabilities and owners’ equity 975,094,567.51 979,665,849.97
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
43
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Consolidated income statement
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Same period of
Item Note Reporting period
last year
1. Operating revenues 793,014,584.36 929,448,983.38
Including: Sales revenue 6.32 793,014,584.36 929,448,983.38
Interest income
Premium income
Handling charge and commission income
2. Total operating costs 735,225,257.48 907,353,861.68
Including: Cost of sales 6.32 644,212,379.74 796,332,577.48
Interest expense
Handling charge and commission expense
Surrenders
Net claims paid
Net amount provided as policy reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 6.33 5,631,036.08 5,679,950.02
Selling expenses 6.34 22,695,745.52 32,613,304.09
Administrative expenses 6.35 46,326,432.58 38,769,244.52
R&D expenses 6.36 30,818,857.76 36,699,200.50
Finance costs 6.37 -14,459,194.20 -2,740,414.93
Of which: Interest expenses 151,742.56 431,740.73
Interest revenue 12,388,999.10 4,370,937.15
Add: other income 6.38 2,260,574.12 2,617,767.00
Profit/loss on investment (“-” means loss) 6.39 7,879,887.04 8,313,038.97
Including: Share of profit in associates and joint
ventures
Income from the derecognition of financial
assets at amortized cost
Foreign exchange gain (“-” means loss)
Net gain on exposure hedges (“-” means loss)
Profit/loss on fair value changes (“-” means loss) 6.40 -1,707,089.00 -4,145,350.00
Credit impairment loss (“-” means loss) 6.41 -1,129,743.77 -89,003.08
Asset impairment loss (“-” means loss) 6.42 -8,052,144.68 -1,830,352.79
Income arising from disposal of assets (“-” means loss) 6.43 279,810.12 63,398,419.60
3. Operating profit (“-” means loss) 57,320,620.71 90,359,641.40
Add: Non-operating revenue 6.44 2,794,509.46 26,181,811.37
Less: Non-operating expense 6.45 211,771.67 20,502.70
4. Total profit (“-” means loss) 59,903,358.50 116,520,950.07
Less: Corporate income tax 6.46 7,827,101.86 29,820,980.12
5. Net profit (“-” means loss) 52,076,256.64 86,699,969.95
44
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of
Item Note Reporting period
last year
5.1 Classified by operating continuity
5.1.1 Net profit from going concern (“-” means net loss) 52,076,256.64 86,699,969.95
5.1.2 Net profit from discontinued operations (“-”
means net loss)
5.2 Classified by ownership
5.2.1 Net profit attributable to owners of the Company 39,220,703.16 47,292,567.95
5.2.2 Minority shareholders’ income 12,855,553.48 39,407,402.00
6. After-tax net amount of other composite income 6.47 1,469,795.41 199,440.37
After-tax net amount of other composite income
1,102,346.56 149,580.28
attributable to owners of the Company
6.1 Other composite income that will not be reclassified
-8,394.48
to profit or loss
6.1.1 Changes caused by remeasurements on defined
-8,394.48
benefit pension schemes
6.1.2 Share of other comprehensive income of
investees that will not be reclassified to profit or loss under
equity method
6.1.3 Changes in the fair value of investments in
other equity instruments
6.1.4 Changes in the fair value of the company’s
credit risks
6.1.5 Other
6.2 Other composite income that will be reclassified to
1,110,741.04 149,580.28
profit or loss
6.2.1 Share of other comprehensive income of
investees that will be reclassified to profit or loss under
equity method
6.2.2 Changes in the fair value of investments in
other debt obligations
6.2.3 Other comprehensive income arising from the
reclassification of financial assets
6.2.4 Allowance for credit impairments in
investments in other debt obligations
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the translation of
1,110,741.04 149,580.28
foreign currency-denominated financial statements
6.2.7 Other
After-tax net amount of other composite income
367,448.85 49,860.09
attributable to minority shareholders
7. Total composite income 53,546,052.05 86,899,410.32
Attributable to owners of the Company 40,323,049.72 47,442,148.23
Attributable to minority shareholders 13,223,002.33 39,457,262.09
8. Earnings per share
8.1 Basic earnings per share 0.21 0.26
8.2 Diluted earnings per share 0.21 0.26
Where business mergers under the same control occurred in the Reporting Period, net profit achieved by the merged parties
before the business mergers was CNY 0.00, with the corresponding amount for the same period of last year being CNY
0.00.
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
45
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Income statement of the Company
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Same period of
Item Note Reporting period
last year
1. Operating revenues 14.4 39,381,607.56 37,149,218.41
Less: Operating costs 14.4 29,743,243.90 31,012,503.76
Taxes and surtaxes 1,161,564.08 916,698.27
Selling expenses 1,462,192.36 2,375,066.13
Administrative expenses 1,845,878.74 2,894,602.95
R&D expenses
Finance costs -23,503.87 -38,149.46
Of which: Interest expenses
Interest revenue 88,362.30 84,577.68
Add: other income 70,439.12
Profit/loss on investment (“-” means loss) 14.5 79,185,554.77 25,443,358.87
Including: Share of profit in associates and joint
ventures
Income from the derecognition of financial
assets at amortized cost (“-” means loss)
Net gain on exposure hedges (“-” means loss)
Profit/loss on fair value changes (“-” means loss)
Credit impairment loss (“-” means loss) 219,385.70 -27,910.56
Asset impairment loss (“-” means loss) 53,233.39 -1,819,781.83
Income arising from disposal of assets (“-” means
loss)
2. Operating profit (“-” means loss) 84,720,845.33 23,584,163.24
Add: Non-operating revenue 115,698.84 362,268.59
Less: Non-operating expense
3. Total profit (“-” means loss) 84,836,544.17 23,946,431.83
Less: Corporate income tax 945,365.26 -536,646.45
4. Net profit (“-” means loss) 83,891,178.91 24,483,078.28
4.1 Net profit from going concern (“-” means net loss) 83,891,178.91 24,483,078.28
4.2 Net profit from discontinued operation (“-” means
net loss)
5. After-tax net amount of other composite income
5.1 Other composite income that will not be
reclassified to profit or loss
5.1.1 Changes caused by remeasurements on
defined benefit pension schemes
5.1.2 Share of other comprehensive income of
investees that will not be reclassified to profit or loss under
equity method
5.1.3 Changes in the fair value of investments in
other equity instruments
5.1.4 Changes in the fair value of the company’s
credit risks
5.1.5 Other
5.2 Other composite income that will be reclassified
to profit or loss
5.2.1 Share of other comprehensive income of
investees that will be reclassified to profit or loss under
equity method
5.2.2 Changes in the fair value of investments in
other debt obligations
5.2.3 Other comprehensive income arising from the
reclassification of financial assets
46
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of
Item Note Reporting period
last year
5.2.4 Allowance for credit impairments in
investments in other debt obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of
foreign currency-denominated financial statements
5.2.7 Other
6. Total composite income 83,891,178.91 24,483,078.28
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
47
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Consolidated cash flow statement
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Same period of last
Item Note Reporting period
year
1. Operating cash flow:
Cash received from sale of commodities and rendering
760,032,384.25 910,416,818.85
of service
Net increase in money deposits from customers and
inter-bank placements
Net increase in loans from the Central Bank
Net increase in funds borrowed from other financial
institutions
Cash received from premium of original insurance
contracts
Net cash received from reinsurance business
Net increase in deposits of policy holders and
investment fund
Cash received from interest, handling charges and
commissions
Net increase in loans from banks and other financial
institutions
Net increase in funds in repurchase business
Net proceeds from acting trading of securities
Tax refunds received 57,320,585.80 88,288,251.27
Other operating cash received 6.48 (1) 36,017,760.78 55,614,951.61
Subtotal of operating cash inflow 853,370,730.83 1,054,320,021.73
Cash paid for goods and services 670,039,827.72 807,860,269.08
Net increase in loans and advances to customers
Net increase in funds deposited in the Central Bank and
inter-bank placements
Cash for paying claims of original insurance contracts
Net increase in interbank loans granted
Cash for paying interest, handling charges and
commissions
Cash for paying policy dividends
Cash paid to and for employees 123,559,701.92 141,016,204.69
Taxes and fares paid 22,265,046.50 11,725,429.89
Other cash payment relating to operating activities 6.48 (2) 65,518,030.83 89,550,908.64
Subtotal of operating cash outflow 881,382,606.97 1,050,152,812.30
Net operating cash flow -28,011,876.14 4,167,209.43
2. Investment cash flow:
Cash received from retraction of investments 216,993,732.02 242,197,004.77
Cash received from return on investments 11,383,180.62 4,614,149.35
Net cash received from disposal of fixed assets,
53,012.94 67,204,817.83
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investment activities 6.48 (3) 240,268,714.80 92,427,273.64
48
2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Note Reporting period
year
Subtotal of investment cash inflow 468,698,640.38 406,443,245.59
Cash paid to acquire fixed assets, intangible assets and
27,331,748.41 35,149,944.63
other long-term assets
Cash paid for investment 205,224,443.75 314,533,270.69
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other business
units
Other cash payments relating to investment activities 6.48 (4) 490,025,153.46 206,867,146.34
Subtotal of investment cash outflow 722,581,345.62 556,550,361.66
Net investment cash flow -253,882,705.24 -150,107,116.07
3. Financing cash flow:
Cash received from capital contributions
Including: Cash received from minority shareholder
investments by subsidiaries
Cash received as borrowings 54,522,840.00 18,814,040.00
Other financing cash received 6.48 (5) 7,000,000.00
Subtotal of financing cash inflow 54,522,840.00 25,814,040.00
Repayment of borrowings 26,769,860.00 19,397,105.19
Cash paid for interest expenses and distribution of
45,072,022.49 16,140,046.71
dividends or profit
Including: dividends or profit paid by subsidiaries to
26,395,184.92 8,481,119.62
minority shareholders
Other cash payments relating to financing activities 6.48 (6) 6,775,024.51
Sub-total of financing cash outflow 78,616,907.00 35,537,151.90
Net financing cash flow -24,094,067.00 -9,723,111.90
4. Effect of foreign exchange rate changes on cash and
1,188,057.91 -1,394,565.02
cash equivalents
5. Net increase in cash and cash equivalents -304,800,590.47 -157,057,583.56
Add: Opening balance of cash and cash equivalents 639,623,201.98 448,492,295.47
6. Closing balance of cash and cash equivalents 334,822,611.51 291,434,711.91
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
6. Cash flow statement of the Company
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Same period of last
Item Note Reporting period
year
1. Operating cash flow:
Cash received from sale of commodities and rendering
12,939,282.22 30,544,622.02
of service
Tax refunds received
Other operating cash received 28,295,141.08 22,188,848.35
Subtotal of operating cash inflow 41,234,423.30 52,733,470.37
Cash paid for goods and services 9,585,274.32 33,069,029.79
Cash paid to and for employees 970,120.74 1,557,848.56
Taxes and fares paid 4,249,252.46 2,665,636.52
Other operating cash payments 90,604,336.94 32,590,375.24
Subtotal of operating cash outflow 105,408,984.46 69,882,890.11
Net operating cash flow -64,174,561.16 -17,149,419.74
2. Investment cash flow:
Cash received from retraction of investments
Cash received from return on investments 79,185,554.77 25,443,358.87
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investment activities
Subtotal of investment cash inflow 79,185,554.77 25,443,358.87
Cash paid to acquire fixed assets, intangible assets and
54,985.00 62,500.00
other long-term assets
Cash paid for investment 1,500,000.00
Net cash paid to acquire subsidiaries and other business
units
Other investment cash payments
Subtotal of investment cash outflow 54,985.00 1,562,500.00
Net investment cash flow 79,130,569.77 23,880,858.87
3. Financing cash flow:
Cash received from capital contributions
Cash received as borrowings
Other financing cash received
Subtotal of financing cash inflow
Repayment of borrowings
Cash paid for interest expenses and distribution of
18,539,168.00 7,415,667.20
dividends or profit
Other cash payments relating to financing activities
Sub-total of financing cash outflow 18,539,168.00 7,415,667.20
Net financing cash flow -18,539,168.00 -7,415,667.20
4. Effect of foreign exchange rate changes on cash and
-14,614.06 -36,019.88
cash equivalents
5. Net increase in cash and cash equivalents -3,597,773.45 -720,247.95
Add: Opening balance of cash and cash equivalents 7,624,622.27 6,985,345.44
6. Closing balance of cash and cash equivalents 4,026,848.82 6,265,097.49
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
7. Consolidated statement of changes in shareholders’ equity
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Reporting period
Equity attributable to owners of the Company
Item Other equity instruments Less: Specif Gener Minority Total owners’
Other
Prefer Perpet treasu ic Surplus al risk interests equity
Share capital Oth Capital reserve comprehensiv Retained profit Subtotal
red ual ry reserv reserve reserv Other
er e incomes
shares bonds stock e e
Balance brought forward 185,391,680.00 296,808,965.79 7,514,750.01 40,499,488.55 218,523,906.99 748,738,791.34 418,530,084.22 1,167,268,875.56
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 7,514,750.01 40,499,488.55 218,523,906.99 748,738,791.34 418,530,084.22 1,167,268,875.56
Changes for the period (decrease presented by "-" 1,102,346.56 20,681,535.16 21,783,881.72 -13,172,182.58 8,611,699.14
prefix)
1. Total comprehensive income 1,102,346.56 39,220,703.16 40,323,049.72 13,223,002.33 53,546,052.05
2. Changes in owners' 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 -18,539,168.00 -18,539,168.00 -26,395,184.92 -44,934,352.92
a. Recognition of surplus reserves
b. Recognition of provision for general risks
c. Distribution to shareholders -18,539,168.00 -18,539,168.00 -26,395,184.92 -44,934,352.92
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. Change amount of Other comprehensive income
that carry forward retained earnings
f. Others
5. Designated reserves
a. Recognition during the current period
b. Withdrawal during the current period
6. Others 0.01 0.01
Balance carried forward 185,391,680.00 296,808,965.79 8,617,096.57 40,499,488.55 239,205,442.15 770,522,673.06 405,357,901.64 1,175,880,574.70
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Same period of last year
Equity attributable to owners of the Company
Item Minority Total owners’
Other equity instruments Less: Other General
Specific Surplus interests equity
Share capital Preferred Perpetual Capital reserve treasury comprehensive risk Retained profit Subtotal
Other reserve reserve Other
shares bonds stock incomes reserve
Balance brought forward 185,391,680.00 296,808,965.79 5,924,132.67 37,804,354.59 122,872,551.30 648,801,684.35 367,597,191.43 1,016,398,875.78
Add: Changes of accounting policies 9,597.14 -33,871.83 839,695.41 815,420.72 384,712.99 1,200,133.71
Correction of prior period errors
Business combination under common control
Others
Balance as at 1 January 185,391,680.00 296,808,965.79 5,933,729.81 37,770,482.76 123,712,246.71 649,617,105.07 367,981,904.42 1,017,599,009.49
Changes for the period (decrease presented by
149,580.28 39,876,900.75 40,026,481.03 30,976,142.47 71,002,623.50
"-" prefix)
1. Total comprehensive income 149,580.28 47,292,567.95 47,442,148.23 39,457,262.09 86,899,410.32
2. Changes in owners' 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 -7,415,667.20 -7,415,667.20 -8,481,119.62 -15,896,786.82
a. Recognition of surplus reserves
b. Recognition of provision for general risks
c. Distribution to shareholders -7,415,667.20 -7,415,667.20 -8,481,119.62 -15,896,786.82
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. Change amount of Other comprehensive income
that carry forward retained earnings
f. 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 6,083,310.09 37,770,482.76 163,589,147.46 689,643,586.10 398,958,046.89 1,088,601,632.99
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
8. Statement of changes in shareholders’ equity of the Company
Prepared by: TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Currency: CNY
Reporting period
Item Other equity instruments Less: Other
Specific Surplus
Share capital Preferred Perpetual Capital reserve treasury comprehensive Retained profit Other Total owners’ equity
Other reserve reserve
shares bonds stock incomes
Balance brought forward 185,391,680.00 271,490,289.82 40,499,488.55 192,850,998.74 690,232,457.11
Add: Changes of accounting policies
Correction of prior period errors
Others
Balance as at 1 January 185,391,680.00 271,490,289.82 40,499,488.55 192,850,998.74 690,232,457.11
Changes for the period (decrease presented by "-"
65,352,010.91 65,352,010.91
prefix)
1. Total comprehensive income 83,891,178.91 83,891,178.91
2. Changes in owners' 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 -18,539,168.00 -18,539,168.00
a. Recognition of surplus reserves
b. Distribution to shareholders -18,539,168.00 -18,539,168.00
c. 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. Change amount of Other comprehensive income that
carry forward retained earnings
f. 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 40,499,488.55 258,203,009.65 755,584,468.02
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Same period of last year
Other equity instruments Other
Item Less:
compreh Specific
Share capital Preferred Perpetua Capital reserve treasury Surplus reserve Retained profit Other Total owners’ equity
Other ensive reserve
shares l bonds stock
incomes
Balance brought forward 185,391,680.00 271,490,289.82 37,804,354.59 176,010,460.28 670,696,784.69
Add: Changes of accounting policies -33,871.83 -304,846.43 -338,718.26
Correction of prior period errors
Others
Balance as at 1 January 185,391,680.00 271,490,289.82 37,770,482.76 175,705,613.85 670,358,066.43
Changes for the period (decrease presented by "-" prefix) 17,067,411.08 17,067,411.08
1. Total comprehensive income 24,483,078.28 24,483,078.28
2. Changes in owners' 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 -7,415,667.20 -7,415,667.20
a. Recognition of surplus reserves
b. Distribution to shareholders -7,415,667.20 -7,415,667.20
c. 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. Change amount of Other comprehensive income that carry forward
retained earnings
f. 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 37,770,482.76 192,773,024.93 687,425,477.51
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements for H1 2020
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
Note 1: Company Profile
Tsann Kuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established
in the People’s Republic of China (“the PRC”) in 1988 as a wholly owned foreign
investment enterprise, the Company named in 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 30 June 2020, 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
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 30 June 2020, 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
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 4 August
2020.
10 subsidiaries were included in the scope of consolidation as of 30 June 2020, please see
Note 8 “The equity in other main entities” for details. 1 subsidiary is excluded from the
consolidation scope in 2020. Please see Note 7 “Change in the scope of consolidation” for
details.
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)
on 15 February 2006, and revised Accounting Standards (order 42 of the Ministry of
Finance) and Compilation Rules for Information Disclosure by Companies Offering
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 30 June 2020. 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.
Note 4: Important Accounting Principles and Accounting Estimates
The Company and subsidiaries in accordance with the actual production and management
features, according to the relevant provisions of Accounting Standards, to make several
specific accounting policies and accounting estimates for other transactions and events of
revenue recognition, see Note 4.24 “Revenue recognition principle and measurement
method” for the description. For description of significant accounting judgments and
estimates made by management, see Note 4.29 “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.
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 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,
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 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.
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 Article 51 of “Accounting Standards for Business Enterprises No.33 -
Consolidated Financial Statements” on the “package deal” criterion (see Note 4.5), 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 4.14 “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
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2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
includes the Company and all of the subsidiaries. Subsidiary is an enterprise or entity under
the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the
relevant elements involved in the control of the change, the company will be re-evaluated.
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 o f 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
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and net profit. Net profit or loss attributable to minority shareholders in the subsidiaries is
presented separately as minority interest in the consolidated income statement below the net
profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a
subsidiary exceeds the minority shareholders’ portion of the opening balance of
shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an
equity investment or other reasons, the remaining equity investment is re-measured at its
fair value at the date when control is lost. The difference between 1) the total amount of
consideration received from the transaction that resulted in the loss of control and the fair
value of the remaining equity investment and 2) the carrying amounts of the interest in the
former subsidiary’s net assets immediately before the loss of the control is recognised as
investment income for the current period when control is lost. Other comprehensive income
related to the former subsidiary's equity investment, using the foundation and the acquiree
directly related to the disposal of the same assets or liabilities are accounted when the
control is lost (ie, in addition to the former subsidiary is remeasured at the net defined
benefit plan or changes in net assets and liabilities resulting from, the rest are transferred to
the current investment income). The retained interest is subsequently measured according to
the rules stipulated in the - “Chinese Accounting Standards for Business Enterprises No.2 -
Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises
No.22 - Determination and measurement of financial instruments”. See Note 4.14
Long-term equity investments and Note 4.8 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 4.14.2.4)) and “due to the disposal of certain equity investments or
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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 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.
4.7 Foreign exchange
4.7.1 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.
4.7.2 Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot
exchange rate at the balance sheet date. All the exchange differences thus resulted are taken
to profit or loss, except for ①those relating to foreign currency borrowings specifically for
construction and acquisition of qualifying assets, which are capitalized in accordance with
the principle of capitalization of borrowing costs, ②hedging accounting, the exchange
difference related to hedging instruments for the purpose of net oversea operating
investment is recorded in the comprehensive income till the date of disposal and recognised
in profit or loss of the period; exchange difference from changes of other account balance of
foreign currency monetary items, ③available-for-trade is recorded into profit or loss except
for amortized cost.
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
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determined. The exchange difference thus resulted are recognised in profit or loss for the
current period or as capital reserve.
4.7.3 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
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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 cur rency
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.
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.
4.8 Financial instrume nts
A financial asset or financial liability is recognised in the balance sheet when the Company
becomes a party to the contractual provisions of a financial instrument.
4.8.1 Classification, recognition and initial measurement of financial assets
The classification of financial assets is generally based on the business model in which a
financial asset is managed and its contractual cash flow characteristics. On initial
recognition, a financial asset is classified as measured at amortised cost, at fair value
through other comprehensive income (“FVOCI”), or at fair value through profit or loss
(“FVTPL”).
Financial assets are measured at fair value on initial recognition. For FVTPL, the related
transaction expense is directly recognised in current profit or loss. For other types of
financial assets, related transaction costs are included in the initial recognition amount. For
the accounts receivable or notes receivable arising from the sale of products or the provision
of labor services that do not contain or consider the significant financing components, the
Company shall use the consideration amount that is expected to be received as the initial
confirmation amount.
4.8.1.1 Financial asset at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions
and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual
cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding. For these financial assets, the
Company adopts the effective interest rate method and performs subsequent measurement
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according to the amortized cost. The gains or losses arising from amortization or impairment
are recognised in profit or loss for the current period.
4.8.1.2 Financial asset at FVOCI
A debt investment is measured at FVOCI if it meets both of the following conditions and is
not designated as at FVTPL:
-- it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
-- its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding. These financial assets are
measured at fair value and their changes are included in other comprehensive income. The
impairment loss or gains, exchange gains and losses and interest income calculated
according to the effective interest method are included in the current profit and loss.
In addition, the Company has designated certain non-trading equity instrument investments
as FVOCI. The relevant dividend income of such financial assets is included in the current
profit and loss, and changes in fair value are included in other comprehensive income. When
the financial assets are derecognised, the accumulated gains or losses previously recognised
in other comprehensive income are transferred from other comprehensive income to
retained earnings, which are not recognised in profit or loss.
4.8.1.3 Financial asset at FVTPL
All financial assets not classified as measured at amortised cost or FVOCI as described
above are measured at FVTPL. On initial recognition, the Company may irrevocably
designate a financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantl y reduces an
accounting mismatch that would otherwise arise.
4.8.2 Classification, recognition and initial measurement of financial liabilities
On initial recognition, a financial liability is classified as measured at amortised cost, at fair
value through other comprehensive income (“FVOCI”), or at fair value through profit or
loss (“FVTPL”).
For financial liabilities at fair value through profit or loss, any related directly attributable
transaction costs are charged to profit or loss; for other categories of financial liabilities, any
related directly attributable transaction costs are included in their initial costs.
4.8.2.1 Financial liabilities at FVTPL
A financial liability is classified as at FVTPL if it is classified as held-for-trading (including
derivative financial liability) or it is designated as such on initial recognition.
Trading financial liabilities (including derivatives that are financial liabilities) are
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subsequently measured at fair value and changes in fair value are recognised in profit or loss
except for hedge accounting.
A financial liability designated as at FVTPL, its changes in fair value of liabilities arising
from changes in the Company's own credit risk are included in other comprehensive income.
When the liability is derecognised, the accumulated changes in fair value arising from
changes in the credit risk of other comprehensive income are transferred to retained earnings,
other changes in value are included in the current profit and loss. If the effects of changes in
the credit risk of these financial liabilities are treated as described above, the accounting
mismatch in profit or loss will be caused or expanded, and the entire gain or loss of the
financial liability(including the amount of the company's own credit risk cha nges) will be
included in the current profit and loss.
4.8.2.2 Other financial liabilities
An entity shall classify all financial liabilities as measured at amortised cost, except for
financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or when the continuing involvement approach applies, and financial guarantee
contracts. It is subsequently measured at amortised costs and any gains or losses arising
from derecognition and amortisation are recognised in profit or loss.
4.8.3 Recognition and measurement of transfer of financial assets
A financial asset is de-recognised if any of the following conditions is satisfied:
a. the right to receive the cash flows attached to the financial asset ceases; or
b. the financial asset has been transferred and significant risks and rewards attached to the
ownership of the financial asset has been transferred to the transferee; or
c. the financial asset has been transferred, the entity has neither transferred nor retained
significant risks and rewards attached to the ownership of the financial asset, and the entity
has given up the control over the financial assets.
Where an entity has neither transferred nor retained significant risks and rewards attached to
the ownership of a transferred financial asset, and has not given up the control over it, the
transferred financial asset is continued to be recognised proportionate to the degree of the
entity's continual involvement. The degree of the entity's continual involvement wi th the
transferred financial asset is represented by the risk faced by the entity resulting from
changes in the value of the transferred financial assets.
Where transfer of a financial asset as a whole satisfies the de-recognition criteria, an
investment income is recognised as the excess of the sum of the consideration received and
the cumulative changes in fair value previously recognised in other comprehensive income
over the carrying amount of the transferred financial asset and the investment income is
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recognised in profit or loss for the period during which the financial asset is transferred.
Where transfer of a financial asset partly satisfies the de-recognition criteria, the carrying
amount of the transferred financial asset is allocated to the de-recognised part and the part of
continual involvement with reference to the respective fair value of the two parts; the excess
of the sum of the consideration received and the cumulative changes in fair value
attributable to the de-recognised part previously recognised in other comprehensive income
over the carrying amount allocated to the de-recognised part is recognised in profit or loss
for the period during which the transfer occurs.
For financial assets transferred in which the Company has continued involvement, the
financial assets are accounted for in accordance with the following criteria:
a. if the risks and rewards associated with the ownership of the financial assets are
transferred to the transferee, the Company de-recognises the financial assets;
b. if the risks and rewards associated with the ownership of the financial assets are retained
by the Company, the Company continue to recognise the financial assets;
c. if the Company neither retain nor transfer almost all the risks and rewards associated with
the ownership of the financial assets, the Company accounts for the financial assets in
accordance with the provisions present in previous paragraph with reference to whether the
Company retains control of the financial assets.
4.8.4 Derecognition of financial liabilities
A financial liability is wholly or partly de-recognised when the present obligation attached
to it has been wholly or partly released. Where an agreement is entered into by the Group
and the creditor(s) which provides for the replacement of the existing financial liabilities by
new financial liabilities that are different in substance to the existing financial liabilities, the
existing and new financial liabilities are de-recognised and recognised respectively.
When a financial liability is wholly or partly de-recognised, the difference between the
consideration paid (including non-monetary assets given away and new financial liabilities
assumed) and the book value of the de-recognised part is recognised in profit or loss for the
period during which the de-recognition occurs.
4.8.5 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.
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4.8.6 Determination of the fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant must pay to sell or transfer a liability in an orderly
transaction that occurs on the measurement date. Where there is an active market for financial
instruments, the Company uses quoted prices in an active market to determine its fair value. Quotations
in an active market refer to prices that are readily available from exchanges, brokers, industry
associations, pricing services, etc., and represent the prices of market transactions that actually occur in
an arm's length transaction. If there is no active market for financial instruments, the company uses
valuation techniques to determine its fair value. Valuation techniques include reference to prices used in
recent market transactions by parties familiar with the situation and voluntary transactions, current fair
values of other financial instruments that are substantially identical, discounted cash flow methods, and
option pricing models. At the time of valuation, the company uses valuation techniques that are available
in the current situation with sufficient data and other information to support it. The company selects input
values that are consistent with the characteristics of the asset or liability that the market participants
consider in the transaction of the relevant asset or liability, and prioritizes the relevant observable inputs
as much as possible. Use unallowable values if the relevant observable input values are not available or
are not practicable.
4.8.7 Equity instrument
An equity instrument is a contract that evidences a residual interest in the assets of the company after
deducting all liabilities. The Company issues (including refinancing), repurchases, sells or cancels equity
instruments as changes in equity, and transaction costs related to equity transactions are deducted from
equity. The Company does not recognize changes in the fair value of equity instruments.
The distribution of dividends by the Company's equity instruments during the existence period (including
"interest" generated by tools that are classified as equity instruments) is treated as profit distribution.
4.9 Impairme nt of financial asset
The financial assets that the Company needs to recognise impairment loss are financial assets measured
at amortized cost, debt instruments that are measured at fair value and whose changes are included in
other comprehensive income, lease receivables, mainly including notes receivable, accounts receivables,
other receivables, debt investments, other debt investments, long-term receivables, etc. In addition, for
contract assets and some financial guarantee contracts, impairment and credit losses are recognized in
accordance with the accounting policies described in this section.
4.9.1 Impairment
Based on expected credit losses, the Company makes provision for impairment and confirms credit
impairment losses for above items in accordance with its applicable expected credit loss measurement
method (general method or simplified method).
Credit loss refers to the difference between all contractual cash flows receivable from the contract and all
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cash flows expected to be received by the Company at the original actual interest rate, that is, the present
value of all cash shortages. Among them, for the purchase or source of financial assets that have suffered
credit impairment, the company discounts the financial assets at the actual interest rate adjusted by credit.
The general method for estimating the credit loss is that the credit risk of the company's financial assets
(including other applicable items such as contract assets, the same below) has been significantly
increased since the initial confirmation on each balance sheet date. If the credit risk has increased
significantly since the initial recognition, the Company measures the impairment based on the amount
equivalent to the expected credit loss during the entire life period; If the credit risk has not increased
significantly since the initial recognition, the Company measures the impairment based on the amount of
expected credit loss in the next 12 months. The Company considers all reasonable and evidenced
information, including forward-looking information, when evaluating expected credit losses.
For financial instruments with lower credit risk on the balance sheet date, the Company measures the
impairment based on the expected credit loss amount within the next 12 months or the whole life period
based on whether its credit risk has increased significantly since the initial recognition.
4.9.2 Criteria for whether credit risk has increased significantly since initial recognition
If the probability of default of a financial asset on the estimated duration of existence determined on
balance sheet date is significantly higher than the probability of default during the estimated duration of
the initial recognition, it indicates a significant increase in the credit risk of the financial asset. Except for
special circumstances, the Company uses the change in default risk occurring within the next 12 months
as a reasonable estimate of the change in default risk throughout the life period to determine whether the
credit risk has increased significantly since the initial recognition.
4.9.3 Assess expected credit risk on a portfolio basis
The Company evaluates credit risk individually for financial assets with significantly different credit
risks, such as: receivables from related parties; receivables that are in dispute with the other party or
involve litigation or arbitration; receivables with clear indications that the debtor is likely to be unable to
meet the repayment obligations of the receivables, etc.
In addition to individual financial assets that assess credit risk, the Company classifies financial assets
into different groups based on common risk characteristics and evaluates credit risk on a portfolio basis.
4.9.4 Accounting treatment of financial assets impairment
For carrying amount of the end of the period, the difference is recognized as the impairment loss; if it is
less than the carrying amount of the current impairment provision, the difference is recognized as an
impairment gain.
4.9.5 Determination method for credit loss of various financial assets
4.9.5.1 Notes receivable
For notes receivable, the Company measures the loss impairme nt in accordance with the
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amount equivalent to the expected credit loss in the whole duration. They are classified into
different groups based on their credit risk characteristics:
Item Reason for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk
According to the credit risk of the acceptor, it should be the same as
Commercial acceptance bill
the "accounts receivable" combination.
4.9.5.2 Accounts receivable
For accounts receivable and contract assets that do not contain significant financing
components, the Company measures the loss impairment in accordance with the amount
equivalent to the expected credit loss in the whole duration.
For accounts receivable, contract assets and lease receivables that contain signi ficant
financing components, the Company chooses to always measure the loss impairment in
accordance with the amount equivalent to the expected credit loss in the whole duration.
In addition to accounts receivable and contract assets for individual assessing credit risk,
they are classified into different groups based on their credit risk characteristics:
Item Reason for determining the groups
This group uses the age of accounts receivable as the credit risk
Age
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be received)
4.9.5.3 Other receivables
In accordance with whether the credit risk of other receivables has significantly increased
since initial recognition, the company utilizes the amount equivalent to the expected credit
loss in the next 12 months or the whole duration to measures the impairment loss. In
addition to other receivables for individual assessing credit risk, they are classified into
different groups based on their credit risk characteristics:
Item Reason for determining the groups
Deposit guarantee This group is deposits receivables,
This group is the declared export tax refund funds that have not been
Export tax refund
received
This group uses the age of accounts receivable as the credit risk
Current account
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be received)
4.10 Inventories
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4.10.1 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.
4.10.2 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.
4.10.3 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 deter mined 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 declines in value is
determined normally by the difference of the cost of individual item less its realizabl e 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.
4.10.4 The perpetual inventory system is maintained for stock system.
4.10.5 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.
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4.11. Contract assets and contract liabilities
The Company presents contract assets or contract liabilities on the balance sheet according
to the relationship between the fulfillment of its contract performance obligations and its
customers’ payment. Considerations that the Company has the right to collect for
commodities transferred or services provided to customers (and such right depends on other
factors than time lapses) are presented as contract assets. Obligations to be fulfilled by the
Company of transferring commodities or providing services to customers, as the Company
has received or should receive customers’ considerations, are presented as contract
liabilities.
Refer to Note 4.11 for the detail on the Company’s method of recognizing the expected
credit loss of contract assets and accounting treatment method.
Contract assets and contract liabilities are presented separately on the balance sheet, and in a
net amount if they are under the same contract. If the net amount is the debit balance, it will
be presented in “contract assets” or “other non-current assets” according to its liquidity; if it
is the credit balance, it will be presented in “contract liabilities” or “other non-current
liabilities” according to its liquidity. Contract assets and contract liabilities that are under
different contracts cannot offset each other.
4.12 Contract costs
To be applicable from 1 January 2020
Contract costs comprise contract performance cost and contract acquisition cost.
The cost incurred by the Company from performing a contract is recognized into an asset as
contract performance cost when it meets the following conditions:
a. This cost directly relates to an existing contract or a contract expected to be acquired. It
consists of direct labor, direct materials, manufacture costs (or similar costs), costs specified
to be borne by the customer and other costs incurred from this contract solely.
b. This cost has increased the Company’s sources that are used to fulfill its contract
performance obligations in the future.
c. This cost is expected to be recovered.
An incremental cost that is incurred by the Company for acquiring a contract and expected
to be recovered is recognized into an asset as contract acquisition cost.
Assets related to contract costs are amortized on the same basis for recognizing the revenue
from commodities or services related to such assets. However, for contract acquisition costs
with an amortization period of less than one year, the Company recognize them into current
profit/loss at their occurrence.
When the carrying value of an asset related to contract costs is higher than the difference
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between the following two items, the Company will withdraw impairment provision for the
exceeded part, recognize it as asset impairment loss and further consider whether to
withdraw expected liabilities relating to the contract with losses:
a. Residual consideration expected to be gained from transferring commodities and services
related to this asset;
b. Costs expected to be incurred from transferring such commodities or services.
When the aforementioned asset impairment provision is reversed later, the carrying value of
the asset after the reversal should not exceed its carrying value on the reversal date under
the assumption of no withdrawal of impairment provision.
For a contract performance cost recognized as an asset, if its amortization period is less than
one year or one normal operating cycle at the initial recognition, it will be presented in
“inventory”; if its amortization period exceeds one year or one normal operating cycle at the
initial recognition, it will be presented in “other non-current assets”.
For a contract acquisition cost recognized as an asset, if its amortization period is less than
one year or one normal operating cycle at the initial recognition, it will be presented in
“other current assets”; if its amortization period exceeds one year or one normal operating
cycle at the initial recognition, it will be presented in “other non-current assets”.
4.13 Non-current Assets Held for Sale and Discontinue d 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.
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 whe n
the carrying amount is higher than the fair value less costs to sell, and allowance for
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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 di sposal 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.
4.14 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 4.8 “financial instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant
stipulations are common, related activities and the arrangement must be after sharing control
participants agreed to the decision-making. Significant influence is the Company s financial
and operating policies of the entity has the right to participate in decision-making, but
cannot control or with other parties’ joint control over those policies.
4.14.1 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
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the acquiree's net equity in the ultimate controller's consolidated financial statements. The
difference between the cost and book value of cash paid, non-monetary assets transferred
and liabilities assumed is adjusted to capital reserves, and to retained earnings if capital
reserves is insufficient. If the consideration is transferred by way of issuing equity
instruments, the face value of the equity instruments issued is recognised in share capital
and the difference between the 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.
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All expenses incurred directly associated with the acquisition by the acquirer, including
expenditure of audit, legal services, valuation and consultancy and other administrative
expenses, are recognised in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at
cost on initial recognition. Depending on the way of acquisition, the cost of acquisition can
be the total cash paid, the fair value of equity instrument issued, the contract price, the fair
value or book value of the assets given away in the case of non-monetary asset exchange, or
the fair value of the relevant long-term equity investments. The cost of acquisition of a
long-term equity investment acquired not through business combination also includes all
directly associated expenses, applicable taxes and fees, and other necessary expenses. The
cost of a long-term equity investment, which enables the Company has significant influence
or joint control over the acquiree which is achieved through additional investment, is
measured as the fair value determined in accordance with CAS 22 - Financial Instruments:
Recognition and Measurement plus the cost of additional investment.
4.14.2 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
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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.
The Company's share of an investee's net loss is limited by the sum of the boo k 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
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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 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
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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 j oint
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.
4.15 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,
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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.
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 4.21 “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.
4.16 Fixed assets
4.16.1 The conditions of recognition
Fixed assets refer 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.
4.16.2 The method for depreciation
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the
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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:
Estimated
Depreciation Expected
Category residual Depreciation(%)
method useful life
value(%)
Straight-line
Houses and building 7.00-10.00 20 4.50-4.65
method
Straight-line
Machineries 0.00 5-15 6.67-20.00
method
Electronic device、 Straight-line
0.00 5-6 16.67-20.00
modules and others method
Straight-line
Vehicles 0.00 6 16.67
method
Improvement expense of Straight-line the shorter of lease term and
0.00
leased fixed assets method 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.
4.16.3 Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note 4.21 “Impairment of
long-term assets”.
4.16.4 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.
4.16.5 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
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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.
4.17 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 4.21 “Impairment of long-term assets”.
4.18 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 for acquisition, construction or production to get ready for their
intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is
the actual interest expense incurred on that borrowing for the period less any bank interest
earned from depositing the borrowed funds before being used on the asset or any investment
income on the temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on
such borrowings is determined by applying a weighted average interest rate to the weighted
average of the excess amounts of accumulated expenditure on the asset over and above the
amounts of specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose
borrowing denominating in foreign currency are all capitalized. Exchange differences in
connection with general-purpose borrowings are recognised in profit or loss in the period in
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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.
4.19 Intangible assets
4.19.1 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 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.
4.19.2 Research and development cost
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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 t he 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.
4.19.3 Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.21 “Impairment of
long-term assets”.
4.20 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.
4.21 Impairme nt 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
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indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable
value of the assets is lower than the book value. The recoverable value is the higher of
estimated present value of the future expected cash flows from the asset and net fair value of
the asset less disposed cost. The fair value of asset is determined by the sales agreement
price within an arm’s length transaction. In case there is no sales agreement, but there is
active market of assets, the fair value can be determined by the selling price. If there is
neither sales agreement nor active market, the fair value of the asset can be estimated based
on the best information obtained.
Disposal expenses include expenses related to the legislation, taxes, transportations and the
direct expense for the asset to be ready for sale. When calculating the present val ue 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.
4.22 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.
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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 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.
4.23 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
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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.
4.24 Revenue recognition principle and measure ment method
4.24.1 General principle
Revenue is the total inflow of economic interests formed by the Company in its routine
activities that increase shareholders’ equity and are irrelevant to the capital contributed by
the shareholders.
The Company recognizes revenue when it has fulfilled its performance obligations in a
contract, namely, when the customer acquires the control over related commodities. The
acquisition of the control over related commodities means that the customer is able to
control the use of the commodities and gain almost all economic interests therefrom.
When a contract contains two or more performance obligations, the Company on the
contract commencement date apportions the transaction price to each individual
performance obligation in the relative proportion of the individual price of commodities or
services committed under each individual performance obligation, and measures the revenue
according to the transaction price apportioned to each individual performance obligation.
Transaction price is the amount of consideration that the Company expects to have the right
to collect for transferring commodities or services to a customer, excluding payments
collected on behalf of a third party. When determining a contract transaction price, if there is
a variable consideration, the Company will determine the best estimate of the variable
consideration by the expected value or the most possible amount, and recognize it into the
transaction price in an amount probably without significant reversal that does not exceed the
total recognized revenue as at the time when related uncertainties are removed. If the
contract contains any significant financing component, the Company will determine the
transaction price according to the amount payable by cash instantly at the time when the
customer acquires the control over the commodities. The difference between the transaction
price and the contract consideration is amortized in the effective interest method during the
contract period. If the interval between the transfer of the control and the customer’s
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payment is less than one year, the Company will not take into consideration the financing
component therein.
When meeting one of the following conditions, it will be classified as fulfillment of
performance obligations in a time period. Otherwise, it will be classified as fulfillment of
performance obligations at a time point:
1) The customer gains and consumes the economic interests from the Company’s contract
performance instantly when the Company performs the contract;
2) The customer is able to control commodities in progress during the Company’s contract
performance;
3) The commodities produced from the Company’s contract performance can be used for
irreplaceable purposes, and the Company has the right to collect payments for the contract
performances cumulatively completed to date during the entire contract period.
For a contract performance obligation fulfilled in a time period, the Company recognizes the
revenue according to the progress towards contract completion in that period, except when
the progress cannot be reasonably determined. The Company identifies the progress of
service provision in the input method (or the output method). When the progress cannot be
identified reasonably, for costs incurred to the Company that are expected to be
compensated, the revenue will be recognized according to the cost amount that has occurred,
till the progress can be reasonably determined.
For a contract performance obligation fulfilled at a time point, the Company recognizes the
revenue at the time point when the customer acquires the control over related commodities.
When judging whether a customer has acquired the control over commodities or services,
the Company will consider the following signs:
1) The Company is entitled to the current right of collecting payment in respect of suc h
commodities or services, namely, the customer has the current obligation of making
payment in respect of such commodities;
2) The Company has transferred the legal ownership of such commodities to the customer,
namely, the customer has owned the legal ownership of such commodities;
3) The Company has transferred the physical commodities to the customer, namely, the
customer has owned such commodities physically;
4) The Company has transferred to the customer major risks and remunerations in respect of
the ownership of such commodities, namely, the customer has acquired major risks and
remunerations in respect of the ownership of such commodities;
5) The customer has accepted such commodities.
Terms of sales return
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For sales attached with the terms of sales return, the Company recognizes the revenue by the
consideration amount that it has the right to receive from its transfer of commodities to the
customer when the customer acquires the control over such commodities, and recognizes the
amount of expected sales return as an estimated liability. At the same time, the Company
deducts the expected cost of taking back the commodities, that is, the return cost receivable,
from the carrying value of such commodities at the transfer, and recognizes it as an asset.
The Company deducts the net amount carry-over cost of the aforementioned asset cost
according to the carrying value of the transferred commodities at the transfer. On each
balance sheet date, the Company re-estimates the return of future sales and re-measures the
aforementioned assets and liabilities.
Obligation of quality assurance
The Company provides quality assurance for the commodities it sells and the projects it
constructs pursuant to contracts and laws. For guarantee-based quality assurance that
assures customers of its compliance with established standards for the commodities it sells,
the Company performs accounting treatment according to Accounting Standards for
Business Enterprises No. 13—Contingencies. For service-based quality assurance in which
the Company provides a separate service, other than its assurance to customers of its
compliance with established standards for the commodities it sells, the Company treats it as
an individual contract performance obligation. In this case, the Company apportions a
partial transaction price to service-based quality assurance in the relative proportion of the
individual prices for providing commodities and service-based quality assurance, and
recognizes the revenue when the customer acquires the control over the services. In
assessing whether a separate service has been provided in quality assurance other than its
assurance to customers of its compliance with established standards for the commodities it
sells, the Company considers factors such as whether the quality assurance is a statutory
requirement, the quality assurance period and the nature of the tasks committed by the
Company.
Key person in charge and agent
When acquiring the control over traded commodities from a third party and transferring it to
a customer, the Company has the right to independently determine the price of the traded
commodities. It means that the Company is able to control such commodities before
transferring them to the customer, and thus, it is the key person in charge and recognizes the
revenue by the total amount of consideration it has received or should receive. Otherwise,
the Company is considered as an agent and recognizes the revenue by the amount of
commissions or surcharges it expects to have the right to charge. Such an amount should be
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determined by the net amount from the total amount of consideration already or to be
received deducting payments to be made to other related parties, or by the specified amount
or proportion of commissions.
4.24.2 Specific methods
The Company recognizes revenue in the following specific methods:
1) Commodity sale contracts
When a commodity sale contract between the Company and a customer contains a contract
performance obligation of transferred commodities, it is classified as fulfillment of contract
performance obligation at a time point. Recognition of the revenue from domestic sale of
products should satisfy the following conditions: The Company has delivered the products
to the customer and the customer has accepted them; the Company has received payment for
the goods or obtained the receipt voucher with highly possible inflow of related economic
interests; major risks and remunerations in respect of the ownership of the commodities
have been transferred; the legal ownership of the commodities has been transferred;
Recognition of the revenue from export of products should satisfy the following conditions:
After loading the products to a ship pursuant to the contract and completing the customs
declaration procedures for export, the Company has received payment for the goods or
obtained the receipt voucher with highly possible inflow of related economic interests;
major risks and remunerations in respect of the ownership of the commodities have been
transferred; the legal ownership of the commodities has been transferred.
2) Service provision contracts
With regard to a contract performance obligation under a service contract between the
Company and a customer, because the customer gains and consumes the economic interests
brought by the Company’s contract performance instantly when the Company performs the
contract, the Company treats it as a contract performance obligation in a time period and
recognizes it through even apportionment during the service period.
4.25 Governme nt 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
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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 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
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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 separate, 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 retur ned, 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.
4.26 Deferred tax assets and deferred tax liabilities
4.26.1 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 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.
4.26.2 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.
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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 futur e, 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.
4.26.3 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.
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4.26.4 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.
4.27 Leases
A finance lease is a lease that transfers in substance all the risks and rewar ds 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.
4.27.1 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.
4.27.2 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.
4.27.3 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
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long-term payable is divided into non-current liability and non-current liability due within
one year depending on maturity and presented on (consolidated) financial statements
separately.
The unrecognised lease expenditure is amortised over the lease term using the effective
interest rate method and the amortisation is recognised as lease expense in profit or loss for
the relevant period. Contingency lease rental is recognised in profit or loss when it is
incurred.
4.27.4 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.
4.28 Significant changes in accounting policies and accounting estimates
4.28.1 Changes of accounting policies
On 5 July 2017, the Ministry of Finance issued the Accounting Standards for Business
Enterprises No.14-Revenue (Revised in 2017) (Accounting [2017] No. 22) (hereafter referred
to as the “New Revenue Guidelines”), and domestic listed companies are required to
implement it from 1 January 2020. The Company implements it on 1 January 2020 and
adjusts relevant contents of accounting policies. See Note 4.24 “Revenue recognition principle
and measurement method” for details.
Requirements of the New Revenue Guidelines for adjusting the cumulative influence for
implementing this standard: The amounts of retained earnings and other relevant items in the
financial statement as at the beginning of the year of initial implementation (that is 1 January
2020) should be adjusted, and the information during the comparable period should not be
adjusted. When implementing the New Revenue Guidelines, the Company only makes
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adjustment to the cumulative influence of contracts yet to be completed on the date of initial
implementation.
Adjustments to related items of the financial statements at the beginning of the first execution
year of the New Revenue Guidelines
Consolidated balance sheet Currency: CNY
Item 31 December 2019 1 January 2020 Adjusted
Current assets
Advances to suppliers 3,112,312.06 3,112,312.06
Contract assets Inapplicable
Total current assets 1,685,193,347.55 1,685,193,347.55
Current liabilities
Advances from
13,294,285.78 2,269,846.97 -11,024,438.81
customers
Contract liabilities Inapplicable 11,024,438.81 11,024,438.81
Total current liabilities 739,918,342.31 739,918,342.31 0.00
Balance sheet of the Company Currency: CNY
Item 31 December 2019 1 January 2020 Adjusted
Current assets
Advances to suppliers 96,278.32 96,278.32
Contract assets Inapplicable
Total current assets 20,641,976.53 20,641,976.53
Current liabilities
Advances from
1,826,178.67 -1,826,178.67
customers
Contract liabilities Inapplicable 1,826,178.67 1,826,178.67
Total current liabilities 289,433,392.86 289,433,392.86 0.00
On 10 December 2019, the Ministry of Finance issued the Interpretation of the Accounting
Standards for Business Enterprises No.13. The Company implements this interpretation since
1 January 2020 without any retroactive adjustment to previous years.
4.28.2 Change of accounting estimates
No change of accounting estimates need to be disclosed for the current period.
4.29 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 a nd assumptions
are based on historical experiences of the Company’s management as well as other factors
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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 reviewed 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:
4.29.1 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.
4.29.2 Impairment of financial assets
The Company uses the expected credit loss model to assess the impairment of financial instruments. The
application of the expected credit loss model requires significant judgment and estimation, and all
reasonable and evidenced information, including forward-looking information, needs to be considered. In
making such judgments and estimates, the Company infers the expected changes in the debtor's credit
risk based on historical data combined with economic policies, macroeconomic indicators, industry risks,
external market environment, technological environment, and changes in customer circumstances.
4.29.3 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
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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.
4.29.4 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. If an equity
instrument investment or contract has a public offer, the company does not use cost as the
best estimate of its fair value.
4.29.5 Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current
assets other than financial assets at the balance sheet date. For an intangible asset that has
indefinite useful life, impairment test is made in addition to the annual impairment test if
there is any indication of impairment. For non-current assets other than financial assets,
impairment test is made when there is any indication that its account balance cannot be
recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value less
cost of disposal and present value of the future cash flows expected to be derived from the
asset.
Net value between the difference of fair value and disposal cost is determined by reference
of the price of similar product in a sale agreement in an arm’s length transaction or an
observable market price less the additional cost directly attributable to the disposal of the
asset.
When estimating the present value of future cash flow, significant judgments are made over
the asset’s production, selling price and relevant operating expenses, and discount rate used
to calculate present value. All available materials that are considered to be relevant shall be
used in the estimation of recoverable value. These materials include estimations of
production, selling price and operating expenses based on reasonable and supportable
assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires
an estimation of present value of future cash flow of the assets or assets group where
goodwill has been allocated. The Company shall makes estimation on the future cash flow
derived from assets or assets group and determine an appropriate discount rate for the
present value of future cash flow when the estimation of present value of future cash flow is
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made.
4.29.6 Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using
the straight-line method over their useful lives after taking into account residual value. The
useful lives are regularly reviewed to determine the depreciation and a mortization 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.
4.29.7 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.
4.29.8 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 o f the
current period during the final determination.
4.29.9 Internal retirement benefits and supplementary retirement benefits
The amount of internal retirement benefits and supplementary retirement benefits expenses
and liabilities of the Company are determined based on various assumptions. These
assumptions include discount rates, growth rates for average medical expenses, growth rates
for retired and retired personnel subsidies, and other factors. Differences between actual
results and assumptions will be confirmed immediately when incurred and included in the
current year's expenses. Although management believes that reasonable assumptions have
been adopted, changes in actual experience values and assumptions will still affect the
company's internal retirement benefits and supplementary retirement benefits expenses and
balance of liabilities.
4.29.10 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
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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.
4.29.11 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.
Note 5: Taxation
5.1 Taxes and surcharges applicable to the Company
Taxes and
Tax base Tax rate%
surcharges
According to the revenues from sales to calculate the
Value added tax output tax, and use the balance after deduct the 3、5、6、9、10、13、16
deductible input tax to pay the VAT
Urban maintenance Sum of VAT payable, consumption duty payable and
and construction business tax payable for the reporting period, and 7
surcharge exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Education
business tax payable for the reporting period, and 3
surcharge
exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Local education
business tax payable for the reporting period, and 2
surcharge
exempt and deductible tax
Corporate income
Taxable profits 25
tax
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5.2 Taxes and surcharges applicable to the primary subsidiaries
5.2.1 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Taxes and Tax rate%
Tax base
surcharges
According to the revenues from sales to calculate the
Value added tax output tax, and use the balance after deduct the 0、5、6、9、10、13、16
deductible input tax to pay the VAT
Urban maintenance Sum of VAT payable, consumption duty payable and
and construction business tax payable for the reporting period, and 5
surcharge exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Education surcharge business tax payable for the reporting period, and 3
exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Local education
business tax payable for the reporting period, and 2
surcharge
exempt and deductible tax
Corporate income
Taxable profits 15
tax
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 Tax rate%
Tax base
surcharges
According to the revenues from sales to calculate the
Value added tax output tax, and use the balance after deduct the 5、9、10、13、16
deductible input tax to pay the VAT
Urban maintenance Sum of VAT payable, consumption duty payable and
and construction business tax payable for the reporting period, and 1
surcharge exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Education surcharge business tax payable for the reporting period, and 3
exempt and deductible tax
Sum of VAT payable, consumption duty payable and
Local education
business tax payable for the reporting period, and 2
surcharge
exempt and deductible tax
Corporate income
Taxable profits 25
tax
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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
Value added tax output tax, and use the balance after deduct the 5
deductible input tax to pay the VAT
Corporate income
Taxable profits 20
tax
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
Value added tax output tax, and use the balance after deduct the 10
deductible input tax to pay the VAT
Corporate income
Taxable profits 25
tax
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VI. Notes to significant elements of consolidated financial statements
Unless otherwise stated, the meaning of “period-beginning” in the following notes is
“January 1 2020”, and “period-end” refers to “June 30 2020”, “current period” refers to
“January to June 2020”, and “prior period” refers to “January to June 2019” respectively.
1. Monetary funds
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Cash on hand 961,400.21 926,966.65
Bank deposits 583,617,649.96 638,696,235.33
Other monetary funds 6,775,024.51 0.00
Total 591,354,074.68 639,623,201.98
Including: The total amount of deposit abroad 22,544,747.98 32,960,640.75
2. Financial assets held for trading
(1) Category
Balance as of 30/6/2 Balance as of
Item
020 1/1/2020
Financial assets measured at fair value through profit
1,319,000.00 3,620,689.00
or loss
Of which: Derivative financial assets 1,319,000.00 3,620,689.00
Total 1,319,000.00 3,620,689.00
(2) Other notes
The derivative financial asset is forward foreign exchange contract signed with financial
institutions.
3. Notes receivable
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Bank acceptance 1,559,385.90 274,548.00
Total 1,559,385.90 274,548.00
4. Accounts receivable
(1) Disclosure by age
Age Balance as of 30/6/2020
Within 1 year 306,461,297.14
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Age Balance as of 30/6/2020
Including: 1-90 days 291,711,626.72
91-180 days 14,711,031.85
181-270 days 38,638.57
271-365 days 0.00
1- 2 years 0.00
2- 3 years 1,167,970.78
Over 3 years 5,000.00
Including: 3-4 years 0.00
4-5 years 5,000.00
Over 5 years 0.00
Subtotal 307,634,267.92
Less: Allowance for bad debt 5,546,955.77
Total 302,087,312.15
(2) Listed by method for measurement of allowance for bad debt
Balance as of 30/6/2020
Carrying amount Allowance for bad debt
Item
% of % of Book value
Amount Amount
total total
Accounts receivable of
individually assessment 0.00 0.00 0.00 0.00 0.00
for impairment
Accounts receivable of
assessment for 307,634,267.92 100.00 5,546,955.77 1.80 302,087,312.15
impairment by portfolio
Including: Portfolio by
305,471,409.87 99.30 5,546,955.77 1.82 299,924,454.10
age
Portfolio by
2,162,858.05 0.70 0.00 0.00 2,162,858.05
related parties
Total 307,634,267.92 100.00 5,546,955.77 1.80 302,087,312.15
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(Continued)
Balance as of 1/1/2020
Carrying amount Allowance for bad debt
Item
% of % of Book value
Amount Amount
total total
Accounts receivable of
individually assessment 0.00 0.00 0.00 0.00 0.00
for impairment
Accounts receivable of
assessment for 295,470,499.64 100.00 9,475,087.59 3.21 285,995,412.05
impairment by portfolio
Including: Portfolio by
293,206,700.42 99.23 9,475,087.59 3.23 283,731,612.83
age
Portfolio by
2,263,799.22 0.77 0.00 0.00 2,263,799.22
related parties
Total 295,470,499.64 100.00 9,475,087.59 3.21 285,995,412.05
① Portfolio by related parties
Balance as of 30/6/2020
Accounts receivable Reasons for
Carrying amount Allowance for bad debt % of total
measurement
Due from related
2,162,858.05 0.00 0.00
parties
Total 2,162,858.05 0.00 0.00
② Accounts receivable using age for measurement of allowance for bad debt
Balance as of 30/6/2020
Accounts
Rate of expected credit loss for the
receivable Carrying amount Allowance for bad debt
whole duration (%)
Current 287,350,944.53 1,800,749.12 0.63
1-30 days past
8,791,224.73 395,605.12 4.50
due
31-60 days past
6,055,767.51 1,211,153.50 20.00
due
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Balance as of 30/6/2020
Accounts
Rate of expected credit loss for the
receivable Carrying amount Allowance for bad debt
whole duration (%)
61-90 days past
2,061,863.75 927,838.69 45.00
due
Over 90 days past
1,211,609.35 1,211,609.35 100.00
due
Total 305,471,409.87 5,546,955.77 1.82
(3) Allowance for bad debt
Current period movement
Balance as of Balance as of
Item Recovery or Used or written
1/1/2020 Recognition Others 30/6/2020
reversal off
Accounts
receivable of
assessment for 9,475,087.59 1,605,037.86 166,404.50 5,382,627.78 -15,862.60 5,546,955.77
impairment by
portfolio
Total 9,475,087.59 1,605,037.86 166,404.50 5,382,627.78 -15,862.60 5,546,955.77
(4) Accounts receivable written off during the reporting period
Item Written off amount
Sporadic accounts receivable written off 5,382,627.78
Including: Significant accounts receivable written off
Nature of Result from
Written off Reasons for Written off
Company name accounts related
amount written off procedure
receivable transaction
Easy Bread Company Cannot be
Loan 2,535,822.80 Yes No
AG recovered
Philips (China) Loan Cannot be
1,839,039.94 Yes No
Investment Co., Ltd. recovered
BLACK & DECKER Cannot be
Loan 677,562.68 Yes No
GLOBAL HO recovered
Loan Cannot be
American Bright 329,692.36 Yes No
recovered
Total 5,382,117.78
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(5) Details of top five accounts receivable
The total amount of top five accounts receivables summarized by debtors as at the end of
current period is CNY 207,255,065.57, accounting for 67.37% of the total accounts
receivable at the period-end, the total corresponding allowance for bad debts is CNY
959,207.20.
5. Advances to suppliers
(1) Disclosure by age
Balance as of 30/6/2020 Balance as of 1/1/2020
Item
Amount % of total Amount % of total
Within 1 year 2,221,389.33 97.94 3,083,417.46 99.07
1- 2 years 46,720.00 2.06 28,894.60 0.93
Total 2,268,109.33 100.00 3,112,312.06 100.00
(2) Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of current period is CNY
986,124.02, accounting for 43.48% of the total advance to suppliers.
6. Other receivables
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Interests receivable 0.00 0.00
Dividends receivable 0.00 0.00
Other receivables 17,477,176.51 29,271,999.53
Total 17,477,176.51 29,271,999.53
(1) Interests receivable
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Interest income of fixed deposit 0.00 0.00
Total 0.00 0.00
(2) Other receivables
① Disclosure by age
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Age Balance as of 30/6/2020
Within 1 year 16,057,820.10
Including: 1-90 days 15,764,461.03
91-180 days 137,853.95
181-270days 23,361.42
271-365 days 132,143.70
1 to 2 years 444,323.65
2 to 3 years 60,100.00
Over 3 years 1,278,504.24
Including: 3-4 years 37,011.00
4-5 years 5,677.00
Over 5 years 1,235,816.24
Subtotal 17,840,747.99
Less: Allowance for bad debt 363,571.48
Total 17,477,176.51
② Disclosure by nature
Nature Balance as of 30/6/2020 Balance as of 1/1/2020
Deposit 1,293,457.14 1,420,512.67
Export tax refund 8,000,000.00 17,500,000.00
Due from related parties 210,822.77 206,827.94
Other current account 8,336,468.08 12,060,268.46
Subtotal 17,840,747.99 31,187,609.07
Less: Allowance for bad debt 363,571.48 1,915,609.54
Total 17,477,176.51 29,271,999.53
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③ Recognition of allowance for bad debt
Stage 1 Stage 2 Stage 3
Expected credit
Expected credit loss
Expected credit loss for the whole
Allowance for bad debt for the whole Total
loss for the next duration(Credit
duration(no credit
12 months impairment has
impairment)
occurred)
Closing balance as of
677,461.07 0.00 1,243,148.47 1,915,609.54
1/1/2020
Carrying amount of
other receivables in
current period on
1/1/2020
Turn to stage 2
Turn to stage 3
Turn back to stage 2
Turn back to stage 1
Allowance
Reversal 308,889.59 308,889.59
Used
Written off 1,243,148.47 1,243,148.47
Other movements 0.00 0.00 0.00 0.00
Closing balance as of
363,571.48 0.00 0.00 363,571.48
30/6/2020
④ Recognition of allowance for bad debt
Current period movement
Balance as at Balance as
Item
1/1/2020 Recogn Recovery or Used or written at 30/6/2020
Others
ition reversal off
Other receivables of
assessment for
1,915,609.54 0.00 308,889.59 1,243,148.47 0.00 363,571.48
impairment by
portfolio
Total 1,915,609.54 0.00 308,889.59 1,243,148.47 0.00 363,571.48
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⑤ Details of top five other receivables
Allowanc
Carrying amount e for bad
Debtors Nature Age % of total
as of 30/6/2020 debt as of
30/6/2020
Zhangzhou Longchi
Development zone State Export tax
8,000,000.00 1-90 days 44.84
Administration of refund
Taxation
Xiamen Laideshun Rent fee,
Logistics Co., Ltd. electricity and 1,044,455.00 1-90 days 5.85
Zhangzhou Branch water bill
China Export & Credit
Insurance Corporation Deposit Over 1
648,450.00 3.63
year
Fujian Branch
State Grid Fujian
Longhai Power Supply Electricity bill 595,834.80 1-90 days 3.34
Co., Ltd.
Zhangzhou Xincheng Electricity and
593,878.41 1-90 days 3.33
Metal Products Co., Ltd. water bill
Total 10,882,618.21 60.99 0.00
⑥ Other receivables with actual verification during the reporting period
Item Amount
Other receivables with actual verification 1,243,148.47
Including: Significant other receivables with actual verification
Nature of Result from
Written off Reasons for Written off
Company name accounts related
amount written off procedure
receivable transaction
Shanghai
Rent fee,
Tanghai Cannot be
electricity and 1,238,148.47 Yes No
Investment Co., recovered
water bill
Ltd.
Laox (Nangjing) Quality
Commerce Co. , guarantee Cannot be
5,000.00 Yes No
Ltd. deposit recovered
Total 1,243,148.47
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7. Inventories
(1) Disclosure by classification
Balance as of 30/6/2020
Carrying amount
Item Impairment
before Book value
allowance
impairment allowance
Raw material 84,272,440.67 19,099,824.52 65,172,616.15
Work in progress 12,256,403.96 12,256,403.96
Consigned processing material 12,413,697.39 12,413,697.39
Self-manufactured semi-finished goods 17,030,461.78 1,770,861.39 15,259,600.39
Finished goods 78,001,576.88 12,194,525.10 65,807,051.78
Low-value consumables 733,928.84 733,928.84
Materials in transit 3,429,002.80 0.00 3,429,002.80
Total 208,137,512.32 33,065,211.01 175,072,301.31
(Continued)
Balance as of 1/1/2020
Item Carrying amount before
Impairment allowance Book value
impairment allowance
Raw material 100,565,847.78 18,759,173.06 81,806,674.72
Work in progress 3,545,082.48 3,545,082.48
Consigned processing material 0.00
Self-manufactured semi-finished goods 30,034,902.11 1,770,861.39 28,264,040.72
Finished goods 122,743,114.25 16,278,222.58 106,464,891.67
Low-value consumables 517,277.32 517,277.32
Materials in transit 1,557,620.47 0.00 1,557,620.47
Total 258,963,844.41 36,808,257.03 222,155,587.38
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(2) Impairment allowance for inventories
Decrease in Reporting
Increase in Reporting period
period
Impact
Balance as of Impact of of Balance as of
Item
1/1/2020 changes in Recovered or changes 30/6/2020
Accrual
exchange Written off in
rates exchang
e rates
Raw
18,759,173.06 4,315,892.00 31,226.11 4,006,466.65 19,099,824.52
material
Self-manu
factured
1,770,861.39 1,770,861.39
semi-finis
hed goods
Finished
16,278,222.58 1,721,467.61 9,372.50 5,814,537.59 0.00 12,194,525.10
goods
Total 36,808,257.03 6,037,359.61 40,598.61 9,821,004.24 0.00 33,065,211.01
8. Other current assets
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Input tax to be deducted 6,201,717.15 8,473,290.63
Financial products 488,607,758.85 492,665,278.14
Prepaid income tax 0.00 1,028.78
Total 494,809,476.00 501,139,597.55
Note: Financial products are mainly bank financial products purchased by the company
using idle funds.
9. Other investments in equity instrume nts
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Non-trading investments in equity instruments 40,000.00 40,000.00
Total 40,000.00 40,000.00
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10. Investment property
(1) Investment property measured using the historical cost convention
Construction in
Item Houses and buildings Land use rights Total
progress
1. Cost:
1.1 Balance as of 1/1//2020 65,957,471.88 29,260,577.51 0.00 95,218,049.39
1.2 Increased in reporting period 0.00 0.00 0.00 0.00
1.2.1 Purchase 0.00 0.00 0.00 0.00
1.2.2 Transfer 0.00 0.00 0.00 0.00
1.2.3 Increased due to merger 0.00 0.00 0.00 0.00
1.3 Decreased in reporting period 0.00 0.00 0.00 0.00
1.3.1 Disposal 0.00 0.00 0.00 0.00
1.3.2 Other transferred out 0.00 0.00 0.00 0.00
1.4 Balance as of 30/6/2020 65,957,471.88 29,260,577.51 0.00 95,218,049.39
2. Accumulated depreciation and accumulated
amortization
2.1 Balance as of 1/1//2020 57,324,796.04 14,902,193.54 0.00 72,226,989.58
2.2 Increased in reporting period 358,490.52 311,055.90 0.00 669,546.42
2.2.1 Accrual or amortization 358,490.52 311,055.90 0.00 669,546.42
2.2.2 Transferred from fixed assets 0.00 0.00 0.00 0.00
2.3 Decreased in reporting period 0.00 0.00 0.00 0.00
2.3.1 Disposal 0.00 0.00 0.00 0.00
2.3.2 Other transferred out 0.00 0.00 0.00 0.00
2.4 Balance as of 30/6/2020 57,683,286.56 15,213,249.44 0.00 72,896,536.00
3. Provision for impairment
3.1 Balance as of 1/1//2020 0.00 0.00 0.00 0.00
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Construction in
Item Houses and buildings Land use rights Total
progress
3.2 Increased in reporting period 0.00 0.00 0.00 0.00
3.2.1 Accrual 0.00 0.00 0.00 0.00
3.3 Decreased in reporting period 0.00 0.00 0.00 0.00
3.3.1 Disposal 0.00 0.00 0.00 0.00
3.3.2 Other transferred out 0.00 0.00 0.00 0.00
3.4 Balance as of 30/6/2020 0.00 0.00 0.00 0.00
4. Carrying amount
4.1 Carrying amount as at 30/6/2020 8,274,185.32 14,047,328.07 0.00 22,321,513.39
4.2 Carrying amount as at 1/1//2020 8,632,675.84 14,358,383.97 0.00 22,991,059.81
(2) Investment property with pending ownership registration
Item Carrying amount Reason for pending
Lvyuan three country villa 645,985.38 In process
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 Estate Development Co., Ltd. in year 1999, and there has no land
expropriation. Shanghai Lvsheng Real Estate 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.
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11. Fixed assets
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Fixed assets 181,817,396.06 185,749,835.56
Disposal of fixed assets 0.00 0.00
Total 181,817,396.06 185,749,835.56
(1) Fixed assets
General information
Improvement
Houses and Electronic device,
Item Machineries Vehicles expense of leased Total
buildings modules and others
fixed assets
1.Cost
1.1 Balance as of 1/1/2020 97,837,748.95 160,818,262.47 864,635,171.31 20,359,069.36 63,153,374.74 1,206,803,626.83
1.2 Increase in reporting
2,746,767.24 3,328,992.45 16,806,271.30 143,352.59 165,734.84 23,191,118.42
period
1.2.1 Purchase 110,241.24 2,786,120.44 16,229,747.45 185,279.39 0.00 19,311,388.52
1.2.2 Transferred from
2,120,822.41 0.00 80,000.00 0.00 0.00 2,200,822.41
construction in progress
1.2.3 Transferred from
0.00 0.00 0.00 0.00 0.00 0.00
investment property
1.2.4 Impact of changes in
515,703.59 542,872.01 496,523.85 -41,926.80 165,734.84 1,678,907.49
exchange rates
1.2.5 Other 0.00 0.00 0.00 0.00 0.00 0.00
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Improvement
Houses and Electronic device,
Item Machineries Vehicles expense of leased Total
buildings modules and others
fixed assets
1.3 Decreased in Reporting
0.00 1,080,829.73 6,171,220.05 604,888.07 546,189.69 8,403,127.54
period
1.3.1 Disposal or scrap 0.00 1,080,829.73 6,171,220.05 604,888.07 546,189.69 8,403,127.54
1.3.2 Transferred to
0.00 0.00 0.00 0.00 0.00 0.00
investment property
1.4 Balance as of
100,584,516.19 163,066,425.19 875,270,222.56 19,897,533.88 62,772,919.89 1,221,591,617.71
30/6/2020
2. Accumulated
Depreciation
2.1 Balance as of 1/1/2020 56,135,847.95 88,242,479.42 762,782,818.05 15,949,665.74 60,940,122.92 984,050,934.08
2.2 Increased in reporting
2,036,961.84 4,369,573.47 18,129,890.43 550,745.46 369,881.13 25,457,052.33
period
2.2.1 Accrual 1,862,985.17 4,077,746.29 17,805,858.43 566,623.79 244,593.30 24,557,806.98
2.2.2 Transferred from
0.00 0.00 0.00 0.00 0.00 0.00
investment property
2.2.3 Impact of changes in
173,976.67 291,827.18 324,032.00 -15,878.33 125,287.83 899,245.35
exchange rates
2.3 Decreased in reporting
0.00 1,206,784.03 6,271,140.30 472,516.00 546,189.69 8,496,630.02
period
2.3.1 Disposal or scrap 0.00 1,206,784.03 6,271,140.30 472,516.00 546,189.69 8,496,630.02
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Improvement
Houses and Electronic device,
Item Machineries Vehicles expense of leased Total
buildings modules and others
fixed assets
2.3.2 Transferred to
0.00 0.00 0.00 0.00 0.00 0.00
investment property
2.4 Balance as of
58,172,809.79 91,405,268.86 774,641,568.18 16,027,895.20 60,763,814.36 1,001,011,356.39
30/6/2020
3. Impairment allowance
3.1Balance as at 1/1/2020 0.00 19,788,593.71 17,000,323.15 175,668.04 38,272.29 37,002,857.19
3.2 Increased in reporting
0.00 354,505.24 1,723,032.53 -2,695.90 161.37 2,075,003.24
period
3.2.1 Accrual 0.00 309,305.99 1,705,479.08 0.00 0.00 2,014,785.07
3.2.2 Impact of changes in
0.00 45,199.25 17,553.45 -2,695.90 161.37 60,218.17
exchange rates
3.3 Decreased in Reporting
0.00 51,558.49 94,444.30 168,992.38 0.00 314,995.17
period
3.3.1 Disposal or scrap 0.00 51,558.49 94,444.30 168,992.38 0.00 314,995.17
3.4 Balance as of
0.00 20,091,540.46 18,628,911.38 3,979.76 38,433.66 38,762,865.26
30/6/2020
4. Carrying amount
4.1 Carrying amount as of
42,411,706.40 51,569,615.87 81,999,743.00 3,865,658.92 1,970,671.87 181,817,396.06
30/6/2020
4.2 Carrying amount as of
41,701,901.00 52,787,189.34 84,852,030.11 4,233,735.58 2,174,979.53 185,749,835.56
1/1/2019
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① Temporarily idle fixed assets
Accumulated . Impairment Carrying
Item Cost
Depreciation allowance amount
Machineries 42,778,344.90 26,020,615.52 16,752,185.13 5,544.25
Electronic device, modules
167,961,260.86 157,912,131.39 9,946,054.30 103,075.17
and others
Vehicles 69,304.00 69,304.00 0.00 0.00
Improvement expense of
999,659.75 972,277.87 27,381.88 0.00
fixed assets
Total 211,808,569.51 184,974,328.78 26,725,621.31 108,619.42
② Fixed assets with pending ownership registration
Items Carrying amount Reason for pending
Qingying garden 134,731.76 In process
Lvyuan three country villa 193,795.61 In process
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 Estate Development Co., Ltd. in year 1999, and
there has no land expropriation. Shanghai Lvsheng Real Estate 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.
(2) Disposal of fixed assets
None
12. Construction in progress
Carrying amounts as of Carrying amounts as of
Item
30/6/2020 1/1/2020
Construction in progress 750,571.75 2,921,901.51
Material holds for construction of fixed
0.00 0.00
assets
Total 750,571.75 2,921,901.51
(1) Construction in progress
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Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Item Carrying Impairm Net carrying Carrying Impairm Net carrying
amounts ent amounts amounts ent amounts
Sporadic
750,571.75 750,571.75 2,921,901.51 2,921,901.51
project
Total 750,571.75 0.00 750,571.75 2,921,901.51 0.00 2,921,901.51
(2) Material holds for construction of fixed assets
None
13. Intangible assets
Item Land rights Software Total
1. Cost:
1.1 Balance as of 1/1/2020 19,408,932.00 44,260,587.99 63,669,519.99
1.2 Increased in reporting period 2,421,758.35 2,421,758.35
1.2.1 Purchase 2,398,086.32 2,398,086.32
1.2.2 Impact of changes in exchange rates 23,672.03 23,672.03
1.3 Decreased in reporting period 21,362.63 21,362.63
1.3.1 Disposal 0.00
1.3.2 Impact of changes in exchange rates 21,362.63 21,362.63
1.4 Balance as of 30/6/2020 19,387,569.37 46,682,346.34 66,069,915.71
2. Accumulated amortization
2.1 Balance as of 1/1/2020 4,370,243.37 28,565,996.38 32,936,239.75
2.2 Increased in reporting period 366,598.18 3,219,439.89 3,586,038.07
2.2.1 Accrual 366,597.88 3,196,076.44 3,562,674.32
2.2.2 Impact of changes in exchange rates 0.30 23,363.45 23,363.75
2.3 Decreased in reporting period 9,366.78 9,366.78
2.3.1 Disposal 0.00 0.00
2.3.2 Impact of changes in exchange rates 9,366.78 9,366.78
2.4 Balance as of 30/6/2020 4,727,474.77 31,785,436.27 36,512,911.04
3. Impairment
3.1 Balance as of 1/1/2020
3.2 Increased in reporting period
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3.2.1 Accrual
3.2.2 Impact of changes in exchange rates
3.3 Decreased in reporting period
3.3.1 Disposal
3.3.2 Impact of changes in exchange rates
3.4 Balance as of 30/6/2020
4. Carrying amount
4.1 Carrying amount of at 30/6/2020 14,660,094.60 14,896,910.07 29,557,004.67
4.2 Carrying amount of at 1/1/2020 15,038,688.63 15,694,591.61 30,733,280.24
14. Long-term deferred charge
Other
Increase Amortization
Carrying decrease Carrying
during the for the
Item amounts as of during the amounts as of
reporting reporting
1/1/2020 reporting 30/6/2020
period period
period
Houses and
buildings renovation 7,063,252.81 1,794,091.27 1,333,928.88 7,523,415.20
expenses
Wall projects of 3
162,662.99 0.00 31,483.20 0.00 131,179.79
phases
Total 7,225,915.80 1,794,091.27 1,365,412.08 0.00 7,654,594.99
15. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets
Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Item Deductible temporary Deferred Deductible Deferred tax
difference tax assets temporary difference assets
Impairment
57,618,864.72 9,034,685.87 59,473,136.87 9,463,194.19
allowance
Credit
impairment 5,339,415.57 927,719.42 9,094,485.90 1,512,918.53
provision
Unrealized
profits from 377,181.36 94,295.34 569,182.52 142,295.63
intragroup
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transactions
Accrued
9,580,165.81 1,570,665.28 11,382,495.34 1,882,789.81
expenses
Payroll liability 474,617.79 94,923.56 416,881.95 83,376.40
Undistributed
14,195,664.70 6,996,923.97 29,628,345.15 7,407,086.29
deficit
Financial
liabilities held 44,200.00 6,630.00 638,800.00 95,820.00
for trading
Total 87,630,109.95 18,725,843.44 111,203,327.73 20,587,480.85
(2) Deferred tax liabilities
Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Item Taxable temporary Deferred tax Taxable temporary Deferred tax
difference assets difference assets
Policy relocation 193,170,474.36 48,292,618.59 193,170,474.36 48,292,618.59
Financial assets
1,319,000.00 197,850.00 3,620,689.00 543,103.35
held for trading
Others 24,974.92 4,995.01 0.00 0.00
Total 194,514,449.28 48,495,463.60 196,791,163.36 48,835,721.94
(3) Details of unrecognized deferred tax assets
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Impairment allowance for assets 14,209,211.55 14,337,977.35
Credit impairment provision 571,111.68 2,296,211.23
Accrued expenses 30,282,022.84 14,687,122.47
Payroll liability 2,247,041.28 9,201,884.77
Undistributed deficit 111,410,452.59 139,107,798.31
Total 158,719,839.94 179,630,994.13
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 recogni zed as
deductible temporary differences and recoverable losses.
(4) The deductible losses of unrecogni zed deferred tax assets shall be matured in the
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following years
Year Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020 Note
2020 10,341,578.00
2021 42,160,374.19 42,160,374.19
2022 4,828,378.89 4,828,378.89
2023 15,495,274.18 15,495,274.18
2024 14,787,979.81 14,787,979.81
2025-2029 34,138,445.52 51,494,213.24
Total 111,410,452.59 139,107,798.31
Note: The annual loss of Tsannkuen Edge Intelligence Co., Ltd. continued to make up for a
maximum period of 10 years.
16. Other non-current assets
Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Item Carrying Impair Net carrying Carrying Impair Net carrying
amounts ment amounts amounts ment amounts
Prepaid mold
5,025.64 5,025.64 148,718.90 148,718.90
fee
Prepaid
649,826.58 0.00 649,826.58 857,295.76 0.00 857,295.76
facilities etc.
Total 654,852.22 0.00 654,852.22 1,006,014.66 0.00 1,006,014.66
17. Short-term loan
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Credit loan 28,318,000.00 0.00
Interest payables 13,283.48 0.00
Total 28,331,283.48 0.00
18. Financial liabilities held for trading
(1) Classification
Carrying amounts as of Carrying amounts as of
Item
30/6/2020 1/1/2020
Financial liabilities held for trading 44,200.00 638,800.00
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Including: Derivative financial
44,200.00 638,800.00
liabilities
Total 44,200.00 638,800.00
(2) Other explanation
The derivative financial liabilities are forward exchange settlement / sale contracts signed
by the company and financial institutions.
19. Notes payable
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Bank acceptance 1,319,784.49 4,110,230.08
Commercial acceptance 0.00 12,319,017.22
Total 1,319,784.49 16,429,247.30
Note: There are no expired notes payable that have not been paid as at the period-end.
20. Accounts payable
(1) Accounts payable
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Within 1 year 460,578,922.90 590,887,361.06
Over 1 year 3,959,867.13 4,091,233.39
Total 464,538,790.03 594,978,594.45
(2) Details of significant accounts payable remaining unsettled for more than one year
Carrying amounts as of Reason(s) for
Item
30/6/2020 unsettlement
Ningbo Chaochao Electrical Equipment Co.,
500,237.01 Quality disputes
Ltd.
21. Advances from customers
(1) Disclosure by classification
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Within 1 year 2,472,888.95 1,993,344.94
Over 1 year 1,966,529.62 276,502.03
Total 4,439,418.57 2,269,846.97
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22. Contract liability
Item Carrying amounts as of 30/6/2020 Carrying amounts as of 1/1/2020
Within 1 year 5,864,724.86 5,824,401.67
Over 1 year 2,272,782.25 5,200,037.14
Total 8,137,507.11 11,024,438.81
23. Employee benefits payable
(1) Disclosure by classification
Carrying
Carrying amount Increase in Decrease in
Item amount as of
as of 1/1/2020 reporting period reporting period
30/6/2020
1.Short-term employee
44,690,289.82 110,063,416.42 117,106,324.59 37,647,381.65
benefits
2.Post-employment
732,580.74 2,892,470.46 3,200,831.15 424,220.05
benefits
3.Termination benefits 1,011,126.00 10,287,815.00 7,609,041.00 3,689,900.00
4.Other benefits due
0.00 0.00 0.00 0.00
within one year
Total 46,433,996.56 123,243,701.88 127,916,196.74 41,761,501.70
(1) Disclosure by classification of short-term employee benefits
Carrying
Carrying amount Increase in Decrease in
Item amount as of
as of 1/1/2020 reporting period reporting period
30/6/2020
1. Wages, salaries and
32,203,389.25 98,379,836.60 107,832,374.26 22,750,851.59
subsidies
2. Employee welfare 0.00 5,365,539.46 2,325,915.60 3,039,623.86
3. Social insurance: 1,133,495.04 3,299,056.77 3,885,524.48 547,027.33
Including: Medical
844,888.44 2,646,201.14 2,961,820.33 529,269.25
insurance
Employment injury
261,846.25 475,931.25 737,156.31 621.19
insurance
Maternity insurance 26,760.35 176,924.38 186,547.84 17,136.89
4.Housing provident fund 9,207,793.77 2,708,239.08 2,573,145.58 9,342,887.27
5.Labour union fee and
0.00 126,429.18 126,429.18 0.00
employee
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education fee
6. Short-term paid
2,145,611.76 184,315.33 362,935.49 1,966,991.60
absences
7.Other short-term
0.00 0.00 0.00 0.00
employee benefits
Total 44,690,289.82 110,063,416.42 117,106,324.59 37,647,381.65
(3) Disclosure by defined contribution plan
Carrying amount as Increase in Decrease in Carrying amount as
Item
of 1/1/2020 reporting period reporting period of 30/6/2020
1. Basic pension 732,157.74 2,822,545.03 3,130,464.42 424,238.35
2.Unemployment
423.00 69,925.43 70,366.73 -18.30
insurance
3. Annuity
0.00 0.00 0.00 0.00
payment
Total 732,580.74 2,892,470.46 3,200,831.15 424,220.05
Note: The Company participates in the endowment insurance and unemployment insurance
plan established by the government, according to these plans, the Company pays planed fees
to the company location. In addition to the monthly fee deposit, the Company no longer
bears further payment obligations. Corresponding expenses are expensed as incurred or
costs related assets.
24. Taxes payable
Carrying amount as of Carrying amount as of
Item
30/6/2020 1/1/2020
Corporate income tax 10,203,587.50 16,326,545.55
Value added tax 697,451.00 348,837.48
Personal income tax 792,006.66 927,844.25
Education surcharge 579,250.98 745,436.58
Urban maintenance and construction
564,005.32 731,213.68
surcharge
Others 530,992.20 580,796.30
Total 13,367,293.66 19,660,673.84
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25. Other payables
Item Carrying amount as of 30/6/2020 Carrying amount as of 1/1/2020
Interest payables 0.00 0.00
Dividends payable 0.00 0.00
Other payables 60,679,281.36 48,482,744.38
Total 60,679,281.36 48,482,744.38
(1) Interest payables
Carrying amount as of Carrying amount as of
Item
30/6/2020 1/1/2020
Interest payables for short-term
0.00 0.00
loan
Total 0.00 0.00
(2) Other payables
① Detail for other payables
Item Carrying amount as of 30/6/2020 Carrying amount as of 1/1/2020
Within 1 year 50,274,412.84 38,467,673.13
Over 1 year 10,404,868.52 10,015,071.25
Total 60,679,281.36 48,482,744.38
② Details of significant other payables remaining unsettled for more than one year
Item Carrying amount as of 30/6/2020 Reason(s) for unsettlement
Deposit 9,172,694.00
Total 9,172,694.00
26. Long-term e mployee benefits payable
(1) Disclosure by classification
Carrying amount as of Carrying amount as of
Item
30/6/2020 1/1/2020
1. Post-employment benefits-net liabilities of
473,513.70 425,896.17
defined benefit plans
Total 473,513.70 425,896.17
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(2) Movement of defined benefit plan
Carrying amount as of Carrying amount as of
Item
30/6/2020 1/1/2020
1. Balance as of 1/1/2020 425,896.17 361,923.23
2. Defined benefit cost recognized in profit or loss
110,157.32 80,874.55
in the current period
3. Defined benefit cost recognized in other
-13,990.74
comprehensive income
4. Other movements -62,539.79 -2,910.87
4.1 Consideration payment at the time of
settlement
4.2 Benefit paid -75,429.06 -18,199.35
4.3 Others 12,889.27 15,288.48
5. Balance as of 30/6/2020 473,513.70 425,896.17
27. Share capital
Movements during the current reporting period (+,－)
Carrying Conversi Carrying
Item amount as of Share Bonus on amount as of
Others Subtotal
1/1/2020 issue issue from 30/6/2020
reserves
Total amount
of floating 185,391,680.00 0.00 0.00 0.00 0.00 0.00 185,391,680.00
shares
28. Capital reserves
Carrying amount as Increase in Decrease in Carrying amount as
Item
of 1/1/2020 Reporting period Reporting period of 30/6/2020
Share
210,045,659.80 210,045,659.80
premium
Other capital
86,763,305.99 86,763,305.99
reserves
Total 296,808,965.79 0.00 0.00 296,808,965.79
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29. Other comprehensive income
Reporting period
Less: previously Less: previously
Carrying After tax After tax Carrying
Amount for recognized in other recognized in other
Item amount as of Less: Inco me attributable to attributable to amount as of
the year comprehensive income comprehensive income
1/1/2020 tax expense the parent minority 30/ 6/2020
before tax transferred into profit transferred into retained
company shareholders
or loss earnings
1. Other co mprehensive income not re-classifiable to profit
-38,643.22 -13,431.17 0.00 0.00 -2,238.53 -8,394.48 -2,798.16 -47,037.70
or loss in subsequent periods
Including: Movements fro m re-measurement of net
-38,643.22 -13,431.17 -2,238.53 -8,394.48 -2,798.16 -47,037.70
liab ilit ies (assets) of defined benefit p lan
The share of other comprehensive income that cannot be
reclassified into profit or loss under the equity method
2. Other co mprehensive inco me re-classifiable to pro fit o r
7,553,393.23 1,480,988.05 0.00 0.00 0.00 1,110,741.04 370,247.01 8,664,134.27
loss in
Including: The share of other comprehensive income that
can be reclassified into profit or loss under the equity
method
Gain or loss on changes in fair value of available-for-sale
financial assets
Gain or loss on held-to-maturity investment reclassified as
available -for-sale financial assets
Effective gain o r loss on cash flow hedge
Foreign exchange difference on translation of financial
7,553,393.23 1,480,988.05 0.00 0.00 0.00 1,110,741.04 370,247.01 8,664,134.27
Statements
Total 7,514,750.01 1,467,556.88 0.00 0.00 -2,238.53 1,102,346.56 367,448.85 8,617,096.57
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30. Surplus reserves
Carrying amount as Increase in Decrease in Carrying amount as
Item
of 1/1/2020 Reporting period Reporting period of 30/6/2020
Statutory
40,499,488.55 0.00 0.00 40,499,488.55
surplus reserve
Total 40,499,488.55 0.00 0.00 40,499,488.55
Note: According to the provisions of the Company Law and the Articles of Association of
the Company to accrue statutory surplus reserve of 10% of net profit, and no longer to
accrue the statutory surplus reserve has reached more than 50% of the registered capital of
the company.
After the Company has accrued the statutory surplus reserve, the Company can accrue any
surplus reserve fund. Upon approval, the discretionary surplus reserve fund may be used to
cover future losses or increase in share capital.
31. Retained earnings
Same period of
Item Reporting period
last year
Pre-adjustment balance brought forward 218,523,906.99 122,872,551.30
Total adjustment to retained earnings at the period-beginning (+, -) 0.00 839,695.41
Retained earnings at the period-beginning after adjustment 218,523,906.99 123,712,246.71
Add: Net profit attributable to shareholders of the parent 39,220,703.16 47,292,567.95
Less: Appropriation to statutory surplus reserve 0.00 0.00
Appropriation to discretionary surplus reserve 0.00 0.00
General reserve 0.00 0.00
Ordinary dividends declared 18,539,168.00 7,415,667.20
Bonus issue 0.00 0.00
Closing retained earnings 239,205,442.15 163,589,147.46
32. Operating revenues and costs
(1) General information
Reporting period Same period of last year
Item
Revenues Costs Revenues Costs
Principal operating activities 757,335,293.08 629,443,740.55 894,953,908.40 780,300,389.90
Other operating activities 35,679,291.28 14,768,639.19 34,495,074.98 16,032,187.58
Total 793,014,584.36 644,212,379.74 929,448,983.38 796,332,577.48
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(2) Revenues from principal operating activities by business
Reporting period Same period of last year
Industry Operating Operating
Operating costs Operating costs
revenues revenues
Household appliances
757,335,293.08 629,443,740.55 894,953,908.40 780,300,389.90
industry
Total 757,335,293.08 629,443,740.55 894,953,908.40 780,300,389.90
(3) Revenues from principal operating activities by products
Reporting period Same period of last year
Products
Operating revenues Operating costs Operating revenues Operating costs
Catering and cooking 500,877,565.26 420,064,627.39 557,292,464.28 492,182,551.87
Home helper 184,127,407.97 155,260,103.89 200,821,213.92 179,178,952.34
Tea/Coffee makers 61,420,124.34 49,375,486.17 126,054,808.02 104,010,181.13
Others 10,910,195.51 4,743,523.10 10,785,422.18 4,928,704.56
Total 757,335,293.08 629,443,740.55 894,953,908.40 780,300,389.90
(4) Revenues from principal operating activities by regions
Reporting period Same period of last year
Area
Operating revenues Operating costs Operating revenues Operating costs
Australia 28,906,788.68 22,885,334.91 38,523,514.39 31,277,519.69
Africa 7,955,700.50 6,226,660.31 7,010,508.86 5,565,327.52
America 356,754,688.62 299,305,059.17 389,942,699.15 339,045,613.58
Europe 188,723,058.75 154,324,305.81 265,055,223.83 228,545,258.16
Asia 174,995,056.53 146,702,380.35 194,421,962.17 175,866,670.95
Total 757,335,293.08 629,443,740.55 894,953,908.40 780,300,389.90
(5) Details of operating revenues from top five clients
Total amount of operating revenues from top five % to the total operating
Period revenues
clients
Reporting period 455,395,408.00 57.43
Same period of last
456,034,003.59 49.06
year
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33. Business tax and surcharges
Item Reporting period Same period of last year
Urban maintenance and construction tax 2,137,451.88 2,225,075.52
Education surcharge 2,096,333.38 2,189,434.17
Property tax 819,140.23 626,643.29
Land holding tax 195,373.38 205,619.86
Stamp duty 369,698.25 432,898.16
Others 13,038.96 279.02
Total 5,631,036.08 5,679,950.02
Note: The recognition criteria for taxes and surcharges refer to Note V “Taxation”.
34. Sales expenses
Item Reporting period Same period of last year
Export expanses 11,010,454.87 14,051,231.69
Employee remunerations 6,507,450.80 8,580,413.26
Claims experiment expenses 2,140,389.33 5,247,967.81
Sales commission and after sales service fees 1,388,868.34 1,539,728.58
Rental expenses 230,514.71 199,523.99
Travel expenses 280,735.87 1,196,187.09
Advertisements charges and sales promotion 631,856.12 1,066,521.60
Administrative expenses 78,301.91 91,939.32
Transportation charges 78,416.80 150,645.04
Others 348,756.77 489,145.71
Total 22,695,745.52 32,613,304.09
35. General and administrative expenses
Item Reporting period Same period of last year
Employee remunerations 26,155,163.04 16,306,722.89
Depreciation and amortization of assets 3,656,458.29 4,128,173.27
Rental expenses 6,307,423.07 5,614,824.57
Insurance expenses 1,169,009.36 1,124,034.83
Administrative expenses 663,709.80 699,955.44
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Item Reporting period Same period of last year
Travel expenses 1,362,500.23 1,862,203.63
Consultant fees 1,788,301.33 2,301,131.21
Maintenance expenses 1,763,412.45 2,941,621.47
Others 3,460,455.01 3,790,577.21
Total 46,326,432.58 38,769,244.52
36. Research and development expenses
Item Reporting period Same period of last year
Employee remunerations 18,255,109.89 22,780,501.64
Text expenses 3,053,587.41 3,584,206.48
Depreciation and amortization of assets 3,979,176.22 3,197,870.02
Certification expenses 1,227,419.06 1,678,876.83
Rental expenses 849,333.70 1,336,501.82
Patent expenses 1,503,219.91 1,349,210.14
Travel expenses 215,272.89 880,299.74
Maintenance expenses 264,882.64 462,359.89
Consultant fees 404,256.48 194,608.92
Others 1,066,599.56 1,234,765.02
Total 30,818,857.76 36,699,200.50
37. Financial costs
Item Reporting period Same period of last year
Interest expenses 151,742.56 431,740.73
Less: Interest income 12,388,999.10 4,370,937.15
Exchange gain or loss -2,810,752.26 606,201.37
Bank charges 588,814.60 592,580.12
Total -14,459,194.20 -2,740,414.93
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38. Other income
Reporting Same period of last
Item
period year
Export credit insurance subsidies 436,989.00 672,767.00
Patent subsidies 100,000.00 0.00
Technology innovation subsidies 0.00 100,000.00
Exhibition subsidies 37,000.00 0.00
Employment stabilization subsidies 134,445.12 0.00
Equipment investment subsidy of technological transformation
0.00 820,200.00
of enterprises
Enterprise R&D investment subsidies 1,552,140.00 1,024,800.00
Total 2,260,574.12 2,617,767.00
39. Investment income
Item Reporting period Same period of last year
Investment income from disposal of financial assets
1,339,489.00 4,324,100.00
held for trading
Investment income from financial products 6,540,398.04 3,988,938.97
Total 7,879,887.04 8,313,038.97
40. Gain from changes in fair value
Reporting Same period of last
Source of fair value change
period year
Financial assets held for trading -2,301,689.00 -742,250.00
Including: Gain from changes in fair value of Derivative
-2,301,689.00 -742,250.00
financial assets
Financial liabilities held for trading 594,600.00 -3,403,100.00
Total -1,707,089.00 -4,145,350.00
41. Losses on credit impairme nt
Item Reporting period Same period of last year
Bad debt losses of accounts receivable -1,438,633.36 137,197.24
Bad debt losses of other receivables 308,889.59 -226,200.32
Total -1,129,743.77 -89,003.08
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42. Losses on assets impairme nt
Item Reporting period Same period of last year
Inventory impairment losses -6,037,359.61 -1,819,781.83
Impairment losses on fixed assets -2,014,785.07 -10,570.96
Total -8,052,144.68 -1,830,352.79
43. Income from asset disposal
Included in reporting
Same period of last
Item Reporting period period non-recurring
year
profit and loss
Income from fixed asset disposal 279,810.12 63,398,419.60 279,810.12
Total 279,810.12 63,398,419.60 279,810.12
44. Non-operating income
Included in reporting
Same period of last
Item Reporting period period non-recurring
year
profit and loss
Government grants (see the
following table for detail: Details for 21,162,176.00
government grants)
Others 2,794,509.46 5,019,635.37 2,794,509.46
Total 2,794,509.46 26,181,811.37 2,794,509.46
Details of government grants which are recognized into profit or loss during Reporting
period
Reporting period Same period of last year
Write Related with
Government Recognized into Recognized Write off Recognized into Recognized
off cost assets/inco
assistance non-operating into other cost and non-operating into other
and me
income income expense income income
expense
Government Related with
relocation 21,162,176.00 income
compensation
Related with
Others 0.00 2,260,574.12 0.00 0.00 2,617,767.00 0.00
income
Total 0.00 2,260,574.12 0.00 21,162,176.00 2,617,767.00 0.00
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45. Non-operating expenses
Included in
Reporting period
Item Reporting period Same period of last year
non-recurring
profit and loss
Loss on scrapping of non-current assets 216.93 15,056.57 216.93
Including: Fixed assets 216.93 15,056.57 216.93
Intangible assets 0.00 0.00 0.00
External donations 0.00 1,283.20 0.00
Fines 0.00 4,162.92 0.00
Others 211,554.74 0.01 211,554.74
Total 211,771.67 20,502.70 211,771.67
46. Income tax expenses
(1) General information
Reporting Same period of last
Item
period year
Current income tax calculated in accordance with relevant tax
6,305,722.79 9,076,498.48
law
Deferred tax 1,521,379.07 20,744,481.64
Total 7,827,101.86 29,820,980.12
(2) Reconciliation of account profit and income tax expenses
Item Reporting period
Profit before tax 59,903,358.50
Income tax computed in accordance with the applicable tax rate 8,428,492.30
Impact of differing tax rates applicable to subsidiaries -7,332,687.87
Impact of adjustment for prior period tax expenses -1,306,289.59
Impact of non-taxable income 0.00
Impact of non-deductible costs, expenses and losses 131,796.54
Impact of utilization of prior period deductible temporary differences or deductable 0.00
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Item Reporting period
losses for which no deferred tax asset has been recognized
Impact of current period deductible temporary differences or deductable losses for
10,047,895.35
which no deferred tax asset has been recognized
Changes in balance of same period of last year deferred tax asset/liabilities due to tax
0.00
rate adjustment
Impact of additional deduction for R&D expenses -2,142,104.87
Income tax expenses 7,827,101.86
47. Other comprehensive income
Please see Note VI-29 for details.
48. Notes to the statement of cash flows
(1) Other cash received relating to operating activities
Item Reporting period Same period of last year
Government grants 2,260,574.12 23,779,943.00
Interests income 1,244,863.72 2,281,606.28
Rent income 28,367,596.27 23,793,654.59
Funds in current account and others 4,144,726.67 5,759,747.74
Total 36,017,760.78 55,614,951.61
(2) Other cash payments relating to operating activities
Reporting Same period of last
Item
period year
Penalties and donations paid 0.00 5,465.68
Bank charges paid by cash 588,814.60 732,318.67
Sales expenses and general and administrative expenses paid by
60,358,993.42 78,237,467.17
cash
Current accounts and others 4,570,222.81 10,575,657.12
Total 65,518,030.83 89,550,908.64
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(3) Other cash received relating to investing activities
Same period of
Item Reporting period
last year
To recover the maturity time deposits that for purpose to earn
240,268,714.80 92,427,273.64
interest income in financial institutions
Total 240,268,714.80 92,427,273.64
(4) Other cash payments relating to investing activities
Same period of
Item Reporting period
last year
Deposits in financial institutions for the purpose of earning
490,025,153.46 206,867,146.34
interest income
Total 490,025,153.46 206,867,146.34
(5) Other cash received relating to financing activities
Item Reporting period Same period of last year
Security deposit of pledged loan 0.00 7,000,000.00
Total 0.00 7,000,000.00
(6) Other cash payments relating to financing activities
Item Reporting period Same period of last year
Security deposit of pledged loan 6,775,024.51 0.00
Total 6,775,024.51 0.00
49. Supple mentary information to the statement of cash flows
(1) Supplementary information to the statement of cash flows
Item Reporting period Same period of last year
① Reconciliation of cash flows from operating activities to net profit:
Net profit 52,076,256.64 86,699,969.95
Add: Loss on asset impairment 8,052,144.68 1,830,352.79
Losses on credit impairment 1,129,743.77 89,003.08
Depreciation of fixed assets, oil and gas assets, biological assets held for production 25,227,353.40 22,621,962.91
Amortization of intangible assets 3,562,674.32 2,855,251.16
Amortization of long-term deferred expenditure 1,365,412.08 1,297,911.46
Loss on disposal of fixed assets, intangible assets and other long-term assets -279,810.12 -63,398,419.60
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Item Reporting period Same period of last year
(gain presented by "-" prefix)
Loss on scrap of fixed assets (gain presented by "-" prefix) 216.93 15,056.57
Loss on fair value changes (gain presented by "-" prefix) 1,707,089.00 4,145,350.00
Financial costs (gain presented by "-" prefix) -4,562,969.14 -183,999.42
Investment loss (gain presented by "-" prefix) -7,879,887.04 -8,313,038.97
Decrease of deferred tax assets (increase presented by "-" prefix) 1,861,637.41 -152,309.22
Increase of deferred tax liabilities (increase presented by "-" prefix) -340,258.34 20,896,790.86
Decrease of inventories (increase presented by "-" prefix) 50,826,332.09 6,995,781.81
Decrease of operating receivables (increase presented by "-" prefix) -23,651,070.40 -10,395,326.14
Increase of operating payables (decrease presented by "-" prefix) -137,106,741.42 -60,837,127.81
Others 0.00 0.00
Net cash flows generated from operating activities -28,011,876.14 4,167,209.43
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 equivalents as of 30/6/2020 334,822,611.51 291,434,711.91
Less: Cash equivalents as of 1/1/2020 639,623,201.98 448,492,295.47
Add: Cash equivalents as of 30/6/2020
Less: Cash equivalents as of 1/1/2020
Net increase of cash and cash equivalents -304,800,590.47 -157,057,583.56
(2) Composition of cash and cash equivalents
Item Reporting period Same period of last year
①Cash 334,822,611.51 291,434,711.91
Including: Cash at hand 961,400.21 851,894.37
Demand bank deposit 333,861,211.30 290,582,817.54
Demand other monetary funds 0.00 0.00
Demand deposit in the Central Bank 0.00 0.00
Deposit in peer firms 0.00 0.00
Loan to peer firms 0.00 0.00
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Item Reporting period Same period of last year
②Cash equivalents 0.00 0.00
Including: Debt instrument matured within three
0.00 0.00
months
③Cash and cash equivalents as of 30/6/2020 334,822,611.51 291,434,711.91
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 30 June 2020, the amount of cash and cash equivalents of statement of cash flows was CNY
334,822,611.51, the balance of monetary fund of balance sheet was CNY 591,354,074.68, and the
difference was CNY 256,531,463.17, of which the pledge loan guarantee of CNY 6,775,024.51 was
deducted from the ending amount of cash and cash equivalents of statement of cash flows due to not meet
the cash and cash equivalent standard, and the rest was time deposit in financial institutions for the
purpose of earning interest income.
50. Foreign currency monetary items
(1) Foreign currency monetary items
Original amount as at Foreign exchange Translated amount as at
Items
30/6/2020 rate 30/6/2020
Monetary funds
Including: USD 27,849,335.53 7.079500 197,159,370.89
JPY 32,054,212.42 0.065808 2,109,423.62
IDR 1,985,988,094.02 0.000492 976,907.55
EUR 24,827.14 7.961000 197,648.86
GBP 9,519.73 8.714400 82,958.73
HKD 328,536.76 0.913440 300,098.62
HUF 81,016.00 0.022338 1,809.74
NTD 35,510,310.00 0.238775 8,478,974.27
Total 209,307,192.28
Short-term loan
Including: USD 4,000,000.00 7.079500 28,318,000.00
Total 28,318,000.00
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Original amount as at Foreign exchange Translated amount as at
Items
30/6/2020 rate 30/6/2020
Accounts
receivable
Including: USD 41,083,779.87 7.079500 290,852,619.60
IDR 348,806,560.00 0.000492 171,577.95
EUR 429.40 7.961 3,418.45
JPY 63,373,225.00 0.065808 4,170,465.19
Total 295,198,081.19
Accounts payable
Including: USD 8,288,666.17 7.079500 58,679,612.15
EUR 10,172.32 7.961 80,981.84
HKD 593,326.35 0.91344 541,968.01
JPY 38,673,647.43 0.065808 2,545,035.39
IDR 1,465,282,731.71 0.000492 720,772.58
Total 62,568,369.97
Other receivables
Including: JPY 1,204,851.16 0.065808 79,288.85
USD 28,904.63 7.079500 204,630.33
IDR 1,521,400,894.00 0.000492 748,377.10
NTD 214,514.00 0.238775 51,220.58
Total 1,083,516.86
Other payables
Including: HKD 33,434.23 0.91344 30,540.16
JPY 370,800.00 0.065808 24,401.61
USD 215,611.54 7.079500 1,526,421.90
IDR 2,159,095,446.43 0.000492 1,062,059.05
Total 2,643,422.72
(2) Description of overseas operating entities
The Company’s holding sub-subsidiary company Pt. Star Comgistic Indonesia locates at
West Java province in Indonesia, due to Pt. Star Comgistic Indonesia is mostly settled in US
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dollars by usual purchases and sales, so that it adopts the US dollar as its functional
currency.
The Company’s holding sub-subsidiary 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-subsidiary 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-subsidiary company East Sino Development Limited locates at
Hong Kong, due to East Sino Development Limited is mostly settled in HKD by usual
purchases and sales, so that it adopts the HKD as its functional currency.
The Company’s holding sub-subsidiary company Orient Star Investments Limited locates at
Hong Kong, 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.
51. Governme nt grants
(1) General information
Amount recorded in current
Category Amount Disclosure
profit and loss
Patent subsidies 100,000.00 Other income 100,000.00
Exhibition subsidies 37,000.00 Other income 37,000.00
Employment stabilization
134,445.12 Other income 134,445.12
subsidies
Export credit insurance subsidies 436,989.00 Other income 436,989.00
Subsidies for enterprise research
1,552,140.00 Other income 1,552,140.00
input
(2) Return of government grants: None
VII. Change of consolidated scope
1. Business combination involving entities under common control: None
2. Business combination involving entities not under common control: None
3. Other reasons for change of consolidated scope
The cancellation of Tsann Kuen (Zhangzhou) Investment Co., Ltd. has been completed in
April 2020.
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VIII. The equity in other main entities
1. The equity in subsidiaries
(1) The construction of the company
Holding proportion
Place
Place of Nature (%)
Subsidiaries of Acquired method
operation of business
registration Directly Indirectly
Manufacture
TsannKuen (Zhangzhou) home Acquired through
Zhangzhou Zhangzhou 75.00 75.00
Enterprise Co., Ltd.(TKL) electronic establishment
appliance
Acquired through
Manufacture
business
TsannKuen China (Shanghai) home
Shanghai Shanghai 46.875 62.50 combination
Enterprise Co., Ltd. (TKS) electronic
under common
appliance
control
Manufacture
TsannKuen (Zhangzhou) South
home Acquired through
Port Electronics Enterprise Co., Zhangzhou Zhangzhou 56.25 75.00
electronic establishment
Ltd. (TKN)
appliance
Sales of
Shanghai Canxing Trading Acquired through
Shanghai Shanghai home 56.25 100.00
Co.,Ltd (STD) establishment
electronic
Xiamen Tsannkuen Property Property Acquired through
Xiamen Xiamen 100.00 100.00
Services Co., Ltd. (TKW) service establishment
Acquired through
business
East Sino Development Hong Hong Trading,
75.00 100.00 combination
Limited. (East Sino) Kong Kong investment
under common
control
Acquired through
Manufacture
business
Pt.Star Comgistic Indonesia home
Indonesia Indonesia 75.00 100.00 combination
(SCI) electronic
under common
appliance
control
Pt.Star Comgistic Property
Real estate Acquired through
Development Indonesia Indonesia Indonesia 75.00 100.00
development establishment
(“SCPDI”)
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Holding proportion
Place
Place of Nature (%)
Subsidiaries of Acquired method
operation of business
registration Directly Indirectly
Acquired through
business
Orient Star Investments Hong Hong Trading,
75.00 100.00 combination
Limited (OSI) Kong Kong investment
under uncommon
control
Acquired through
business
Tsannkuen Edge Intelligence Industrial
Taiwan Taiwan 75.00 100.00 combination
Co., Ltd. (TKEI) design
under common
control
(2) Important non-wholly-owned subsidiary
Holding
Dividends
proportion of Profit and loss attributable Total amount of
attributable to
Subsidiaries minority to minority equity during minority equity
minority
shareholders reporting period at the period-end
shareholders
(%)
TKL 25.00 11,402,011.05 26,395,184.92 326,298,477.31
TKS 53.125 1,727,205.10 122,527,344.42
SCI 25.00 -285,690.87 28,325,802.52
TKEI 25.00 -8,575.18 4,012,876.35
(3) The main financial information of important non-wholly-owned subsidiary
Balance as of 30/6/2020
Subsidiaries Non-current Current Non-current
Current assets Total Total
assets liabilities liabilities
TKL 1,411,097,415.23 468,781,472.71 1,879,878,887.94 574,487,128.72 197,850.00 574,684,978.72
TKS 271,400,137.75 11,652,737.80 283,052,875.55 4,120,549.82 48,292,618.59 52,413,168.41
SCI 92,928,517.80 76,172,025.15 169,100,542.93 55,797,332.84 55,797,332.84
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Subsidiaries Balance as of 30/6/2020
TKEI 16,369,478.52 2,958,049.59 19,327,528.11 2,797,514.07 478,508.67 3,276,022.73
(Continued)
Balance as of 1/1/2020
Subsidiaries Non-current Current Non-current
Current assets Total Total
assets liabilities liabilities
TKL 1,585,989,781.79 477,030,933.80 2,063,020,715.59 697,311,007.52 543,103.35 697,854,110.87
TKS 266,758,090.65 11,936,773.80 278,694,864.45 3,013,748.32 48,292,618.59 51,306,366.91
SCI 81,050,940.01 73,740,744.72 154,791,684.73 42,010,662.19 42,010,662.19
TKEI 16,327,132.09 3,383,316.35 19,710,448.44 3,674,562.65 425,896.15 4,100,458.80
(Continued)
Reporting period
Cash flow
Total amount of
Subsidiaries relating to
Revenues Net profit comprehensive
operating
income
activities
TKL 715,492,117.08 45,608,044.19 40,240,655.81
TKS 475,388.40 3,251,209.60 3,537,815.91
SCI 83,292,609.62 -1,142,763.48 -6,414,480.36
TKEI 5,077,370.67 -34,300.74 -900,971.02
(Continued)
Same period of last year
Total amount
Cash flow relating
Subsidiaries of
Revenues Net profit to operating
comprehensive
activities
income
TKL 884,551,699.73 37,058,705.83 2,673,162.45
TKS 537,628.52 62,334,333.43 20,108,849.49
SCI 42,766,092.00 -10,665,886.45 -783,976.44
TKEI 4,062,649.39 -991,957.28 -921,407.08
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IX. The risk associated with financial instrume nts
The main financial instruments of the Company including equity investments, investment in
debt obligations, loans, accounts receivable, accounts payable and etc., please see Note VI
for detail of related items. The risk associated with financial instruments, and risk
management policies which the company uses to reduce these risks as described below. The
management of the Company manages and supervises the risks to ensure that the risks can
be controlled within a limited range.
The Company analyzes the rationality of risk variables and possible impacts of possible
changes on current gain and loss or shareholders’ equity through sensitivity analysis. All
risk variables rarely can change in isolation, and the correlation between variables has great
influence on the ultimate amount generated from the change of some risk variable. Thus, the
following is done on the assumption that each variable changes in isolation.
(I) The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and
benefits, 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 Co mpany, establish suitable risk
tolerance baseline and precede the risk management, and supervise a variety of risks timely
and reliably, and control the risk within a limited range.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally.
The company bears the foreign exchange risk primarily concerned with USD, JPY, 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.
The Company purchases forward contract of foreign currency to reduce the foreign
exchange exposure generated from foreign currency assets, of which the contracts shall be
based on the amount of foreign currency assets.
2. Credit risk
That could cause the Company’s maximum credit risk of financial losses mainly from the
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losses of financial assets, which are resulted by the other party of contract fails to fulfill the
obligations and the financial guarantee undertaken by the Company, as at June 30 2020,
including:
The carrying amount of financial asseets recognized in consolidated balance sheet; in terms
of financial instruments measured by fair value, the book value reflects the risk exposure but
not the biggest exposure. The biggest exposure will be changed with the change of future
fair value.
In order to reduce credit risk, the Company set up a team responsible for determination of
credit limits, credit approvals and other monitoring procedures to ensure that the necessary
measures be taken to recover overdue debts. In addition, the Company reviews the
recoverable amount of each individual trade debt at each balance sheet date to ensure
recognized fully provision for bad debts for the money cannot be recovered. So that the
Company’s management believes the Company’s credit risk has been greatly reduced.
The Company’s circulating funds deposited in banks which with high credit ratings, so that
the lower credit risk of circulating funds.
(1) Age analysis of financial assets overdue without impairment
No financial asset overdue without impairment.
(2) Analysis of financial assets that have occurred individual impairment
No financial assets that have occurred individual impairment.
3. Liquidity risk
When managing liquidity risk, the Company’s management believes that maintaining
adequate cash and cash equivalents, and monitoring that at same time, in order to meet the
needs of operation of the Company, and to reduce the impact of fluctuations in cash flows.
The management of the Company monitors the use of bank borrowings and ensures to abide
by loan agreements.
X. Disclosure of fair value
1. Period-end fair value of assets & liabilities that are measured by fair value
Fair value as of 30/6/2020
First level Second level Third level
Item
measurement measurement measurement of Total
of fair value of fair value fair value
1. Continuous measurement of fair
value
1.1 Financial assets held for trading
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Fair value as of 30/6/2020
First level Second level Third level
Item
measurement measurement measurement of Total
of fair value of fair value fair value
1.1.1 Financial assets at fair value
1,319,000.00 1,319,000.00
through current profit and loss
1.1.1.1 Liabilities investment
1.1.1.2 Equity investment
1.1.1.3 Derivative financial assets 1,319,000.00 1,319,000.00
1.2 Other investments in equity
instruments
1.3 Other non-current financial assets
Total amount of asset that is
1,319,000.00 1,319,000.00
continually measured by fair value
1.4 Financial liabilities held for
trading
1.4.1 Financial liabilities at fair value
44,200.00 44,200.00
through current profit and loss
Including: Tradable bonds
Derivative financial
44,200.00 44,200.00
liabilities
Others
Total amount of liabilities that is
44,200.00 44,200.00
continually measured by fair value
2. The basis for determining the market price of continuous and non-continuous fair
value measure ment items of the first level
Unadjusted quotations obtained on active markets from the same assets or liabilities on the
balance sheet date.
XI. Related parties and related party transaction
1. Details of the parent
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Shareholding in Voting right in
Place of
Parents Nature of business Registered capital the Company the Company
registration
(%) (%)
Manufacture and
STAR COMGISTIC
Taiwan sales electrical NTD 3 billion 42.90 44.68
CAPITAL CO.,LTD.
equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL CO.,
LTD.
2. Subsidiaries
See Note VIII-1 “The equity in subsidiaries”.
3. Details of other related parties
Other related parties Relationship
The company directly controlled by the key management
Thermaster Electronic (Xiamen) Ltd.
and closed family members
Xiamen Wuhuama Restaurant Management
Ultimate holding company have equity
Co., Ltd.
TsannKuen Enterprise Co., Ltd. Same actual controller
Gold Mine Chain Enterprise Co., Ltd Same actual controller
Canxing International Travel Service Co., Ltd Same ultimate holding company
4. Transactions with related parties
(1) Transactions through purchase or sell goods and accept or supply services
① The situation of purchases goods or accepts services
Whether
Content Reporting Approval trade Same period of
Related parties exceed trade
of transaction period credit last year
credit or not
Thermaster
Purchase of
Electronic 14,049,564.67 38,493,000.00 No 16,615,879.99
goods
(Xiamen) Ltd.
TsannKuen
Purchase of
Enterprise Co., 2,630.42 12,000.00 No 659.33
goods
Ltd.
Gold Mine
Purchase of
Chain Enterprise 210.75 12,000.00 No 644.30
goods
Co., Ltd.
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Whether
Content Reporting Approval trade Same period of
Related parties exceed trade
of transaction period credit last year
credit or not
STAR
COMGISTIC Purchase of
223.21 12,000.00 No 4,518.01
CAPITAL CO., goods
LTD.
Total 14,052,629.05 16,621,701.63
The situation of sells goods or rendering services
Content
Related parties Reporting period Same period of last year
of transaction
STAR COMGISTIC CAPITAL CO., LTD. Sale of goods 2,901,040.95 5,915,611.17
Total 2,901,040.95 5,915,611.17
(2) Lease between related parties
① The Company is as the lessor
Lease rental
Lease rental
recognized in
Lessee Classification recognized in
current
prior period
period
Xiamen Wuhuama Restaurant Management Co., Ltd. Property 21,588.89 21,960.00
Total 21,588.89 21,960.00
② The Company is as the lessee
Lease rental Lease rental
Lessor Classification recognized in recognized in prior
current period period
STAR COMGISTIC CAPITAL CO., LTD. Property 592,801.84 552,564.86
Total 592,801.84 552,564.86
(3) Assets transfer, debt restructuring between related parties
Content of Same period of last
Related parties Reporting period
transaction year
Sale of fixed
STAR COMGISTIC CAPITAL CO., LTD. 0.00 7,103.88
assets
Total 0.00 7,103.88
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(4) Remunerations of key management personals Currency: Ten thousand yuan
Item Reporting period Same period of last year
Remunerations of key management
154.55 131.77
personals
(5) Other transactions with related parties
Same period of
Content of
Related parties Reporting period
transaction last year
Canxing International Travel Service Co., Ltd. Accept service 18,072.06 155,794.48
Gold Mine Chain Enterprise Co., Ltd. Provide service 26,795.39 20,814.40
Total 44,867.45 176,608.88
5. The balance of payables and receivables among related parties
(1) Receivables owed by related parties
Carrying amount as of 30/6/2020 Carrying amount as of 1/1/2020
Carrying amount Allowance Carrying Allowance
Related party
for bad amount for bad debt
debt
Accounts receivable:
STAR COMGISTIC CAPITAL
2,162,858.05 2,263,799.22
CO., LTD.
Total 2,162,858.05 2,263,799.22
Other receivables:
STAR COMGISTIC CAPITAL
210,822.77 206,827.94
CO., LTD.
Total 210,822.77 206,827.94
(2) Payables owed to related parties
Carrying amount as of 30/6/2020 Carrying
Related party amount as of
1/1/2020
Accounts payable:
Thermaster Electronic (Xiamen) Ltd. 8,809,623.12 7,317,114.51
Total 8,809,623.12 7,317,114.51
Advances from customers
Xiamen Wuhuama Restaurant Management Co., Ltd. 0.00 19,731.63
Total 0.00 19,731.63
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Carrying amount as of 30/6/2020 Carrying
Related party amount as of
1/1/2020
Other payables:
Xiamen Wuhuama Restaurant Management Co., Ltd. 0.00 27,056.60
STAR COMGISTIC CAPITAL CO., LTD. 0.00 117,215.44
Canxing International Travel Service Co., Ltd. 0.00 27,990.96
Total 0.00 172,263.00
XII. Commitme nts and contingencies
1. Important commitme nts
(1) Operating lease commitments
Irrevocable lease contracts under performance and their financial effects as at the
period-end.
Carrying amount as of Carrying amount as of 1/1/2020
Related party
30/6/2020
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 112,771.00 112,771.00
Total 123,685.00 123,685.00
(2) Other commitments
None
2. Contingencies
No significant contingencies need to be disclosed as of June 30 2020.
XIII. Post reporting date events
1. Evaluation of impact of Coronavirus disease (COVID-19)
For the outbreak and spread of COVID-19 epidemic overseas, the Company will continue to
focus and evaluate the impact of epidemic, adjust every operation arrangement timely, ta ke
various measures and increase income and reduce expenditure so as to reduce the negative
influence of COVID-19 epidemic.
XIV. Notes to the main elements of the separate financial statement of the Company
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1. Accounts receivable
(1) Disclosure by age
Age Balance as of 30/6/2020
Within 1 year 8,689,949.59
Including: 1-90 days 7,559,443.72
91-180 days 1,130,505.87
181-270days
271-365 days
1 to 2 years
2 to 3 years 1,157,970.78
Over 3 years 5,000.00
Including: 3-4 years
4-5 years 5,000.00
Over 5 years
Subtotal 9,852,920.37
Less: Allowance for bad debt 1,253,781.78
Total 8,599,138.59
(2) Disclosure by method for measurement of allowance for bad debt
Balance as of 30/6/2020
Item
Carrying amount Allowance for bad debt
Book value
Amount % of total Amount
% of total
Accounts receivable of
individually assessment for
impairment
Accounts receivable of
assessment for impairment by 9,852,920.37 100.00 1,253,781.78 12.72 8,599,138.59
portfolio
Including: Portfolio by age 9,844,498.97 99.91 1,253,781.78 12.74 8,590,717.19
Portfolio by related parties 8,421.40 0.09 8,421.40
Total 9,852,920.37 100.00 1,253,781.78 12.72 8,599,138.59
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(Continued)
Balance as of 1/1/2020
Item Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of
individually assessment for
impairment
Accounts receivable of
assessment for impairment 7,288,144.48 100.00 1,420,186.28 19.49 5,867,958.20
by portfolio
Including: Portfolio by age 7,175,859.42 98.46 1,420,186.28 19.79 5,755,673.14
Portfolio by related
112,285.06 1.54 112,285.06
parties
Total 7,288,144.48 100.00 1,420,186.28 19.49 5,867,958.20
① Portfolio by related parties
Balance as of 30/6/2020
Allowance
Accounts receivable Reasons for
Carrying amount for bad % of total
measurement
debt
Due from related parties 8,421.40
Total 8,421.40
② Accounts receivable using age for measurement of allowance for bad debt
Balance as of 30/6/2020
Item
Carrying amount Allowance for bad debt %
Current 7,874,647.43 39,373.24 0.50
1-30 days past due 709,279.95 31,917.60 4.50
31-60 days past due 97,600.81 19,520.16 20.00
61-90 days past due 45.00
Over 90 days past due 1,162,970.78 1,162,970.78 100.00
Total 9,844,498.97 1,253,781.78 12.74
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(3) Allowance for bad debt
Current period movement
Balance as of Recognition Recovery or Used or Others Balance as
Item
1/1/2020 reversal written of 30/6/2020
off
Accounts
receivable of
assessment for 1,420,186.28 166,404.50 1,253,781.78
impairment by
portfolio
Total 1,420,186.28 0.00 166,404.50 0.00 0.00 1,253,781.78
(4) Details of top five accounts receivable
The total amount of top five accounts receivables summarized by debtors as at the
period-end is CNY 9,694,955.04, accounting for 98.40% of the total accounts receivable as
at the period-end, the total corresponding allowance for bad debts is CNY 1,248,059.06.
2. Other receivables
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Interests receivable
Dividend receivable
Other receivables 2,042,327.50 2,622,732.62
Total 2,042,327.50 2,622,732.62
(1) Interests receivable
None
(2) Dividend receivable
None
(3) Other receivables
① Disclosure by age
Age Balance as of 30/6/2020
Within 1 year 1,933,216.40
Including: 1-90 days 1,924,327.35
91-180 days 8,889.05
181-270days 0.00
271-365 days 0.00
1 to 2 years 5,300.00
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Age Balance as of 30/6/2020
2 to 3 years 55,800.00
Over 3 years 62,300.00
Including: 3-4 years 2,300.00
4-5 years
Over 5 years 60,000.00
Subtotal 2,056,616.40
Less: Allowance for bad debt 14,288.90
Total 2,042,327.50
② Disclosure by nature
Item Balance as of 30/6/2020 Balance as of 1/1/2020
Deposit 110,000.00 214,400.00
Due from related parties 1,691,330.37 1,800,844.03
Other current account 255,286.03 674,758.69
Subtotal 2,056,616.40 2,690,002.72
Less: Allowance for bad debt 14,288.90 67,270.10
Total 2,042,327.50 2,622,732.62
③ Recognition of allowance for bad debt
Stage 1 Stage 2 Stage 3
Expected credit Expected credit loss Expected credit loss for
Allowance for bad debt loss for the next 12 for the whole the whole duration Total
months duration (no credit (credit impairment has
impairment) occurred)
Closing balance as of
67,270.10 67,270.10
1/1/2020
Carrying amount of
other receivables in
current period on
1/1/2020
Turn to stage 2
Turn to stage 3
Turn back to stage 2
Turn back to stage 1
Recognition
Reversal 52,981.20 52,981.20
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Stage 1 Stage 2 Stage 3
Expected credit Expected credit loss Expected credit loss for
Allowance for bad debt loss for the next 12 for the whole the whole duration Total
months duration (no credit (credit impairment has
impairment) occurred)
Used
Written off
Other movements
Closing balance as of
14,288.90 14,288.90
30/6/2020
④ Recognition of allowance for bad debt
Current period movement
Balance as Balance as
Item at at
Recognition Recovery or Used or Others
1/1/2020 30/6/2020
reversal written off
Accounts receivable
of assessment for
67,270.10 52,981.20 14,288.90
impairment by
portfolio
Total
67,270.10 52,981.20 14,288.90
⑤ Details of top five other receivables
Carrying Allowance
amount for bad
Debtors Nature Age % of total
as of debt as of
30/6/2020 30/6/2020
Current
TKL 1,691,330.37 1-90 days 82.24
account
HARRIS BRICKEN MCVAY
Legal cost 52,902.00 1-90 days 2.57
SLIWOSKI,LLP
Alipay Deposit 50,000.00 Over 1 year 2.43
Xiamen Tsannkuen Flagship
Deposit 50,000.00 Over 1 year 2.43
Store Alipay
People’s Court of Haicang
Legal cost 29,635.00 1-90 days 1.44
District, Xiamen, Fujian
Total 1,873,867.37 91.11
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3. Long-term equity investments
(1) Classification of long-term equity investments
Balance as of 30/ 6/2020 Balance as of 1/1/ 2020
Item
Carrying Provision for Carrying Provision for
Book value Book value
amount impairment amount impairment
Investment in
923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
subsidiaries
Investment in
associates and joint
ventures
Total 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
(2) Investment in subsidiaries
Balance as
Provision
of
Decrease for
Increase in Carrying 30/6/2020
Balance as at in impairment
Investee current amount of
1/1/2020 current accrued in
period as of 30/6/2020 provision
period current
for
period
impairment
TsannKuen
(Zhangzhou)
921,914,701.56 921,914,701.56
Enterprise Co.,
Ltd.
Xiamen
Tsannkuen
Property 1,500,000.00 1,500,000.00
Services Co.,
Ltd.
Total 923,414,701.56 923,414,701.56
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4. Operating revenues and costs
Reporting period Same period of last year
Item
Revenues Costs Revenues Costs
Principal
operating 14,652,175.88 12,982,449.80 15,952,167.75 14,703,450.93
activities
Other operating
24,729,431.68 16,760,794.10 21,197,050.66 16,309,052.83
activities
Total 39,381,607.56 29,743,243.90 37,149,218.41 31,012,503.76
5. Investment income
Item Reporting period Same period of last year
Investment income from disposal of
long-term equity investments
Long-term equity investment income
79,185,554.77 25,443,358.87
calculated by cost method
Total 79,185,554.77 25,443,358.87
XV. Supple mentary information
1. Extraordinary gains or losses for current period
Supplemental information Total amount Explanation
Gains or losses arising from disposal of non-current assets 279,810.12
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. grants directly associated with the 2,260,574.12
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
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Supplemental information Total amount Explanation
current reporting period to the combination dates.
Gains or losses arising from contingent events not associated with
the Company’s operating activities
Mainly investment income
Gains or losses arising from changes in the fair values of financial from sale of forward
assets and liabilities held for trading, and investment income from foreign exchange contracts,
disposal of financial assets and liabilities held for trading and 6,172,798.04 gains on changes of fair
available-for-sale financial assets, excluding effective hedging value and income of
instruments associated with the Company’s operating activities financial products and
other current assets
Recovery of impairment allowance for receivables subject to
individual assessment for impairment
Gains or losses arising from entrusted borrowings
Gains or losses arising from changes in the fair values of investment
property measured at fair value
Impact of one-off adjustment required by tax laws, accounting
standards and relevant regulations on the profit or loss for the current
reporting period
Revenue arising from entrusted operation
Other non-operating revenue and non-operating expenses not listed
2,582,737.79
above
Other gains or losses satisfying the definition of extraordinary gains
or losses
Less: Effect of corporate income tax 1,898,569.93
Less: Net amount attributable to minority interests (after tax) 2,683,386.62
Total 6,713,963.52
Note: The Company recognized non-recurring categories of activities in accordance with the Explanatory
Announcement regarding Information Disclosure by Publicly Listed Company No. 1 - Non-recurring
Profit and Loss (Zhengjianhui Gonggao [2008] No.43).
2. Yield Rate of Net Assets and Earnings Per Share
Weighted average Earnings Per Share (Yuan per
Profits for the reporting period yield rate of net share)
assets% Basic EPS Diluted EPS
Net profits attributable to ordinary shareholders 5.10 0.21 0.21
Net profits attributable to ordinary shareholders
4.25 0.18 0.18
(excl. extraordinary gains or losses)
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