2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2021 ANNUAL REPORT
March 2022
1
2021 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.
Cai Yuansong, 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.
All directors attended the board meeting for reviewing this Report.
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.
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 RMB1.0 (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.
This Report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
2
2021 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. Management Discussion & Analysis ....................................................................... 10
Section IV. Corporate Governance .............................................................................................. 30
Section V. Environmental & Social Responsibility .................................................................... 56
Section VI. Significant Events .................................................................................................... 57
Section VII. Change in Shares & Shareholders .......................................................................... 67
Section VIII. Preference Shares .................................................................................................. 73
Section IX. Bonds ....................................................................................................................... 73
Section X. Financial Report ........................................................................................................ 74
Documents Available for Reference
1. The financial statements signed and sealed by the company principal and the head of the
accounting work & the accounting division (head of accounting) of the Company;
2. The original Auditor’s Report sealed by the CPA firm, as well as signed and sealed by the CPAs;
and
3. The originals of all the Company’s documents and announcements which were disclosed on the
website designated by the CSRC in the reporting period.
3
2021 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
4
2021 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 Cai Yuansong
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
5
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. About information disclosure and where this Report is placed
Securities Times (domestic), Ta Kung Pao
Stock exchange website where this Report is disclosed
(HK) (overseas)
Media and website where this Report is disclosed 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
6
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Increase/decrease
2021 2020 of current year 2019
over last year (%)
Operating revenue (RMB Yuan) 2,347,280,300.56 2,144,181,738.33 9.47 2,001,939,841.94
Net profit attributable to shareholders
of the Company (RMB Yuan) 122,249,955.82 139,522,190.75 -12.38 105,233,212.02
Net profit attributable to shareholders
of the Company before extraordinary 86,639,602.54 94,686,086.28 -8.50 57,267,985.97
gains and losses (RMB Yuan)
Net cash flows from operating
activities (RMB Yuan) 148,525,571.88 315,271,083.24 -52.89 143,620,287.98
Basic EPS (RMB Yuan/share) 0.66 0.75 -12.00 0.57
Diluted EPS (RMB Yuan/share) 0.66 0.75 -12.00 0.57
Weighted average ROE (%) 13.47 17.34 -3.87 15.07
Increase/decrease
As at 31 Dec. As at 31 Dec. of current As at 31 Dec.
2021 2020 year-end than last 2019
year-end (%)
Total assets (RMB Yuan) 2,785,902,354.47 2,408,046,446.78 15.69 1,956,448,835.98
Net assets attributable to shareholders
956,326,734.42 864,030,127.11 10.68 748,738,791.34
of the Company (RMB Yuan)
Whether the lower of the net profit attributable to shareholders of the Company before and after extraordinary
gains and losses was negative
□ Yes √ No
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 185,391,680
this Report (share)
Fully diluted EPS based on the latest total shares:
Dividends paid to preference shareholders 0
Interest paid for perpetual bonds (RMB Yuan) 0
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.66
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
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Inapplicable
7
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenue 564,283,057.89 633,005,949.22 616,004,494.88 533,986,798.57
Net profit attributable to 27,743,333.09 32,674,355.03 38,636,129.90 23,196,137.80
shareholders of the Company
Net profit attributable to
shareholders of the Company 22,135,773.73 25,898,206.87 31,634,146.77 6,971,475.17
before extraordinary gains and
losses
Net cash flows from operating -54,477,772.75 -8,496,686.65 -53,553,230.01 265,053,261.29
activities
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 2021 2020 2019 Note
Gain/loss on the disposal of non-current assets
(including the offset part of the asset impairment 2,101,750.59 195,318.03 63,688,086.21
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 continually granted at 4,786,030.51 6,241,497.95 26,259,614.81
certain quotas or amounts according to the
government’s policies and standards
Capital occupation charges on non-financial
enterprises that are recorded into current gains and
losses
Gains due to that the investment costs for the
Company to obtain subsidiaries, associates and
joint ventures are lower than the enjoyable fair
value of the identifiable net assets of the investees
when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or
asset management
Asset impairment provisions due to acts of God
such as natural disasters
Gain/loss on debt restructuring
8
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2021 2020 2019 Note
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
Gains and losses on change in fair value from forex
tradable financial assets and tradable financial contracts
liabilities, as well as investment income from sold, gains on
disposal of tradable financial assets and tradable 48,392,884.92 61,211,756.54 19,610,630.54 changes in
financial liabilities and financial assets available fair value and
for sales except for effective hedging related with income from
normal businesses of the Company investments
in financial
products
Impairment provision reversal of accounts
receivable on which the impairment test is carried
out separately
Gain/loss on entrustment loans
Gain/loss on change of the fair value of investing
real estate of which the subsequent measurement
is carried out adopting the fair value method
Effect on current gains/losses when a one-off
adjustment is made to current gains/losses
according to requirements of taxation, accounting
and other relevant laws and regulations
Custody fee income when entrusted with
operation
Non-operating income and expense other than the
4,876,463.40 4,668,961.96 5,303,835.25
above
Other gain and loss items that meet the definition
of an extraordinary gain/loss
Less: Income tax effects 10,199,627.23 11,395,313.47 26,185,728.82
Minority interests effects (after tax) 14,347,148.91 16,086,116.54 40,711,211.94
Total 35,610,353.28 44,836,104.47 47,965,226.05
The Company had no other gain and loss items that meet the definition of an extraordinary gain/loss.
The Company did not classify as a recurrent gain/loss item any extraordinary gain/loss item mentioned in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses.
9
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section III. Management Discussion & Analysis
I. Overview of the industry in which the Company operates in the reporting period
The COVID-19 pandemic had a huge impact on the global economy during 2021, with rising prices of
industrial raw materials, appreciation of the RMB, and the global shipping market seeing a bottleneck. It
brought both challenges and opportunities for companies. Along with the strong recovery of the Chinese
economy and the control of the pandemic, the industry in which the Company operates was on a healthy
track, with continued growth in export revenue.
Currently, the global pandemic and the world economy are still in a severe and complicated condition, which
are slowing down the fast development in the home appliance industry. In response, the Company follows
the corporate culture of research and development. 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 so as to create new market demand and compete in the industry.
II. 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.
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
10
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 key customers in the overseas market
and branding in the domestic market. 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 49 patents in R&D, including 17 invention patents, 25 utility
model patents and 7 design patents. 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.
IV. Main business analysis
1. Overview
For the reporting period, we achieved operating revenue of RMB2,347 million, up 9.47% year-on-year; a
profit before tax of RMB184 million, down 12.53% year-on-year; a net profit attributable to shareholders of
the Company of RMB122 million, down 12.38% year-on-year; and basic earnings per share of RMB0.66,
RMB0.09 lower than that of last year.
The changes in the aforesaid indicators are primarily attributed to increases in new products and export
orders, rising prices of raw materials, appreciation of the RMB. The Company reshaped the supply chain,
and maximized earnings on new products; negotiated with customers about product prices; improved the
workshop environment to retain workers, refined production processes, and increased production efficiency,
with an aim to offset adverse external factors.
2. Revenues and costs
(1) Breakdown of operating revenues
11
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
2021 2020
Item In total In total +/-%
Amount operating Amount operating
revenues (%) revenues (%)
By segments
Small home
appliance 2,267,468,882.08 96.60 2,066,576,833.78 96.38 9.72
manufacturing
Other services 79,811,418.48 3.40 77,604,904.55 3.62 2.84
Total 2,347,280,300.56 100.00 2,144,181,738.33 100.00 9.47
By products
Cooking
1,593,009,945.48 67.87 1,470,116,469.53 68.57 8.36
utensils
Everyday home
453,992,911.28 19.34 397,954,437.24 18.56 14.08
appliances
Tea and coffee
207,555,003.70 8.84 184,473,267.41 8.60 12.51
makers
Other products 12,911,021.62 0.55 14,032,659.60 0.65 -7.99
Other services 79,811,418.48 3.40 77,604,904.55 3.62 2.84
Total 2,347,280,300.56 100.00 2,144,181,738.33 100.00 9.47
By areas
Australia 72,781,067.49 3.11 75,243,660.83 3.51 -3.27
Africa 17,004,158.12 0.72 14,907,902.56 0.70 14.06
America 1,212,559,936.12 51.66 1,118,127,377.12 52.15 8.45
Europe 535,993,134.94 22.83 440,214,124.77 20.53 21.76
Asia 508,942,003.89 21.68 495,688,673.05 23.11 2.67
Total 2,347,280,300.56 100.00 2,144,181,738.33 100.00 9.47
(2) Segments, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
12
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Operating Cost of
Operating Gross profit revenue: sales: +/-% Gross profit
Item revenue Cost of sales margin (%) +/-% from last margin: +/-%
from last year from last year
year
By segments
Small home
appliance 2,267,468,882.08 1,989,093,799.41 12.28 9.72 15.45 -4.35
manufacturing
Other services 79,811,418.48 26,336,497.02 67.00 2.84 -22.36 10.71
Total 2,347,280,300.56 2,015,430,296.43 14.14 9.47 14.72 -3.93
By products
Cooking 1,593,009,945.48 1,387,183,234.62 12.92 8.36 12.36 -3.10
utensils
Everyday
home 453,992,911.28 412,983,229.49 9.03 14.08 23.14 -6.69
appliances
Tea and
Coffee 207,555,003.70 181,085,113.39 12.75 12.51 22.99 -7.44
makers
Other 12,911,021.62 7,842,221.91 39.26 -7.99 40.30 -20.91
products
Other services 79,811,418.48 26,336,497.02 67.00 2.84 -22.36 10.71
Total 2,347,280,300.56 2,015,430,296.43 14.14 9.47 14.72 -3.93
By areas
Australia 72,781,067.49 62,180,251.00 14.57 -3.27 3.89 -5.89
Africa 17,004,158.12 14,500,206.92 14.73 14.06 22.22 -5.69
America 1,212,559,936.12 1,062,954,014.22 12.34 8.45 13.80 -4.12
Europe 535,993,134.94 472,001,850.88 11.94 21.76 30.98 -6.20
Asia 508,942,003.89 403,793,973.41 20.66 2.67 3.38 -0.54
Total 2,347,280,300.56 2,015,430,296.43 14.14 9.47 14.72 -3.93
(3) Are the Companys goods selling revenue higher than the service revenue?
√ Yes □ No
Segment Item Unit 2021 2020 YoY +/-%
Small home Sales
Unit 28,765,567 23,975,250 19.98
appliance volume
manufacturing Output Unit 27,666,083 23,998,870 15.28
Reasons for any over-30% YoY movement of the data above:
□ Applicable √ Inapplicable
13
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(4) Execution of signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Breakdown of cost of sales
By segments and products
Unit: RMB Yuan
2021 2020
YoY
Segment Item In total cost In total cost
Amount Amount +/-%
of sales (%) of sales (%)
Raw materials 1,426,141,784.42 70.76 1,232,491,340.23 70.16 15.71
Third-party
258,607,931.55 12.83 212,187,651.37 12.08 21.88
processing
Small home Labor cost 147,780,952.25 7.33 129,928,536.96 7.40 13.74
appliance Manufacturing
manufacturing 79,140,555.95 3.93 88,204,468.63 5.02 -10.28
expenses
Transportation
32,107,163.64 1.59 - - 100.00
cost
Other 45,315,411.61 2.25 60,018,972.61 3.41 -24.50
Other Other 26,336,497.02 1.31 33,919,348.10 1.93 -22.36
Total 2,015,430,296.43 100.00 1,756,750,317.90 100.00 14.72
(6) Whether there were changes of the consolidation scope during the reporting period
□ Yes √ No
(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
Total sales of the top 5 customers (RMB Yuan) 1,505,668,485.38
Ratio of the total sales of the top 5 customers to the annual total sales (%) 66.40%
Ratio of the total sales of related parties among the top 5 customers to the
-
annual total sales (%)
Information of the top 5 customers of the Company
14
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name of
Serial No. Sales amount (RMB Yuan) Proportion in annual total sales (%)
customer
1 1 405,517,994.03 17.88%
2 2 397,697,949.43 17.54%
3 3 285,825,683.36 12.60%
4 4 238,879,241.87 10.54%
5 5 177,747,616.69 7.84%
Total 1,505,668,485.38 66.40%
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
Total purchase from the top 5 suppliers (RMB Yuan)
336,290,802.57
Ratio of the total purchase from the top 5 suppliers to the annual total purchase (%) 20.09%
Ratio of the total purchase from related parties among the top 5 suppliers to the
2.49%
annual total purchase (%)
Information of the top 5 suppliers of the Company
Purchase amount (RMB Ratio to the annual
No. Name of supplier
Yuan) purchase amount (%)
1 1 145,947,111.31 8.72%
2 2 54,464,458.27 3.25%
3 3 48,664,674.00 2.91%
4 4 45,600,814.86 2.72%
5 5 41,613,744.13 2.49%
Total 336,290,802.57 20.09%
Notes of the other situation of the major suppliers
□ Applicable √ Inapplicable
3. Expenses
15
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
YoY +/-
Item 2021 2020 Notes of the significant changes
(%)
According to the new regulation unveiled in
December 2021 under the Accounting Standard
No. 14 for Business Enterprises—Revenue,
Selling transportation cost shall be included in cost of
21,045,003.77 55,857,793.41 -62.32
expenses sales. Therefore, the Company reclassified
transportation cost from selling expenses to cost
of sales in the current period, resulting in a drop
in selling expenses.
Administrative
73,921,676.82 82,381,345.47 -10.27
expenses
Finance costs 30,632,346.78 27,512,741.83 11.34
R&D
64,037,360.74 61,944,782.42 3.38
expenses
4. R&D investment
√ Applicable □ Inapplicable
R&D personnel of the Company
2021 2020 +/- (%)
Number of the R&D personnel (person) 372 337 10.39
Ratio to the R&D personnel (%) 10.39% 7.31% 3.08
Educational background of the R&D personnel
Doctor - -
Master 7 9 -22.22
Bachelor 78 77 1.30
College graduates 117 102 14.71
Below college 170 149 14.09
Age structure of the R&D personnel
Below 30 110 112 -1.79
30~40 145 134 8.21
Above 40 117 91 28.57
R&D investment of the Company
2021 2020 +/- (%)
Investment amount of the R&D (RMB Yuan) 64,037,360.74 61,944,782.42 3.38
Ratio of the R&D investment to the operating
2.73% 2.89% -0.16
revenue (%)
16
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Amount of the capitalized R&D investment (RMB
- - -
Yuan)
Ratio of the capitalized R&D investment to the
- - -
R&D investment
Reason for any significant change in the R&D personnel structure, as well as the impact:
□ Applicable √ Inapplicable
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
revenue
□ Applicable √ Inapplicable
5. Cash flow
Unit: RMB Yuan
Item 2021 2020 +/- (%)
Subtotal of cash inflows from operating
2,710,559,994.89 2,141,042,251.53 26.60
activities
Subtotal of Cash outflows for operating
2,562,034,423.01 1,825,771,168.29 40.33
activities
Net cash flows from operating activities 148,525,571.88 315,271,083.24 -52.89
Subtotal of cash inflows from investing
1,134,254,708.37 856,688,665.62 32.40
activities
Subtotal of cash outflows from investing
1,095,898,953.14 1,072,088,051.44 2.22
activities
Net cash flows from investing activities 38,355,755.23 -215,399,385.82 -117.81
Subtotal of cash inflows from financing
160,367,803.06 97,907,340.00 63.80
activities
Subtotal of cash outflows from financing
247,309,107.89 160,602,021.04 53.99
activities
Net cash flows from financing activities -86,941,304.83 -62,694,681.04 38.67
Net increase of cash and cash equivalents 98,049,966.90 33,178,004.70 195.53
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
Net cash flows from operating activities: The straight sale of the receivables from two customers, an increase in
cash received from sale of goods, the postponement of the payment to supplier from Q4 2020 to the current period,
and an increase in cash payments for goods purchased resulted in an increase in net cash outflow in the current
period.
17
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Net cash flows from investing activities: An increase of RMB520 million in the recovery of investment in
financial products upon maturity, and an increase of RMB250 million in term deposit investments resulted in an
increase in net cash inflow in the current period.
Net cash flows from financing activities: Increases in dividend payments and repayment of due short-term
borrowings resulted in an increase in net cash outflow in the current period.
Reason for any big difference between the net operating cash flow and the net profit for the reporting period
□ Applicable √ Inapplicable
V. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the
Amount total profits Notes of the causes Recurring or not
amount (%)
Income from settled forward forex
Investment 63,493,757.1 contracts and financial products, as
34.45% Not
income 4 well as accrued interest on term
deposits
Gain from
-15,100,872.2 Assessed losses on forward forex
changes in fair -8.19% Not
2 contracts
value
Loss on credit Withdrawal or reversal of impairment
1,295,024.60 0.70% Not
impairment allowances for accounts receivable
Increase in inventory valuation
Loss on asset
-9,275,519.35 -5.03% allowances and fixed asset Not
impairment
impairment allowances
Gain on disposal
2,101,750.59 1.14% Income from disposal of fixed assets Not
of assets
Receipt of compensation for patent
infringement, compensation from
Non-operating
5,236,403.37 2.84% customer for cancellation of order, Not
income
and overdue payments that the
Company no longer needs to pay
Non-operating
359,939.97 0.20% Donation and penalty expenses Not
expenses
18
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
31 December 2021 1 January 2021
As a As a Change in
Reason for any significant
Item percentage percentage percentage
Amount Amount change
of total of total (%)
assets (%) assets (%)
Cash and cash
779,404,127.58 27.98% 707,794,598.20 23.82% 4.16%
equivalents
Held-for-trading Decrease in financial
420,721,027.78 15.10% 720,821,900.00 24.26% -9.16%
financial assets products due to maturity
Accounts Recovery of accounts
258,128,493.77 9.27% 431,006,560.62 14.51% -5.24%
receivable receivable
Contract assets
Increase in advance paid
Advances to
3,862,095.12 0.14% 2,622,554.07 0.09% 0.05% by sub-subsidiary SCI to
suppliers
material supplier
Other Decrease in export tax
18,463,787.27 0.66% 31,938,548.59 1.07% -0.41%
receivables rebates receivable
Inventories 252,434,003.44 9.06% 255,052,077.36 8.58% 0.48%
Increase in debt
Non-current
investments maturing
assets maturing 21,845,333.33 0.78% - 0.00% 0.78%
within one year
within one year
transferred to this item
Increase in principals of
Other current
266,300,137.82 9.56% 18,634,037.60 0.63% 8.93% term deposits maturing
assets
within one year
Investment
20,380,947.36 0.73% 21,255,610.91 0.72% 0.01%
properties
Long-term
equity
investments
Fixed assets 151,647,083.48 5.44% 164,338,962.07 5.53% -0.09%
Construction in Increase in prepayments
1,102,833.08 0.04% 728,529.68 0.02% 0.02%
progress for park renovation
Use rights
543,070,792.39 19.49% 563,104,966.92 18.95% 0.54%
assets
Long-term Transfers to this item due
deferred 9,914,564.44 0.36% 6,831,730.07 0.23% 0.13% to the acceptance upon
expenses check in the current
19
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31 December 2021 1 January 2021
As a As a Change in
Reason for any significant
Item percentage percentage percentage
Amount Amount change
of total of total (%)
assets (%) assets (%)
period of the smoke
extraction system for
firefighting purposes for
workshops, the renovation
of rooftop gutters and the
floor hardening project
Short-term Repayment of short-term
- 0.00% 16,345,141.13 0.55% -0.55%
borrowings borrowing upon maturity
Transfer of the postponed
income tax in the first five
years of the
government-required
Taxes payable 46,692,538.61 1.68% 20,238,247.17 0.68% 1.00%
demolition of the phase I
plant of TKS from
deferred tax liabilities to
this item
Non-current
liabilities
10,147,932.67 0.36% 10,589,357.15 0.36% 0.00%
maturing within
one year
Contract
24,030,988.10 0.86% 25,605,755.71 0.86% 0.00%
liabilities
Long-term
borrowings
Lease liabilities 542,514,317.35 19.47% 552,515,609.77 18.60% 0.87%
Transfer of the postponed
income tax in the first five
years of the
Deferred tax
21,946,814.30 0.79% 51,425,551.57 1.73% -0.94% government-required
liabilities
demolition of the phase I
plant of TKS to taxes
payable
Overseas assets account for a higher percentage:
√ Applicable □ Inapplicable
20
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Measures
In the
taken to Any major
Locatio Operation Company’
Asset Nature Value protect Earnings impairment
n status s net assets
asset risk or not
(%)
safety
Small Impairment
home allowances
Invest Indones Periodic
SCI 172,622,455.71 appliance 801,765.73 18.05% have been
ment ia review
manufactur established for
ing long-term
equity
investments in
Equity Product subsidiaries
Periodic
TKEI acquisit 21,428,145.15 Taiwan R&D and -3,898,832.95 2.24% which suffered
review
ion design a great loss in
2021
1) East Sino established an impairment allowance of HKD26,335,911 for the long-term equity investment in SCI in
2021.
Other 2) Orient Star established an impairment allowance of USD4,780,609.6 for the long-term equity investment in TKEI
informa in 2021.
tion 3) TKL established impairment allowances of RMB52,011,973.46 in total for the long-term equity investments in
East Sino and Orient Star in 2021.
The impairment allowances above had no impact on the consolidated profit/loss of the Company.
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Cumulati Impairme
Profit/loss on ve fair nt
Purchased in
Opening fair value value provided Sold in this Other
Item this reporting Closing balance
balance changes in this changes in this reporting period changes
period
reporting period charged reporting
to equity period
Financial assets
1. Held-for-tradin
g financial assets
(excluding 700,000,000.00 1,569,027.78 650,000,000 935,000,000 416,569,027.78
derivative
financial assets)
2. Derivative
20,821,900.00 -16,669,900.00 4,152,000.00
financial assets
3. Other debt
investments
4. Other equity
instrument
21
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
investments
Subtotal of
720,821,900.00 -15,100,872.22 650,000,000.00 935,000,000.00 420,721,027.78
financial assets
Investment
properties
Productive
biological assets
Others
Total of the above 720,821,900.00 -15,100,872.22 650,000,000.00 935,000,000.00 420,721,027.78
Financial
- -
liabilities
Contents of other changes:
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 the reporting period
Among other monetary funds, RMB3,255,362.8 is the letter of credit 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.
VII. Investments made
1. Total investments made
√ Applicable □ Inapplicable
Investments made in this reporting Investments made in the prior year
+/-%
period (RMB Yuan) (RMB Yuan)
38,879,586.00 0.00 100%
2. Significant equity investments made in this reporting period
□ Applicable √ Inapplicable
3. Significant non-equity investments ongoing in this reporting period
□ Applicable √ Inapplicable
22
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Financial investments
(1) Securities investments
□ Applicable √ Inapplicable
(2) Investment in derivative financial instruments
√ Applicable □ Inapplicable
23
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Ratio of
investment
Investment Investmen
Type of Amount amount at the
Related-par amount at Pursed in Sold in t amount Actual
investment Initial provide end of the
Operating ty Commencem Termination the this this profit/los
Relation in derivative investment d for at the end period to the
party transaction ent date date beginning reporting reporting s for the
financial amount impairm of the Company's
or not of the period period period
instruments ent period net asset at the
period
end of the
period (%)
Forward
Bank Non-related No 139,492.48 01/01/2021 12/31/2021 46,529.65 92,962.83 114,206.91 25,285.57 26.44% 1,589.52
forex
Total 139,492.48 46,529.65 92,962.83 114,206.91 25,285.57 26.44% 1,589.52
Source of investment funds All from the Company's own funds
Lawsuits No lawsuits
Disclosure date of the announcement about the board’s
2013-3-12
consent for the investment
Disclosure date of the announcement about the general
2013-5-18
meeting’s consent for the investment
1. Analysis on risks from holding of derivative products: gains or losses from difference between contracted exchange rate and market
exchange rate on value date.
2. Control measures:
(1) Principle: The purpose of the financial derivative operation is to avoid risks. The Company shall not conduct transactional operation for
Risk analysis and risk control measures for positions held
other purposes than risk avoidance. The Company shall not conduct complex derivative trading above the actual operation needs and shall not
in derivatives in this reporting period (including but not
speculate in derivative trading with hedging as an excuse. The overall contractual amount for risk avoidance of the Company shall not exceed
limited to market risk, liquidity risk, credit risk,
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
operational risk, legal risk, etc.)
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 strictly execute
the business operation and risk management mechanisms for derivative investment.
(3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel
24
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
(1) Gains on settled derivatives in the reporting period were RMB32.5651 million, and assessed losses on those unsettled were RMB16.6699
million, among which assessed gains of RMB20.8219 million on unsettled forward forex contracts last year were reversed.
Changes in market price or fair value of derivatives
invested in this reporting period (specific methods used (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last
and relevant assumption and parameter settings shall be trading day of the month.
disclosed for analysis of fair value of derivatives)
(3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount
undue by the month*the estimated exchange rate and the currency amount when bought in.
Significant changes in the Company’s accounting policies
and specific accounting principles for derivatives in this No significant changes
reporting period as compared to the prior period
Special opinions expressed by independent directors The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision
concerning the Company’s derivatives investment and risk mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation
control and is in compliance with relevant laws and regulations, with the risks controllable.
5. Use of funds raised
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Inapplicable
25
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Sale of major equity interests
□ Applicable √ Inapplicable
IX. 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
Company Operating
with the Main business scope Registered capital Total assets Net assets Operating profit Net profit
name revenues
Company
Small home appliance
TKL Subsidiary USD160 million 2,684,229,782.43 1,379,507,782.51 2,118,181,090.43 109,210,932.15 102,911,621.69
manufacturing
Subsidiaries obtained or disposed in this reporting period
□ Applicable √ Inapplicable
X. Structured bodies controlled by the Company
□ Applicable √ Inapplicable
26
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XI. Outlook of the Companys future development
1. International
Despite the impact of the COVID-19 pandemic, 2020-2021 export revenue continued to grow. Influenced by
Sino-US Trade War, parts of the countries began to adopt trade protectionism and suppress the domestic
electrical home appliances for the methods such as improve the import tariff. The outburst of the global
financial crisis led to the rise of the international trade protection, the aggravation of the tariff barrier and the
non-tariff barrier especially such as the technology standard, Intellectual property right protection and
anti-dumping etc., as well as the export of the domestic electrical home appliance encountered more and
more threatens tariff and non-tariff barrier with the more complicated international environment faced with
the electrical home appliances.
Influenced by the slow recovery of the global economy, exchange rate fluctuations, rising prices of industrial raw
materials, 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, the Company may face the risk of a
decline in sales revenue caused by a decline of the demand in the international market.
2. Domestic
With the upgrade of domestic consumption and the production development of related industries, the home
appliance market tends to be more intelligent, ecological and three-dimensional. The current competitive
landscape among sellers, manufacturers and product categories has changed significantly. Instead of going into
simple online and offline competition or competition among e-commerce merchants, physical store distributors
and new retail platform channel providers, the home appliance industry will need to achieve comprehensive
ability improvement in the future by relying on "product competitiveness that wins users over" in the market
based on its own capabilities and industry resources. In this context, the Company's R&D, production and supply
chain capabilities that have been developed over the years are expected to usher in new market opportunities in
the new model.
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 distribution channels such as social and e-commerce platforms. If the domestic market development
proceeds well, the Company may have the opportunity to embrace new opportunities from new tracks.
Regarding the development and building of domestically sold brands, on the one hand, the Company will
accelerate the creation of a domestically sold product R&D system and at the same time establish self-operated
and new retail sales channels on the basis of existing products to further improve the customer, channel and
27
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
corresponding marketing structure systems; on the other hand, it will further explore traditional online and offline
sales channels and the borderless expansion stage of new retail, and carry out development and building through a
series of models such as product content and application scenarios. By quickly laying a solid foundation, the
Company will improve its ability to serve customers, maintain users, guide demand with products and occupy the
purchasing power for future tracks of home appliances in first-tier markets, thereby generating new revenue
streams and profits.
3. Risk of market competition
Small domestic appliances are fast-moving consumer goods. The industry has huge market space and therefore,
fierce competition. Some unfair and irregular competition has emerged as a result, such as trademark and patent
infringement. The Company will respond to market competition risks by strengthening the protection of patent
intellectual property rights.
4. Exchange rate fluctuation
Since the majority of the Company’s products are exported, exchange rate fluctuations could have a great impact
on the operating performance of the Company. In order to mitigate such impact on its assets, liabilities and profit,
the Company conducts derivative trading (primarily forward forex contracts) against the risk of exchange rate
fluctuation.
5. 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,
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.
6. Environmental protection and low carbon
As the execution of the Environmental Protection Act and other relevant laws and regulations, 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.
7. Rising prices of industrial raw materials
Affected by the pandemic, prices of industrial raw materials have been rising since the second half of 2020, with
record highs in some of them. The intensification of the international war situation has caused the trade prices of
28
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
crude oil, gold and other resources to keep going up in the short term. The prices of main raw materials are still on
the rise as of now. As the world and domestic economies are recovering, the Company conducts price negotiations
with its suppliers, and works on the development of alternative materials, in order to offset the rising prices of raw
materials.
8. Impact of the COVID-19 pandemic
The COVID-19 pandemic creates not only a huge impact on the operation of the global economy but also
challenges and opportunities for the development of the Company. Affected by pandemic-related uncertainties,
destination ports in the western countries work at lower efficiency, causing bottlenecks on the global shipping
market, which may impact the delivery of the Company's exported products and result in additional sales costs for
the Company.
XII. Visits paid to the Company for purposes of research, communication, interview, etc. in
this reporting period
√ Applicable □ Inapplicable
Index to
Date of Place of Way of Type of main
Visitor Contents and materials provided
visit visit visit visitor inquiry
information
The Company’s operating performance,
15 January The Mr. Yi
By phone Individual B-share reform, and dividends, by N/A
2021 Company Qiang
phone, no materials provided
The Company’s operating performance,
1 February The
By phone Individual Mr. Ding B-share reform, and dividends, by N/A
2021 Company
phone, no materials provided
The Company’s operating performance,
9 March The
By phone Individual Mr. Xu B-share reform, and dividends, by N/A
2021 Company
phone, no materials provided
Reason for a low dividend ratio, impact
of rising raw material prices and
countermeasures. With the last annual
Youmeili
report showing an increase in orders due
23 March The Fund
By phone Institution to the pandemic, how about orders after N/A
2021 Company Management
the pandemic and countermeasures.
Limited
Outlook of the Company, core
competitiveness, by phone, no materials
provided
The Company’s operating performance,
14 April The
By phone Individual Mr. Cao and B-share reform, by phone, no N/A
2021 Company
materials provided
The Company’s operating performance,
27 April The
By phone Individual Mr. Xu and B-share reform, by phone, no N/A
2021 Company
materials provided
6 May The By phone Individual Mr. Xue The Company’s operating performance, N/A
29
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Index to
Date of Place of Way of Type of main
Visitor Contents and materials provided
visit visit visit visitor inquiry
information
2021 Company and B-share reform, by phone, no
materials provided
Impact of the continued pandemic
overseas on the Company’s overseas
15 June The
By phone Individual Mr. Xu manufacturing sites, and impact of rising N/A
2021 Company
raw material prices on the Company, by
phone, no materials provided
The Company’s production and
15 July The operations, and impact of rising raw
By phone Individual Mr. Xu N/A
2021 Company material prices on the Company, by
phone, no materials provided
The Company’s production and
14
The operations, and impact of rising raw
October By phone Individual Mr. Xu N/A
Company material prices on the Company, by
2021
phone, no materials provided
Closure of TKEI, B-share reform,
13
The Mr. Xu whether the Company intended to set up
December By phone Individual N/A
Company Hongming an R&D center, by phone, no materials
2021
provided
Acceleration of intelligent
20
The Mr. Zou transformation, higher dividend ratio,
December By phone Individual N/A
Company Jianjun and B-share reform, by phone, no
2021
materials provided
Section IV. 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
30
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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
31
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
II. Independence from the controlling shareholder and actual controller in asset, personnel,
finance, organization and business
The Company is independent from its controlling shareholder in aspects such as business, personnel, assets,
organization 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 meeting
Meeting Type Convened date Disclosure date
participation ratio resolution
2020 Annual
Meeting of Annual 45.02% 14 May 2021 15 May 2021 www.cninfo.com.cn
Shareholders
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
□ Applicable √ Inapplicable
V. Directors, supervisors and executive officers
1. Basic information
32
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Increase Decrease
Restricted Reasons
Starting Opening in this in this Other Closing
Ending date Stock shares for the
Name Office title Incumbent/former Gender Age date of shareholding reporting reporting changes shareholding
of tenure options granted share
tenure (share) period period (share) (share)
(share) changes
(share) (share)
Chairman of the
Pan Zhirong Former Male 55 2017-04-06 2021-05-19 0 0 0 0 0 0 0
Board & GM
Chairman of the
Cai Yuansong Incumbent Male 65 2021-05-19 2023-04-23 0 0 0 0 0 0 0
Board & GM
Lin Jidian Director Incumbent Male 53 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Wang Youliang Director Incumbent Male 53 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Independent
Ge Xiaoping Incumbent Female 59 2017-04-06 2023-04-23 0 0 0 0 0 0 0
director
Independent
Liu Luhua Incumbent Male 52 2020-04-24 2023-04-23 0 0 0 0 0 0 0
director
Independent
Wu Yibing Incumbent Male 40 2020-04-24 2023-04-23 0 0 0 0 0 0 0
director
Supervisory Board
Yang Yongquan Incumbent Male 57 2020-04-24 2023-04-23 0 0 0 0 0 0 0
chairman
Ding 2023-04-23
Supervisor Incumbent Male 56 2019-10-22 0 0 0 0 0 0 0
Hongming
Zheng Caiyun Supervisor Incumbent Female 46 2016-06-01 2023-04-23 0 0 0 0 0 0 0
Wu Jianhua Financial Chief Incumbent Male 42 2019-03-29 0 0 0 0 0 0 0
Sun Meimei Board Secretary Incumbent Female 48 2011-04-23 0 0 0 0 0 0 0
Total -- -- -- -- -- -- --
33
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Indicate by tick mark whether the directors or supervisors left and executive officers were disengaged during the
tenure in this reporting period
√ Yes □ No
The former Chairman of the Board & GM resigned for personal reasons on 19 May 2021.
Changes in directors, supervisors and executive officers
√ Applicable □ Inapplicable
Name Office title Type of change Date Reason
Pan Zhirong Chairman of the Board &GM Resigned 2021-05-19 Personal reasons
2. Brief biographies
Main working experience of current directors, supervisors and senior management staff
Name Position Educational Main working experience and chief responsibilities in the Company
background
Cai Chairma Graduated 1988.01.01-1993.02.16 Tsann Kuen (Xiamen) Electric GM
Yuanso n of the from Appliance Co., Ltd.
ng Board Manchester
&GM State 1993.02.16-2002.05.21 Tsann Kuen (China) Enterprise Co., Managing director
University, Ltd.
Minnesota 1997.09.02-now Thermaster Electronic (Xiamen) Director
with a degree Ltd.
in Business
Administratio 2002.05.22-2008.05.24 Tsann Kuen (China) Enterprise Co., Chairman of the Board
n Ltd.
2002.07.24-2008.07.25 Tsann Kuen (Zhangzhou) Enterprise Chairman of the Board
Co., Ltd.
2011.06-now Sekond Creative Design Co., Ltd. Chairman of the Board
(Taiwan)
2017.04.06-2021.05.19 Tsann Kuen (China) Enterprise Co., Director
Ltd.
2017.04.21-2021.07.04 Tsann Kuen (Zhangzhou) Enterprise Director
Co., 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)
2020.02.25-now STAR COMGISTIC CAPITAL Director
CO., LTD. (Taiwan)
2020.02.25-now Tsann Kuen Enterprise Co., Ltd. Director
34
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
(Taiwan)
2020.04.01-now Tsann Kuen China (Shanghai) Director
Enterprise Co., Ltd.
2020.04.09-now Tsann Kuen Japan Co., Ltd. Chairman of the Board
2020.04.24-2021.10.25 Gold mine chain enterprise Co., Ltd Director
2020.04.29-now WISE LAND PROPERTIES Director
LIMITED (HK)
2020.04.29-now WORLD KINGDOM Director
PROPERTIES LIMITED (HK)
2020.04.29-now East Sino Development Limited Director
(HK)
2021.05.19-now Orient Star Investments Limited Director
(HK)
2021.05.19-now Tsann Kuen (China) Enterprise Co., Chairman of the Board
Ltd. & GM
2021.07.05-now Tsann Kuen (Zhangzhou) Enterprise Chairman of the Board
Co., Ltd.
2021.07.05-now Tsann Kuen (Zhangzhou) South Chairman of the Board
Port Electronics Enterprise Co., Ltd.
2021.07.19-now Shanghai Canxing Trading Co., Ltd. Chairman of the Board
2021.08.04-now PT.STAR COMGISTIC Chairman of the Board
INDONESIA
Lin Director Graduated 1996.06-1999.08 Changjia Construction Co., Ltd. Special assistant to
Jidian from GM, Audit specialist
Department of
Business 1999.08-2000.10 ADDA CORPORATION Manager of Auditing
Management Department, assistant
Tatung to Chairman of the
University Board
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., Auditing manager,
Ltd, East China Administration of supervisor, director
YFY Packaging Inc., SinoPac
Financial Holdings Company
Limited, SinoPac Paper
Corporation, Union Paper
Corporation, China Color Printing
35
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
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(
KUNSHAN)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 Planning Department of HSIN Vice GM of
TUNG YANG Co., LTD. (Taiwan) E-commerce of
Business
2019.12-2020.05 Canxing International Travel Chairman of the Board
Service Co., Ltd (Taiwan)
2019.12-2020.4.28 Tsann Kuen Enterprise Co., Ltd. Vice GM
(Taiwan)
2020.3.31-now Tsann Kuen Enterprise Co., Ltd. Chairman of the Board
(Taiwan)
2020.4.28-now Tsann Kuen Enterprise Co., Ltd. CEO
(Taiwan)
2020.3.31-now STAR COMGISTIC CAPITAL Chairman of the Board
CO., LTD. (Taiwan)
2020.1.8-now Tsannkuen Edge Intelligence Co., Supervisor
Ltd. (Taiwan)
2020.4.1-now Tsann Kuen Japan Co., Ltd. Director
2020.4.1-now Tsann Kuen (Zhangzhou) South Supervisor
Port Electronics Enterprise Co., Ltd.
2020.4.1-now Tsann Kuen China (Shanghai) Director
Enterprise Co., Ltd.
2020.4.1-now Tsann Kuen (Zhangzhou) Enterprise Vice Chairman of the
Co., Ltd. Board
36
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2020.4.21-now STARCOMGISTIC SINGAPORE Director
PTE.LTD.
2020.4.21-now STARCOMGISTIC AUSTRALIA Director
PTY LTD
2020.4.20-now Wu Wha Ma International Co., Ltd. Director
(Taiwan)
2020.4.21-now Sino Global Development Ltd. Director
(HK)
2020.4.24-now Tsann Kuen (China) Enterprise Co., Director
Ltd.
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
Wang Director Graduated 2001.12-2007.06 Tsann Kuen Enterprise Co., Ltd. Accountant specialist,
Youlian from Griffith (Taiwan) section head
g University
with a degree 2007.06-2020.10 Tsann Kuen Enterprise Co., Ltd. Assistant accounting
in Accounting, (Taiwan) manager & Acting
Finance and speaker
Economics 2010.10-2016.10 Tsann Kuen Enterprise Co., Ltd. Financial manager
(Taiwan)
2011.06-2021.3.31 Dali Investment Co., Ltd. (Taiwan) Director
2016.10-2018.12 Tsann Kuen Enterprise Co., Ltd. Senior manager of
(Taiwan) Finance Department
2018.06-now AXA Insurance Agent Co., Ltd. Director
(Taiwan)
2018.12-now Tsann Kuen Enterprise Co., Ltd. Assistant manager of
(Taiwan) 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., Director
Ltd.
2021.3.11-now Dali Investment Co., Ltd. (Taiwan) Supervisor
Ge Independ Graduated 1980.12-1986.11 Hubei Electric Accountant
Xiaopin ent from
g director Zhongnan 1986.11-1989.06 Fuzhou Camera Co., Ltd. Internal auditor
University of
Economics 1989.06-1997.01 PLA Military Academy of Finance Teacher
and Law with and Economics
a degree in 1997.01-2000.09 Fujian Mindu CPA Department manager
37
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
Finance and
2000.09-2007.03 Xiamen Andexin CPA Chief accountant
Accounting
2007.03-2010.03 Fujian Mindu BDO CPA and vice director
accountant
2008.05-2014.05 Tsann Kuen (China) Enterprise Co., Independent director
Ltd.
2014.06-2018.06.29 China Shengmu Organic Milk Independent director
Limited
2017.04.06-now Tsann Kuen (China) Enterprise Co., Independent director
Ltd.
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 Independ Graduated 1991.09-1992.12 Xiamen Intermediate People’s Clerk
Luhua ent from Xiamen Court
director University
with a master 1992.12-1993.06 Orient (Xiamen) Golf Co., Ltd. Legal manager
degree in Civil
and 1993.06.now Fujian Tianyi Law Firm Partner, vice director
Commerce
Law 2002.03-now Xiamen Arbitration Commission Arbitrator
2009.08-2016.03 Xiamen XGMA Machinery Co., Independent director
Ltd.
2012.05-now Xiamen University Tan Kah Kee Part-time associate
College professor
2013.04-2016.12 DAZHOU XINGYE HOLDINGS Independent director
CO.,LTD
2014.04-2020.01 Xiamen Port Development Co.,Ltd Independent director
2020.4.24-now Tsann Kuen (China) Enterprise Co., Independent director
Ltd.
2020.07.31-now Xiamen Chengtun Mining Co., Ltd. Independent director
Wu Independ Graduated 2010.8.26-2014.8.1 Accounting Department of School Assistant professor
Yibing ent from Fudan of Management, Xiamen University
director University
with a doctor 2014.8.1-now Accounting Department of School Associate professor
degree in of Management, Xiamen University
Accounting 2019.12.30-now Shanghai Kinlita Chemical Co., Independent director
Ltd.
2019.7.18-now Leedarson IoT Technology Inc. Independent director
38
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2019.12.28-now KUK RESOURCES-SAVING Independent director
TECHNOLOGY CO., LTD.
2020.4.24-now Tsann Kuen (China) Enterprise Co., Independent director
Ltd.
2022.1.13-now G-bits Network Technology Independent director
(Xiamen) Co., Ltd.
Yang Supervis Graduated 1996.07-2003.06 Deloitte Taiwan Audit manager
Yongqu or from School
an of Accounting 2003.06-2003.10 Deloitte Taiwan Audit manager
Department,
National 2003.10-2005.02 Tsann Kuen Enterprise Co., Ltd. GM of Accounting
Taiwan (Taiwan) Department
University 2005.03-2006.07 Tsann Kuen Enterprise Co., Ltd. Senior manager of
(Taiwan) Accounting
Department
2006.08-2007.10 Tsann Kuen Enterprise Co., Ltd. Assistant manager of
(Taiwan) Accounting
Department
2007.11-2009.12 Tsann Kuen Enterprise Co., Ltd. Senior assistant
(Taiwan) manager of Accounting
Department
2009.12- 2018.12 Tsann Kuen Enterprise Co., Ltd. Vice GM of
(Taiwan) Accounting
Department
2012.07.24-2019.10.22 Tsann Kuen (China) Enterprise Co., Supervisor
Ltd.
2014.06.11-2019.09.13 PT.STAR COMGISTIC Supervisor
INDONESIA
2014.07.08-2019.09.09 Shanghai Canxing Trading Co., Ltd. Director
2015.01.21-2019.09.09 Tsann Kuen China (Shanghai) Director
Enterprise Co., Ltd.
2016.04.07-2020.01.07 Tsannkuen Edge Intelligence Co., Supervisor
Ltd. (Taiwan)
2016.08.04-2019.09.13 PT.STAR COMGISTIC Supervisor
PRORERTY DEVELOPMENT
INDONESIA
2017.05.28-2019.09.09 Tsann Kuen (Zhangzhou) South Director
Port Electronics Enterprise Co., Ltd.
2018.06.15-2019.09.09 Tsann Kuen (Zhangzhou) Supervisor
Investment Co., Ltd.
2018.08.15-2019.04.08 Tsann Kuen (Zhangzhou) Enterprise Supervisor
Co., Ltd.
39
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2018.12.14-2019.09.30 Tsann Kuen Enterprise Co., Ltd. Vice GM of Business
(Taiwan) Management
Department
2019.04.08-2019.09.09 Tsann Kuen (Zhangzhou) Enterprise Vice Chairman of the
Co., Ltd. Board
2019.06.21-2019.09.05 Xiamen Tsannkuen Property Chairman of the Board
Services Co., Ltd.
2019.12.23-now Tsann Kuen Enterprise Co., Ltd. Vice GM of
(Taiwan) Accounting
Department
2019.12.23-now STAR COMGISTIC CAPITAL Vice GM of Business
CO., LTD. (Taiwan) Management
Department
2020.4.24-now Tsann Kuen (China) Enterprise Co., Supervisory Board
Ltd. chairman
Ding Supervis Graduated 1991.8.13-2002.10.9 Tsann Kuen Enterprise Co., Ltd. QRA section manager
Hongmi or from (Taiwan)
ng Department of 2002.10.10-2003.8.31
Industrial Tsann Kuen (China) Enterprise Co., Vice manager of glass
Engineering Ltd. factory
and 2003.9.1-2005.5.26 Tsann Kuen China (Shanghai) Vice manager of Motor
Management Enterprise Co., Ltd. business department
of STUST
2005.5.27-2007.1.12 Tsann Kuen (Zhangzhou) Vice manager of
Enterprise Co., Ltd. Cuisinart factory
2008.1.13-2009.8.31 Tsann Kuen (Zhangzhou) Vice manager of Iron
Enterprise Co., Ltd. business department
2009.9.1-2014.8.31 Tsann Kuen (Zhangzhou) Manager of Central
Enterprise Co., Ltd. Lab
2014.9.1-2015.8.31 PT.STAR COMGISTIC Operations manager
INDONESIA
2015.9.1-2016.12.31 Tsann Kuen (Zhangzhou) Assistant manager of
Enterprise Co., Ltd. QRA
2017.1.1-2017.12.31 Tsann Kuen (Zhangzhou) Operations assistant
Enterprise Co., Ltd. manager of PSO
2018.1.1-now Tsann Kuen (Zhangzhou) Assistant manager of
Enterprise Co., Ltd. QRA/Purchasing
Department/laboratory
2019.10.22—now Tsann Kuen (China) Enterprise Co., Supervisor
Ltd.
Zheng Supervis Graduated 2011.06- now Tsann Kuen (China) Enterprise Co., Financial manager
Caiyun or from School Ltd.
of Economics
2008.07-2011.05 Tsann Kuen (China) Enterprise Co., Vice Financial
and
Ltd. Manager
40
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
Management, 1998.08-2008.06
Tsann Kuen (China) Enterprise Co., Account Specialist
Fujian
Ltd.
Forestry
College 2014.03.05-2020.4.28 East Sino Development Limited Director
(HK)
2017.04.28-now Orient Star Investments Limited Director
(HK)
2016.03.02-2018.10.30 Xiamen Tsann Kuen Home Supervisor
Appliance Design Co., Ltd.
2018.06.15-2020.4.20 Tsann Kuen (Zhangzhou) Director
Investment Co., Ltd.
2016.06.01-now Tsann Kuen (China) Enterprise Co., Staff-representative
Ltd. Supervisor
2019.9.10-now Tsann Kuen (Zhangzhou) South Director
Port Electronics Enterprise Co., Ltd.
2019.9.10-2020.4.1 Tsann Kuen (Zhangzhou) Vice chairman of the
Enterprise Co., Ltd. Board
2020.4.1-now Tsann Kuen (Zhangzhou) Enterprise Director
Co., 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 Supervisor
INDONESIA
2019.10.14-now PT.STAR COMGISTIC Supervisor
PRORERTY DEVELOPMENT
INDONESIA
Sun Board China Institute 2011.04.23-now Tsann Kuen (China) Enterprise Co., Board Secretary
Meimei Secretary of Information Ltd.
Management
2005.07-2011.04 Tsann Kuen (China) Enterprise Co., Securities
with a degree
in Business Ltd. Representative
Administratio
n
Wu Financial Graduated 2003.9.1-2006.6.30 Tsann Kuen (Zhangzhou) Accounting
Jianhua Chief from Enterprise Co., Ltd. Department clerk
Department
2006.7.1-2006.12.31 Tsann Kuen (Zhangzhou) Head of Cost Section
of Accounting
of Fuzhou Enterprise Co., Ltd. of Accounting
University Department
2007.1.1-2008.6.30 Tsann Kuen (Zhangzhou) Head of General
Enterprise Co., Ltd. Account Section of
Accounting
Department
2008.7.1-2010.5.31 Tsann Kuen (Zhangzhou) Head of Sales Section
Enterprise Co., Ltd. of Accounting
41
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
Department
2010.6.1-2014.4.30 Tsann Kuen (Zhangzhou) Vice manager of Cost
Enterprise Co., Ltd. /Accounts Payable in
Accounting
Department
2014.5.1-2019.3.21 Tsann Kuen (China) Enterprise Co., Vice manager of Cost
Ltd. /Accounts Payable in
Accounting
Department
2019.3.22-now Tsann Kuen (China) Enterprise Co., Accounting
Ltd. Department manager
2019.3.29-now Tsann Kuen (China) Enterprise Co., Financial Chief
Ltd.
2019.5.14-now Xiamen Tsann Kuen Property Supervisor
Service Co.,Ltd.
2019.9.10-2020.4.20 Tsann Kuen (Zhangzhou) Supervisor
Investment Co., Ltd.
2019.9.10-2020.4.20 Tsann Kuen (Zhangzhou) Supervisor
Enterprise Co., Ltd.
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
Cai EUPA Industry Corporation Limited
Director 2018-08-14 No
Yuansong (HK)
Cai
Fillman Investments Limited (HK) Director 2018-08-14 No
Yuansong
Cai Fordchee Development Limited
Director 2018-08-14 No
Yuansong (HK)
Remark:
Posts held concurrently in other entities
√ Applicable □ Inapplicable
42
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowanc
Ending
Starting date of e from
Name Other entity Post date of
tenure other
tenure
entity
Thermaster Electronic (Xiamen)
Cai Yuansong Director 1997-09-02 No
Ltd.
Sekond Creative Design Co., Ltd. Chairman of
Cai Yuansong 2011-06-01 Yes
(Taiwan) the Board
Tsann Kuen (Zhangzhou) 2021-07-0
Cai Yuansong Director 2017-04-21 No
Enterprise Co., Ltd. 4
Tsann Kuen (Zhangzhou) Chairman of
Cai Yuansong 2021-07-05 No
Enterprise Co., Ltd. the Board
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. (Taiwan)
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.
Chairman of
Cai Yuansong Tsann Kuen Japan Co., Ltd. 2020-04-09 No
the Board
Gold mine chain enterprise Co., Ltd 2021-10-2
Cai Yuansong Director 2020-04-24 No
(Taiwan) 5
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)
Orient Star Investments Limited
Cai Yuansong Director 2021-05-19 No
(HK)
Tsann Kuen (Zhangzhou) South
Chairman of
Cai Yuansong Port Electronics Enterprise Co., 2021-07-05 No
the Board
Ltd.
Shanghai Canxing Trading Co., Chairman of
Cai Yuansong 2021-07-19 No
Ltd. the Board
PT.STAR COMGISTIC Chairman of
Cai Yuansong 2021-08-04 No
INDONESIA the Board
Tsann Kuen Enterprise Co., Ltd. Chairman of
Lin Jidian 2020-03-31 Yes
(Taiwan) the Board
43
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowanc
Ending
Starting date of e from
Name Other entity Post date of
tenure other
tenure
entity
Tsann Kuen Enterprise Co., Ltd.
Lin Jidian CEO 2020-04-28 Yes
(Taiwan)
STAR COMGISTIC CAPITAL Chairman of
Lin Jidian 2020-03-31 Yes
CO., LTD. (Taiwan) the Board
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.
Vice
Tsann Kuen (Zhangzhou)
Lin Jidian chairman of 2020-04-01 No
Enterprise Co., Ltd.
the 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., Ltd.
Lin Jidian Director 2020-04-20 No
(Taiwan)
Sino Global Development Ltd.
Lin Jidian Director 2020-04-21 No
(HK)
Gold mine chain enterprise Co., Ltd
Lin Jidian Director 2020-04-24 No
(Taiwan)
Chairman of
Lin Jidian Dali Investment Co., Ltd. (Taiwan) 2021-03-11 No
the Board
Senior
Ge Xiaoping BDO-Xiamen Branch 2019-05-01 Yes
consultant
Partner, vice
Liu Luhua Fujian Tianyi Law Firm 1993-06-01 Yes
director
Liu Luhua Xiamen Arbitration Commission Arbitrator 2002-03-01 Yes
Part-time
Xiamen University Tan Kah Kee
Liu Luhua associate 2012-05-01 Yes
College
professor
Independent
Liu Luhua Xiamen Chengtun Mining Co., Ltd. 2020-07-31 Yes
director
Accounting Department of School Associate
Wu Yibing 2014-08-01 Yes
of Management, Xiamen University professor
Shanghai Kinlita Chemical Co., Independent
Wu Yibing 2019-12-30 No
Ltd. director
Wu Yibing Leedarson IoT Technology Inc. Independent 2019-07-18 Yes
44
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowanc
Ending
Starting date of e from
Name Other entity Post date of
tenure other
tenure
entity
director
KUK RESOURCES-SAVING Independent
Wu Yibing 2019-12-28 Yes
TECHNOLOGY CO., LTD. director
G-bits Network Technology Independent
Wu Yibing 2022-01-13 Yes
(Xiamen) Co., Ltd. director
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
Managemen 2019-12-23 Yes
Yongquan CO., LTD. (Taiwan)
t
Department
Assistant
manager of
Quality
Ding Tsann Kuen (Zhangzhou) Assurance
2018-01-01 Yes
Hongming Enterprise Co., Ltd. Department/
Purchasing
Department/
Laboratory
Orient Star Investments Limited
Zheng Caiyun Director 2017-04-28 No
(HK)
Tsann Kuen (Zhangzhou) South
Zheng Caiyun Port Electronics Enterprise Co., Director 2019-09-10 No
Ltd.
Tsann Kuen (Zhangzhou)
Zheng Caiyun Director 2020-04-01 No
Enterprise Co., Ltd.
Shanghai Canxing Trading Co., Supervisor
Zheng Caiyun 2020-04-01 No
Ltd.
PT.STAR COMGISTIC Supervisor
Zheng Caiyun 2019-10-14 No
INDONESIA
PT.STAR COMGISTIC
Zheng Caiyun PRORERTY DEVELOPMENT Supervisor 2019-10-14 No
INDONESIA
Remark:
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
45
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. 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 Remuneratio
before-tax n from
Gend Incumbent/form
Name Office title Age remuneration related
er er
from the parties of the
Company Company
Chairman of the Board &
Pan Zhirong Male 55 Former 106.53 No
GM
Cai Chairman of the Board &
Male 65 Incumbent 135.67 Yes
Yuansong GM
Lin Jidian Director Male 53 Incumbent 3.6 Yes
Wang Director
Male 53 Incumbent 3.6 Yes
Youliang
Femal
Ge Xiaoping Independent director 59 Incumbent 15 No
e
Liu Luhua Independent director Male 52 Incumbent 12 No
Wu Yibing Independent director Male 40 Incumbent 12 No
Yang Supervisor Board Chairman
Male 57 Incumbent 2.4 Yes
Yongquan
Ding Supervisor
Male 56 Incumbent 42.13 No
Hongming
Zheng Supervisor
Male 46 Incumbent 24.83 No
Caiyun
Wu Jianhua Financial Chief Male 42 Incumbent 24.01 No
Femal
Sun Meimei Board Secretary 48 Incumbent 19.67 No
e
Total -- -- -- -- 401.44 --
46
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Performance of directors in this reporting period
1. Board meetings convened during this reporting period
Meeting Convened date Disclosure date Resolutions
The First Board Meeting in 2021 2021-01-12 2021-01-13 See www.cninfo.com.cn
The Second Board Meeting in 2021 2021-02-25 2021-02-26 See www.cninfo.com.cn
The Third Board Meeting in 2021 2021-03-20 2021-03-23 See www.cninfo.com.cn
The Fourth Board Meeting in 2021 2021-04-27 2021-04-28 See www.cninfo.com.cn
The First Special Board Meeting in 2021 2021-05-19 2021-05-20 See www.cninfo.com.cn
The Fifth Board Meeting in 2021 2021-08-03 2021-08-04 See www.cninfo.com.cn
The Sixth Board Meeting in 2021 2021-10-26 2021-10-27 See www.cninfo.com.cn
The Seventh Board Meeting in 2021 2021-12-10 2021-12-11 See www.cninfo.com.cn
2. Attendance of directors in board meetings and meetings of shareholders
Attendance of directors in board meetings and meetings of shareholders
Board
meeting
Attendance Absence
director
Attendance Attendance at at board Absence from board Shareholders’
should
at board board meeting by meeting from board meeting for meeting
Director attend in
meeting on telecommunication through a meeting two attended
this
site (times) (times) proxy (times) consecutive (times)
reporting
(times) times
period
(times)
Pan Zhirong 4 3 1 0 0 No 0
Cai Yuansong 8 3 5 0 0 No 0
Lin Jidian 8 0 7 1 0 No 0
Wang Youliang 8 0 8 0 0 No 0
Ge Xiaoping 8 8 0 0 0 No 1
Liu Luhua 8 7 0 1 0 No 1
Wu Yibing 8 8 0 0 0 No 1
3. Objections raised by directors on issues of the Company
Indicate by tick mark whether any directors raised any objections on issues of the Company.
√ Yes □ No
47
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Director Issues with objections Content of objections
The Motion on Closing and Deregistration of
Closing and deregistration of controlling
Controlling Grandchildren Company Tsannkuen
Lin Jidian grandchildren company Tsannkuen Edge
Edge Intelligence Co., Ltd. on the Seventh Board
Intelligence Co., Ltd.
Meeting in 2021 convened on 10 December 2021
The Motion on Closing and Deregistration of
Closing and deregistration of controlling
Controlling Grandchildren Company Tsannkuen
Wang Youliang grandchildren company Tsannkuen Edge
Edge Intelligence Co., Ltd. on the Seventh Board
Intelligence Co., Ltd.
Meeting in 2021 convened on 10 December 2021
The director Lin Jidian voted against the motion with the reason that a multinational enterprise
shall widely absorb R&D talents to be free to advance or retreat.
Remark:
The director Wang Youliang abstained in the vote for inability to give opinions on the motion
raised.
4. Other details about the performance of duties by directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
□ Yes √ No
Explanation on the advices of independent directors for the Company being adopted or not adopted: none
VII. Performance of duties by specialized committees under the Board during this reporting
period
Other Details
Number Important about issues
details
of Convened opinions and with
Committee Members Content about the
meetings date suggestions
performance objections
convened raised
of duties (if any)
As an
overseas
1. The motion on
grandchildren
capital increase in
company,
grandchildren company
SCI shall
2021-01-12 SCI by controlling
think of ways
Cai subsidiary Tsann Kuen
to build a
Yuansong, (Zhangzhou) Enterprise
localization
Wang Co., Ltd.
bank lending
Youliang, system
Strategy
Ge 2
Committee The
Xiaoping,
Liu committee
Luhua, 1. The motion on member
Wu Yibing closing and cancelling Wang
controlling Youliang
2021-12-10
grandchildren company abstained in
Tsannkuen Edge the vote for
Intelligence Co., Ltd. inability to
give
opinions on
48
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Other Details
Number Important about issues
details
of Convened opinions and with
Committee Members Content about the
meetings date suggestions
performance objections
convened raised
of duties (if any)
the motion
raised
The first review
comments on the
2021-01-08
Annual Financial
Statements for 2020
1. The motion on
Annual Estimated
2021-02-25
Routine Related-party
Transactions for 2021
The second review
comments on the
2021-02-26
Annual Financial
Statements for 2020
1. Internal
Self-evaluation Report
for 2020
2. Annual Report for
2020 and the Abstract
3. Annual Financial
Statements for 2020
Ge 4. Annual Profit
Xiaoping, Distribution Planning
Audit
Liu 5 for 2020
Committee
Luhua,
5. The Final Report for
Wu Yibing
2020 on the Audit
Working of the
Company Made by
RSM China
2021-03-20 6. The motion on
further employment of
audit accounting firm
7. The motion on the
asset management of
the company-owned
fund by the controlling
subsidiary Tsann Kuen
(Zhangzhou) Enterprise
Co., Ltd.
8. The motion on the
asset management of
the company-owned
fund by the controlling
grandchildren company
Tsann Kuen China
(Shanghai) Enterprise
49
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Other Details
Number Important about issues
details
of Convened opinions and with
Committee Members Content about the
meetings date suggestions
performance objections
convened raised
of duties (if any)
Co., Ltd.
1. The First Quarter
2021-04-27 Report for 2021 and the
Abstract
1. The Semi-annual
2021-08-03 Report for 2021 and the
Abstract
1. The Third Quarter
2021-10-26 Report and the Abstract
for 2021
1. The summary report
on the performance of
duties by the
Ge 2021-03-20 Nomination,
Nomination, Remuneration and
Xiaoping,
Remuneration Appraisal Committee of
Liu
and Appraisal the Board for 2020
Luhua,
Committee
Lin Jidian 1. The motion on hiring
Cai Yuansong, the
2021-05-19
chairman of the Board
as GM concurrently
VIII. 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
IX. Employees
1. Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 157
Number of in-service employees of main subsidiaries 3,425
Total number of in-service employees 3,582
Total number of employees with remuneration in this reporting
10,268
period
Number of retirees to whom the Company or its main subsidiaries
-
need to pay retirement pension
Function
Category Number of employees
Production 2,519
50
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Sales 95
Technical 332
Financial 45
Administrative 591
Total 3,582
Educational background
Category Number of employees
Doctor -
Master 13
Bachelor 202
College graduates 248
Below college 3,119
Total 3,582
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. Establishment of a three-level training system (new employee training, department-level training and
company-level training)
2. Cultivation and building of talent teams (management/technology) on a rolling basis
3. Training certification for key positions
4. Training on core competitiveness items to achieve the Company's strategies
5. "One Teacher, One Class" internal trainer cultivation
6. School-enterprise cooperation on talent cultivation
4. Labor outsourcing
√ Applicable □ Inapplicable
Total man-hours (hour) 122,288
Total remuneration paid (RMB Yuan) 1,956,608.00
51
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
X. List of the profits distribution and turning capital reserve into share capital of the
Company
List of the formulation, execution or adjustment of the profits distribution policies, especially the cash dividend
policies
√ Applicable □ Inapplicable
The Company’s profit distribution preplan for 2020 has been reviewed and approved on the third board meeting in
2021 and been reviewed and approved on the shareholders’ meeting on 14 May 2021. And the formulation of the
profit distribution policies conformed to the Company’s Shareholder Return Plan for Next Three Years
(2017-2020). The distribution has been completed on 23 June 2021.
Special explanation of cash dividend policy
Yes. The Company’s profit distribution
preplan for 2020 has been reviewed and
approved on the third board meeting in 2021
Whether conformed to the regulations of the Articles of and been reviewed and approved on the
association or the requirements of the resolutions of the shareholders’ meeting on 14 May 2021. And
shareholders’ meeting: the formulation of the profit distribution
policies conformed to the Company’s
Shareholder Return Plan for Next Three Years
(2017-2020).
Whether the dividend standard and the proportion were definite
Yes
and clear:
Whether the relevant decision-making process and the system
Yes
were complete:
Whether the independent director acted dutifully and exerted the
Yes
proper function:
Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal Yes
interest had gained fully protection:
Whether the conditions and the process met the regulations and
was transparent of the adjustment or altered of the cash dividend Yes
policy:
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
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) -
Dividend for every 10 shares (RMB Yuan) (tax included) 1.00
52
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Turning capital reserve into share capital for every 10 shares
-
(share)
Total shares as the basis for the allocation preplan (share) 185,391,680.00
Amount of cash dividend (RMB Yuan) (tax included) 18,539,168.00
Amount of cash dividend by other methods (like share
-
repurchase) (RMB Yuan)
Total cash dividends (including those by other methods) (RMB
18,539,168.00
Yuan)
Distributable profit (RMB Yuan) 334,348,896.89
Percentage of total cash bonus (including those by other
100%
methods) of the total 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 2021, the Company intended to distribute a cash dividend of RMB1 (tax included) for every 10 shares held by
its shareholders, and the estimated distributable profits of the Company was RMB18,539,168 with the retained
profits of RMB315,809,728.89 for carry-forward to the next year. There was no turn from capital reserve to share
capital for the year.
XI. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Inapplicable
No such cases in this reporting period.
XII. Establishment and implementation of internal control system in this reporting period
1. Establishment and implementation of internal control
The Company has established a relatively perfect, sound and effective internal control system which can be
effectively implemented.
2. Serious internal control defects found in this reporting period
□ Yes √ No
XIII. Management and control over subsidiaries in this reporting period
None
53
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIV. Internal control self-evaluation report and auditors report on internal control
1. Internal control self-evaluation report
Disclosure date of the internal
2022-3-15
control self-evaluation report
Index to the disclosed internal
www.cninfo.com.cn
control self-evaluation report
Total assets of the evaluated
entities as a percentage in the 100.00%
consolidated total assets
Operating revenues of the
evaluated entities as a percentage
100.00%
in the consolidated 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
Refer to one or several controlling regulators investigated which lead to
defects groups in the enterprise which public attention, and cause huge loss of
lead to the enterprise's serious deviation customers, or need be report.
from controlling target. Important defect:
Important defect: Safety-lead to a employ or citizen
Refer to one or several controlling disability or fatality
Nature standard defects groups, its severity and economic Company reputation- negative news
results lower than great defect which spread around the state, had
may lead to the enterprise’s deviation complained the media or lead to the
from controlling target. contract will be cancelled by the
Common defect: customers.
Refer to any financial-report related Common defect:
internal control defect that does not Has occurred or is about to cause harm
constitute serious defect or important to the health of workers or citizens
defect.
Company reputation-negative news
spread around certain region damaging
the Company’s reputation to some
extent
54
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Serious defect:
>5% of total profits of consolidated
statements in recent period
>1% of total assets of consolidated
statements in recent period
>2% of total operation revenue of
consolidated statements in recent period
A serious violation of laws, regulations
and rules and the government's policy,
was restricted enter industry, suspended Serious defect: RMB5 million
business licenses, forced to shut down. (including RMB5 million) or above.
Important defect: Important defect: Within RMB1
Within 3%~5% of total profits of million (including RMB1 million) to
consolidated statements in recent period RMB5 million (including RMB5
Quantitative standard million)
Within 0.5%~1% of total assets of
consolidated statements in recent period Common defect: less than RMB1
million
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
financial-report-related defects -
Number of serious
non-financial-report-related
-
defects
Number of important
financial-report-related defects -
Number of important
non-financial-report-related
-
defects
2. Auditors 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
55
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31 Dec. 2021.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 2022-3-15
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
XV. Self-inspection and rectification in the specific project on governance of listed companies
None
Section V. Environmental & Social Responsibility
I. Significant environmental issues
Whether the Company or any of its subsidiaries is identified as a key polluter by the environment authorities
□ Yes √ No
There were no administrative penalties for environmental issues.
II. Social responsibilities
None
II. Poverty alleviation or rural revitalization activities
None
56
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VI. Significant Events
I. Performance of commitments
1. Commitments of the Companys 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
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Commitment on share
reform
Commitment in the
acquisition report or the
report on equity
changes
Commitments made
upon the assets
replacement
Commitments made
upon first issuance or
refinance
Commitment on equity
incentive
Based on the The
confidence on the Company’s
continuous and stable stocks
development of the resumed
Company, it trading on 31
committed to increase Dec. 2012,
the shareholding if but the
the Company’s stock Company’s
price lower than stock price
HKD2.40 per share hasn’t met
Commitment after the the condition
Other commitments FILLMAN
on implementation of the Long-term (closing
made to minority INVESTMENTS 12/28/2012
shareholding shares contraction effective price was
shareholders LIMITED
increase and trading lower than
resumption, and it HKD2.40)
would increase no for
more than 2% shares shareholding
(i.e. 3.7078 million increase
shares) of the total since the date
shares issued by the of trading
Company within one resumption,
year since the date of FILLMAN
initial shareholding Investment
increase. If the plan Limited
57
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
on increasing holding hasn’t
2% shares of the total implemented
shares is completed the
within 12 months, shareholding
and the stock price increase
has also reached the plan.
target price, it will
perform relevant
approval procedures,
and propose to CSRC
on continuous
implementation of
shareholding increase
by exemption of
offering.
Executed on time or not Yes
Specific reasons for
failing to fulfill
commitments on time
and plans for next step
(if any)
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
II. Occupation of the Companys funds by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
III. Illegal provision of guarantees for external parties
No such cases in this reporting period.
IV. Notes for the related information of “non-standard audit reports” for the latest period by
board of directors
□ Applicable √ Inapplicable
V. Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “auditors non-standard report” issued by the CPAs firm for
this reporting period
□ Applicable √ Inapplicable
58
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. YoY changes in accounting policies, estimations or correction of material accounting
errors
□ Applicable √ Inapplicable
VII. YoY changes in the scope of the consolidated financial statements
□ Applicable √ Inapplicable
VIII. 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 domestic
2 years
CPAs firm
Names of the certified public accountants from the domestic
Chen Lianwu, Ren Xiaochao
CPAs firm
Consecutive years of the audit service provided by the certified
2 years
public accountants from the domestic CPAs firm
Indicate by tick mark whether the CPAs firm was changed in this reporting period
□ Yes √ No
Indicate by tick mark whether the CPAs firm was changed during the audit
□ Yes √ No
Indicate by tick mark whether the change of CPAs firm perform the procedure for examination and approval
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
□ Applicable √ Inapplicable
IX. Possibility of delisting after disclosure of this Report
□ Applicable √ Inapplicable
X. Bankruptcy and restructuring
□ Applicable √ Inapplicable
XI. Significant litigations and arbitrations
□ Applicable √ Inapplicable
59
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XII. Punishments and rectifications
□ Applicable √ Inapplicable
XIII. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Inapplicable
XIV. Significant related-party transactions
1. Related-party transactions relevant to routine operation
□ Applicable √ Inapplicable
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. Transactions with related finance company
□ Applicable √ Inapplicable
6. Transactions with related finance company controlled by the Company
□ Applicable √ Inapplicable
7. Other significant related-party transactions
□ Applicable √ Inapplicable
XV. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Inapplicable
60
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Contracting
□ Applicable √ Inapplicable
(3) Leasing
□ Applicable √ Inapplicable
2. Significant guarantees
√ Applicable □ Inapplicable
Unit: RMB’0,000
Guarantees between subsidiaries
Disclosure Actual Guaran
date of the occurrence Term tee for
Line of Actual Type of Due
guarantee date (date of a
Guaranteed party guaran guarantee guarante or
line of guara related
tee amount e not
announcem agreement ntee party
ent signing) or not
PT.STAR 2021/09/0
6,137.
COMGISTIC 2021/8/3 1~2021/12 390.50 Pledged 1 year No No
78
INDONESIA /28
Total actual guarantee
Total guarantee line for subsidiaries
amount for subsidiaries
approved during this Reporting 6,137.78 6,085.62
during this Reporting
Period (C1)
Period (C2)
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries at
subsidiaries at the end of this 6,137.78 390.50
the end of this Reporting
Reporting Period (C3)
Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved during amount during this
6,137.78 6,085.62
this Reporting Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total actual guarantee
Total approved guarantee line at the
balance at the end of this
end of this Reporting Period 6,137.78 390.50
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4)
0.41%
in net assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual
-
controller and their related parties (D)
Amount of debt guarantees provided directly or indirectly for
-
entities with a liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net
-
assets (F)
61
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total amount of the three kinds of guarantees above
-
(D+E+F)
Explanation on undue guarantee or possible joint liquidated
None
liability undertaken
Explanation on providing external guarantee violating
None
established procedures
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
Self-owned fund 70,000.00 41,500.00 0.00
product
Total 70,000.00 41,500.00 0.00
62
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Particular information of high-risk entrusted asset management with individual significant amount or low security and poor liquidity
√ Applicable □ Inapplicable
Unit: RMB’0,000
Amou
Brea Whether
Actual nt Overview
k-ev Amount of there is
Type recovery of withdr Whether go of the item
Type Resou Use en actual profits wealth
of the Annual yield Estimate profits or awn through and the
Name of the trustee of the Amount rce of Initial date Ended Date of float or losses in management
produ for reference profit losses in impair stator related
trustee funds fund ing reporting entrustment
ct reporting ment procedures index for
proc period plan in
period provis inquiring
eeds future or not
ion
Chiyu Banking
Corporation 5,000 2020/1/9 2021/1/8 4.35% 220.52 220.52
Ltd.-Fuzhou Branch
Chiyu Banking
Corporation 5,000 2020/8/10 2021/2/10 3.70% 94.56 94.56
Ltd.-Fuzhou Branch Pay
ment
Chiyu Banking
of
Corporation Break 5,000 2020/9/8 2021/3/8 3.60% 90.50 90.50
Stru inter Subject to
Ltd.-Fuzhou Branch -even
Self-o ctura est Recovered the future http://www.
floatin
Xiamen International Bank wned l and upon N/A Yes market yield cninfo.com.
g 8,500 2020/3/10 2021/3/10 4.00% 344.72 344.72
Bank fund depo prin maturity and fund cn
proce
sit cipal condition
Xiamen International eds
5,000 2020/10/23 2021/4/21 at 3.40% 85.00 85.00
Bank
matu
Xiamen International rity
5,000 2020/11/11 2021/5/10 3.40% 85.00 85.00
Bank
BEA (Xiamen) 5,000 2021/1/13 2021/7/13 3.50% 87.99 87.99
Xiamen International
6,000 2020/8/18 2021/8/17 3.40% 206.27 206.27
Bank
63
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Amou
Brea Whether
Actual nt Overview
k-ev Amount of there is
Type recovery of withdr Whether go of the item
Type Resou Use en actual profits wealth
of the Annual yield Estimate profits or awn through and the
Name of the trustee of the Amount rce of Initial date Ended Date of float or losses in management
produ for reference profit losses in impair stator related
trustee funds fund ing reporting entrustment
ct reporting ment procedures index for
proc period plan in
period provis inquiring
eeds future or not
ion
Xiamen International
5,500 2020/8/20 2021/8/19 3.40% 189.08 189.08
Bank
Xiamen International
5,000 2020/9/4 2021/9/3 3.40% 171.89 171.89
Bank
Xiamen International
5,000 2020/12/11 2021/9/7 3.40% 127.50 127.50
Bank
Xiamen International
5,000 2020/11/19 2021/11/19 3.40% 172.36 172.36
Bank
Xiamen International
5,000 2020/12/10 2021/12/9 3.40% 171.89 171.89
Bank
Xiamen International
5,000 2020/12/11 2021/12/10 3.40% 171.89 171.89
Bank
Xiamen International
5,000 2021/3/18 2021/12/13 3.50% 131.25 131.25
Bank
Xiamen International
3,500 2021/3/19 2021/12/14 3.50% 91.88 91.88
Bank
BEA (Xiamen) 5,000 2021/2/25 2021/12/23 3.50% 146.32 146.32
BEA (Xiamen) 5,000 2021/7/15 2021/12/28 3.50% 80.69 80.69
Xiamen International
6,000 2021/8/19 2022/8/19 3.50% 212.92 42.75
Bank
Undue
Xiamen International 5,500 2021/8/24 2022/8/24 3.50% 195.17 37.74
64
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Amou
Brea Whether
Actual nt Overview
k-ev Amount of there is
Type recovery of withdr Whether go of the item
Type Resou Use en actual profits wealth
of the Annual yield Estimate profits or awn through and the
Name of the trustee of the Amount rce of Initial date Ended Date of float or losses in management
produ for reference profit losses in impair stator related
trustee funds fund ing reporting entrustment
ct reporting ment procedures index for
proc period plan in
period provis inquiring
eeds future or not
ion
Bank
Xiamen International
5,000 2021/9/8 2022/9/8 3.50% 177.43 30.35
Bank
Xiamen International
5,000 2021/9/9 2022/9/9 3.50% 177.43 30.08
Bank
Xiamen International
5,000 2021/11/23 2022/11/23 3.50% 177.43 10.29
Bank
BEA (Xiamen) 5,000 2021/12/9 2022/12/9 3.48% 176.42 3.19
BEA (Xiamen) 5,000 2021/12/16 2022/12/16 3.48% 176.42 2.22
BEA (Xiamen) 5,000 2021/12/30 2022/6/30 3.50% 88.47 0.28
Total 135,000 4,051.00 2,826.21
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
65
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Entrusted loans
□ Applicable √ Inapplicable
4. Other significant contracts
□ Applicable √ Inapplicable
XVI. Other significant events
□ Applicable √ Inapplicable
XVII. Significant events of subsidiaries
√ Applicable □ Inapplicable
Due to the poor operating results and low profitability of TKEI over the years, a large loss of RMB36.21 million
had been incurred accumulatively by December 2021, causing TKL to continuously lose money in its long-term
investments. In order to stop losses in a timely manner and to integrate and optimize the Company's resource
allocation while reducing management costs and operating risks, TKL plans to close and deregister wholly-owned
grandchildren company TKEI. For details, please refer to the Announcement on the Closing and Deregistration of
Controlling Grandchildren Company Tsannkuen Edge Intelligence Co., Ltd. on http://www.cninfo.com.cn dated
11 December 2021.
To truthfully reflect the Company's financial position and asset value, a full analysis and assessment of the
recoverable value of the long-term equity investments made by the Company and its controlled subsidiaries on 31
December 2021 have been conducted in accordance with the Accounting Standards for Business Enterprises, the
accounting policies of the Company and other relevant regulations, and impairment provisions have been accrued
for possible long-term equity investments based on the principle of prudence. Upon assessment, a total of
RMB54.42 million was accrued in 2021 for the long-term equity investments of subsidiary TKL in its subsidiaries
East Sino Development Limited, Orient Star Investments Limited and Tsann Kuen (Zhangzhou) South Port
Electronics Enterprise Co., Ltd. The impairment provisions have no impact on the Company's consolidated
profits.
66
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Section VII. 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
0 0.00% 0 0 0 0 0 0 0.00%
shares
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
S
hares 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
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
2.1 RMB
67
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
ordinary shares
2.2 Domestically
listed foreign 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
2.3 Foreign
capital stocks
listed abroad
2.4 Other
3. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for the share changes
□ Applicable √ Inapplicable
Approval of share changes
□ Applicable √ Inapplicable
Transfer of share ownership
□ Applicable √ Inapplicable
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and
net assets per share attributed to equity shareholder and financial index etc.
□ Applicable √ Inapplicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Inapplicable
2. Changes in restricted shares
□ Applicable √ Inapplicable
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
68
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
III. Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total
number of
preference
Total number of
shareholders
common Total number of
Total number with
shareholders at the preference
of common resumed
14,714 prior month-end 14,664 shareholders with
shareholders at voting rights
before the resumed voting rights
the period-end at the prior
disclosure of this at the period-end
month-end
Report
before the
disclosure of
this Report
5% or greater shareholders or the top 10 shareholders
Total Pledged, marked or
Increase/de
Shareho shares frozen shares
Nature of crease Number of Number of
lding held at
Name of shareholder sharehold during this restricted unrestricte
percenta the Numbe
er reporting shares d shares Status
ge (%) period-en r
period
d
FORDCHEE Foreign
53,940,5
DEVELOPMENT corporatio 29.10% Unchanged 0 53,940,530 0
30
LIMITED n
EUPA INDUSTRY Foreign
24,268,8
CORPORATION corporatio 13.09% Unchanged 0 24,268,840 0
40
LIMITED n
GUOTAI JUNAN Foreign
9,109,18
SECURITIES(HONGKO corporatio 4.91% -165,717 0 9,109,182 0
2
NG) LIMITED n
FILLMAN Foreign
4,621,59
INVESTMENTS corporatio 2.49% Unchanged 0 4,621,596 0
6
LIMITED n
SHENWAN
Foreign
HONGYUAN 2,208,51
corporatio 1.19% 75,762 0 2,208,514 0
SECURITIES (HK) 4
n
LIMITED
Domestic 1,900,77
CHEN YONGQUAN 1.03% Unchanged 0 1,900,776 0
individual 6
Foreign 1,607,17
CHEN YONGQING 0.87% Unchanged 0 1,607,178 0
individual 8
Foreign 1,492,96
CHEN LIJUAN 0.81% 91,834 0 1,492,968 0
individual 8
CHINA MERCHANTS State-own 1,393,27
0.75% 1,269,125 0 1,393,275 0
SECURITIES (HK) CO., ed 5
69
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
LIMITED corporatio
n
Domestic 1,130,00
DING XIAOLUN 0.61% Unchanged 0 1,130,000 0
individual 0
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
controlling shareholders. It is unknown whether the other public shareholders
Related or acting-in-concert parties
are related parties or acting-in-concert parties as prescribed in the
among the shareholders above
Administrative Methods for Disclosure of the Shareholding Changes of the
Listed Company’s Shareholders.
Above shareholders involved in
entrusting/being entrusted with
None
voting rights and giving up voting
rights
Special account for share repurchases
(if any) among the top 10 None
shareholders
Top ten unrestricted common shareholders
Number of unrestricted Type of shares
Name of shareholder common shares held at the
period-end Type Number
FORDCHEE DEVELOPMENT Domestically listed foreign
53,940,530 53,940,530
LIMITED share
EUPA INDUSTRY CORPORATION Domestically listed foreign
24,268,840 24,268,840
LIMITED share
GUOTAI JUNAN
Domestically listed foreign
SECURITIES(HONGKONG) 9,109,182 9,109,182
share
LIMITED
FILLMAN INVESTMENTS Domestically listed foreign
4,621,596 4,621,596
LIMITED share
SHENWAN HONGYUAN Domestically listed foreign
2,208,514 2,208,514
SECURITIES (HK) LIMITED share
Domestically listed foreign
CHEN YONGQUAN 1,900,776 1,900,776
share
Domestically listed foreign
CHEN YONGQING 1,607,178 1,607,178
share
Domestically listed foreign
CHEN LIJUAN 1,492,968 1,492,968
share
CHINA MERCHANTS Domestically listed foreign
1,393,275 1,393,275
SECURITIES (HK) CO., LIMITED share
Domestically listed foreign
DING XIAOLUN 1,130,000 1,130,000
share
Related or acting-in-concert parties The first, the second and the fourth shareholders are the Company’s corporate
70
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
among the top ten unrestricted public controlling shareholders. It is unknown whether the other public shareholders
shareholders and between the top ten are related parties or acting-in-concert parties as prescribed in the
unrestricted public shareholders and Administrative Methods for Disclosure of the Shareholding Changes of the
the top ten shareholders Listed Company’s Shareholders.
Top ten common shareholders
None
conducting securities margin trading
Did any of the top ten common shareholders or the top ten unrestricted common shareholders of the
Company conduct any promissory repo during the Reporting Period?
□ Yes √ No
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
Organization code Business scope
shareholder company establishment
principal
Fordchee
Cai Yuansong 01/03/1990 14676920-000-01-21-0 Investment
Development Limited
EUPA Industry
Cai Shuhui 07/21/1989 12959659-000-07-20-1 Investment
Corporation Limited
Fillman Investments
Cai Shuhui 07/21/1992 16269694-000-07-20-5 Investment
Limited
Shareholdings of the
controlling
shareholder in other
None
listed companies at
home 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
71
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
HU Wu Tsai Tsai
Tsai Huang Other
CHUN Tsann Yuan Yuan
Shuhui Meihui shareholders
MEI Kuen Song Yuan
25% 15.76% 25% 3% 12.5% 12.9% 5.84%
Tsann Kuen
Other
Wu Tsann Kuen Tsai Shu Hui Investment Co.,
shareholders
Ltd.
5.15% 44.4% 46.29%
4.16%
STAR COMGISTIC
CAPITAL CO.,LTD.
100%
Sino Global Development
Limited
100% 100%
93.9%
EUPA Industry FORDCHEE FILLMAN
Corporation Development Investment
Limited Limited Limited
29.1%
2.49%
13.09%
Tsann Kuen (China)
Enterprise Co., Ltd.
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
√ Yes □ No
Change of the actual controller during this reporting period
□ Applicable √ Inapplicable
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.
72
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
□ Applicable √ Inapplicable
4. Accumulative pledged shares held by the Companys controlling shareholder or the largest
shareholder and its acting-in-concert party accounts for 80% of shares of the Company held
by them
□ Applicable √ Inapplicable
5. 10% or greater corporate shareholders
□ Applicable √ Inapplicable
6. Limited shareholding decrease by the Companys controlling shareholder, actual controller,
reorganizer and other commitment makers
□ Applicable √ Inapplicable
IV. Specific implementation of share repurchases during this reporting period
Implementation progress of share repurchases
□ Applicable √ Inapplicable
Progress on reducing the repurchased shares by way of centralized bidding
□ Applicable √ Inapplicable
Section VIII. Preference Shares
□ Applicable √ Inapplicable
No preference shares in this reporting period.
Section IX. Bonds
□ Applicable √ Inapplicable
No bonds in this reporting period.
73
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Section X. Financial Report
I. Auditors Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 03/12/2022
Name of audit institution RSM China
No. of audit report RSM Shen Zi [2022] NO. 518Z0026
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
Board Chairman: Cai Yuansong
The Board of Directors of Tsann Kuen (China)
Enterprise Co., Ltd.
12 March 2022
74
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Auditors Report
Tsann Kuen (China) Enterprise Co., Ltd.
RSMSZ [2022] NO.518Z0026
RSM CHINA CPA LLP
CHINABEIJING
75
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Contents
NO. Content Page
1 Auditor’s report 1-8
2 Consolidated Statement of Financial Position 9
Consolidated Statement of Profit or Loss and Other
3 10
Comprehensive Income
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
Statement of Profit or Loss and Other Comprehensive
7 15
Income of Parent Company
8 Statement of Cash Flows of Parent Company 16
Statement of Changes in Owners' Equity of Parent
9 17- 18
Company
10 Notes to the Financial Statements 19- 158
76
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Auditors Report
RSM SZ [2022]NO.518Z0026
To the Shareholders of Tsann Kuen (China) Enterprise Co., Ltd.:
I. Opinion
We have audited the financial statements of Tsann Kuen (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 2021, 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 2021, 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.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, are of the most
77
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 of 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 5.6
―Inventories‖ to the financial statement of the relevant disclosures.
As of 31 December 2021, the closing balance of inventories in the Company’s
consolidated statement is CNY 252,434,003.44, and impairment allowance of
inventories is CNY 21,066,845.37. 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.
The management should to make significant judgments and assumptions in the forecast,
especially for future selling prices, production costs, operating expenses and related
taxes. Due to the complexity of the impairment test, the annual inventory impairment
test involves key judgments and estimation, 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:
a) To understand and evaluate the effectiveness of the design and operation of
management's internal controls related to inventory impairments allowance.
78
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 inventories with high value or idle.
d) For inventories 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 inventories 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 revenues
a. Description
Please refer to Note 3.24 of accounting policy of revenue, and please refer to Note 5.34
to the financial statement of the relevant disclosures.
There has an increase of 9.47% over last year which is the operating revenue of the
consolidated financial statement is CNY 2,347,280,300.56 in CY2021.
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 item.
b. Audit Response
In response to the Company’s recognition of revenues, we have implemented the
following audit procedures:
79
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 review 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
information comprises the information included in the Annual Report of the Company
for the year of 2021, but does not include the financial statements and our auditor’s
report thereon.
80
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
VI. Auditors 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
81
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 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.
82
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
83
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
(There is no text on this page, it is the stamp and signature page for the report RSM SZ [2022]
NO.518Z0026 of the Company.)
RSM China CPA LLP CICPA:
CHEN, Lianwu (Partner)
ChinaBeijing CICPA:
REN, Xiaochao
12 March 2022
84
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Financial Position
as at 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2021/12/31 2020/12/31 Item Note 2021/12/31 2020/12/31
Current assets: Current liabilities:
Cash and cash equivalents 5.1 779,404,127.58 707,794,598.20 Short-term borrowings 5.18 - 16,345,141.13
Held-for-trading financial assets 5.2 420,721,027.78 720,821,900.00 Held-for-trading financial liabilities - -
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable - - Notes payable 5.19 7,709,123.54 7,521,531.97
Accounts receivable 5.3 258,128,493.77 431,006,560.62 Accounts payable 5.20 637,575,276.70 874,962,887.93
Accounts receivable financing - - Advances from customers 5.21 6,771,786.99 6,853,100.03
Advances to suppliers 5.4 3,862,095.12 2,622,554.07 Contract liabilities 5.22 24,030,988.10 25,605,755.71
Other receivables 5.5 18,463,787.27 31,938,548.59 Employee benefits payable 5.23 45,462,900.33 51,262,265.67
Including: Interests receivable - - Taxes payable 5.24 46,692,538.61 20,238,247.17
Dividend receivable - - Other payables 5.25 47,498,375.30 52,803,158.48
Inventories 5.6 252,434,003.44 255,052,077.36 Including: Interests payables - -
Contract assets - - Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing within one year 5.7 21,845,333.33 - Non-current liabilities maturing within one year 5.26 10,147,932.67 -
Other current assets 5.8 266,300,137.82 18,634,037.60 Other current liabilities - -
Total current assets 2,021,159,006.11 2,167,870,276.44 Total current liabilities 825,888,922.24 1,055,592,088.09
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 - -
Other equity instrument investment 5.9 40,000.00 40,000.00 Lease liabilities 5.27 542,514,317.35 -
Other non-current financial assets Long-term payables - -
Investment properties 5.10 20,380,947.36 21,255,610.91 Long-term employee benefits payable 5.28 350,926.82 312,775.91
Fixed assets 5.11 151,647,083.48 164,338,962.07 Estimated liabilities - -
Construction in progress 5.12 1,102,833.08 728,529.68 Deferred income - -
Productive biological assets - - Deferred tax liabilities 5.16 21,946,814.30 51,425,551.57
Oil and gas assets Other non-current liabilities - -
Right-of-use assets 5.13 543,070,792.39 - Total non-current liabilities 564,812,058.47 51,738,327.48
Intangible assets 5.14 24,281,537.26 29,346,312.82 Total liabilities 1,390,700,980.71 1,107,330,415.57
Research and development expenditure - - Owners equity:
Goodwill - - Share capital 5.29 185,391,680.00 185,391,680.00
Long-term deferred expenses 5.15 9,914,564.44 6,831,730.07 Other equity instruments - -
Deferred tax assets 5.16 12,701,830.53 15,590,322.49 Including: Preference shares - -
Other non-current assets 5.17 1,603,759.82 2,044,702.30 Perpetual capital securities - -
Total non-current assets 764,743,348.36 240,176,170.34 Capital reserves 5.30 296,808,965.79 296,808,965.79
Less: Treasury stock - -
Other comprehensive income 5.31 -321,533.48 1,823,063.03
Specific reserves - -
Surplus reserves 5.32 61,371,246.13 49,087,662.68
Retained earnings 5.33 413,076,375.98 330,918,755.61
Total owner’s equity attributable to parent company 956,326,734.42 864,030,127.11
Non-controlling interests 438,874,639.34 436,685,904.10
Total owners equity 1,395,201,373.76 1,300,716,031.21
Total assets 2,785,902,354.47 2,408,046,446.78 Total liabilities and owners' equity 2,785,902,354.47 2,408,046,446.78
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
85
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2021 2020
I. Revenue 5.34 2,347,280,300.56 2,144,181,738.33
Including: operating revenue 5.34 2,347,280,300.56 2,144,181,738.33
II. Cost of sales 2,215,147,036.43 1,996,500,782.99
Including: operating cost 5.34 2,015,430,296.43 1,756,750,317.90
Taxes and surcharges 5.35 10,080,351.89 12,053,801.96
Selling and distribution expenses 5.36 21,045,003.77 55,857,793.41
General and administrative expenses 5.37 73,921,676.82 82,381,345.47
Research and development expenses 5.38 64,037,360.74 61,944,782.42
Finance costs 5.39 30,632,346.78 27,512,741.83
Including: Interest expense 26,060,552.41 433,614.88
Interest income 9,890,980.23 14,782,907.49
Add: Other income 5.40 4,786,030.51 6,241,497.95
Investment income/(losses) 5.41 63,493,757.14 43,371,745.54
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 5.42 -15,100,872.22 17,840,011.00
Impairment loss of credit 5.43 1,295,024.60 -41,845.03
Impairment loss of asset 5.44 -9,275,519.35 -9,241,368.18
Gains/(losses) from disposal of assets 5.45 2,101,750.59 195,318.03
III. Profit/(loss) from operations 179,433,435.40 206,046,314.65
Add: Non-operating income 5.46 5,236,403.37 5,986,192.66
Less: Non-operating expenses 5.47 359,939.97 1,317,230.70
IV. Profit/(loss) before tax 184,309,898.80 210,715,276.61
Less: Income tax expenses 5.48 20,883,176.71 24,744,852.06
V. Net profit/(loss) for the year 163,426,722.09 185,970,424.55
(I) Net profit/(loss) by continuity
1.Net profit/(loss) from continuing operation 163,426,722.09 185,970,424.55
2.Net profit/(loss) from discontinued operation
(II) Net profit/(loss) by ownership attribution
1.Attributable to owners of the parent 122,249,955.82 139,522,190.75
2.Attributable to non-controlling interests 41,176,766.27 46,448,233.80
VI. Other comprehensive income for the year, after tax 5.49 -2,859,462.01 -7,588,915.97
(I) Attributable to owners of the parent 5.49 -2,144,596.51 -5,691,686.98
1. Items that will not be reclassified subsequently to profit or loss 5.49 9,453.29 70,226.49
（1）Remeasurement of the net defined benefit liability (asset) 5.49 9,453.29 70,226.49
（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
2. Items that may be reclassified subsequently to profit or loss 5.49 -2,154,049.80 -5,761,913.47
（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 5.49 -2,154,049.80 -5,761,913.47
(II) Attributable to non-controlling interests 5.49 -714,865.50 -1,897,228.99
VII. Total comprehensive income for the year 160,567,260.08 178,381,508.58
(I) Attributable to owners of the parent 120,105,359.31 133,830,503.77
(II) Attributable to non-controlling interests 40,461,900.77 44,551,004.81
VIII. Earnings per share
(I) Basic earnings per share 14.2 0.66 0.75
(II) Diluted earnings per share 14.2 0.66 0.75
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
86
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2021 2020
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of services 2,467,884,094.36 1,933,508,028.72
Cash received from tax refund 176,598,405.86 128,505,987.51
Other cash received relating to operating activities 5.50 66,077,494.67 79,028,235.30
Subtotal of cash inflows from operating activities 2,710,559,994.89 2,141,042,251.53
Cash payments for goods purchased and services received 2,161,935,854.62 1,400,547,701.80
Cash payments to and on behalf of employees 310,074,818.82 282,939,721.63
Payments of taxes 35,006,772.54 33,505,720.46
Other cash payments relating to operating activities 5.50 55,016,977.03 108,778,024.40
Subtotal of cash outflows from operating activities 2,562,034,423.01 1,825,771,168.29
Net cash flows from operating activities 148,525,571.88 315,271,083.24
II. Cash flows from investing activities
Cash received from disposal and redemption of investments 1,095,335,804.49 566,712,167.00
Cash received from returns on investments 26,751,128.55 20,450,321.92
Net cash received from disposals of fixed assets, intangible assets
3,990,381.19 3,312,025.54
and other long-term assets
Net cash received from disposals of subsidiaries and other
- -
business units
Other cash received relating to investing activities 5.50 8,177,394.14 266,214,151.16
Subtotal of cash inflows from investing activities 1,134,254,708.37 856,688,665.62
Cash payments to acquire fixed, intangible and other long-term
50,372,910.09 45,058,052.50
assets
Cash payments to acquire investments 782,906,043.05 760,815,847.78
Net cash payments to acquire subsidiaries and other business
- -
units
Other cash payments relating to investing activities 5.50 262,620,000.00 266,214,151.16
Subtotal of cash outflows from investing activities 1,095,898,953.14 1,072,088,051.44
Net cash flows from investing activities 38,355,755.23 -215,399,385.82
III. Cash flows from financing activities
Cash received from capital contributions - -
Including: Cash received from absorbing minority shareholders'
- -
equity investment by subsidiaries
Cash received from borrowings 108,345,140.00 97,907,340.00
Other cash received relating to financing activities 5.50 52,022,663.06 -
Subtotal of cash inflows from financing activities 160,367,803.06 97,907,340.00
Cash repayments of debts 124,463,640.00 80,248,680.00
Cash payments for dividends, distribution of profit and interest
66,781,457.47 45,359,949.52
expenses
Including: Dividends, distribution of profit paid by subsidiaries to
38,273,165.53 26,395,184.93
minority shareholders
Other cash payments relating to financing activities 5.50 56,064,010.42 34,993,391.52
Subtotal of cash outflows from financing activities 247,309,107.89 160,602,021.04
Net cash flows from financing activities -86,941,304.83 -62,694,681.04
IV. Effect of foreign exchange rate changes on cash and cash
-1,890,055.38 -3,999,011.68
equivalents
V. Net increase / (decrease) in cash and cash equivalents 98,049,966.90 33,178,004.70
Plus: Cash and cash equivalents at the beginning of the period 672,801,206.68 639,623,201.98
VI. Cash and cash equivalents at the end of the period 770,851,173.58 672,801,206.68
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
87
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2021
Owners equity attributable to the parent company
Other equity Sp
Less
instruments eci
Item : Non-controllin Total owners
Perpet Other fic
Capital Trea Surplus Retained
Share capital Prefer ual comprehensi res Subtotal g interests equity
Othe reserves sury reserves earnings
ence capital ve income er
rs stoc
shares securit ve
k
ies s
I. 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
Add：Changes in accounting
- -
policy
Correction of prior
- -
period errors
Business
combination under common - -
control
Others - -
II. Balance at 1 January 2021 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
III. Changes in equity during
- - - - - - -2,144,596.51 - 12,283,583.45 82,157,620.37 92,296,607.31 2,188,735.24 94,485,342.55
the reporting period
(I) Total comprehensive income -2,144,596.51 122,249,955.82 120,105,359.31 40,461,900.77 160,567,260.08
(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 - - - - - - - - 12,283,583.45 -40,092,335.45 -27,808,752.00 -38,273,165.53 -66,081,917.53
1.Withdrawal of surplus
12,283,583.45 -12,283,583.45 - -
reserves
2.Profit distribution to owners
-27,808,752.00 -27,808,752.00 -38,273,165.53 -66,081,917.53
(or shareholders)
3.Others - -
(IV) Transfer between owners'
- - - - - - - - - - - - -
equity
88
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2021
Owners equity attributable to the parent company
Other equity Sp
Less
instruments eci
:
Item Perpet Other fic Non-controllin Total owners
Capital Trea Surplus Retained g interests equity
Share capital Prefer ual comprehensi res Subtotal
Othe reserves sury reserves earnings
ence capital ve income er
rs stoc
shares securit ve
k
ies s
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
185,391,680.00 - - - 296,808,965.79 - -321,533.48 - 61,371,246.13 413,076,375.98 956,326,734.42 438,874,639.34 1,395,201,373.76
2021
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
89
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2020
Non-controllin Total owners
Owners equity attributable to the parent company
g interests equity
Other equity Sp
Less
Item instruments eci
:
Perpet Other fic
Capital Trea Surplus Retained
Share capital Prefer ual comprehensi res Subtotal
Othe reserves sury reserves earnings
ence capital ve income er
rs stoc
shares securit ve
k
ies s
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
- - - - - - -5,691,686.98 - 8,588,174.13 112,394,848.62 115,291,335.77 18,155,819.88 133,447,155.65
the reporting period
(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
90
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2020
Non-controllin Total owners
Owners equity attributable to the parent company
g interests equity
Other equity Sp
Less
Item instruments eci
:
Perpet Other fic
Capital Trea Surplus Retained
Share capital Prefer ual comprehensi res Subtotal
Othe reserves sury reserves earnings
ence capital ve income er
rs stoc
shares securit ve
k
ies s
1.Withdrawal of surplus
8,588,174.13 -8,588,174.13 - -
reserves
2.Profit distribution to owners
-18,539,168.00 -18,539,168.00 -26,395,184.93 -44,934,352.93
(or shareholders)
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
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
2020
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
91
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Financial Position of Parent Company
as at 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Assets Note 2021/12/31 2020/12/31 Liabilities and owners' equity Note 2021/12/31 2020/12/31
Current assets: Current liabilities:
Cash and cash equivalents 6,601,322.99 7,767,004.93 Short-term borrowings - -
Held-for-trading financial assets - - Held-for-trading financial liabilities - -
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable - - Notes payable - -
Accounts receivable 13.1 797,988.71 2,710,138.48 Accounts payable 2,015,215.89 31,990,751.46
Accounts receivable financing - - Advances from customers 1,106,121.34 1,101,005.38
Advances to suppliers 22,478.60 32,124.35 Contract liabilities 242,002.25 224,884.11
Other receivables 13.2 3,982,081.71 3,311,425.63 Employee benefits payable 6,411,378.97 7,903,368.21
Including: Interests receivable - - Taxes payable 1,795,825.37 1,896,604.41
Dividend receivable - - Other payables 99,269,544.28 168,453,443.56
Inventories 799,320.40 1,457,947.89 Including: Interests payables - -
Contract asset - - Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing within one year - - Non-current liabilities maturing within one year 268,533.41 -
Other current assets - - Other current liabilities - -
Total current assets 12,203,192.41 15,278,641.28 Total current liabilities 111,108,621.51 211,570,057.13
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 securities - -
Other equity instrument investment 40,000.00 40,000.00 Lease liabilities 281,020.17 -
Other non-current financial assets Long-term payables - -
92
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Assets Note 2021/12/31 2020/12/31 Liabilities and owners' equity Note 2021/12/31 2020/12/31
Investment properties 23,190,348.63 25,202,712.69 Long-term employee benefits payable - -
Fixed assets 309,133.46 606,019.76 Estimated liabilities - -
Construction in progress 253,211.02 - Deferred income - -
Productive biological assets - - Deferred tax liabilities - -
Oil and gas assets Other non-current liabilities - -
Right-of-use assets 537,436.72 - Total non-current liabilities 281,020.17 -
Intangible assets - - Total liabilities 111,389,641.68 211,570,057.13
Research and development expenditure - - Owners equity:
Goodwill - - Share capital 185,391,680.00 185,391,680.00
Long-term deferred expenses 1,190,863.62 641,932.25 Other equity instruments - -
Deferred tax assets 2,852,867.10 3,961,079.97 Including: Preference shares - -
Other non-current assets - - Perpetual capital securities - -
Total non-current assets 951,788,562.11 953,866,446.23 Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock - -
Other comprehensive income - -
Specific reserves - -
Surplus reserves 61,371,246.13 49,087,662.68
Retained earnings 334,348,896.89 251,605,397.88
Total owners equity 852,602,112.84 757,575,030.38
Total assets 963,991,754.52 969,145,087.51 Total liabilities and owners' equity 963,991,754.52 969,145,087.51
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
93
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Profit or Loss and Other Comprehensive Income of Parent Company
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2021 2020
I. Revenue 13.4 52,917,749.30 68,883,738.63
Less: Costs of sales 13.4 37,678,865.36 51,844,199.89
Taxes and surcharges 2,430,150.76 3,075,220.21
Selling and distribution expenses 2,074,987.95 2,732,391.99
Administrative expenses 3,181,940.73 3,926,459.53
Research and development expenses - -
Finance costs -199,996.12 -61,043.76
Including: Interest expense 31,398.58 -
Interest income 185,192.21 135,260.63
Add: Other income 212,981.13 143,424.10
Investment income/(losses) 13.5 114,819,496.58 79,185,554.77
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 -82,768.03 1,417,920.25
Impairment loss of asset -193,305.88 -493,315.66
Gains/(losses) from disposal of assets - -
II. Profit/(loss) from operations 122,508,204.42 87,620,094.23
Add: Non-operating income 1,462,072.76 545,569.95
Less: Non-operating expenses 26,229.85 119,962.35
III. Profit/(loss) before tax 123,944,047.33 88,045,701.83
Less: Income tax expenses 1,108,212.87 2,163,960.56
IV. Net profit/(loss) for the year 122,835,834.46 85,881,741.27
(I) Net profit/(loss) from continuing operation 122,835,834.46 85,881,741.27
(II) 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)
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
VI. Total comprehensive income for the year 122,835,834.46 85,881,741.27
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
94
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Cash Flows of Parent Company
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2021 2020
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
11,899,388.22 65,664,448.37
services
Cash received from tax refund - -
Other cash received relating to operating activities 48,546,537.34 13,617,056.31
Subtotal of cash inflows from operating activities 60,445,925.56 79,281,504.68
Cash payments for goods purchased and services received 34,852,194.59 57,547,689.75
Cash payments to and on behalf of employees 4,025,294.45 1,452,471.96
Payments of taxes 5,051,486.33 5,954,002.67
Other cash payments relating to operating activities 103,317,339.66 74,575,393.44
Subtotal of cash outflows from operating activities 147,246,315.03 139,529,557.82
Net cash flows from operating activities -86,800,389.47 -60,248,053.14
II. Cash flows from investing activities
Cash received from disposal and redemption of investments - 0.00
Cash received from returns on investments 114,819,496.58 79,185,554.77
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 114,819,496.58 79,185,554.77
Cash payments to acquire fixed, intangible and other
1,088,037.05 255,950.97
long-term assets
Cash payments to acquire investments - -
Net cash payments to acquire subsidiaries and other
- -
business units
Other cash payments relating to investing activities - -
Subtotal of cash outflows from investing activities 1,088,037.05 255,950.97
Net cash flows from investing activities 113,731,459.53 78,929,603.80
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 interest
27,808,752.00 18,539,168.00
expenses
Other cash payments relating to financing activities 288,000.00 -
Subtotal of cash outflows from financing activities 28,096,752.00 18,539,168.00
Net cash flows from financing activities -28,096,752.00 -18,539,168.00
IV. Effect of foreign exchange rate changes on cash and cash
- -
equivalents
V. Net increase / (decrease) in cash and cash equivalents -1,165,681.94 142,382.66
Plus: Cash and cash equivalents at the beginning of the period 7,767,004.93 7,624,622.27
VI. Cash and cash equivalents at the end of the period 6,601,322.99 7,767,004.93
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
95
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2021
Other equity instruments Other
Item Less:
Perpetual comprehen Specific Surplus Total owners
Share capital Preferenc Capital reserves Treasury Retained earnings
capital Others sive reserves reserves equity
e shares stock
securities income
I. 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
Add：Changes in accounting
-
policy
Correction of prior
-
period errors
Others -
II. Balance at 1 January 2021 185,391,680.00 - - - 271,490,289.82 - - - 49,087,662.68 251,605,397.88 757,575,030.38
III. Changes in equity during
- - - - - - - - 12,283,583.45 82,743,499.01 95,027,082.46
the reporting period
(I) Total comprehensive income - 122,835,834.46 122,835,834.46
(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 - - - - - - - - 12,283,583.45 -40,092,335.45 -27,808,752.00
1.Withdrawal of surplus
12,283,583.45 -12,283,583.45 -
reserves
2.Profit distribution to owners
-27,808,752.00 -27,808,752.00
(or shareholders)
3.Others -
(IV) Transfer between owners'
- - - - - - - - - - -
equity
96
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2021
Other equity instruments Other
Item Less:
Perpetual comprehen Specific Surplus Total owners
Share capital Preferenc Capital reserves Treasury Retained earnings
capital Others sive reserves reserves equity
e shares stock
securities income
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
185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
2021
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
97
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2021
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2020
Other equity instruments
Other
Item Less:
comprehen Specific Surplus Total owners
Share capital Prefer Perpetual Capital reserves Treasury Retained earnings
sive reserves reserves equity
ence capital Others stock
income
shares securities
I. Balance at 31
185,391,680.00 271,490,289.82 40,499,488.55 192,850,998.74 690,232,457.11
December 2019
Add：Changes in
-
accounting policy
Correction of
-
prior period errors
Others -
II. Balance at 1 January
185,391,680.00 - - - 271,490,289.82 - - - 40,499,488.55 192,850,998.74 690,232,457.11
2020
III. Changes in equity
during the reporting - - - - - - - - 8,588,174.13 58,754,399.14 67,342,573.27
period
(I) Total comprehensive
- 85,881,741.27 85,881,741.27
income
(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
8,588,174.13 -8,588,174.13 -
reserves
98
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2020
Other equity instruments
Other
Item Less:
comprehen Specific Surplus Total owners
Share capital Prefer Perpetual Capital reserves Treasury Retained earnings
sive reserves reserves equity
ence capital Others stock
income
shares securities
2.Profit distribution to
-18,539,168.00 -18,539,168.00
owners (or shareholders)
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
185,391,680.00 - - - 271,490,289.82 - - - 49,087,662.68 251,605,397.88 757,575,030.38
December 2020
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
99
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
TsannKuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2021
(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 Development Limited, EUPA Industry Corporation Limited and Fillman
Investments Limited. 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 2021,
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)
100
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Enterprise Co., Ltd. Shares Traded Sponsor of the Approval‖), On 6 December 2006, the
Company received the [2006] No.266 file ―The notice of TsannKuen (China) Enterprise Co.,
Ltd, concerning the Approval of non-listed Foreign Shares Traded‖ from China Securities
Regulatory Commission. The China Securities Regulatory Commission agreed 700,476,830
unlisted shares (account for 62.97% of the share capital) held by the Company’s shareholders,
EUPA Industry Corporation Limited, Fordchee Development Limited, and Fillman
Investments 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 2021, total B shares
held by the three legal shareholders (EUPA Industry Corporation Limited, Fordchee
Development Limited, and Fillman Investments Limited) are 82,830,966 shares after the
implementation of share reducing model (Accounts for 44.68% of the share capital).
Legal representative: CAI, Yuansong
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 12 March
2022, in accordance with the Articles of Association, the financial statements will be
submitted to the shareholders meeting for consideration Conference.
101
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
1.2 Scope and changes of consolidated financial statements
11 subsidiaries were included in the scope of consolidation as of December 31 2021, please
see Note 7 INTEREST IN OTHER ENTITIES for details. The scope of the Company's
consolidation did not change during the reporting period.
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.
102
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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, truly and completely reflecting the
Company’s financial position as at 31 December 2021, 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 1 January to 31 December in calendar year.
3.3 Operating Cycle
The normal operating cycle of the Company is twelve months.
3.4 Functional Currency
The Company takes Renminbi Yuan (―RMB‖) 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.
103
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
For the accounting treatment of business combination under common control by step
acquisitions, please refer to Note 3.6.(f).
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;
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.
For the accounting treatment of business combination under the same control by step
acquisitions, please refer to Note 3.6.(f).
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.
104
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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
105
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 Make adjustments to 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
106
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.6.4.1 Acquisition of subsidiaries or business
Subsidiaries or business acquired through business combination under common control
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.
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.
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.
Subsidiaries or business acquired through business combination not under common control
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
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.
Cash flows from the acquisition date to the end of the reporting period shall be included into
the consolidated statement of cash flows.
3.6.4.2 Disposal of subsidiaries or business
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
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.
107
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 is offset with the owner’s equity,
represented as ―treasury stock‖ under ―owner’s equity‖ in the consolidated statement of
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
108
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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. 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
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.
109
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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.
110
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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.
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
111
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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:
The transactions are entered into simultaneously or in contemplation of one another.
The transactions form a single transaction designed to achieve an overall commercial
effect.
The occurrence of one transaction depends on the occurrence of at least one other
transaction.
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.
112
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
113
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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.
114
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 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-way 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 market place 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
115
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
(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 interest rate
method. Any gain or loss arising from derecognition according to the amortization 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 principle 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
116
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 above mentioned 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
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.
117
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 meet 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,
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, amount of
118
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 shall
be classified as financial liabilities, regardless that 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 on a financial
119
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
asset that is measured at amortised cost, a debt investment at fair value through other
comprehensive income, a contract asset, a lease receivable, a loan commitment and a financial
guarantee contract.
(i) 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 (ie all cash 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
120
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 instrument 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 instrument at stage 3,
interest revenue shall be calculated by applying the effective interest rate to the amortised cost
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 an amount equal 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 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 According to the credit risk of the acceptor, it should be the same as the "
acceptance bill accounts receivable" combination.
121
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
Aging of Accounts
This group uses the accounts receivables aging as the credit risk characteristics.
Receivables
Related parties Related party relationships (except for evidencing that they cannot 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 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 behalf of
Deposit guarantee
others and quality guarantee deposits to be collected in daily activies.
Export tax refund This group is the declared export tax refund funds that have not been received.
Open credits This group uses the age of accounts receivable as the credit risk characteristics.
Related parties Related party relationships (except for evidencing that they cannot 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.
122
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.9.5.2 Low credit risk
If the financial instrument has a low risk of default, 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.
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:
Significant changes in internal price indicators of credit risk as a result of a change in
credit risk since inception
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；
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；
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
influence the probability of a default occurring;
123
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Significant change that are expected to reduce the borrower’s economic incentive to make
scheduled contractual payments;
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；
Significant changes in the expected performance and behavior of the borrower；
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
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. Evidences that a financial asset is credit-impaired include observable data about the
following events:
124
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 reorganisation;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 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:
125
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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,
126
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 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 be offset. When meets the following conditions, financial
127
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 and the associated liability.
3.9.8 Determination of fair value of financial instruments
Determination of financial assets and financial liabilities please refer to Note 3.10
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 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.
128
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
is 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 into three levels the inputs to
valuation techniques used to measure fair value. The fair value hierarchy gives the highest
priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to 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.
129
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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, goods in stock, turnover material, 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 Impairment allowance 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 In normal operation process, finished goods, products and materials for direct sale,
their net realizable values are determined at estimated selling prices less estimated selling
expenses and relevant taxes and surcharges; for inventories held to execute sales contract or
service contract, their net realizable values are 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.
130
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
The Company shall present contract assets or contract liabilities in the statement of financial
position, depending on the relationship between the Company’s satisfying a performance
obligation and the customer’s payment. A contract asset shall be presented if the Company
has the right to consideration in exchange for goods or services that the Company has
transferred to a customer when that right is conditioned on something other than the passage
of time. A contract liability shall be presented if the Company has the obligation to transfer
goods or services to a customer for which the Company has received consideration (or the
amount is due) from the customer.
Method of determination and accounting for expected credit loss for contract assets please
refer to Note 3.9.
131
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Contract assets and contract liabilities shall be presented separately in the statement of
financial position. The contract asset and contract liability for the same contract shall be
presented on a net basis. A net balance shall be listed in the item of "Contract assets" or
"Other non-current assets" according to its liquidity; a credit balance shall be listed in the item
of "Contract liabilities" or "Other non-current liabilities" according to its liquidity. Contract
assets and contract liabilities for different contracts cannot be offset.
3.13 Contract costs
Contract costs include costs to fulfill a contract and the costs to obtain a contract.
The Company shall recognise an asset from the costs incurred to fulfill a contract only if those
costs meet all of the following criteria:
3.13.1 the costs relate directly to a contract or to an anticipated contract, including: direct
labour, direct materials, manufacturing costs (or similar costs), costs that are explicitly
chargeable to the customer under the contract and other costs that are incurred only because
an entity entered into the contract;
3.13.2 the costs enhance resources of the Company that will be used in satisfying performance
obligations in the future; and
3.13.3 the costs are expected to be recovered.
The incremental costs of obtaining a contract shall be recognised as an asset if the Company
expects to recover them.
An asset related to contract costs shall be amortised on a systematic basis that is consistent
with the revenue recognition of the goods or services to which the asset relates. The Company
recognises the contract acquisition costs as an expense when incurred if the amortisation
period of the asset that the Company otherwise would have recognised is one year or less.
The Company shall accrue the provision for impairment, recognise an impairment loss in
profit or loss to the extent that the carrying amount of an asset related to the contract cost
exceeds the difference of below two items, and further consider whether the estimated
liability related to the onerous contract needs to be accrued:
132
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.13.3.1 the remaining amount of consideration that the Company expects to receive in
exchange for the goods or services to which the asset relates; less
3.13.3.2 the costs that relate directly to providing those goods or services and that have not
been recognised as expenses.
The Company shall recognise in profit or loss a reversal of some or all of an impairment loss
previously recognised when the impairment conditions no longer exist or have improved. The
increased carrying amount of the asset shall not exceed the amount that would have been
determined (net of amortisation) if no impairment loss had been recognised previously.
Providing that the costs to fulfil a contract satisfy the requirement to be recognised as an asset,
the Company shall present them in the account ―Inventory‖ if the contract has an original
expected duration of one year (or a normal operating cycle) or less, or in the account ―Other
non-current assets‖ if the contract has an original expected duration of more than one year (or
a normal operating cycle).
Providing that the costs to obtain a contract satisfy the requirement to be recgonised as an
asset, the Company shall present them in the account ―Other current asset‖ if the contract has
an original expected duration of one year (or a normal operating cycle) or less, or in the
account ―Other non-current assets‖ if the contract has an original expected duration of more
than one year (or a normal operating cycle).
3.14 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor 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
133
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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.
134
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 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
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.
135
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
For long-term equity investment acquired through debt restructuring, the initial cost is
determined based on the fair value of the equity obtained and the difference between initial
investment cost and carrying amount of debts shall be recorded in current profit or loss.
3.14.3 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.
3.14.3.1 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.
3.14.3.2 Equity method
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 losses after
136
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 investment, difference between its fair value
and the carrying value, in addition to the cumulative changes in fair value previously recorded
in other comprehensive income, shall be recogised into retained earnings of the period of
using equity method.
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.
137
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.14.4 Impairment testing and provision for impairment loss
For investment in subsidiaries, associates or a joint ventures, provision for impairment loss
please refer to Note 3.20.
3.15 Investment Properties
3.15.1 Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both,
including:
3.15.1.1 Land use right leased out
3.15.1.2Land held for transfer upon appreciation
3.15.1.3Buildings 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;
138
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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
139
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 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
140
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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:
3.18.1.1 Expenditures for the asset are being incurred;
3.18.1.2 Borrowing costs are being incurred, and;
3.18.1.3 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
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 capitalisation rate will be the
weighted average of the borrowing costs applicable to the general borrowing.
141
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.19 Intangible Assets
3.19.1 Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.
3.19.2 The useful life and amortisation of intangible assets
3.19.2.1 The estimated useful lives of the intangible assets with finite useful lives are as
follows:
Category Estimated useful life Basis
Land use right 50 years Legal life
The service life is determined by reference to the period
Software 5 years
that can bring economic benefits to the Company
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. No
change has incurred in current year in the estimated useful life and amortisation method upon
review.
3.19.2.2 Assets of which the period to bring economic benefits to the Company are
unforeseeable are regarded as intangible assets with indefinite useful lives. The Company
reassesses the useful lives of those assets at every year end. If the useful lives of those assets
are still indefinite, impairment test should be performed on those assets at the balance sheet
date.
3.19.2.3 Amortisation of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon
their acquisition and systematically amortised on a straight-line basis over the useful life. The
amortisation amount shall be recognised into current profit or loss according to the beneficial
items. The amount to be amortised is cost deducting residual value. For intangible assets
which has impaired, the cumulative impairment provision shall be deducted as well. The
residual value of an intangible asset with a finite useful life shall be assumed to be zero unless:
there is a commitment by a third party to purchase the asset at the end of its useful life; or
there is an active market for the asset and residual value can be determined by reference to
142
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
that market; and it is probable that such a market will exist at the end of the asset’s useful life.
Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses
the useful lives of those assets at every year end. 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.
3.19.3 Criteria of classifying expenditures on internal research and development
projects into research phase and development phase
3.19.3.1 Preparation activities related to materials and other relevant aspects undertaken by
the Company for the purpose of further development shall be treated as research phase.
Expenditures incurred during the research phase of internal research and development projects
shall be recognised in profit or loss when incurred.
3.19.3.2 Development activities after the research phase of the Company shall be treated as
development phase.
3.19.4 Criteria for capitalization of qualifying expenditures during the development
phase
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:
3.19.4.1 Technical feasibility of completing the intangible assets so that they will be available
for use or sale;
3.19.4.2 Its intention to complete the intangible asset and use or sell it;
3.19.4.3 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;
3.19.4.4 The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
3.19.4.5 Its ability to measure reliably the expenditure attributable to the intangible asset.
143
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures,
investment properties subsequently measured at cost, fixed assets, constructions in progress,
intangible assets, etc. (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.
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, good will 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.
144
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 the recoverable
amount shall be then calculated and the impairment loss shall be recognised accordingly. 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‖.
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,
145
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 as 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 all of the following conditions are satisfied:
146
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
The Company has a present legal or constructive obligation to make such payments as a
result of past events; and
A reliable estimate of the amounts of employee benefits obligation arising from the
profit- sharing plan can be made.
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
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.
The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value
of the defined benefit obligation less the fair value of plan assets (if any).
147
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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 (asset) comprising interest income on plan
assets, interest cost on the defined benefit obligation and interest on the effect of the asset
ceiling, shall be included in profit or loss.
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, 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 (asset).
Remeasurements of the net defined benefit liability (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:
148
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
3.22.3.2When 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.
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
149
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
3.23.1.3The 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
evidences indicate 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
3.24.1 General Principle
Revenue is defined as the gross inflow of economic benefits arising in the course of the
ordinary activities of the Company when those inflows result in the increases in shareholders’
equity, other than increases relating to contributions from shareholders.
The Company shall recognise revenue when it satisfies a performance obligation in the
contract as the customer obtains control of a good or service. Control of a good or service
refers to the ability to direct the use of, and obtain substantially all of the remaining economic
benefits from, the good or service.
When the contract has two or more obligation performances, the Company shall allocate the
transaction price to each performance obligation in proportion to a relative stand-alone selling
price at contract inception of the promised good or service underlying each performance
obligation in the contract and recognize revenue based on the transaction price allocated to
each performance obligation.
150
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
The Company satisfies a performance obligation over time, if one of the following criteria is
met; otherwise a performance obligation is satisfied at a point in time:
3.24.1.1 the customer simultaneously receives and consumes the benefits provided by the
Company’s performance as the Company performs;
3.24.1.2 the Company’s performance creates or enhances an asset (for example, work in
progress) that the customer controls as the asset is created or enhanced;
3.24.1.3 the Company’s performance does not create an asset with an alternative use to the
Company and the Company has an enforceable right to payment for performance completed
to date.
For each performance obligation satisfied over time, the Company shall recognise revenue
over time by measuring the progress towards complete satisfaction of that performance
obligation, unless those progress cannot be reasonably measured. The Company measures the
151
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
progress of a performance obligation for the service rendered using input methods (or output
methods). In some circumstances, the Company cannot be able to reasonably measure the
progress of a performance obligation, but the Company expects to recover the costs incurred
in satisfying the performance obligation. In those circumstances, the Company shall recognise
revenue only to the extent of the costs incurred until such time that it can reasonably measure
the progress of the performance obligation.
The Company shall recognise revenue at the point in which a customer obtains control of a
promised good or service if a performance obligation is satisfied at a point in time. To
determine the point in time at which a customer obtains control of a promised good or service,
the Company shall consider indicators of the transfer of control, which include, but are not
limited to, the followings:
(i) The Company has a present right to payment for the good or service – a customer is
presently obliged to pay for the good or service;
(ii) The Company has transferred legal title of an asset to a customer - the customer has legal
title to the asset;
(iii) The Company has transferred physical possession of an asset to a customer - the customer
has physical possession of the asset;
(iv) The Company has transferred the significant risks and rewards of ownership of the asset
to a customer - the customer has the significant risks and rewards of ownership of the asset;
(v) The customer has accepted the goods or services, etc.
3.24.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
3.24.1 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.
152
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
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 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.
3.24.3 Construction contract
For the performance obligation of the construction contract between the Company and the
153
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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,
and non-monetary grants from the government shall be measured at their fair value or at a
nominal value of RMB 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.
154
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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.
3.25.3.13Repayment 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.
155
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
realised, 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
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.
156
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 taxable
profit (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 (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 other debt investments; an adjustment to the opening balance of retained
earnings resulting from either a change in accounting policy that is applied 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.
157
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.26.3.3 Unused tax losses and unused tax credits
Unused 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.
Unused tax losses and unused tax credits arising from a 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.
158
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.26.3.5Share-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
Effective at 1 January 2021
3.27.1 Identifying a lease
At inception of a contract, the Company shall assess whether the contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control the use of
one or more identified assets for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset for a period of
time, the Company shall assess whether, throughout the period of use, the customer has the
right to obtain substantially all of the economic benefits from use of the identified asset and to
direct the use of the identified asset.
3.27.2 Identifying a separate lease component
When a contract includes more than one separate lease components, the Company shall
separate components of the contract and account for each lease component separately. The
right to use an underlying asset is a separate lease component if both conditions have been
satisfied: (i) the lessee can benefit from use of the underlying asset either on its own or
together with other resources that are readily available to the lessee; (ii) the underlying asset is
neither highly dependent on, nor highly interrelated with, the other underlying assets in the
contract.
159
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.27.3 The Company as a lessee
At the commencement date, the Company identifies the lease that has a lease term of 12
months or less and does not contain a purchase option as a short-term lease. A lease qualifies
as a lease of a low-value asset if the nature of the asset is such that, when new, the asset is
typically of low value. If the Company subleases an asset, or expects to sublease an asset, the
head lease does not qualify as a lease of a low-value asset.
For short-term leases for which the underlying asset is of low value, the Company shall
recognise the lease payments associated with those leases as cost of relevant asset or expenses
in current profit or loss on a straight-line basis method over the lease term.
Except for the election of simple treatment as short-term lease or lease of a low-value asset as
mentioned above, at the commencement date, the Company shall recognise a right-of-use
asset and a lease liability.
3.27.3.1 Right-of-use asset
A right-of-use asset is an asset that represents a lessee’s right to use an underlying asset for the
lease term.
At the commencement date, the Company shall initially measure the right-of-use asset at cost.
The cost of the right-of-use asset shall comprise:
the amount of the initial measurement of the lease liability；
any lease payments made at or before the commencement date, less any lease incentives
received;
any initial direct costs incurred by the lessee; and
an estimate of costs to be incurred by the lessee in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to
the condition required by the terms and conditions of the lease. The Company recognises and
measures the cost in accordance with the recognition criteria and measurement method for
estimated liabilities, details please refer to Notes 3.23. Those costs incurred to produce
inventories shall be included in the cost of inventories.
160
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
The right-of-use asset shall be depreciated according to the categories using straight‐ line
method (or units of production method, double declining balance method and sum of the
years digit method). If it is reasonably certain that the ownership of the underlying asset shall
be transferred to the lessee by the end of the lease term, the depreciation rate shall be
determined based on the classification of the right-of- use asset and estimated residual value
rate from the commencement date to the end of the useful life of the underlying asset.
Otherwise, the depreciation rate shall be determined based on the classification of the
right-of-use asset from the commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term.
The depreciation method, estimated useful life, residual rates and annual depreciation rates
which are determined according to the categories of right-of-use asset are listed as followings:
Annual
Depreciation Estimated useful Residual
Category depreciation
method life (year) rates (%)
rates (%)
Buildings and
straight-line basis Lease period - -
constructions
Vehicles straight-line basis Lease period - -
3.27.3.2 Lease liability
At the commencement date, the lease liability shall be measured at the present value of the
lease payments that are not paid at that date. The lease payments included in the measurement
of the lease liability comprise the following 5 items:
fixed payments and in-substance fixed payments, less any lease incentives receivable;
variable lease payments that depend on an index or a rate；
the exercise price of a purchase option if the lessee is reasonably certain to exercise that
option；
payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease；
amounts expected to be payable by the lessee under residual value guarantees.
161
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
In order to calculate the present value of the lease payments, interest rate implicit in the lease
shall be used as the discount rate. If that rate cannot be readily determined, the Company shall
use the incremental borrowing rate. The difference between the lease payments and its present
value shall be recognised as unrecognised financing charges, calculated bases on the discount
rate of the present value of the lease payments in each period within the lease term and
recorded as interest expense in current profit or loss. Variable lease payments not included in
the measurement of lease liabilities shall be recognised in current profit or loss when incurred.
After the commencement date, the Company shall remeasure the lease liability based on the
revised present value of the lease payments and adjust the carrying amount of the right-of-use
asset if there is a change in the in-substance fixed payments, or change in the amounts
expected to be payable under a residual value guarantee, or change in an index or a rate used
to determine lease payments, or change in the assessment or exercising of an option to
purchase the underlying asset, or an option to extend or terminate the lease.
3.27.4 The Company as a lessor
At the commencement date, the Company shall classify a lease as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of an underlying asset,
otherwise it shall be classified as an operating lease.
3.27.4.1 Operating leases
The Company shall recognise lease payments from operating leases as income on a
straight-line basis / units of production method (or other systematic and rational basis) over
the term of the relevant lease and the initial direct costs incurred in obtaining an operating
lease shall be capitalised and recognised as an expense over the lease term on the same basis
as the lease income. The Company shall recognise the variable lease payments relating to the
operating lease but not included in the measurement of the lease receivables into current profit
or loss when incurred.
3.27.4.2 Finance leases
At the commencement date, the Company shall recognise the lease receivables at an account
equal to the net investment in the lease (the sum of the present value of the unguaranteed
162
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
residual values and the lease payment that are not received at the commencement date
discounted at the interest rate implicit in the lease) and derecognise the asset relating to the
finance lease. The Company shall recognise interest income using the interest rate implicit in
the lease over the lease term.
The Company shall recognise the variable lease payments relating to the finance lease but not
included in the measurement of the net investment in the lease into current profit or loss when
incurred.
3.27.5 Lease modifications
3.27.5.1 A lease modification accounted for as a separate lease
The Company shall account for a modification to a lease as a separate lease, if both:
the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
the consideration for the lease increases by an amount commensurate with the stand-alone
price for the increase in scope.
3.27.5.2 A lease modification not accounted for as a separate lease
The Company as a lessee
At the effective date of the lease modification, the Company shall redetermine the lease term
of the modified lease and remeasure the lease liability by discounting the revised lease
payments using a revised discount rate. The revised discount rate is determined as the interest
rate implicit in the lease for the remainder of the lease term, if that rate can be readily
determined, or the incremental borrowing rate at the effective date of the modification, if the
interest rate implicit in the lease cannot be readily determined.
The Company shall account for the remeasurement of the lease liability by:
decreasing the carrying amount of the right-of-use asset to reflect the partial or full
termination of the lease for lease modifications that decrease the scope of the lease or shorten
the lease term. The Company shall recognise in profit or loss any gain or loss relating to the
partial or full termination of the lease.
163
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Making a corresponding adjustment to the carrying amount of the right-of-use asset for
all other lease modifications.
The Company as a lessor
The Company shall account for a modification to an operating lease as a new lease from the
effective date of the modification, considering any prepaid or accrued lease payments relating
to the original lease as part of the lease payments for the new lease.
For a modification to a finance lease that is not accounted for as a separate lease, the
Company shall account for the modification as follows:
if the lease would have been classified as an operating lease had the modification been in
effect at the inception date, the Company shall account for the lease modification as a new
lease from the effective date of the modification and measure the carrying amount of the
underlying asset as the net investment in the lease immediately before the effective date of the
lease modification;
if the lease would have been classified as a finance lease had the modification been in
effect at the inception date, the Company shall account for the lease modification according to
the requirements in the modification or renegotiation of the contract.
The following accounting policies applicable for the year 2020 or before
The Company classifies the lease that substantially transfers all the risks and rewards
incidental to ownership of an underlying asset as a finance lease. Other lease shall be
classified as an operating lease.
3.27.6 Accounting for operating leases
3.27.6.1 When the Company as a 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 the amount of
usage. If the lessor provides the 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
164
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
3.27.6.2 When the Company as a 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 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.
3.27.7 Accounting for finance leases
3.27.7.1 When the Company as a 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. Depreciation period is determined according to 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 lives of the leased assets. If it is not certain that the
165
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
3.27.7.2 When the Company as a 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 Accounting Judgements and Estimates
The Company continuously assesses the significant accounting estimates and key assumptions
according to its historical experiences and other elements, including reasonable expectations
on the future events. The significant estimates and key assumptions that may result in
significant adjustment on the assets and liabilities’ carrying value in the following fiscal year
are listed as below:
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.
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
166
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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
167
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
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
168
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
169
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3.29 Changes in Significant Accounting Policies and Accounting Estimates
3.29.1 Significant changes in accounting polices
Implement the new lease standard
On 7 December 2018, the Ministry of Finance released the ―Accounting Standards for
Business Enterprises No. 21 - Lease‖ (hereinafter referred as to the ―new lease standard‖).
The Company applied the new lease standard for the annual reporting period beginning on 1
January 2021, and modified the accounting policies accordingly. For details please refer to
Note 3.27.
For a contract that has existed before the date of initially applying the new lease standard, the
Company chooses not to re-assess whether this contract is or contains a lease.
For a contract signed or modified after the date of initially applying the new lease standard,
the Company assesses whether this contract is or contains a lease in accordance the definition
of lease in the new lease standard.
3.29.1.1 The Company as a lessee
The Company chooses to recognise the cumulative impact of initially applying this standard
as an adjustment to the opening balance of retained earnings and other related accounts of the
financial statements at the date of initial application (1 January 2021), not restating
comparative information.
For leases previously classified as finance leases, the carrying amount of the right-of-use
asset and the lease liability at the date of initial application shall be the carrying amount of the
lease asset and finance lease payable immediately before that date measured applying
previous standard.
For leases previously classified as operating leases, the Company measured that lease
liability at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate at the date of initial application, and on a lease-by-lease basis,
measures that right-of-use asset at an amount equal to the lease liability adjusted by the
amount of any prepaid or accrued lease payments relating to that lease recognised in the
170
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
statement of financial position immediately before the date of initial application. [or:
measures that right-of-use asset at its carrying amount as if the standard had been applied
since the commencement date, but discounted using the lessee’s incremental borrowing rate at
the date of initial application]
The Company tests whether the right-of-use asset has been impaired and accounts for the
impairment loss according to Note 3.20 at the date of initial application.
The Company accounts for the operating lease for which the underlying asset is of low value
in a simplified method in which no right-of-use asset and lease liability need to be recognised.
In addition, the Company uses one or more of the following practical expedients for leases
previously classified as operating leases:
Account for the leases for which the lease term ends within 12 months of the date of
initial application in the same way as short-term leases.
Apply a single discount rate to a portfolio of leases with reasonably similar characteristics
when measuring the lease liability.
Exclude initial direct costs from the measurement of the right-of-use asset.
Use hindsight in determining the lease term if the contract contains options to extend or
terminate the lease.
Rely on its assessment of whether leases are onerous applying ―Accounting Standards for
Business Enterprises No 13-Contingencies‖ immediately before the date of initial application
as an alternative to performing an impairment review, and adjust the right-of-use asset at the
date of initial application by the amount of any provision for onerous leases recognised in the
statement of financial position immediately before the date of initial application.
Account for the lease based on the final contract term if the lease was modified before the
date of initial application.
3.29.1.2 The Company as a lessor
The Company, as the intermediate lessor, reassesses subleases previously classified as
operating leases and are ongoing at the date of initial application, to determine whether each
171
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
sublease should be classified as an operating lease or a finance lease at the date of initial
application on the basis of the remaining contractual terms and conditions of the head lease
and sublease at that date. Except for the above-mentioned situation, the Company does not
make any adjustments on transition for leases in which it is a lessor and accounts for those
leases applying this Standard from the date of initial application.
Due to adoption of the new lease standards, the Company adjusted the consolidated financial
statements as at 1 January 2021, including CNY 563,104,966.92 in right-of-use assets, CNY
563,104,966.92 in lease liabilities, among them, the lease liabilities due within one year
amounted to CNY 10,589,357.15, which were reclassified to non-current liabilities due within
one year. Corresponding adjustments have no impact on the company's consolidated financial
statements attributable to the owner's equity of the parent company; The Company adjusted
the financial statements of the parent company as at 1 January 2021, including CNY
806,155.00 in right-of-use assets, CNY 806,155.00 in lease liabilities, Among them, the lease
liabilities due within one year amounted to CNY 256,601.42, which were reclassified to
non-current liabilities due within one year. Corresponding adjustments have no impact on the
company's consolidated financial statements attributable to the owner's equity of the parent
company.
On 1 January 2021, the Company and the parent company adjusted the unpaid minimum
operating lease payments disclosed under the original lease standards for significant operating
leases to lease liabilities recognized under the new lease standards. The reconciliation table is
as follows:
Items The Company Parent Company
Significant Operating Lease Minimum Lease Payments at 31
1,063,828,230.11 864,000.00
December 2020
Less: Minimum lease payments with simplified processing - -
Including: short-term rentals - -
Leases of low-value assets with a remaining lease
- -
term of more than 12 months
Plus: 31 December 2020 Finance Lease Minimum Lease
- -
Payments
Minimum lease payments under the new lease standard at 1
1,063,828,230.11 864,000.00
January 2021
172
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items The Company Parent Company
Weighted average of incremental borrowing rates at 1
4.65% 4.65%
January 2021
Lease Liabilities at 1 January 2021 563,104,966.92 806,155.00
listed as:
Non-current liabilities due within one year 10,589,357.15 256,601.42
lease liability 552,515,609.77 549,553.58
The above changes in accounting policies were approved by the Company's first meeting of
the Board of Directors in 2021 held on 12 January 2021.
Implement the “Interpretation of Accounting Standards for Business Enterprises No.
14”.
On 26 January 2021, the Ministry of Finance released the ―Interpretation of Accounting
Standards for Business Enterprises No. 14‖ (hereinafter referred as to the ―Interpretation
No.14‖), which comes into force upon promulgation. The company applied the ―Interpretation
No.14‖ for the annual reporting period beginning on 26 January 2021. The implementation of
the ―Interpretation No.14‖ has no impact on the company’s financial statements.
Implement the “Presentation of centralized fund management” in the “Interpretation of
Accounting Standards for Business Enterprises No. 15”.
On 30 December 2021, the Ministry of Finance released ―Interpretation of Accounting
Standards for Business Enterprises No. 15‖ (Caikuai [2021] No.35, hereinafter referred as to
the ―Interpretation No.15‖), in which the content of the ―Presentation of centralized fund
management‖ comes into force upon promulgation. The company applied the provision for
the annual reporting period beginning on 30 December 2021. The implementation of the
―Presentation of centralized fund management‖ has no impact on the company’s financial
statements.
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 the new lease standard and Interpretation No.14.
Consolidated Balance Sheet
173
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Unit: Yuan Currency: CNY
31 December
Items 1 January 2021 Adjustment
2020
Right-of-use asset not applicable 563,104,966.92 563,104,966.92
Non-current liabilities due within one year 10,589,357.15 10,589,357.15
Lease liabilities not applicable 552,515,609.77 552,515,609.77
On 1 January 2021, for the operating lease before the initial application date, the company
uses the present value of the incremental borrowing rate discounted before the initial
application date to measure the lease liability, with an amount of CNY 563,104,966.92, of
which the amount due within one year CNY 10,589,357.15 was reclassified to non-current
liabilities due within one year. The company measures the right-of-use asset according to the
amount equal to the lease liability and makes necessary adjustments according to the prepaid
rent, with an amount of CNY 563,104,966.92.
Parent Company Balance Sheet
Unit: Yuan Currency: CNY
31 December
Items 1 January 2021 Adjustment
2020
Right-of-use asset not applicable 806,155.00 806,155.00
Non-current liabilities due within one year 256,601.42 256,601.42
Lease liabilities not applicable 549,553.58 549,553.58
On 1 January 2021, for the operating lease before the initial application date, the company
uses the present value of the incremental borrowing rate discounted before the initial
application date to measure the lease liability, with an amount of CNY 806,155.00, of which
the amount due within one year CNY 256,601.42 was reclassified to non-current liabilities
due within one year. The company measures the right-of-use asset according to the amount
equal to the lease liability and makes necessary adjustments according to the prepaid rent,
with an amount of CNY 806,155.00.
4. TAXATION
174
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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, and calculates the value-added tax
Value added tax (VAT) 5%、6%、9%、13%
based on the difference after deducting the
deductible input tax in the current period
Urban maintenance and
Payable turnover tax, tax exemption 7%
construction tax
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 25%
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, and calculates the value-added tax 0%、5%、6%、9%、
Value added tax
based on the difference after deducting the 13%
deductible input tax in the current period
Urban maintenance and
Payable turnover tax, tax exemption 5%
construction tax
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 15%
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, and calculates the value-added tax
Value added tax 5%、9%、13%
based on the difference after deducting the
deductible input tax in the current period
Urban maintenance and
Payable turnover tax, tax exemption 5%
construction tax
Educational surcharge Payable turnover tax, tax exemption 3%
175
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Categories of tax Basis of tax assessment Tax rate
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 25%
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, and calculates the value-added tax
Value added tax 5%
based on the difference after deducting the
deductible input tax in the current period
Enterprise income tax Taxable profits 20%
4.2.4 Pt.Star Comgistic Indonesia
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added tax
Value added tax 10%
based on the difference after deducting the
deductible input tax in the current period
Enterprise income tax Taxable profits 25%
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
31 Decmber
Items 31 Decmber 2020
2021
Cash on hand 903,610.79 875,000.35
Cash in bank 769,947,562.79 671,926,206.33
Other monetary funds 8,552,954.00 34,993,391.52
Total 779,404,127.58 707,794,598.20
176
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
31 Decmber
Items 31 Decmber 2020
2021
Including：The total amount deposited overseas 25,902,620.39 11,312,975.48
5.2 Held-for-trading financial assets
Items 31 Decmber 2021 31 Decmber 2020
Financial assets measured at fair value through Profit or Loss 420,721,027.78 720,821,900.00
Including: Derivative financial assets 4,152,000.00 20,821,900.00
Structured Deposit Investment 416,569,027.78 700,000,000.00
Total 420,721,027.78 720,821,900.00
5.3 Accounts Receivables
5.3.1 Accounts receivable by aging
Aging 31 Decmber 2021 31 Decmber 2020
Within 1 year 261,066,287.73 435,535,426.84
Including：Within 90 days 225,242,974.51 384,591,893.80
91 days to 180 days 35,746,963.54 50,777,968.04
181 days to 270 days 70,001.04 165,565.00
271 days to 365 days 6,348.64
1 year to 2 years 110,740.52
2 years to 3 years
Over 3 years 5,000.00 5,000.00
Subtotal 261,182,028.25 435,540,426.84
Less：provision for bad debt 3,053,534.48 4,533,866.22
Total 258,128,493.77 431,006,560.62
5.3.2 Accounts receivable by bad debt provision method
31 Decmber 2021
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt
recognized individually
Provision for bad debt
261,182,028.25 100.00 3,053,534.48 1.17 258,128,493.77
recognized collectively
Including：Portfolio by 258,884,698.08 99.12 3,053,534.48 1.18 255,831,163.60
177
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
31 Decmber 2021
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
age
Portfolio by related
2,297,330.17 0.88 2,297,330.17
parties
Total 261,182,028.25 100.00 3,053,534.48 1.17 258,128,493.77
(Continued)
31 Decmber 2020
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt
recognized 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
433,328,896.48 99.49 4,533,866.22 1.05 428,795,030.26
age
Portfolio by related
2,211,530.36 0.51 2,211,530.36
parties
Total 435,540,426.84 100.00 4,533,866.22 1.04 431,006,560.62
Specific instructions for provision for bad debts:
31 Decmber 2021
Aging Expected credit loss rate for
Book balance Provision for bad debt
the whole duration (%)
Not overdue 225,050,726.04 1,125,253.64 0.50
Overdue 1 - 30 days 32,618,158.66 1,467,817.14 4.50
Overdue 31 - 60 days 549,207.74 109,841.55 20.00
Overdue 61 - 90 days 574,515.44 258,531.95 45.00
Overdue more than 90 days 92,090.20 92,090.20 100.00
Total 258,884,698.08 3,053,534.48 1.18
178
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
(Continued)
31 Decmber 2020
Aging Expected credit loss rate for
Book balance Provision for bad debt
the whole duration (%)
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 days 70,565.00 70,565.00 100.00
Total 433,328,896.48 4,533,866.22 1.05
On 31 December 2021 and 31 December 2020, accounts receivables with bad debt provision
are recognized by portfolio by related parties.
31 Decmber 2021
Accounts Receivables Provision for bad Provision ratio Reason for
Book balance
debt (%) provision
Portfolio by related parties 2,297,330.17
Total 2,297,330.17
(Continued)
31 Decmber 2020
Accounts Receivables Provision for bad Provision ratio Reason for
Book balance
debt (%) provision
Portfolio by related parties 2,211,530.36
Total 2,211,530.36
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.
5.3.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
31 Decmber 31 Decmber
Category Recovery or
2020 Provision Write-off Other 2021
reversal
Provision for bad 4,533,866.22 7,551.14 1,379,838.62 81,559.32 26,484.94 3,053,534.48
179
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Changes during the reporting period
31 Decmber 31 Decmber
Category Recovery or
2020 Provision Write-off Other 2021
reversal
debt by group
Total 4,533,866.22 7,551.14 1,379,838.62 81,559.32 26,484.94 3,053,534.48
5.3.4 Accounts receivable write-off during the reporting period
Items Amount
Accounts receivable write-off 81,559.32
5.3.5 Top five of closing balances of customers
The total amount of the top five customers with largest accounts receivables balances at year
end is CNY 180,482,649.29, accounting for 69.10% 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
1,840,632.41.
5.4 Advances to Suppliers
5.4.1 Advances to suppliers by aging
31 Decmber 2021 31 Decmber 2020
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 3,862,095.12 100.00 2,622,554.07 100.00
Total 3,862,095.12 100.00 2,622,554.07 100.00
5.4.2 Top five of closing balances of suppliers
The total amount of the top five suppliers with the largest prepaid amounts at the end of the
year is CNY 2,897,008.20, accounting for 75.02% of the total amount of the prepayment at
the end of the year.
5.5 Other Receivables
5.5.1 Other receivables by category
Items 31 Decmber 2021 31 Decmber 2020
Interest receivable
Dividend receivable
180
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items 31 Decmber 2021 31 Decmber 2020
Other receivables 18,463,787.27 31,938,548.59
Total 18,463,787.27 31,938,548.59
5.5.2 Interest receivable
None.
5.5.3 Dividends receivable
None.
5.5.4 Other Receivables
5.5.4.1 Other receivables by aging
Aging 31 Decmber 2021 31 Decmber 2020
Within 1 year 17,226,134.38 30,566,672.96
Including: Within 90 days 17,032,996.98 30,331,697.53
91 days to 180 days 38,300.00 86,800.00
181 days to 270 days 18,118.30 87,375.43
271 days to 365 days 136,719.10 60,800.00
1year to 2 years 181,507.30 62,600.00
2 years to 3 years 15,669.11 364,556.15
Over 3 years 1,307,520.97 1,134,501.09
Subtotal 18,730,831.76 32,128,330.20
Less: provision for bad debt 267,044.49 189,781.61
Total 18,463,787.27 31,938,548.59
5.5.4.2 Other receivables by nature
Nature 31 Decmber 2021 31 Decmber 2020
Export tax refund 9,244,471.36 25,064,584.54
Other current account 7,987,728.04 5,625,222.17
Deposit 1,295,528.25 1,236,358.34
Due from related parties 203,104.11 202,165.15
Subtotal 18,730,831.76 32,128,330.20
Less: Provision for bad debt 267,044.49 189,781.61
Total 18,463,787.27 31,938,548.59
181
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.5.4.3 Other receivables by bad debt provision method
A. On 31 December 2021, provision for bad debt recognized based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 18,730,831.76 267,044.49 18,463,787.27
Stage 2
Stage 3
Total 18,730,831.76 267,044.49 18,463,787.27
On 31 December 2021, provision for bad debt at stage 1:
Provision ratio Provision for Carrying
Category Book balance Reason
(%) bad debt amount
Provision for bad debt
recognized individually
Provision for bad debt
18,730,831.76 1.43 267,044.49 18,463,787.27
recognized by portfolio
Credit risk has not
1. Export tax refund 9,244,471.36 9,244,471.36
increased significantly
Credit risk has not
2. Other current account 7,987,728.04 3.34 267,044.49 7,720,683.55
increased significantly
Credit risk has not
3. Deposit 1,295,528.25 1,295,528.25
increased significantly
Credit risk has not
4. Due from related parties 203,104.11 203,104.11
increased significantly
Total 18,730,831.76 1.43 267,044.49 18,463,787.27
B. On 31 December 2020, provision for bad debt recognized 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:
182
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Provision Provision for Carrying
Category Book balance Reason
ratio (%) bad debt amount
Provision for bad debt
recognized 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 increased
1. Export tax refund 25,064,584.54 25,064,584.54
significantly
Credit risk has not increased
2. Other current account 5,625,222.17 3.37 189,781.61 5,435,440.56
significantly
Credit risk has not increased
3. Deposit 1,236,358.34 1,236,358.34
significantly
Credit risk has not increased
4. Due from related parties 202,165.15 202,165.15
significantly
Total 32,128,330.20 0.59 189,781.61 31,938,548.59
5.5.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss for
Expected credit
Provision for bad debt for the whole the whole duration Total
loss for the
duration (no credit (Credit impairment has
next 12 months
impairment) occurred)
Closing balance as of 1/1/2021 189,781.61 189,781.61
Carrying amount of other receivables in
— — — —
current period on 1/1/2021
--Turn to stage 2
--Turn to stage 3
--Turn back to stage 2
--Turn back to stage 1
Recognition 77,262.88 77,262.88
Reversal
Used
Written off
Other movements
183
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss for
Expected credit
Provision for bad debt for the whole the whole duration Total
loss for the
duration (no credit (Credit impairment has
next 12 months
impairment) occurred)
Closing balance as of 31/12/2021 267,044.49 267,044.49
5.5.4.5 Top five closing balances by entity
Proportion of the balance to
Balance at 31 Provision
Entity name Nature Aging the total other receivables
December 2021 for bad debt
(%)
Zhangzhou Taiwan investment Export
zone State Administration of tax 9,244,471.36 1- 90 days 49.35
Taxation refund
State Grid Fujian Longhai Power Current
4,230,427.11 1- 90 days 22.59
Supply Co., Ltd. account
Current
Groupe SEB (Shenzhen) Co., Ltd 1,224,995.00 1- 90 days 6.54
account
China Export & Credit Insurance Over 3
Deposit 648,450.00 3.46
Corporation Fujian Branch years
Over 3
PT.PLN (PERSERO) Deposit 400,289.86 2.14
years
Total 15,748,633.33 84.08
5.6 Inventories
5.6.1 Inventories by category
31 December 2021 31 December 2020
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Raw materials 78,663,566.37 11,302,881.31 67,360,685.06 100,787,147.78 14,006,349.34 86,780,798.44
Work in process 19,972,180.33 19,972,180.33 21,018,640.91 21,018,640.91
Self-manufactured
semi-finished 29,460,145.63 1,840,187.56 27,619,958.07 20,946,038.00 1,000,088.39 19,945,949.61
goods
Finished goods 143,632,446.12 7,923,776.50 135,708,669.62 134,905,753.88 11,506,798.79 123,398,955.09
184
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
31 December 2021 31 December 2020
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Low-value
583,732.05 583,732.05 837,653.40 837,653.40
consumables
Materials in
1,188,778.31 1,188,778.31 3,070,079.91 3,070,079.91
transit
Total 273,500,848.81 21,066,845.37 252,434,003.44 281,565,313.88 26,513,236.52 255,052,077.36
5.6.2 Provision for impairment
Increase in current year Decrease in current year
31 December 31 December
Item Impact of changes Recovered or
2020 Accrual Other 2021
in exchange rates Written-off
Raw materials 14,006,349.34 3,516,234.39 -43,977.99 6,175,724.43 11,302,881.31
Work in process
Self-manufactured
semi-finished 1,000,088.39 1,656,479.03 816,379.86 1,840,187.56
goods
Finished goods 11,506,798.79 1,131,405.98 -8,569.74 4,705,858.53 7,923,776.50
Low-value
consumables
Materials in
transit
Total 26,513,236.52 6,304,119.40 -52,547.73 11,697,962.82 21,066,845.37
5.7 Non current assets due within one year
Item 31 December 2021 31 December 2020
Debt investment due within one year 21,845,333.33
Less：provision for impairment
Total 21,845,333.33
5.8 Other Current Assets
Item 31 December 2021 31 December 2020
Input tax to be deducted 14,466,364.00 7,818,199.72
185
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Item 31 December 2021 31 December 2020
Financial investment 251,833,773.82 10,815,837.88
Total 266,300,137.82 18,634,037.60
5.9 Other equity instrument investment
5.9.1 General information of other equity instrument investment
Item 31 December 2021 31 December 2020
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:
1. Balance on 31 December 2020 64,309,127.61 29,260,577.51 93,569,705.12
2. Increase during the reporting period 675,333.52 675,333.52
(1) Acquisition
(2) Transfer from inventories /fixed
675,333.52 675,333.52
assets /construction in progress
3. Decrease during the reporting period
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2021 64,984,461.13 29,260,577.51 94,245,038.64
Accumulated depreciation and
amortization:
1. Balance on 31 December 2020 56,789,788.87 15,524,305.34 72,314,094.21
2. Increase during the reporting period 911,652.97 638,344.10 1,549,997.07
(1) Accrual or amortization 309,273.38 638,344.10 947,617.48
(2) Transfer from fixed assets 602,379.59 602,379.59
3. Decrease during the reporting period
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2021 57,701,441.84 16,162,649.44 73,864,091.28
Provision for impairment:
1. Balance on 31 December 2020
186
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items Building and plants Land use rights Total
2. Increase during the reporting period
(1) Accrual or amortization
(2) Other
3. Decrease during the reporting period
(1) Disposal
(2) Other
4. Balance on 31 December 2021
Carrying amount:
1. Balance on 31 December 2021 7,283,019.29 13,097,928.07 20,380,947.36
2. Balance on 31 December 2020 7,519,338.74 13,736,272.17 21,255,610.91
5.10.2 Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 710,583.91
Total 710,583.91
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 is no land expropriation. In January 2006,
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.
5.11 Fixed Assets
5.11.1 Fixed assets by category
Items 31 December 2021 31 December 2020
Fixed assets 151,647,083.48 164,338,962.07
Disposal of fixed assets
Total 151,647,083.48 164,338,962.07
187
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.11.2 Fixed assets
5.11.2.1 General information of fixed assets
Houses and Electronic devices, Improvement expense of
Items Machinery Vehicles Total
buildings modules and others leased fixed assets
Initial cost:
1. 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
2. Increase during the reporting period 8,279,424.28 2,184,266.46 24,728,066.37 253,322.04 7,002.61 35,452,081.76
(1) Acquisition 250,326.84 2,173,624.26 24,715,347.16 253,189.10 27,392,487.36
(2) Transfer from construction in progress 8,029,097.44 8,029,097.44
(3) Impact of changes in exchange rates 10,642.20 12,719.21 132.94 7,002.61 30,496.96
3. Decrease during the reporting period 1,645,866.58 4,440,356.37 92,819,827.62 92,851.80 6,448,088.56 105,446,990.93
(1) Disposal 179,317.70 3,705,910.18 92,138,287.14 43,640.86 6,275,568.35 102,342,724.23
(2) Other transferred out 675,333.52 675,333.52
(3) Impact of changes in exchange rate 791,215.36 734,446.19 681,540.48 49,210.94 172,520.21 2,428,933.18
4. Balance on 31 December 2021 100,281,383.99 159,309,219.21 801,789,960.12 19,187,403.28 50,620,807.99 1,131,188,774.59
Accumulated depreciation and amortization:
1. 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
2. Increase during the reporting period 3,634,104.51 6,718,416.87 29,784,830.99 1,056,697.86 269,103.91 41,463,154.14
(1) Provision or amortisation 3,634,104.51 6,713,914.62 29,775,592.98 1,056,630.85 265,161.93 41,445,404.89
(2) Other
(3) Impact of changes in exchange rate 4,502.25 9,238.01 67.01 3,941.98 17,749.25
188
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Houses and Electronic devices, Improvement expense of
Items Machinery Vehicles Total
buildings modules and others leased fixed assets
3. Decrease during the reporting period 927,916.39 3,733,118.11 86,779,342.91 75,440.23 6,427,967.12 97,943,784.76
(1) Disposal 22,190.54 3,274,291.01 86,287,082.52 40,854.09 6,275,568.35 95,899,986.51
(2) Other transferred out 602,379.59 602,379.59
(3) Impact of changes in exchange rate 303,346.26 458,827.10 492,260.39 34,586.14 152,398.77 1,441,418.66
4. Balance on 31 December 2021 58,192,194.96 95,983,688.32 719,261,031.19 16,739,564.72 49,272,592.86 939,449,072.05
Provision for impairment:
1. Balance on 31 December 2020 20,150,939.56 20,720,129.36 6,382.26 37,567.84 40,915,019.02
2. Increase during the reporting period 1,873,665.94 699,802.26 4,859.44 393,978.24 2,972,305.88
(1) Provision or amortisation 1,873,665.94 698,896.33 4,859.44 393,978.24 2,971,399.95
(2) Other
(3) Impact of changes in exchange rate 905.93 905.93
3. Decrease during the reporting period 302,452.65 3,488,255.73 2,748.67 1,248.79 3,794,705.84
(1) Disposal 229,271.69 3,448,615.49 2,625.58 3,680,512.76
(2) Other
(3) Impact of changes in exchange rate 73,180.96 39,640.24 123.09 1,248.79 114,193.08
4. Balance on 31 December 2021 21,722,152.85 17,931,675.89 8,493.03 430,297.29 40,092,619.06
Carrying amount:
1. Balance on 31 December 2021 42,089,189.03 41,603,378.04 64,597,253.04 2,439,345.53 917,917.84 151,647,083.48
2. 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
189
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.11.2.2 Idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Machinery 46,014,324.24 28,057,677.15 17,956,647.09
Electronic device,
131,920,195.62 121,795,461.61 10,089,349.82 35,384.19
modules, and others
Vehicles 89,33 4.50 87,028.04 2,306.46
Improvement expense of
1,214,979.75 1,187,597.87 27,381.88
fixed assets
Total 179,238,834.11 151,127,764.67 28,075,685.25 35,384.19
5.11.2.3 Fixed assets without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 129,197.08
Qingying garden 111,560.90 Legal procedures in process
Total 240,757.98
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 is no land
expropriation. In January 2006, 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.
5.12 Construction in Progress
5.12.1 Construction in progress by category
Items 31 December 2021 31 December 2020
Construction in progress 1,102,833.08 728,529.68
Construction materials
Total 1,102,833.08 728,529.68
5.12.2 Construction in progress
190
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.12.2.1 General information of construction in progress
31 December 2021 31 December 2020
Provision
Items Book Carrying Book Provision for Carrying
for
balance amount balance impairment amount
impairment
Sporadic project 1,102,833.08 1,102,833.08 728,529.68 728,529.68
Total 1,102,833.08 1,102,833.08 728,529.68 728,529.68
5.12.3 Construction materials
None.
5.13 Right-of-use Assets
Item Houses and buildings Vehicles Total
Initial cost:
1. Balance on 31 December 2020
Changes in accounting policies 562,228,535.20 876,431.72 563,104,966.92
Balance on 1 January 2021 562,228,535.20 876,431.72 563,104,966.92
2. Increase during the reporting period
3. Decrease during the reporting period 876,431.72 876,431.72
4. Impact of changes in exchange rates -26,932.42 - -26,932.42
5. Balance on 31 December 2021 562,201,602.78 562,201,602.78
Accumulated depreciation:
1. Balance on 31 December 2020
Changes in accounting policies
Balance on 1 January 2021
2. Increase during the reporting period 19,133,616.26 876,431.72 20,010,047.98
3. Decrease during the reporting period 876,431.72 876,431.72
4. Impact of changes in exchange rates -2,805.87 -2,805.87
5. Balance on 31 December 2021 19,130,810.39 19,130,810.39
Provision for impairment:
1. Balance on 31 December 2020
Changes in accounting policies
Balance on 1 January 2021
2. Increase during the reporting period
3. Decrease during the reporting period
4. Impact of changes in exchange rates
5. Balance on 31 December 2021
191
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Item Houses and buildings Vehicles Total
Carrying amount:
1. Carrying amount on 31 December 2021 543,070,792.39 543,070,792.39
2. Carrying amount on 1 January 2021 562,228,535.20 876,431.72 563,104,966.92
Note: In 2021, the accrued depreciation amount of right-of-use assets is CNY 20,007,242.11,
including CNY 133,909.07 is recognized in selling expenses, CNY 8,993,382.50 is
recognized in other operating costs, CNY 6,248,708.79 is recognized in administration
expenses, CNY 903,235.50 is recognized in R&D expenses, and CNY 3,728,006.25 is
recognized in COGS.
5.14 Intangible Assets
5.14.1 General information of intangible assets
Items Land use rights Software Total
Initial cost:
1. Balance on 31 December 2020 18,282,356.61 50,077,949.73 68,360,306.34
2. Increase during the reporting period 57,470.99 3,598,998.11 3,656,469.10
(1) Acquisition 3,598,964.60 3,598,964.60
(2) Transfer from inventories /fixed assets
/construction in progress
(3) Impact of changes in exchange rates 57,470.99 33.51 57,504.50
3. Decrease during the reporting period 475,440.78 7,250.25 482,691.03
(1) Disposal 7,250.25 7,250.25
(2) Other transferred out
(3) Impact of changes in exchange rates 475,440.78 475,440.78
4. Balance on 31 December 2021 17,864,386.82 53,669,697.59 71,534,084.41
Accumulated depreciation and amortization:
1. Balance on 31 December 2020 4,664,431.31 34,349,562.21 39,013,993.52
2. Increase during the reporting period 597,249.43 7,761,848.36 8,359,097.79
(1) Accrual or amortization 597,249.43 7,761,840.87 8,359,090.30
(2) Transfer from fixed assets
(3) Impact of changes in exchange rates 7.49 7.49
3. Decrease during the reporting period 113,275.17 7,268.99 120,544.16
(1) Disposal 7,268.99 7,268.99
(2) Other transferred out
192
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items Land use rights Software Total
(3) Impact of changes in exchange rates 113,275.17 113,275.17
4. Balance on 31 December 2021 5,148,405.57 42,104,141.58 47,252,547.15
Provision for impairment:
1. Balance on 31 December 2020
2. Increase during the reporting period
(1) Accrual or amortization
(2) Other
(3) Impact of changes in exchange rates
3. Decrease during the reporting period
(1) Disposal
(2) Other
(3) Impact of changes in exchange rates
4. Balance on 31 December 2021
Carrying amount:
1. Carrying amount on 31 December 2021 12,715,981.25 11,565,556.01 24,281,537.26
2. Carrying amount on 31 December 2020 13,617,925.30 15,728,387.52 29,346,312.82
5.15 Long-term Deferred Expenses
Decrease during the reporting
31 December Increase during the 31 December
Items period
2020 reporting period 2021
Amortization Other decrease
Houses and buildings
6,683,390.42 6,844,630.51 3,681,661.58 9,846,359.35
renovation expenses
Wall projects of 3 phases 99,696.59 62,966.40 36,730.19
Telecommunications
48,643.06 17,168.16 31,474.90
project expenses
Total 6,831,730.07 6,844,630.51 3,761,796.14 9,914,564.44
5.16 Deferred Tax Assets and Deferred Tax Liabilities
5.16.1 Deferred tax assets before offsetting
31 December 2021 31 December 2020
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences assets differences assets
Provision for asset
53,252,980.48 8,909,644.41 59,565,618.38 9,996,562.15
impairment
193
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
31 December 2021 31 December 2020
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences assets differences assets
Provision for credit
2,633,777.35 410,297.02 3,144,069.54 478,564.04
impairment
Unrealized intragroup
274,902.60 68,725.65 284,635.52 71,158.88
profit
Accrued expenses 10,481,585.03 1,704,218.05 12,221,158.78 2,001,465.13
Payroll liability 272,562.30 54,512.47
Undistributed deficit 710,270.92 177,567.73 11,952,239.29 2,988,059.82
Right-of-use Assets 9,542,517.80 1,431,377.67
Total 76,896,034.18 12,701,830.53 87,440,283.81 15,590,322.49
5.16.2 Deferred tax liabilities before offsetting
31 December 2021 31 December 2020
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences liabilities differences liabilities
Policy relocation 84,032,696.08 21,008,174.02 193,170,474.36 48,292,618.59
Financial assets held
5,721,027.78 938,640.28 20,821,900.00 3,123,285.00
for trading
Other 48,239.76 9,647.98
Total 89,753,723.86 21,946,814.30 214,040,614.12 51,425,551.57
5.16.3 Unrecognized deferred tax assets
Items 31 December 2021 31 December 2020
Provision for asset impairment 7,906,483.95 7,862,637.16
Provision for credit impairment 686,801.62 1,579,578.29
Accrued expenses 11,340,751.50 15,032,275.03
Payroll liability 9,961,756.20 9,600,380.92
Undistributed deficit 68,961,157.80 125,592,039.85
Total 98,856,951.07 159,666,911.25
5.16.4 Deductible losses not recognised as deferred tax assets will expire in the following
periods:
Year 31 December 2021 31 December 2020 Note
Year 2021 59,954,740.54
Year 2022 4,118,107.97 4,828,378.89
194
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Year 31 December 2021 31 December 2020 Note
Year 2023 16,003,668.47 16,003,668.47
Year 2024 14,837,857.89 14,837,857.89
Year 2025 2,056,192.96 2,056,451.61
Year 2026 to 2031 31,945,330.51 27,910,942.45
Total 68,961,157.80 125,592,039.85
5.17 Other Non-current Assets
Items 31 December 2021 31 December 2020
Prepaid mold fee 5,025.64 46,275.64
Prepaid equipment fee 1,598,734.18 1,998,426.66
Total 1,603,759.82 2,044,702.30
5.18 Short-term Borrowings
5.18.1 Disclosure of short-term borrowings by category
Item 31 December 2021 31 December 2020
Pledged loan 16,345,141.13
Total 16,345,141.13
5.19 Notes Payable
Type 31 December 2021 31 December 2020
Bank acceptance bills 7,709,123.54 7,521,531.97
Total 7,709,123.54 7,521,531.97
5.20 Accounts Payable
5.20.1 Accounts payable by nature
Items 31 December 2021 31 December 2020
Within 1 year 632,406,578.98 871,081,181.47
Over 1 year 5,168,697.72 3,881,706.46
Total 637,575,276.70 874,962,887.93
5.20.2 Significant accounts payable with aging of over one year
Items 31 December 2021 Reason
Ningbo Chaochao Electrical
500,237.01 Quality disputes
Equipment Co., Ltd.
Total 500,237.01
195
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.21 Advances from Customers
5.21.1 Details of advances from customers
Items 31 December 2021 31 December 2020
Within 1 year 3,403,313.55 3,404,910.00
Over 1 year 3,368,473.44 3,448,190.03
Total 6,771,786.99 6,853,100.03
5.22 Contract Liabilities
5.22.1 Details of contract liabilities
Item 31 December 2021 31 December 2020
Advance from merchandise 24,030,988.10 25,605,755.71
Total 24,030,988.10 25,605,755.71
5.23 Employee Benefits Payable
5.23.1 Details of employee benefits payable
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2020 reporting exchange 2021
period
period rate
1. Short-term employee
51,114,418.96 290,977,429.11 296,593,145.89 -71,590.82 45,427,111.36
benefits
2. Post-employment
benefits-defined 147,846.71 12,463,966.59 12,573,730.76 -2,293.57 35,788.97
contribution plans
3. Termination benefits 266,076.47 266,076.47
4. Other benefits due
within one year
Total 51,262,265.67 303,707,472.17 309,432,953.12 -73,884.39 45,462,900.33
5.23.2 Details of short-term employee benefits
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2020 reporting exchange 2021
period
period rate
1. Salaries, bonuses,
38,769,148.35 256,230,116.85 262,383,883.12 -74,728.56 32,540,653.52
allowances and subsidies
196
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2020 reporting exchange 2021
period
period rate
2. Employee benefits 17,679,409.31 17,682,165.59 2,756.28
3. Social insurance 553,971.19 10,498,106.99 10,329,879.43 381.46 722,580.21
Including: (1) Health
523,734.07 7,895,213.85 7,730,822.15 381.46 688,507.23
insurance
(2) Work-related injury
2,083,420.83 2,083,093.53 327.30
insurance
(3) Birth insurance 30,237.12 519,472.31 515,963.75 33,745.68
4. Housing accumulation
9,604,605.92 5,551,084.65 5,190,101.37 9,965,589.20
fund
5. Labour union funds
and employee education 624,277.34 624,277.34
funds
6. Short-term absence
2,186,693.50 15,335.97 3,741.04 2,198,288.43
pay
7. Short-term
profit-sharing plan
8. Other short-term
379,098.00 379,098.00
employee benefits
Total 51,114,418.96 290,977,429.11 296,593,145.89 -71,590.82 45,427,111.36
5.23.3 Details of defined contribution plans
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2020 reporting exchange 2021
period
period rate
1. Basic endowment
147,835.21 12,141,396.41 12,251,433.18 -2,293.57 35,504.87
insurance
2. Unemployment
11.50 322,570.18 322,297.58 284.10
insurance
3. Enterprise annuity
Total 147,846.71 12,463,966.59 12,573,730.76 -2,293.57 35,788.97
197
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.24 Taxes Payable
Item 31 December 2021 31 December 2020
Value added tax (VAT) 678,457.84 180,939.30
Enterprise income tax 42,807,959.02 16,319,231.37
Individual income tax 514,904.85 797,007.65
City construction tax 736,427.92 729,009.73
Educational surcharge 731,734.24 729,009.84
Other 1,223,054.74 1,483,049.28
Total 46,692,538.61 20,238,247.17
5.25 Other Payables
5.25.1 Other payables by category
Item 31 December 2021 31 December 2020
Interest payable
Dividend payable
Other payable 47,498,375.30 52,803,158.48
Total 47,498,375.30 52,803,158.48
5.25.2 Other payables
5.25.2.1 Other payables by nature
Item 31 December 2021 31 December 2020
Within 1 year 32,029,517.15 39,088,143.93
Over 1 year 15,468,858.15 13,715,014.55
Total 47,498,375.30 52,803,158.48
5.25.2.2 Significant other payables with aging over one year
Item 31 December 2021 Reason
Return upon termination of
Deposit 11,517,090.75
contract
Total 11,517,090.75
5.26 Non current liabilities due within one year
Item 31 December 2021 31 December 2020
Lease liabilities due within one year 10,147,932.67 —
Total 10,147,932.67
198
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.27 Lease liabilities
Item 31 December 2021 31 December 2020
Lease payments 1,028,022,895.46 —
Less：unrecognized financing charges 475,360,645.44 —
Subtotal 552,662,250.02 —
Less：Lease liabilities due within one year 10,147,932.67 —
Total 542,514,317.35 —
5.28 Long-term Employee Benefits Payable
5.28.1 General information of long-term employee benefits payable
Item 31 December 2021 31 December 2020
1. Post-employment benefits-net liability
350,926.82 312,775.91
under defined benefit plans
Total 350,926.82 312,775.91
5.28.2 Changes in defined benefit plans
Present value of the defined benefit obligation:
Item 2021 2020
1. Balance at the beginning of the reporting period 312,775.91 425,896.17
2. Defined benefit cost recognised in current profit or loss 46,029.34 19,118.67
3. Defined benefit cost recognised in other comprehensive income -2,886.57 -93,635.32
4. Other changes: -4,991.86 -38,603.61
(1) Consideration paid in settlements
(2) Payment of benefits -6,349.72 -12,498.64
(3) Others 1,357.86 -26,104.97
5. Balance at the end of the reporting period 350,926.82 312,775.91
5.29 Share Capital
Changes during the reporting period (+,-)
31 December 31 December
Item Bonus Capitalization
2020 New issues Other Subtotal 2021
issues of reserves
Number of
185,391,680.00 185,391,680.00
total shares
199
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.30 Capital Reserves
31 December Increase during the Decrease during the 31 December
Item
2020 reporting period reporting period 2021
Capital premium (share
210,045,659.80 210,045,659.80
premium)
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 296,808,965.79
200
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.31 Other Comprehensive Income
Current year
Less: previously Less: previously
After tax After tax
31 December recognized in other recognized in other 31 December
Item Amount for the Less: Income attributable to attributable to
2020 comprehensive income comprehensive income 2021
year before tax tax expense the parent minority
transferred into profit transferred into retained
company shareholders
or loss earnings
1. Other comprehensive income
will not be reclassified to profit or 31,583.27 15,755.48 3,151.09 9,453.29 3,151.10 41,036.56
loss
Including：Remeasurement of
31,583.27 15,755.48 3,151.09 9,453.29 3,151.10 41,036.56
changes in defined benefit plans
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
1,791,479.76 -2,872,066.40 -2,154,049.80 -718,016.60 -362,570.04
profit or loss
201
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Current year
Less: previously Less: previously
After tax After tax
31 December recognized in other recognized in other 31 December
Item Amount for the Less: Income attributable to attributable to
2020 comprehensive income comprehensive income 2021
year before tax tax expense the parent minority
transferred into profit transferred into retained
company shareholders
or 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
1,791,479.76 -2,872,066.40 -2,154,049.80 -718,016.60 -362,570.04
foreign operations
Total 1,823,063.03 -2,856,310.92 3,151.09 -2,144,596.51 -714,865.50 -321,533.48
202
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.32 Surplus Reserves
Increase Decrease
Changes of
31 December 1 January during the during the 31 December
Item accounting
2020 2021 reporting reporting 2021
policy
period period
Statutory
49,087,662.68 49,087,662.68 12,283,583.45 61,371,246.13
surplus reserves
Total 49,087,662.68 49,087,662.68 12,283,583.45 61,371,246.13
5.33 Retained Earnings
Item 2021 2020
Balance at the end of last period before adjustments 330,918,755.61 218,523,906.99
Adjustments for the opening balance (increase /(decrease))
Balance at the beginning of the reporting period after
330,918,755.61 218,523,906.99
adjustments
Add: net profit attributable to owners of the parent
122,249,955.82 139,522,190.75
company for the reporting period
Less: appropriation to statutory surplus reserves 12,283,583.45 8,588,174.13
Appropriation to discretionary surplus reserves
Provision for general risk reserves
Payment of ordinary share dividends 27,808,752.00 18,539,168.00
Payment of ordinary share dividends
Retained Earnings at the end of this period 413,076,375.98 330,918,755.61
5.34 Revenue and Cost of Sales
2021 2020
Item
Revenue Costs of sales Revenue Costs of sales
Principal
2,267,468,882.08 1,989,093,799.41 2,066,576,833.78 1,722,830,969.80
activities
Other activities 79,811,418.48 26,336,497.02 77,604,904.55 33,919,348.10
Total 2,347,280,300.56 2,015,430,296.43 2,144,181,738.33 1,756,750,317.90
203
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.34.1 Revenue from principal activities (by industry or business)
2021 2020
Industry (business)
Revenue Costs of sales Revenue Costs of sales
Household
appliances 2,267,468,882.08 1,989,093,799.41 2,066,576,833.78 1,722,830,969.80
industry
Total 2,267,468,882.08 1,989,093,799.41 2,066,576,833.78 1,722,830,969.80
5.34.2 Revenue from principal activities (by product)
2021 2020
Product
Revenue Costs of sales Revenue Costs of sales
Catering and
1,593,009,945.48 1,387,183,234.62 1,470,116,469.53 1,234,617,024.23
Cooking
Home helper 453,992,911.28 412,983,229.49 397,954,437.24 335,387,964.40
Tea/Coffee makers 207,555,003.70 181,085,113.39 184,473,267.41 147,236,293.39
Other 12,911,021.62 7,842,221.91 14,032,659.60 5,589,687.78
Total 2,267,468,882.08 1,989,093,799.41 2,066,576,833.78 1,722,830,969.80
5.34.3 Revenue from principal activities (by region)
2021 2020
Region
Revenue Costs of sales Revenue Costs of sales
Australia 72,781,067.49 62,180,251.00 75,243,660.83 59,851,012.52
Africa 17,004,158.12 14,500,206.92 14,907,902.56 11,863,723.39
America 1,212,559,936.12 1,062,954,014.22 1,118,127,377.12 934,093,466.91
Europe 535,993,134.94 472,001,850.88 440,214,124.77 360,354,097.45
Asia 429,130,585.41 377,457,476.39 418,083,768.50 356,668,669.53
Total 2,267,468,882.08 1,989,093,799.41 2,066,576,833.78 1,722,830,969.80
5.35 Taxes and Surcharges
Item 2021 2020
City construction tax 3,295,350.34 4,064,818.02
Educational surcharge 3,241,836.46 3,985,963.82
Property tax 2,019,682.27 2,495,452.34
Land use tax 392,026.92 387,977.28
Stamp duty 1,106,232.75 1,008,286.88
Other 25,223.15 111,303.62
Total 10,080,351.89 12,053,801.96
204
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.36 Selling and Distribution Expenses
Item 2021 2020
Employee remunerations 13,099,186.83 12,441,053.90
Sales commission and after sales service fees 2,933,615.97 4,037,792.85
Export expenses 31,418,797.93
Claims experiment expenses 1,082,657.21 5,341,375.17
Travel expenses 228,157.42 337,561.92
Advertisements charges and sales promotion 188,454.51 1,107,178.53
Administrative expenses 159,359.79 153,540.35
Rental expenses 26,082.79 285,625.05
Transportation expenses 161,424.41
Other expenses 3,327,489.25 573,443.30
Total 21,045,003.77 55,857,793.41
Note: According to the requirements of the "Guidelines for the Application of Regulatory
Rules - Accounting No. 2" issued by the China Securities Regulatory Commission in
December 2021, the freight has been listed in the operating costs in this period.
5.37 General and Administrative Expenses
Item 2021 2020
Employee remunerations 36,170,158.34 38,653,129.40
Depreciation and amortization 12,281,145.89 7,147,885.76
Insurance expenses 5,556,605.51 4,626,617.16
Maintenance expenses 5,008,950.70 4,997,217.26
Consultant fees 3,002,980.81 2,937,651.61
Travel expenses 2,113,129.43 3,049,227.60
Administrative expenses 1,299,812.02 1,320,127.10
Rental expenses 251,395.76 11,788,219.02
Other 8,237,498.36 7,861,270.56
Total 73,921,676.82 82,381,345.47
5.38 Research and Development Expenses
Item 2021 2020
Employee remunerations 38,445,308.13 37,874,280.16
Depreciation and amortization 9,546,509.88 7,645,493.09
Test expenses 7,617,991.59 5,586,121.57
Patent expenses 2,030,309.02 2,683,493.35
205
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Item 2021 2020
Maintenance expenses 1,645,792.35 583,808.94
Certification expenses 1,543,882.51 2,003,763.18
Consultant fees 876,714.62 1,255,335.01
Travel expenses 157,859.52 334,763.99
Rental expenses 153,684.69 1,646,108.80
Others 2,019,308.43 2,331,614.33
Total 64,037,360.74 61,944,782.42
5.39 Finance Expenses
Item 2021 2020
Interest expenses 26,060,552.41 433,614.88
Less: Interest income 9,890,980.23 14,782,907.49
Foreign exchange losses 13,019,296.30 40,643,356.53
Bank charges 1,443,478.30 1,218,677.91
Total 30,632,346.78 27,512,741.83
5.40 Other Income
Item 2021 2020 Related to assets /income
1. Government grant recognized in other
4,669,583.18 6,241,497.95 Related to income
income
Including: Government grant related to
deferred income
Government grant related to deferred
income
Government grant directly recognised in
4,669,583.18 6,241,497.95 Related to income
current profit or loss
2. Others related to daily operation
116,447.33 Related to income
activities and recognized in other income
Including: Charges of withholding
individual income tax
Additional deduction of input tax 116,447.33 Related to income
Income from debt restructuring
Total 4,786,030.51 6,241,497.95
206
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Details of government grant recognised in other income:
Item 2021 2020 Related to assets /income
Enterprise R&D investment subsidies 1,714,500.00 1,552,140.00 Related to income
Export credit insurance subsidy 1,676,564.00 1,449,323.00 Related to income
Foreign trade export incentives 1,500,000.00 Related to income
Technology innovation subsidies 200,000.00 617,000.00 Related to income
Increasing production and efficiency
319,000.00 564,414.00 Related to income
reward
Patent subsidies 20,500.00 324,500.00 Related to income
Employment stabilization subsidies 45,313.24 214,120.95 Related to income
Exhibition subsidies 20,000.00 Related to income
Third generation service charge 64,934.41 Related to income
Cross provincial employment of poverty
191,625.00 Related to income
relief population in 2021
The fifth ―Egret Cup‖ industrial design 5,000.00 Related to income
Enterprise foreign exchange hedging 415,000.00 Related to income
Labor social security subsidy 17,146.53 Related to income
Total 4,669,583.18 6,241,497.95
5.41 Investment Income
Item 2021 2020
Investment income obtained during the holding period of
25,182,036.14 19,292,756.54
trading financial assets
Investment income from disposal of trading financial assets 32,565,100.00 24,078,989.00
Interest income from fixed deposit 5,746,621.00
Total 63,493,757.14 43,371,745.54
5.42 Gains on Changes in Fair Values
Sources of gains on changes in fair value 2021 2020
Held-for-trading financial assets -15,100,872.22 17,840,011.00
Including: changes in fair value of derivatives -16,669,900.00 17,840,011.00
Financial products 1,569,027.78
Total -15,100,872.22 17,840,011.00
207
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.43 Impairment Loss of Credit
Item 2021 2020
Bad debt of accounts receivables 1,372,287.48 -524,524.49
Bad debt of other receivables -77,262.88 482,679.46
Total 1,295,024.60 -41,845.03
5.44 Impairment Loss of Assets
Item 2021 2020
Impairment of inventories -6,304,119.40 -4,492,628.29
Impairment of fixed assets -2,971,399.95 -4,748,739.89
Total -9,275,519.35 -9,241,368.18
5.45 Gains from Disposal of Assets
Item 2021 2020
Gains from Disposal of Assets 2,101,750.59 195,318.03
Total 2,101,750.59 195,318.03
5.46 Non-operating Income
5.46.1 Details of non-operating income
Item 2021 2020 Recognized in current extraordinary gains and losses
Other 5,236,403.37 5,986,192.66 5,236,403.37
Total 5,236,403.37 5,986,192.66 5,236,403.37
5.47 Non-operating Expenses
Recognized in current
Item 2021 2020
extraordinary gains and losses
Loss from damage or scrapping
1,262.19 919,177.43 1,262.19
of non-current assets
Including: loss from scrapping
1,262.19 919,177.43 1,262.19
of fixed assets
Donations 140,260.92 65,422.42 140,260.92
Penalty and late payment 30,209.55 30,209.55
Other 188,207.31 332,630.85 188,207.31
Total 359,939.97 1,317,230.70 359,939.97
208
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.48 Income Tax Expenses
5.48.1 Details of income tax expenses
Item 2021 2020
Current tax expenses 47,475,660.56 17,157,864.07
Deferred tax expenses -26,592,483.85 7,586,987.99
Total 20,883,176.71 24,744,852.06
5.48.2 Reconciliation of accounting profit and income tax expenses
Item 2021 2020
Profit before tax 184,309,898.80 210,715,276.61
Income tax expense at the statutory /applicable tax rate 46,077,474.70 52,678,819.15
Effect of different tax rate of subsidiaries -17,567,267.26 -21,483,131.51
Adjustments of impact from prior period income tax -508,460.84 -1,306,289.59
Effect of income that is exempt from taxation -274,277.62 -134,668.40
Effect of non-deductible costs, expenses or losses 1,903,266.93 2,179,942.24
Effect of previously unrecognized deductible losses
-2,803,292.66 -1,603,091.09
recognized as deferred tax assets
Effect of deductible temporary differences and deductible
760,022.07 118,846.55
losses not recognized as deferred tax assets
R&D expenses plus deduction -6,704,288.61 -5,705,575.29
Income tax expenses 20,883,176.71 24,744,852.06
5.49 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 5.31 Other Comprehensive
Income.
5.50 Notes to the Statement of Cash Flow
5.50.1 Other cash received relating to operating activities
Item 2021 2020
Government grants 4,669,583.18 6,241,497.95
Interest income 6,933,567.34 14,782,907.49
Rent income 45,450,868.76 49,433,171.12
209
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Item 2021 2020
Funds in current account and others 9,023,475.39 8,570,658.74
Total 66,077,494.67 79,028,235.30
5.50.2 Other cash payments relating to operating activities
Item 2021 2020
Penalties and donations 170,470.47 65,422.42
Bank charges 1,443,479.00 1,218,677.91
Sales expenses, general and administrative expenses,
43,675,026.22 94,807,395.57
and research and development expenses paid by cash
Current accounts and others 9,728,001.34 12,686,528.50
Total 55,016,977.03 108,778,024.40
5.50.3 Other cash received relating to investing activities
Item 2021 2020
Fixed deposits recovered after maturity for the purpose
8,177,394.14 266,214,151.16
to earn interest income in financial institutions
Total 8,177,394.14 266,214,151.16
5.50.4 Other cash payments relating to investing activities
Item 2021 2020
Fixed deposits in financial institutions for the purpose
262,620,000.00 266,214,151.16
to earn interest income
Total 262,620,000.00 266,214,151.16
5.50.5 Other cash received relating to financing activities
Item 2021 2020
Deposit for letter of credit 29,272,663.06
Security deposit of pledged loan 22,750,000.00
Total 52,022,663.06
5.50.6 Other cash payments relating to financing activities
Item 2021 2020
Lease payments of right-of-use assets 35,779,376.08
Security deposit of pledged loan 22,750,000.00
Deposit for letter of credit 20,284,634.34 12,243,391.52
Total 56,064,010.42 34,993,391.52
210
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.51 Supplementary Information to the Statement of Cash Flows
5.51.1 Supplementary information to the statement of cash flows
Supplementary information 2021 2020
1. Adjustments of net profit to cash flows from operating
activities:
Net profit 163,426,722.09 185,970,424.55
Add: Provisions for impairment of assets 9,275,519.35 9,241,368.18
Impairment loss of credit -1,295,024.60 41,845.03
Depreciation of fixed assets, investment properties, oil and gas
42,393,022.37 44,843,898.80
asset and productive biological assets
Depreciation of right-of-use assets 20,010,047.98
Amortisation of intangible assets 8,359,090.30 7,187,042.15
Amortisation of long-term deferred expenses 3,761,796.14 2,778,811.10
Gain on disposal of fixed assets, intangible assets, and other
-2,101,750.59 -195,318.03
long-term assets (Gain expressed with ―-‖)
Loss on scrapping of fixed assets (Gain expressed with ―-‖) 1,262.19 919,177.43
Loss on changes in fair value (Gain expressed with ―-‖) 15,100,872.22 -17,840,011.00
Financial expense (Income expressed with ―-‖) 23,103,306.62 -2,443,195.54
Investment loss (Income expressed with ―-‖) -63,493,757.14 -43,371,745.54
Decreases in deferred tax assets (Increase expressed with ―-‖) 2,888,491.96 4,997,158.36
Increases in deferred tax liabilities (Decrease expressed with ―-‖) -29,478,737.27 2,589,829.63
Decrease in inventories (Increase expressed with ―-‖) -3,618,087.75 -38,424,205.42
Decrease in operating receivables (Increase expressed with ―-‖) 179,876,843.62 -146,298,730.41
Increases in operating payables (Decrease expressed with ―-‖) -219,684,045.61 305,274,733.95
Other
Net cash flows from operating activities 148,525,571.88 315,271,083.24
2. Significant investing and financing activities not involving cash
receipts and payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets acquired under finance leases
3. Net increases in cash and cash equivalents:
Cash at the end of the reporting period 770,851,173.58 672,801,206.68
211
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Supplementary information 2021 2020
Less: Cash at the beginning of the reporting period 672,801,206.68 639,623,201.98
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 98,049,966.90 33,178,004.70
5.51.2 The components of cash and cash equivalents
31 December 31 December
Item
2021 2020
1. Cash 770,851,173.58 672,801,206.68
Including: Cash on hand 903,610.79 875,000.35
Cash in bank available for immediate use 769,947,562.79 671,926,206.33
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 period 770,851,173.58 672,801,206.68
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 2021, the amount of cash and cash equivalents in the statement of cash flows was
CNY 770,851,173.58, and the balance of monetary funds of balance sheet was CNY 779,404,127.58. The
difference of CNY 8,552,954.00 was caused by deducting the 3-month fixed deposit of CNY 5,297,591.20
and the deposit for letter of credit of CNY 3,255,362.80, which are failing to meet the standards of cash and
cash equivalents, from the cash and cash equivalents in the statement of cash flows.
5.52 Restricted Assets
Item Carrying amount on 31 December 2021 Reason for restriction
Other monetary funds 3,255,362.80 Security deposits
Total 3,255,362.80
212
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Note: The assets with restricted ownership or right-of-use are the deposit for letter of credit of TsannKuen
(Zhangzhou) Enterprise Co., Ltd. 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.
5.53 Foreign Currency Monetary Items
5.53.1 Details for foreign currency monetary items:
Carrying amount in foreign Exchange Carrying amount in CNY
Item
currency on 31 December 2021 rate on 31 December 2021
Cash and cash equivalents
Including: HKD 35,711.74 0.817600 29,197.92
USD 29,467,287.82 6.375700 187,874,586.95
JPY 111,536,976.42 0.055415 6,180,821.55
EUR 43,633.88 7.219700 315,023.52
GBP 9,519.60 8.606400 81,929.49
IDR 12,761,052,979.24 0.000446 5,691,429.63
HUF 81,016.00 0.019573 1,585.73
NTD 1,215,618.00 0.230033 279,632.26
Total 200,454,207.05
Accounts receivables
Including: USD 40,606,318.94 6.375700 258,893,707.67
JPY 34,659,690.00 0.055415 1,920,666.72
IDR 425,798,000.00 0.000446 189,905.91
Total 261,004,280.30
Accounts payables
Including: USD 7,702,682.85 6.375700 49,109,995.05
EUR 11,130.00 7.219700 80,355.26
HKD 34,775.70 0.817600 28,432.61
JPY 6,391,729.37 0.055415 354,197.68
IDR 177,158,115.09 0.000446 79,012.52
NTD 1,523,052.00 0.230033 350,352.22
Total 50,002,345.34
Other receivables
213
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Carrying amount in foreign Exchange Carrying amount in CNY
Item
currency on 31 December 2021 rate on 31 December 2021
Including: USD 10,695.13 6.375700 68,188.94
IDR 1,337,933,624.00 0.000446 596,718.40
NTD 982,330.00 0.230033 225,968.32
Total 890,875.66
Other payables
Including: HKD 15,295.16 0.817600 12,505.32
USD 183,909.42 6.375700 1,172,551.29
JPY 64,100.00 0.055415 3,552.10
IDR 862,225,350.00 0.000446 384,552.51
NTD 16,173,338.00 0.230033 3,720,401.46
Total 5,293,562.68
214
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
5.54 Government Grants
5.54.1 Government grants related to assets
Recognized in current profit or loss or
Items presented in the Presented items that recognised in current profit or
Item Amount directly as deduct of related cost
statement of financial position loss or directly as deduct of related cost
2021 2020
Equipment investment subsidies Fixed assets 74,563.64 74,563.64 Cost of sales
5.54.2 Government grants related to income
Recognised in current profit or loss or Presented items that
Items presented in
directly as deduct of related cost recognised in current profit or
Item Amount the statement of
loss or directly as deduct of
financial position 2021 2020
related cost
R&D expenses subsidies 1,714,500.00 Other income 1,714,500.00 1,552,140.00 Other income
Export credit insurance subsidies 1,676,564.00 Other income 1,676,564.00 1,449,323.00 Other income
Incentives for promoting foreign trade growth in 2019 Other income 1,000,000.00 Other income
Export incentives during the period of coronavirus
Other income 500,000.00 Other income
from January to April 2020
Reward for export increase in 2019 Other income 564,414.00 Other income
High level R&D and innovation awards in 2020 Other income 300,000.00 Other income
Patent subsidy by the Zhangzhou Taiwan Investment
Other income 274,500.00 Other income
Zone
Employment stabilization subsidies 45,313.24 Other income 45,313.24 204,884.24 Other income
Science and technology insurance subsidies Other income 200,000.00 Other income
215
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Recognised in current profit or loss or Presented items that
Items presented in
directly as deduct of related cost recognised in current profit or
Item Amount the statement of
loss or directly as deduct of
financial position 2021 2020
related cost
Science and technology subsidies 200,000.00 Other income 200,000.00 Other income
Provincial intellectual property advantage enterprise
Other income 100,000.00 Other income
Award
The first batch of patent funding in 2020 Other income 50,000.00 Other income
Social security subsidies for rural labor 17,146.53 Other income 17,146.53 3,577.14 Other income
Awards of Zhangzhou Industrial Design Competition Other income 17,000.00 Other income
Subsidy for the Guangzhou Export Commodities Fair Other income 20,000.00 Other income
Reward for absorbing the impoverished people to
Other income 5,659.57 Other income
work in 2020
Third generation service charge 64,934.41 Other income 64,934.41 Other income
Increasing production and efficiency reward for the
319,000.00 Other income 319,000.00 Other income
first quarter of 2021
Cross provincial employment of poverty relief
191,625.00 Other income 191,625.00 Other income
population in 2021
The first batch of patent funding in 2021 7,000.00 Other income 7,000.00 Other income
The second batch of patent funding in 2021 13,500.00 Other income 13,500.00 Other income
The fifth ―Egret Cup‖ industrial design 5,000.00 Other income 5,000.00 Other income
Enterprise foreign exchange hedging 415,000.00 Other income 415,000.00 Other income
Total 4,669,583.18 4,669,583.18 6,241,497.95
216
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
6. CHANGES IN THE SCOPE OF CONSOLIDATION
6.1 Business Combination not Under Common control
None.
6.2 Business Combination under Common Control
None.
6.3 Other reasons for change of consolidated scope
None.
217
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
7. INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
7.1.1 Composition of corporate group
Percentage of equity
Principal place Registered interests by the Company
Name of subsidiary Nature of business Methods of acquisition
of business City (%)
Direct Indirect
TsannKuen (Zhangzhou) Enterprise Co., Manufactures home
Zhangzhou Zhangzhou 75.00 75.00 Acquired through establishment
Ltd. (TKL) electronic appliance
TsannKuen China (Shanghai) Enterprise Manufactures home Acquired through business
Shanghai Shanghai 46.875 62.50
Co., Ltd. (TKS) electronic appliance combination under common control
TsannKuen (Zhangzhou) South Port Manufactures home
Zhangzhou Zhangzhou 56.25 75.00 Acquired through establishment
Electronics Enterprise Co., Ltd. (TKN) electronic appliance
Shanghai Canxing Trading Co., Ltd Sales of home
Shanghai Shanghai 56.25 100.00 Acquired through establishment
(STD) electronic
Xiamen Tsannkuen Property Services Co.,
Xiamen Xiamen Property services 100.00 100.00 Acquired through establishment
Ltd. (TKW)
East Sino Development Limited. (East Acquired through business
Hong Kong Hong Kong Investment, Trading 75.00 100.00
Sino) combination under common control
Manufactures home Acquired through business
Pt. Star Comgistic Indonesia (SCI) Indonesia Indonesia 75.00 100.00
electronic appliance combination under common control
218
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Percentage of equity
Principal place Registered interests by the Company
Name of subsidiary Nature of business Methods of acquisition
of business City (%)
Direct Indirect
Pt. Star Comgistic Property Development Real estate
Indonesia Indonesia 75.00 100.00 Acquired through establishment
Indonesia (SCPDI) development
Acquired through business
Orient Star Investments Limited (OSI) Hong Kong Hong Kong Investment, Trading 75.00 100.00 combination not under common
control
Tsannkuen Edge Intelligence Co., Ltd. Acquired through business
Taiwan Taiwan Industrial design 75.00 100.00
(TKEI) combination under common control
7.1.2 Significant non-wholly owned subsidiaries
Profit or loss attributable to non- Dividends declared to distribute to Non-controlling
Name of Proportion of ownership interest
controlling interests during the non-controlling interests during the interests at the end of the reporting
subsidiary held by non- controlling interests
reporting period reporting period period
TKL 25.00 25,727,905.42 38,273,165.53 344,876,945.63
TKS 53.13 4,657,020.35 128,356,597.18
SCI 25.00 186,244.23 35,881,341.80
TKEI 25.00 -988,435.05 3,478,460.69
219
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
7.1.3 Main financial information of significant non-wholly owned subsidiaries
31 December 2021
Name of
Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities
assets liabilities liabilities
TKL 1,696,368,515.44 987,861,266.99 2,684,229,782.43 759,445,581.79 545,276,418.13 1,304,721,999.92
TKS 285,418,969.52 6,353,285.01 291,772,254.53 28,950,447.01 21,209,389.30 50,159,836.31
SCI 104,039,232.69 68,583,223.01 172,622,455.71 29,097,088.51 29,097,088.51
TKEI 18,693,308.08 2,734,837.07 21,428,145.15 6,028,343.83 1,485,958.58 7,514,302.41
(Continued)
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
2021
Name of
Total comprehensive Net cash flows from
subsidiary Revenue Net profit/(loss)
income operating activities
TKL 2,118,181,090.43 102,911,621.69 225,975,983.15
TKS 969,174.51 8,766,155.95 -399,273.30
SCI 241,383,474.27 744,976.91 2,963,140.71
TKEI 8,186,917.93 -3,953,740.20 3,311,021.81
(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
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
220
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
7.2 Transactions which Resulted in Change of Equity Interests in a Subsidiary without
Loss of Control
None.
8. RISKS RELATED TO FINANCIAL INSTRUMENTS
Risks related to the financial instruments of the Company arise from the recognition of
various financial assets and financial liabilities during its operation, including credit risk,
liquidity risk and market risk.
Management of the Company is responsible for determining risk management objectives and
policies related to financial instruments. Operational management is responsible for the daily
risk management through functional departments (e.g. credit management department of the
Company reviews each credit sale). Internal audit department is responsible for the daily
supervision of implementation of the risk management policies and procedures, and report
their findings to the audit committee in a timely manner.
Overall risk management objective of the Company is to establish risk management policies
to minimize the risks without unduly affecting the competitiveness and resilience of the
Company.
8.1 Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because
the other party of the financial instrument fails to fulfill its obligation. The credit risk of the
Company is related to cash and equivalent, notes receivable, accounts receivables, other
receivables and long-term receivables. Credit risk of these financial assets is derived from the
counterparty’s breach of contract. The maximum risk exposure is equal to the carrying
amount of these financial instruments.
Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited
in such financial institutions as commercial bank, of which the Company thinks with higher
reputation and financial position.
221
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
For notes receivable, other receivables and long-term receivables, the Company establishes
related policies to control their credit risk exposure. The Company assesses credit capability
of its customers and determines their credit terms based on their financial position, possibility
of the guarantee from third party, credit record and other factors (such as current market status,
etc.). The Company monitors its customers’ credit record periodically, and for those
customers with poor credit record, the Company will take measures such as written call,
shortening or cancelling their credit terms so as to ensure the overall credit risk of the
Company is controllable.
8.1.1 Determination of significant increases in credit risk
The Company assesses at each reporting date as to whether the credit risk on financial
instruments has increased significantly since initial recognition. When the Company
determines whether the credit risk has increased significantly since initial recognition, it
considers based on reasonable and supportable information that is available without undue
cost or effort, including quantitative and qualitative analysis of historical information, external
credit ratings and forward-looking information. The Company determines the changes in the
risk of a default occurring over the expected life of the financial instrument through
comparing 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 based on individual financial instrument or a group of financial instruments with
the similar credit risk characteristics.
When met one or more of the following quantitative or qualitative criteria, the Company
determines that the credit risk on financial instruments has increased significantly: the
quantitative criteria applied mainly because as at the reporting date, the increase in the
probability of default occurring over the lifetime is more than a certain percentage since the
initial recognition; the qualitative criteria applied if the debtor has adverse changes in business
and economic conditions, early warning list of customer, and etc.
8.1.2 Definition of credit-impaired financial assets
The criteria adopted by the Company for determination of credit impairment are consistent
222
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
with internal credit risk management objectives of relevant financial instruments in
considering both quantitative and qualitative indicators.
When the Company assesses whether the debtor has incurred the credit impairment, the main
factors considered are as following: Significant financial difficulty of the issuer or the
borrower; a breach of contract, e.g., default or past-due event; a lender having granted a
concession to the borrower for economic or contractual reasons relating to the borrower’s
financial difficulty that the lender would not otherwise consider; the probability that the
borrower will enter bankruptcy or other financial re-organisation; the disappearance of an
active market for the financial asset because of financial difficulties of the issuer or the
borrower; the purchase or origination of a financial asset at a deep discount that reflects the
incurred credit losses.
8.1.3 The parameter of expected credit loss measurement
The company measures impairment provision for different assets with the expected credit loss
of 12-month or the lifetime based on whether there has been a significant increase in credit
risk or credit impairment has occurred. The key parameters for expected credit loss
measurement include default probability, default loss rate and default risk exposure. The
Company sets up the model of default probability, default loss rate and default risk exposure
in considering the quantitative analysis of historical statistics (such as counterparties’ ratings,
guarantee method and collateral type, repayment method, etc.) and forward-looking
information.
Relevant definitions are as following:
Default probability refers to the probability of the debtor will fail to discharge the repayment
obligation over the next 12 months or the entire remaining lifetime;
Default loss rate refers to the Company's expectation of the loss degree of default risk
exposure. The default loss rate varies depending on the type of counterparty, recourse method
and priority, and the collateral. The default loss rate is the percentage of the risk exposure loss
when default has occurred and it is calculated over the next 12 months or the entire lifetime;
223
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
The default risk exposure refers to the amount that the company should be repaid when
default has occurred in the next 12 months or the entire lifetime. Both the assessment of
significant increase in credit risk of forward-looking information and the calculation of
expected credit losses involve forward-looking information. Through historical data analysis,
the Company identifies key economic indicators that have impact on the credit risk and
expected credit losses for each business.
The maximum exposure to credit risk of the Company is the carrying amount of each
financial asset in the statement of financial position. The Company does not provide any other
guarantees that may expose the Company to credit risk.
For the accounts receivable of the Company, the amount of top 5 clients represents 69.10% of
the total (31 December 2020: 76.91 %); for the other receivables, the amount of the top five
entities represents 84.08% of the total (31 December 2020: 90.30%).
8.2 Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by
delivering cash or other financial assets. The Company is responsible for the capital
management of all of its subsidiaries, including short-term investment of cash surplus and
dealing with forecasted cash demand by raising loans. The Company’s policy is to monitor
the demand for short-term and long-term floating capital and whether the requirement of loan
contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.
8.3 Market Risk
8.3.1 Foreign currency 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.
224
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
8.3.1.1 As of December 31, 2021, 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 2021 31 December 2020
Cash and cash equivalent 200,454,207.05 184,142,487.23
Accounts receivable 261,004,280.30 462,881,138.22
Other receivables 890,875.66 812,189.04
Accounts payable 50,002,345.34 102,150,272.47
Other payables 5,293,562.68 3,506,599.56
Short-term loan 16,345,141.13
The Company continuously monitors the volume of foreign currency transactions and foreign
currency assets and liabilities to minimize the foreign currency risk. 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.
8.3.2 Interest rate risk
Interest rate risk of the Company primarily arises from its long-term interest-bearing debts,
such as long-term loans and bonds payables, etc. Financial liabilities with floating interest rate
make the Company subject to cash flow interest rate risk, and financial liabilities with fixed
interest rate make the Company subject to fair value interest rate risk. The Company
determines the relative proportion of the fixed interest contracts and floating interest contracts
based on the current market environment.
Finance department of the Company’s headquarter monitors interest rate of the group
continuously. Increase of the interest rate will result in the increase of the cost of new
interest-bearing debts and the interest expense of the unpaid interest-bearing debts with
floating rate, and subsequently lead to significant negative impact on the financial
performance of the Company. The management makes adjustment in accordance with the
update market condition in a timely manner.
225
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
9.1 Assets and Liabilities Measured at Fair Value at 31 December 2021
Fair value at 31 December 2021
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
420,721,027.78 420,721,027.78
profit or loss
Debt instruments 416,569,027.78 416,569,027.78
Equity instruments
Derivatives 4,152,000.00 4,152,000.00
Total assets measured at fair value on a
420,721,027.78 420,721,027.78
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.
226
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
10. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
Recognition criteria for related parties: one party controls, jointly controls or exerts significant
influence on the other party, and two or more parties are controlled and jointly controlled by
one party constitute related parties.
10.1 General Information of the Parent Company
Percentage of
Registered Nature of the Registered Voting rights in
Name of the parent equity interests in
address business capital the Company (%)
the Company (%)
STAR Manufactures
COMGISTIC and sales NTD
Taiwan 42.90 44.68
CAPITAL CO., electrical 3,000,000,000.00
LTD. equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL CO., LTD.
10.2 General Information of Subsidiaries
Details of the subsidiaries please refer to Notes 7 INTERESTS IN OTHER ENTITIES.
10.3 Other Related Parties of the Company
Name Relationship with the Company
The company is directly controlled by the key
Thermaster Electronic (Xiamen) Ltd.
management and closed family members
TsannKuen Enterprise Co., Ltd. Same actual controller
Gold mine chain enterprise Co., Ltd Same actual controller
Xiamen Wuhuama Restaurant Management Co., Ltd. Ultimate holding company have equity
Canxing International Travel Service Co., Ltd Same actual controller
10.4 Related Party Transactions
10.4.1 Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Related parties Nature of the transaction(s) 2021 2020
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 41,613,744.13 42,913,323.94
Purchase of goods, receiving
TsannKuen Enterprise Co., Ltd. 4,469.14 10,303.44
of services
227
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Related parties Nature of the transaction(s) 2021 2020
Gold mine chain enterprise Co., Ltd Purchase of goods 439.33 3,395.48
STAR COMGISTIC CAPITAL CO., Purchase of goods, receiving
1,866.97 1,258.52
LTD. of services
Total 41,620,519.57 42,928,281.38
Sales of goods and rendering of services:
Nature of the
Related parties 2021 2020
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Sales of goods 9,607,312.58 8,476,153.59
Total 9,607,312.58 8,476,153.59
10.4.2 Leases
The Company as lessor:
The lessee Type of assets 2021 2020
Xiamen Wuhuama Restaurant Management
Property 24,941.37
Co., Ltd.
Total 24,941.37
The Company as lessee:
The lessor Type of assets 2021 2020
STAR COMGISTIC CAPITAL CO., LTD. Property 1,166,230.15 1,182,432.53
Total 1,166,230.15 1,182,432.53
10.4.3 Transfers of assets and debt restructuring
Nature of the
Related parties 2021 2020
transaction(s)
Sale of fixed
Gold mine chain enterprise Co., Ltd 1,644.86
assets
Total 1,644.86
10.4.4 Key management personnel compensation
Item 2021 2020
Key management personnel compensation 401.44 315.81
228
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
10.4.5 Other related party transactions
Nature of the
Related parties 2021 2020
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Quality claim payment 368,818.81 533,432.11
STAR COMGISTIC CAPITAL CO., LTD. Accept service 106,528.65
Gold mine chain enterprise Co., Ltd Provide labor service 26,723.74
Canxing International Travel Service Co., Ltd Accept service 18,023.73
TsannKuen Enterprise Co., Ltd. Accept labor service 39,536.23 170.22
Total 514,883.69 578,349.80
10.5 Receivables and Payables with Related Parties
10.5.1 Receivables
31 December 2021 31 December 2020
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Accounts STAR COMGISTIC
2,297,330.17 2,211,530.36
receivable CAPITAL CO., LTD.
Other STAR COMGISTIC
203,104.11 202,165.15
receivables CAPITAL CO., LTD.
Total 2,500,434.28 2,413,695.51
10.5.2 Payables
Items Related parties 31 December 2021 31 December 2020
Accounts
Thermaster Electronic (Xiamen) Ltd. 7,408,747.24 14,561,684.71
payable
Other STAR COMGISTIC CAPITAL CO.,
533,432.11
payables LTD.
Other
TsannKuen Enterprise Co., Ltd. 1,521.28
payables
Total 7,408,747.24 15,096,638.10
11. COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
229
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
11.1.1 Operating lease commitments:
Minimum lease payments under
31 December 2021 31 December 2020
non-cancellable operating leases：
Within 1 year 3,470.78 3,638.00
1-2 years 3,470.78 3,638.00
2-3 years 3,470.78 3,638.00
Subsequent years 97,181.84 109,133.00
Total 107,594.18 120,047.00
11.1.2 Other commitments
As at 31 December 2021, the Company has no significant commitments need to be disclosed.
11.2 Contingencies
Significant contingencies existing at the balance sheet date:
As of 31st December 2021, The Company has no significant contingencies need to be
disclosed.
12. EVENTS AFTER THE REPORTING PERIOD
12.1 Profit Distribution
On 12 March 2022, the first Board Meeting of 2022 held by the Company reviewed and
approved the profit distribution plan for 2021. Based on the total share capital of 185,391,680
shares as at the end of 2021, cash dividend of CNY 1.00 per 10 shares will be distributed to
all shareholders of the Company (tax included). The profit for distribution of the Company is
CNY 18,539,168.00. The proposal still needs to be approved by the shareholders' general
meeting of the Company.
12.2 other
As at 12 March 2022, the Company has no other events after the reporting period need to be
disclosed.
13. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE
PARENT COMPANY
230
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
13.1 Accounts Receivable
13.1.1 Accounts receivable by aging
Aging 31 December 2021 31 December 2020
Within 1 year 732,884.86 2,748,224.01
Including: 1 – 90 days 723,207.30 2,397,992.02
91 – 180 days 250,231.99
181 – 270 days 3,328.92 100,000.00
271 – 365 days 6,348.64
1-2 years 110,740.52
2-3 years
Over 3 years 5,000.00 5,000.00
Subtotal 848,625.38 2,753,224.01
Less: Provision for bad debt 50,636.67 43,085.53
Total 797,988.71 2,710,138.48
13.1.2 Accounts receivable by bad debt provision method
31 December 2021
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt
recognised individually
Provision for bad debt
848,625.38 100.00 50,636.67 5.97 797,988.71
recognised collectively
Including: Portfolio by age 848,625.38 100.00 50,636.67 5.97 797,988.71
Portfolio by related parties
Total 848,625.38 100.00 50,636.67 5.97 797,988.71
(Continued)
31 December 2020
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
Provision for bad debt
recognised individually
231
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
31 December 2020
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
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
Specific instructions for provision for bad debts:
As of 31 December 2021 and 31 December 2020, accounts receivable with bad debt provision
recognised collectively by aging
31 December 2021 31 December 2020
Aging Provision for Provision Provision for Provision
Book balance Book balance
bad debt ratio (%) bad debt ratio (%)
Not overdue 295,643.50 1,478.22 0.50 2,089,752.42 10,448.76 0.50
Overdue 1 – 30 days 527,563.80 23,740.37 4.50 614,150.50 27,636.77 4.50
Overdue 31 – 60 days
Overdue 61 – 90 days
Overdue more than 90
25,418.08 25,418.08 100.00 5,000.00 5,000.00 100.00
days
Total 848,625.38 50,636.67 5.97 2,708,902.92 43,085.53 1.59
As of 31 December 2020, accounts receivable with bad debt provision recognised collectively
by related parties:
31 December 2020
Aging
Book balance Bad debt Book balance
Related parties accounts receivable 44,321.09
Total 44,321.09
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
collectively by groups.
232
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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
2020 Provision Write-off 2021
reversal
Provision for bad debt
43,085.53 7,551.14 50,636.67
recognised collectively
Total 43,085.53 7,551.14 50,636.67
13.1.4 On 31 December 2021, top five closing balances by entity
Proportion of the
Balance at 31 Provision for
Entity name balance to the total
December 2021 bad debt
accounts receivable (%)
Shanghai LOCK&LOCK Trading Co.,
435,004.80 51.26 19,575.22
Ltd.
Shenzhen Pinluo Innovation Industry
276,549.50 32.59 5,085.11
Co., Ltd.
Electrolux (China) Electric Co., Ltd. 100,000.00 11.78 500.00
Shanghai Branch
Suning Procurement Center of 20,418.08 2.41 20,418.08
Suning.Com Group Co., Ltd.
Peiqi Industry (Shanghai) Co., Ltd. 11,653.00 1.37 58.27
Total 843,625.38 99.41 45,636.67
13.2 Other Receivables
13.2.1 Other receivables by category
Items 31 December 2021 31 December 2020
Interest receivable
Dividend receivable
Other receivables 3,982,081.71 3,311,425.63
Total 3,982,081.71 3,311,425.63
13.2.2 Interest receivable
None.
13.2.3 Dividends receivable
None.
233
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
13.2.4 Other Receivables
13.2.4.1 Other receivables by aging
Aging 31 December 2021 31 December 2020
Within 1 year 3,953,247.20 3,235,576.23
Including: 1 – 90 days 3,899,828.90 3,135,074.23
91 – 180 days 7,300.00 38,800.00
181 – 270 days 13,118.30 52,902.00
271 – 365 days 33,000.00 8,800.00
1-2 years 80,502.00
2-3 years 102,300.00
Over 3 years 50,000.00
Subtotal 4,083,749.20 3,337,876.23
Less: Provision for bad debt 101,667.49 26,450.60
Total 3,982,081.71 3,311,425.63
13.2.4.2 Other receivables by nature
Nature 31 December 2021 31 December 2020
Deposit 50,000.00 100,000.00
Due from related parties 2,859,918.55 2,809,136.68
Other open credits 1,173,830.65 428,739.55
Subtotal 4,083,749.20 3,337,876.23
Less: Provisions for bad debt 101,667.49 26,450.60
Total 3,982,081.71 3,311,425.63
13.2.4.3 Other receivables by bad debt provision method
A. As at 31 December 2021, provision for bad debt recognised based on three stages model:
Stages Book balance Provision for bad debt Carrying acount
Stage 1 4,083,749.20 101,667.49 3,982,081.71
Stage 2
Stage 3
Total 4,083,749.20 101,667.49 3,982,081.71
234
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
As at 31 December 2021, provision for bad debt at stage 1:
Provision Provision for Carrying
Category Book balance Reason
ratio (%) bad debt amount
Provision for bad debt
recognised individually
Provision for bad debt
4,083,749.20 2.49 101,667.49 3,982,081.71
recognised collectively
Deposit 50,000.00 50,000.00
Due from related parties 2,859,918.55 2,859,918.55
Other open credits 1,173,830.65 8.66 101,667.49 1,072,163.16
Total 4,083,749.20 2.49 101,667.49 3,982,081.71
B. As of 31 December 2020, provision for bad debt recognised based on three stages model:
Stages Book balance Provision for bad debt Carrying amount
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 at 31 December 2020, provision for bad debt at stage 1:
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
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
Basis for the amount of bad debt provisions for the current period:
Refer to Note 3.9 for the recognition criteria and description of the bad debt provisions based
on groups.
235
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
13.2.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
12-month Lifetime expected Lifetime expected
Provision for loss allowance Total
expected credit credit losses (not credit losses
losses credit-impaired) (credit-impaired)
Balance at 1 January 2021 26,450.60 26,450.60
Balance at 1 January 2021
recognised in the reporting — — — —
period
Transfer to stage 2
Transfer to stage 3
Transfer back to stage 2
Transfer back to stage 1
Provision 75,216.89 75,216.89
Recovery
Reversal
Write-off
Other changes
Balance on 31 December 2021 101,667.49 101,667.49
13.2.4.5 Other receivables write-off during the reporting period
Balance as of Proportion of the
Provision
Entity name Nature 31 December Aging balance to the total
for bad debt
2021 other receivables (%)
TsannKuen (Zhangzhou) Open
2,859,918.55 Within 90 days 70.03
Enterprise Co., Ltd.(TKL) credits
Ningbo Intermediate People's
Litigation 60,600.00 Within 2 years 1.48 35,300.00
Court
TsannKuen Electric Flagship Open
60,000.00 Within 90 days 1.47
Store credits
HARRIS｜BRICKEN｜
Litigation 52,902.00 1 – 2 years 1.30 52,902.00
MCVAYSLIWOSKI,LLP
Xiamen TsannKuen Flagship
Deposit 50,000.00 Over 3 years 1.22
Store Alipay
Total 3,083,420.55 75.50 88,202.00
236
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
13.3 Long-term Equity Investments
31 December 2021 31 December 2020
Items Provision for Provision for
Book balance Book value Book balance Book value
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
Provision for Provision for
Increase during the Decrease during the
Investees 31 December 2020 31 December 2021 impairment during impairment at 31
reporting period reporting period
the reporting period December 2021
TsannKuen (Zhangzhou) Enterprise
921,914,701.56 921,914,701.56
Co., Ltd.(TKL)
Xiamen Tsannkuen Property
1,500,000.00 1,500,000.00
Services Co., Ltd. (TKW)
Total 923,414,701.56 923,414,701.56
237
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
13.4 Revenue and Cost of Sales
2021 2020
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 8,384,224.17 6,417,190.60 22,770,398.92 19,877,092.68
Other activities 44,533,525.13 31,261,674.76 46,113,339.71 31,967,107.21
Total 52,917,749.30 37,678,865.36 68,883,738.63 51,844,199.89
13.5 Investment Income
Items 2021 2020
Investment income from long-term equity investments
114,819,496.58 79,185,554.77
under cost method
Total 114,819,496.58 79,185,554.77
14. SUPPLEMENTARY INFORMATION
14.1 Extraordinary Gains or Losses
Items 2021 2020 Description
Losses on disposal of non-current assets 2,101,750.59 195,318.03
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 to
4,786,030.51 6,241,497.95
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
238
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items 2021 2020 Description
Provision for impairment of each asset due to force
majeure such as a natural disaster
Gains /(losses) on debt restructuring
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
48,392,884.92 61,211,756.54
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
239
2021 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Items 2021 2020 Description
Custody fee income from entrusted operations
Other non-operating income/expenses except for items
4,876,463.40 4,668,961.96
mentioned above
Other extraordinary gains/(losses) defined
Total extraordinary gains/(losses) 60,157,129.42 72,317,534.48
Less: tax effect 10,199,627.23 11,395,313.47
Net extraordinary gains/(losses) 49,957,502.19 60,922,221.01
Less: net extraordinary gains/(losses) attributable to
14,347,148.91 16,086,116.54
non-controlling interest
Net extraordinary gains/(losses) attributable to ordinary
35,610,353.28 44,836,104.47
shareholders
14.2 Return on Net Assets and Earnings Per Share (EPS)
14.2.1 2021
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders 13.47 0.66 0.66
Net profit attributable to ordinary shareholders
9.54 0.47 0.47
after extraordinary gains and losses
14.2.2 2020
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders 17.34 0.75 0.75
Net profit attributable to ordinary shareholders
11.76 0.51 0.51
after extraordinary gains and 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.
Name of the Company: TsannKuen (China) Enterprise Co., Ltd.
Date: 12 March 2022
240
