2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2020 ANNUAL REPORT
March 2021
1
2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Tsann Kuen (China) Enterprise Co., Ltd. (hereinafter referred to as “the
Company”) warrant that this Report is factual, accurate and complete without any false information,
misleading statements or material omissions. And they shall be jointly and severally liable for that.
All directors attended the board meeting for reviewing this Report.
The Company’s profit distribution preplan upon review and approval of this board meeting: Based
on the total 185,391,680 shares, a cash dividend of RMB1.5 (tax included) will be distributed for
every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be
turned into share capital.
Pan Zhirong, company principal, and 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.
Any forward-looking statement such as those involving the future operational plans in this Report
shall not be considered as virtual promises of the Company to investors. And investors are kindly
reminded to pay attention to possible risks.
This Report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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2020 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.................................................................................10
Section IV. Performance Discussion & Analysis......................................................12
Section V. Significant Events......................................................................................30
Section VI. Change in Shares & Shareholders........................................................ 43
Section VII. Preference Shares.................................................................................. 47
Section VIII. Directors, Supervisors, Senior Management Staff & Employees...48
Section IX. Corporate Governance...........................................................................59
Section X. Corporate Bonds.......................................................................................65
Section XI. Financial Report..................................................................................... 65
Section XII. Documents Available for Reference.................................................... 66
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Content
Xiamen Tsann Kuen, MCKB, Company,
Refers to Tsann Kuen (China) Enterprise Co., Ltd.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise
South Port Electronics, TKN Refers to
Co., Ltd.
STD Refers to Shanghai Canxing Trading Co., Ltd.
East Sino Development Refers to East Sino Development Limited
SCI Refers to Pt.Star Comgistic Indonesia
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.
Yuan Refers to RMB Yuan
Major Risk Warning
Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn are designated by the Company as the
media for information disclosure. All information of the Company shall be subject to what is
disclosed by the Company on the said media. And Investors are kindly reminded to pay attention to
possible investment risks.
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information of the Company
Stock name TKC-B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Company name in
厦门灿坤实业股份有限公司
Chinese
Abbr. 闽灿坤
Company name in
TSANNKUEN(CHINA) ENTERPRISE CO. ,LTD.
English
Abbr. TKC
Legal representative Pan Zhirong
Registered address No.88 Xinglong Road, Huli Industrial Park, Xiamen, Fujian Province, P.R. China
Zip code 361006
TSANN KUEN Industrial Park, Taiwanese Investment Zone, Zhangzhou, Fujian
Office address
Province
Zip code 363107
Internet website www.eupa.tw
Email address mm_sun@tkl.tsannkuen.com
II. Contact us
Board Secretary Securities Representative
Name Sun Meimei Dong Yuanyuan
TSANN KUEN Industrial Park, TSANN KUEN Industrial Park, Taiwanese
Contact address Taiwanese Investment Zone, Zhangzhou, Investment Zone, Zhangzhou, Fujian
Fujian Province Province
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail address mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for information Securities Times (domestic), Ta Kung Pao
disclosure (HK) (overseas)
Internet website designated by CSRC for disclosing this Report www.cninfo.com.cn
TSANN KUEN Industrial Park,
Where this Report is placed Taiwanese Investment Zone, Zhangzhou,
Fujian Province
IV. Changes in the registered information
Credibility code 91350200612002170L
Changes of the main business since listing No changes
Changes of the controlling shareholder No changes
V. Other information
The CPAs firm hired by the Company:
Name RSM China
901-22 to 901-26, Tower 1-Wai Jing Mao Building, 22 Fuchengmen Wai
Office address
Street, Xicheng District, Beijing, China
Signing accountants Chen Lianwu, Ren Xiaochao
Sponsor engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate accounting data of previous years?
□ Yes √ No
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Increase/decrease
of current year
Item 2020 2019 2018
over last year
(%)
Operating revenue 2,144,181,738.33 2,001,939,841.94 7.11 1,790,062,803.08
Net profit attributable to
139,522,190.75 105,233,212.02 32.58 11,831,622.78
shareholders of the Company
Net profit attributable to
shareholders of the Company
94,686,086.28 57,267,985.97 65.34 -968,285.11
before extraordinary gains and
losses
Net cash flows from operating
315,271,083.24 143,620,287.98 119.52 106,076,060.82
activities
Basic EPS (RMB Yuan/share) 0.75 0.57 31.58 0.06
Diluted EPS (RMB Yuan/share) 0.75 0.57 31.58 0.06
Weighted average ROE (%) 17.34 15.07 2.27 1.82
Increase/decrease
As at 31 Dec. As at 31 Dec. of current As at 31 Dec.
Item
2020 2019 year-end than 2018
last year-end (%)
Total assets 2,408,046,446.78 1,956,448,835.98 23.08 1,842,514,750.64
Net assets attributable to
864,030,127.11 748,738,791.34 15.40 648,801,684.35
shareholders of the Company
Total shares of the Company as at closure of the last trading day before the disclosure of this Report:
Total shares of the Company as at closure of the last trading day
before the disclosure of this Report (share) 185,391,680
Fully diluted EPS based on the latest total shares:
Fully diluted EPS based on the latest total shares (RMB
Yuan/share) 0.75
VII. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference in the Reporting Period.
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2020 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 √ Inapplicable
No difference in the Reporting Period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Inapplicable
VIII. Financial highlights by quarter
Unit: RMB Yuan
Item Q1 Q2 Q3 Q4
Operating revenue 311,268,019.82 481,746,564.54 693,486,076.76 657,681,077.21
Net profit attributable to shareholders
8,577,244.43 30,643,458.73 54,549,173.46 45,752,314.13
of the Company
Net profit attributable to shareholders
of the Company before extraordinary 7,008,708.45 25,498,031.19 38,474,618.79 23,704,727.85
gains and losses
Net cash flows from operating activities -56,790,702.14 28,778,826.00 175,863,935.96 167,419,023.42
Any material difference between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports?
□ Yes √ No
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2020 2019 2018 Note
Gain/loss on the disposal of non-current
assets (including the offset part of the asset 195,318.03 63,688,086.21 975,770.89
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 6,241,497.95 26,259,614.81 4,903,720.34
certain quotas or amounts according to the
government’s unified standards
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2020 2019 2018 Note
Capital occupation charges on non-financial
enterprises that are recorded into current
gains and losses
Gains due to that the investment costs for
the Company to obtain subsidiaries,
associates and joint ventures are lower than
the enjoyable fair value of the identifiable
net assets of the investees when making the
investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with
investments or asset management
Asset impairment provisions due to acts of
God such as natural disasters
Gain/loss on debt restructuring
Expenses on business reorganization, such
as expenses on staff arrangements,
integration, etc.
Gain/loss on the part over the fair value due
to transactions with distinctly unfair prices
Current net gains and losses of subsidiaries
acquired in business combination under the
same control from period-begin to
combination date
Gain/loss on contingent events irrelevant to
the Company’s normal business
Mainly gains
on forward
forex contracts
Gains and losses on change in fair value
sold, gains on
from tradable financial assets and tradable
changes in fair
financial liabilities, as well as investment
value and
income from disposal of tradable financial
61,211,756.54 19,610,630.54 10,464,696.66 income from
assets and tradable financial liabilities and
investments in
financial assets available for sales except for
wealth
effective hedging related with normal
management
businesses of the Company
products and
other current
assets
Impairment provision reversal of accounts
receivable on which the impairment test is
carried out separately
Gain/loss on entrustment loans
Gain/loss on change of the fair value of
investing real estate of which the subsequent
measurement is carried out adopting the fair
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2020 2019 2018 Note
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
Non-operating income and expense other
4,668,961.96 5,303,835.25 3,563,106.86
than the above
Other gain and loss items that meet the
definition of an extraordinary gain/loss
Less: Income tax effects 11,395,313.47 26,185,728.82 3,099,747.35
Minority interests effects (after tax) 16,086,116.54 40,711,211.94 4,007,639.51
Total 44,836,104.47 47,965,226.05 12,799,907.89
Section III. Business Highlights
I. Main business during the reporting period
Developing, manufacturing 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). No material changes occurred to the business model of the Company in the reporting
period.
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
II. Material changes in main assets
1. Material changes in main assets
Main assets Material change
Monetary funds No material change
Up 19808.42% from the end of last year, mainly because of the reclassification of
Held-for-trading financial
assets investments in wealth management products and the assessed gains on forward forex
contracts in the current period
Down 100.00% from the end of last year, mainly because of the settlement of notes
Notes receivable
receivable that were due
Up 50.70% from the end of last year, mainly because of an increase in the balance of
Accounts receivable
accounts receivable along with the rising operating revenues
Advances to suppliers No material change
Other receivables No material change
Down 96.28% from the end of last year, mainly because of the reclassification of
Other current assets
investments in wealth management products in the current period
Investment properties No material change
Fixed assets No material change
Down 75.07% from the end of last year, mainly because of the check and acceptance of
Construction in progress
the rebuilt component plant of subsidiary SCI in the current period
Intangible assets No material change
Long-term deferred charge No material change
Deferred tax assets No material change
Up 103.25% from the end of last year, mainly because of an increase in prepayments
Other non-current assets
for equipment in the current period
2. Main assets overseas
√ Applicable □ Inapplicable
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2020 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Any
Measures In the
Operati major
taken to Company’s
Asset Nature Value Location on Earnings impairme
protect asset net assets
status nt risk or
safety (%)
not
Periodic
SCI Investment 207,298,478.66 Indonesia Normal 1,578,916.61 23.99 No
review
Equity Periodic
TKEI 21,456,326.00 Taiwan Normal 2,296,409.71 2.48 No
acquisition review
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.
The Company has been adhering to the two development paths of innovative R&D and technological application,
as well as to the dual circulation strategy of focusing on export and boosting domestic sales.
Focusing on smart control, smart household appliances, the application of IoT, etc. in product development, 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 73 patents in R&D, including 36 invention patents, 25 utility model
patents and 12 design patents. 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.
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Section IV. Performance Discussion & Analysis
I. Business review for the reporting period
Looking back to 2020, the production and sales activities of the Company were adversely affected in the first half
of the year by factors such as the widespread COVID-19 pandemic and the ongoing China-U.S. trade war. In
response, stringent anti-pandemic measures were adopted in the reporting period. As a result, we 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.
The Board of Directors and the management of the Company adhered to the development strategy of focusing on
the principal business operations, and 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.
In face of the various unfavorable factors for export, we were more prudent in purchases to control stocks and
cash flows. A hierarchical management system based on customers’ credit lines was carried out in respect of
accounts receivable, order taking and shipment, and their credit line insurance coverage was increased. In addition,
negotiations to bring down procurement costs, expense control and other measures were carried out. Meanwhile,
asset impairment allowances were established upon assessment of net realizable value of inventories and
impairments of fixed assets.
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
1. Overview
For 2020, we achieved a net profit attributable to shareholders of the Company of RMB140 million, up 32.58%
from last year. The change was primarily driven by:
(1) The net profit attributable to shareholders of the Company of RMB105 million in last year comprised the
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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) The Company continued to enhance R&D and innovation and launch new products to the market, boosting
consumer purchases. In addition, the market demand was also stimulated by the consumers who stayed at home
due to the pandemic. As a result, the Company achieved operating revenues of RMB2.144 billion, up 7.11% from
last year. Meanwhile, 2020 also saw an increase in profitability due to effective risk control, accurate match of
supply and demand, supply chain upgrading measures including negotiations with raw material suppliers on lower
costs, cost control and process refinement.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2020 2019
Item In total In total +/-%
Amount operating Amount operating
revenues (%) revenues (%)
By segments
Small home appliance
2,066,576,833.78 96.38 1,919,745,046.46 95.89 7.65
manufacturing
Other services 77,604,904.55 3.62 82,194,795.48 4.11 -5.58
Total 2,144,181,738.33 100.00 2,001,939,841.94 100.00 7.11
By products
Cooking utensils 1,470,116,469.53 68.57 1,271,637,191.29 63.52 15.61
Everyday home
397,954,437.24 18.56 388,186,251.50 19.39 2.52
appliances
Tea and coffee makers 184,473,267.41 8.60 244,844,541.59 12.23 -24.66
Other products 14,032,659.60 0.65 15,077,062.08 0.75 -6.93
Other services 77,604,904.55 3.62 82,194,795.48 4.11 -5.58
Total 2,144,181,738.33 100.00 2,001,939,841.94 100.00 7.11
By areas
Australia 75,243,660.83 3.51 83,031,966.00 4.15 -9.38
Africa 14,907,902.56 0.70 19,351,407.62 0.97 -22.96
America 1,118,127,377.12 52.15 906,460,709.85 45.28 23.35
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Europe 440,214,124.77 20.53 492,289,796.35 24.59 -10.58
Asia 495,688,673.05 23.11 500,805,962.12 25.01 -1.02
Total 2,144,181,738.33 100.00 2,001,939,841.94 100.00 7.11
(2) Segments, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gross
Gross Operating Cost of
profit
Operating profit revenue: sales:
Item Cost of sales margin:
revenue margin +/-% from +/-% from
+/-% from
(%) last year last year
last year
By segments
Small home appliance manufacturing 2,066,576,833.78 1,722,830,969.80 16.63 7.65 5.62 1.60
Other services 77,604,904.55 33,919,348.10 56.29 -5.58 -2.09 -1.56
Total 2,144,181,738.33 1,756,750,317.90 18.07 7.11 5.46 1.28
By products
Cooking utensils 1,470,116,469.53 1,234,617,024.23 16.02 15.61 13.16 1.82
Everyday home appliances 397,954,437.24 335,387,964.40 15.72 2.52 -0.37 2.44
Tea and Coffee makers 184,473,267.41 147,236,293.39 20.19 -24.66 -24.43 -0.24
Other products 14,032,659.60 5,589,687.78 60.17 -6.93 -35.27 17.45
Other services 77,604,904.55 33,919,348.10 56.29 -5.58 -2.09 -1.56
Total 2,144,181,738.33 1,756,750,317.90 18.07 7.11 5.46 1.28
By areas
Australia 75,243,660.83 59,851,012.52 20.46 -9.38 -9.85 0.42
Africa 14,907,902.56 11,863,723.39 20.42 -22.96 -20.38 -2.58
America 1,118,127,377.12 934,093,466.91 16.46 23.35 21.79 1.07
Europe 440,214,124.77 360,354,097.45 18.14 -10.58 -13.75 3.01
Asia 495,688,673.05 390,588,017.63 21.20 -1.02 -2.29 1.02
Total 2,144,181,738.33 1,756,750,317.90 18.07 7.11 5.46 1.28
(3) Are the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No
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Unit: Unit
Industry Item 2020 2019 YoY +/-%
Sales volume 23,975,250 22,450,713 6.79
Small home appliance manufacturing Output 23,998,870 22,585,389 6.26
Stock 1,769,267 1,745,647 1.35
Reasons for any over-30% YoY movement of the data above:
□ Applicable √ Inapplicable
(4) Execution of signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Breakdown of cost of sales
Unit: RMB Yuan
2020 2019
Item YoY +/-%
In total cost of In total cost of
Amount Amount
sales (%) sales (%)
By segments
Small home
appliance 1,722,830,969.80 98.07 1,631,156,891.41 97.92 5.62
manufacturing
Other services 33,919,348.10 1.93 34,644,195.77 2.08 -2.09
Total 1,756,750,317.90 100.00 1,665,801,087.18 100.00 5.46
By products
Cooking utensils 1,234,617,024.23 70.28 1,091,065,894.00 65.49 13.16
Everyday home
appliances 335,387,964.40 19.09 336,632,218.03 20.21 -0.37
Tea and Coffee
makers 147,236,293.39 8.38 194,823,071.49 11.70 -24.43
Other products 5,589,687.78 0.32 8,635,707.89 0.52 -35.27
Other services 33,919,348.10 1.93 34,644,195.77 2.08 -2.09
Total 1,756,750,317.90 100.00 1,665,801,087.18 100.00 5.46
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(6) Whether there were changes of the consolidation scope during the reporting period
√ Yes □ No
Subsidiary Tsann Kuen (Zhangzhou) Investment Co., Ltd. (TKI) was deregistered in April 2020. Therefore, it has
been excluded from the consolidated financial statements since the date of deregistration, with its revenues,
expenses and profits before the deregistration included in the consolidated income statement, and its cash flows
before the deregistration included in the consolidated cash flow statement.
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
□ Applicable √ Inapplicable
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Unit: RMB Yuan
Total sales of the top 5 customers 1,316,814,003.65
Ratio of the total sales of the top 5 customers to the annual total sales (%) 61.41
Ratio of the total sales of related parties among the top 5 customers to the
0.00
annual total sales (%)
Information of the top 5 customers of the Company
Proportion in annual total sales
Serial No. Name of customer Sales amount
(%)
1 No. 1 352,376,529.92 16.43
2 No. 2 299,457,921.84 13.97
3 No. 3 199,029,628.31 9.28
4 No. 4 284,357,993.32 13.26
5 No. 5 181,591,930.26 8.47
Total 1,316,814,003.65 61.41
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
Unit: RMB Yuan
17
Total purchase from the top 5 suppliers 254,819,356.91
Ratio of the total purchase from the top 5 suppliers to the annual total purchase
17.23
(%)
Ratio of the total purchase from related parties among the top 5 suppliers to the
2.90
annual total purchase (%)
Information of the top 5 suppliers of the Company
Unit: RMB Yuan
Ratio to the annual purchase
No. Name of supplier Purchase amount
amount (%)
1 No. 1 76,870,398.14 5.20
2 No. 2 55,202,359.18 3.73
3 No. 3 45,721,437.28 3.09
4 No. 4 42,913,323.94 2.90
5 No. 5 34,111,838.37 2.31
Total 254,819,356.91 17.23
Notes of the other situation of the major suppliers
√ Applicable □ Inapplicable
The No.4 supplier among the top 5 suppliers is the related party of the Company.
3. Expenses
Unit: RMB Yuan
Item 2020 2019 YoY +/- (%) Notes of the significant changes
Selling expenses 55,857,793.41 63,389,947.24 -11.88
Administrative expenses 82,381,345.47 83,008,382.58 -0.76
R&D expenses 61,944,782.42 71,898,743.35 -13.84
Mainly due to the increase in
Finance costs 27,512,741.83 -7,160,360.79 484.24 unrealized assessed exchange
losses in the current period
4. R&D investment
√ Applicable □ Inapplicable
The Company has been adhering to R&D, continued to promote innovation in R&D to create more intimacy with
customers, and create market demand by developing smart-home and low-carbon products. Meanwhile,
18
living-alone and sanitization products are developed as a response to the COVID-19 pandemic. These efforts help
expand our market share and strengthen our operating revenues and profitability.
R&D investment of the Company
Item 2020 2019 +/- (%)
Number of the R&D personnel
337 390 -13.59
(person)
Ratio to the R&D personnel (%) 7.31 10.58 -3.27
Investment amount of the R&D
61,944,782.42 71,898,743.35 -13.84
(RMB Yuan)
Ratio of the R&D investment to the
2.89 3.59 -0.70
operating revenue (%)
Amount of the capitalized R&D
0.00 0.00 0.00
investment (RMB Yuan)
Ratio of the capitalized R&D
0.00 0.00 0.00
investment to the R&D investment
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
revenue
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation
□ Applicable √ Inapplicable
5. Cash flow
Unit: RMB Yuan
Item 2020 2019 +/- (%)
Subtotal of cash inflows from operating
2,141,042,251.53 2,203,247,739.72 -2.82
activities
Subtotal of Cash outflows for operating
1,825,771,168.29 2,059,627,451.74 -11.35
activities
Net cash flows from operating activities 315,271,083.24 143,620,287.98 119.52
Subtotal of cash inflows from investing
856,688,665.62 938,297,482.71 -8.70
activities
Subtotal of cash outflows from investing
1,072,088,051.44 880,481,265.12 21.76
activities
Net cash flows from investing activities -215,399,385.82 57,816,217.59 -472.56
Subtotal of cash inflows from financing
97,907,340.00 93,195,400.00 5.06
activities
19
Subtotal of cash outflows from financing
160,602,021.04 99,593,204.12 61.26
activities
Net cash flows from financing activities -62,694,681.04 -6,397,804.12 -879.94
Net increase of cash and cash equivalents 33,178,004.70 191,130,906.51 -82.64
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
1. Net cash flows from operating activities increased by 119.52% from last year mainly due to the decrease of the
payment of accounts receivable at the beginning of the reporting period in the reporting period compared with that
of last year and the extension of suppliers’ payment terms for the reporting period.
2. Net cash flows from investing activities decreased by 472.56% from last year mainly due to the increase of
finance products purchased for the reporting period and no such case for the reporting period in which the income
from the policy relocation of the phase II plant of TKS flowed in last year.
3. Net cash flows from financing activities decreased by 879.94% from last year mainly due to the increase of
dividends distribution, the increase of borrowings by TKI and the increase of cash deposit paid for pledge
borrowings and deposit to creditor for the reporting period.
Reason for any big difference between the net operating cash flow and the net profit for the reporting period
□ Applicable √ Inapplicable
III. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the total
Recurrin
Items Amount profits amount Notes of the causes
g or not
(%)
Assessment gains of the delivered forward
Investment
43,371,745.54 20.58 forex and investment gains from finance Yes
income
products
Gain from
Assessment gains of the undelivered forward
changes in fair 17,840,011.00 8.47 Yes
forex
value
Loss on credit
-41,845.03 -0.02 Impairment provisions for accounts receivable Yes
impairment
Loss on asset Impairment provisions for fixed assets and
-9,241,368.18 -4.39 Yes
impairment inventory falling price loss
Gain on
disposal of 195,318.03 0.09 Gain on disposal of fixed assets Yes
assets
20
Government subsidy in relation to production
Other income 6,241,497.95 2.96 Yes
and operation
Non-operating Insurance claims and reparations from
5,986,192.66 2.84 Yes
income customers for cancellation of orders
Non-operating
1,317,230.70 0.63 Scrap of assets Yes
expenses
IV. Assets and liabilities
1. Significant changes in asset composition
Adjustments to related items of the financial statements at the beginning of the first execution year of the New
Revenue or Leases Guidelines since 2020
Applicable
Unit: RMB Yuan
December 31, 2020 1 January, 2020
As a As a Change in
Reason for any
Item percentage percentage percentage
Amount Amount significant change
of total of total (%)
assets (%) assets (%)
Monetary funds 707,794,598.20 29.39 639,623,201.98 32.69 -3.30 No
Mainly due to the
reclassification of
investments in wealth
Held-for-trading management products
720,821,900.00 29.93 3,620,689.00 0.19 29.74
financial assets and the assessed gains
on forward forex
contracts in the current
period
Increase of accounts
Accounts receivable balance due
receivable 431,006,560.62 17.90 285,995,412.05 14.62 3.28
to increase of
operating revenues
Inventories 255,052,077.36 10.59 222,155,587.38 11.36 -0.77 No
Mainly due to the
Other current
18,634,037.60 0.77 501,139,597.55 25.61 -24.84 reclassification of
assets
investments in wealth
21
management products
in the current period
Investment
21,255,610.91 0.88 22,991,059.81 1.18 -0.30 No
properties
Fixed assets 164,338,962.07 6.82 185,749,835.56 9.49 -2.67 No
Acceptance
completion of the part
plant of the
Company’s subsidiary
Construction in
progress 728,529.68 0.03 2,921,901.51 0.15 -0.12 STAR COMGISTIC
CAPITAL CO., LTD.
reconstructed at the
beginning of the
period
Short-term Pledge borrowings of
borrowings 16,345,141.13 0.68 0.00 0.00 0.68
the reporting period
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Profit/loss on Cumulative Impairment
fair value fair value provided in Other
Opening Purchased in this Sold in this
Item changes in this changes this change Closing balance
balance reporting period reporting period
reporting charged to reporting s
period equity period
Financial assets
1. Tradable
financial
assets
(excluding 0.00 0.00 0.00 0.00 750,000,000.00 50,000,000.00 0.00 700,000,000.00
derivative
financial
assets)
2. Derivative
3,620,689.00 17,201,211.00 0.00 0.00 968,153,000.00 750,263,889.00 0.00 20,821,900.00
financial assets
3. Investments in
other debt 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
obligations
4. Other equity
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
instrument
22
investments
Subtotal of
3,620,689.00 17,201,211.00 0.00 0.00 1,718,153,000.00 800,263,889.00 0.00 720,821,900.00
financial assets
Investment
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
property
Productive living
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
assets
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total of the above 3,620,689.00 17,201,211.00 0.00 0.00 1,718,153,000.00 800,263,889.00 0.00 720,821,900.00
Financial liabilities 638,800.00 -638,800.00 0.00 0.00 76,493,800.00 180,885,700.00 0.00 0.00
Any significant changes in the major assets’ measurement attributes of the Company in the Reporting Period?
□ Yes √ No
3. Restricted asset rights as of the end of this reporting period
√ Applicable □ Inapplicable
Note: Among other monetary funds, CNY 12,243,391.52 is the letter of credit deposit and CNY 22,750,000.00 is
the loan deposit. Other than the mentioned restricted funds, the Company does not have other funds with
restrictions or potential recovery risks due to mortgage, pledge, or freezing in the currency funds at the end of the
period.
V. Investments made
1. Total investments made
√ Applicable □ Inapplicable
Unit: RMB Yuan
Investments made in this reporting
Investments made in the prior year +/-%
period
0.00 36,682,533.00 -100.00
2. Significant equity investments made in this reporting period
□ Applicable √ Inapplicable
3. Significant non-equity investments ongoing in this reporting period
□ Applicable √ Inapplicable
23
4. Financial investments
(1) Securities investments
□ Applicable √ Inapplicable
(2) Investment in derivative financial instruments
√ Applicable □ Inapplicable
24
Unit: RMB’0,000
Ratio of
investment
Type of Investme amount at
Investmen nt
investment Amount the end of
Related- t amount Pursed in amount Actual
in Initial Sold in this provided the period
Operatin Relatio party Commenc Terminatio at the this profit/los
derivative investmen reporting for at the to the
g party n transacti ement date n date beginning reporting s for the
financial t amount period impairm end of Company's
on or not of the period period
instrument ent the net asset at
period
s period the end of
the period
(%)
Non-re Forward 139,644.6 01/01/202 12/31/202 104,464.6 46,529.6
Bank No 35,179.93 93,114.96 53.85 4,191.90
lated forex 1 0 0 8 5
139,644.6 104,464.6 46,529.6
Total 35,179.93 93,114.96 53.85 4,191.90
1 8 5
Source of investment funds All from the Company's own funds
Lawsuits No lawsuits
Disclosure date of the announcement about
03/12/2013
the board’s consent for the investment
Disclosure date of the announcement about
the general meeting’s consent for the 05/18/2013
investment
25
1. Analysis on risks from holding of derivative products: gains or losses from difference between contracted exchange rate and
market exchange rate on value date.
2. Control measures:
(1) Principle: The purpose of the financial derivative operation is to avoid risks. The Company shall not conduct transactional
operation for other purposes than risk avoidance. The Company shall not conduct complex derivative trading above the actual
operation needs and shall not speculate in derivative trading with hedging as an excuse. The overall contractual amount for risk
avoidance of the Company shall not exceed the summation of the net risk exposure of the existing assets and liabilities and the
net risk exposure of assets and liabilities arising from the operation of the Company in the coming year.
(2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and
Risk analysis and risk control measures for strictly execute the business operation and risk management mechanisms for derivative investment.
positions held in derivatives in this
reporting period (including but not limited (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional
to market risk, liquidity risk, credit risk,
operational risk, legal risk, etc.) personnel for investment decision-making, business operation, risk control, etc. It shall also inquire and compare among various
markets and products. Besides, it shall strictly control the variety and size of derivative investment and try to choose derivative
trading on exchange as much as possible.
(4) Periodic evaluation: Derivative investments shall be evaluated at least twice for a month and the evaluation report shall be
sent to a high-ranking executive authorized by the Board of Directors. And a derivative investment report shall be sent to the
Board of Directors annually. The Company and its subsidiaries only need to submit to the Board of Directors of the subsidiaries.
(5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment
amount.
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
26
(1) Gains on delivered derivatives in the Reporting Period were RMB24.079 million, and assessed gains on those undelivered
were RMB17.84 million, among which RMB2.9819 million of assessed gains on undelivered forward forex contracts of last year
Changes in market price or fair value of
derivatives invested in this reporting period was reversed.
(specific methods used and relevant
assumption and parameter settings shall be (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges
disclosed for analysis of fair value of on the last trading day of the month.
derivatives)
(3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the
contracted amount undue by the month*the estimated exchange rate and the currency amount when bought in.
Significant changes in the Company’s
accounting policies and specific accounting
No significant changes
principles for derivatives in this reporting
period as compared to the prior period
Special opinions expressed by
The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding
independent directors concerning the
supervision mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly
Company’s derivatives investment and risk
necessary in its routine operation and is in compliance with relevant laws and regulations, with the risks controllable.
control
5. Use of funds raised
□ Applicable √ Inapplicable
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Inapplicable
2. Sale of major equity interests
□ Applicable √ Inapplicable
27
VII. Main controlled and joint stock companies
√ Applicable □ Inapplicable
Main subsidiaries and joint stock companies with over 10% effect on the Company’s net profit
Unit: RMB Yuan
Relationship
Compan Registere Operating Operating
with the Main business scope Total assets Net assets Net profit
y name d capital revenues profit
Company
Small home appliance USD160
TKL Subsidiary 2,401,385,659.83 1,429,688,822.92 1,925,972,956.80 186,856,102.75 170,102,957.89
manufacturing million
Sub-subsidiar Small home appliance USD40
TKS 283,432,008.45 232,846,262.27 935,988.16 7,175,512.98 5,457,764.73
y manufacturing million
Sub-subsidiar Small home appliance USD35
SCI 207,298,478.66 106,980,080.04 242,314,396.65 1,742,672.72 1,578,916.61
y manufacturing million
Sub-subsidiar R&D and design of
TKEI TWD300 21,456,326.00 17,762,318.54 11,923,713.18 2,223,172.62 2,296,409.71
y products
million
Subsidiaries obtained or disposed in this reporting period
√ Applicable □ Inapplicable
Name Method Impacts on overall production and performance
Tsann Kuen (Zhangzhou) Investment Co., Ltd. Cancelled No impacts on the net profit of the listed company
VIII. Structured bodies controlled by the Company
□ Applicable √ Inapplicable
28
IX. Outlook of the Company’s future development
(I) Strategies for future development
1. Strategy upgrading for main customers, and expansion for new strategic customers
Establish a diversified R&D technical service system, provide a comprehensive customer service and customer
management platform, and provide customers with a structured solution from the perspective of consumers. The
Company's true core strategy is to be close to customers, not cost-orientation. Launch products meeting the
demands of consumers and establish differentiated competitive advantages.
In terms of customer management, we focus our resources, continue to screen customers according to the Pareto
Principle, and devote effective resources to strategic customers in line with our future development, so as to form
a mutually beneficial and win-win business partner.
2. Construction of domestic market
With the wide use of intelligent control (AI/face recognition/voice control), IoT technology and 5G technology in
the future, traditional household appliances manufacturers are urged to upgrade their technology. With the
improvement of people's living standards and the increasing demand for convenient and Smart Home, the future
development of Smart Home in the domestic market has become an inevitable trend. In the future, the Company
will focus on brand strategy and the development of Smart Home.
The Company has adjusted its product-oriented marketing strategy in China to a consumer-oriented one that
focuses on new consumer groups, new channels and new customer development. Specifically, strategies for two
major brands are deployed (EUPA Tsannkuen: Professional and superior with tactile appeal and high unit price;
Urbane: Cost-effectively affordable with lively and youthful design).
3. Lean factory management meeting the demands of strategic customers
The Company continues to promote the factory management mode, focusing and dedicating service to win
customer and consumer recognition and satisfaction. Meanwhile, it builds an ecosystem of strategic cooperation
for supply chains to achieve an accurate balance between supply and demand and an efficient synergy of
organizations, adopts big data system upgrade management, introduces new raw materials, new technology, lean
manufacturing equipment, improves production space, improves production yield and production efficiency, and
achieves lean production optimization.
4. Strengthen of overseas manufacturing deployment and enhancement of manufacturing competitiveness
Against the background of Sino-US Trade War and that parts of the countries adopting trade protectionism and
suppress the domestic products through the methods such as improve the import tariff, the Company lays an
29
overseas manufacturing base in Indonesia and will accelerate the integration of its supply chain as well as laying a
new field for transformation. This police is highly integrated with the "One Belt, One Road" strategic area, taking
the lead in seizing opportunities for overseas market development and deepening international operations. In the
future, the Company will continue to actively expand overseas markets, focus on key international regions,
products and resources so as to achieve greater and stronger growth.
(II) Industry development trend and outlook of the market
As the wireless, IT and intelligent era comes, the trend of intelligent home appliances boosts the development and
transformation of small domestic appliances.
1. Europe and the United States are the main consumer markets of small domestic appliances, the average
household small domestic appliances have a large capacity and a short life cycle, the demand for replacement
market is large, the global market demand for small domestic appliances shows a stable trend. With the economic
growth, the improvement of people's living standards and the increasingly stringent international market
environment standards, the series, large-scale and energy-saving environmental protection small domestic
appliances will become the general trend.
2. China is an important base for the production of small domestic appliances. China's advantages in labor, cost,
technology and industrial support have made china undertaken the world's major small domestic appliances
business. With the powerful large domestic appliances and international brands entering the small domestic
appliances market, the competition in the small domestic appliances market will become more intense, and the
business sector will enter the operation of specialization, systematization and branding, in order to compete more
market share, through relying on the advantages of capital and R&D, a number of small brand enterprises which
are relatively weak, lack of R&D, cost advantages and market network management advantages will be phased
out.
3. China is still considered a strong market. The home appliance industry of China has entered an era featuring
brand as the winning trump. Different from the traditional home appliances, the small home appliances are still in
a developing stage in terms of sale. As the way of spending changes, more new products enter the market and old
appliances are being renewed, domestic demand for small home appliances will soar and the industry will enjoy
good prospects. Actually, it is expected that the coming few years will be a golden period for the development of
the small home appliance market of China.
(III) Future risk analysis
1. International
Influenced by Sino-US Trade War, parts of the countries began to adopt trade protectionism and suppress the
domestic electrical home appliances for the methods such as improve the import tariff. The outburst of the global
30
financial crisis led to the rise of the international trade protection, the aggravation of the tariff barrier and the
non-tariff barrier especially such as the technology standard, Intellectual property right protection and
anti-dumping etc., as well as the export of the domestic electrical home appliance encountered more and more
threatens tariff and non-tariff barrier with the more complicated international environment faced with the electrical
home appliances.
Influenced by the slowly recovery of the global economy, the enlarge of the exchange rate fluctuation, the enhance
of the domestic comprehensive cost, and with global inflation pressure that cannot be eased in the short run and
more and more non-economic obstacles from western countries in their trading with China, once the demand in
the international market is insufficient, the Company will face the risk of a decline in sales revenue caused by a
decline of the demand in the international market.
2. Domestic
With the development of domestic production and the improvement of people's living standards, the domestic
market competition will become more intense, the domestic home appliances market competition pattern has
changed significantly, and the new economic model under the background of Internet sales will become a market
opportunity in the next few years.
In view of the domestic market, on the one hand, the Company takes technological innovation as the core to
promote brand image investment and talent team building, establish its own brand, and develop green smart home
appliances to increase the share of the domestic market. On the other hand, the Company continues to improve the
protection of the Company's patent intellectual property rights to face competition in the industry and actively
expand new channels such as Internet sales and TV shopping to promote sales. If the domestic market
development is not effective, the Company will face the risk of declining sales revenue.
3. Exchange rate fluctuation
The Company’s products were export-oriented, so the influence of the exchange rate fluctuation on the Company
was rather big. Facing with the negative influences of the appreciation of the RMB, the main methods are: to
avoid the exchange risks by the financial tools and to fully considerate the influences of the exchange risks when
receiving an order, thus to transfer the exchange risks.
4. Increase of the labor costs and the labor shortage
Factors such as increase of local minimum wage standard, decrease of labor supply and the seasonal human
resource demand of surrounding enterprises, have resulted in increase of comprehensive labor costs of the
Company year by year. To cope with the risk of decline in profitability due to rising labor costs, the Company
improves the staff production efficiency by promoting procurement modularization and lean automation,
continuously make the production and manufacturing environment better, promote bonus retention policy,
31
improve compensation & benefits of the employees, enhance the construction of corporate culture, increase the
work enthusiasm and identity of employees to reduce employee turnover rate.
5. Environmental protection low-carbon
As the execution of the Environmental Protection Act, to prevent and remedy pollution and other public nuisance
as well as to ensure the environmental and public health become the development tendency that the production
processes of the enterprises must active deal with; the Company continuously put the lean manufacturing into the
core goal of the enterprises, and with the introduce of the new environmental protection materials, the input of the
automation and the technical promotion of the environmental manufacture processing, the environment protection
of products of the Company will be continuously promoted.
6. Impact on the epidemic situation of COVID-19 Epidemic
So far, the sudden COVID-19 pandemic has raged through the world for more than a year, creating not only a
huge impact on the operation of the global economy but also challenges and opportunities for the development of
the Company.
The "stay-at-home economy" has become a fact of life due to the policy responses of different countries after the
outbreak, but people's quality of life will not be diminished. More people will cook at home. Therefore, the
demand for small home appliances will increase. Meanwhile, as a result of the pandemic uncertainty overseas,
there will be additional sales costs for the Company.
X. Visits paid to the Company for purposes of research, communication, interview, etc.
1. In this reporting period
√ Applicable □ Inapplicable
Place of Type of Contents and Index to main inquiry
Date of visit Way of visit Visitor
visit visitor materials provided information
Inquired of the work
The By phone and no resumption and the impact of
02/19/2020 By phone Individual Mr. Zhang
Company materials provided the epidemic situation, and the
reform of B-share
Inquired of the impact of the
epidemic situation to the
The By phone and no
03/17/2020 By phone Individual Mr. Zhang
Company materials provided production, and impact of
foreign epidemic situation to
orders of the Company.
03/25/2020 The By phone Individual Mr. Wang By phone and no Inquired of the impact of the
32
Place of Type of Contents and Index to main inquiry
Date of visit Way of visit Visitor
visit visitor materials provided information
Company materials provided epidemic situation to the
production, and impact of
foreign epidemic situation to
orders of the Company.
Inquired of shareholders’
The By phone and no voting on shareholders
04/14/2020 By phone Individual Mr. Wen
Company materials provided meetings by Guotai Junan
Securities Co., Ltd.
The By phone and no Inquired of the reform of
05/22/2020 By phone Individual Mr. Ding
Company materials provided B-share
The By phone and no Inquired of the reform of
05/25/2020 By phone Individual Mr. Ding
Company materials provided B-share
Inquired of the operation of
The By phone and no
05/26/2020 By phone Individual Mr. Xu
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
05/27/2020 By phone Individual Mr. Liu
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
05/28/2020 By phone Individual Mr. Yang
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
06/09/2020 By phone Individual Mr. Chen
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
06/10/2020 By phone Individual Mr. Liu
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
09/09/2020 By phone Individual Mr. He
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
09/10/2020 By phone Individual Mr. Ding materials provided the Company and the reform
Company
of B-share
The By phone and no
09/11/2020 By phone Individual Mr. Yang materials provided Inquired of the operation of
Company
33
Place of Type of Contents and Index to main inquiry
Date of visit Way of visit Visitor
visit visitor materials provided information
the Company and the reform
of B-share
Inquired of the operation of
The By phone and no
10/28/2020 By phone Individual Mr. Fan
Company materials provided the Company and the reform
of B-share
Inquired of the operation of
the Company, the reason why
The By phone and no
11/05/2020 By phone Individual Mr. Sun the revenue situation is nearly
Company materials provided
equal to earnings growth and
the reform of B-share
Inquired of the operation of
The By phone and no
12/02/2020 By phone Individual Mr. Xu the Company, the reform of
Company materials provided
B-share and stock price trend
Inquired of the operation of
The By phone and no
12/31/2020 By phone Individual Mr. He
Company materials provided the Company and the reform
of B-share
2. From the end of this Reporting Period to the disclosure date of this Report
Times of visit 18
Number of visiting institutions 0
Number of visiting individuals 18
Number of other visitors 0
Significant undisclosed information disclosed, revealed
No
or leaked
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common shares,
especially the cash dividend policies
34
√ Applicable □ Inapplicable
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of association or the
Yes
requirements of the resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper function: Yes
Whether the medium and small shareholders had the chances to fully express their
Yes
suggestions and appeals, of which their legal interest had gained fully protection:
Whether the conditions and the process met the regulations and was transparent of the
Yes
adjustment or altered of the cash dividend policy:
List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning
capital reserve into share capital of the Company of the recent 3 years (the reporting period inclusive)
For 2018, the Company distributed a cash dividend of RMB0.4 (tax included) for every 10 shares held by its
shareholders and there was no turn from capital reserve to share capital for 2018. For 2019, the Company
distributed a cash dividend of RMB1 (tax included) for every 10 shares held by its shareholders and there was no
turn from capital reserve to share capital for 2019. For 2020, the Company intended to distribute a cash dividend
of RMB1.5 (tax included) for every 10 shares held by its shareholders, and the estimated distributable profits of
the Company was RMB27,808,752 with the retained profits of RMB223,796,645.88 for carry-forward to the next
year. There was no turn from capital reserve to share capital for the year.
List of the cash dividend distribution of the common shares of the Company of the recent 3 years (the reporting
period inclusive)
Unit: RMB Yuan
The ratio The ratio
Net profit accounting accounting
belonging to in net profit Amount Total amount in net profit
Ratio of
Amount of shareholders of which of the of cash which
the cash
Dividend cash dividend the listed belongs to cash dividend belongs to
dividend
year (including company in shareholders dividend (including by shareholders
by other
tax) consolidated of the listed by other other of the listed
methods
statement of company in methods methods) company in
dividend year consolidated consolidated
statement statement
2020 27,808,752.00 139,522,190.75 19.93% 0 0 27,808,752.00 19.93%
2019 18,539,168.00 105,233,212.02 17.62% 0 0 18,539,168.00 17.62%
2018 7,415,667.20 11,831,622.78 62.68% 0 0 7,415,667.20 62.68%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
□ Applicable √ Inapplicable
35
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
√ Applicable □ Inapplicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax included) 1.5
Turning capital reserve into share capital for every 10 shares (share) 0
Total shares as the basis for the allocation preplan (share) 185,391,680.00
Amount of cash dividend (RMB Yuan) (tax included) 27,808,752.00
Amount of cash dividend by other methods (like share repurchase) (RMB Yuan) 0
Total cash dividends (including those by other methods) (RMB Yuan) 27,808,752.00
Distributable profit (RMB Yuan) 251,605,397.88
Percentage of total cash bonus (including those by other methods) of the total
100%
profits dividends
Cash dividend situation
If the development stage of the Company belongs to the mature period without any significant assets expenditure
arrangement, when executing the profits distribution, the ratio of the cash dividend to the profits distribution of the
reporting period should at least reach 80%.
Details about the profit allocation or turning capital reserve into share capital
For 2020, the Company intended to distribute a cash dividend of RMB1.5 (tax included) for every 10 shares held by its
shareholders, and the estimated distributable profits of the Company was RMB27,808,752 with the retained profits of
RMB223,796,645.88 for carry-forward to the next year. There was no turn from capital reserve to share capital for the
year.
III. Performance of commitments
1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as
the Company and other commitment makers, fulfilled in this reporting period or ongoing at the period-end
√ Applicable □ Inapplicable
Time of
Period of
Commitment Commitment making
Commitment Contents commitme Fulfillment
maker type commitme
nt
nt
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
36
Based on the confidence on
the continuous and stable
development of the
The
Company, it committed to
Company’s
increase the shareholding if
stocks resumed
the Company’s stock price
trading on 31
lower than HKD2.40 per
Dec. 2012, but
share after the
the Company’s
implementation of the shares
stock price
contraction and trading
hasn’t met the
resumption, and it would
condition
increase no more than 2%
(closing price
shares (i.e. 3.7078 million
was lower than
Other commitments FILLMAN Commitment on shares) of the total shares
Long-term HKD2.40) for
made to minority INVESTMEN shareholding issued by the Company 12/28/2012
effective shareholding
shareholders TS LIMITED increase within one year since the
increase since
date of initial shareholding
the date of
increase. If the plan on
trading
increasing holding 2% shares
resumption,
of the total shares is
FILLMAN
completed within 12 months,
Investment
and the stock price has also
Limited hasn’t
reached the target price, it
implemented
will perform relevant
the
approval procedures, and
shareholding
propose to CSRC on
increase plan.
continuous implementation
of shareholding increase by
exemption of offering.
Executed on time or not Yes
During the Reporting Period, there were no Commitments of the Company’s actual controller, shareholders,
related parties and acquirer, as well as the Company and other commitment makers, fulfilled in this reporting
period or ongoing at the period-end.
2. Where there had been an earnings forecast for an asset or project and this reporting period was still
within the forecast period, explain why the forecast has been reached for this reporting period.
□ Applicable √ Inapplicable
IV. Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
V. Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “auditor’s non-standard report” issued by the CPAs firm for
this reporting period
□ Applicable √ Inapplicable
37
VI. YoY changes in accounting policies, estimations and methods
√ Applicable □ Inapplicable
(1) Changes in accounting policies
On 5 July 2017, the Ministry of Finance issued “Accounting Standards for Business Enterprises No. 14 - Revenue”
(Caikuai [2017] No. 22) (which is referred as the “New Revenue Standards”). On 10 December 2019, the Ministry
of Finance issued “Accounting Standards for Business Enterprises No. 13”, requiring the domestically listed
companies to execute the new revenue standards starting from 1 January 2020. The Company implemented the
abovementioned new revenue standards and interpretation of the standards on 1 January 2020, and adjusted
relevant contents of accounting policies.
The new revenue standards require that the cumulative impact of the first implementation of the standards shall be
adjusted for the amount of retained earnings and other related items in the financial statements at the beginning of
the first implementation year (January 1, 2020), and the information of the comparable period shall not be
adjusted. When implementing the new revenue standards, the Company only adjusts the cumulative impact of
contracts that have not been completed on the first implementation date.
The cumulative effects of the above accounting policies are as follows:
Due to the implementation of the new revenue standards, the Company's consolidated financial statements
correspondingly adjusted the contract liabilities of CNY 10,350,334.42 and advances from customers of CNY
-10,350,334.42 on January 1, 2020. The financial statements of the parent company correspondingly adjusted the
contract liabilities of CNY 1,152,074.28 and the advances from customers of CNY -1,152,074.28 on January 1,
2020.
The above accounting policy changes were approved by the Company's first board meeting of 2020 held on
March 14, 2020.
(2) Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
(3) Adjustments of the financial statements at the beginning of the reporting period for the
first-year adoption of new revenue standards.
Consolidated Financial Statements
Unit: Yuan Currency: CNY
Items 31 December 2019 1 January 2020 Adjustment
Current assets：
Advances from customers 13,294,285.78 2,943,951.36 - 10,350,334.42
Contract liabilities N/a. 10,350,334.42 10,350,334.42
38
Financial Statements of Parent Company
Unit: Yuan Currency: CNY
Items 31 December 2019 1 January 2020 Adjustment
Current assets：
Advances from customers 1,826,163.67 674,089.39 - 1,152,074.28
Contract liabilities N/a. 1,152,074.28 1,152,074.28
VII. Retroactive restatement due to correction of material accounting errors in this reporting
period
□ Applicable √ Inapplicable
VIII. YoY changes in the scope of the consolidated financial statements
√ Applicable □ Inapplicable
Tsann Kuen (Zhangzhou) Investment Co., Ltd., a subsidiary of the Company, was cancelled in April 2020 and has
been excluded from the Company’s consolidated financial statements since the cancellation date. The revenue,
expense and profit thereof before the completion of the cancellation shall be included in the consolidated income
statement, and the cash flow in the consolidated cash flow statement.
IX. Engagement and disengagement of CPAs firm
Current CPAs firm
Name of the domestic CPAs firm RSM China
The Company’s payment for the domestic CPAs firm
108
(RMB’0,000)
Consecutive years of the audit service provided by the
1
domestic CPAs firm
Names of the certified public accountants from the
Chen Lianwu, Ren Xiaochao
domestic CPAs firm
Consecutive years of the audit service provided by the
certified public accountants from the domestic CPAs 1 year for Chen Lianwu, 1 year for Ren Xiaochao
firm
Indicate by tick mark whether the CPAs firm was changed in this reporting period
39
√ Yes □ No
Indicate by tick mark whether the CPAs firm was changed during the audit
□ Yes √ No
Indicate by tick mark whether the change of CPAs firm perform the procedure for examination and approval
√ Yes □ No
A detailed explanation of the CPAs reappointment and change
Ruihua Certified Public Accountants (LLP) (hereinafter referred to as "Ruihua Accountants") originally engaged
by the Company provided audit services for the Company. During practice, it earnestly performed the duties of an
audit firm and safeguarded the legitimate rights and interests of the Company and shareholders from a
professional perspective; the audits reflected the Company's financial position objectively, impartially and fairly
pursuant to the principle of independent audit. Nevertheless, in view of the Company's business development and
future needs for audit, the Company will not renew the engagement of Ruihua Accountants as its audit firm. The
Company has communicated in advance with Ruihua Accountants on such decision. Ruihua Accountants is aware
of the same and confirms that it has no objections. The Company expresses its heartfelt thanks to the audit team of
Ruihua Accountants for their hard work in providing audit services for the Company!
After careful consideration based on the Company's business development and strategic needs, according to the
assessment of the independence, professional competence, credit records and investor protection capabilities of
audit firms, the Company will appoint RSM China as its financial audit firm for 2020. For the one year of
engagement, RSM China will be responsible for the 2020 financial report audit and internal control audit
(including the issuance of related audit reports) of the Company. Relevant audit will be mainly undertaken by the
Shenzhen office of RSM China.
The Proposal on the Change of CPA Firm was approved at the Fifth Board Meeting in 2020 dated 4 August 2020.
For details, please refer to the Announcement on the Resolutions of the Fifth Board Meeting in 2020 and the
Announcement on the Change of CPA Firm disclosed on Securities Times, Ta Kung Pao (HK) and
www.cninfo.com.cn dated 6 August 2020.
The Proposal on the Change of CPA Firm was approved at the First Extraordinary General Meeting in 2020 dated
28 August 2020. For details, please refer to the Announcement on the Resolutions of the First Extraordinary
General Meeting in 2020 disclosed on Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn dated 29
August 2020.
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Inapplicable
For the reporting period, the Company engaged RSM China as the internal control auditor and did not hire any
financial advisor or sponsor.
40
X. Possibility of listing suspension or termination after disclosure of this Report
□ Applicable √ Inapplicable
XI. Bankruptcy and restructuring
□ Applicable √ Inapplicable
XII. Significant litigations and arbitrations
□ Applicable √ Inapplicable
XIII. Punishments and rectifications
□ Applicable √ Inapplicable
XIV. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Inapplicable
XV. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Inapplicable
41
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Unit: RMB’0,000
Pricing Proportion Whether
Content of Approve Settlement
Type of the principle of in same exceeded Similar
the Transact Transactio d method of the Disclosure Disclosu
Related party Relationship related-party the kind of the market
related-party ion price n amount transacti related-party date re index
transaction related-party transactio approved price
transaction on quota transaction
transaction ns (%) quota
Company
directly
controlled by Purchase of
Thermaster Based on the
actual commodities Purchase of
Electronic market price 4,291.33 2.90 3,849.30 Yes Settled
controller and from the raw parts
(Xiamen) Ltd. and both according to www.cn
their close related party
family parties abide N/A the contract N/A 03/17/2020 info.co
members by the fair and signed by m.cn
reasonable both parties
STAR Sale of principle
Ultimate
COMGISTIC Sale of components
controlling 847.62 0.41 1,387.20 No
CAPITAL CO., commodities and finished
company
LTD. products
Total 5,138.95 5,236.50
Details of large amount of sales returns N/A
As for the prediction on the total amount of routine related-party N/A
transactions to be occurred in the reporting period by relevant
types, the actual performance in the reporting period
Reason for significant difference between the transaction price and N/A
the market price
42
2. Related-party transactions regarding purchase or sales of assets or equity interests
□ Applicable √ Inapplicable
3. Related-party transitions regarding joint investments
□ Applicable √ Inapplicable
4. Credits and liabilities with related parties
√ Applicable □ Inapplicable
Whether was any contract related to the non-operating credits and liabilities with related parties?
□ Yes √ No
5. Other significant related-party transactions
□ Applicable √ Inapplicable
XVII. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Inapplicable
(2) Contracting
□ Applicable √ Inapplicable
(3) Leasing
□ Applicable √ Inapplicable
2. Significant guarantees
√ Applicable □ Inapplicable
(1) Guarantees
43
Unit: RMB’0,000
Guarantees between subsidiaries
Actual
Disclosure date Guarantee
occurrence Actual
Guaranteed of the guarantee Line of Type of Term of Due for a
date (date of guarantee
party line guarantee guarantee guarantee or not related
agreement amount
announcement party or not
signing)
08/07/2019 03/10/2020
PT.STAR
COMGISTIC 03/17/2020 03/27/2020 Pledged 1 year No No
6,196.84 2,884.91
INDONESIA
06/24/2020 07/08/2020
Total actual guarantee
Total guarantee line for subsidiaries
amount for subsidiaries
approved during this Reporting 3,750.00 4,061.49
during this Reporting
Period (C1)
Period (C2)
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries
subsidiaries at the end of this 6,196.84 2,884.91
at the end of this
Reporting Period (C3)
Reporting Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved
3,750.00 amount during this 4,061.49
during this Reporting Period (C1)
Reporting Period (C2)
Total actual guarantee
Total approved guarantee line at the
6,196.84 balance at the end of this 2,884.91
end of this Reporting Period (C3)
Reporting Period (C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in
3.34%
net assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual
0
controller and their related parties (D)
Amount of debt guarantees provided directly or indirectly for
0
entities with a liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net
0
assets (F)
Total amount of the three kinds of guarantees above (D+E+F) 0
Explanation on undue guarantee or possible joint liquidated
None
liability undertaken
Explanation on providing external guarantee violating established
None
procedures
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Inapplicable
44
3. Entrusted cash management
(1) Entrusted asset management
√ Applicable □ Inapplicable
Overview of entrusted assets management in Reporting Period
Unit: RMB’0,000
Type Resource of funds Amount incurred Undue balance Amount overdue
Bank financial product Self-owned fund 70,000.00 70,000.00 0.00
Total 70,000.00 70,000.00 0.00
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
Whether
Actual
there is
Amount of recovery Whether Overview
Amount wealth
actual of go of the
Type Type of Resou Use Break-eve Annual withdrawn manage
Name of the Estimate profits or profits through item and
of the the Amount rce of Initial date Ended Date of n floating yield for impairme ment
trustee profit losses in or losses stator the related
trustee product funds fund proceeds reference nt entrustm
reporting in procedu index for
provision ent plan
period reportin res inquiring
in future
g period
or not
Bank of Struc
Break-e Self-o Payment Recover Subject
Communica tural www.cnin
Bank ven 5,000 wned 06/18/2019 01/15/2020 of interest 4.30% 124.29 124.29 ed upon N/A Yes to the
tion-Putian depo fo.com.cn
floating fund and maturity future
Branch sit
45
Whether
Actual
there is
Amount of recovery Whether Overview
Amount wealth
actual of go of the
Type Type of Resou Use Break-eve Annual withdrawn manage
Name of the Estimate profits or profits through item and
of the the Amount rce of Initial date Ended Date of n floating yield for impairme ment
trustee profit losses in or losses stator the related
trustee product funds fund proceeds reference nt entrustm
reporting in procedu index for
provision ent plan
period reportin res inquiring
in future
g period
or not
proceed principal market
CHINA
s at yield
MINSHEN
maturity and fund
G 4,500 01/18/2019 01/17/2020 4.10% 183.99 183.99
conditio
BANK-Xia
n
men Branch
China
Everbright
Break-e 5,000 04/09/2019 04/09/2020 3.90% 195.00 195.00
Bank-Xiame
n Branch ven
fixed
China proceed
Everbright s 5,000 05/07/2019 05/07/2020 3.80% 190.00 190.00
Bank-Xiame
n Branch
Xiamen
International 9,500 08/12/2019 08/11/2020 4.10% 394.91 394.91
Bank
Xiamen Break-e
International ven 5,000 08/30/2019 08/29/2020 4.00% 202.78 202.78
Bank floating
Xiamen proceed
International s 5,000 05/13/2020 11/9/2020 3.70% 92.50 92.50
Bank
Chiyu
15,000 12/11/2019 12/10/2020 4.35% 661.56 661.56
Banking
46
Whether
Actual
there is
Amount of recovery Whether Overview
Amount wealth
actual of go of the
Type Type of Resou Use Break-eve Annual withdrawn manage
Name of the Estimate profits or profits through item and
of the the Amount rce of Initial date Ended Date of n floating yield for impairme ment
trustee profit losses in or losses stator the related
trustee product funds fund proceeds reference nt entrustm
reporting in procedu index for
provision ent plan
period reportin res inquiring
in future
g period
or not
Corporation
Ltd.-Fuzhou
Branch
Chiyu
Banking
Corporation 5,000 01/09/2020 01/08/2021 4.35% 220.52
Ltd.-Fuzhou
Branch
Chiyu
Banking
Corporation 5,000 08/10/2020 02/10/2021 3.70% 94.56
Ltd.-Fuzhou
Break-e
Branch
ven
Xiamen floating Undue
International proceed 5,000 09/04/2020 09/03/2021 3.40% 171.89
Bank s
Chiyu
Banking
Corporation 5,000 09/08/2020 03/08/2021 3.60% 90.50
Ltd.-Fuzhou
Branch
Xiamen
International 8,500 03/10/2020 03/10/2021 4.00% 344.72
Bank
47
Whether
Actual
there is
Amount of recovery Whether Overview
Amount wealth
actual of go of the
Type Type of Resou Use Break-eve Annual withdrawn manage
Name of the Estimate profits or profits through item and
of the the Amount rce of Initial date Ended Date of n floating yield for impairme ment
trustee profit losses in or losses stator the related
trustee product funds fund proceeds reference nt entrustm
reporting in procedu index for
provision ent plan
period reportin res inquiring
in future
g period
or not
Xiamen
International 6,000 08/18/2020 08/17/2021 3.40% 206.27
Bank
Xiamen
International 5,500 08/20/2020 08/19/2021 3.40% 189.08
Bank
Xiamen
International 5,000 10/23/2020 04/21/2021 3.40% 85.00
Bank
Xiamen
International 5,000 11/11/2020 05/10/2021 3.40% 85.00
Bank
Xiamen
International 5,000 11/19/2020 11/19/2021 3.40% 172.36
Bank
Xiamen
International 5,000 12/10/2020 12/9/2021 3.40% 171.89
Bank
Xiamen
International 5,000 12/11/2020 12/10/2021 3.40% 171.89
Bank
Xiamen
5,000 12/11/2020 09/07/2021 3.40% 127.50
International
48
Whether
Actual
there is
Amount of recovery Whether Overview
Amount wealth
actual of go of the
Type Type of Resou Use Break-eve Annual withdrawn manage
Name of the Estimate profits or profits through item and
of the the Amount rce of Initial date Ended Date of n floating yield for impairme ment
trustee profit losses in or losses stator the related
trustee product funds fund proceeds reference nt entrustm
reporting in procedu index for
provision ent plan
period reportin res inquiring
in future
g period
or not
Bank
Total 124,000 4,176.21 2,045.03
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
□ Applicable √ Inapplicable
49
(2) Entrusted loans
□ Applicable √ Inapplicable
4. Significant contracts relevant to routine operation
□ Applicable √ Inapplicable
5. Other significant contracts
□ Applicable √ Inapplicable
XVIII. Social responsibilities
1. Social responsibilities taken
□ Applicable √ Inapplicable
2. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Inapplicable
3. Details related to environment protection
□ Applicable √ Inapplicable
XIX. Other significant events
□ Applicable √ Inapplicable
XX. Significant events of subsidiaries
□ Applicable √ Inapplicable
50
Section VI. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
1. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.1 Shares held by state
1.2 Shares held by
state-owned corporations
1.3 Shares held by other
domestic investors
Among which: Shares held
by domestic corporations
Shares held by
domestic individuals
1.4 Shares held by foreign
investors
Among which: Shares held
by foreign corporations
Shares held by foreign
individuals
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 listed
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
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
51
Transfer of share ownership
□ Applicable √ Inapplicable
Implementation progress of share repurchases
□ Applicable √ Inapplicable
2. Changes in restricted shares
□ Applicable √ Inapplicable
II. Issuance and listing of securities
1. Securities (excluding preference shares) issued in this reporting period
□ Applicable √ Inapplicable
2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability
structures
□ Applicable √ Inapplicable
3. Existing staff-held shares
□ Applicable √ Inapplicable
III. Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total number of
preference
Total number of
Total number Total number of shareholders with
common shareholders
of common preference shareholders resumed voting
15,144 at the prior month-end 15,097 0 0
shareholders at with resumed voting rights at the prior
before the disclosure
the period-end rights at the period-end month-end before
of this Report
the disclosure of
this Report
5% or greater shareholders or the top 10 shareholders
Sharehol Total Increase/decr Pledged or frozen
Number of Number of
Nature of ding shares held ease during shares
Name of shareholder restricted unrestricted
shareholder percenta at the this reporting
shares shares Status Number
ge (%) period-end period
FORDCHEE
Foreign
DEVELOPMENT 29.10% 53,940,530 Unchanged 0 53,940,530 N/A 0
corporation
LIMITED
EUPA INDUSTRY
Foreign
CORPORATION 13.09% 24,268,840 Unchanged 0 24,268,840 N/A 0
corporation
LIMITED
GUOTAI JUNAN Foreign 5.00% 9,274,899 -154,717 0 9,274,899 N/A 0
52
SECURITIES(HONGKO corporation
NG) LIMITED
FILLMAN
Foreign
INVESTMENTS 2.49% 4,621,596 Unchanged 0 4,621,596 N/A 0
corporation
LIMITED
SHENWAN
HONGYUAN Foreign
1.15% 2,132,752 -116,000 0 2,132,752 N/A 0
SECURITIES (HK) corporation
LIMITED
Domestic
CHEN YONGQUAN 1.03% 1,900,776 Unchanged 0 1,900,776 N/A 0
individual
Foreign
CHEN YONGQING 0.87% 1,607,178 -45,929 0 1,607,178 N/A 0
individual
Foreign
CHEN LIJUAN 0.76% 1,401,134 Unchanged 0 1,401,134 N/A 0
individual
Domestic
DING XIAOLUN 0.61% 1,130,000 43,500 0 1,130,000 N/A 0
individual
Domestic
CHEN RONGZHAO 0.33% 611,400 611,400 0 611,400 N/A 0
individual
Strategic investor or general
corporation becoming a top ten
None
shareholder due to placing of new
shares
The first, the second and the fourth shareholders are the Company’s corporate
Related or acting-in-concert parties controlling shareholders. It is unknown whether the other public shareholders are
among the shareholders above related parties or acting-in-concert parties as prescribed in the Administrative Methods
for Disclosure of the Shareholding Changes of the Listed Company’s Shareholders.
Top 10 unrestricted shareholders
Number of unrestricted Type of shares
Name of shareholder shares held at the
period-end Type Number
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
9,274,899 Domestically listed foreign share 9,274,899
SECURITIES(HONGKONG) LIMITED
FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign share 4,621,596
SHENWAN HONGYUAN SECURITIES
2,132,752 Domestically listed foreign share 2,132,752
(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
DING XIAOLUN 1,130,000 Domestically listed foreign share 1,130,000
CHEN RONGZHAO 611,400 Domestically listed foreign share 611,400
Related or acting-in-concert parties among The first, the second and the fourth shareholders are the Company’s corporate
the top ten unrestricted public shareholders controlling shareholders. It is unknown whether the other public shareholders are
53
and between the top ten unrestricted public related parties or acting-in-concert parties as prescribed in the Administrative
shareholders and the top ten shareholders Methods for Disclosure of the Shareholding Changes of the Listed Company’s
Shareholders.
Top ten common shareholders conducting
None
securities margin trading
2. Information about the controlling shareholder
Nature of controlling shareholder: foreign investment holding
Type of controlling shareholder: corporation
Legal
Name of controlling representative /
Date of establishment Organization code Business scope
shareholder company
principal
Fordchee Development 14676920-000-01-21
Cai Yuansong 01/03/1990 Investment
Limited -0
EUPA Industry Corporation 12959659-000-07-20
Cai Shuhui 07/21/1989 Investment
Limited -1
16269694-000-07-20
Fillman Investments Limited Cai Shuhui 07/21/1992 Investment
-5
Shareholdings of the
controlling shareholder in
other listed companies at home None
or abroad in this reporting
period
There are no notes to the controlling shareholder for the Company
Change of the controlling shareholder during this reporting period
□ Applicable √ Inapplicable
3. Information about the actual controller and its acting-in-concert party
Nature of actual controller: foreign individual
Type of actual controller: individual
Relationship with Right of residence in other countries or
Name of actual controller Nationality
actual controller regions
Wu Tsann Kuen In person Taiwan, China None
Main occupation and duty Promoter of TSANN KUEN Group in China and Taiwan
Used-to-be-holding listed Actual controller of Tsann Kuen (Taiwan) Enterprise Co., Ltd. STAR
companies at home and abroad COMGISTIC CAPITAL (Taiwan) CO., LTD. and Star International Travel
in the last ten years Service (Taiwan) Co., Ltd.
Whether there are shareholders holding over 10% shares at the ultimate control level for the Company
54
□ Yes √ No
Change of the actual controller during this reporting period
□ Applicable √ Inapplicable
No such cases in this reporting period.
Ownership and control relations between the actual controller and the Company
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Inapplicable
4. 10% or greater corporate shareholders
□ Applicable √ Inapplicable
5. Limited shareholding decrease by the Company’s controlling shareholder, actual controller, reorganizer
and other commitment makers
□ Applicable √ Inapplicable
55
Section VII. Preference Shares
□ Applicable √ Inapplicable
No preference shares in this reporting period.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholdings of directors, supervisors and executive officers
□ Applicable √ Inapplicable
II. Changes in directors, supervisors and executive officers
√ Applicable □ Inapplicable
Name Office title Type of change Date Reason
He Zongyuan Director Left 02/28/2020 Personal reasons
Supervisory Left
Xu Xiaowan 02/28/2020 Personal reasons
Board chairman
Left for expiration of Left for expiration of
Xu Degeng Director 04/24/2020
appointment appointment
Independent Left for expiration of Left for expiration of
Tang Jinmu 04/24/2020
director appointment appointment
Independent Left for expiration of Left for expiration of
Bai Shaoxiang 04/24/2020
director appointment appointment
Lin Jidian Director Elected 04/24/2020 Elected
Wang Youliang Director Elected 04/24/2020 Elected
Independent Elected
Liu Luhua Elected 04/24/2020
director
Independent Elected
Wu Yibing Elected 04/24/2020
director
III. Brief biographies
Main working experience of current directors, supervisors and senior management staff
56
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
Pan Chairm Graduated 1990.09-2003.06 TECO Electric & Machinery Co., Ltd. R&D and Business
Zhirong an of from (Taiwan) manager
the Machinery
Board Division of 2003.08-2006.01 Tsann Kuen Enterprise Co., Ltd. Manager of research
&GM ILMJ (Taiwan) institute
2006.02-2008.09 Tsann Kuen Enterprise Co., Ltd. Assistant manager of
(Taiwan) research institute
2008.10-2010.07.25 Tsann Kuen (Zhangzhou) Enterprise Co., Vice GM of Trade
Ltd. Department
2010.07.26-2014.5.20 Tsann Kuen (China) Enterprise Co., Ltd. General manager
2010.07.07-2014.5.27 Tsann Kuen (Zhangzhou) Enterprise Co., Managing director
Ltd.
2011.5.21-2014.5.19 Tsann Kuen (China) Enterprise Co., Ltd. Director
2014.03.05-2020.4.28 East Sino Development Limited (HK) Director
2014.05.20-2017.04.05 Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
2014.05.27-now Tsann Kuen (Zhangzhou) Enterprise Co., Chairman of the Board
Ltd.
2014.06.11-now PT.STAR COMGISTIC INDONESIA Chairman of the Board
2016.08.04-2020.4.21 PT.STAR COMGISTIC PRORERTY Chairman of the Board
DEVELOPMENT INDONESIA
2015.01.21-2019.04.07 Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2019.04.08-2020.4.1 Tsann Kuen China (Shanghai) Enterprise Chairman of the Board
Co., Ltd.
2015.02.25-now Tsannkuen Edge Intelligence Co., Ltd. Chairman of the Board
(Taiwan)
2015.05.20-now Orient Star Investments Limited (HK) Director
2016.03.02-2018.10.30 Xiamen Tsann kuen Home Appliance Chairman of the Board
Design Co., Ltd.
2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board,
GM
2018.03.14-2019.01.01 Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2018.08.14-2020.04.08 Tsann Kuen Japan Co., Ltd. Director
2019.01.02-now Tsann Kuen (Zhangzhou) South Port Chairman of the Board
Electronics Enterprise Co., Ltd.
2018.06.15-2020.04.20 Tsann Kuen (Zhangzhou) Investment Chairman of the Board
Co., Ltd.
2019.01.02-now Shanghai Canxing Trading Co., Ltd. Chairman of the Board
2019.05.15-2019.06.20 Xiamen Tsannkuen Property Services Co., Chairman of the Board
57
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
Ltd.
Lin Jidian Director Graduated 1996.06-1999.08 Changjia Construction Co., Ltd. Special assistant to GM,
from Audit specialist
Department
of Business 1999.08-2000.10 ADDA CORPORATION Manager of Auditing
Management Department, assistant to
Tatung Chairman of the Board
University 2000.10-2002.10 Royal DSM Manager of Auditing
Department, Special
assistant to GM
2002.10-2004.02 GO-IN Technology Co., Ltd. Special assistant to GM,
manager of Administrative
Department, speaker
2004.04-2013.04 Yuen Foong Yu Paper Mfg. Co., Ltd, East Auditing manager,
China Administration of YFY Packaging supervisor, director
Inc., SinoPac Financial Holdings Company
Limited, SinoPac Paper Corporation,
Union Paper Corporation, China Color
Printing Co., Ltd., Mitsukoshi Enterprise
Co., Ltd., Yeon Technologies Co., Ltd.,
Huaci Bills Co., Ltd., FOONGTONE
TECHNOLOGY CO., LTD., Belton Co.,
Ltd. (Taiwan, Japan), YFY Capital Co.,
Ltd., YFY Paper Co., Ltd. (Shanghai,
Nanjing, Suzhou, Jiaxing, Kunshan), YFY
Paper Mfg. Co., Ltd. (Yangzhou),
YUENFOONGYUFAMILYCARE(KUNS
HAN)COLTD, Mitsukoshi Environmental
Protection Engineering Co., Ltd.
(Kunshan), Ningbo Beautone Co., Ltd.,
Beijing Yingge Digital Co., Ltd.,
BOARDTEK ELECTRONICS
CORPORATION, Applied Wireless
IDentifications Group,Inc.(US) Director,
HOPAX
2013.04-2019.01 Planning Research Department and Vice GM
Auditing Department of TaiPei 101
2019.04-2019.12 E-commerce of Business Planning Vice GM
Department of HSIN TUNG YANG Co.,
LTD. (Taiwan)
2019.12-2020.05 Canxing International Travel Service Co., Chairman of the Board
Ltd (Taiwan)
2019.12-2020.4.28 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM
2020.3.31-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Chairman of the Board
2020.4.28-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) CEO
58
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
2020.3.31-now STAR COMGISTIC CAPITAL CO., LTD. Chairman of the Board
(Taiwan)
2020.1.8-now Tsannkuen Edge Intelligence Co., Ltd. Supervisor
(Taiwan)
2020.4.1-now Tsann Kuen Japan Co., Ltd. Director
2020.4.1-now Tsann Kuen (Zhangzhou) South Port Supervisor
Electronics Enterprise Co., Ltd.
2020.4.1-now Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2020.4.1-now Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
Ltd. Board
2020.4.21-now STARCOMGISTIC SINGAPORE Director
PTE.LTD.
2020.4.21-now STARCOMGISTIC AUSTRALIA PTY Director
LTD
2020.4.20-now Wu Wha Ma International Co., Ltd. Director
(Taiwan)
2020.4.21-now Sino Global Development Ltd. (HK) Director
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2020.4.24-now Gold mine chain enterprise Co., Ltd Chairman of the Board
2021.3.11-now Dali Investment Co., Ltd. (Taiwan) Chairman of the Board
Cai Directo Graduated 1988.01.01-1993.02.16 Tsann Kuen (Xiamen) Electric Appliance GM
Yuanson r from Co., Ltd.
g Manchester
State 1993.02.16-2002.05.21 Tsann Kuen (China) Enterprise Co., Ltd. Managing director
University, 1997.09.02-now Thermaster Electronic (Xiamen) Ltd. Director
Minnesota
with a 2002.05.22-2008.05.24 Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
degree in
Business 2002.07.24-2008.07.25 Tsann Kuen (Zhangzhou) Enterprise Co., Chairman of the Board
Administrati Ltd.
on 2011.06-now Chairman of the Board
Sekond Creative Design Co., Ltd.
(Taiwan)
2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2017.04.21-now Tsann Kuen (Zhangzhou) Enterprise Co., Director
Ltd.
2018.08.14-now EUPA Industry Corporation Limited Director
(HK)
2018.08.14-now Fillman Investments Limited (HK) Director
2018.08.14-now FORDCHEE Development Limited Director
(HK)
59
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
2020.02.25-now STAR COMGISTIC CAPITAL CO., Director
LTD. (Taiwan)
2020.02.25-now Tsann Kuen Enterprise Co., Ltd. Director
(Taiwan)
2020.04.01-now Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2020.04.09-now Tsann Kuen Japan Co., Ltd. Chairman of the Board
2020.04.24-now Gold mine chain enterprise Co., Ltd Director
2020.04.29-now WISE LAND PROPERTIES LIMITED Director
(HK)
2020.04.29-now WORLD KINGDOM PROPERTIES Director
LIMITED (HK)
2020.04.29-now East Sino Development Limited (HK) Director
Wang Director Graduated 2001.12-2007.06 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accountant specialist,
Youliang from Griffith section head
University
with a degree 2007.06-2020.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant accounting
in manager & Acting speaker
Accounting, 2010.10-2016.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Financial manager
Finance and
Economics 2011.06-2021.3.31 Dali Investment Co., Ltd. (Taiwan) Director
2016.10-2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior manager of Finance
Department
2018.06-now AXA Insurance Agent Co., Ltd. (Taiwan) Director
2018.12-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant manager of
Finance Department
2019.09.25-now Wu Wha Ma International Co., Ltd. Supervisor
(Taiwan)
2020.4.24-now Gold mine chain enterprise Co., Ltd Supervisor
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2021.3.11-now Dali Investment Co., Ltd. (Taiwan) Supervisor
Ge Indepen Graduated 1980.12-1986.11 Hubei Electric Accountant
Xiaoping dent from
director Zhongnan 1986.11-1989.06 Fuzhou Camera Co., Ltd. Internal auditor
University 1989.06-1997.01 PLA Military Academy of Finance and Teacher
of
Economics
Economics
and Law 1997.01-2000.09 Fujian Mindu CPA Department manager
with a
degree in 2000.09-2007.03 Xiamen Andexin CPA Chief accountant
Finance and 2007.03-2010.03 Fujian Mindu BDO CPA and vice director
Accounting
accountant
60
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
2008.05-2014.05 Tsann Kuen (China) Enterprise Co., Ltd. Independent director
2014.06-2018.06.29 China Shengmu Organic Milk Limited Independent director
2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
2017.2.10-2019.01.16 Fujian Xunxing Zipper Science & Independent director
Technology Co., Ltd.
2010.03-2019.05 BDO-Xiamen Branch Partner and the head of
Xiamen Branch
2019.05-now BDO-Xiamen Branch Senior consultant
Liu Indepen Graduated 1991.09-1992.12 Xiamen Intermediate People’s Court Clerk
Luhua dent from Xiamen
director University 1992.12-1993.06 Orient (Xiamen) Golf Co., Ltd. Legal manager
with a master 1993.06-now Fujian Tianyi Law Firm Partner, vice director
degree in
Civil and 2002.03-now Xiamen Arbitration Commission Arbitrator
Commerce
Law 2009.08-2016.03 Xiamen XGMA Machinery Co., Ltd. Independent director
2012.05-now Part-time associate
Xiamen University Tan Kah Kee College
professor
2013.04-2016.12 DAZHOU XINGYE HOLDINGS Independent director
CO.,LTD
2014.04-2020.01 Xiamen Port Development Co.,Ltd Independent director
2020.07.31-now Xiamen Chengtun Mining Co., Ltd. Independent director
Wu Indepen Graduated 2010.8.26-2014.8.1 Accounting Department of School of Assistant professor
Yibing dent from Fudan Management, Xiamen University
director University
with a doctor 2014.8.1-now Accounting Department of School of Associate professor
degree in Management, Xiamen University
Accounting
Yang Supervi Graduated 1996.07-2003.06 Deloitte Taiwan Audit manager
Yongquan sor from School
of 2003.06-2003.10 Deloitte Taiwan Audit manager
Accounting 2003.10-2005.02 Tsann Kuen Enterprise Co., Ltd. (Taiwan) GM of Accounting
Department, Department
National
Taiwan 2005.03-2006.07 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior manager of
University Accounting Department
2006.08-2007.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant manager of
Accounting Department
2007.11-2009.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior assistant manager of
Accounting Department
2009.12- 2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Accounting
61
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
Department
2012.07.24-2019.10.22 Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
2014.06.11-2019.09.13 PT.STAR COMGISTIC INDONESIA Supervisor
2014.07.08-2019.09.09 Shanghai Canxing Trading Co., Ltd. Director
2015.01.21-2019.09.09 Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2016.04.07-2020.01.07 Tsannkuen Edge Intelligence Co., Ltd. Supervisor
(Taiwan)
2016.08.04-2019.09.13 PT.STAR COMGISTIC PRORERTY Supervisor
DEVELOPMENT INDONESIA
2017.05.28-2019.09.09 Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2018.06.15-2019.09.09 Tsann Kuen (Zhangzhou) Investment Co., Supervisor
Ltd.
2018.08.15-2019.04.08 Tsann Kuen (Zhangzhou) Enterprise Co., Supervisor
Ltd.
2018.12.14-2019.09.30 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Business
Management Department
2019.04.08-2019.09.09 Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
Ltd. Board
2019.06.21-2019.09.05 Xiamen Tsannkuen Property Services Co., Chairman of the Board
Ltd.
2019.12.23-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Accounting
Department
2019.12.23-now STAR COMGISTIC CAPITAL CO., LTD. Vice GM of Business
(Taiwan) Management Department
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd. Supervisory Board
chairman
Ding Supervi Graduated 1991.8.13-2002.10.9 Tsann Kuen Enterprise Co., Ltd. QRA section manager
Hongmin sor from (Taiwan)
g Department
2002.10.10-2003.8.31 Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of glass
of Industrial
Engineering factory
and 2003.9.1-2005.5.26 Tsann Kuen China (Shanghai) Enterprise Vice manager of Motor
Management Co., Ltd. business department
of STUST
2005.5.27-2007.1.12 Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Cuisinart
Ltd. factory
2008.1.13-2009.8.31 Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Iron
Ltd. business department
2009.9.1-2014.8.31 Tsann Kuen (Zhangzhou) Enterprise Co., Manager of Central Lab
Ltd.
62
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
2014.9.1-2015.8.31 PT.STAR COMGISTIC INDONESIA Operations manager
2015.9.1-2016.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of
Ltd. QRA
2017.1.1-2017.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Operations assistant
Ltd. manager of PSO
2018.1.1-now Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of
Ltd. QRA/Purchasing
Department/laboratory
2019.10.22—now Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
Zheng Supervi Graduated 2011.06- now Tsann Kuen (China) Enterprise Co., Ltd. Financial manager
Caiyun sor from School
2008.07-2011.05 Tsann Kuen (China) Enterprise Co., Ltd. Vice Financial Manager
of
Economics 1998.08-2008.06 Tsann Kuen (China) Enterprise Co., Ltd. Account Specialist
and
Management 2014.03.05-2020.4.28 East Sino Development Limited (HK) Director
, Fujian
2017.04.28-now Orient Star Investments Limited (HK) Director
Forestry
College 2016.03.02-2018.10.30 Xiamen Tsann Kuen Home Appliance Supervisor
Design Co., Ltd.
2018.06.15-2020.4.20 Tsann Kuen (Zhangzhou) Investment Director
Co., Ltd.
2016.06-now Tsann Kuen (China) Enterprise Co., Ltd. Staff-representative
Supervisor
2019.9.10-now Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2019.9.10-2020.4.1 Tsann Kuen (Zhangzhou) Enterprise Co., Vice chairman of the
Ltd. Board
2020.4.1-now Tsann Kuen (Zhangzhou) Enterprise Co., Director
Ltd.
2019.09.10-2020.4.1 Shanghai Canxing Trading Co., Ltd. Director
2020.4.1-now Shanghai Canxing Trading Co., Ltd. Supervisor
2019.10.14-now PT.STAR COMGISTIC INDONESIA Supervisor
2019.10.14-now PT.STAR COMGISTIC PRORERTY Supervisor
DEVELOPMENT INDONESIA
Sun Board China 2011.04-now Tsann Kuen (China) Enterprise Co., Ltd. Board Secretary
Meimei Secreta Institute of
ry 2005.07-2011.04 Tsann Kuen (China) Enterprise Co., Ltd. Securities Representative
Information
Management
with a
degree in
Business
Administrati
on
63
Name Positio Educational Main working experience and chief responsibilities in the Company
n background
Wu Financi Graduated 2003.9.1-2006.6.30 Tsann Kuen (Zhangzhou) Enterprise Co., Accounting Department
Jianhua al Chief from Ltd. clerk
Department
2006.7.1-2006.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Head of Cost Section of
of
Accounting Ltd. Accounting Department
of Fuzhou 2007.1.1-2008.6.30 Tsann Kuen (Zhangzhou) Enterprise Co., Head of General Account
University Ltd. Section of Accounting
Department
2008.7.1-2010.5.31 Tsann Kuen (Zhangzhou) Enterprise Co., Head of Sales Section of
Ltd. Accounting Department
2010.6.1-2014.4.30 Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Cost
Ltd. /Accounts Payable in
Accounting Department
2014.5.1-2019.3.21 Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of Cost
/Accounts Payable in
Accounting Department
2019.3.22-now Tsann Kuen (China) Enterprise Co., Ltd. Accounting Department
manager
2019.3.29-now Tsann Kuen (China) Enterprise Co., Ltd. Financial Chief
2019.5.14-now Xiamen Tsann Kuen Property Service Supervisor
Co.,Ltd.
2019.9.10-2020.4.20 Tsann Kuen (Zhangzhou) Investment Supervisor
Co., Ltd.
2019.9.10-now Tsann Kuen (Zhangzhou) Enterprise Co., Supervisor
Ltd.
64
Posts concurrently held in shareholding entities
√ Applicable □ Inapplicable
Allowance from
Starting date of Ending date of
Name Shareholding entity Post the shareholding
tenure tenure
entity
EUPA Industry Corporation Limited
Cai Yuansong Director 2018-08-14 No
(HK)
Cai Yuansong Fillman Investments Limited (HK) Director 2018-08-14 No
Fordchee Development Limited
Cai Yuansong Director 2018-08-14 No
(HK)
Remark:
Posts held concurrently in other entities
√ Applicable □ Inapplicable
Starting Ending Allowance
Name Other entity Post date of date of from other
tenure tenure entity
Tsann Kuen (Zhangzhou)
Pan Zhirong Chairman of the Board 2014-05-27 No
Enterprise Co., Ltd.
PT.STAR COMGISTIC
Pan Zhirong Chairman of the Board 2014-06-11 No
INDONESIA
Tsannkuen Edge Intelligence Co.,
Pan Zhirong Chairman of the Board 2015-02-25 No
Ltd. (Taiwan)
Orient Star Investments Limited
Pan Zhirong Director 2015-05-20 No
(HK)
Tsann Kuen (Zhangzhou) South
Pan Zhirong Port Electronics Enterprise Co., Chairman of the Board 2019-01-02 No
Ltd.
Shanghai Canxing Trading Co.,
Pan Zhirong Chairman of the Board 2019-01-02 No
Ltd.
Tsann Kuen Enterprise Co., Ltd.
Lin Jidian Chairman of the Board 2020-03-31 Yes
(Taiwan)
Tsann Kuen Enterprise Co., Ltd.
Lin Jidian CEO 2020-04-28 Yes
(Taiwan)
STAR COMGISTIC CAPITAL
Lin Jidian Chairman of the Board 2020-03-31 Yes
CO., LTD. (Taiwan)
Tsannkuen Edge Intelligence Co.,
Lin Jidian Supervisor 2020-01-08 No
Ltd. (Taiwan)
Lin Jidian Tsann Kuen Japan Co., Ltd. Director 2020-04-01 No
Tsann Kuen (Zhangzhou) South
Lin Jidian Port Electronics Enterprise Co., Supervisor 2020-04-01 No
Ltd.
Tsann Kuen China (Shanghai)
Lin Jidian Director 2020-04-01 No
Enterprise Co., Ltd.
65
Starting Ending Allowance
Name Other entity Post date of date of from other
tenure tenure entity
Tsann Kuen (Zhangzhou) Vice chairman of the
Lin Jidian 2020-04-01 No
Enterprise Co., Ltd. Board
STARCOMGISTIC SINGAPORE
Lin Jidian Director 2020-04-21 No
PTE.LTD.
STARCOMGISTIC AUSTRALIA
Lin Jidian Director 2020-04-21 No
PTY LTD
Wu Wha Ma International Co.,
Lin Jidian Director 2020-04-20 No
Ltd. (Taiwan)
Sino Global Development Ltd.
Lin Jidian Director 2020-04-21 No
(HK)
Gold mine chain enterprise Co.,
Lin Jidian Director 2020-04-24 No
Ltd (Taiwan)
Lin Jidian Dali Investment Co., Ltd. (Taiwan) Chairman of the Board 2021-03-11 No
Thermaster Electronic (Xiamen)
Cai Yuansong Director 1997-09-02 No
Ltd.
Sekond Creative Design Co., Ltd.
Cai Yuansong Chairman of the Board 2011-06-01 Yes
(Taiwan)
Tsann Kuen (Zhangzhou)
Cai Yuansong Director 2017-04-21 No
Enterprise Co., Ltd.
EUPA Industry Corporation
Cai Yuansong Director 2018-08-14 No
Limited (HK)
Cai Yuansong Fillman Investments Limited (HK) Director 2018-08-14 No
Fordchee Development Limited
Cai Yuansong Director 2018-08-14 No
(HK)
STAR COMGISTIC CAPITAL
Cai Yuansong Director 2020-02-25 Yes
CO., LTD.
Tsann Kuen Enterprise Co., Ltd.
Cai Yuansong Director 2020-02-25 Yes
(Taiwan)
Tsann Kuen China (Shanghai)
Cai Yuansong Director 2020-04-01 No
Enterprise Co., Ltd.
Cai Yuansong Tsann Kuen Japan Co., Ltd. Chairman of the Board 2020-04-09 No
Gold mine chain enterprise Co.,
Cai Yuansong Director 2020-04-24 No
Ltd (Taiwan)
WISE LAND PROPERTIES Director
Cai Yuansong 2020-04-29 No
LIMITED (HK)
WORLD KINGDOM PROPERTIES Director
Cai Yuansong 2020-04-29 No
LIMITED (HK)
East Sino Development Limited
Cai Yuansong Director 2020-04-29 No
(HK)
Wang AXA Insurance Agent Co., Ltd.
Director 2018-06-01 No
Youliang (Taiwan)
66
Starting Ending Allowance
Name Other entity Post date of date of from other
tenure tenure entity
Wang Tsann Kuen Enterprise Co., Ltd. Assistant manager of
2018-12-01 Yes
Youliang (Taiwan) Finance Department
Wang Wu Wha Ma International Co.,
Supervisor 2019-09-25 No
Youliang Ltd. (Taiwan)
Wang Gold mine chain enterprise Co.,
Supervisor 2020-04-24 No
Youliang Ltd (Taiwan)
Wang
Dali Investment Co., Ltd. (Taiwan) Supervisor 2021-03-11 No
Youliang
Ge Xiaoping BDO-Xiamen Branch Senior consultant 2019-05-01 Yes
Liu Luhua Fujian Tianyi Law Firm Partner, vice director 1993-06-01 Yes
Liu Luhua Xiamen Arbitration Commission Arbitrator 2002-03-01 Yes
Xiamen University Tan Kah Kee Part-time associate
Liu Luhua 2012-05-01 Yes
College professor
Xiamen Chengtun Mining Co.,
Liu Luhua Independent director 2020-07-31 Yes
Ltd.
Accounting Department of School
Wu Yibing of Management, Xiamen Associate professor 2014-08-01 Yes
University
Vice GM of
Yang Tsann Kuen Enterprise Co., Ltd.
Accounting 2019-12-23 Yes
Yongquan (Taiwan)
Department
Vice GM of Business
Yang STAR COMGISTIC CAPITAL
Management 2019-12-23 Yes
Yongquan CO., LTD. (Taiwan)
Department
Assistant manager of
Ding Tsann Kuen (Zhangzhou) Quality Assurance
2018-01-01 Yes
Hongming Enterprise Co., Ltd. Department/Purchasing
Department/Laboratory
Zheng Orient Star Investments Limited
Director 2017-04-28 No
Caiyun (HK)
Tsann Kuen (Zhangzhou) South
Zheng
Port Electronics Enterprise Co., Director 2019-09-10 No
Caiyun
Ltd.
Zheng Tsann Kuen (Zhangzhou)
Director 2020-04-01 No
Caiyun Enterprise Co., Ltd.
Zheng Shanghai Canxing Trading Co., Supervisor
2020-04-01 No
Caiyun Ltd.
Zheng PT.STAR COMGISTIC Supervisor
2019-10-14 No
Caiyun INDONESIA
PT.STAR COMGISTIC
Zheng
PRORERTY DEVELOPMENT Supervisor 2019-10-14 No
Caiyun
INDONESIA
Remark:
67
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this reporting period
Applicable √ Inapplicable
IV. Remuneration of directors, supervisors and executive officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and
executive officers
According to the Company Law, the Securities Law and other laws and regulations, the remuneration of the
directors and supervisors shall be decided by the Shareholders’ General Meeting, while the remuneration of the
senior management staffs shall be decided by the Board of Directors. And the remuneration of the directors,
supervisors and senior management staffs is decided by referring the market level and according to the Company’s
human resource management system.
Remuneration of directors, supervisors and executive officers in this reporting period
Unit: RMB’0,000
Total
Remuneration
before-tax
from related
Name Office title Gender Age Incumbent/former remuneration
parties of the
from the
Company
Company
Chairman of
Pan
the Board & Male 54 Incumbent 117.00 No
Zhirong
GM
He
Director Male 66 Former 0.58 Yes
Zongyuan
Xu Director
Male 49 Former 48.00 No
Degeng
Cai Director
Male 64 Incumbent 3.60 No
Yuansong
Lin Jidian Director Male 52 Incumbent 2.47 Yes
Wang Director
Male 52 Incumbent 2.47 Yes
Youliang
Bai Independent
Male 48 Former 3.63 No
Shaoxiang director
Tang Independent
Male 55 Former 4.55 No
Jinmu director
Ge Independent
Female 58 Incumbent 13.92 No
Xiaoping director
Independent
Liu Luhua Male 51 Incumbent 8.23 No
director
Independent
Wu Yibing Male 39 Incumbent 8.23 No
director
68
Total
Remuneration
before-tax
from related
Name Office title Gender Age Incumbent/former remuneration
parties of the
from the
Company
Company
Xu Supervisor
Female 49 Former 0.75 Yes
Xiaowan
Yang Supervisor
Male 56 Incumbent 1.65 Yes
Yongquan
Ding Supervisor
Male 55 Incumbent 41.40 No
Hongming
Zheng Supervisor
Male 45 Incumbent 22.11 No
Caiyun
Wu
Financial Chief Male 41 Incumbent 21.27 No
Jianhua
Sun Board
Female 47 Incumbent 15.95 No
Meimei Secretary
Total 315.81
Equity incentives for directors, supervisors and executive officers in this reporting period
□ Applicable √ Inapplicable
V. Employees
1. Number, functions and educational backgrounds of employees
Item Total
Number of in-service employees of the Company 154
Number of in-service employees of main subsidiaries 4,459
Total number of in-service employees 4,613
Total number of employees with remuneration in this reporting period 5,064
Number of retirees to whom the Company or its main subsidiaries need to pay
0
retirement pension
Educational background Number of employees Function Number of employees
Doctor 0 Sales 95
Master 13 Financial 46
Bachelor 196 Technical 355
College graduates 267 Administrative 683
Below college 4,137 Production 3,434
Total 4,613 Total 4,613
69
2. Employee remuneration policy
The Company has established its remuneration system and formulated Remuneration Management Measures and
Performance Appraisal Management Rules based position division according to the Labor Law, the internal HR
Administrative Rules and relevant laws and regulations in line with the Company’s strategic planning, the HR
allocation on the market, the talent demand, job responsibilities and job qualifications. The staff’s remuneration
level has comprehensively taken the Company’s operating conditions, profitability and internal fairness into
consideration based on the position’s value, job performance and personal ability.
3. Employee training plans
1. New Staff Training (On-site Staff/Cadre/Manager/Fresh Graduate Training Camp);
2. Management Cadre Cultivation and Building;
3. Job Qualification Promotion Training;
4. General Curriculum will be held to improve the staff’s comprehensive quality;
5. 3T Internal Lecturer Training Team Building and Management.
4. Labor outsourcing
□ Applicable √ Inapplicable
70
Section IX. Corporate Governance
I. Basic details of corporate governance
During the reporting period, the Company standardize its operations strictly in accordance with requirements of
relevant law and rules of Company Law, Securities Law, Code of Corporate Governance for Listed Companies in
China, Rules for Listing Shares at Shenzhen Stock Exchange and so on, and endlessly amplified and perfected
administration structure and corporate system of the Company as well as established relatively accomplished
corporate governance structure. According to relevant regulations of CSRC, the Company completed the
establishment of Accountability System for Material Error in Annual Report Information Disclosure, and strictly
in line with relevant regulations in the process of disclosing this annual report. Currently, the situation of
corporate governance structure basically accorded with regulations stipulated in regulatory documents on
governance of listed companies reported by CSRC. There were no governance problems remained unsolved.
The governance of the Company is as follows:
1. Shareholders and Shareholders’ General Meeting
The Company convened Shareholders’ General Meeting in line with Articles of Association of the Company and
Rules of Procedures for Shareholders’ General Meeting, treated all shareholders with equity, guaranteed middle
and small shareholders enjoy equal status and ensured all shareholders be able to exercise their rights.
2. Controlling shareholders and the Company
Controlling shareholders were strictly in accordance with requirements to exercise rights of promoters and
assumed responsibilities. The Company realized independence between controlling shareholder and listed
companies in business, assets, agencies and finance; and independent operation between the Board of Directors of
the Company, the Supervisory Board and internal agency which ensured independence in accounting, assuming
responsibility and bearing risks, so as to ensure legal rights and interests of investors.
3. Directors and the Board of Directors
The Company strictly in accordance with election procedure of directors in Articles of Association of the
Company to elect directors that the number of directors and the structure of the Board of Directors were in line
with requirements of laws and regulations. The Board of Directors earnestly executed Rules of Procedure for the
Board of Directors so as to guaranteed efficient operation and scientific strategic decision. All directors of the
Company performed their responsibilities honestly, sincerely and assiduously, presented the Board of Directors,
the Shareholders’ General Meeting seriously, and participated in relevant trains actively.
4. Supervisors and the Supervisory Board
The Supervisory Board of the Company strictly in line with relevant provisions of Company Law and the Articles
of Association of the Company that the number of supervisors and the structure of the Supervisory Board were in
accordance with requirements of laws and regulations. All supervisors exercised the Rules of Procedure for the
Supervisory Board, earnestly performed their responsibilities. In light of the responsibility for shareholders, all
supervisors conducted inspection and supervision to the legitimacy corporate finance of the Company and other
significant decisions, legally performed responsibilities to directors of the Company and senior management and
supervised the implement of resolutions of the Board of Directors and Shareholders’ General Meeting.
5. Information disclosure and transparency
71
The Company strictly in accordance with requirements of relevant provisions and regulatory documents such as
Rules for Listing Shares at Shenzhen Stock Exchange, Guidelines on Fair Information Disclosure of Listed
Companies, performed responsibilities of information disclosure of the Company truthfully, accurately, timely and
completely, and then guaranteed the equal opportunity of all shareholders of the Company to gain relevant
information of the Company.
6. There isn’t any problem on horizontal competition of the Company
In the reporting period, the Company continuing and strictly in accordance with Company Law, Securities Law,
Basic Standards for Enterprise Internal Control, Supporting Guidelines for Corporate Internal Control as well as
requirements of regulated documents of corporate governance for listed companies published by CSRC, endlessly
accomplished corporate governance structure, actively enforced corporate governance work, and gradually
perfected corporate governance and internal control system, intensified supervision of internal control, promoted
operation efficiency, operation regulation and corporate governance level, endeavor to seek optimized profit and
earnestly protected legal profit of minority shareholders.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of
listed companies
□ Yes √ No
No such cases in this reporting period.
II. Independence of businesses, personnel, asset, organizations and finance which are separate
from the controlling shareholder
The Company is completely separated from its controlling shareholder in aspects such as business, personnel,
assets, institutions and finance.
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Annual and special meetings of shareholders convened during this reporting period
1. Meetings of shareholders convened during this reporting period
Investor Index to the
Disclosure
Meeting Type participation Convened date disclosed
date
ratio information
2019 Annual Meeting of
Annual 44.88% 04/24/2020 04/25/2020 www.cninfo.com.cn
Shareholders
The First Special
Meeting of Shareholders Special 44.90% 08/28/2020 08/29/2020 www.cninfo.com.cn
in 2020
72
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
□ Applicable √ Inapplicable
V. Performance of independent directors in this reporting period
1. Attendance of independent directors in board meetings and meetings of shareholders
Attendance of independent directors in board meetings and meetings of shareholders
Board
Absence
meeting Attendance
Attendanc Attendance at Absence from Sharehol
independent at board
e at board board from board ders’
Independent director meeting
meeting meeting by board meeting meeting
director should attend through a
on site telecommunic meeting for two attended
in this proxy
(times) ation (times) (times) consecutiv (times)
Reporting (times)
e times
Period (times)
Tang Jinmu 1 0 1 0 0 No 0
Bai No
1 0 1 0 0 1
Shaoxiang
Ge Xiaoping 7 5 1 1 0 No 2
Liu Luhua 6 5 0 1 0 No 1
Wu Yibing 6 5 1 0 0 No 1
2. Objections raised by independent directors on issues of the Company
□ Yes √ No
3. Other details about the performance of duties by independent directors
√ Yes □ No
The independent director of the Company focused on the Company’s operation and executed responsibilities
independently and at the same issued independent fair advice on the related transaction, trust management, etc.,
which played a positive role of improving the Company’s governance structure, promoting the scientificity and
objectivity of the policy of the Board of Directors as well as protecting the Company’s and the whole shareholders’
interests. See details of the performance of independent directors on the Work Report on 2020 Independent
Director disclosed on http://www.cninfo.com.cn.
VI. Performance of duties by specialized committees under the Board during this reporting
period
The Board of Directors of the Company consists of three special committees, respectively is Strategy Committee,
Audit Committee, Nomination, Remuneration and Appraisal Committee. Each special committee’s responsibilities
are clear, according to execution rules of duty issued by the Company’s board of directors, the special committee
73
perform his duty, study on professional events, put forward opinions and suggestions as a reference for the
decision-making of the Board.
(1) Performance of the Board of Directors' Strategy Committee
During the reporting period, one meeting was held:
1. The 2021 Annual Budget Report was reported on the First Meeting of the Board of Directors’ Strategy
Committee for 2020 held on 10 December 2020.
(2) Performance of the Board of Directors’ Audit Committee
During the reporting period, six meetings were held:
1. The First Meeting of the Board of Directors’ Audit Committee for 2020 was held on 14 March 2020, on which
the following proposals were reviewed and approved: internal self-evaluation report for 2019, annual report for
2019 and the abstract, annual financial statements for 2019, annual profit distribution planning for 2019, the final
report for 2019 on the audit working of the Company made by Ruihua CPA, Annual Estimated Routine
Related-party Transactions for 2020, changes in accounting policies, the motion on the asset management of the
company-owned fund by the controlling subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. and the motion
on the asset management of the company-owned fund by the controlling grandchildren company Tsann Kuen
China (Shanghai) Enterprise Co., Ltd.
In terms of the annual financial report auditing, the company’s board of directors audit committee fully performed
its supervisory responsibilities and maintained the independence of such audit based on such principle as diligence
and conscientiousness:
① Before the CPA participated in the annual audit, all financial statements formulated by the Company were
carefully reviewed, and relevant review opinions were also issued in written form.
②The audit committee communicated with the accountant in charge of the annual audit of the Company, Ruihua
CPA, and confirmed the schedule for the execution of 2018 auditing works. During such annual audit, the audit
committee fully communicated with the responsible CAP, and urged the execution of such annual audit as
scheduled.
③After Ruihua CPA issued its opinions on primary audit, the audit committee reviewed the Company’s financial
statements again, and issued written review comments.
④After Ruihua Certified Public Accountants issued annual auditing report, objective evaluated the auditing work
in the Company this year.
2. The Second Meeting of the Board of Directors’ Audit Committee for 2020 held on 24 April 2020 elected the
convener of the Fifth Board of Directors’ Audit Committee.
3. The Third Meeting of the Board of Directors’ Audit Committee for 2020 held on 28 April 2020 reviewed and
approved the First Quarter Report for 2020 and the Abstract.
4. The Fourth Meeting of the Board of Directors’ Audit Committee for 2020 held on 4 August 2020 reviewed and
74
approved Semi-annual Report for 2020 and the Abstract.
5. The Fifth Meeting of the Board of Directors’ Audit Committee for 2020 held on 27 October 2020 reviewed and
approved the Third Quarter Report and the Abstract.
6. The Sixth Meeting of the Board of Director’s Audit Committee for 2020 held on 10 December 2020 reviewed
and approved the Audit Scheme for 2021.
(3) Particulars about Nomination, Remuneration and Appraisal Committee of the Board
During reporting period, there were two meetings held by the Nomination, Remuneration and Appraisal
Committee of the Board:
1. The First Meeting of the Nomination, Remuneration and Appraisal Committee of the Board for 2020 held on 14
March 2020 reviewed and approved the summary report on the performance of duties by the Nomination,
Remuneration and Appraisal Committee of the Board for 2019.
2. The Second Meeting of the Nomination, Remuneration and Appraisal Committee of the Board for 2020 held on
24 April 2020 elected the convener of the Fifth Nomination, Remuneration and Appraisal Committee of the
Board.
VII. Performance of duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this reporting period?
□ Yes √ No
VIII. Appraisal and incentive for executive officers
The Company regularly appraised the performance of Senior Management Staffs strictly in accordance with the
relevant laws and regulations as well as existing performance appraisal system. The Board of Directors was
divided into nomination, remuneration and appraise committee, of which conducted appraise and encouragement
to senior management and relevant personnel. The Company also placed limitation to resumption behavior,
authority and responsibility of senior management in line with Articles of Association and internal control system.
IX. Internal control
1. Serious internal control defects found in this reporting period
□ Yes √ No
2. Internal control self-evaluation report
75
Disclosure date of the internal control self-evaluation report 03/20/2021
Index to the disclosed internal control self-evaluation report www.cninfo.com.cn
Total assets of the evaluated entities as a percentage in the consolidated total
100.00%
assets
Operating revenues of the evaluated entities as a percentage in the consolidated
100.00%
operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
Serious defect:
Safety-a number of employee
fatalities
Company reputation- negative news
Serious defect: spread around, the government or
regulators investigated which lead to
Refer to one or several controlling defects public attention, and cause huge loss
groups in the enterprise which lead to the of customers, or need be report.
enterprise's serious deviation from
controlling target. Important defect:
Important defect: Safety-lead to a employ or citizen
disability or fatality
Refer to one or several controlling defects
Nature standard groups, its severity and economic results Company reputation- negative news
lower than great defect which may lead to spread around the state, had
the enterprise’s deviation from controlling complained the media or lead to the
target. contract will be cancelled by the
customers.
Common defect:
Common defect:
Refer to any financial-report related internal
control defect that does not constitute Has occurred or is about to cause
serious defect or important defect. harm to the health of workers or
citizens
Company reputation-negative news
spread around certain region
damaging the Company’s reputation
to some extent
Serious defect:
>5% of total profits of consolidated
statements in recent period Serious defect: RMB5 million
(including RMB5 million) or above.
>1% of total assets of consolidated
statements in recent period Important defect: Within RMB1
million (including RMB1 million) to
>2% of total operation revenue of
RMB5 million (including RMB5
consolidated statements in recent period
Quantitative standard million)
A serious violation of laws, regulations and
Common defect: less than RMB1
rules and the government's policy, was
million
restricted enter industry, suspended business
licenses, forced to shut down.
Important defect:
Within 3%~5% of total profits of
consolidated statements in recent period
76
Within 0.5%~1% of total assets of
consolidated statements in recent period
Within 1%~2% of total operation revenue of
consolidated statements in recent period
Common defect:
＜ 3% of total profits of consolidated
statements in recent period ＜ 0.5% of total
assets of consolidated statements in recent
period ＜ 1% of total operation revenue of
consolidated statements in recent period
A serious violation of laws, regulations and
rules and the government's policy, lead to
fines and penalty
Number of serious
0
financial-report-related defects
Number of serious
non-financial-report-related 0
defects
Number of important
0
financial-report-related defects
Number of important
non-financial-report-related 0
defects
X. Auditor’s report on internal control
√ Applicable □ Inapplicable
Opinion paragraph in the auditor’s report on internal control
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. has maintained effective internal control on financial report in all
significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 Dec.
2020.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 03/20/2021
Index to the disclosed auditor’s report on internal control http://www.cninfo.com.cn
Type of the auditor’s opinion Standard unqualified opinion
Serious non-financial-report-related defects None
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the
Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
77
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Section X. Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue
before the approval date of this Report or were due but could not be redeemed in full?
No
Section XI. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 03/20/2021
Name of audit institution RSM China
No. of audit report RSM Shen Zi [2021] NO. 518Z0032
Name of CPA Chen Lianwu, Ren Xiaochao
II. Financial statements (attached)
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
0
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Section XII. Documents Available for Reference
1. This Annual Report carrying the signature and seal of the Board Chairman;
2. The financial statements signed and sealed by the legal representative, the accounting head for this
Report and the accounting head of the Company; and
3. The originals of all the Company’s documents and announcements which were disclosed on Securities
Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn/ in the reporting period designated by the
CSRC.
Board Chairman: Pan Zhirong
The Board of Directors of Tsann Kuen (China) Enterprise
Co., Ltd.
20 March 2021
1
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Auditor’s Report
TsannKuen (China) Enterprise Co., Ltd.
RSMSZ[2021] NO. 518Z0032
RSM CHINA CPA LLP
CHINABEIJING
2
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Contents
Page
1 Auditor’s report 1-8
2 Consolidated Statement of Financial Position 9
3 Consolidated Statement of Profit or Loss and Other Comprehensive Income 10
4 Consolidated Statement of Cash Flows 11
5 Consolidated Statement of Changes in Owners' Equity 12 - 13
6 Statement of Financial Position of Parent Company 14
7 Statement of Profit or Loss and Other Comprehensive Income of Parent Company 15
8 Statement of Cash Flows of Parent Company 16
9 Statement of Changes in Owners' Equity of Parent Company 17 – 18
10 Notes to the Financial Statements 19 - 138
3
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Auditor’s Report
RSM SZ [2021] NO.518Z0032
To the Shareholders of TsannKuen (China) Enterprise Co., Ltd.:
I. Opinion
We have audited the financial statements of TsannKuen (China) Enterprise Co., Ltd.
(hereafter referred to as “the Company”), which comprises the consolidated and the parent
company’s statement of financial position as of 31 December 2020, the consolidated and the
parent company’s statement of profit or loss and other comprehensive income, the
consolidated and the parent company’s statement of cash flows, the consolidated and the
parent company’s statement of changes in equity for the year then ended, and the notes to
the financial statements.
In our opinion, the accompanying the Company’s financial statements present fairly, in all
material respects, the consolidated and the company’s financial position as of 31 December
202, and of their financial performance and cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics for Professional Accountants of the
Chinese Institute of Certified Public Accountants, and we have fulfilled our other ethical
responsibilities. We believe that the audit evidences we obtained are sufficient and
appropriate to provide a basis for our opinion.
4
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, are of the most
significance in our audit of the financial statements of the current period. These matters are
addressed in the context of our audit of the financial statements as a whole, and informing
our opinion thereon, and we do not provide a separate opinion on these matters.
i) Impairment allowance for inventories
a. Description
Please refer to Note 3.11 “Inventories” of the accounting policies and Note 3.28 “Significant
Accounting Judgments and Estimates” of the accounting assessments and estimation of
impairment allowance for inventories, and please refer to Note 5.7 “Inventories” to the
financial statement of the relevant disclosures.
As of 31 December 2020, the closing balance of inventories in the Company’s consolidated
statement is CNY 255,052,077.36, and impairment allowance for inventories is CNY
26,513,236.52. At the balance sheet date, impairment test is carried out by management and
impairment allowance for inventories is made if the cost is higher than the net realizable
value. Net realizable value is determined by the estimated selling prices minus the estimated
costs of completion, the estimated selling expenses, and related taxes.
Management needs to make significant judgments and assumptions in the forecast,
especially for future selling prices, production costs, operating expenses and related taxes
and fees. Due to the complexity of the impairment test, the annual inventory impairment test
involves key judgments and estimates, and therefore, we listed the inventory impairment
allowance as a key audit item.
b. Audit Response
In response to the Company’s inventory impairment allowance, we have implemented the
following audit procedures:
5
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
a) To understand and evaluate the effectiveness of the design and operation of management's
internal controls related to inventory impairments allowance.
b) To obtain the aging list of inventory and review the aging list and turn over situation, and
to discuss the accounting estimation of inventory impairment allowance with management,
to assess the reasonable of the inventory impairment allowance.
c) To perform the inventory observation procedures, to check the quantities and status of
inventories, and inspect inventory products with high value or idle.
d) For products that were able to obtain open market sales prices, we independently looked
up the open market price information and compare them to the estimated selling prices.
e) For products that were not able to obtain open market sales prices, we selected samples to
compare the estimated selling prices with the actual selling prices in the near future or
subsequent period.
f) To select samples to compare costs of completion with similar raw materials and work in
process in the current year, and assessed the rationality of the costs of completion estimated
by the Company.
ii) Recognition of Revenue
a. Description
Please refer to Note 3.24 of accounting policy of revenue, and please refer to Note 5.32 to
the financial statement of the relevant disclosures.
In 2020, the operating revenue of the consolidated financial statements is CNY
2,144,181,738.33, an increase of 7.11% over the previous period.
Since operating revenue is one of the Company's key performance indicators, and changes
in gross profit margin have a significant impact on the operating results of current period of
the Company, we identify revenue recognition as a key audit matter.
6
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
b. Audit Response
In response to the Company’s recognition of revenues, we have implemented the following
audit procedures:
a) To understand and evaluate the effectiveness of the design and operation of management's
internal control related to revenue recognition.
b) Selecting samples to check the sales contracts and combining with interviews with
management to identify contract terms and conditions related to the transfer of risks and
rewards on product ownership, and to evaluate the timing of transfer of significant risks and
rewards related to product sales confirmation, evaluating whether the timing of the
company's revenue recognition comply with the requirements of corporate accounting
standards.
c) Selecting samples of sales transactions during this year, checking the collection records,
sales invoices, sales receipts, performing confirmation letter or other alternative test
procedures for the closing balance of accounts receivable, and audit the authenticity of sales.
d) Performing analytical procedures, including analyzing monthly revenue, cost, and gross
profit margin fluctuations for the current period; analyzing the revenue, cost, and gross
margin fluctuations between the current period and the previous period. The factor analysis
method is used to analyze the influence of each factor on gross profit, and analyze the
reasonableness of each factor affecting the gross profit.
e) For revenues recognized before and after the balance sheet date, we performed sales
cut-off test, including checking the outbound orders, export declarations and other
supporting documents to assess whether the revenues were included in the appropriate
accounting period.
IV. Other information
Management of the Company is responsible for the other information. The other
7
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
information comprises the information included in the Annual Report of the Company for
the year of 2020, but does not include the financial statements and our auditor’s report
thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in
this regard.
V. Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management of the Company is responsible for the preparation and fair presentation of the
financial statements in accordance with Accounting Standards of Business Enterprises, and
for the design, implementation, and maintenance of such internal controls as management
determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or have no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.
8
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with CSAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
i) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
ii) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
iii) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
iv) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required by the CSA to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
9
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a
going concern.
v) Evaluate the overall presentation, structure and content of the financial statements, and
whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
vi) Obtain sufficient and appropriate audit evidence regarding the financial information of
the entities or business activities within the Company to express an opinion on the financial
statements. We are responsible for the direction, supervision, and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that are of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
10
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(There is no text on this page, it is the stamp and signature page for the report RSM SZ
[2021] NO.518Z0032 of the Company.)
RSM China CPA LLP CICPA:
Chen lian wu
ChinaBeijing CICPA:
Ren xiao chao
20 March 2021
11
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Financial Position
as at 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2020/12/31 2019/12/31 Item Note 2020/12/31 2019/12/31
Current assets: Current liabilities
Cash and cash equivalents 5.1 707,794,598.20 639,623,201.98 Short-term borrowings 5.17 16,345,141.13 -
Held-for-trading financial assets 5.2 720,821,900.00 3,620,689.00 Held-for-trading financial liabilities 5.18 - 638,800.00
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable 5.3 - 274,548.00 Notes payable 5.19 7,521,531.97 16,429,247.30
Accounts receivable 5.4 431,006,560.62 285,995,412.05 Accounts payable 5.20 874,962,887.93 594,978,594.45
Accounts receivable financing Advances from customers 5.21 6,853,100.03 13,294,285.78
Advances to suppliers 5.5 2,622,554.07 3,112,312.06 Contract liabilities 5.22 25,605,755.71 N/a.
Other receivables 5.6 31,938,548.59 29,271,999.53 Employee benefits payable 5.23 51,262,265.67 46,433,996.56
Including: Interests receivable - - Taxes payable 5.24 20,238,247.17 19,660,673.84
Dividend receivable - - Other payables 5.25 52,803,158.48 48,482,744.38
Inventories 5.7 255,052,077.36 222,155,587.38 Including: Interests payables - -
Contract assets - N/a. Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing within Non-current liabilities maturing within one
- - - -
one year year
Other current assets 5.8 18,634,037.60 501,139,597.55 Other current liabilities -
Total current assets 2,167,870,276.44 1,685,193,347.55 Total current liabilities 1,055,592,088.09 739,918,342.31
Non-current assets: Non-current liabilities:
Debt investments Long-term borrowings
Other debt investments Bonds payable
Long-term receivables Including: Preference share
Long-term equity investments - - Perpetual capital securities
12
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item Note 2020/12/31 2019/12/31 Item Note 2020/12/31 2019/12/31
Other equity instrument investment 5.9 40,000.00 40,000.00 Long-term payables - -
Other non-current financial assets Long-term employee benefits payable 5.26 312,775.91 425,896.17
Investment properties 5.10 21,255,610.91 22,991,059.81 Estimated liabilities - -
Fixed assets 5.11 164,338,962.07 185,749,835.56 Deferred income - -
Construction in progress 5.12 728,529.68 2,921,901.51 Deferred tax liabilities 5.15 51,425,551.57 48,835,721.94
Productive biological assets Other non-current liabilities - -
Oil and gas assets Total non-current liabilities 51,738,327.48 49,261,618.11
Intangible assets 5.13 29,346,312.82 30,733,280.24 Total liabilities 1,107,330,415.57 789,179,960.42
Research and development
Owners’ equity
expenditure
Goodwill Share capital 5.27 185,391,680.00 185,391,680.00
Long-term deferred expenses 5.14 6,831,730.07 7,225,915.80 Other equity instruments
Deferred tax assets 5.15 15,590,322.49 20,587,480.85 Including: Preference shares
Other non-current assets 5.16 2,044,702.30 1,006,014.66 Perpetual capital securities
Total non-current assets 240,176,170.34 271,255,488.43 Capital reserves 5.28 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income 5.29 1,823,063.03 7,514,750.01
Specific reserves
Surplus reserves 5.30 49,087,662.68 40,499,488.55
Retained earnings 5.31 330,918,755.61 218,523,906.99
Total owner’s equity attributable to parent
864,030,127.11 748,738,791.34
company
Non-controlling interests 436,685,904.10 418,530,084.22
Total owners’ equity 1,300,716,031.21 1,167,268,875.56
Total assets 2,408,046,446.78 1,956,448,835.98 Total liabilities and owners' equity 2,408,046,446.78 1,956,448,835.98
Legal Representative: Chief Financial Officer： Finance Manager：
13
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2020 2019
I. Revenue 5.32 2,144,181,738.33 2,001,939,841.94
Including: operating revenue 5.32 2,144,181,738.33 2,001,939,841.94
II. Cost of sales 1,996,500,782.99 1,888,431,236.36
Including: operating cost 5.32 1,756,750,317.90 1,665,801,087.18
Taxes and surcharges 5.33 12,053,801.96 11,493,436.80
Selling and distribution expenses 5.34 55,857,793.41 63,389,947.24
General and administrative expenses 5.35 82,381,345.47 83,008,382.58
Research and development expenses 5.36 61,944,782.42 71,898,743.35
Finance costs 5.37 27,512,741.83 -7,160,360.79
Including: Interest expense 5.37 433,614.88 941,366.70
Interest income 5.37 14,782,907.49 5,218,650.55
Add: Other income 5.38 6,241,497.95 4,979,380.03
Investment income/(losses) 5.39 43,371,745.54 18,069,441.54
Including: Investment income from associates
- -
and joint ventures
Gains /(losses) from derecognition of financial
- -
assets measured at amortised cost
Income /(losses) from net exposure hedging - -
Gains/(losses) from changes in fair values 5.40 17,840,011.00 1,541,189.00
Impairment loss of credit 5.41 -41,845.03 -1,186,738.45
Impairment loss of asset 5.42 -9,241,368.18 -13,657,041.57
Gains/(losses) from disposal of assets 5.43 195,318.03 63,688,086.21
III. Profit/(loss) from operations 206,046,314.65 186,942,922.34
Add: Non-operating income 5.44 5,986,192.66 27,300,416.65
Less: Non-operating expenses 5.45 1,317,230.70 834,405.40
IV. Profit/(loss) before tax 210,715,276.61 213,408,933.59
Less: Income tax expenses 5.46 24,744,852.06 49,353,924.80
V. Net profit/(loss) for the year 185,970,424.55 164,055,008.79
(I) Net profit/(loss) by continuity
14
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item Note 2020 2019
Net profit/(loss) from continuing operation 185,970,424.55 164,055,008.79
Net profit/(loss) from discontinued operation
(II) Net profit/(loss) by ownership attribution
Attributable to owners of the parent 139,522,190.75 105,233,212.02
Attributable to non-controlling interests 46,448,233.80 58,821,796.77
VI. Other comprehensive income for the year,
5.47 -7,588,915.97 2,118,961.53
after tax
(a) Attributable to owners of the parent 5.47 -5,691,686.98 1,589,221.15
(i) Items that will not be reclassified
5.47 70,226.49 8,394.48
subsequently to profit or loss
1.Remeasurement of the net defined benefit
5.47 70,226.49 8,394.48
liability (asset)
2. Other comprehensive income using the equity
method which will not be reclassified subsequently to
profit and loss
3. Changes in fair value of other equity
instrument investment
4. Changes in fair value of the Company’s own
credit risks
(ii) Items that may be reclassified subsequently to
5.47 -5,761,913.47 1,580,826.67
profit or loss
1. Other comprehensive income using the
equity method which will be reclassified subsequently
to profit or loss
2. Changes in fair value of other debt
instrument investment
3. Other comprehensive income arising from
the reclassification of financial assets
4. Provision for credit impairment in other debt
investments
5. Reserve for cash flow hedges
6. Exchange differences on translating foreign
5.47 -5,761,913.47 1,580,826.67
operations
(b) Attributable to non-controlling interests 5.47 -1,897,228.99 529,740.38
VII. Total comprehensive income for the year 178,381,508.58 166,173,970.32
Attributable to owners of the parent 133,830,503.77 106,822,433.17
Attributable to non-controlling interests 44,551,004.81 59,351,537.15
VIII. Earnings per share:
Basic earnings per share 14.2 0.75 0.57
Diluted earnings per share 14.2 0.75 0.57
Legal Representative: Chief Financial Officer： Finance Manager：
15
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2020 2019
I. Cash flows from operating activities
Cash received from the sale of goods and the
1,933,508,028.72 1,955,902,503.92
rendering of services
Cash received from tax refund 128,505,987.51 158,146,279.37
Other cash received relating to operating
5.48 79,028,235.30 89,198,956.43
activities
Subtotal of cash inflows from operating
2,141,042,251.53 2,203,247,739.72
activities
Cash payments for goods purchased and services
1,400,547,701.80 1,650,115,355.00
received
Cash payments to and on behalf of employees 282,939,721.63 283,829,082.26
Payments of taxes 33,505,720.46 24,500,977.75
Other cash payments relating to operating
5.48 108,778,024.40 101,182,036.73
activities
Subtotal of cash outflows from operating
1,825,771,168.29 2,059,627,451.74
activities
Net cash flows from operating activities 315,271,083.24 143,620,287.98
II. Cash flows from investing activities
Cash received from disposal and redemption of
566,712,167.00 620,000,000.00
investments
Cash received from returns on investments 20,450,321.92 21,778,521.54
Net cash received from disposals of fixed assets,
3,312,025.54 68,470,997.38
intangible assets and other long-term assets
Net cash received from disposals of subsidiaries
- -
and other business units
Other cash received relating to investing activities 5.48 266,214,151.16 228,047,963.79
Subtotal of cash inflows from investing activities 856,688,665.62 938,297,482.71
Cash payments to acquire fixed, intangible and
45,058,052.50 59,768,023.19
other long-term assets
Cash payments to acquire investments 760,815,847.78 592,665,278.14
Net cash payments to acquire subsidiaries and
-
other business units
Other cash payments relating to investing
5.48 266,214,151.16 228,047,963.79
activities
Subtotal of cash outflows from investing
1,072,088,051.44 880,481,265.12
activities
Net cash flows from investing activities -215,399,385.82 57,816,217.59
III. Cash flows from financing activities
Cash received from capital contributions -
Including: Cash received from absorbing
minority shareholders' equity investment by -
subsidiaries
16
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Cash received from borrowings 97,907,340.00 71,995,400.00
Other cash received relating to financing activities 5.48 - 21,200,000.00
Subtotal of cash inflows from financing activities 97,907,340.00 93,195,400.00
Cash repayments of debts 80,248,680.00 83,696,417.30
Cash payments for dividends, distribution of
45,359,949.52 15,896,786.82
profit and interest expenses
Including: Dividends, distribution of profit paid
26,395,184.93 8,481,119.57
by subsidiaries to minority shareholders
Other cash payments relating to financing activities 5.48 34,993,391.52
Subtotal of cash outflows from financing activities 160,602,021.04 99,593,204.12
Net cash flows from financing activities -62,694,681.04 -6,397,804.12
IV. Effect of foreign exchange rate changes on
-3,999,011.68 -3,907,794.94
cash and cash equivalents
V. Net increase / (decrease) in cash and cash
33,178,004.70 191,130,906.51
equivalents
Plus: Cash and cash equivalents at the beginning
639,623,201.98 448,492,295.47
of the period
VI. Cash and cash equivalents at the end of the
672,801,206.68 639,623,201.98
period
Legal Representative: Chief Financial Officer： Finance Manager：
17
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
2020
Owners’ equity attributable to the parent company
Other equity instruments Specifi
Item Less: Other Non-controlling Total owners’
Preferen Perpetual Capital c Surplus Retained
Share capital Treasury comprehensive Subtotal interests equity
ce capital Others reserves reserv reserves earnings
stock income
shares securities es
I. Balance at 31 December 2019 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 in accounting policy - -
Correction of prior period errors - -
Business combination under common control - -
Others - -
II. Balance at 1 January 2020 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
III. Changes in equity during the reporting period - - - - - - -5,691,686.98 - 8,588,174.13 112,394,848.62 115,291,335.77 18,155,819.88 133,447,155.65
(i) Total comprehensive income -5,691,686.98 139,522,190.75 133,830,503.77 44,551,004.81 178,381,508.58
(ii) Capital contributions or withdrawals by owners - - - - - - - - - - - - -
1. Ordinary shares contributed by shareholders - -
2．Capital contributed by holders of other equity instruments - -
3．Share-based payments recognised in owners’ equity - -
4．Others - -
(iii) Profit distribution - - - - - - - - 8,588,174.13 -27,127,342.13 -18,539,168.00 -26,395,184.93 -44,934,352.93
1．Withdrawal of surplus reserves 8,588,174.13 -8,588,174.13 - -
2．Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00 -26,395,184.93 -44,934,352.93
3．Others - -
(iv) Transfer between owners' equity - - - - - - - - - - - - -
1． Capital reserves transfer to share capital - -
2．Surplus reserves transfer to share capital - -
3．Surplus reserves used to cover accumulated deficits - -
4．Defined benefit plan transfer to retained earnings - -
5. Other comprehensive income transfer to retained earnings - -
6. Others - -
(v) Specific reserves - - - - - - - - - - - - -
1．Withdrawal during the reporting period - -
2．Usage during the reporting period - -
(vi) Others - -
IV. Balance at 31 December 2020 185,391,680.00 - - - 296,808,965.79 - 1,823,063.03 - 49,087,662.68 330,918,755.61 864,030,127.11 436,685,904.10 1,300,716,031.21
18
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2019
Owners’ equity attributable to the parent company
Other equity
instruments
Less: Speci Non-controlling Total owners’
Item Perpet Other
Prefe Capital Treasu fic Surplus Retained interests equity
Share capital ual comprehensiv Subtotal
rence Othe reserves ry reser reserves earnings
capital e income
share rs stock ves
securiti
s
es
I. Balance at 31 December 2018 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 in accounting policy 1,396.19 34,291.54 494,653.29 530,341.02 62,475.21 592,816.23
Correction of prior period errors - -
Business combination under common control - -
Others - -
II. Balance at 1 January 2019 185,391,680.00 - - - 296,808,965.79 - 5,925,528.86 - 37,838,646.13 123,367,204.59 649,332,025.37 367,659,666.64 1,016,991,692.01
III. Changes in equity during the reporting
- - - - - - 1,589,221.15 - 2,660,842.42 95,156,702.40 99,406,765.97 50,870,417.58 150,277,183.55
period
(i) Total comprehensive income 1,589,221.15 105,233,212.02 106,822,433.17 59,351,537.15 166,173,970.32
(ii) Capital contributions or withdrawals by
- - - - - - - - - - - - -
owners
1. Ordinary shares contributed by
- -
shareholders
2．Capital contributed by holders of
- -
other equity instruments
3．Share-based payments recognised in
- -
owners’ equity
4．Others - -
(iii) Profit distribution - - - - - - - - 2,660,842.42 -10,076,509.62 -7,415,667.20 -8,481,119.57 -15,896,786.77
1．Withdrawal of surplus reserves 2,660,842.42 -2,660,842.42 - -
3．Profit distribution to owners (or
-7,415,667.20 -7,415,667.20 -8,481,119.57 -15,896,786.77
shareholders)
4．Others - -
(iv) Transfer between owner' equity - - - - - - - - - - - - -
1． Capital reserves transfer to share
- -
capital
2．Surplus reserves transfer to share capital - -
3．Surplus reserves used to cover
- -
accumulated deficits
4．Defined benefit plan transfer to retained
- -
earnings
5. Other comprehensive income transfer to
- -
retained earnings
6. Others - -
(v) Specific reserves - - - - - - - - - - - - -
1．Withdrawal during the reporting period - -
2．Usage during the reporting period - -
(vi) Others - -
IV. Balance at 31 December 2019 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
Legal Representative: Chief Financial Officer： Finance Manager：
19
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Financial Position of Parent Company
as at 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Assets Note 2020/12/31 2019/12/31 Liabilities and owners' equity Note 2020/12/31 2019/12/31
Current assets: Current liabilities
Cash and cash equivalents 7,767,004.93 7,624,622.27 Short-term borrowings - -
Held-for-trading financial assets - - Held-for-trading financial liabilities - -
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable - 274,548.00 Notes payable - -
Accounts receivable 13.1 2,710,138.48 5,867,958.20 Accounts payable 31,990,751.46 40,632,779.54
Accounts receivable financing Advances from customers 1,101,005.38 1,826,178.67
Advances to suppliers 32,124.35 96,278.32 Contract liabilities 224,884.11 N/a.
Other receivables 13.2 3,311,425.63 2,622,732.62 Employee benefits payable 7,903,368.21 7,403,395.56
Including: Interests receivable - - Taxes payable 1,896,604.41 1,255,578.53
Dividend receivable - - Other payables 168,453,443.56 238,315,460.56
Inventories 1,457,947.89 4,155,837.12 Including: Interests payables - -
Contract asset N/a. Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing Non-current liabilities maturing
- - - -
within one year within one year
Other current assets - - Other current liabilities - -
Total current assets 15,278,641.28 20,641,976.53 Total current liabilities 211,570,057.13 289,433,392.86
Non-current assets: Non-current liabilities:
Debt investments Long-term borrowings
Other debt investments Bonds payable
Long-term receivables Including: Preference share
Long-term equity investments 13.3 923,414,701.56 923,414,701.56 Perpetual capital
20
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Assets Note 2020/12/31 2019/12/31 Liabilities and owners' equity Note 2020/12/31 2019/12/31
securities
Other equity instrument
40,000.00 40,000.00 Long-term payables
investment
Other non-current financial assets Long-term employee benefits payable
Investment properties 25,202,712.69 27,532,926.93 Estimated liabilities
Fixed assets 606,019.76 963,505.93 Deferred income
Construction in progress - 355,339.84 Deferred tax liabilities
Productive biological assets Other non-current liabilities
Oil and gas assets Total non-current liabilities - -
Intangible assets - 2,249.99 Total liabilities 211,570,057.13 289,433,392.86
Research and development
Owners’ equity
expenditure
Goodwill Share capital 185,391,680.00 185,391,680.00
Long-term deferred expenses 641,932.25 590,108.66 Other equity instruments
Deferred tax assets 3,961,079.97 6,125,040.53 Including: Preference shares
Other non-current assets - - Perpetual capital securities
Total non-current assets 953,866,446.23 959,023,873.44 Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other comprehensive income - -
Specific reserves
Surplus reserves 49,087,662.68 40,499,488.55
Retained earnings 251,605,397.88 192,850,998.74
Total owners’ equity 757,575,030.38 690,232,457.11
Total assets 969,145,087.51 979,665,849.97 Total liabilities and owners' equity 969,145,087.51 979,665,849.97
Legal Representative: Chief Financial Officer： Finance Manager：
21
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Profit or Loss and Other Comprehensive Income of Parent Company
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2020 2019
I. Revenue 13.4 68,883,738.63 82,165,558.32
Less: Costs of sales 13.4 51,844,199.89 62,973,095.21
Taxes and surcharges 3,075,220.21 2,067,746.41
Selling and distribution expenses 2,732,391.99 4,110,826.64
Administrative expenses 3,926,459.53 6,602,895.94
Research and development expenses - -
Finance costs -61,043.76 -96,658.30
Including: Interest expense
Interest income 135,260.63 144,864.48
Add: Other income 143,424.10 72,081.85
Investment income/(losses) 13.5 79,185,554.77 25,443,358.87
Including: Investment income from
associates and joint ventures
Gains /(losses) from derecognition of
financial assets measured at amortised cost
Income /(losses) from net exposure hedging
Gains/(losses) from changes in fair values - -
Impairment loss of credit 1,417,920.25 91,100.66
Impairment loss of asset -493,315.66 -1,501,628.65
Gains/(losses) from disposal of assets - -
II. Profit/(loss) from operations 87,620,094.23 30,612,565.15
Add: Non-operating income 545,569.95 703,468.01
Less: Non-operating expenses 119,962.35 94.60
III. Profit/(loss) before tax 88,045,701.83 31,315,938.56
Less: Income tax expenses 2,163,960.56 4,707,514.35
IV. Net profit/(loss) for the year 85,881,741.27 26,608,424.21
Net profit/(loss) from continuing operation 85,881,741.27 26,608,424.21
Net profit/(loss) from discontinued operation
V. Other comprehensive income for the year,
- -
after tax
(i) Items that will not be reclassified
- -
subsequently to profit or loss
1.Remeasurement of the net defined benefit
liability (asset)
22
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2. Other comprehensive income using the equity
method which will not be reclassified subsequently
to profit and loss
3. Changes in fair value of other equity
instrument investment
4. Changes in fair value of the Company’s own
credit risks
(ii) Items that may be reclassified subsequently to
- -
profit or loss
1. Other comprehensive income using the equity
method which will be reclassified subsequently to
profit or loss
2. Changes in fair value of other debt
instrument investment
3. Other comprehensive income arising from
the reclassification of financial assets
4. Provision for credit impairment in other debt
investments
5. Reserve for cash flow hedges
6. Exchange differences on translating foreign
operations
VII. Total comprehensive income for the year 85,881,741.27 26,608,424.21
Legal Representative: Chief Financial Officer： Finance Manager：
23
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Cash Flows of Parent Company
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2020/12/31 2019/12/31
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
65,664,448.37 86,819,019.73
services
Cash received from tax refund -
Other cash received relating to operating activities 13,617,056.31 14,804,925.85
Subtotal of cash inflows from operating activities 79,281,504.68 101,623,945.58
Cash payments for goods purchased and services received 57,547,689.75 80,633,383.09
Cash payments to and on behalf of employees 1,452,471.96 1,893,059.17
Payments of taxes 5,954,002.67 5,594,861.55
Other cash payments relating to operating activities 74,575,393.44 28,378,869.41
Subtotal of cash outflows from operating activities 139,529,557.82 116,500,173.22
Net cash flows from operating activities -60,248,053.14 -14,876,227.64
II. Cash flows from investing activities
Cash received from disposal and redemption of
investments
Cash received from returns on investments 79,185,554.77 25,443,358.87
Net cash received from disposals of fixed assets, intangible
assets and other long-term assets
Net cash received from disposals of subsidiaries and other
business units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities 79,185,554.77 25,443,358.87
Cash payments to acquire fixed, intangible and other
255,950.97 975,913.79
long-term assets
Cash payments to acquire investments 1,500,000.00
Net cash payments to acquire subsidiaries and other
business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 255,950.97 2,475,913.79
Net cash flows from investing activities 78,929,603.80 22,967,445.08
III. Cash flows from financing activities
Cash received from capital contributions
Cash received from borrowings
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities - -
Cash repayments of debts
Cash payments for dividends, distribution of profit and
18,539,168.00 7,415,667.20
interest expenses
Other cash payments relating to financing activities
Subtotal of cash outflows from financing activities 18,539,168.00 7,415,667.20
Net cash flows from financing activities -18,539,168.00 -7,415,667.20
IV. Effect of foreign exchange rate changes on cash and
-36,273.41
cash equivalents
V. Net increase / (decrease) in cash and cash equivalents 142,382.66 639,276.83
Plus: Cash and cash equivalents at the beginning of the
7,624,622.27 6,985,345.44
period
VI. Cash and cash equivalents at the end of the period 7,767,004.93 7,624,622.27
Legal Representative: Chief Financial Officer： Finance Manager：
24
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2020
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
2020
Other equity instruments Other
Less:
Item Prefer Perpetual Capital comprehen Specific Surplus Retained Total owners’
Share capital Othe Treasury
ence capital reserves sive reserves reserves earnings equity
rs stock
shares securities income
I. Balance at 31 December 2019 185,391,680.00 - - - 271,490,289.82 - - - 40,499,488.55 192,850,998.74 690,232,457.11
Add：Changes in accounting policy -
Correction of prior period errors -
Others -
II. Balance at 1 January 2020 185,391,680.00 - - - 271,490,289.82 - - - 40,499,488.55 192,850,998.74 690,232,457.11
III. Changes in equity during the reporting period - - - - - - - - 8,588,174.13 58,754,399.14 67,342,573.27
(i) Total comprehensive income - 85,881,741.27 85,881,741.27
(ii) Capital contributions or withdrawals by owners - - - - - - - - - - -
1. Ordinary shares contributed by
-
shareholders
2．Capital contributed by holders of
-
other equity instruments
3．Share-based payments recognised in owners’ equity -
4．Others -
(iii) Profit distribution - - - - - - - - 8,588,174.13 -27,127,342.13 -18,539,168.00
1．Withdrawal of surplus reserves 8,588,174.13 -8,588,174.13 -
2．Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00
3．Others -
(iv) Transfer between owners' equity - - - - - - - - - - -
1． Capital reserves transfer to share capital -
2．Surplus reserves transfer to share capital -
3．Surplus reserves used to cover accumulated deficits -
4．Defined benefit plan transfer to retained earnings -
5. Other comprehensive income transfer to retained
-
earnings
6. Others -
(v) Specific reserves - - - - - - - - - - -
1．Withdrawal during the reporting period -
2．Usage during the reporting period -
(vi) Others -
IV. Balance at 31 December 2020 185,391,680.00 - - - 271,490,289.82 - - - 49,087,662.68 251,605,397.88 757,575,030.38
25
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2019
Other equity instruments
Less: Other
Item Perpetual Capital Specific Surplus Retained Total
Share capital Preference Treasury comprehensive
capital Others reserves reserves reserves earnings owners’ equity
shares stock income
securities
I. Balance at 31 December 2018 185,391,680.00 271,490,289.82 37,804,354.59 176,010,460.28 670,696,784.69
Add：Changes in accounting policy 34,291.54 308,623.87 342,915.41
Correction of prior period errors -
Others -
II. Balance at 1 January 2019 185,391,680.00 - - - 271,490,289.82 - - - 37,838,646.13 176,319,084.15 671,039,700.10
III. Changes in equity during the reporting period - - - - - - - - 2,660,842.42 16,531,914.59 19,192,757.01
(i) Total comprehensive income - 26,608,424.21 26,608,424.21
(ii) Capital contributions or withdrawals by owners - - - - - - - - - - -
1. Ordinary shares contributed by
-
shareholders
2．Capital contributed by holders of
-
other equity instruments
3．Share-based payments recognised in owners’
-
equity
4．Others -
(iii) Profit distribution - - - - - - - - 2,660,842.42 -10,076,509.62 -7,415,667.20
1．Withdrawal of surplus reserves 2,660,842.42 -2,660,842.42 -
2．Profit distribution to owners (or shareholders) -7,415,667.20 -7,415,667.20
3．Others -
(iv) Transfer between owners' equity - - - - - - - - - - -
1． Capital reserves transfer to share capital -
2．Surplus reserves transfer to share capital -
3．Surplus reserves used to cover accumulated
-
deficits
4．Defined benefit plan transfer to retained earnings -
5. Other comprehensive income transfer to retained
-
earnings
6. Others -
(v) Specific reserves - - - - - - - - - - -
1．Withdrawal during the reporting period -
2．Usage during the reporting period -
(vi) Others -
IV. Balance at 31 December 2019 185,391,680.00 - - - 271,490,289.82 - - - 40,499,488.55 192,850,998.74 690,232,457.11
Legal Representative: Chief Financial Officer： Finance Manager：
26
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
TsannKuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2020
(All amounts are expressed in Renminbi Yuan (“CNY”) unless otherwise stated)
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
TsannKuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established
in the People’s Republic of China (“the PRC”) in 1988 as a wholly owned foreign
investment enterprise, the Company named in TsannKuen China (Xiamen) Ltd., firstly,
invested by the Fordchee (Hongkong) Co., Ltd., EUPA Industry Corporation Limited and
Hong Kong Fillman investment Co., Ltd.. On 16 February 1993, with the approval of the
Ministry of Foreign Trade and Economic Co-operation, the Company was reorganized into
an incorporated company and was renamed as TsannKuen (China) Enterprise Co., Ltd. In
June 1993, the Company issued 40,000,000 new shares pursuant to an international placing
and public offer and these new shares (“B shares”) were then listed on the Shenzhen Stock
Exchange on 30 June 1993. According to the “Intended Implementation of Share Reducing
Proposal” of the 5th extraordinary board of director of 2012 and the 3rd extraordinary
shareholders’ general meeting of 2012, obtained the consent from the Investment Promotion
Bureau of Xiamen which is authorized by the Ministry of Commerce and the approval
documents ”The Approval by Investment Promotion Bureau of Xiamen to Consent the
Capital Reduction of TsannKuen (China) Enterprise Co., Ltd”(IPB audit [2012] NO. 698),
as the base 1,112,350,077 shares of the total original share capital, for implementation of
share reducing model that all registered shareholders who was recorded on 28 December
2012 with the proportion 6:1 to reduce the shares. After the implementation of share
reducing model, total share capital was reduced from 1,112,350,077 shares to 185,391,680
shares of the company. Until 31 December 2020, the Company’s share capital is CNY
185,391,680.
Following 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
27
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
unlisted shares (account for 62.97% of the share capital) held by the Company’s
shareholders, EUPA Industry Corporation Limited, Fordchee Development Limited, and
Fillman Investment Limited to transfer into B shares. On 29 November 2007, these B shares
could be listed and exercised on Shenzhen Stock Exchange. Up to 31 December 2020, total
B shares held 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 (Accounts 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 Company was involved in the following operating activities: developing, manufacturing
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 20 March
2021, in accordance with the Articles of Association, the financial statements will be
submitted to the shareholders meeting for consideration Conference.
1.2 Scope and changes of consolidated financial statements
11 subsidiaries were included in the scope of consolidation as of December 31 2020, please
see Note 7 INTEREST IN OTHER ENTITIES for details. 1 subsidiarie is reduced from the
consolidation scope in 2020. Please see Note 6 CHANGES IN THE SCOPE OF
CONSOLIDATION.
28
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis of Preparation
Based on going concern, according to actually occurred transactions and events, the
Company prepares its financial statements in accordance with the Accounting Standards for
Business Enterprises – Basic standards and concrete accounting standards, Accounting
Standards for Business Enterprises – Application Guidelines, Accounting Standards for
Business Enterprises – Interpretations and other relevant provisions (collectively known as
“Accounting Standards for Business Enterprises, issued by Ministry of Finance of PRC”). In
addition, the Company complies with the Compilation Rules for Information Disclosure by
Companies Offering Securities to the Public No.15 – General Provisions on Financial
Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC) to
disclose its financial information.
2.2 Going Concern
The Company has assessed its ability to continually operate for the next twelve months from
the end of the reporting period, and no matters that may result in doubt on its ability as a
going concern were noted. Therefore, it is reasonable for the Company to prepare financial
statements on the going concern basis.
3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises.
Businesses not mentioned are complied with relevant accounting policies of the Accounting
Standards for Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truthfully and completely reflecting the
Company’s financial position as of 31 December 2020, and its operating results, changes in
shareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting Period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
Normal business cycle is realised by the Company as the period starting from the purchase
of processing assets to the realization of cash or cash equivalents. The company has a
12-month operating cycle, and its assets and liabilities as liquidity criteria for the
classification.
29
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.4 Functional Currency
The Company takes Renminbi Yuan (“CNY”) as the functional currency.
The Company’s overseas subsidiaries choose the currency of the primary economic
environment in which the subsidiaries operate as the functional currency.
3.5 Accounting Treatment of Business Combinations under and not under Common
Control
3.5.1 Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under
common control shall be measured at their carrying amount of the acquired entity at the
combination date. If the accounting policy adopted by the acquired entity is different from
that adopted by the acquiring entity, the acquiring entity shall, according to accounting
policy it adopts, adjust the relevant items in the financial statements of the acquired party
based on the principal of materiality. As for the difference between the carrying amount of
the net assets obtained by the acquiring entity and the carrying amount of the consideration
paid by it, the capital reserve (capital premium or share premium) shall be adjusted. If the
capital reserve (capital premium or share premium) is not sufficient to absorb the difference,
any excess shall be adjusted against retained earnings.
Refer to Note 3.6 (6) for accounting treatment of business combination under common
control by step acquisitions.
3.5.2 Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under
common control shall be measured at their fair value at the acquisition date. If the
accounting policy adopted by the acquired entity is different from that adopted by the
acquiring entity, the acquiring entity shall, according to accounting policy it adopts, adjust
the relevant items in the financial statements of the acquired entity based on the principal of
materiality. The acquiring entity shall recognise the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains from the
acquired entity as goodwill. The acquiring entity shall, pursuant to the following provisions,
treat the negative balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquired entity:
3.5.2.1 It shall review the measurement of the fair values of the identifiable assets, liabilities
and contingent liabilities it obtains from the acquired entity as well as the combination
costs;
30
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.5.2.2 If, after the review, the combination costs are still less than the fair value of the
identifiable net assets it obtains from the acquired entity, the balance shall be recognised in
profit or loss of the reporting period.
Refer to Note 3.6.6 or the accounting treatment of business combination under the same
control by step acquisitions.
3.5.3 Treatment of business combination related costs
The intermediary costs such as audit, legal services and valuation consulting and other
related management costs that are directly attributable to the business combination shall be
charged in profit or loss in the period in which they are incurred. The costs to issue equity or
debt securities for the consideration of business combination shall be recorded as a part of
the value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
3.6.1 Scope of consolidation
The scope of consolidated financial statements shall be determined on the basis of control. It
not only includes subsidiaries determined based on voting power (or similar) or other
arrangement, but also structured entities under one or several contract arrangements.
Control exists when the Company has all the following: power over the investee; exposure,
or rights to variable returns from the Company’s involvement with the investee; and the
ability to use its power over the investee to affect the amount of the investor’s returns.
Subsidiaries are the entities that controlled by the Company (including enterprise, a divisible
part of the investee, and structured entity controlled by the enterprise). A structured entity
(sometimes called a Special Purpose Entity) is an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding who controls the entity.
3.6.2 Special requirement as the parent company is an investment entity
If the parent company is an investment entity, it should measure its investments in particular
subsidiaries as financial assets at fair value through profit or loss instead of consolidating
those subsidiaries in its consolidated and separate financial statements. However, as an
exception to this requirement, if a subsidiary provides investment-related services or
activities to the investment entity, it should be consolidated.
The parent company is defined as investment entity when meets following conditions:
3.6.2.1 Obtains funds from one or more investors for the purpose of providing those
investors with investment management services;
3.6.2.2 Commits to its investors that its business purpose is to invest funds solely for returns
from capital appreciation, investment income or both; and
31
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.2.3 Measures and evaluates the performance of substantially all of its investments on a
fair value basis.
If the parent company becomes an investment entity, it shall cease to consolidate its
subsidiaries at the date of the change in status, except for any subsidiary which provides
investment-related services or activities to the investment entity shall be continued to be
consolidated. The deconsolidation of subsidiaries is accounted for as though the investment
entity partially disposed subsidiaries without loss of control.
When the parent company previously classified as an investment entity ceases to be an
investment entity, subsidiary that was previously measured at fair value through profit or
loss shall be included in the scope of consolidated financial statements at the date of the
change in status. The fair value of the subsidiary at the date of change represents the
transferred deemed consideration in accordance with the accounting for business
combination not under common control.
3.6.3 Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the
financial statements of the Company and its subsidiaries, and using other related
information.
When preparing consolidated financial statements, the Company shall consider the entire
group as an accounting entity, adopt uniform accounting policies and apply the requirements
of Accounting Standard for Business Enterprises related to recognition, measurement and
presentation. The consolidated financial statements shall reflect the overall financial
position, operating results, and cash flows of the group.
3.6.3.1 Like items of assets, liabilities, equity, income, expenses, and cash flows of the
parent are combined with those of the subsidiaries.
3.6.3.2 The carrying amount of the parent’s investment in each subsidiary is eliminated
(off-set) against the parent’s portion of equity of each subsidiary.
3.6.3.3 Eliminate the impact of intragroup transactions between the Company and the
subsidiaries or between subsidiaries, and when intragroup transactions indicate an
impairment of related assets, the losses shall be recognised in full.
3.6.3.4 Adjust special transactions from the perspective of the group.
3.6.4 Method of preparation of the consolidated financial statements when subsidiaries
are acquired or disposed in the reporting period
3.6.4.1 Acquisition of subsidiaries or business
3.6.4.1.1 Subsidiaries or business acquired through business combination under common
32
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
control
a. When preparing consolidated statements of financial position, the opening balance of the
consolidated balance sheet shall be adjusted. Related items of comparative financial
statements shall be adjusted as well, deeming that the combined entity has always existed
ever since the ultimate controlling party began to control.
b. Incomes, expenses, and profits of the subsidiary incurred from the beginning of the
reporting period to the end of the reporting period shall be included into the consolidated
statement of profit or loss. Related items of comparative financial statements shall be
adjusted as well, deeming that the combined entity has always existed ever since the
ultimate controlling party began to control.
c. Cash flows from the beginning of the reporting period to the end of the reporting period
shall be included into the consolidated statement of cash flows. Related items of
comparative financial statements shall be adjusted as well, deeming that the combined entity
has always existed ever since the ultimate controlling party began to control.
3.6.4.1.2 Subsidiaries or business acquired through business combination not under
common control
a. When preparing the consolidated statements of financial position, the opening balance of
the consolidated statements of financial position shall not be adjusted.
b. Incomes, expenses, and profits of the subsidiary incurred from the acquisition date to the
end of the reporting period shall be included into the consolidated statement of profit or
loss.
c. Cash flows from the acquisition date to the end of the reporting period shall be included
into the consolidated statement of cash flows.
3.6.4.3 Disposal of subsidiaries or business
3.6.4.3.1 When preparing the consolidated statements of financial position, the opening
balance of the consolidated statements of financial position shall not be adjusted.
3.6.4.3.2 Incomes, expenses, and profits incurred from the beginning of the subsidiary to the
disposal date shall be included into the consolidated statement of profit or loss.
3.6.4.3.3 Cash flows from the beginning of the subsidiary to the disposal date shall be
included into the consolidated statement of cash flows.
3.6.5 Special consideration in consolidation elimination
3.6.5.1 Long-term equity investment held by the subsidiaries to the Company shall be
recognised as treasury stock of the Company, which offsets with the owner’s equity,
represented as “treasury stock” under “owner’s equity” in the consolidated statement of
33
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
financial position.
Long-term equity investment held by subsidiaries between each other is accounted for
taking long-term equity investment held by the Company to its subsidiaries as reference.
That is, the long-term equity investment is eliminated (off- set) against the portion of the
corresponding subsidiary’s equity.
3.6.5.2 Due to not belonging to paid-in capital (or share capital) and capital reserve, and
being different from retained earnings and undistributed profit, “Specific reserves” and
“General risk provision” shall be recovered based on the proportion attributable to owners
of the parent company after long-term equity investment to the subsidiaries is eliminated
with the subsidiaries’ equity.
3.6.5.3 If temporary timing difference between the book value of the assets and liabilities in
the consolidated statement of financial position and their tax basis is generated as a result of
elimination of unrealized inter-company transaction profit or loss, deferred tax assets of
deferred tax liabilities shall be recognised, and income tax expense in the consolidated
statement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related
to transactions or events directly recognised in owner’s equity or business combination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Company
selling assets to its subsidiaries shall be eliminated against “net profit attributed to the
owners of the parent company” in full. Unrealized inter-company transactions profit or loss
generated from the subsidiaries selling assets to the Company shall be eliminated between
“net profit attributed to the owners of the parent company” and “non-controlling interests”
pursuant to the proportion of the Company in the related subsidiaries. Unrealized
inter-company transactions profit or loss generated from the assets sales between the
subsidiaries shall be eliminated between “net profit attributed to the owners of the parent
company” and “non-controlling interests” pursuant to the proportion of the Company in the
selling subsidiaries.
3.6.5.5 If loss attributed to the minority shareholders of a subsidiary in current period is
more than the proportion of non-controlling interest in this subsidiary at the beginning of the
period, non-controlling interest is still to be written down.
3.6.6 Accounting for Special Transactions
3.6.6.1 Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate
financial statements of the Company, the cost of the long-term equity investment obtained in
purchasing non-controlling interests is measured at the fair value of the consideration paid.
34
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
In the consolidated financial statements, difference between the cost of the long-term equity
investment newly obtained in purchasing non-controlling interests and share of the
subsidiary’s net assets from the acquisition date or combination date continuingly calculated
pursuant to the newly acquired shareholding proportion shall be adjusted into capital reserve
(capital premium or share premium). If capital reserve is not enough to be offset, surplus
reserve and undistributed profit shall be offset in turn.
3.6.6.2 Gaining control over the subsidiary in stages through multiple transactions
3.6.6.2.1 Business combination under common control in stages through multiple
transactions
On the combination date, in the separate financial statement, initial cost of the long-term
equity investment is determined according to the share of carrying amount of the acquiree’s
net assets in the ultimate controlling entity’s consolidated financial statements after
combination. The difference between the initial cost of the long-term equity investment and
the carrying amount of the long-term investment held prior of control plus book value of
additional consideration paid at acquisition date is adjusted into capital reserve (capital
premium or share premium). If the capital reserve is not enough to absorb the difference,
any excess shall be adjusted against surplus reserve and undistributed profit in turn.
In the consolidated financial statements, the assets and liabilities acquired during the
combination should be recognized at their carrying amount in the ultimate controlling
entity’s consolidated financial statements on the combination date unless any adjustment is
resulted from the difference in accounting policies. The difference between the carrying
amount of the investment held prior of control plus book value of additional consideration
paid on the acquisition date and the net assets acquired through the combination is adjusted
into capital reserve (capital premium or share premium). If the capital reserve is not enough
to absorb the difference, any excess shall be adjusted against retained earnings.
If the acquiring entity holds equity investment in the acquired entity prior to the
combination date and the equity investment is accounted for under the equity method,
related profit or loss, other comprehensive income and other changes in equity which have
been recognised during the period from the later of the date of the Company obtaining
original equity interest and the date of both the acquirer and the acquiree under common
control of the same ultimate controlling party to the combination date should be offset
against the opening balance of retained earnings at the comparative financial statements
period respectively.
35
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.6.2.2 Business combination not under common control in stages through multiple
transactions
On the consolidation date, in the separate financial statements, the initial cost of long-term
equity investment is determined according to the carrying amount of the original long-term
investment plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held prior
to the acquisition date shall be re-measured at its fair value on the acquisition date.
Difference between the fair value of the equity interest and its book value is recognised as
investment income. The other comprehensive income related to the equity interest held prior
to the acquisition date calculated through equity method, should be transferred to current
investment income of the acquisition period, excluding other comprehensive income
resulted from the remeasurement of the net assets or net liabilities under defined benefit
plan. The Company shall disclose acquisition-date fair value of the equity interest held prior
to the acquisition date, and the related gains or losses due to the remeasurement based on
fair value.
3.6.6.3 Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of
control, when the Company prepares consolidated financial statements, difference between
consideration received from the disposal and the corresponding share of subsidiary’s net
assets cumulatively calculated from the acquisition date or combination date shall be
adjusted into capital reserve (capital premium or share premium). If the capital reserve is not
enough to absorb the difference, any excess shall be offset against retained earnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
3.6.6.4.1 Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment,
when the consolidated financial statements are prepared, the retained equity interest should
be re-measured at fair value at the date of loss of control. The difference between i) the fair
value of consideration received from the disposal plus non-controlling interest retained; ii)
share of the former subsidiary’s net assets cumulatively calculated from the acquisition date
or combination date according to the original proportion of equity interest, shall be
recognised in current investment income when control is lost.
Moreover, other comprehensive income and other changes in equity related to the equity
investment in the former subsidiary shall be transferred into current investment income
when control is lost, excluding other comprehensive income resulted from the
remeasurement of the movement of net assets or net liabilities under defined benefit plan.
36
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.6.4.2 Disposal in stages
In the consolidated financial statements, whether the transactions should be accounted for as
“a single transaction” needs to be decided firstly.
If the disposal in stages should not be classified as “a single transaction”, in the separate
financial statements, for transactions prior of the date of loss of control, carrying amount of
each disposal of long-term equity investment need to be recognized, and the difference
between consideration received and the carrying amount of long-term equity investment
corresponding to the equity interest disposed should be recognized in current investment
income; in the consolidated financial statements, the disposal transaction should be
accounted for according to related policy in “Disposal of long-term equity investment in
subsidiaries without a loss of control”.
If the disposal in stages should be classified as “a single transaction”, these transactions
should be accounted for as a single transaction of disposal of subsidiary resulting in loss of
control. In the separate financial statements, for each transaction prior of the date of loss of
control, difference between consideration received and the carrying amount of long-term
equity investment corresponding to the equity interest disposed should be recognised as
other comprehensive income firstly, and transferred to profit or loss as a whole when control
is lost; in the consolidated financial statements, for each transaction prior of the date of loss
of control, difference between consideration received and proportion of the subsidiary’s net
assets corresponding to the equity interest disposed should be recognised in profit or loss as
a whole when control is lost.
In considering of the terms and conditions of the transactions as well as their economic
impact, the presence of one or more of the following indicators may lead to account for
multiple transactions as a single transaction:
a. The transactions are entered into simultaneously or in contemplation of one another.
b. The transactions form a single transaction designed to achieve an overall commercial
effect.
c. The occurrence of one transaction depends on the occurrence of at least one other
transaction.
d. One transaction, when considered on its own merits, does not make economic sense, but
when considered together with the other transaction or transactions would be considered
economically justifiable.
3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional capital
injection by the subsidiaries’ minority shareholders.
37
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the
subsidiaries, which resulted in the dilution of equity interest of parent company in these
subsidiaries. In the consolidated financial statements, difference between share of the
corresponding subsidiaries’ net assets calculated based on the parent’s equity interest before
and after the capital injection shall be adjusted into capital reserve (capital premium or share
premium). If the capital reserve is not enough to absorb the difference, any excess shall be
adjusted against retained earnings.
3.7 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents include short-term (generally within three months of maturity at acquisition),
highly liquid investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
3.8 Foreign Currency Transactions and Translation of Foreign Currency Financial
Statements
3.8.1 Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign
currency shall be translated into the amount in the functional currency at the spot exchange
rate of the transaction date, or at an exchange rate which is determined through a systematic
and reasonable method and is approximate to the spot exchange rate of the transaction date
(hereinafter referred to as the approximate exchange rate).
3.8.2 Translation of monetary items denominated in foreign currency on the balance
sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the
balance sheet date. The balance of exchange arising from the difference between the spot
exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses at
the current period. The foreign currency non-monetary items measured at the historical cost
shall still be translated at the spot exchange rate on the transaction date; for the foreign
currency non-monetary items restated to a fair value measurement, shall be translated into
the at the spot exchange rate at the date when the fair value was determined, the difference
between the restated functional currency amount and the original functional currency
amount shall be recorded into the profits and losses at the current period.
3.8.3 Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and
38
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign
operation financial statements denominated in foreign currency (other than functional
currency) shall be translated in accordance with the following method:
3.8.3.1 The asset and liability items in the statement of financial position shall be translated
at the spot exchange rates at the date of that statement of financial position. The owners’
equity items except undistributed profit shall be translated at the spot exchange rates when
they are incurred.
3.8.3.2 The income and expense items in the statement of profit and other comprehensive
income shall be translated at the spot exchange rates or approximate exchange rate at the
date of transaction.
3.8.3.3 Foreign currency cash flows and cash flows of foreign subsidiaries shall be
translated at the spot exchange rate or approximate exchange rate when the cash flows are
incurred. The effect of exchange rate changes on cash is presented separately in the
statement of cash flows as an adjustment item.
3.8.3.4 The differences arising from the translation of foreign currency financial statements
shall be presented separately as “other comprehensive income” under the owners’ equity
items of the consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the
exchange differences relating to that foreign operation recognised under other
comprehensive income in the statement of financial position, shall be reclassified into
current profit or loss according to the proportion disposed.
3.9 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity
and a financial liability or equity instrument of another entity.
3.9.1 Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial
position when, and only when, an entity becomes party to the contractual provisions of the
instrument.
A financial asset can only be derecognised when meets one of the following conditions:
3.9.1.1 The rights to the contractual cash flows from a financial asset expire
3.9.1.2 The financial asset has been transferred and meets one of the following
derecognition conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is
extinguished—i.e., when the obligation specified in the contract is discharged or cancelled
39
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
or expires. An exchange of the Company (borrower) and lender of debt instruments that
carry significantly different terms or a substantial modification of the terms of an existing
liability are both accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability.
Purchase or sale of financial assets in a regular way shall be recognised and derecognised
using trade date accounting. A regular purchase or sale of financial assets is a transaction
under a contract whose terms require delivery of the asset within the time frame established
generally by regulations or convention in the marketplace concerned. Trade date is the date
at which the entity commits itself to purchase or sell an asset.
3.9.2 Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business
model for managing the financial asset and the contractual cash flow characteristics of the
financial asset: financial asset at amortised cost, financial asset at fair value through profit or
loss (FVTPL) and financial asset at fair value through other comprehensive income
(FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective of
the entity’s business model for managing those financial assets changes. In this
circumstance, all affected financial assets shall be reclassified on the first day of the first
reporting period after the changes in business model; otherwise, the financial assets cannot
be reclassified after initial recognition.
Financial assets shall be measured at initial recognition at fair value. For financial assets
measured at FVTPL, transaction costs are recognised in current profit or loss. For financial
assets not measured at FVTPL, transaction costs should be included in the initial
measurement. Notes receivable or accounts receivable that arise from sales of goods or
rendering of services are initially measured at the transaction price defined in the accounting
standard of revenue where the transaction does not include a significant financing
component.
Subsequent measurement of financial assets will be based on their categories:
3.9.2.1 Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the
following conditions are met: the financial asset is held within the business model whose
objective is to hold financial assets in order to collect contractual cash flows, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are
solely payment of principal and interest on the principal amount outstanding. These
financial assets are subsequently measured at amortised cost by adopting the effective
40
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
interest rate method. Any gain or loss arising from derecognition according to the
amortisation under effective interest rate method or impairment are recognised in current
profit or loss.
3.9.2.2 Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are
solely payment of principal and interest on the principal amount outstanding. All changes in
fair value are recognised in other comprehensive income except for gain or loss arising from
impairment or exchange differences, which should be recognised in current profit or loss. At
derecognition, cumulative gain or loss previously recognised under OCI is reclassified to
current profit or loss. However, interest income calculated based on the effective interest
rate is included in current profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity
instrument investments as measured through FVTOCI. All changes in fair value are
recognised in other comprehensive income except for dividend income recognised in current
profit or loss. At derecognition, cumulative gain or loss are reclassified to retained earnings.
3.9.2.3 Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for abovementioned financial asset at amortised cost or financial asset
at fair value through other comprehensive income (FVTOCI), should be classified as
financial asset at fair value through profit or loss (FVTPL). These financial assets should be
subsequently measured at fair value. All the changes in fair value are included in current
profit or loss.
3.9.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through
profit or loss (FVTPL), loan commitments at a below-market interest rate and financial
guarantee contracts and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
3.9.3.1 Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and
financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After
initial recognition, any gain or loss (including interest expense) are recognised in current
profit or loss except for those hedge accounting is applied. For financial liability that is
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
designated as at FVTPL, changes in the fair value of the financial liability that is attributable
to changes in the own credit risk of the issuer shall be presented in other comprehensive
income. At derecognition, cumulative gain or loss previously recognised under OCI is
reclassified to retained earnings.
3.9.3.2 Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under
specified contract terms. The provision of impairment losses of loan commitments shall be
recognised based on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to make
payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts liability shall be subsequently measured at the higher of: The
amount of the loss allowance recognised according to the impairment principles of financial
instruments; and the amount initially recognised less the cumulative amount of income
recognised in accordance with the revenue principles.
3.9.3.3 Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost
using the effective interest method.
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
3.9.3.3.1 If the Company has no unconditional right to avoid delivering cash or another
financial instrument to fulfill a contractual obligation, this contractual obligation meets the
definition of financial liabilities. Some financial instruments do not comprise terms and
conditions related to obligations of delivering cash or another financial instrument explicitly,
yet they may include contractual obligation indirectly through other terms and conditions.
3.9.3.3.2 If a financial instrument must or may be settled in the Company's own equity
instruments, it should be considered that the Company’s own equity instruments are
alternatives of cash or another financial instrument, or to entitle the holder of the equity
instruments to sharing the remaining rights over the net assets of the issuer. If the former is
the case, the instrument is a liability of the issuer; otherwise, it is an equity instrument of the
issuer. Under some circumstances, it is regulated in the contract that the financial instrument
must or may be settled in the Company's own equity instruments, where the amount of
contractual rights and obligations are calculated by multiplying the number of the equity
instruments to be available or delivered by its fair value upon settlement. Such contracts
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
shall be classified as financial liabilities, regardless whether the amount of contractual rights
and liabilities is fixed, or fluctuate totally or partially with variables other than market price
of the entity’s own equity instruments (such as interest rate, price of some kind of goods or
some kind of financial instrument).
3.9.4 Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative
contracts are signed and subsequently measured at fair value. The derivative with a positive
fair value shall be recognized as an asset, and with a negative fair value shall be recognised
as a liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised
directly into current profit or loss except for the effective portion of cash flow hedges which
shall be recognised in other comprehensive income and reclassified into current profit or
loss when the hedged items affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a host,
the Company shall apply the requirements of financial asset classification to the entire
hybrid contract. If a host that is not a financial asset and the hybrid contract is not measured
at fair value with changes in fair value recognised in profit or loss, and the economic
characteristics and risks of the embedded derivative are not closely related to the economic
characteristics and risks of the host, and a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative, the embedded derivative
shall be separated from the hybrid instrument and accounted for as a separate derivative
instrument. If the Company is unable to measure the fair value of the embedded derivative
at the acquisition date or subsequently at the balance sheet date, the entire hybrid contract is
designated as financial assets or financial liabilities at fair value through profit or loss.
3.9.5 Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses for financial
asset that is measured at amortised cost, debt investment at fair value through other
comprehensive income, contract asset, lease receivable, loan commitment, and financial
guarantee contract.
3.9.5.1 Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial instruments
with the respective risks of a default occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the Company expects to receive, which is all cash
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
shortfalls, discounted at the original effective interest rate or credit-adjusted effective
interest rate for purchased or originated credit-impaired financial assets.
Lifetime expected credit losses are the expected credit losses that result from all possible
default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that
represent the expected credit losses that result from default events on a financial instrument
that are possible within the 12 months after the reporting date (or the expected lifetime if the
expected life of a financial instrument is less than 12 months).
At each reporting date, the Company classifies financial instruments into three stages and
makes provisions for expected credit losses accordingly. A financial instrument of which the
credit risk has not significantly increased since initial recognition is at stage 1. The
Company shall measure the loss allowance for that financial instrument at an amount equal
to 12-month expected credit losses. A financial instrument with a significant increase in
credit risk since initial recognition but is not considered to be credit-impaired is at stage 2.
The Company shall measure the loss allowance for that financial instrument at an amount
equal to the lifetime expected credit losses. A financial instrument is considered to be credit
impaired as at the end of the reporting period is at stage 3. The Company shall measure the
loss allowance for that financial instrument at an amount equal to the lifetime expected
credit losses.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low
credit risk at the reporting date and measure the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses.
For financial instruments at stage 1, stage 2 and those have low credit risk, the interest
revenue shall be calculated by applying the effective interest rate to the gross carrying
amount of a financial asset (ie, impairment loss not been deducted). For financial
instruments at stage 3, interest revenue shall be calculated by applying the effective interest
rate to the amortised costs after deducting of impairment loss.
For notes receivable, accounts receivable and accounts receivable financing, no matter it
contains a significant financing component or not, the Company shall measure the loss
allowance at the amount that equals to the lifetime expected credit losses.
3.9.5.1.1 Receivables/Contract Assets
For the notes receivable, accounts receivable, other receivables, accounts receivable
financing, contract assets and long-term receivables which are demonstrated to be impaired
44
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
by any objective evidence, or applicable for individual assessment, the Company shall
individually assess for impairment and recognise the loss allowance for expected credit
losses. If the Company determines that no objective evidence of impairment exists for notes
receivable, accounts receivable, other receivables, accounts receivable financing, contract
assets, and long-term receivables, or the expected credit loss of a single financial asset
cannot be assessed at reasonable cost, such notes receivable, accounts receivable, other
receivables, accounts receivable financing, contract assets, and long-term receivables shall
be divided into several groups based on similar credit risk characteristics and calculate
collectively on the expected credit loss. The determination basis of groups is as following:
a. Notes Receivables
The Company measures the loss impairment in accordance with the amount equivalent to
the lifetime expected credit losses for notes receivables. The notes receivables are divided
into different groups based on credit risk characteristics:
Item Basis for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk.
Commercial acceptance bill According to the credit risk of the acceptor, it should be the same as
the " accounts receivable" combination.
b. Accounts Receivables
For accounts receivables 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 receivables and lease receivables that contain significant financing
components, the Company continuously chooses to measure the loss impairment in
accordance with the amount equivalent to the expected credit loss in the whole duration.
Other than the accounts receivable whose credit risk is assessed individually, the other
accounts receivables are grouped based on their credit risk characteristics:
Group Basis for determining the groups
This group uses the accounts receivables aging as the credit risk
Aging of Accounts Receivables
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be received).
c. Other Receivables
The Company assesses whether the credit risk of other receivables has significantly
increased since initial recognition, and utilizes the amount equivalent to the expected credit
45
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
loss in the next 12 months or the whole duration to measures the impairment loss
accordingly. Besides the other receivables that have individually assessed credit risk, the
rest of the other receivables are classified into different goups based on their credit risk
characteristics:
Group Basis for determining the groups
This group of receivables includes deposit receivables, advances on
Deposit guarantee
behalf of others and quality guarantee deposits to be collected in
daily activies.
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
Open credits
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be covered)
3.9.5.1.2 Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected
credit loss through the default exposure and the 12-month or lifetime expected credit loss
rate based on the nature of the investment, counterparty, and the type of risk exposure.
3.9.5.2 Low credit risk
If the financial instrument has a low risk of default, and the borrower has a strong capacity
to meet its contractual cash flow obligations in the near term and adverse changes in
economic and business conditions in the longer term may, but will not necessarily, reduce
the ability of the borrower to fulfill its contractual cash flow obligations, then the financial
instrument is considered to have low credit risk.
3.9.5.3 Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased
significantly since initial recognition, using the change in the risk of a default occurring over
the expected life of the financial instrument, through the comparison of the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable
information, that is available without undue cost or effort, and that is indicative of
significant increases in credit risk since initial recognition, including forward-looking
information. The information considered by the Company are as following:
46
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
a) Significant changes in internal price indicators of credit risk as a result of a change
in credit risk since inception;
b) Existing or forecast adverse change in the business, financial or economic
conditions of the borrower that results in a significant change in the borrower’s
ability to meet its debt obligations;
c) An actual or expected significant change in the operating results of the borrower;
An actual or expected significant adverse change in the regulatory, economic, or
technological environment of the borrower；
d) Significant changes in the value of the collateral supporting the obligation or in the
quality of third-party guarantees or credit enhancements, which are expected to
reduce the borrower’s economic incentive to make scheduled contractual payments
or to otherwise have an effect on the probability of a default occurring;
e) Significant change that are expected to reduce the borrower’s economic incentive to
make scheduled contractual payments;
f) Expected changes in the loan documentation including an expected breach of
contract that may lead to covenant waivers or amendments, interest payment
holidays, interest rate step-ups, requiring additional collateral or guarantees, or
other changes to the contractual framework of the instrument；
g) Significant changes in the expected performance and behaviour of the borrower；
h) Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the
credit risk has increased significantly since initial recognition on an individual financial
instrument or a group of financial instruments. When assessed based on a group of financial
instruments, the Company can group financial instruments on the basis of shared credit risk
characteristics, for example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments are more than 30 days past
due. The Company can only rebut this presumption if the Company has reasonable and
supportable information that is available without undue cost or effort, that demonstrates that
the credit risk has not increased significantly since initial recognition even though the
contractual payments are more than 30 days past due.
3.9.5.4 Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred
47
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
for financial asset at amortised cost and debt investment at fair value through other
comprehensive income. A financial asset is credit-impaired when one or more events that
have a detrimental impact on the estimated future cash flows of that financial asset have
occurred. Evidence that a financial asset is credit-impaired include observable data about the
following events:
Significant financial difficulty of the issuer or the borrower; a breach of contract, such as a
default or past due event; the lender(s) of the borrower, for economic or contractual reasons
relating to the borrower’s financial difficulty, having granted to the borrower a concession(s)
that the lender(s) would not otherwise consider；it is becoming probable that the borrower
will enter bankruptcy or other financial reorganization; the disappearance of an active
market for that financial asset because of financial difficulties; the purchase or origination of
a financial asset at a deep discount that reflects the incurred credit losses.
3.9.5.5 Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition,
the Company shall at each reporting date remeasure the expected credit loss and recognise
in profit or loss, as an impairment gain or loss, the amount of expected credit losses or
addition (or reversal). For financial asset at amortised cost, the loss allowance shall reduce
the carrying amount of the financial asset in the statement of financial position; for debt
investment at fair value through other comprehensive income, the loss allowance shall be
recognised in other comprehensive income and shall not reduce the carrying amount of the
financial asset in the statement of financial position.
3.9.5.6 Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering the contractual cash flow of a
financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition
of the financial asset. This circumstance usually occurs when the Company determines that
the debtor has no assets or sources of income that could generate sufficient cash flow to
repay the write-off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of
impairment loss.
3.9.6 Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to
48
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
receive the cash flows of the financial asset, but assumes a contractual obligation to pay
the cash flows to one or more recipients.
3.9.6.1 Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial
asset, or neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset but has not retained control of the financial asset, the financial asset shall
be derecognised.
Whether the Company has retained control of the transferred asset depends on the
transferee’s ability to sell the asset. If the transferee has the practical ability to sell the asset
in its entirety to an unrelated third party and is able to exercise that ability unilaterally and
without needing to impose additional restrictions on the transfer, the Company has not
retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition
based on the substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference
between the following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
The sum of consideration received and the part derecognised of the cumulative changes
in fair value previously recognised in other comprehensive income (The financial assets
involved in the transfer are classified as financial assets at fair value through other
comprehensive income in accordance with Article 18 of the Accounting Standards for
Business Enterprises - Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies
for derecognition, the previous carrying amount of the larger financial asset shall be
allocated between the part that continues to be recognised (For this purpose, a retained
servicing asset shall be treated as a part that continues to be recognised) and the part that is
derecognised, based on the relative fair values of those parts on the date of the transfer. The
difference between following two amounts shall be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part
derecognised；
The sum of the consideration received for the part derecognised and part derecognised
of the cumulative changes in fair value previously recognised in other comprehensive
income (The financial assets involved in the transfer are classified as financial assets at
fair value through other comprehensive income in accordance with Article 18 of the
49
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Accounting Standards for Business Enterprises - Recognition and Measurement of
Financial Instruments).
3.9.6.2 Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of
ownership of a transferred asset, and retains control of the transferred asset, the Company
shall continue to recognise the transferred asset to the extent of its continuing involvement
and also recognise an associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent to
which it is exposed to changes in the value of the transferred asset.
3.9.6.3 Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the
transferred financial asset, the Company shall continue to recognise the transferred asset in
its entirety and the consideration received shall be recognised as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent
accounting period, the Company shall continuously recognise any income (gain) arising
from the transferred asset and any expense (loss) incurred on the associated liability.
3.9.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of
financial position and shall not offset each other. When the following conditions are met,
financial assets and financial liabilities shall be offset and the net amount presented in the
statement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts.
The Company intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the
Company shall not offset the transferred asset with the associated liability.
3.9.8 Determination of fair value of financial instruments
Refer to Note 3.10 for determination of financial assets and financial liabilities.
3.10 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market
value in the principal market, or in the absence of a principal market, in the most
advantageous market price for the related asset or liability. The fair value of an asset or a
50
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
The principal market is the market in which transactions for an asset or liability take place
with the greatest volume and frequency. The most advantageous market is the market which
maximizes the value that could be received from selling the asset and minimizes the value
which is needed to be paid in order to transfer a liability, considering the effect of transport
costs and transaction costs both.
If the active market of the financial asset or financial liability exists, the Company shall
measure the fair value using the quoted price in the active market. If the active market of the
financial instrument is not available, the Company shall measure the fair value using
valuation techniques.
A fair value measurement of a non-financial asset takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.
3.10.1 Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, including the market approach, the
income approach, and the cost approach. The Company shall use valuation techniques
consistent with one or more of those approaches to measure fair value. If multiple valuation
techniques are used to measure fair value, the results shall be evaluated considering the
reasonableness of the range of values indicated by those results. A fair value measurement is
the point within that range that is most representative of fair value in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant
observable inputs. The unobservable inputs can only be used when relevant observable
inputs are not available or practically would not be obtained. Observable inputs refer to the
information which is available from market and reflects the assumptions that market
participants would use when pricing the asset or liability. Unobservable Inputs refer to the
information which is not available from market and it has to be developed using the best
information available in the circumstances from the assumptions that market participants
would use when pricing the asset or liability.
3.10.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises the inputs to valuation
techniques used to measure fair value into three levels. The fair value hierarchy gives the
highest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to
51
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date. Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or
liability.
3.11 Inventories
3.11.1 Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business, in
the process of production for such sale, or in the form of materials or supplies to be
consumed in the production process or in the rendering of services, including raw materials,
work in progress, semi-finished goods, finished goods, low value consumption goods, goods
in transit, etc.
3.11.2 Measurement method of cost of inventories sold or used
The cost of inventories used or sold is determined on the weighted average basis.
3.11.3 Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once
a year, and surplus or losses of inventory stocktaking shall be included in current profit and
loss.
3.11.4 Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over
net realizable value of the inventories is recognised as provision for impairment of inventory,
and recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable evidence
obtained, and factors such as purpose of holding the inventory and impact of post balance
sheet event shall be considered.
3.11.4.1 The net realizable value of finished goods, products and materials for direct sale is
determined at estimated selling prices less estimated selling expenses and relevant taxes and
surcharges in normal operation process. The net realizable value for inventories held to
execute sales contract or service contract is calculated on the basis of contract price. If the
quantities of inventories specified in sales contracts are less than the quantities held by the
Company, the net realizable value of the excess portion of inventories shall be based on
general selling prices. Net realizable value of materials held for sale shall be measured
based on market price.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.11.4.2 For materials in stock need to be processed, in the ordinary course of production
and business, net realisable value is determined at the estimated selling price less the
estimated costs of completion, the estimated selling expenses and relevant taxes. If the net
realisable value of the finished products produced by such materials is higher than the cost,
the materials shall be measured at cost; if a decline in the price of materials indicates that
the cost of the finished products exceeds its net realisable value, the materials are measured
at net realisable value and differences shall be recognised at the provision for impairment.
3.11.4.3 Provisions for inventory impairment are generally determined on an individual
basis. For inventories with large quantity and low unit price, the provisions for inventory
impairment are determined on a category basis.
3.11.4.4 If any factor rendering write-downs of the inventories has been eliminated at the
reporting date, the amounts written down are recovered and reversed to the extent of the
inventory impairment, which has been provided for. The reversal shall be included in profit
or loss.
3.11.5 Amortisation method of low-value consumables
Low-value consumables: One-off writing off method is adopted.
Package material: One-off writing off method is adopted.
3.12 Contract Assets and Contract Liabilities
Effective on 1st January 2020
The Company presents contract assets or contract liabilities in the balance sheet in
accordance with the relationship between performance obligations and customer payments.
The Company has the right to charge for the transfer of goods or services to customers (and
the right depends on factors other than the passage of time) are presented as contract assets.
The company's obligations to transfer goods or provide services to customers for
consideration received or receivable from customers are presented as contract liabilities.
Refer to Note 3.9 for the determination and accounting treatments of the company's
expected credit loss of contract assets.
Contract assets and contract liabilities are presented separately in the balance sheet. Contract
assets and contract liabilities under the same contract are presented as net amount. If the
netted amount has the debit balance, then it is reported as "contract assets" or "other
non-current assets" based on its liquidity; if the netted amount has a credit balance, it is
listed in the item of "contract liabilities" or "other non-current liabilities" based on its
liquidity. Contract assets and contract liabilities under different contracts shall not offset
each other.
53
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.13 Contract Cost
Effective on 1st January 2020
Contract costs contain contract enforcement costs and contract acquisition costs.
The cost incurred by the Company for the enforcement of the contract is recognized as an
asset as the contract enforcement cost when the following conditions are simultaneously
met:
3.13.1 The cost is directly related to a current or anticipated contract, including direct labor,
direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the
customer, and other costs incurred solely due to the contract.
3.13.2 The cost increases the company's future resources for fulfilling contract enforcement
obligations.
3.13.3 The cost is expected to be recovered.
The incremental cost incurred by the Company in order to obtain the contract is expected to
be recovered, and shall be recognized as an asset as the cost of obtaining the contract.
Assets related to contract costs are amortised on the same basis as the revenue recognition
of goods or services related to the asset; however, if the amortisation period of contract
acquisition costs does not exceed one year, the Company will include the contract costs in
the current profits and losses at occurrence.
If the book value of the assets related to the contract cost is higher than the difference
between the following two items, the Company will make provision for impairment of the
excess part and recognize it as an asset impairment loss, and further consider whether to
withdraw losses related to the contract estimated liabilities:
3.13.3.1 The remaining consideration expected to be obtained due to the transfer of goods or
services related to the asset;
3.13.3.2 Estimate the cost that will incur for the transfer of the related goods or services.
If the aforementioned asset impairment provision is subsequently reversed, the book value
of the asset after the reversal shall not exceed the book value of the asset on the date of
reversal under the assumption that no impairment provision is made.
For the contract enforcement cost recognized as an asset, the amortisation period shall not
exceed one year or a normal business cycle at initial recognition, and shall be presented in
the "inventory" item. The amortisation period exceeds one year or a normal business cycle
at the initial recognition, shall be presented in “other non-current assets”.
The contract acquisition cost recognized as an asset shall be reported in "other current
assets" when the amortisation period does not exceed one year or one normal business cycle
54
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
at the time of initial recognition, and reported in the item of "other non current assets" when
the amortisation period exceeds one year or one normal business cycle at the time of initial
recognition.
3.14 Long-term Equity Investments
Long-term equity investments refer to equity investments where the Company has control of,
or significant influence over, an investee, as well as equity investments in joint ventures.
Associates of the Company are those entities over which the Company has significant
influence.
3.14.1 Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged
relevant activity must be decided under unanimous consent of the parties sharing control. In
assessing whether the Company has joint control of an arrangement, the Company shall
assess first whether all the parties, or a group of the parties, control the arrangement. When
all the parties, or a group of the parties, considered collectively, are able to direct the
activities of the arrangement, the parties control the arrangement collectively. Then the
Company shall assess whether decisions about the relevant activities require the unanimous
consent of the parties that collectively control the arrangement. If two or more groups of the
parties could control the arrangement collectively, it shall not be assessed as have joint
control of the arrangement. When assessing the joint control, the protective rights are not
considered.
Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control of those policies. In determination
of significant influence over an investee, the Company should consider not only the existing
voting rights directly or indirectly held but also the effect of potential voting rights held by
the Company and other entities that could be currently exercised or converted, including the
effect of share warrants, share options and convertible corporate bonds that issued by the
investee and could be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting
power of the investee, it is presumed that the Company has significant influence of the
investee, unless it can be clearly demonstrated that in such circumstance, the Company
cannot participate in the decision-making in the production and operating of the investee.
3.14.2 Determination of initial investment cost
3.14.2.1 Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company
55
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
makes payment in cash, transfers non-cash assets, or bears liabilities as the consideration for
the business combination, the share of carrying amount of the owners’ equity of the acquiree
in the consolidated financial statements of the ultimate controlling party is recognised as the
initial cost of the long-term equity investment on the combination date. The difference
between the initial investment cost and the carrying amount of cash paid, non-cash assets
transferred, and liabilities assumed shall be adjusted against the capital reserve; if capital
reserve is not enough to be offset, undistributed profit shall be offset in turn.
For a business combination involving enterprises under common control, if the Company
issues equity securities as the consideration for the business combination, the share of
carrying amount of the owners’ equity of the acquiree in the consolidated financial
statements of the ultimate controlling party is recognised as the initial cost of the long-term
equity investment on the combination date. The total par value of the shares issued is
recognised as the share capital. The difference between the initial investment cost and the
carrying amount of the total par value of the shares issued shall be adjusted against the
capital reserve; if capital reserve is not enough to be offset, undistributed profit shall be
offset in turn.
For business combination not under common control, the assets paid, liabilities incurred or
assumed, and the fair value of equity securities issued to obtain the control of the acquiree at
the acquisition date shall be determined as the cost of the business combination and
recognised as the initial cost of the long-term equity investment. The audit, legal, valuation
and advisory fees, other intermediary fees, and other relevant general administrative costs
incurred for the business combination, shall be recognised in profit or loss as incurred.
3.14.2.2 For long-term equity investments acquired not through the business combination,
the investment cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the
actually paid purchase cost, including the expenses, taxes and other necessary expenditures
directly related to the acquisition of long-term equity investments.
For long-term equity investments acquired through issuance of equity securities, the initial
cost is the fair value of the issued equity securities.
For the long-term equity investments obtained through exchange of non-monetary assets, if
the exchange has commercial substance, and the fair values of assets traded out and traded
in can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out together
with relevant taxes. Difference between fair value and book value of the assets traded out is
56
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
recorded in current profit or loss. If the exchange of non-monetary assets does not meet the
above criterion, the book value of the assets traded out and relevant taxes are recognised as
the initial investment cost.
For long-term equity investment acquired through debt restructuring, the book value is
determined based on the fair value of waived debts and the taxes and other costs directly
attributable to the assets. Difference between fair value and carrying amount of waived
debts shall be recorded in current profit or loss.
3.14.2.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control
shall be accounted for at cost method. Long-term equity investment to a joint venture or an
associate shall be accounted for at equity method.
3.14.2.3.1 Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment
shall be adjusted when additional amount is invested or a part of it is withdrawn. The
Company recognises its share of cash dividends or profits which have been declared to
distribute by the investee as current investment income.
3.14.2.3.2 Equity method
For Long-term equity investment recognised at equity method, cost of the long-term equity
investment shall be recognized based on the following conditions:
If the initial cost of the investment is in excess of the share of the fair value of the net
identifiable assets in the investee at the date of investment, the difference shall not be
adjusted to the initial cost of long-term equity investment; if the initial cost of the
investment is in short of the share of the fair value of the net identifiable assets in the
investee at the date investment, the difference shall be included in the current profit or loss
and the initial cost of the long-term equity investment shall be adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its share
of the investee’s other comprehensive income, as investment income or losses and other
comprehensive income respectively, and adjusts the carrying amount of the investment
accordingly. The carrying amount of the investment shall be reduced by the share of any
profit or cash dividends declared to distribute by the investee. The investor’s share of the
investee’s owners’ equity changes, other than those arising from the investee’s net profit or
loss, other comprehensive income, or profit distribution, shall be recognised in the
investor’s equity, and the carrying amount of the long-term equity investment shall be
adjusted accordingly. The Company recognises its share of the investee’s net profits or
57
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
losses after making appropriate adjustments of investee’s net profit based on the fair values
of the investee’s identifiable net assets at the investment date. If the accounting policy and
accounting period adopted by the investee is not in consistency with the Company, the
financial statements of the investee shall be adjusted according to the Company’s
accounting policies and accounting period, based on which, investment income or loss and
other comprehensive income, etc., shall be adjusted. The unrealized profits or losses
resulting from inter-company transactions between the company and its associate or joint
venture are eliminated in proportion to the company’s equity interest in the investee, based
on which investment income or losses shall be recognised. Any losses resulting from
inter-company transactions between the investor and the investee, which belong to asset
impairment, shall be recognised in full.
Where the Company obtains the power of joint control or significant influence, but not
control, over the investee, due to additional investment or other reason, the relevant
long-term equity investment shall be accounted for by using the equity method, initial cost
of which shall be the fair value of the original investment plus the additional investment.
Where the original investment is classified as other equity instrument investment, the
difference between the fair value and the book value, as well as the accumulated gains or
losses previously recorded in other comprehensive income, shall be transferred out of other
comprehensive income, and recognized into retained earnings in the current period when the
equity method is adopted.
If the Company loses the joint control or significant influence of the investee for some
reasons such as disposal of equity investment, the retained interest shall be measured at fair
value and the difference between the carrying amount and the fair value at the date of loss
the joint control or significant influence shall be recognised in profit or loss. When the
Company discontinues the use of the equity method, the Company shall account for all
amounts previously recognised in other comprehensive income under equity method in
relation to that investment on the same basis as would have been required if the investee had
directly disposed of the related assets or liabilities.
3.14.2.4 Methods of impairment and provision for impairment
The asset impairment method for the investment in subsidiaries, joint ventures and joint
ventures is shown in Note 3.20.
3.15 Investment property
3.15.1 Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both,
including:
58
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.15.1.1 Land use right leased out
3.15.1.2 Land held for transfer upon appreciation
3.15.1.3 Buildings leased out
3.15.2 The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment properties.
Refer to Note 3.20 for provision for impairment.
The Company calculates the depreciation or amortisation based on the net amount of
investment property cost less the accumulated impairment and the net residual value using
straight-line method. Investment property is depreciated or amortised in accordance with the
policy consistent with that of buildings or land use rights.
3.16 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of
producing commodities, rendering services, renting or business management with useful
lives exceeding one year.
3.16.1 Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the
following criteria are satisfied:
3.16.1.1 It is probable that the economic benefits relating to the fixed assets will flow into
the Company;
3.16.1.2 The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if
recognition criteria of fixed assets are satisfied, otherwise the expenditure shall be recorded
in current profit or loss when incurred.
3.16.2 Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available
for intended use using the straight-line-method. The estimated useful life and annual
depreciation rates which are determined according to the categories, estimated economic
useful lives, and estimated net residual rates of fixed assets are listed as followings:
Depreciation Residual Estimated useful Annual depreciation
Catergory
method rates (%) life (year) rates (%)
Buildings and
Straight-line method 7.00-10.00 20 4.50-4.65
constructions
Machinery equipment Straight-line method 0.00 5-15 6.67-20.00
59
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Depreciation Residual Estimated useful Annual depreciation
Catergory
method rates (%) life (year) rates (%)
Electrical equipment,
Straight-line method 0.00 5-6 16.67-20.00
molde, and other
Vehicles Straight-line method 0.00 6 16.67
Improvement Amortisation shall be made according to
expenditure of leased Straight-line method 0.00 the shorter of benefit period and lease
fixed assets period
For the fixed assets with impairment provided, the impairment provision should be excluded
from the cost when calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated net
residual value and depreciation method of the fixed assets. Estimated useful life of the fixed
assets shall be adjusted if it is changed compared to the original estimation.
3.16.3 Recognition criteria, valuation and depreciation methods of fixed assets
obtained through a finance lease
If the entire risk and rewards related to the leased assets have been substantially transferred,
the Company shall recognise the lease as a finance lease. The cost of the fixed assets
obtained through a finance lease is determined at the lower of the fair value of the leased
assets and the present value of the minimum lease payment on the date of the lease. The
fixed assets obtained by a finance lease are depreciated in the method which is consistent
with the self-owned fixed assets of the Company. For fixed assets obtained through a
finance lease, if it is reasonably certain that the ownership of the leased assets will be
transferred to the lessee by the end of the lease term, they shall be depreciated over their
remaining useful lives; otherwise, the leased assets shall be depreciated over the shorter of
the lease terms or their remaining useful lives.
3.17 Construction in Progress
3.17.1 Classification of construction in progress
Construction in progress is measured on an individual project basis.
3.17.2 Recognition criteria and timing of transfer from construction in progress to
fixed assets
The initial book values of the fixed assets are stated at total expenditures incurred before
they are ready for their intended use, including construction costs, original price of
machinery equipment, other necessary expenses incurred to bring the construction in
progress to get ready for its intended use and borrowing costs of the specific loan for the
60
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
construction or the proportion of the general loan used for the constructions incurred before
they are ready for their intended use. The construction in progress shall be transferred to
fixed asset when the installation or construction is ready for the intended use. For
construction in progress that has been ready for their intended use but relevant budgets for
the completion of projects have not been completed, the estimated values of project budgets,
prices, or actual costs should be included in the costs of relevant fixed assets, and
depreciation should be provided according to relevant policies of the Company when the
fixed assets are ready for intended use. After the completion of budgets needed for the
completion of projects, the estimated values should be substituted by actual costs, but
depreciation already provided is not adjusted.
3.18 Borrowing Costs
3.18.1 Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying assets when meet the following
conditions:
2.18.1.1 Expenditures for the asset are being incurred;
2.18.1.2 Borrowing costs are being incurred, and;
2.18.1.3 Acquisition, construction, or production activities that are necessary to prepare the
assets for their intended use or sale are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on
foreign currency borrowings shall be recognized into current profit or loss when incurred.
Capitalization of borrowing costs is suspended during periods in which the acquisition,
construction or production of a qualifying asset is interrupted abnormally and the
interruption is for a continuous period of more than 3 months.
Capitalization of such borrowing costs ceases when the qualifying assets being acquired,
constructed, or produced become ready for their intended use or sale. The expenditure
incurred subsequently shall be recognised as expenses when incurred.
3.18.2 Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase, construction, or manufacturing of assets
eligible for capitalization, the Company shall determine the amount of borrowing costs
eligible for capitalisation as the actual borrowing costs incurred on that borrowing during
the period less any interest income on bank deposit or investment income on the temporary
investment of those borrowings.
Where funds allocated for purchase, construction or manufacturing of assets eligible for
61
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
capitalization are part of a general borrowing, the eligible amounts are determined by the
weighted-average of the cumulative capital expenditures in excess of the specific borrowing
multiplied by the general borrowing capitalization rate. The capitalization rate will be the
weighted average of the borrowing costs applicable to the general borrowing.
3.19 Intangible Assets
3.19.1 Intangible assets
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 purchased by the Company are accounted as intangible assets. Buildings
such as plants that are developed and constructed by the Company, and relevant land use
rights and buildings, are accounted 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 as fixed assets.
When intangible assets with definite useful lives are available for use, the original cost less
net residual value and any accumulate impairment losses is amortised over its estimated
useful life using the straight-line method. Intangible assets with indefinite useful life are not
amortised.
For intangible assets with finite useful life, the estimated useful life and amortisation
method are reviewed annually at the end of each reporting period and adjusted when
necessary. An additional review is also carried out for useful life of the intangible assets
with indefinite useful life. If there is evidence to indicate that the useful lives of those assets
become finite, the useful lives shall be estimated, and the intangible assets shall be
amortised systematically and reasonably within the estimated useful lives.
3.19.2 Research and development costs
The company's internal research and development project expenditures are categorized into
research phase expenditures and development phase expenditures.
Expenditures arising from development phase on internal research and development projects
shall be recognised as intangible assets only if all of the following conditions have been met,
otherwise shall be recognised in profit or loss when incurred:
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.19.2.1 Technical feasibility of completing the intangible assets so that they will be
available for use or sale;
3.19.2.2 Its intention to complete the intangible asset and use or sell it;
3.19.2.3 The method that the intangible assets generate economic benefits, including the
Company can demonstrate the existence of a market for the output of the intangible assets or
the intangible assets themselves or, if it is to be used internally, the usefulness of the
intangible assets;
3.19.2.4 The availability of adequate technical, financial, and other resources to complete
the development and to use or sell the intangible asset;
3.19.2.5 Its ability to measure reliably the expenditure attributable to the intangible asset.
The costs cannot be distinguished into the search phase and the development phase is
recognised in profit or loss for the period in which it incurred.
3.19.3 Impairment of intangible assets
Refer to Note 3.20 for impairment and provisions of intangible assets.
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures,
investment properties, fixed assets and constructions in progress subsequently measured at
cost, productive biological assets, intangible assets, goodwill, the rights and interests of
proved mining areas of petroleum and natural gas and wells and other relevant facilities
measured at cost (excluding inventories, investment properties measured at fair value,
deferred tax assets, financial assets), shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any
indication that an asset may be impaired. If any such indication exists, the Company shall
estimate the recoverable amount of the asset and test for impairment. Irrespective of
whether there is any indication of impairment, the Company shall test for impairment of
goodwill acquired in a business combination, intangible assets with an indefinite useful life
or intangible assets not yet available for use annually.
The recoverable amounts of the long-term assets are the higher of their fair values less costs
to dispose and the present values of the estimated future cash flows of the long-term assets.
The Company estimate the recoverable amounts on an individual basis. If it is difficult to
estimate the recoverable amount of the individual asset, the Company estimates the
recoverable amount of the groups of assets that the individual asset belongs to.
Identification of a group of asset is based on whether the cash inflows from it are largely
independent of the cash inflows from other assets or groups of assets.
63
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
If, and only if, the recoverable amount of an asset or a group of assets is less than its
carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount
and the provision for impairment loss shall be recognised accordingly.
For the purpose of impairment testing, goodwill acquired in a business combination shall,
from the acquisition date, be allocated to relevant group of assets based on reasonable
method; if it is difficult to allocate to relevant group of assets, goodwill shall be allocated to
relevant combination of asset groups. The relevant group of assets or combination of asset
groups is a group of assets or combination of asset groups that is benefit from the synergies
of the business combination and is not larger than the reporting segment determined by the
Company.
When test for impairment, if there is an indication that relevant group of assets or
combination of asset groups may be impaired, impairment testing for group of assets or
combination of asset groups excluding goodwill shall be conducted first, and calculate the
recoverable amount and recognize the impairment loss. Then the group of assets or
combination of asset groups including goodwill shall be tested for impairment, by
comparing the carrying amount with its recoverable amount. If the recoverable amount is
less than the carrying amount, the Company shall recognise the impairment loss.
The mentioned impairment loss will not be reversed in subsequent accounting period once it
had been recognised.
3.21 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be
amortised over current and subsequent periods with the amortisation period exceeding one
year. Long-term deferred expenses are amortized on a straight-line basis during the expected
benefit period.
3.22 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the
Company in exchange for service rendered by employees or for the termination of
employment relationship. Employee benefits include short-term employee benefits,
post-employment benefits, termination benefits and other long-term employee benefits.
Benefits provided to an employee's spouse, children, dependents, family members of
decreased employees, or other beneficiaries are also employee benefits.
According to liquidity, employee benefits are presented in the statement of financial position
as “Employee benefits payable” and “Long-term employee benefits payable”.
64
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.1 Short-term employee benefits
3.22.1.1 Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service,
actually occurred short-term employee benefits as a liability, with a corresponding charge to
current profit except for those recognised as capital expenditure based on the requirement of
accounting standards.
3.22.1.2 Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred
into current profit or loss or related capital expenditure. Employee welfare shall be
measured at fair value if it is a non-monetary benefits.
3.22.1.3 Social insurance such as medical insurance, work injury insurance and maternity
insurance, housing funds, labor union fund and employee education fund
Payments made by the Company of social insurance for employees, such as medical
insurance, work injury insurance and maternity insurance, payments of housing funds, and
labor union fund and employee education fund accrued in accordance with relevant
requirements, in the accounting period in which employees provide services, is calculated
according to required accrual bases and accrual ratio in determining the amount of employee
benefits and the related liabilities, which shall be recognised in current profit or loss or the
cost of relevant asset.
3.22.1.4 Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid
absences when the employees render service that increases their entitlement to future paid
absences. The additional payable amounts shall be measured at the expected additional
payments as a result of the unused entitlement that has accumulated. The Company shall
recognise relevant employee benefit of non-accumulating paid absences when the absences
actually occurred.
3.22.1.5 Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing
plan when both of the following conditions are satisfied:
3.22.1.5.1 The Company has a present legal or constructive obligation to make such
payments as a result of past events;
3.22.1.5.2 A reliable estimate of the amounts of employee benefits obligation arising from
the profit- sharing plan can be made.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.2 Post-employment benefits
3.22.2.1 Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides
service, the contribution payable to a defined contribution plan as a liability, with a
corresponding charge to the current profit or loss or the cost of a relevant asset.
When contributions to a defined contribution plan are not expected to be settled wholly
before twelve months after the end of the annual reporting period in which the employees
render the related service, they shall be discounted using relevant discount rate (market
yields at the end of the reporting period on high quality corporate bonds in active market or
government bonds with the currency and term which shall be consistent with the currency
and estimated term of the defined contribution obligations) to measure employee benefits
payable.
3.22.2.2 Defined benefit plan
3.22.2.2.1 The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method, the Company shall make
estimates about demographic variables and financial variables in adopting the unbiased and
consistent actuarial assumptions and measure defined benefit obligation, and determine the
obligation period. The Company shall discount the obligation arising from defined benefit
plan using relevant discount rate (market yields at the end of the reporting period on high
quality corporate bonds in active market or government bonds with the currency and term
which shall be consistent with the currency and estimated term of the defined benefit
obligations) in order to determine the present value of the defined benefit obligation and the
current service cost.
3.22.2.2.2 The net defined benefit liability or asset
The net defined benefit liability or asset is the deficit or surplus recognised as the present
value of the defined benefit obligation less the fair value of plan assets.
When the Company has a surplus in a defined benefit plan, it shall measure the net defined
benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.
3.22.2.2.3 The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on
settlement. Other service cost shall be recognised in profit or loss unless accounting
standards require or allow the inclusion of current service cost within the cost of assets.
Net interest on the net defined benefit liability or asset comprising interest income on plan
assets, interest cost on the defined benefit obligation and interest on the effect of the asset
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
ceiling, shall be included in profit or loss.
3.22.2.2.4 The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the
remeasurements including:
Actuarial gains and losses, which are the changes in the present value of the defined
benefit obligation resulting from experience adjustments or the effects of changes in
actuarial assumptions;
Return on plan assets, excluding amounts included in net interest on the net defined
benefit liability or asset;
Any change in the effect of the asset ceiling, excluding amounts included in net interest
on the net defined benefit liability or asset.
Remeasurements of the net defined benefit liability or asset recognised in other
comprehensive income shall not be reclassified to profit or loss in a subsequent period.
However, the Company may transfer those amounts recognised in other comprehensive
income within equity.
3.22.3 Termination benefits
The Company providing termination benefits to employees shall recognise an employee
benefits liability for termination benefits, with a corresponding charge to the profit or loss of
the reporting period, at the earlier of the following dates:
3.22.3.1 When the Company cannot unilaterally withdraw the offer of termination benefits
because of an employment termination plan or a curtailment proposal.
3.22.3.2 When the Company recognises costs or expenses related to a restructuring that
involves the payment of termination benefits.
If the termination benefits are not expected to be settled wholly before twelve months after
the end of the annual reporting period, the Company shall discount the termination benefits
using relevant discount rate (market yields at the end of the reporting period on high quality
corporate bonds in active market or government bonds with the currency and term which
shall be consistent with the currency and estimated term of the defined benefit obligations)
to measure the employee benefits.
3.22.4 Other long-term employee benefits
3.22.4.1 Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees
satisfies the conditions for classifying as a defined contribution plan, all those benefits
payable shall be accounted for as employee benefits payable at their discounted value.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.4.2 Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognised the cost of employee benefit
from other long-term employee benefits as the following components:
Service costs;
Net interest cost for net liability or asset of other long-term employee benefits
Changes resulting from the remeasurements of the net liability or asset of other
long-term employee benefits
In order to simplify the accounting treatment, the net amount of above items shall be
recognised in profit or loss or relevant cost of assets.
3.23 Estimated Liabilities
3.23.1 Recognition criteria of estimated liabilities
The Company recognises the estimated liabilities when obligations related to contingencies
satisfy all the following conditions:
3.23.1.1 That obligation is a current obligation of the Company;
3.23.1.2 It is likely to cause any economic benefit to flow out of the Company as a result of
performance of the obligation; and
3.23.1.3 The amount of the obligation can be measured reliably.
3.23.2 Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of
expenses required for the performance of relevant present obligations. The Company, when
determining the best estimate, has had a comprehensive consideration of risks with respect
to contingencies, uncertainties, and the time value of money. The carrying amount of the
estimated liabilities shall be reviewed at the end of every reporting period. If conclusive
evidence indicates that the carrying amount fails to be the best estimate of the estimated
liabilities, the carrying amount shall be adjusted based on the updated best estimate.
3.24 Revenue recognition principle and measurement
Applicable from January 1, 2020
3.24.1 General principle
Revenue is the total inflow of economic benefits formed in the company's daily activities
that will increase shareholders' equity and does not relate to the capital invested by
shareholders.
The Company has fulfilled the performance obligation in the contract, that is, the revenue is
recognised when the customer obtains the control right of relevant goods. To obtain the
control right of the relevant commodity means to be able to dominate the use of the
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
commodity and obtain almost all the economic benefits from it.
If there are two or more performance obligations in the contract, the Company will allocate
the transaction price to each performance obligation based on the relative proportion of the
separate selling price of the goods or services promised by each performance obligation on
the start date of the contract, and measure the income based on the transaction price
allocated to each single performance obligation.
The transaction price refers to the amount of consideration that the Company is expected to
be entitled to receive due to the transfer of goods or services to customers, excluding
payments collected on behalf of third parties. When determining the transaction price of the
contract, the Company determines the transaction price according to the terms of the
contract and in combination with its historical practices. When determining the transaction
price, the Company takes into account the influence of variable considerations, significant
financing elements in the contract, the non-cash considerations, the considerations payable
to customers and other factors. The Company determines the transaction price including
variable consideration at an amount that does not exceed the amount at which the
accumulated recognized income is unlikely to have a significant reversal when the relevant
uncertainty is eliminated. If there is a significant financing component in the contract, the
Company will determine the transaction price based on the amount payable in cash when
the customer obtains the control right of the commodity. The difference between the
transaction price and the contract consideration will be amortised by the effective interest
method during the contract period. If the interval between the control right transfer and the
customer's payment is less than one year, the company will not consider the financing
component.
If one of the following conditions is met, the performance obligation shall be fulfilled within
a certain period of time; otherwise, the performance obligation shall be fulfilled at a certain
point of time:
3.24.1.1 The customer obtains and consumes the economic benefits brought by the
Company's fulfillment of contract when the Company performs the obligations;
3.24.1.2 The customer can control the commodities under construction during the
Company's execution of the contract;
3.24.1.3 The commodities produced by the Company during the performance of the contract
have irreplaceable uses, and the Company has the right to collect payment for the
cumulative performance part that has been completed so far during the entire contract
period.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
For performance obligations fulfilled within a certain period of time, the Company
recognises revenue in accordance with the performance progress during that period, except
where the performance progress cannot be reasonably determined. The Company
determines the progress of the performance of services in accordance with the input method
(or output method). When the progress of the contract performance cannot be reasonably
determined, if the cost incurred by the Company is expected to be compensated, the revenue
shall be recognised according to the amount of the cost incurred until the progress of the
contract performance can be reasonably determined.
For performance obligations fulfilled at a certain point in time, the Company recognises
revenue at the point when the customer obtains control of the relevant commodities. The
Company considers the following signs when judging whether a customer has obtained
control of goods or services:
3.24.1.4 The Company has the current right to receive payment for the goods or services,
that is, the customer has the current obligation to pay for the goods;
3.24.1.5 The Company has transferred the legal ownership of the goods to the customer, that
is, the customer has the legal ownership of the goods;
3.24.1.6 The Company has transferred the goods in kind to the customer, that is, the
customer has possessed the goods in kind;
3.24.1.7 The company has transferred the main risks and rewards of the ownership of the
goods to the customers, that is, the customers have obtained the main risks and rewards of
the ownership of the goods;
3.24.1.8 The customer has accepted the goods or services.
3.24.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
3.24.2.1 Commodity sales contract
The sales contract between the Company and the customer includes the performance
obligation of transferring the goods, which belongs to the performance obligation at a
certain point in time.
Recognition of exporting revenue must meet the following conditions: The Company
recognizes revenue for exporting goods based on the sales contracts or sales orders,
regardless of the sales model adopted.
The Company has shipped the products according to the contract and gone through the
customs declaration and export procedures; the payment for goods has been recovered or the
receipt has been obtained, and the relevant economic benefits are likely to flow in; the main
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
risks and rewards of the ownership of the goods have been transferred, and the legal
ownership of the goods has been transferred.
Recognition of domestic sales product revenue must meet the following conditions: the
Company has delivered the products to the customer according to the contract and the
customer has accepted the products; the payment has been recovered or the receipt of
payment has been obtained, and the relevant economic benefits are likely to flow in; the
main risks and rewards of the ownership of the goods have been transferred, and the legal
ownership of the goods has been transferred.
Treatment of sales return: according to the general rules of international trade, the adoption
of FOB and CIF settlement indicates that the buyer has accepted the purchased goods at the
place of shipment, and the relevant risks have been undertaken by the buyer after the
acceptance and shipment. Therefore, the Company does not make provision for the above
matters separately, but directly records them into the profits and losses in the current period.
Processing of product claims: the estimated claim expense rate is calculated based on the
actual claim amount in the past two years (excluding special claims) as a percentage of the
annual sales revenue, and accrued at period end based on the current sales revenue and the
estimated claim expense rate to recognize the claim expenses for products sold in the
current period.
3.24.2.2 Service contract
The performance obligation of the service contract between the Company and the customer.
Since the customer obtains and consumes the economic benefits brought by the Company’s
performance at the same time as the Company fulfills the contract, the Company recognises
it as a performance obligation performed within a certain period of time, and amortized
equally during the service provision period.
3.24.2.3 Construction contract
For the performance obligation of the construction contract between the Company and the
customer, since the customer can control the goods under construction in the process of the
Company's performance, the Company takes it as the performance obligation to perform in
a certain period of time, and recognizes the income according to the performance progress,
except that the performance progress cannot be reasonably determined. The Company
determines the progress of the performance of providing services in accordance with the
output method. The progress of the performance shall be determined according to the
proportion of the completed contract workload to the expected total contract workload. On
the balance sheet date, the Company re-estimates the progress of completed performance or
completed services to reflect the changes in performance.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.25 Government Grants
3.25.1 Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
3.25.1.1 The Company will comply with the conditions attaching to them; and
3.25.1.2 The grants will be received.
3.25.2 Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable.
The non-monetary grants from the government shall be measured at their fair value or at the
nominal value of CNY 1.00 when reliable fair value is not available.
3.25.3 Accounting for government grants
3.25.3.1 Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the
Company used for purchase or construction, or forming the long-term assets by other ways.
The government subsidies related to assets offset the book value of related assets, and shall
be recognised in profit or loss on a systematic basis over the useful lives of the relevant
assets. Grants measured at their nominal value shall be directly recognised in profit or loss
of the period when the grants are received. When the relevant assets are sold, transferred,
written off or damaged before the assets are terminated, the remaining deferred income shall
be transferred into profit or loss of the period of disposing relevant assets.
3.25.3.2 Government grants related to income
Government grants not related to assets are classified as government grants related to
income. Government grants related to income are accounted for in accordance with the
following criteria:
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses in future periods, such government grants shall be recognised as deferred
income and included into profit or loss in the same period as the relevant expenses or losses
are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses incurred, such government grants are directly recognised into current
profit or loss (or write down related expenses).
For government grants comprised of part related to assets as well as part related to income,
each part is accounted for separately; if it is difficult to identify different parts, the
government grants are accounted for as government grants related to income as a whole.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Government grants related to daily operation activities are recognised in other income in
accordance with the nature of the activities, and government grants irrelevant to daily
operation activities are recognised in non-operating income.
3.25.3.3 Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of
the asset if the book value of the asset has been written down, or reducing the balance of
relevant deferred income if deferred income balance exists, any excess will be recognised
into current profit or loss; or directly recognised into current profit or loss for other
circumstances.
3.26 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability
in the statement of financial position and its tax base at the balance sheet date. The
Company recognise and measure the effect of taxable temporary differences and deductible
temporary differences on income tax as deferred tax liabilities or deferred tax assets using
liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.
3.26.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the
carryforward of unused tax losses and the carryforward of unused tax credits to the extent
that it is probable that taxable profit will be available against which the deductible
temporary differences, the carryforward of unused tax losses and the carryforward of unused
tax credits can be utilised at the tax rates that are expected to apply to the period when the
asset is realized, unless the deferred tax asset arises from the initial recognition of an asset
or liability in a transaction that:
Is not a business combination; and
At the time of the transaction, affects neither accounting profit nor taxable profit
(tax loss)
The Company shall recognise a deferred tax asset for all deductible temporary differences
arising from investments in subsidiaries, associates, and joint ventures, only to the extent
that, it is probable that:
The temporary difference will reverse in the foreseeable future; and
Taxable profit will be available against which the deductible temporary difference
can be utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that
taxable profit will be available against which the deductible temporary difference can be
73
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
utilized, the Company recognises a previously unrecognised deferred tax asset.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting
period. The Company shall reduce the carrying amount of a deferred tax asset to the extent
that it is no longer probable that sufficient taxable profit will be available to allow the
benefit of part or all of that deferred tax asset to be utilised. Any such reduction shall be
reversed to the extent that it becomes probable that sufficient taxable profit will be
available.
3.26.2 Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax
rate that are expected to apply to the period when the liability is settled.
3.26.2.1 No deferred tax liability shall be recognised for taxable temporary differences
arising from:
The initial recognition of goodwill; or
The initial recognition of an asset or liability in a transaction which: is not a
business combination; and at the time of the transaction, affects neither accounting
profit nor tax loss.
3.26.2.2 An entity shall recognise a deferred tax liability for all taxable temporary
differences associated with investments in subsidiaries, associates, and joint ventures,
except to the extent that both of the following conditions are satisfied:
The Company is able to control the timing of the reversal of the temporary
difference; and
It is probable that the temporary difference will not reverse in the foreseeable future.
3.26.3 Recognition of deferred tax liabilities or assets involved in special transactions
or events
3.26.3.1 Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a
business combination not under common control, a deferred tax liability or a deferred tax
asset shall be recognised, and simultaneously, goodwill recognised in the business
combination shall be adjusted based on relevant deferred tax expense (or income).
3.26.3.2 Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair
value fluctuation of available for sale investments; an adjustment to the opening balance of
retained earnings resulting from either a change in accounting policy that is applied
74
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
retrospectively or the correction of a prior period (significant) error; amounts arising on
initial recognition of the equity component of a compound financial instrument that contains
both liability and equity component.
3.26.3.3 Unused tax losses and unused tax credits
3.26.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of the
Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of
tax law that can be offset against taxable income in future periods. The criteria for
recognising deferred tax assets arising from the carryforward of unused tax losses and tax
credits are the same as the criteria for recognising deferred tax assets arising from
deductible temporary differences. The Company recognises a deferred tax asset arising from
unused tax losses or tax credits only to the extent that there is convincing other evidence
that sufficient taxable profit will be available against which the unused tax losses or unused
tax credits can be utilised by the Company. Income taxes in current profit or loss shall be
deducted as well.
3.26.3.3.2 Unsused tax losses and unused tax credits arising from business combination
Under a business combination, the acquiree’s deductible temporary differences which do
not satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not
be recognised. Within 12 months after the acquisition date, if new information regarding the
facts and circumstances exists at the acquisition date and the economic benefit of the
acquiree’s deductible temporary differences at the acquisition is expected to be realised, the
Company shall recognise acquired deferred tax benefits and reduce the carrying amount of
any goodwill related to this acquisition. If goodwill is reduced to zero, any remaining
deferred tax benefits shall be recognised in profit or loss. All other acquired deferred tax
benefits realised shall be recognised in profit or loss.
3.26.3.4 Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying
value of the assets and liabilities in the consolidated financial statements and their taxable
bases is generated from elimination of inter-company unrealized profit or loss, deferred tax
assets or deferred tax liabilities shall be recognised in the consolidated financial statements,
and income taxes expense in current profit or loss shall be adjusted as well except for
deferred tax related to transactions or events recognised directly in equity and business
combination.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.26.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period
in which the expenses are recognised according to the accounting standards, the Company
estimates the tax base in accordance with available information at the end of the accounting
period and the temporary difference arising from it. Deferred tax shall be recognised when
criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds
the amount of the cumulative expenses related to share-based payment recognised according
to the accounting standards, the tax effect of the excess amount shall be recognised directly
in equity.
3.27 Leases
The Company classifies the leases that substantially transfers all the risks and rewards
incidental to ownership of an underlying asset as finance leases. Other leases shall be
classified as operating leases.
3.27.1 Accounting for operating leases
3.27.1.1 When the Company is the lessee, the lease payments should be recognised into
profit or loss of the reporting period over the lease terms on a straight-line basis or based on
the amount of usage. If the lessor provides a rent-free period, the Company shall allocate
total lease payment over the entire lease terms including the rent-free period using
straight-line basis or other reasonable method. Lease expense and the corresponding
liabilities shall be recognised during the rent-free period. If expenses relating to lease which
should be borne by the Company are paid by the lessor of the assets, they shall be deducted
from the total lease expenses and the balances shall be amortised over the lease terms by the
Company.
Initial direct costs relating to lease transactions incurred by the Company shall be
recognised into current profit or loss. Contingent rental, if included in the lease contract,
shall be recognised into profit or loss upon occurrence.
3.27.1.2 When the Company is the lessor, lease income should be recognised over the lease
terms on a straight-line basis. If the lessor provides the rent-free period, the Company shall
allocate total lease income over the entire lease terms including the rent-free period using
straight-line basis or other reasonable method. Lease income shall be recognised during the
rent-free period. If expenses relating to leases which should be borne by the lessee of the
assets are paid by the Company, they shall be deducted from the total lease income and the
balances shall be amortised over the lease terms by the Company.
Initial direct costs relating to lease transactions incurred by the Company shall be
76
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
recognised into current profit or loss. If the amounts are material, they shall be capitalised
and amortised over the lease terms on the same basis as the recognition of lease income.
Contingent rental, if included in the lease contract, shall be recognised into profit or loss
upon occurrence.
3.27.2 Accounting for finance leases
3.27.2.1 When the Company is the lessee, at commencement of the lease, assets obtained
through finance leases should be recorded at the lower of their fair values and the present
values of the minimum lease payments. The Company shall recognise long-term payables at
amounts equal to the minimum lease payments, and the differences shall be recognised as
unrecognised finance charges, which shall be amortised over the lease terms as finance
expenses by using effective interest rate method and recognised into finance cost.
Initial direct costs are recorded in the value of the leased assets.
The Company adopts the same depreciation policy for the leased assets as its self-owned
fixed assets. The depreciation period is determined based on the lease contract. If it is
reasonably certain that the Company will obtain the ownership of the assets at the expiration
of the lease, the depreciation period will be the useful life of the leased asset. If it is not
certain that the Company will obtain the ownership of the asset at the expiration of the lease,
the depreciation period is the shorter of the lease period and their useful lives.
3.27.2.2 When the Company is the lessor, at commencement of the lease, lease receivables
shall be measured at minimum lease receivables plus initial direct costs relating to lease
transactions and recognised as long-term receivable in the statement of financial position.
Unguaranteed residual values are recorded simultaneously. The differences between the total
of minimum lease receivable, initial direct cost and unguaranteed residual values and their
present value shall be recognised as unearned finance income, and shall amortised over the
lease terms as lease income at the effective interest rate method.
3.28 Significant account judgment and estimates
The Company continuously evaluates the important accounting estimates and key
assumptions adopted based on historical experience and other factors, including reasonable
expectations of future events. Important accounting estimates and key assumptions that are
likely to lead to significant adjustment risk of the book value of assets and liabilities in the
next accounting year are listed as follows:
3.28.1 Classification of financial assets
The significant judgments involved in determining the classification of financial assets
include the analysis of business model and contract cash flow characteristics.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company determines the business model of managing financial assets at the level of
financial asset portfolio, which considers factors including the price evaluation and the
reporting method of the performance of financial assets to key management personnel, the
risks affecting the performance of financial assets and their management methods, as well as
the method for relevant business management personnel to obtain remuneration, and so on.
When evaluating whether the contractual cash flow of financial assets is consistent with the
basic lending arrangement, the Company has the following significant judgments: whether
the principal may be due to early repayment and other reasons, which may lead to changes
in the time distribution or amount during the duration; whether the interest only includes the
time value of money, credit risk, other basic borrowing risks, and the consideration of costs
and profits. For example, does the early repayment reflect only the unpaid principal and the
interest based on the unpaid principal, as well as the reasonable compensation paid for early
termination of the contract.
3.28.2 Measurement of expected credit losses of accounts receivable
The company uses accounts receivable default exposure and expected credit loss rate to
calculate the expected credit loss of accounts receivable, and determines the expected credit
loss rate based on the default probability and default loss rate. When determining the
expected credit loss rate, the Company uses internal historical credit loss and other data,
combined with current conditions and forward-looking information to adjust the historical
data. When considering forward-looking information, the indicators used by the Company
include the risk of economic downturn, changes in the external market environment,
technological environment, and customer conditions. The Company regularly monitors and
reviews assumptions related to the calculation of expected credit losses.
3.28.3 Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according
to the accounting policies in regards of inventories, and makes impairment provision for the
inventories that have higher costs than net realizable value, as well as obsolete and
slow-movement inventories. Inventory impairment to net realizable value is based on
assessing the saleability of inventories and their net realizable value. Appraisal of inventory
impairment requires management to make judgments and estimates on the basis of obtaining
conclusive evidence, and considering the purpose of holding inventory, the impact of post
balance sheet events and other factors. The difference between the actual results and the
original estimates shall have impact on the book value of the inventories and the reversal of
the impairment provisions during the period when the estimates are change.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.28.4 The fair value of financial instruments
For financial instruments without active trading market, the Company determines their fair
value through various valuation methods. The valuation methods include discounted cash
flow model analysis and other. During the valuation, the Company shall estimate the future
cash flows, credit risks, market volatility and correlation, and select the appropriate discount
rate. Such assumptions are uncertain and their changes shall have impact on the fair value of
financial instruments. If the equity instrument investment or contract has a public offer, the
Company does not take the cost as the best estimate of its fair value.
3.28.5 Impairment of non-current assets
The Company accesses whether there are signs of possible impairment of non-current assets
other than financial assets on the balance sheet date. For intangible assets with uncertain
service lives, additional impairment tests are carried out in addition to the annual
impairment test when there are signs of impairment. Other non-current assets other than
financial assets shall be tested for impairment when there are indications that their book
value are not recoverable.
Impairment exists when the book value of the asset or asset group is higher than the
recoverable amount, that is, the higher of the net amount of the fair value minus the disposal
expenses and the present value of the estimated future cash flow.
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 on
the output, selling price, related operating costs of the asset (or asset group) and the discount
rate used in calculating the present value. The Company shall use all relevant information
available, including the forecast of production, selling price and related operating costs
based on reasonable and supportable assumptions to estimate the recoverable amount.
The Company tests for goodwill impairment at least annually. This requires estimations of
the present value of the future cash flow of the asset group or combination of asset groups to
which goodwill is allocated. When predicting the present value of the future cash flows, the
Company needs to predict the cash flows generated by the future asset group or the
combination of asset groups, and select the appropriate discount rate to determine the
present value of the future cash flow.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.28.6 Depreciation and amortization
The Company shall depreciate or amortise the investment properties, fixed assets and
intangible assets using the straight-line method within their service lives after considering
their residual value. The Company regularly reviews their service lives to determine the
depreciation and amortization expenses charged in each reporting period. The Company
determines the useful lives based on historical experience of similar assets and the estimated
technical update. If there is indication that there has been a significant change in the factor
used to determine the depreciation or amortization, the depreciation and amortization
expenses will be adjusted in future periods.
3.28.7 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.
3.28.8 Income tax
In the Company's normal operating activities, there are some transactions where ultimate tax
treatments and calculations are uncertain. Whether there are possible for some items to
make expenditure before tax needs approval from competent tax authorities. If there is any
difference between finalized determination value and their initial estimations value, the
difference shall have the impact on the income tax and deferred income tax of the current
period during the final determination.
3.28.9 Internal retirement benefits and supplementary retirement benefits
The amount of internal retirement benefits and supplementary retirement benefits expenses
and liabilities of the Company is 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 the actual
results and assumptions will be confirmed immediately when incurred and included in the
current year's expenses. Although the 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.
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TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.29 Changes in Significant Accounting Policies and Accounting Estimates
3.29.1 Significant changes in accounting polices
On 5 July 2017, the Ministry of Finance issued “Accounting Standards for Business
Enterprises No. 14 - Revenue” (Caikuai [2017] No. 22) (which is referred as the “New
Revenue Standards”). On 10 December 2019, the Ministry of Finance issued “Accounting
Standards for Business Enterprises No. 13”, requiring the domestically listed companies to
execute the new revenue standards starting from 1 January 2020. The Company
implemented the abovementioned new revenue standards and interpretation of the standards
on 1 January 2020, and adjusted relevant contents of accounting policies. Refer to Note 3.24
for details.
The new revenue standards require that the cumulative impact of the first implementation of
the standards shall be adjusted for the amount of retained earnings and other related items in
the financial statements at the beginning of the first implementation year (January 1, 2020),
and the information of the comparable period shall not be adjusted. When implementing the
new revenue standards, the Company only adjusts the cumulative impact of contracts that
have not been completed on the first implementation date.
The cumulative effects of the above accounting policies are as follows:
Due to the implementation of the new revenue standards, the Company's consolidated
financial statements correspondingly adjusted the contract liabilities of CNY 10,350,334.42
and advances from customers of CNY -10,350,334.42 on January 1, 2020. The financial
statements of the parent company correspondingly adjusted the contract liabilities of CNY
1,152,074.28 and the advances from customers of CNY -1,152,074.28 on January 1, 2020.
The above accounting policy changes were approved by the Company's first board meeting
of 2020 held on March 14, 2020.
3.29.2 Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
3.29.3 Adjustments of the financial statements at the beginning of the reporting period
for the first-year adoption of new revenue standards.
Consolidated Financial Statements
Unit: Yuan Currency: CNY
Items 31 December 2019 1 January 2020 Adjustment
Current assets：
Advances from customers 13,294,285.78 2,943,951.36 - 10,350,334.42
Contract liabilities N/a. 10,350,334.42 10,350,334.42
81
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Financial Statements of Parent Company
Unit: Yuan Currency: CNY
Items 31 December 2019 1 January 2020 Adjustment
Advances from customers 1,826,163.67 674,089.39 - 1,152,074.28
Contract liabilities N/a. 1,152,074.28 1,152,074.28
Explanation of adjustment of each item:
Note 1: Contract liabilities, advances from customers
On January 1, 2020, the Company reclassified CNY 10,350,334.42 of advances from
customers related to the sale of goods and the provision of labor services to contract
liabilities.
4. Taxation
4.1 Major Categories of Tax and Tax Rates Applicable to the Company
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of taxable income,
Value added tax
and calculates the value-added tax based on the difference after 5, 6, 9, 13
(VAT)
deducting the deductible input tax in the current period
Urban maintenance
Payable turnover tax, tax exemption 7
and construction tax
Educational Payable turnover tax, tax exemption
3
surcharge
Local education Payable turnover tax, tax exemption
2
surcharge
Enterprise income
Taxable profits 25
tax
4.2 Tax rates of income tax of different subsidiaries are stated as below:
4.2.1 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of taxable income,
Value added tax and calculates the value-added tax based on the difference after 0, 5, 6, 9, 13
deducting the deductible input tax in the current period
Urban maintenance
Payable turnover tax, tax exemption 5
and construction tax
Educational
Payable turnover tax, tax exemption 3
surcharge
82
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Categories of tax Basis of tax assessment Tax rate
Local education
Payable turnover tax, tax exemption 2
surcharge
Enterprise income
Taxable profits 15
tax
The export sales of products and raw materials are subject to tax exemption, credit and
refund policies, and the value-added tax rate is 0%.
4.2.2 TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of taxable income,
Value added tax and calculates the value-added tax based on the difference after 5, 9, 13
deducting the deductible input tax in the current period
Urban maintenance
Payable turnover tax, tax exemption 5
and construction tax
Educational
Payable turnover tax, tax exemption 3
surcharge
Local education
Payable turnover tax, tax exemption 2
surcharge
Enterprise income
Taxable profits 25
tax
4.2.3 Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of taxable income,
Value added tax and calculates the value-added tax based on the difference after 5
deducting the deductible input tax in the current period
Enterprise income
Taxable profits 20
tax
4.2.4 Pt. Star Comgistic Indonesia (hereafter, SCI)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of taxable income,
Value added tax and calculates the value-added tax based on the difference after 10
deducting the deductible input tax in the current period
Enterprise income
Taxable profits 25
tax
83
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
4.3 Preferential tax policy
According to the principle of “The Notice Regarding to Fujian Province 2020 Second Group
of High Technology Enterprise Review” (Mingkegao No. [2020]29), TKL was identified as
Fujian Province High Technology Enterprise (Certification No. GR202035002032), valid
from the year 2020 to 2022. The enterprise income tax of this period is calculated at 15%.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
Items 31 December 2020 31 December 2019
Cash on hand 875,000.35 926,966.65
Cash in bank 671,926,206.33 638,696,235.33
Other monetary funds 34,993,391.52
Total 707,794,598.20 639,623,201.98
Including：The total amount deposited overseas 11,312,975.48 32,960,640.75
Note: Among other monetary funds, CNY 12,243,391.52 is the letter of credit deposit and
CNY 22,750,000.00 is the loan deposit. Other than the mentioned restricted funds, the
Company does not have other funds with restrictions or potential recovery risks due to
mortgage, pledge, or freezing in the currency funds at the end of the period.
5.2 Held-for-trading financial assets
Items 31 December 2020 31 December 2019
Financial assets measured at fair value through Profit or Loss 720,821,900.00 3,620,689.00
Including: Derivative financial assets 20,821,900.00 3,620,689.00
Structured Deposit Investment 700,000,000.00
Total 720,821,900.00 3,620,689.00
Note: Derivative financial is forward foreign exchange settlement and sale contracts signed
by the Company with financial institutions.
5.3 Notes Receivables
5.3.1 Accounts receivable by aging
31 December 2020 31 December 2019
Items Provision for Carrying Book Provision for Carrying
Book Balance
bad debt amount Balance bad debt amount
Bank acceptance
274,548.00 274,548.00
bills
84
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2020 31 December 2019
Items Provision for Carrying Book Provision for Carrying
Book Balance
bad debt amount Balance bad debt amount
Commercial
acceptance bills
Total 274,548.00 274,548.00
5.3.2 Notes receivable pledged by the company at the end of the period
None.
5.3.3 Notes receivable endorsed or discounted by the Company but not yet due at the
end of the period
None.
5.3.4 Notes transferred by the Company to receivables due to the failure of the drawer
to perform at the end of the period
None.
5.3.5 Notes receivables written off in the current period
None.
5.4 Accounts Receivables
5.4.1 Accounts receivable by aging
Aging 31 December 2020 31 December 2019
Within one year 435,535,426.84 289,295,483.59
Including: Within 90 days 384,591,893.80 260,722,448.72
91 – 180 days 50,777,968.04 28,058,035.00
181 – 270 days 165,565.00 182,376.78
271 – 365 days 332,623.09
1-2 years 1,073,716.11
2-3 years 453,694.77
Over 3 years 5,000.00 4,647,605.17
Subtotal 435,540,426.84 295,470,499.64
Less: provision for bad debt 4,533,866.22 9,475,087.59
Total 431,006,560.62 285,995,412.05
85
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.4.2 Accounts receivable by bad debt provision method
31 December 2020
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
Provision for bad debt
recognised individually
Provision for bad debt
435,540,426.84 100.00 4,533,866.22 1.04 431,006,560.62
recognized collectively
Including: Portfolio by age 433,328,896.48 99.49 4,533,866.22 1.05 428,795,030.26
Portfolio by related parties 2,211,530.36 0.51 2,211,530.36
Total 435,540,426.84 100.00 4,533,866.22 1.04 431,006,560.62
(Continued)
31 December 2019
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
Provision for bad debt
recognised individually
Provision for bad debt
295,470,499.64 100.00 9,475,087.59 3.21 285,995,412.05
recognized collectively
Including: Portfolio by age 293,206,700.42 99.23 9,475,087.59 3.23 283,731,612.83
Portfolio by related parties 2,263,799.22 0.77 2,263,799.22
Total 295,470,499.64 100.00 9,475,087.59 3.21 285,995,412.05
Specific instructions for provision for bad debts:
On 31 December 2020 and 31 December 2019, accounts receivables with bad debt
provision are recognised by portfolio by age.
31 December 2020
Aging
Accounts receivable Provision for bad debt Provision ratio (%)
Not overdue 392,745,091.77 1,963,725.46 0.50
Overdue 1 – 30 days 36,596,667.51 1,646,850.01 4.50
Overdue 31 – 60 days 3,638,927.08 727,785.43 20.00
Overdue 61 – 90 days 277,645.12 124,940.32 45.00
Overdue more than 90
70,565.00 70,565.00 100.00
days
Total 433,328,896.48 4,533,866.22 1.05
86
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(Continued)
31 December 2019
Aging
Accounts receivable Accounts receivable Accounts receivable
Not overdue 255,331,295.08 1,276,656.48 0.50
Overdue 1 – 30 days 30,327,562.45 1,364,740.31 4.50
Overdue 31 – 60 days 841,208.62 168,241.72 20.00
Overdue 61 – 90 days 74,882.17 33,696.98 45.00
Overdue more than 90
6,631,752.10 6,631,752.10 100.00
days
Total 293,206,700.42 9,475,087.59 3.23
On 31 December 2020 and 31 December 2019, accounts receivables with bad debt
provision are recognised by portfolio by related parties.
31 December 2020
Accounts Receivables Provision for Provision ratio Reason for
Book balance
bad debt (%) provision
Portfolio by related parties 2,211,530.36
Total 2,211,530.36
(Continued)
31 December 2019
Accounts Receivables Provision for Provision ratio Reason for
Book balance
bad debt (%) provision
Portfolio by related parties 2,263,799.22
Total 2,263,799.22
Basis for the amount of bad debt provision in the current period:
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
based on groups.
5.4.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
31 December 31 December
Category Recovery
2019 Provision Write-off Other 2020
or reversal
Provision for
bad debt by 9,475,087.59 524,524.49 5,364,881.02 100,864.84 4,533,866.22
group
Total 9,475,087.59 524,524.49 5,364,881.02 100,864.84 4,533,866.22
87
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
There is no significant bad debt provision recovered or reversed in the current period.
5.4.4 Accounts receivable write-off during the reporting period
Items Amount
Accounts receivable write-off 5,364,881.02
The significant accounts receivable writen-off:
Nature of Written off Reasons for Write-off Result from
Company Name accounts amount write-off procedure related
receivable transaction
Receivables Company
Expected to be
EasyBreadCompanyAG from sales of 2,504,658.10 internal No
uncollectible
goods approval
Receivables Company
Philips (China) Expected to be
from sales of 1,816,206.54 internal No
Investment Co., Ltd. uncollectible
goods approval
Receivables Company
Expected to be
American Bright from sales of 308,382.36 internal No
uncollectible
goods approval
Total 4,629,247.00
5.4.5 Top five closing balances by entity
The total amount of the top five clients with largest accounts receivables balances at year
end is CNY 334,987,860.20, accounting for 76.91% of the total amount of accounts
receivable at the end of the year, and the total amount of bad debt provision at the end of the
year is CNY 2,930,440.96.
5.5 Advances to Suppliers
5.5.1 Advances to suppliers by aging
Aging 31 December 2020 31 December 2019
Amount Proportion (%) Amount Proportion (%)
Within one year 2,622,554.07 100.00 3,083,417.46 99.07
Over one year 28,894.60 0.93
Total 2,622,554.07 100.00 3,112,312.06 100.00
5.5.2 Top five closing balances by entity
The total amount of the top five vendors with the largest prepaid amounts by the Company
at the end of the year is CNY 971,215.16, accounting for 37.03% of the total amount of the
prepayment at the end of the year.
88
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.6 Other Receivables
5.6.1 Other receivables by category
Items 31 December 2020 31 December 2019
Interest receivable
Dividend receivable
Other receivables 31,938,548.59 29,271,999.53
Total 31,938,548.59 29,271,999.53
5.6.2 Interest receivable
None
5.6.3 Dividends receivable
None
5.6.4 Other Receivables
5.6.4.1 Other receivables by aging
Aging 31 December 2020 31 December 2019
Within one year 30,566,672.96 27,838,457.65
Including: Within 90 days 30,331,697.53 27,247,664.61
91 – 180 days 86,800.00 316,067.72
181 – 270 days 87,375.43 84,201.57
271 – 365 days 60,800.00 190,523.75
1-2 years 62,600.00 2,106,002.95
2-3 years 364,556.15
Over 3 years 1,134,501.09 1,243,148.47
Subtotal 32,128,330.20 31,187,609.07
Less: provision for bad debt 189,781.61 1,915,609.54
Total 31,938,548.59 29,271,999.53
5.6.4.2 Other receivables by nature
Nature 31 December 2020 31 December 2019
Export tax refund 25,064,584.54 17,500,000.00
Other open credits 5,625,222.17 12,060,268.46
Deposit 1,236,358.34 1,420,512.67
Due from related parties 202,165.15 206,827.94
Subtotal 32,128,330.20 31,187,609.07
Less: Provision for bad debt 189,781.61 1,915,609.54
Total 31,938,548.59 29,271,999.53
89
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.6.4.3 Other receivables by bad debt provision method
5.6.4.3.1 On 31 December 2020, provision for bad debt recognised based on three stages
model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 32,128,330.20 189,781.61 31,938,548.59
Stage 2
Stage 3
Total 32,128,330.20 189,781.61 31,938,548.59
On 31 December 2020, provision for bad debt at stage 1:
12-month
Provision Carrying
Category Book balance expected credit Reason
for bad debt amount
losses rate (%)
Provision for bad debt
recognised individually
Provision for bad debt
32,128,330.20 0.59 189,781.61 31,938,548.59
recognized by portfolio
Credit risk
has not
Export tax refund 25,064,584.54 25,064,584.54
increased
significantly
Credit risk
has not
Other current account 5,625,222.17 3.37 189,781.61 5,435,440.56
increased
significantly
Credit risk
has not
Deposit 1,236,358.34 1,236,358.34
increased
significantly
Credit risk
Due from related has not
202,165.15 202,165.15
parties increased
significantly
Total 32,128,330.20 0.59 189,781.61 31,938,548.59
90
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.6.4.3.2 On 31 December 2019, provision for bad debt recognised based on three stages
model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 29,949,460.60 677,461.07 29,271,999.53
Stage 2
Stage 3 1,238,148.47 1,238,148.47
Total 31,187,609.07 1,915,609.54 29,271,999.53
On 31 December 2019, provision for bad debt at stage 1:
12-month expected
Provision for
Category Book balance credit losses rate Carrying amount Reason
bad debt
(%)
Provision for bad debt
recognised individually
Provision for bad debt
29,949,460.60 2.26 677,461.07 29,271,999.53
recognized by portfolio
Credit risk
has not
1. Export tax refund 17,500,000.00 17,500,000.00
increased
significantly
Credit risk
has not
2. Other current account 10,822,119.99 6.26 677,461.07 10,144,658.92
increased
significantly
Credit risk
has not
2. Deposit 1,420,512.67 1,420,512.67
increased
significantly
Credit risk
has not
4. Due from related parties 206,827.94 206,827.94
increased
significantly
Total 29,949,460.60 2.26 677,461.07 29,271,999.53
91
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
On 31 December 2019, provision for bad debt at stage 3:
12-month
Provision for Carrying
Category Book balance expected credit Reason
bad debt amount
losses rate (%)
Provision for bad debt
recognised
individually
Provision for bad debt
recognized by 1,238,148.47 100.00 1,238,148.47
portfolio
Cannot be
Other current account 1,238,148.47 100.00 1,238,148.47
recovered
Total 1,238,148.47 100.00 1,238,148.47
Basis for the amount of provision for bad debts in the current period:
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
based on groups.
5.6.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
Expected credit loss
Provision for bad Expected credit Expected credit loss
for the whole duration Total
debt loss for the next for the whole duration
(Credit impairment
12 months (no credit impairment)
has occurred)
Closing balance as
677,461.07 1,238,148.47 1,915,609.54
of 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 482,679.46 482,679.46
92
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Stage 1 Stage 2 Stage 3
Expected credit loss
Provision for bad Expected credit Expected credit loss
for the whole duration Total
debt loss for the next for the whole duration
(Credit impairment
12 months (no credit impairment)
has occurred)
Used
Written off 5,000.00 1,238,148.47 1,243,148.47
Other movements
Closing balance as
189,781.61 189,781.61
of 31/12/2020
5.6.4.5 Other receivables write-off during the reporting period
Items Amount
Other receivables write-off 1,243,148.47
Including: Other receivables with significant balance write-off during the reporting period
Due from related
Entity name Nature Amount Reason Procedure
parties or not
Shanghai Tanghai Cannot be
Open credits 1,238,148.47 Yes No
Investment Co., Ltd recovered
Total 1,238,148.47
5.6.4.6 Top five closing balances by entity
Proportion of the Provision
Balance at 31
Entity name Nature Aging balance to the total for bad
December 2020
other receivables (%) debt
Zhangzhou Longchi
Development Zone Export tax
25,064,584.54 1-90 days 78.01
State Administration refund
of Taxation
State Grid Fujian
Longhai Power Open credits 2,560,234.58 1-90 days 7.97
Supply Co., Ltd.
China Export &
Credit Insurance Over 3
Deposit 648,450.00 2.02
Corporation Fujian years
Branch
93
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Proportion of the Provision
Balance at 31
Entity name Nature Aging balance to the total for bad
December 2020
other receivables (%) debt
Over 3
PT.PLN(PERSERO) Deposit 486,051.09 1.51
years
Xiamen Laideshun
Logistics Co., Ltd. Open credits 251,156.84 1-90 days 0.78
Zhangzhou Branch
Total 29,010,477.05 90.30
5.7 Inventories
5.7.1 Inventories by category
31 December 2020 31 December 2019
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Raw materials 100,787,147.78 14,006,349.34 86,780,798.44 100,565,847.78 18,759,173.06 81,806,674.72
Work in process 21,018,640.91 21,018,640.91 3,545,082.48 3,545,082.48
Self-manufactured
semi-finished 20,946,038.00 1,000,088.39 19,945,949.61 30,034,902.11 1,770,861.39 28,264,040.72
goods
Finished goods 134,905,753.88 11,506,798.79 123,398,955.09 122,743,114.25 16,278,222.58 106,464,891.67
Low-value
837,653.40 837,653.40 517,277.32 517,277.32
consumables
Materials in
3,070,079.91 3,070,079.91 1,557,620.47 1,557,620.47
transit
Total 281,565,313.88 26,513,236.52 255,052,077.36 258,963,844.41 36,808,257.03 222,155,587.38
5.7.2 Provision for impairment
Decrease in current
Increase in current year
year
31 December 31 December
Item Impact of
2019 Recovered or 2020
Accrual changes in Other
Written off
exchange rates
Raw material 18,759,173.06 1,961,096.57 -143,623.74 6,570,296.55 14,006,349.34
Work in progress
Self-manufactured
semi-finished goods 1,770,861.39 654,417.24 1,425,190.24 1,000,088.39
94
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Decrease in current
Increase in current year
year
31 December 31 December
Item Impact of
2019 Recovered or 2020
Accrual changes in Other
Written off
exchange rates
Finished goods 16,278,222.58 1,877,114.48 -45,002.36 6,603,535.91 11,506,798.79
Low-value
consumables
Materials in transit
Total 36,808,257.03 4,492,628.29 -188,626.10 14,599,022.70 26,513,236.52
5.8 Other Current Assets
Items 31 December 2020 31 December 2019
Input tax to be deducted 7,818,199.72 8,473,290.63
Financial investment 710,815,837.88 492,665,278.14
Prepaid income tax 1,028.78
Total 718,634,037.60 501,139,597.55
Note: Financial investments are mainly bank financial products purchased by Company with
idle funds.
5.9 Other equity instrument investment
5.9.1 General information of other equity instrument investment
Item 31 December 2020 31 December 2019
Non-trading equity instrument
40,000.00 40,000.00
investment
Total 40,000.00 40,000.00
5.10 Investment Properties
5.10.1 Investment properties accounted for using cost model
Items Building and plants Land use rights Total
Initial cost:
Balance on 31 December 2019 65,957,471.88 29,260,577.51 95,218,049.39
Increase during the reporting period
1. Acquisition
2. Transfer from inventories /fixed
assets /construction in progress
3. Impact of changes in exchange rate
95
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Building and plants Land use rights Total
Decrease during the reporting period 1,648,344.27 1,648,344.27
1. Disposal 1,648,344.27 1,648,344.27
2. Other transferred out
3. Impact of changes in exchange rate
Balance on 31 December 2020 64,309,127.61 29,260,577.51 93,569,705.12
Accumulated depreciation and
amortisation:
Balance on 31 December 2019 57,324,796.04 14,902,193.54 72,226,989.58
Increase during the reporting period 698,437.17 622,111.80 1,320,548.97
1. Accrual or amortization 698,437.17 622,111.80 1,320,548.97
2. Transfer from fixed assets
3. Impact of changes in exchange rate
Decrease during the reporting period 1,233,444.34 1,233,444.34
1. Disposal 1,233,444.34 1,233,444.34
2. Other transferred out
3. Impact of changes in exchange rate
Balance on 31 December 2020 56,789,788.87 15,524,305.34 72,314,094.21
Provision for impairment:
Balance on 31 December 2019
Increase during the reporting period
1. Accrual or amortization
2. Other
3. Impact of changes in exchange rate
Decrease during the reporting period
1. Disposal
2. Other
3. Impact of changes in exchange rate
Balance on 31 December 2020
Carrying amount:
Balance on 31 December 2020 7,519,338.74 13,736,272.17 21,255,610.91
Balance on 31 December 2019: 8,632,675.84 14,358,383.97 22,991,059.81
96
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.10.2 Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 645,985.38
Note: Lvyuan three country villa is the houses with limited property rights purchased by the
TsannKuen China (Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company
from Shanghai Lvsheng Real State Development Co., Ltd. in 1999, and there has no land
expropriation. Shanghai Lvsheng Real State Development Co., Ltd. and Shanghai Jiading
district, Huangdu town Lvyuan community residents' committees issued the certificate
jointly to prove the right of this property belongs to TsannKuen China (Shanghai) Enterprise
Co., Ltd. in January 2006.
5.11 Fixed Assets
5.11.1 Fixed assets by category
Items 31 December 2020 31 December 2019
Fixed assets 164,338,962.07 185,749,835.56
Disposal of fixed assets
Total 164,338,962.07 185,749,835.56
97
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2 Fixed assets
5.11.2.1 General information of fixed assets
Houses and Electronic devices, modules Improvement expense of
Items Machineries Vehicles Total
buildings and others leased fixed assets
Initial cost:
Balance on 31 December 2019 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
Increase during the reporting period 2,056,276.73 4,472,599.49 26,110,238.93 178,816.34 32,817,931.49
(i) Acquisition 4,472,599.49 26,110,238.93 178,816.34 30,761,654.76
(ii)Transfer from construction in progress 2,056,276.73 2,056,276.73
(iii) Impact of changes in exchange rates
Decrease during the reporting period 6,246,199.39 3,725,552.84 20,863,688.87 1,510,952.66 6,091,480.80 38,437,874.56
(i) Disposal 3,994,915.60 1,634,144.82 19,007,680.33 1,304,604.56 5,551,211.00 31,492,556.31
(ii) Other reduction
(iii) Impact of changes in exchange rates 2,251,283.79 2,091,408.02 1,856,008.54 206,348.10 540,269.80 6,945,318.25
Balance on 31 December 2020 93,647,826.29 161,565,309.12 869,881,721.37 19,026,933.04 57,061,893.94 1,201,183,683.76
Accumulated depreciation:
Balance on 31 December 2019 56,135,847.95 88,242,479.42 762,782,818.05 15,949,665.74 60,940,122.92 984,050,934.08
Increase during the reporting period 3,693,628.20 7,566,121.82 30,658,461.14 1,093,004.06 512,134.61 43,523,349.83
(i) Provision or amortisation 3,693,628.20 7,566,121.82 30,658,461.14 1,093,004.06 512,134.61 43,523,349.83
(ii) Transfer from fixed assets
(iii) Impact of changes in exchange rates
98
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Houses and Electronic devices, modules Improvement expense of
Items Machineries Vehicles Total
buildings and others leased fixed assets
Decrease during the reporting period 4,343,469.31 2,810,211.68 17,185,736.08 1,284,362.71 6,020,801.46 31,644,581.24
(i) Disposal 3,498,071.05 1,501,950.18 15,818,742.90 1,171,165.71 5,551,211.00 27,541,140.84
(ii) Other reduction
(iii) Impact of changes in exchange rates 845,398.26 1,308,261.50 1,366,993.18 113,197.00 469,590.46 4,103,440.40
Balance on 31 December 2020 55,486,006.84 92,998,389.56 776,255,543.11 15,758,307.09 55,431,456.07 995,929,702.67
Provision for impairment:
Balance on 31 December 2019 19,788,593.71 17,000,323.15 175,668.04 38,272.29 37,002,857.19
Increase during the reporting period 635,624.09 4,107,393.00 2,804.75 4,745,821.84
(i) Provision or amortisation 635,624.09 4,110,311.05 2,804.75 4,748,739.89
(ii) Other
(iii) Impact of changes in exchange rates -2,918.05 -2,918.05
Decrease during the reporting period 273,278.24 387,586.79 172,090.53 704.45 833,660.01
(i) Disposal 66,383.22 282,011.95 142,462.35 490,857.52
(ii) Other reduction
(iii) Impact of changes in exchange rates 206,895.02 105,574.84 29,628.18 704.45 342,802.49
Balance on 31 December 2020 20,150,939.56 20,720,129.36 6,382.26 37,567.84 40,915,019.02
Carrying amount:
Balance on 31 December 2020 38,161,819.45 48,415,980.00 72,906,048.90 3,262,243.69 1,592,870.03 164,338,962.07
Balance on 31 December 2019: 41,701,901.00 52,787,189.34 84,852,030.11 4,233,735.58 2,174,979.53 185,749,835.56
99
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2.2 Idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Machineries 44,200,168.73 27,234,225.08 16,965,690.13 253.52
Electronic device,
166,775,056.66 154,573,768.56 12,127,133.38 74,154.72
modules, and others
Vehicles 72,795.03 71,680.01 1,115.02
Improvement expense
999,659.75 972,277.87 27,381.88
of fixed assets
Total 212,047,680.17 182,851,951.52 29,121,320.41 74,408.24
5.11.2.3 Fixed assets without certificate of title
Items Carrying amount Reason
Lvyuan three country villa 193,795.61
Qingying garden 127,008.14 Legal procedures in process
Note: Lvyuan three country villa is the houses with limited property rights purchased by the
TsannKuen China (Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company
from Shanghai Lvsheng Real State Development Co., Ltd. in 1999, and there has no land
expropriation. Shanghai Lvsheng Real State Development Co., Ltd. and Shanghai Jiading
district, Huangdu town Lvyuan community residents' committees issued the certificate
jointly to prove the right of this property belongs to TsannKuen China (Shanghai) Enterprise
Co., Ltd. in January 2006.
5.12 Construction in Progess
5.12.1 Construction in progress by category
Items 31 December 2020 31 December 2019
Construction in progress 728,529.68 2,921,901.51
Construction materials
Total 728,529.68 2,921,901.51
5.12.2 Construction in progress
5.12.2.1 General information of construction in progress
31 December 2020 31 December 2019
Items Book Provision for Carrying Provision for Carrying
Book balance
balance impairment amount impairment amount
Sporadic
728,529.68 728,529.68 2,921,901.51 2,921,901.51
project
Total 728,529.68 728,529.68 2,921,901.51 2,921,901.51
100
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.12.3 Construction materials
None
5.13 Intangible Assets
5.13.1 General information of intangible assets
Items Land use rights Software Total
Initial cost:
Balance on 31 December 2019 19,408,932.00 44,260,587.99 63,669,519.99
Increase during the reporting period 492,593.57 6,599,549.05 7,092,142.62
1. Acquisition 6,599,549.05 6,599,549.05
2. Transfer from inventories /fixed assets
318,738.86 318,738.86
/construction in progress
3. Impact of changes in exchange rate 173,854.71 173,854.71
Decrease during the reporting period 1,619,168.96 782,187.31 2,401,356.27
1. Disposal 772,766.03 772,766.03
2. Other transferred out
3. Impact of changes in exchange rate 1,619,168.96 9,421.28 1,628,590.24
Balance on 31 December 2020 18,282,356.61 50,077,949.73 68,360,306.34
Accumulated depreciation and
amortisation:
Balance on 31 December 2019 4,370,243.37 28,565,996.38 32,936,239.75
Increase during the reporting period 621,106.16 6,572,741.80 7,193,847.96
1. Accrual or amortization 621,106.16 6,565,935.99 7,187,042.15
2. Transfer from fixed assets
3. Impact of changes in exchange rate 6,805.81 6,805.81
Decrease during the reporting period 326,918.22 789,175.97 1,116,094.19
1. Disposal 789,175.97 789,175.97
2. Other transferred out
3. Impact of changes in exchange rate 326,918.22 326,918.22
Balance on 31 December 2020 4,664,431.31 34,349,562.21 39,013,993.52
Provision for impairment:
Balance on 31 December 2019
Increase during the reporting period
1. Accrual or amortization
2. Other
101
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Land use rights Software Total
3. Impact of changes in exchange rate
Decrease during the reporting period
1. Disposal
2. Other
3. Impact of changes in exchange rate
Balance on 31 December 2020
Carrying amount:
Balance on 31 December 2020 13,617,925.30 15,728,387.52 29,346,312.82
Balance on 31 December 2019: 15,038,688.63 15,694,591.61 30,733,280.24
5.14 Long-term Deferred Expenses
Increase Decrease during the
31 December during the reporting period 31 December
Items
2019 reporting Other 2020
Amortisation
period decrease
Houses and buildings
7,063,252.81 2,333,120.95 2,712,983.34 6,683,390.42
renovation expenses
Wall projects of 3
162,662.99 62,966.40 99,696.59
phases
Telecommunications
51,504.42 2,861.36 48,643.06
project expenses
Total 7,225,915.80 2,384,625.37 2,778,811.10 6,831,730.07
5.15 Deferred Tax Assets and Deferred Tax Liabilities
5.15.1 Deferred tax assets before offsetting
31 December 2020 31 December 2019
Deductible Deferred tax Deductible Deferred tax
Items
temporary assets temporary assets
differences differences
Provision for asset
59,565,618.38 9,996,562.15 59,473,136.87 9,463,194.19
impairment
Provision for credit
3,144,069.54 478,564.04 9,094,485.90 1,512,918.53
impairment
Unrealized
284,635.52 71,158.88 569,182.52 142,295.63
intragroup profit
102
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2020 31 December 2019
Deductible Deferred tax Deductible Deferred tax
Items
temporary assets temporary assets
differences differences
Accrued expenses 12,221,158.78 2,001,465.13 11,382,495.34 1,882,789.81
Payroll liability 272,562.30 54,512.47 416,881.95 83,376.40
Undistributed
11,952,239.29 2,988,059.82 29,628,345.15 7,407,086.29
deficit
Financial liabilities
638,800.00 95,820.00
held for trading
Total 87,440,283.81 15,590,322.49 111,203,327.73 20,587,480.85
5.15.2 Deferred tax liabilities before offsetting
31 December 2020 31 December 2019
Deductible Deferred tax Deductible Deferred tax
Items
temporary liabilities temporary liabilities
differences differences
Policy relocation 193,170,474.36 48,292,618.59 193,170,474.36 48,292,618.59
Financial assets held
20,821,900.00 3,123,285.00 3,620,689.00 543,103.35
for trading
Others 48,239.76 9,647.98
Total 214,040,614.12 51,425,551.57 196,791,163.36 48,835,721.94
5.15.3 Unrecognized deferred tax assets
Items 31 December 2020 31 December 2019
Provision for asset impairment 7,862,637.16 14,337,977.35
Provision for credit impairment 1,579,578.29 2,296,211.23
Accrued expenses 15,032,275.03 14,687,122.47
Payroll liability 9,600,380.92 9,201,884.77
Undistributed deficit 125,592,039.85 139,107,798.31
Total 159,666,911.25 179,630,994.13
Note: The list above is not recognized as deductible temporary differences and recoverable
losses due to the uncertainty of whether whether sufficient taxable income will be obtained
in the future.
103
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.15.4 Deductible losses not recognised as deferred tax assets will expire in the
following periods:
Items 31 December 2020 31 December 2019 Note
Year 2020 10,341,578.00
Year 2021 59,954,740.54 42,160,374.19
Year 2022 4,828,378.89 4,828,378.89
Year 2023 16,003,668.47 15,495,274.18
Year 2024 14,837,857.89 14,837,857.89
Year 2025 to 2030 29,967,394.06 51,444,335.16
Total 125,592,039.85 139,107,798.31
Note: The annual loss of Tsannkuen Edge Intelligence Co., Ltd. continues to make up for a
maximum period of 10 years.
5.16 Other Non-current Assets
Items 31 December 2020 31 December 2019
Prepaid mold fee 46,275.64 148,718.90
Prepaid equipment fee 1,998,426.66 857,295.76
Total 2,044,702.30 1,006,014.66
5.17 Short-term Borrowings
5.17.1 Disclosure of short-term borrowings by category
Item 31 December 2020 31 December 2019
Pledged loan 16,345,141.13
Total 16,345,141.13
5.18 Held-for-Trading Financial Liabilities
Increase Decrease
during the during the
Item 31 December 2019 31 December 2020
reporting reporting
period period
Held-for-trading financial
638,800.00 638,800.00
liabilities
Including: Derivative financial
638,800.00 638,800.00
liabilities
Total 638,800.00 638,800.00
Note: Derivative financial liabilities are forward foreign exchange settlement/sale contracts
signed by the Company with the financial institutions.
104
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.19 Notes Payable
Items 31 December 2020 31 December 2019
Bank acceptance bills 7,521,531.97 4,110,230.08
Commercial acceptance bills 12,319,017.22
Total 7,521,531.97 16,429,247.30
Note: There are no expired notes payable that have not been paid as at the end of current
year.
5.20 Accounts Payable
5.20.1 Accounts payable by nature
Items 31 December 2020 31 December 2019
Within 1 year 871,081,181.47 590,887,361.06
Over 1 year 3,881,706.46 4,091,233.39
Total 874,962,887.93 594,978,594.45
5.20.2 Significant accounts payable with aging of over one year
Items 31 December 2020 Reason
Ningbo Chaochao Electrical
500,237.01 Quality disputes
Equipment Co., Ltd.
Total 500,237.01
5.21 Advances from Customers
5.21.1 Details of advances from customers
Items 31 December 2020 31 December 2019
Within 1 year 3,404,910.00 7,925,968.34
Over 1 year 3,448,190.03 5,368,317.44
Total 6,853,100.03 13,294,285.78
5.22 Contract Liabilities
5.22.1 Details of contract liabilities
Items 31 December 2020 31 December 2019
Advance from merchandise 25,605,755.71
Total 25,605,755.71
5.23 Employee Benefits Payable
5.23.1 Details of employee benefits payable
Increase during Decrease during Impact of
31 December 31 December
Items the reporting the reporting changes in
2019 2020
period period exchange rate
Short-term employee benefits 44,690,289.82 271,030,612.03 264,460,558.80 -145,924.09 51,114,418.96
105
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Increase during Decrease during Impact of
31 December 31 December
Items the reporting the reporting changes in
2019 2020
period period exchange rate
Post-employment
benefits-defined contribution 732,580.74 7,510,038.74 8,050,805.09 -43,967.68 147,846.71
plans
Termination benefits 1,011,126.00 7,654,246.59 8,665,372.59
Other benefits due within one
year
Total 46,433,996.56 286,194,897.36 281,176,736.48 -189,891.77 51,262,265.67
5.23.2 Short-term employee benefits
Increase during Decrease during Impact of
31 December 31 December
Items the reporting the reporting changes in
2019 2020
period period exchange rate
Salaries, bonuses, allowances
32,203,389.25 240,714,340.56 234,048,537.16 -100,044.30 38,769,148.35
and subsidies
Employee benefits 15,240,912.88 15,238,820.08 -2,092.80
Social insurance 1,133,495.04 7,976,611.38 8,514,654.93 -41,480.30 553,971.19
Including: Health insurance 844,888.44 5,899,465.73 6,196,024.59 -24,595.51 523,734.07
Injury insurance 261,846.25 1,665,389.53 1,910,350.99 -16,884.79
Birth insurance 26,760.35 411,756.12 408,279.35 30,237.12
Housing accumulation fund 9,207,793.77 5,513,733.64 5,116,921.49 9,604,605.92
Labour union funds and
1,304,400.41 1,304,400.41
employee education funds
Short-term absence pay 2,145,611.76 255,386.16 211,997.73 -2,306.69 2,186,693.50
Short-term profit-sharing
plan
Other short-term employee
25,227.00 25,227.00
benefits
Total 44,690,289.82 271,030,612.03 264,460,558.80 -145,924.09 51,114,418.96
5.23.3 Defined contribution plans
Increase during Decrease during Impact of
31 December 31 December
Items the reporting the reporting changes in
2019 2020
period period exchange rate
Basic endowment insurance 732,157.74 7,335,309.15 7,875,664.00 -43,967.68 147,835.21
106
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Increase during Decrease during Impact of
31 December 31 December
Items the reporting the reporting changes in
2019 2020
period period exchange rate
Unemployment insurance 423.00 174,729.59 175,141.09 11.50
Enterprise annuity
Total 732,580.74 7,510,038.74 8,050,805.09 -43,967.68 147,846.71
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’s 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.
5.24 Taxes Payable
Items 31 December 2020 31 December 2019
Value added tax (VAT) 180,939.30 348,837.48
Enterprise income tax 16,319,231.37 16,326,545.55
Individual income tax 797,007.65 927,844.25
City construction tax 729,009.73 731,213.68
Educational surcharge 729,009.84 745,436.58
Other 1,483,049.28 580,796.30
Total 20,238,247.17 19,660,673.84
5.25 Other Payables
5.25.1 Other payables by category
Items 31 December 2020 31 December 2019
Interest payable
Dividend payable
Other payable 52,803,158.48 48,482,744.38
Total 52,803,158.48 48,482,744.38
5.25.2 Other payables
5.25.2.1 Other payables by nature
Items 31 December 2020 31 December 2019
Within 1 year 39,088,143.93 38,467,673.13
Over 1 year 13,715,014.55 10,015,071.25
Total 52,803,158.48 48,482,744.38
107
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.25.2.2 Significant other payables with aging over one year
Items 31 December 2020 Reason
Deposit 9,483,375.00 Return upon termination of contract
Total 9,483,375.00
5.26 Long-term Employee Benefits Payable
5.26.1 General information of long-term employee benefits payable
Items 31 December 2020 31 December 2019
Post-employment benefits-net liability under defined
312,775.91 425,896.17
benefit plans
Total 312,775.91 425,896.17
5.26.2 Changes in defined benefit plans
Present value of the defined benefit obligation:
Items 2020 2019
Balance at the beginning of the reporting period 425,896.17 361,923.23
Cost recognised in current profit or loss 19,118.67 80,874.55
Cost recognised in other comprehensive income -93,635.32 -13,990.74
Other changes: -38,603.61 -2,910.87
(i) Consideration paid in settlements
(ii) Payment of benefits -12,498.64 -18,199.35
(iii) Others -26,104.97 15,288.48
Balance at the end of the reporting period 312,775.91 425,896.17
5.27 Share Capital
Changes during the reporting period (+,-)
31 December 31 December
Item Bonus Capitalisation
2019 New issues Others Subtotal 2020
issues of reserves
Number of
185,391,680.00 185,391,680.00
total shares
5.28 Capital Reserves
Increase during Decrease during
31 December 31 December
Item the reporting the reporting
2019 2020
period period
Capital premium (share
210,045,659.80
premium) 210,045,659.80
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 296,808,965.79
108
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.29 Other Comprehensive Income
Current year
Less: previously Less: previously
After tax
31 December recognised in other recognised in other After tax 31 December
Item Amount for the Less: Income attributable to
2019 comprehensive income comprehensive income attributable to the 2020
year before tax tax expense minority
transferred into profit or transferred into retained parent company
shareholders
loss earnings
1. Other comprehensive income
will not be reclassified to profit or -38,643.22 117,044.24 23,408.85 70,226.49 23,408.90 31,583.27
loss
Including: Changes of
remeasurement of the defined -38,643.22 117,044.24 23,408.85 70,226.49 23,408.90 31,583.27
benefit plan
Other comprehensive income will
not be reclassified into profit or loss
under equity method
Changes in fair value of other
equity instrument investment
Changes in fair value related to own
credit risk
2. Items will be reclassified to profit
7,553,393.23 -7,682,551.29 -5,761,913.47 -1,920,637.82 1,791,479.76
or loss
109
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Current year
Less: previously Less: previously
After tax
31 December recognised in other recognised in other After tax 31 December
Item Amount for the Less: Income attributable to
2019 comprehensive income comprehensive income attributable to the 2020
year before tax tax expense minority
transferred into profit or transferred into retained parent company
shareholders
loss earnings
Including: Other comprehensive
income will be reclassified into
profit or loss under equity method
Changes in fair value of other debt
investment
Reclassification of financial assets
to other comprehensive income
Provision of credit impairment of
other debt investment
Cash flow hedge reserve (The
effective portion of the gains
/(losses) on cash flow hedge)
Exchange differences on translating
7,553,393.23 -7,682,551.29 -5,761,913.47 -1,920,637.82 1,791,479.76
foreign operations
Total 7,514,750.01 -7,565,507.05 23,408.85 -5,691,686.98 -1,897,228.92 1,823,063.03
110
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.30 Surplus Reserves
Increase Decrease
Changes of
31 December 1 January during the during the 31 December
Item accounting
2019 2020 reporting reporting 2020
policy
period period
Statutory surplus
40,499,488.55 40,499,488.55 8,588,174.13 49,087,662.68
reserves
Total 40,499,488.55 40,499,488.55 8,588,174.13 49,087,662.68
Note: Pursuant to the Company Law of the People's Republic of China and Articles of
Association, the Company appropriates 10% of net profit to the statutory surplus reserves. If
the accumulated amount of the statutory surplus reserve reaches more than 50% of the
registered capital of the Company, it shall not be withdrawn.
After the Company accrues 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.
5.31 Retained Earnings
Items 2020 2019
Balance at the end of last period before adjustments 218,523,906.99 122,872,551.30
Adjustments for the opening balance (increase /(decrease)) 494,653.29
Balance at the beginning of the reporting period after
218,523,906.99 123,367,204.59
adjustments
Add: net profit attributable to owners of the parent company
139,522,190.75 105,233,212.02
for the reporting period
Less: appropriation to statutory surplus reserves 8,588,174.13 2,660,842.42
Appropriation to discretionary surplus reserves
Provision for general risk reserves
Payment of ordinary share dividends 18,539,168.00 7,415,667.20
Common stock dividends converted to share capital
Balance at the end of the reporting period 330,918,755.61 218,523,906.99
5.32 Revenue and Cost of Sales
2020 2019
Items
Revenue Costs of sales Revenue Costs of sales
Principal
2,066,576,833.78 1,722,830,969.80 1,919,745,046.46 1,631,156,891.41
activities
Other activities 77,604,904.55 33,919,348.10 82,194,795.48 34,644,195.77
Total 2,144,181,738.33 1,756,750,317.90 2,001,939,841.94 1,665,801,087.18
111
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.32.1 Revenue from principal activities (by industry or business)
2020 2019
Industry (business)
Revenue Costs of sales Revenue Costs of sales
Household appliances
2,066,576,833.78 1,722,830,969.80 1,919,745,046.46 1,631,156,891.41
industry
Total 2,066,576,833.78 1,722,830,969.80 1,919,745,046.46 1,631,156,891.41
5.32.2 Revenue from principal activities (by product)
2020 2019
Industry (business)
Revenue Costs of sales Revenue Costs of sales
Catering and Cooking 1,470,116,469.53 1,234,617,024.23 1,271,637,191.29 1,091,065,894.00
Home helper 397,954,437.24 335,387,964.40 388,186,251.50 336,632,218.03
Tea/Coffee makers 184,473,267.41 147,236,293.39 244,844,541.59 194,823,071.49
Others 14,032,659.60 5,589,687.78 15,077,062.08 8,635,707.89
Total 2,066,576,833.78 1,722,830,969.80 1,919,745,046.46 1,631,156,891.41
5.32.3 Revenue from principal activities (by region)
2020 2019
Region
Revenue Costs of sales Revenue Costs of sales
Australia 75,243,660.83 59,851,012.52 83,031,966.00 66,388,350.68
Africa 14,907,902.56 11,863,723.39 19,351,407.62 14,900,668.94
America 1,118,127,377.12 934,093,466.91 906,460,709.85 766,978,154.00
Europe 440,214,124.77 360,354,097.45 492,289,796.35 417,808,120.75
Asia 418,083,768.50 356,668,669.53 418,611,166.64 365,081,597.04
Total 2,066,576,833.78 1,722,830,969.80 1,919,745,046.46 1,631,156,891.41
5.33 Taxes and Surcharges
Items 2020 2019
City construction tax 4,064,818.02 4,344,437.75
Educational surcharge 3,985,963.82 4,276,791.97
Property tax 2,495,452.34 1,484,363.10
Land use tax 387,977.28 393,321.00
Stamp duty 1,008,286.88 985,573.31
Other 111,303.62 8,949.67
Total 12,053,801.96 11,493,436.80
112
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.34 Selling and Distribution Expenses
Items 2020 2019
Export expenses 31,418,797.93 29,409,292.34
Employee remunerations 12,441,053.90 16,960,247.48
Claims experiment expenses 5,341,375.17 6,666,539.88
Sales commission and after sales
4,037,792.85 3,612,254.90
service fees
Advertisements charges and sales
1,107,178.53 2,345,198.27
promotion
Travel expenses 337,561.92 2,193,296.51
Rental expenses 285,625.05 412,767.45
Others 573,443.30 1,306,722.79
Transportation expenses 161,424.41 281,331.30
Administrative expenses 153,540.35 202,296.32
Total 55,857,793.41 63,389,947.24
5.35 General and Administrative Expenses
Items 2020 2019
Employee remunerations 38,653,129.40 37,160,444.19
Rental expenses 11,788,219.02 10,488,506.08
Depreciation and amortization of
7,147,885.76 8,094,423.95
assets
Others 7,861,270.56 7,966,318.16
Maintenance expenses 4,997,217.26 6,801,817.68
Insurance expenses 4,626,617.16 2,409,628.91
Travel expenses 3,049,227.60 4,188,371.76
Consultant fees 2,937,651.61 4,072,610.10
Administrative expenses 1,320,127.10 1,826,261.75
Total 82,381,345.47 83,008,382.58
5.36 Research and Development Expenses
Items 2020 2019
Employee remunerations 37,874,280.16 43,111,232.54
Depreciation and amortization of
7,645,493.09 6,896,148.91
assets
Test expenses 5,586,121.57 7,452,505.41
113
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 2020 2019
Patent expenses 2,683,493.35 2,757,390.62
Certification expenses 2,003,763.18 2,958,178.50
Rental expenses 1,646,108.80 2,685,197.90
Others 2,331,614.33 2,646,238.22
Consultant fees 1,255,335.01 747,912.93
Maintenance expenses 583,808.94 879,622.91
Travel expenses 334,763.99 1,764,315.41
Total 61,944,782.42 71,898,743.35
5.37 Finance Expenses
Items 2020 2019
Interest expenses 433,614.88 941,366.70
Less: Interest income 14,782,907.49 5,218,650.55
Foreign exchange losses 40,643,356.53 -4,017,602.90
Bank charges 1,218,677.91 1,134,525.96
Total 27,512,741.83 -7,160,360.79
5.38 Other Income
Items 2020 2019 Related to assets /income
1. Government grant recognised in
6,241,497.95 4,979,380.03 Related to income
other income
Including: Government grant
related to deferred income
Government grant related to
deferred income
Government grant directly
6,241,497.95 4,979,380.03 Related to income
recognised in current profit or loss
2. Others related to daily operation
activities and recognised in other
income
Including: Charges of withholding
individual income tax
Additional deduction of input tax
Income from debt restructuring
Total 6,241,497.95 4,979,380.03
114
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Details of government grant recognised in other income:
Items 2020 2019 Related to assets /income
Enterprise R&D investment Related to income
1,552,140.00 1,024,800.00
subsidies
Export credit insurance subsidy 1,449,323.00 2,065,671.50 Related to income
Foreign trade export incentives 1,500,000.00 Related to income
Technology innovation subsidies 617,000.00 400,000.00 Related to income
Increasing production and efficiency Related to income
564,414.00 447,500.00
reward
Patent subsidies 324,500.00 339,000.00 Related to income
Employment stabilization subsidies 214,120.95 684,008.53 Related to income
Exhibition subsidies 20,000.00 Related to income
Special subsidies for online Related to income
18,400.00
technology trading projects
Total 6,241,497.95 4,979,380.03
5.39 Investment Income
Items 2020 2019
Investment income from financial assets at fair value
24,078,989.00 -3,709,080.00
through profit or loss during holding period
Investment income from financial products 19,292,756.54 21,778,521.54
Total 43,371,745.54 18,069,441.54
5.40 Gains on Changes in Fair Values
Sources of gains on changes in fair value 2020 2019
Held-for-trading financial assets 17,840,011.00 2,179,989.00
Including: changes in fair value of derivatives 17,840,011.00 2,179,989.00
Held-for-trading financial liabilities -638,800.00
Total 17,840,011.00 1,541,189.00
5.41 Impairment Loss of Credit
Items 2020 2019
Bad debt of accounts receivables -524,524.49 -1,070,365.41
Bad debt of other receivables 482,679.46 -116,373.04
Total -41,845.03 -1,186,738.45
115
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.42 Impairment Loss of Assets
Items 2020 2019
Impairment of inventories -4,492,628.29 -12,371,033.33
Impairment of fixed assets -4,748,739.89 -1,286,008.24
Total -9,241,368.18 -13,657,041.57
5.43 Gains from Disposal of Assets
Items 2020 2019
Gains from Disposal of Assets 195,318.03 63,688,086.21
Total 195,318.03 63,688,086.21
5.44 Non-operating Income
5.44.1 Details of non-operating income
Recognized in current
Items 2020 2019 extraordinary gains and
losses
Government grants irrelevant to daily
operation activities (see the following
table for details: Government grants 21,162,176.00
irrelevant to daily operation activities
for details）
Other 5,986,192.66 6,138,240.65 5,986,192.66
Total 5,986,192.66 27,300,416.65 5,986,192.66
5.44.2 Government grants irrelevant to daily operation activities
Related to assets
Items 2020 2019
/income
Government relocation
21,162,176.00 Related to income
compensation
Total 21,162,176.00
5.45 Non-operating Expenses
Recognized in current
Items 2020 2019 extraordinary gains and
losses
Loss from damage or scrapping of
919,177.43 673,056.59 919,177.43
non-current assets
Including: loss from scrapping of
919,177.43 673,056.59 919,177.43
non-current assets
116
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Recognized in current
Items 2020 2019 extraordinary gains and
losses
Donations 65,422.42 157,185.88 65,422.42
Others 332,630.85 332,630.85
Fines 4,162.93
Total 1,317,230.70 834,405.40 1,317,230.70
5.46 Income Tax Expenses
5.46.1 Details of income tax expenses
Items 2020 2019
Current tax expenses 17,157,864.07 22,206,953.28
Deferred tax expenses 7,586,987.99 27,146,971.52
Total 24,744,852.06 49,353,924.80
5.46.2 Reconciliation of accounting profit and income tax expenses
Items 2020 2019
Profit before tax 210,715,276.61 213,408,933.59
Income tax expense at the statutory /applicable tax
52,678,819.15 53,352,233.40
rate
Effect of different tax rate of subsidiaries -21,483,131.51 -11,778,337.22
Adjustments of impact from prior period income
-1,306,289.59 114,978.76
tax
Effect of income that is exempt from taxation -134,668.40 -111,634.56
Effect of non-deductible costs, expenses or losses 2,179,942.24 842,659.70
Effect of previously unrecognized deductible
-1,603,091.09
losses recognised as deferred tax assets
Effect of deductible temporary differences and
deductible losses not recognised as deferred tax 118,846.55 11,311,012.68
assets
R&D expenses plus deduction -5,705,575.29 -4,376,987.96
Income tax expenses 24,744,852.06 49,353,924.80
5.47 Other Comprehensive Income
For details of the other comprehensive income and related tax effect, transfer to profit or
loss and adjustment of other comprehensive income, refer to Note 5.29 Other
Comprehensive Income
117
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.48 Notes to the Statement of Cash Flow
5.48.1 Other cash received relating to operating activities
Items 2020 2019
Government grants 6,241,497.95 26,961,556.03
Interests income 14,782,907.49 5,218,650.55
Rent income 49,433,171.12 50,324,606.89
Funds in current account and others 8,570,658.74 6,694,142.96
Total 79,028,235.30 89,198,956.43
5.48.2 Other cash payments relating to operating activities
Items 2020 2019
Penalties and donations 65,422.42 161,348.81
Bank charges 1,218,677.91 1,134,525.96
Sales expenses, general and
administrative expenses, and research 94,807,395.57 97,204,731.46
and development expenses paid by cash
Current accounts and others 12,686,528.50 2,681,430.50
Total 108,778,024.40 101,182,036.73
5.48.3 Other cash received relating to investing activities
Items 2020 2019
Time deposits recovered after maturity
for the purpose to earn interest income 266,214,151.16 228,047,963.79
in financial institutions
Total 266,214,151.16 228,047,963.79
5.48.4 Other cash payments relating to investing activities
Items 2020 2019
Time deposits in financial institutions
for the purpose of earning interest 266,214,151.16 228,047,963.79
income
Total 266,214,151.16 228,047,963.79
5.48.5 Other cash received relating to financing activities
Items 2020 2019
Capital absorbed and loan between
related parties
Security deposit of pledged loan 21,200,000.00
Total 21,200,000.00
118
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.48.6 Other cash payments relating to financing activities
Items 2020 2019
Security deposit of pledged loan 22,750,000.00 —
Deposit for letter of credit 12,243,391.52
Total 34,993,391.52
5.49 Supplementary Information to the Statement of Cash Flows
5.49.1 Supplementary information to the statement of cash flows
Supplementary information 2020 2019
1. Adjustments of net profit to cash flows from
operating activities:
Net profit 185,970,424.55 164,055,008.79
Add: Provisions for impairment of assets 9,241,368.18 13,657,041.57
Impairment loss of credit 41,845.03 1,186,738.45
Depreciation of fixed assets, investment properties, oil
44,843,898.80 44,172,129.60
and gas asset and productive biological assets
Amortisation of intangible assets 7,187,042.15 6,033,431.63
Amortisation of long-term deferred expenses 2,778,811.10 2,548,054.42
Gains on disposal of fixed assets, intangible assets, and
-195,318.03 -63,688,086.21
other long-term assets
Loss on scrapping of fixed assets 919,177.43 673,056.59
Gains on changes in fair value -17,840,011.00 -1,541,189.00
Finance income -2,443,195.54 4,849,161.64
Investment income -43,371,745.54 -18,069,441.54
Decreases in deferred tax assets 4,997,158.36 5,816,473.68
Increases in deferred tax liabilities 2,589,829.63 21,330,497.84
Increases in inventories -38,424,205.42 8,689,169.57
Increases in operating receivables -146,298,730.41 -3,558,046.68
Increases in operating payables 305,274,733.95 -42,533,712.37
Others
Net cash flows from operating activities 315,271,083.24 143,620,287.98
2. Significant investing and financing activities not
involving cash receipts and payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one year
119
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Supplementary information 2020 2019
Fixed assets acquired under finance leases
3. Net increases in cash and cash equivalents:
Cash at the end of the reporting period 672,801,206.68 639,623,201.98
Less: Cash at the beginning of the reporting period 639,623,201.98 448,492,295.47
Add: Cash equivalents at the end of the reporting
period
Less: Cash equivalents at the beginning of the reporting
period
Net increase in cash and cash equivalents 33,178,004.70 191,130,906.51
5.50.2 The components of cash and cash equivalents
Items 31 December 2020 31 December 2019
1. Cash 672,801,206.68 639,623,201.98
Including: Cash on hand 875,000.35 926,966.65
Cash in bank available for immediate use 671,926,206.33 638,696,235.33
Other monetary funds available for immediate use
Deposit in the central banks available for
immediate use
Deposit in peer firms
Loan to peer firms
2. Cash equivalents
Including: Bond investments maturing within three
months
3. Cash and cash equivalents at the end of the reporting
672,801,206.68 639,623,201.98
period
Including: Restricted cash and cash equivalents of the
parent company and the subsidiaries of the group
Note 1: Cash and cash equivalents exclude the restricted cash and cash equivalents in parent
company or subsidiary.
Note 2: On 31 December 2020, the amount of cash and cash equivalents in the statement of
cash flows was CNY 672,801,206.68, and the balance of monetary funds of balance sheet
was CNY 707,794,598.20. The difference of CNY 34,993,391.52 was caused by deducting
the security deposit of pledge loan of CNY 22,750,000.00 and the deposit for letter of credit
of CNY 12,243,391.52 from the cash and cash equivalents in the statement of cash flows.
120
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.51 Restricted Assets
Carrying amount on 31
Item Reason
December 2020
Other monetary funds 34,993,391.52 Security deposits
Total 34,993,391.52 /
Note: All restricted assets are the other monetary funds, of which CNY 12,243,391.52 is the
deposit for letter of credit and CNY 22,750,000.00 is the security deposit of pledge loan.
Other than the mentioned restricted funds, the Company does not have other funds with
restrictions or potential recovery risks due to mortgage, pledge, or freezing in the currency
funds at the end of the period.
5.52 Foreign Currency Monetary Items
5.52.1 Details for foreign currency monetary items:
Carrying amount in Carrying amount in
Items foreign currency on 31 Exchange rate CNY on 31 December
December 2020 2020
Cash and cash equivalents
Including: HKD 35,867.41 0.841640 30,187.45
USD 27,123,103.18 6.524900 176,975,535.94
JPY 31,549,211.53 0.063236 1,995,045.94
EUR 51,708.05 8.025000 414,957.10
GBP 9,519.64 8.890300 84,632.46
IDF 944,680,509.61 0.000457 431,718.99
HUF 81,015.89 0.022012 1,783.32
NTD 18,380,526.99 0.228972 4,208,626.03
Total 184,142,487.23
Accounts receivables
Including: USD 70,710,850.43 6.524900 461,381,227.97
JPY 20,574,460.00 0.063236 1,301,046.55
IDR 435,150,320.00 0.000457 198,863.70
Total 462,881,138.22
Accounts payables
Including: USD 14,885,260.92 6.524900 97,124,838.98
EUR 78,533.03 8.025000 630,227.57
HKD 392,959.70 0.841640 330,730.60
121
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Carrying amount in Carrying amount in
Items foreign currency on 31 Exchange rate CNY on 31 December
December 2020 2020
JPY 37,860,308.00 0.063236 2,394,134.44
IDR 351,749,544.70 0.000457 160,749.54
NTD 6,592,908.04 0.228972 1,509,591.34
Total 102,150,272.47
Other receivables
Including: USD 9,890.12 6.524900 64,532.04
NTD 1,117,363.00 0.228972 255,844.84
IDR 1,076,175,401.00 0.000457 491,812.16
Total 812,189.04
Other payables
Including: USD 377,907.46 6.524900 2,465,808.39
HKD 28,475.66 0.841640 23,966.25
JPY 218,034.00 0.063236 13,787.60
NTD 296,167.00 0.228972 67,813.95
IDR 2,046,440,642.43 0.000457 935,223.37
Total 3,506,599.56
Short-term borrowings
Including: USD 2,505,040.86 6.524900 16,345,141.13
Total 16,345,141.13
5.53 Government Grants
5.53.1 Government grants related to assets
Items Recognised in current profit or Presented items that
presented in loss or directly as deduct of recognised in
Item Amount the statement related cost current profit or loss
of financial or directly as deduct
2020 2019
position of related cost
Equipment
Fixed assets 74,563.64 118,058.78 Cost of sales
investment subsidies
122
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.53.2 Government grants related to income
Items Recognised in current profit or Presented items that
presented in loss or directly as deduct of recognised in
Items Amounts the statement related cost current profit or loss
of financial or directly as deduct
2020 2019
position of related cost
R&D expenses
1,552,140.00 Other income 1,552,140.00 1,024,800.00 Other income
subsidies
Export credit
1,449,323.00 Other income 1,449,323.00 2,065,671.50 Other income
insurance subsidies
Incentives for
promoting foreign
1,000,000.00 Other income 1,000,000.00 Other income
trade growth in
2019
Export incentives
during the period of
coronavirus from 500,000.00 Other income 500,000.00 Other income
January to April
2020
Reward for export
564,414.00 Other income 564,414.00 Other income
increase in 2019
High level R&D
and innovation 300,000.00 Other income 300,000.00 Other income
awards in 2020
Patent subsidy by
the Zhangzhou
274,500.00 Other income 274,500.00 Other income
Taiwan Investment
Zone
Employment
stabilization 204,884.24 Other income 204,884.24 72,081.85 Other income
subsidies
Science and
technology 200,000.00 Other income 200,000.00 Other income
insurance subsidies
123
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Recognised in current profit or Presented items that
presented in loss or directly as deduct of recognised in
Items Amounts the statement related cost current profit or loss
of financial or directly as deduct
2020 2019
position of related cost
Provincial
intellectual property
100,000.00 Other income 100,000.00 Other income
advantage
enterprise Award
The first batch of
patent funding in 50,000.00 Other income 50,000.00 Other income
2020
Social security
subsidies for rural 3,577.14 Other income 3,577.14 Other income
labor
Awards of
Zhangzhou
17,000.00 Other income 17,000.00 Other income
Industrial Design
Competition
Subsidy for the
Guangzhou Export 20,000.00 Other income 20,000.00 Other income
Commodities Fair
Reward for
absorbing the
impoverished 5,659.57 Other income 5,659.57 Other income
people to work in
2020
2017 Fujian
Science and Other income 100,000.00 Other income
Technology Award
Special subsidies
for online
Other income 18,400.00 Other income
technology trading
projects
124
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Recognised in current profit or Presented items that
presented in loss or directly as deduct of recognised in
Items Amounts the statement related cost current profit or loss
of financial or directly as deduct
2020 2019
position of related cost
2018 patent grant
Other income 150,000.00 Other income
fund award
The first batch of
patent funding in Other income 51,000.00 Other income
2019
Intellectual
property advantage Other income 100,000.00 Other income
enterprise funding
Provincial increase
in production and
Other income 447,500.00 Other income
efficiency incentive
funds in 2019 Q1
Subsidies for
high-level R & D
Other income 300,000.00 Other income
and innovation
platforms
The second batch of
patent funding in Other income 38,000.00 Other income
2019
Enterprise
employment Other income 611,926.68 Other income
incentives
Non-operating Non-operating
Demolition funds 21,162,176.00
income income
6. CHANGES IN THE SCOPE OF CONSOLIDATION
6.1 Business Combination not Under Common control
None
6.2 Business Combination under Common Control
None
125
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
6.3 Other reasons for change of consolidated scope
In April 2020, the Company cancelled its subsidiary TsannKuen (Zhangzhou) Investment
Co., Ltd. (TKI). From the date of completion of the cancellation, TsannKuen (Zhangzhou)
Investment Co., Ltd. will no longer be included in the scope of the consolidated statements.
The income, expenses, and profits before the completion of the cancellation will be included
in the consolidated income statement, and the cash flows before the completion of the
cancellation will be included in the consolidated cash flow statement.
7. INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
7.1.1 Composition of corporate group
Percentage of
Principal
Registered Nature of equity interests by Methods of
Name of subsidiary place of
City business the Company (%) acquisition
business
Direct Indirect
TsannKuen Manufactures
Acquired
(Zhangzhou) home
Zhangzhou Zhangzhou 75.00 75.00 through
Enterprise Co., electronic
establishment
Ltd.(TKL) appliance
Acquired
TsannKuen China Manufactures
through business
(Shanghai) home
Shanghai Shanghai 46.875 62.50 combination
Enterprise Co., Ltd. electronic
under common
(TKS) appliance
control
TsannKuen
Manufactures
(Zhangzhou) South Acquired
home
Port Electronics Zhangzhou Zhangzhou 56.25 75.00 through
electronic
Enterprise Co., Ltd. establishment
appliance
(TKN)
Shanghai Canxing Sales of Acquired
Trading Co.,Ltd Shanghai Shanghai home 56.25 100.00 through
(STD) electronic establishment
Xiamen Tsannkuen Acquired
Property
Property Services Xiamen Xiamen 100.00 100.00 through
services
Co., Ltd. (TKW) establishment
126
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Percentage of
Principal
Registered Nature of equity interests by Methods of
Name of subsidiary place of
City business the Company (%) acquisition
business
Direct Indirect
Acquired
East Sino through business
Investment,
Development Hong Kong Hong Kong 75.00 100.00 combination
Trading
Limited. (East Sino) under common
control
Acquired
Manufactures
through business
Pt.Star Comgistic home
Indonesia Indonesia 75.00 100.00 combination
Indonesia (SCI) electronic
under common
appliance
control
Pt.Star Comgistic
Acquired
Property Real estate
Indonesia Indonesia 75.00 100.00 through
Development development
establishment
Indonesia (SCPDI)
Acquired
Orient Star through business
Investment,
Investments Limited Hong Kong Hong Kong 75.00 100.00 combination not
Trading
(OSI) under common
control
Acquired
Tsannkuen Edge through business
Industrial
Intelligence Co., Taiwan Taiwan 75.00 100.00 combination
design
Ltd. (TKEI) under common
control
TsannKuen
Acquired
(Zhangzhou) Investment,
Zhangzhou Zhangzhou 75.00 100.00 through
Investment Co., Ltd. Trading
establishment
(TKI)
127
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
7.1.2 Significant non-wholly owned subsidiaries
Dividends
Proportion of Profit or loss declared to
Non-controlling
ownership attributable to non- distribute to
interests at the
Name of subsidiary interest held by controlling interests non-controlling
end of the
non- controlling during the reporting interests during
reporting period
interests period the reporting
period
TKL 25.00 42,525,739.47 26,395,184.92 357,422,205.73
TKS 53.13 2,899,437.51 123,699,576.83
SCI 25.00 394,729.15 26,745,020.01
TKEI 25.00 574,102.42 4,440,579.65
7.1.3 Main financial information of significant non-wholly owned subsidiaries
31 December 2020
Name of
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
assets liabilities liabilities
TKL 1,940,114,137.32 461,271,522.51 2,401,385,659.83 968,573,551.91 3,123,285.00 971,696,836.91
TKS 274,648,848.79 8,783,159.66 283,432,008.45 2,293,127.59 48,292,618.59 50,585,746.18
SCI 140,047,331.70 67,251,146.96 207,298,478.66 100,318,398.62 100,318,398.62
TKEI 18,999,605.00 2,456,721.00 21,456,326.00 3,371,583.52 322,423.88 3,694,007.40
(Continued)
31 December 2019
Name of
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
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)
2020
Name of
Total comprehensive Net cash flows from
subsidiary Revenue Net profit/(loss)
income operating activities
TKL 1,925,972,956.80 170,102,957.89 375,104,778.07
TKS 935,988.16 5,457,764.73 21,277,974.84
128
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2020
Name of
Total comprehensive Net cash flows from
subsidiary Revenue Net profit/(loss)
income operating activities
SCI 242,314,396.65 1,578,916.61 -24,842,285.74
TKEI 11,923,713.18 2,296,409.71 1,962,210.40
(Continued)
2019
Name of
Total comprehensive Net cash flows from
subsidiary Revenue Net profit/(loss)
income operating activities
TKL 1,891,438,194.50 117,117,735.59 121,362,837.92
TKS 1,009,359.74 64,576,091.37 20,111,191.73
SCI 112,791,823.64 -15,500,417.14 -6,027,787.01
TKEI 7,893,221.28 -2,817,850.84 -1,395,768.29
7.2 Transactions which Resulted in Change of Equity Interests in a Subsidiary without
Loss of Control
None
8. RISKS RELATED TO FINANCIAL INSTRUMENTS
The main financial instruments of the Company include equity investments, debt
investments, loans, accounts receivable, accounts payable and etc., please see Note 5 for
detail of related items. The risks associated with financial instruments and the risk
management policies which the Company uses to reduce these risks are 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 uses sensitivity analysis techniques to analyze the possible impact of
reasonable and possible changes in risk variables on current profits and losses or
shareholder equity. Since any risk variable rarely changes in isolation, and the correlation
between variables will have a significant effect on the final impact of the change of a certain
risk variable, the following contents are based on the assumption that the change of each
variable is carried out independently.
8.1 The targets and policies of risks management
The target of the Company's risk management is to achieve an appropriate balance between
risks and returns, reduce the negative impact of risks on the Company's operating
performance to the lowest level, and maximize the interests of shareholders and other equity
129
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
investors. Based on this risk management objective, the basic strategy of the Company’s risk
management is to determine and analyze the various risks faced by the Company, to
establish suitable risk tolerance baseline and conduct risk management, and to supervise
various risks timely and reliably, so the the risks are controlled within a limited range.
8.1.1 Market risk
8.1.1.1 Foreign exchange risk
The main exchange rate risk of the Company comes from the foreign currency assets and
liabilities held by the Company and its subsidiaries that are not denominated in its
functional currency. The Company bears the foreign exchange risk primarily concerned with
USD, JPY, IDR, EUR, HKD and NTD. Three of the Company’s subsidiaries use foreign
currencies for purchasing and sales, including SCI uses USD for purchasing and sales,
SCPDI uses IDR for purchasing and sales, TKEI uses NTD for purchasing and sale. Other
than the three subsidiaries mentioned above, other major business activities of the Company
are priced and settled in CNY.
8.1.1.1.1 As of December 31, 2020, the main foreign exchange exposure of the Company’s
foreign currency assets and liabilities are as follows (For presentation purpose, the
exposures are presented in CNY and transferred at the spot rate of the balance sheet date):
Items 31 December 2020 31 December 2019
Cash and cash equivalent 184,142,487.23 176,871,782.30
Accounts receivable 462,881,138.22 284,850,806.41
Other receivables 812,189.04 1,116,258.83
Accounts payable 102,150,272.47 71,785,937.07
Other payables 3,506,599.56 2,319,594.65
Short-term loan 16,345,141.13
The Group purchases foreign currency forward contracts to reduce the foreign exchange risk,
and foreign currency forward contracts shall be based on the amount of foreign currency
assets.
8.2 Credit Risk
On December 31, 2020, the maximum credit risk exposure that may cause financial loss of
the Company mainly comes from the loss of financial assets of the company caused by the
failure of the other party to perform its obligations and the financial guarantee undertaken
by the Company, including:
The book amount of financial assets recognized in the consolidated balance sheet; for
financial instruments at fair value, the book value reflects their risk exposure, but not the
130
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
maximum risk exposure, and the maximum risk exposure will change as their fair value
changes in the future.
To reduce credit risks, the Company has established a team responsible for determining the
credit limit, conducting credit approval, and implementing other monitoring procedures to
ensure that necessary measures are taken to recover overdue claims. In addition, the
Company reviews the recovery of each single receivable on each balance sheet date to
ensure that adequate provision for bad debt is made for uncollectible amounts. As a result of
the implemented procedures, the management of the Company believes that the credit risk
assumed by the company has been greatly reduced.
The Company's circulating funds are deposited in banks with higher credit ratings, so the
credit risk of circulating funds is low.
8.2.1 Aging analysis of financial assets that are overdue and not impaired
The Company does not have any financial assets that are overdue and not impaired.
8.2.2 Analysis of financial assets that have suffered an individual impairment
The Company does not have any single impairment financial assets.
8.3 Liquidity Risk
When managing liquidity risk, the Company’s management believes that maintaining
adequate cash and cash equivalents, and monitoring that at the 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 the loan agreements.
9. FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the level
of the hierarchy in which the lowest level input that is significant to the measurement is
classified.
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical
assets or liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1)
that are either directly or indirectly observable.
Level 3: Inputs are unobservable inputs for the assets or liabilities
131
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
9.1 Assets and Liabilities Measured at Fair Value at 31 December 2020
Fair value at 31 December 2020
Items
Level 1 Level 2 Level 3 Total
Recurring fair value measurements
(a) Held-for-trading financial assets
(i) Financial assets at fair value through
720,821,900.00 720,821,900.00
profit or loss
Debt instruments 700,000,000.00 700,000,000.00
Equity instruments
Derivatives 20,821,900.00 20,821,900.00
Total assets measured at fair value on a
720,821,900.00 720,821,900.00
recurring basis
(b) Held-for-trading financial liabilities
(i) Held-for-trading bonds
(ii)Derivatives
(iii)Others
Total liabilities measured at fair value
on a recurring basis
9.2 Determination for the Quoted Prices of Fair Value Measurement in Level 1 on a
Recurring or Nonrecurring Basis
The fair value measurement is based on the valuation provided by the bank where the
unsettled forward foreign exchange is located on the balance sheet date.
10. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
10.1 General Information of the Parent Company
Percentage
of equity Voting rights
Registered Nature of the Registered
Name of the parent interests in in the
address business capital
the Company Company (%)
(%)
STAR COMGISTIC Manufactures and
NTD
CAPITAL CO., Taiwan sales electrical 42.90 44.68
3,000,000,000.00
LTD. equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL CO., LTD.
132
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
10.2 General Information of Subsidiaries
Refer to Notes 7 INTERESTS IN OTHER ENTITIES for details of the subsidiaries.
10.3 Other Related Parties of the Company
Name Relationship with the Company
Thermaster Electronic (Xiamen) Ltd. The company is directly controlled by the key management
and closed family members
TsannKuen Enterprise Co., Ltd. Same actual controller
Gold mine chain enterprise Co., Ltd Same actual controller
Xiamen Wuhuama Restaurant Ultimate holding company have equity
Management Co., Ltd.
Canxing International Travel Service Same actual controller
Co., Ltd
10.4 Related Party Transactions
10.4.1 Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Nature of the
Related parties 2020 2019
transaction(s)
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 42,913,323.94 36,183,028.16
TsannKuen Enterprise Co., Ltd. Purchase of goods 10,303.44 2,909.57
Gold mine chain enterprise Co., Ltd Purchase of goods 3,395.48 2,317.48
STAR COMGISTIC CAPITAL CO.,
Purchase of goods 1,258.52 7,181.83
LTD.
Total 42,928,281.38 36,195,437.04
Sales of goods and rendering of services:
Nature of the
Related parties 2020 2019
transaction(s)
STAR COMGISTIC CAPITAL CO.,
Sales of goods 8,476,153.59 11,059,581.80
LTD.
Total 8,476,153.59 11,059,581.80
10.4.2 Leases
The Company as lessor:
The lessee Type of assets 2020 2019
Xiamen Wuhuama Restaurant
Property 24,941.37 51,828.96
Management Co., Ltd.
Total 24,941.37 51,828.96
133
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company as lessee
The lessor Type of assets 2020 2019
STAR COMGISTIC CAPITAL
Property 1,182,432.53 1,129,317.89
CO., LTD.
Total 1,182,432.53 1,129,317.89
10.4.3 Transfers of assets and debt restructuring
Nature of the
Related parties 2020 2019
transaction(s)
STAR COMGISTIC CAPITAL
Sale of fixed assets 23,060.39
CO., LTD.
Total 23,060.39
10.4.4 Key management personnel compensation
Item 2020 2019
Key management personnel
315.81 287.55
compensation
10.4.5 Other related party transactions
Nature of the
Related parties 2020 2019
transaction(s)
STAR COMGISTIC CAPITAL Quality claim
533,432.11
CO., LTD. payment
Gold mine chain enterprise Co.,
Provide labor service 26,723.74 29,777.74
Ltd
Canxing International Travel
Accept service 18,023.73 374,204.59
Service Co., Ltd
TsannKuen Enterprise Co., Ltd. Accept labor service 170.22
Total 578,349.80 403,982.33
10.5 Receivables and Payables with Related Parties
10.5.1 Receivables
31 December 2020 31 December 2019
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Accounts STAR COMGISTIC
2,211,530.36 2,263,799.22
receivable CAPITAL CO., LTD.
Other STAR COMGISTIC
202,165.15 206,827.94
receivables CAPITAL CO., LTD.
134
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2020 31 December 2019
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Total 2,413,695.51 2,470,627.16
10.5.2 Payables
Items Related parties 31 December 2020 31 December 2019
Accounts
Thermaster Electronic (Xiamen) Ltd 14,561,684.71 7,317,114.51
payable
Advances from Xiamen Wuhuama Restaurant
19,731.63
customers Management Co., Ltd.
STAR COMGISTIC CAPITAL CO.,
Other payables 533,432.11 117,215.44
LTD.
Other payables TsannKuen Enterprise Co., Ltd. 1,521.28
Xiamen Wuhuama Restaurant
Other payables 27,056.60
Management Co., Ltd.
Canxing International Travel Service
Other payables 27,990.96
Co., Ltd
Total 15,096,638.10 7,509,109.14
11. COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
11.1.1 Operating lease commitments:
Items 31 December 2020 31 December 2019
Minimum lease payments under non-cancellable
operating leases：
Within 1 year 3,638.00 3,638.00
1-2 years 3,638.00 3,638.00
2-3 years 3,638.00 3,638.00
Subsequent years 109,133.00 112,771.00
Total 120,047.00 123,685.00
11.1.2 Operating lease commitments:
None.
11.2 Contingencies
Significant contingencies existing at the balance sheet date:
135
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
As of 31st December 2020, The Company has no significant contingencies need to be
disclosed.
12. EVENTS AFTER THE REPORTING PERIOD
12.1 Profit Distribution
On March 20, 2021, the third Board Meeting of 2021 held by the Company reviewed and
approved the profit distribution plan for 2020. Based on the total share capital of
185,391,680 shares as at the end of 2020, cash dividend of CNY 1.5 per 10 shares will be
distributed to all shareholders of the Company (tax included). The profit for distribution of
the Company is CNY 27,808,752.00. The proposal still needs to be approved by the
shareholders' general meeting of the Company.
12.2 Impact of the new accounting standards from 1 January 2020
On December 2018, the Ministry of Finance issued the "Notice on the Revision and
Issuance of CAS 21 - Lease"(CaiKuai [2018] No. 35) (hereinafter collectively referred to as
the New Lease Standards), and requires companies that are both domestically and oversea
listed, and companies listed overseas which utilize the International Financial Reporting
Standards or Business Accounting Standards to implement the new lease standards starting
from 1 January 2019. Other domestically listed companies shall implement the new lease
standards starting from 1 January 2020. As approved by the Company's first board meeting
on 12 January 2021, the Company shall implement the above new revenue standard from 1
January 2021, and change relevant accounting policies in accordance with the provisions of
the new lease standards.
13. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE
PARENT COMPANY
13.1 Accounts Receivable
13.1.1 Accounts receivable by aging
Aging 31 December 2020 31 December 2019
Within 1 year 2,748,224.01 6,124,172.21
Including: 1 – 90 days 2,397,992.02 4,141,000.56
91 – 180 days 250,231.99 1,883,171.65
181 – 270 days 100,000.00 100,000.00
271 – 365 days
136
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2020 31 December 2019
1-2 years 725,880.65
2-3 years 432,446.13
Over 3 years 5,000.00 5,645.49
Subtotal 2,753,224.01 7,288,144.48
Less: Provision for bad debt 43,085.53 1,420,186.28
Total 2,710,138.48 5,867,958.20
13.1.2 Accounts receivable by bad debt provision method
31 December 2020
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
Provision for bad debt
recognised individually
Provision for bad debt
2,753,224.01 100.00 43,085.53 1.56 2,710,138.48
recognised collectively
Including: Portfolio by age 2,708,902.92 98.39 43,085.53 1.59 2,665,817.39
Portfolio by related parties 44,321.09 1.61 44,321.09
Total 2,753,224.01 100.00 43,085.53 1.56 2,710,138.48
(Continued)
31 December 2019
Book balance Provision for bad debt
Category Carrying
Proportion Carrying
Amount Amount amount
(%) amount
Provision for bad debt
recognised individually
Provision for bad debt
7,288,144.48 100.00 1,420,186.28 19.49 5,867,958.20
recognised collectively
Including: Portfolio by age 7,175,859.42 98.46 1,420,186.28 19.79 5,755,673.14
Portfolio by related parties 112,285.06 1.54 112,285.06
Total 7,288,144.48 100.00 1,420,186.28 19.49 5,867,958.20
Specific instructions for provision for bad debts:
As of 31 December 2020 and 31 December 2019, accounts receivable with bad debt
provision recognised collectively by aging
137
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2020
Aging
Book balance Provision for bad debt Provision ratio (%)
Not overdue 2,089,752.42 10,448.76 0.50
Overdue 1 – 30 days 614,150.50 27,636.77 4.50
Overdue 31 – 60 days
Overdue 61 – 90 days
Overdue more than 90 days 5,000.00 5,000.00 100.00
Total 2,708,902.92 43,085.53 1.59
(Continued)
31 December 2019
Aging
Book balance Provision for bad debt Provision ratio (%)
Not overdue 3,886,655.88 19,433.28 0.50
Overdue 1 – 30 days 1,730,745.30 77,883.54 4.50
Overdue 31 – 60 days 294,485.97 58,897.19 20.00
Overdue 61 – 90 days 45.00
Overdue more than 90 days 1,263,972.27 1,263,972.27 100.00
Total 7,175,859.42 1,420,186.28 19.79
As of 31 December 2020 and 31 December 2019, accounts receivable with bad debt
provision recognised collectively by related parties
31 December 2020
Aging
Book balance Provision for bad debt Provision ratio (%)
Related parties accounts
44,321.09
receivable
Total 44,321.09
(Continued)
31 December 2019
Aging
Book balance Provision for bad debt Provision ratio (%)
Related parties accounts
112,285.06
receivable
Total 112,285.06
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
collectively by groups.
138
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.1.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
31 December 31 December
Category Recovery or
2019 Provision Write-off 2020
reversal
Provision for bad
debt recognised 1,420,186.28 1,377,100.75 43,085.53
collectively
Total 1,420,186.28 1,377,100.75 43,085.53
13.1.4 On 31 December 2020, top five closing balances by entity
Proportion of the balance
Balance at 31 Provision for
Entity name to the total accounts
December 2020 bad debt
receivable (%)
Pinluo Technology (Pingtan) Co.,
1,483,415.94 53.88 31,905.72
Ltd.
Tianjin Jihuo Technology
466,859.98 16.96 2,334.30
Development Co., Ltd.
Shanghai LOCK&LOCK Trading
435,004.80 15.80 2,175.02
Co., Ltd.
Peiqi Industry (Shanghai) Co., Ltd. 207,881.68 7.55 1,039.41
Electrolux (China) Electric Co., Ltd.
100,000.00 3.63 500.00
Shanghai Branch
Total 2,693,162.40 97.82 37,954.45
13.2 Other Receivables
13.2.1 Other receivables by category
Items 31 December 2020 31 December 2019
Interest receivable
Dividend receivable
Other receivables 3,311,425.63 2,622,732.62
Total 3,311,425.63 2,622,732.62
13.2.2 Interest receivable
None
13.2.3 Dividends receivable
139
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
None
13.2.4 Other receivables
13.2.4.1 Other receivables by aging
Aging 31 December 2020 31 December 2019
Within 1 year 3,235,576.23 2,439,584.72
Including: 1 – 90 days 3,135,074.23 2,271,063.69
91 – 180 days 38,800.00 168,521.03
181 – 270 days 52,902.00
271 – 365 days 8,800.00
1-2 years 250,418.00
2-3 years 102,300.00
Over 3 years
Subtotal 3,337,876.23 2,690,002.72
Less: Provision for bad debt 26,450.60 67,270.10
Total 3,311,425.63 2,622,732.62
13.2.4.2 Other receivables by nature
Nature 31 December 2020 31 December 2019
Deposit 100,000.00 214,400.00
Due from related parties 2,809,136.68 1,800,844.03
Other open credits 428,739.55 674,758.69
Subtotal 3,337,876.23 2,690,002.72
Less: Provisions for bad debt 26,450.60 67,270.10
Total 3,311,425.63 2,622,732.62
13.2.4.3 Other receivables by bad debt provision method
13.2.4.3.1 As of 31 December 2020, provision for bad debt recognised based on three stages
model:
Stages Book balance Provision for bad debt Book value
Stage 1 3,337,876.23 26,450.60 3,311,425.63
Stage 2
Stage 3
Total 3,337,876.23 26,450.60 3,311,425.63
As of 31 December 2020, provision for bad debt in stage 1:
12-month
Provision Carrying
Category Book balance expected credit Reason
for bad debt amount
losses rate (%)
Provision for bad debt
140
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
12-month
Provision Carrying
Category Book balance expected credit Reason
for bad debt amount
losses rate (%)
recognised individually
Provision for bad debt
3,337,876.23 0.79 26,450.60 3,311,425.63
recognised collectively
Deposit 100,000.00 100,000.00
Due from related parties 2,809,136.68 2,809,136.68
Other open credits 428,739.55 6.17 26,450.60 402,288.95
Total 3,337,876.23 0.79 26,450.60 3,311,425.63
13.2.4.3.2 As of 31 December 2020, provision for bad debt recognised based on three stages
model:
Stages Book balance Provision for bad debt Book value
Stage 1 2,690,002.72 67,270.10 2,622,732.62
Stage 2
Stage 3
Total 2,690,002.72 67,270.10 2,622,732.62
As of 31 December 2019, provision for bad debt in stage 1:
12-month
Provision Carrying
Category Book balance expected credit Reason
for bad debt amount
losses rate (%)
Provision for bad debt
recognised individually
Provision for bad debt
2,690,002.72 2.50 67,270.10 2,622,732.62
recognised collectively
Deposit 214,400.00 214,400.00
Due from related parties 1,800,844.03 1,800,844.03
Other open credits 674,758.69 9.97 67,270.10 607,488.59
Total 2,690,002.72 2.50 67,270.10 2,622,732.62
Basis for the amount of bad debt provisions for the current period:
Refer to Note 3.10 for the recognition criteria and description of the bad debt provisions
based on groups.
141
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.2.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
Lifetime
Provision for loss Lifetime expected
12-month expected expected credit Total
allowance credit losses
credit losses losses (not
(credit-impaired)
credit-impaired)
Balance at 1 January
67,270.10 67,270.10
2020
Balance at 1 January
2020 recognised in — — — —
the reporting period
Transfer to stage 2
Transfer to stage 3
Transfer back to stage 2
Transfer back to stage 1
Provision
Recovery 40,819.50 40,819.50
Reversal
Write-off
Other changes
Balance on 31 December
26,450.60 26,450.60
2020
13.2.4.5 Other receivables write-off during the reporting period
Proportion of
Balance as of
the balance to Provision for
Entity name Nature 31 December Aging
the total other bad debt
2020
receivables (%)
Open Within 90
TKL 2,809,136.68 84.16
credits days
HARRIS｜BRICKEN｜ 181 – 270
Litigation 52,902.00 1.58 15,870.60
MCVAYSLIWOSKI,LLP days
Alipay Deposit 50,000.00 2 – 3 years 1.50
Xiamen TsannKuen Deposit 50,000.00 2 – 3 years 1.50
142
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Proportion of
Balance as of
the balance to Provision for
Entity name Nature 31 December Aging
the total other bad debt
2020
receivables (%)
Flagship Store Alipay
Guangzhou Intellectual 91 – 365
Litigation 28,800.00 0.86 6,400.00
Property Court days
Total 2,990,838.68 89.60 22,270.60
13.3 Long-term Equity Investments
31 December 2020 31 December 2019
Provision Provision
Items Book
for Carrying amount Book balance for Carrying amount
balance
impairment impairment
Subsidiaries 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
Joint ventures
and associates
Total 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
13.3.1 Investments in subsidiaries
Increase Decrease Provision for Provision for
31 December during the during the 31 December impairment impairment at
Investees
2019 reporting reporting 2020 during the 31 December
period period reporting period 2020
TsannKuen
(Zhangzhou) Enterprise 921,914,701.56 921,914,701.56
Co., Ltd.(TKL)
Xiamen Tsannkuen
Home Appliance
1,500,000.00 1,500,000.00
Design Co., Ltd.
(TKW)
Total 923,414,701.56 923,414,701.56
13.4 Revenue and Cost of Sales
2020 2019
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 22,770,398.92 19,877,092.68 33,560,529.62 30,591,361.25
143
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2020 2019
Items
Revenue Costs of sales Revenue Costs of sales
Other activities 46,113,339.71 31,967,107.21 48,605,028.70 32,381,733.96
Total 68,883,738.63 51,844,199.89 82,165,558.32 62,973,095.21
13.5 Investment Income
Items 2020 2019
Investment income from long-term equity
79,185,554.77 25,443,358.87
investments under cost method
Total 79,185,554.77 25,443,358.87
14. SUPPLEMENTARY INFORMATION
14.1 Extraordinary Gains or Losses
Items 2020 2019 Description
Losses on disposal of non-current assets 195,318.03 63,688,086.21
Tax refunds or reductions with ultra vires approval or
without official approval documents
Government grants recognised in current profit or
loss (except government grants that is closely related
6,241,497.95 26,259,614.81
to operations and determined based on a fixed scale
according to the national unified standard)
Funds occupation fee recognised in current profit or
loss from non-financial companies
The excess of attributable fair value of net identifiable
assets over the consideration paid for subsidiaries,
associates, or joint ventures recognised by the
Company
Gains/(losses) generated from non-monetary asset
exchange
Gains /(losses) on entrusted investments or asset
managements
Provision for impairment of each asset due
to force majeure such as a natural disaster
Gains /(losses) on debt restructuring
144
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 2020 2019 Description
Corporate restructuring charge, such as expenditure
for staff resettlement and integration cost
Gains /(losses) from excess of fair value in non-arm’s
length transactions
Net gains /(losses) of subsidiaries arising from
business combination under common control
from the beginning of the reporting period
till the combination date
Gains /(losses) arising from contingencies other than
those related to principal activities of the Company
Gains /(losses) arising from changes in fair value of
held-for-trading financial assets, derivative financial
assets, held-for-trading financial liabilities and
derivative financial liabilities during the holding
period and investment income arising from disposal of
61,211,756.54 19,610,630.54
held-for-trading financial assets, derivative financial
assets, held-for-trading financial liabilities, derivative
financial liabilities and other debt investment except
effective hedging transactions related to the
Company's principal activities
Reversal of provision for impairment of accounts
receivable tested for impairment individually
Gains /(losses) arising from entrusted loans to other
entities
Gains /(losses) arising from changes in fair value of
investment properties adopting fair value model
for subsequent measurement
Impact of one-off adjustment to current profit or loss
based on the requirements of taxation and accounting
laws and regulations
Custody fee income from entrusted operations
Other non-operating income/expenses except for
4,668,961.96 5,303,835.25
items mentioned above
145
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 2020 2019 Description
Other extraordinary gains/(losses) defined
Total extraordinary gains/(losses) 72,317,534.48 114,862,166.81
Less: tax effect 11,395,313.47 26,185,728.82
Net extraordinary gains/(losses) 60,922,221.01 88,676,437.99
Less: net extraordinary gains/(losses) attributable to
16,086,116.54 40,711,211.94
non-controlling interest
Net extraordinary gains/(losses) attributable to
44,836,104.47 47,965,226.05
ordinary shareholders
Note: The symbol"+" in the non-recurring profit and loss item represents income, and "-"
represents loss or expenditure.
The Company recognised the extraordinary gains or losses in accordance with the
Explanatory Announcement regarding Information Disclosure by Publicly Listed Company
No. 1 - Non-recurring Profit and Loss (CSRC announcement [2008] No.43).
14.2 Return on Net Assets and Earnings Per Share (‘EPS’)
14.2.1 Year 2020
Weighted average EPS
Profit for the reporting period
return on net assets (%) Basic Diluted
Net profit attributable to ordinary
17.34 0.75 0.75
shareholders
Net profit attributable to ordinary
shareholders after extraordinary gains and 11.82 0.51 0.51
losses
14.2.2 Year 2019
Weighted average EPS
Profit for the reporting period
return on net assets (%) Basic Diluted
Net profit attributable to ordinary
15.07 0.57 0.57
shareholders
Net profit attributable to ordinary
shareholders after extraordinary gains and 8.20 0.31 0.31
losses
14.3 Supplementary Information on Changes in Accounting Policies
Please see Note 3.29 “Changes in Significant Accounting Policies and Accounting
Estimates” for details.
146
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Name of the Company: TsannKuen (China) Enterprise Co., Ltd.
Date: 20 March 2021
147
