2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2022 ANNUAL REPORT
March 2023
1
2022 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 RMB3.0 (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
2022 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 .............................................................................................. 29
Section V Environmental & Social Responsibility..................................................................... 50
Section VI. Significant Events .................................................................................................... 50
Section VII. Change in Shares & Shareholders .......................................................................... 60
Section VIII. Preference Shares .................................................................................................. 65
Section IX. Bonds ....................................................................................................................... 65
Section X. Financial Report ........................................................................................................ 65
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
2022 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
2022 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
English TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
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
III. About information disclosure and where this Report is placed
Stock exchange website where this Report is disclosed Securities Times (domestic)
Media and website where this Report is disclosed www.cninfo.com.cn
TSANN KUEN Industrial Park, Taiwanese
Where this Report is placed
Investment Zone, Zhangzhou, Fujian
5
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 CPA LLP
901-22 to 901-26, Tower 1-Wai Jing Mao Building, 22 Fuchengmen Wai
Office address Street, Xicheng District, Beijing, China
Signing CPAs Wu Xiaolei, Guo Chunlin, Li Chunyuan
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
Increase/decrease of
2022 2021 current year over 2020
last year (%)
Operating revenue (RMB Yuan) 1,584,267,529.08 2,347,280,300.56 -32.51 2,144,181,738.33
Net profit attributable to shareholders 94,283,302.93 122,249,955.82 -22.88 139,522,190.75
of the Company (RMB Yuan)
Net profit attributable to shareholders
of the Company before extraordinary 73,172,417.28 86,639,602.54 -15.54 94,686,086.28
gains and losses (RMB Yuan)
Net cash flows from operating
activities (RMB Yuan) 164,775,609.26 148,525,571.88 10.94 315,271,083.24
Basic EPS (RMB Yuan/share) 0.51 0.66 -22.73 0.75
Diluted EPS (RMB Yuan/share) 0.51 0.66 -22.73 0.75
Weighted average ROE (%) 9.46 13.47 -4.01 17.34
Increase/decrease of
As at 31 Dec. 2022 As at 31 Dec. 2021 current year-end As at 31 Dec. 2020
than last year-end
(%)
Total assets (RMB Yuan) 2,607,540,908.00 2,785,902,354.47 -6.40 2,408,046,446.78
6
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Net assets attributable to shareholders
of the Company (RMB Yuan) 1,040,523,297.91 956,326,734.42 8.80 864,030,127.11
The lower of the company's net profit before and after extraordinary gains and losses in the last three fiscal years
was negative, and the audit report of the last year shows that the company's ability to continue as a going concern
is uncertain
Yes No
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
this Report (share) 185,391,680
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) 0.51
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
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenue 428,568,462.60 439,723,790.76 405,227,088.15 310,748,187.57
Net profit attributable to shareholders of the 12,759,686.99 26,869,586.61 27,985,838.30 26,668,191.03
Company
7
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Q1 Q2 Q3 Q4
Net profit attributable to shareholders of the
Company before extraordinary gains and 3,456,701.69 25,934,963.76 24,602,410.77 19,178,341.06
losses
Net cash flows from operating activities 15,190,356.22 38,238,560.50 -7,543,998.34 118,890,690.88
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 2022 2021 2020 Note
Gain/loss on the disposal of non-current assets
(including the offset part of the asset impairment 730,715.85 2,101,750.59 195,318.03
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 certain quotas or 7,993,459.91 4,786,030.51 6,241,497.95
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
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
8
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2022 2021 2020 Note
Company’s normal business
Mainly gains
on forward
forex contracts
sold, gains on
Gains and losses on change in fair value from tradable
changes in fair
financial assets and tradable financial liabilities, as well
value and
as investment income from disposal of tradable
24,698,675.41 48,392,884.92 61,211,756.54 income from
financial assets and tradable financial liabilities and
investments in
financial assets available for sales except for effective
financial
hedging related with normal businesses of the Company
products,
accrued
interest for
time deposits
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
3,068,167.50 4,876,463.40 4,668,961.96
above
Other gain and loss items that meet the definition of an
5,901.34
extraordinary gain/loss
Less: Income tax effects 6,436,822.09 10,199,627.23 11,395,313.47
Minority interests effects (after tax) 8,949,212.27 14,347,148.91 16,086,116.54
Total 21,110,885.65 35,610,353.28 44,836,104.47
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
2022 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
In 2022, the post COVID-19 epidemic period, together with the situation of the war between Russia and
Ukraine, has had a huge impact on the global economy. The high prices of industrial raw materials, the
currency exchange rate fluctuations, and the turbulence in the global shipping markets has brought many
uncertainties to the development of enterprises, slowing down the rapid development of the home appliance
industry. The company adheres to the development strategy of "innovative design, specialized manufacturing,
smart home appliances, international brand", focuses on the investment in professional design and
specialized manufacturing. On the basis of expanding the global small home appliance market, the company
increases the expansion of the domestic market in China, adheres to the close interaction and strategic
cooperation with customers and innovative research and development, so that to enhance product value
through innovation to meet customers’ needs, create new market demand and face the industry competition.
II. Main business during the reporting period
Developing, manufacturing household appliances, electronics, light industr ial 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.
The company has been adhering to the corporate culture of research and development, established a
professional research and development technology service system, deepened the product platform of
professional design on the basis of 45 years of small home appliance design and manufacturing, and created
10
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
market value with the global brands and customers; adhere on close interaction and strategic cooperation
with customers and innovative research and development, so that to enhance the product value from
innovation to meet customers' needs, create new market demand and face the industry competition.
The company adheres to the two development routes of innovation research and development and
technology application, the double cycle strategy of global market and Chinese domestic market. On the
basis of expanding the global international market, the company increases the development of the domestic
market in China.
The product focuses on the research and development direction of product function, smart home appliance
and the application of scene IOT technology, providing high added value of solid function, intelligent
operation, green energy saving. The company creates new market demand and faces the industry competition
around the products of appearance level, quality and value.
In the reporting period, the Company obtained 43 patents in R&D, including 29 invention patents, 10 utility
model patents and 4 design patents. The acquisition of patents will help improve the protection of 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, the operating revenue of the Company amounted to RMB1,584 million, decreasing
32.51% from last year; the profit before tax of the Company amounted to RMB139 million, decreasing
24.53% from last year; the net profit attributable to shareholders of the Company amounted to
RMB94.2833 million, decreasing 22.88% from last year; and the basic earnings per share of the Company is
RMB0.51, RMB0.15 lower than that of last year.
The main reason for the change in the above indicators is the recession of the global consumer market, the
lack of purchasing power, and the unsatisfactory consumption of customer inventory. Orders have gradually
fallen since the first half of the year. Under the general downturn of the consumption environment, the
company will continue to expand the momentum of order receiving to increase revenue and profit through
close interaction with customers and innovative research and development.
11
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2022 2021
Item In total operating In total operating +/-%
Amount Amount
revenues (%) revenues (%)
By segments
Small home
appliance 1,500,156,144.12 94.69 2,267,468,882.08 96.60 -33.84
manufacturing
Other services 84,111,384.96 5.31 79,811,418.48 3.40 5.39
Total 1,584,267,529.08 100.00 2,347,280,300.56 100.00 -32.51
By products
Cooking utensils 944,835,478.47 59.64 1,593,009,945.48 67.87 -40.69
Everyday home
366,208,675.06 23.12 453,992,911.28 19.34 -19.34
appliances
Tea and coffee
169,414,501.98 10.69 207,555,003.70 8.84 -18.38
makers
Other products 19,697,488.61 1.24 12,911,021.62 0.55 52.56
Other services 84,111,384.96 5.31 79,811,418.48 3.40 5.39
Total 1,584,267,529.08 100.00 2,347,280,300.56 100.00 -32.51
By areas
Australia 36,160,110.01 2.28 72,781,067.49 3.10 -50.32
Africa 35,772,966.67 2.26 17,004,158.12 0.72 110.38
America 622,677,921.09 39.30 1,212,559,936.12 51.66 -48.65
Europe 419,003,051.04 26.45 535,993,134.94 22.84 -21.83
Asia 470,653,480.27 29.71 508,942,003.89 21.68 -7.52
Total 1,584,267,529.08 100.00 2,347,280,300.56 100.00 -32.51
(2) Segments, products or areas contributing over 10% of operating revenues or profit
Applicable Inapplicable
Unit: RMB Yuan
Operating
Cost of sales: Gross profit
Gross profit revenue:
Item Operating revenue Cost of sales +/-% from last margin: +/-%
margin (%) +/-% from
year from last year
last year
By segments
Small home
appliance 1,500,156,144.12 1,280,524,186.68 14.64 -33.84 -35.62 2.36
manufacturing
12
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Operating
Cost of sales: Gross profit
Gross profit revenue:
Item Operating revenue Cost of sales +/-% from last margin: +/-%
margin (%) +/-% from
year from last year
last year
Other services 84,111,384.96 25,490,844.72 69.69 5.39 -3.21 2.69
Total 1,584,267,529.08 1,306,015,031.40 17.56 -32.51 -35.20 3.42
By products
Cooking utensils 944,835,478.47 808,741,287.29 14.40 -40.69 -41.70 1.48
Everyday home
366,208,675.06 319,155,173.77 12.85 -19.34 -22.72 3.82
appliances
Tea and Coffee
169,414,501.98 140,499,683.64 17.07 -18.38 -22.41 4.32
makers
Other products 19,697,488.61 12,128,041.98 38.43 52.56 54.65 -0.83
Other services 84,111,384.96 25,490,844.72 69.69 5.39 -3.21 2.69
Total 1,584,267,529.08 1,306,015,031.40 17.56 -32.51 -35.20 3.42
By areas
Australia 36,160,110.01 30,347,478.22 16.07 -50.32 -51.19 1.50
Africa 35,772,966.67 28,464,470.69 20.43 110.38 96.30 5.70
America 622,677,921.09 537,370,246.55 13.70 -48.65 -49.45 1.36
Europe 419,003,051.04 349,905,513.15 16.49 -21.83 -25.87 4.55
Asia 470,653,480.27 359,927,322.79 23.53 -7.52 -10.86 2.87
Total 1,584,267,529.08 1,306,015,031.40 17.56 -32.51 -35.20 3.42
In the event that the statistical caliber of the Company's main business data is adjusted during the reporting period,
the Company's main business data for the latest 1 year is adjusted to the caliber at the end of the reporting period
Applicable Inapplicable
(3) Are the Company’s goods selling revenue higher than the service revenue?
Yes No
Segment Item Unit 2022 2021 YoY +/-%
Small home appliance Sales volume Unit 15,716,824 28,765,567 -45.36
manufacturing Output Unit 15,977,286 27,666,083 -42.25
Reasons for any over-30% YoY movement of the data above:
Applicable Inapplicable
The 45.36% decrease in sales volume and 42.25% decrease in production volume compared to the same period
were mainly due to the decrease in orders during the period.
13
2022 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
2022 2021
Segment Item YoY
In total cost of In total cost of +/-%
Amount sales (%) Amount sales (%)
Raw materials 901,964,809.18 69.06 1,426,141,784.42 70.76 -36.75
Third-party 155,970,727.76 11.95 258,607,931.55 12.83 -39.69
processing
Small home Labor cost 102,620,452.58 7.86 147,780,952.25 7.33 -30.56
appliance
manufacturing Manufacturing 56,709,145.31 4.34 79,140,555.95 3.93 -28.34
expenses
Transportation 14,422,508.75 1.10 32,107,163.63 1.59 -55.08
cost
Other 48,836,543.10 3.74 45,315,411.61 2.25 7.77
Other Other 25,490,844.72 1.95 26,336,497.02 1.31 -3.21
Total 1,306,015,031.40 100.00 2,015,430,296.43 100.00 -35.20
(6) Whether there were changes of the consolidation scope during the reporting period
Yes No
In March 2022, the Company cancelled its subsidiary Shanghai Canxing Trading Co. Ltd., which was no longer
included in the scope of consolidated financial statements from the date of cancellation.
In July 2022, the Company cancelled its subsidiary Zhangzhou Tsann Kuen Nangang Electric Co. Ltd., which was
no longer included in the scope of consolidated financial statements from the date of cancellation.
(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) 1,023,761,601.30
Ratio of the total sales of the top 5 customers to the annual total sales (%) 68.24
Ratio of the total sales of related parties among the top 5 customers to the annual total sales (%) 0.00
14
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Information of the top 5 customers of the Company
Serial No. Name of customer Sales amount (RMB Yuan) Proportion in annual total sales (%)
1 1 282,213,419.32 18.81
2 2 253,985,117.27 16.93
3 3 190,964,290.44 12.73
4 4 165,041,909.12 11.00
5 5 131,556,865.15 8.77
Total 1,023,761,601.30 68.24
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) 145,818,380.99
Ratio of the total purchase from the top 5 suppliers to the annual total purchase (%) 14.70
Ratio of the total purchase from related parties among the top 5 suppliers to the annual total
2.57
purchase (%)
Information of the top 5 suppliers of the Company
No. Name of supplier Purchase amount (RMB Ratio to the annual purchase
Yuan) amount (%)
1 1 48,044,102.99 4.85
2 2 25,922,302.26 2.61
3 3 25,501,621.08 2.57
4 4 23,827,662.47 2.40
5 5 22,522,692.19 2.27
Total 145,818,380.99 14.70
Notes of the other situation of the major suppliers
Applicable Inapplicable
3. Expenses
Unit: RMB Yuan
Item 2022 2021 YoY +/- (%) Notes of the significant changes
Selling expenses 22,718,269.59 21,045,003.77 7.95
Administrative
expenses 71,930,327.01 73,921,676.82 -2.69
Mainly as a result of gain on foreign exchange
Finance costs 390,110.88 30,632,346.78 -98.73 in the period.
R&D expenses 61,922,089.98 64,037,360.74 -3.30
15
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. R&D investment
Applicable Inapplicable
Progress Expected impact on
Major R&D Objectives to be
Purpose of the project of the the company's
project name achieved
project future development
Develop products that meet the
requirements of smart home and Expand market Expand market
Innovative
low-carbon environmental protection, and share, improve share, improve
research and ongoing
develop personal life and healthy company revenue company revenue
development
disinfection and sterilization products for and profit and profit
the prevalence of COVID-19
R&D personnel of the Company
2022 2021 +/- (%)
Number of the R&D personnel (person) 341 372 -8.33
Ratio to the R&D personnel (%) 10.79 10.39 0.40
Educational background of the R&D personnel
Doctor - - -
Master 2 7 -71.43
Bachelor 69 78 -11.54
College graduates 120 117 2.56
Below college 150 170 -11.76
Age structure of the R&D personnel
Below 30 114 110 3.64
30~40 105 145 -27.59
Above 40 122 117 4.27
R&D investment of the Company
2022 2021 +/- (%)
Investment amount of the R&D (RMB Yuan) 61,922,089.98 64,037,360.74 -3.30
Ratio of the R&D investment to the operating revenue (%) 3.91 2.73 1.18
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
16
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
revenue
Applicable Inapplicable
Explanation of the reasons for the significant change in the capitalization rate of R&D investment and its
reasonableness
Applicable Inapplicable
5. Cash flow
Unit: RMB Yuan
Item 2022 2021 +/- (%)
Subtotal of cash inflows from operating activities 1,909,382,845.61 2,710,559,994.89 -29.56
Subtotal of Cash outflows for operating activities 1,744,607,236.35 2,562,034,423.01 -31.91
Net cash flows from operating activities 164,775,609.26 148,525,571.88 10.94
Subtotal of cash inflows from investing activities 1,184,676,439.46 1,134,254,708.37 4.45
Subtotal of cash outflows from investing activities 1,473,142,410.58 1,095,898,953.14 34.42
Net cash flows from investing activities -288,465,971.12 38,355,755.23 -852.08
Subtotal of cash inflows from financing activities 223,150,697.05 160,367,803.06 39.15
Subtotal of cash outflows from financing activities 301,304,952.16 247,309,107.89 21.83
Net cash flows from financing activities -78,154,255.11 -86,941,304.83 -10.11
Net increase of cash and cash equivalents -195,339,519.76 98,049,966.90 -299.22
Notes of the major effects on the YoY significant changes occurred of the data above
Applicable Inapplicable
Net cash flow from investment activities: mainly due to the increase in investment in financial products and fixed
deposits 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
17
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Ratio to the total Recurring or
Amount Notes of the causes
profits amount (%) not
Income from settled forward forex
Investment income 25,925,914.30 18.64 contracts and financial products, as well as Not
accrued interest on term deposits
Gain from changes in
-1,227,238.89 -0.88 Assessed losses on forward forex contracts Not
fair value
Loss on credit Withdrawal or reversal of impairment
1,883,894.53 1.35 Not
impairment allowances for accounts receivable
Loss on asset Increase in inventory valuation allowances
-12,371,666.30 -8.89 Not
impairment and fixed asset impairment allowances
Gain on disposal of
742,730.95 0.53 Income from disposal of fixed assets Not
assets
Receipt of compensation for patent
infringement, compensation from customer
Non-operating income 3,161,103.92 2.27 for cancellation of order, and overdue Not
payments that the Company no longer
needs to pay
This is mainly due to the donation and the
transfer of other current assets (input tax to
Non-operating
104,951.52 0.08 be deducted) to non-operating expense due Not
expenses
to the cancellation of the subsidiary
Nangang Electric.
VI. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
31 December 2022 1 January 2022
As a As a Change in
Item percentage percentage percentage Reason for any significant change
Amount Amount (%)
of total of total
assets (%) assets (%)
Cash and cash
576,867,829.77 22.12 779,404,127.58 27.98 -5.86
equivalents
Held-for-trading
569,493,788.89 21.84 420,721,027.78 15.10 6.74 Increase in financial products
financial assets
Mainly due to a decrease in revenue
Accounts receivable 95,950,882.88 3.68 258,128,493.77 9.27 -5.59 resulting to a decrease in accounts
receivable during the period.
Contract assets
Inventories 180,065,428.49 6.91 252,434,003.44 9.06 -2.15
Non-current assets
Increase in debt investments maturing
maturing within one 0.00 0.00 21,845,333.33 0.78 -0.78
within one year transferred to this item
year
Increase in principals of term deposits
Other current assets 428,851,919.37 16.45 266,300,137.82 9.56 6.89
maturing within one year
18
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31 December 2022 1 January 2022
As a As a Change in
Item percentage percentage percentage Reason for any significant change
Amount Amount (%)
of total of total
assets (%) assets (%)
Investment
19,148,198.30 0.73 20,380,947.36 0.73 0.00
properties
Long-term equity
investments
Fixed assets 147,946,111.81 5.67 151,647,083.48 5.44 0.23
This is mainly due to the
reclassification of the contracted
Construction in
2,656,954.05 0.10 1,102,833.08 0.04 0.06 equipment in other non-current assets
progress
to the construction in progress in the
current period.
Use rights assets 525,637,136.84 20.16 543,070,792.39 19.49 0.67
This is mainly due to the
reclassification of the contracted
Other non-current
813,512.56 0.03 1,603,759.82 0.06 -0.03 equipment account in other non-current
assets
assets to the construction in progress
account in the current period.
Short-term
borrowings
Mainly due to the decrease in purchases
Notes payable 2,630,056.46 0.10 7,709,123.54 0.28 -0.18 resulting to the decrease of banker's
acceptances issued during the period.
Mainly due to a decrease in purchases
Account payable 398,955,150.23 15.30 637,575,276.70 22.89 -7.59 resulting to a decrease in accounts
payable during the period.
Contract liabilities 21,522,608.04 0.83 24,030,988.10 0.86 -0.03
Long-term
borrowings
Lease liabilities 534,850,528.45 20.51 542,514,317.35 19.47 1.04
Long-term
Mainly due to the cancellation of a
employee
0.00 0.00 350,926.82 0.01 -0.01 subsidiary Tsann Kuen Intelligence Co.
compensation
during the period.
payable
This is mainly due to the increase in
Expected liabilities 480,930.00 0.02 0.00 0.00 0.02
pending litigation during the period.
Overseas assets account for a higher percentage:
Applicable Inapplicable
19
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Measures In the Any major
Asset Nature Value Location Operation taken to Earnings Company’ impairment risk
status protect asset s net assets or not
safety (%)
Provision for
Small impairment of
home long term equity
SCI Investment 169,056,544.38 Indonesia appliance Periodic -6,798,839.94 16.25 investment has
manufactu review been made for a
ring significant
amount of loss in
FY2022.
1) East Sino established an impairment allowance of HKD40,550,120 for the long-term equity investment in SCI in 2022.
Other
informati 2) TKL established impairment allowances of RMB36,222,205.69 in total for the long-term equity investments in East Sino in
on 2022.
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 416,569,027.78 1,785,861.11 550,000,000.00 400,000,000.00 568,354,888.89
derivative
financial assets)
2. Derivative
4,152,000.00 -3,013,100.00 1,138,900.00
financial assets
3. Other debt
investments
4. Other equity
instrument
investments
Subtotal of
420,721,027.78 -1,227,238.89 550,000,000.00 400,000,000.00 569,493,788.89
financial assets
Investment
properties
Productive
20
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
biological assets
Others
Total of the above
Financial
420,721,027.78 -1,227,238.89 550,000,000.00 400,000,000.00 569,493,788.89
liabilities
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, RMB1,356,175.95 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)
0.00 38,879,586.00 -100.00
2. Significant equity investments made in this reporting period
Applicable Inapplicable
3. Significant non-equity investments ongoing in this reporting period
Applicable Inapplicable
4. Financial investments
(1) Securities investments
Applicable Inapplicable
21
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
Applicable Inapplicable
1) Investments in derivatives for hedging purposes during the reporting period
Applicable Inapplicable
Unit: RMB’0,000
Types of Derivatives Initial Gains or losses on Accumulated fair Amount acquired Amount sold Amount at Investment amount as a percentage of the
Investments investment changes in fair value value changes during the during the end of period company's net assets at the end of the
amount during the period included in reporting period reporting period reporting period (%)
equity
Forward foreign exchange 71,933.12 -301.31 46,647.55 65,571.56 6,361.56 6.11
Total 71,933.12 -301.31 46,647.55 65,571.56 6,361.56 6.11
A description of the accounting policies
and specific principles of accounting for
hedging operations during the reporting There were no significant changes in the Company's accounting policies and specific principles of accounting for derivatives in the reporting
period, and whether there have been any period compared to the previous reporting period.
significant changes from the previous
reporting period
Actual profit or loss for the reporting The loss on the delivered portion of the investment derivatives for the reporting period was RMB4,069.3 thousand and the assessed loss on the
period undelivered portion was RMB3,013.1 thousand, of which the assessed gain on the undelivered forward exchange of the investment derivatives for
the previous year was RMB4,152 thousand.
Illustration of hedging effectiveness In 2022, the exchange rate of RMB against the US dollar fluctuated sharply and derivative investments for hedging purposes were made during the
reporting period to reduce the impact of exchange rate fluctuations on the Company's assets, liabilities and profit.
Sources of funding for derivative
Own funds
investments
22
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Risk analysis of derivative positions and 1. Risk analysis of derivative positions: exchange gains or losses arising from the difference between the contracted exchange rate on the delivery
description of control measures for the date and the market rate on the delivery date.
reporting period (including but not limited
2. Control measures.
to market risk, liquidity risk, credit risk,
operational risk, legal risk, etc.) (1) Principles: The Company's financial derivative operations are all for hedging purposes and it is not allowed to engage in non-hedging
transactional operations; the Company shall not engage in complex derivative transactions beyond the actual needs of its operations and shall not
engage in derivative speculation under the pretext of hedging; the total amount of the Company's overall hedging contracts shall not exceed the net
exposure of existing assets and liabilities plus the net exposure of the Company's assets and liabilities arising from its operations in the coming
year.
(2) Job requirements: Personnel involved in investments should fully understand the risks of derivative investments and strictly implement the
business operation and risk management system for derivative investments.
(3) Operational norms: Before the company carries out derivative investments, it should be reasonably equipped with professional personnel in
investment decision-making, business operation and risk control, and should compare and request quotations between multiple markets and
multiple products. The company should strictly control the types and scale of derivative investments and use OTC-traded derivatives as far as
possible.
(4) Regular evaluation: Derivative investments shall be evaluated at least twice a month and the evaluation report shall be sent to the senior
management authorized by the Board of Directors. A report on the status of the Company's financial derivative investment transactions must be
submitted to the Board of Directors once a year. Each subsidiary of the Company is only required to report to the Board of Directors of that
subsidiary.
(5) Stop Loss Point: The maximum loss limit of a single derivative investment and the maximum loss limit of all investments shall not exceed
20% of the total amount of the investment.
(6) Audit system: The audit department of the Company shall audit derivative transactions on a regular basis and prepare reports and hand in to the
relevant units.
Changes in the market price of the invested (1) The impact loss on the delivered portion of the investment derivatives for the reporting period was RMB4,069.3 thousand and the assessed loss
derivative or the fair value of the product on the undelivered portion was RMB3,013.1 thousand, of which the assessed gain on the undelivered forward exchange of the investment
during the reporting period, and the derivatives for the previous year was RMB4,152 thousand.
analysis of the fair value of the derivative
(2) The original contracted banks provided bank estimates of the current exchange rate of the contracted outstanding forward exchange settlement
23
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
should disclose the specific methodology transactions on the last trading day of each month.
used and the setting of relevant
(3) Gains or losses on changes in fair value are recognized on the basis of the difference between the contracted amount outstanding as at the end
assumptions and parameters
of the month * the exchange rate in the estimation table.
Litigation involved N/A
Date of Disclosure of Board
Announcement for Approval of Derivative 2022-3-15
Investments
Date of disclosure of announcement of
shareholders' meeting for approval of 2022-5-14
derivative investments
Special Opinion of Independent Directors The Company has conducted rigorous internal assessments for its financial derivatives business and established corresponding regulatory
on the Company's Derivative Investments mechanisms. We are of the view that the financial derivatives business conducted by the Company is closely related to its daily operation needs,
and Risk Control with controllable risks and in compliance with the relevant provisions of the relevant laws and regulations.
(2) Derivative investments for speculative purposes during the reporting period
Applicable Inapplicable
24
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Use of funds raised
Applicable Inapplicable
VIII. Sale of major assets and equity interests
1. Sale of major assets
Applicable Inapplicable
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
Relationshi Main
Compan Registere Operating Operating
p with the business Total assets Net assets Net profits
y name d capital revenues profits
Company scope
Small home
appliance USD160 2,410,380,240.6 1,373,132,760.7 1,422,956,876.6 88,647,422.7 86,245,437.7
TKL Subsidiary
manufacturin million 7 5 6 7 6
g
Subsidiaries obtained or disposed in this reporting period
Applicable Inapplicable
Name of company Mode of acquisition and disposal of Impact on overall production
subsidiaries during the reporting period operations and results
Shanghai Canxing Trading Co., Cancelled The impact on the net profit of the
Ltd. listed company for the reporting period
was RMB-3,571.65 Yuan.
Tsann Kuen (Zhangzhou) South Cancelled The impact on the net profit of the
Port Electronics Enterprise Co., listed company for the reporting period
Ltd. was RMB44,644.93 Yuan.
25
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
X. Structured bodies controlled by the Company
Applicable Inapplicable
XI. Outlook of the Company’s future development
A. Future Development Strategy
(1) Strategic upgrading of major clients and expansion of new clients
On the basis of integrating the three core systems of commodity marketing, sales and R&D, establishing a
professional R&D technical service system, precipitating forty-five years of small household appliance design and
manufacturing, deepening the product platform of professional design, provide structured solutions for customers
from a commodity marketing perspective in various regions of the world in terms of consumption habits and
culture. The core strategy of the enterprise is to cooperate closely with customers, create a competitive advantage
in product value, and launch products that meet the market needs of customers.
In terms of customer market management, we focus resource on strategic customer cooperation and investment,
take customer market as the investment orientation, and invest effective resources on strategic customers in line
with our future development, forming a mutually beneficial and win-win business partner.
(2) Expansion of Tsann Kuen EPA brand management in the Chinese market
Enhance product references for intelligent control (AI/face recognition/voice control), scene IOT technology, 5G
technology to meet people's needs for quality of life, launch convenient and smart home appliance product series,
establish independent R&D system for domestic sales products, focus on brand strategy and investment in the
development of smart home appliances.
China market development: establish independent R&D system for domestic sales products, online and offline
marketing channels, OBM and ODM product differentiation to jointly promote development, focus on new
consumer groups, new channels, new customer expansion, and consumer-centric brand building strategies.
Tsann Kuen EPA: Professional, value, premium, quality.
(3) Integrating QCDH Precision Manufacturing and Supply Chain Systems
The company integrates the management mode of the division of precision manufacturing with the combination of
customer area and product line, while focusing on the core parts of precision manufacturing investment, deep
ploughing product technology and production process technology, focus and focus on professional manufacturing
to win the recognition and satisfaction of customers and consumers. The company adopts a large data system to
upgrade management, introduce new raw materials, new technology and technology, lean manufacturing
equipment, improve production and manufacturing space to improve production yields and production efficiency,
to achieve specialized manufacturing production, drive the park supply chain manufacturing capacity and
supporting capacity upgrade and transformation; at the same time, cultivate the supply chain strategic cooperation
ecosystem, to achieve accurate supply and demand docking, efficient organizational synergy, and IT system
26
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
support.
(4) Expanding Tsann Kuen Group's domestic and international business development with innovative
design and specialized manufacturing based on small home appliances as its core business
With the global supply chain system fission and reorganization, the company steadily grasp to 45 years of small
home appliances innovation design and specialized manufacturing as the industry, vigorously developed the
business architecture of Xiamen Huli and Shanghai Jiading, providing strong commercial platform support for the
Chinese market, and at the same time, formed the Tsann Kuen business development model by taking advantage
of the local development advantages of Xiamen Huli and Shanghai Jiading, and further developed Tsann Kuen
overseas manufacturing base in Indonesia, accelerated the integration of supply chain and independent market of
Indonesia manufacturing base, fully utilized the advantage of regional cooperation of "One Belt One Road"
strategy, seized the development opportunity of overseas market, constructed and improved the mode of mutual
promotion of domestic and international manufacturing and commercial development of Tsann Kuen Group.
B. Key risk factors for future development
(1) International aspects
The international environment for the home appliance industry has become more complex due to the fracturing
and restructuring of the global supply chain system, the out-of-control war between Russia and Ukraine, the rise
of international trade protectionism, and the intensification of tariff and non-tariff barriers such as technical
standards, intellectual property rights protection and anti-dumping barriers.
Due to the slow recovery of the international economy, increasing exchange rate fluctuations, rising domestic
comprehensive costs, global inflationary pressures that are difficult to alleviate in the short term, and declining
consumption power in international market demand, the industry will be exposed to the risk that sales revenue will
not be as high as expected due to the decline in international market demand.
(2) Domestic aspects
The increasing cost of domestic labor, coupled with the age structure of the manufacturing workforce, and the
shift of human resources to the manufacturing sector, has affected the complete inheritance structure and upgrade
development of manufacturing capabilities, exacerbated the fracturing of the global supply chain and weakened
the dominant position of Chinese manufacturing and reduced competitiveness in the international market. The
company to promote the specialized automated manufacturing system, drive the supply chain supporting upgrade,
and constantly improve the production and manufacturing operating environment, promote the talent training and
retention policy and strengthen the corporate culture construction, the construction of the core organization talent
force structure construction. At the same time, the company will further develop the overseas manufacturing base
of Tsann Kuen Indonesia, accelerate the integration of the supply chain and independent market of the Indonesian
manufacturing base, and fully utilize the advantage of regional cooperation in the "Belt and Road" strategy to
seize the development opportunities in overseas markets.
(3) Exchange rate fluctuation
27
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The volatility of the RMB exchange rate is exacerbated by the volatility and uncertainty of the exchange rates of
major global currencies, as well as the huge liquidity of China's cross-border capital. At present, the company's
products are mainly exported and exchange rate fluctuations have a significant impact on the company's business
activities. The main measures taken are: using financial instruments to hedge exchange rate risks and taking into
full consideration the impact of exchange rate risks when receiving orders, as well as adopting RMB and foreign
currency transactions for purchasing materials to transfer and offset exchange rate risks.
(4) Energy supply structure and environmental protection and low carbon
The Russian-Ukrainian war has brought about changes in the energy supply structure, while the environmental
protection and low-carbon mainstream has affected the direction of the production process and product
development of enterprises, protecting the environment and public health is the development trend that enterprises
must actively respond to; the company has laid out the "green energy-saving and healthy" as the product
development strategy, while continuing to include the lean process in the core objectives of the enterprise, the
introduction of new environmentally friendly materials, investment in automation and environmental protection
process technology to promote the green energy-saving and healthy development of the company's products.
(5) The impact of the COVID-19 pandemic
The epidemic has basically blocked face-to-face international business activities for three years and has had a
huge impact on global economic operations, changes in the global supply chain system, as well as profound
impacts and challenges on people's consumer outlook and spending power, and on business development. The
company's business team organised business activities in the Americas and Europe in the fourth quarter of 2022 to
closely develop customer business cooperation, root in innovative design and specialized manufacturing of small
home appliances, and develop global product sales market expansion together with customers, while increasing
the development of the Chinese market.
C. Industry trends and market outlook
Entering the era of wireless, information and intelligence, smart home appliances have driven the development
and transformation of small household appliances.
(1) Europe and the United States are the main consumer markets of small household appliances, the average
household has a large capacity of small household appliances with relatively short service life. There is a large
demand for replacement. Although affected by the three-year epidemic, and the Russian-Ukraine war, the global
market demand for small household appliances remained stable for a long time. At the same time, with the
economic growth, the improvement of people's living standards and international market environmental standards,
the formation of smart green small household appliances in series, scale, energy conservation and environmental
protection has become the general trend.
(2) China is an important base for the production of small household appliances. With its advantages in labour,
cost, technology and industrial support, etc., China has undertaken the world's major small household appliances
business. Powerful large appliances and international brands have invested in the small home appliance market,
28
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
small home appliance market competition is more intense. The business segment will enter the professional,
systematic and branded operation. In order to compete for more market share, relying on capital advantages and R
& D advantages, it will gradually eliminate a number of small brand enterprises with relatively weak strength,
lack of R & D and cost advantages and market network management advantages.
(3) China's domestic market continues to be positive. China's home appliance industry has entered the era of brand
winning, unlike traditional home appliances, small home appliance sales in China is still in the growth stage, with
the change in consumer attitudes, the listing and popularization of more new products, and the upgrading of the
original products, small home appliances in the domestic market demand will continue to grow, China's small
home appliance industry has a broad market development prospect.
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
13 March The The Company’s operating performance
By phone Individual Mr. Su
2022 Company and dividends.
02 April The The Company’s operating performance
By phone Individual Mr. Su
2022 Company and dividends.
The decline of the Company’s operating
11 July The performance, the Company’s production
By phone Individual Mr. Xu
2022 Company and operation situation, B-share reform,
and dividends.
29
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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
30
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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, Self-Regulatory Guidelines for Listed Companies No. 5 -
Information Disclosure Management, performed responsibilities of information disclosure of the Company
truthfully, accurately, timely and completely, and then guaranteed the equal opportunity of all shareholders of the
Company to gain relevant information of the Company.
6. There isn’t any problem on horizontal competition of the Company
In the reporting period, the Company continuing and strictly in accordance with Company Law, Securities Law,
Basic Standards for Enterprise Internal Control, Supporting Guidelines for Corporate Internal Control as well as
requirements of regulated documents of corporate governance for listed companies published by CSRC, endlessly
accomplished corporate governance structure, actively enforced corporate governance work, and gradually
perfected corporate governance and internal control system, intensified supervision of internal control, promoted
operation efficiency, operation regulation and corporate governance level, endeavor to seek optimized profit and
earnestly protected legal profit of minority shareholders.
Whether there are material differences between the actual state of corporate governance and the provisions on
governance of listed companies issued by laws, administrative regulations and the CSRC
Yes No
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
Meeting Type Investor Convened date Disclosure date Index to meeting
participation ratio resolution
2021 Annual
Meeting of Annual 44.90% 13 May 2022 14 May 2022 www.cninfo.com.cn
Shareholders
31
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
Applicable Inapplicable
32
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
V. Directors, supervisors and executive officers
1. Basic information
Increase Decrease
Restricted Reasons
Opening in this in this Other Closing
Starting date Ending date Stock shares for the
shareholding changes shareholding
Name Office title Incumbent/former Gender Age options granted reporting reporting share
of tenure of tenure (share) (share) (share)
(share) period period changes
(share) (share)
Chairman of
Cai Incumbent Male 66 2021-05-19 2023-04-23 0 0 0 0 0 0 0
the Board &
Yuansong
GM
Incumbent Male 54 2020-04-24 0 0 0 0 0 0 0
Lin Jidian Director
Wang Incumbent Male 54 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Director
Youliang
Cai Incumbent Male 38 2022-5-13 2023-04-23 0 0 0 0 0 0 0
Director
Bingfeng
Ge Independent Incumbent Female 60 2017-04-06 2023-04-23 0 0 0 0 0 0 0
Xiaoping director
Independent Incumbent Male 53 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Liu Luhua
director
Incumbent Male 41 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Wu Yibing Independent
33
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
director
Supervisory
Yang Incumbent Male 58 2020-04-24 2023-04-23 0 0 0 0 0 0 0
Board
Yongquan
chairman
2023-04-23
Ding Incumbent Male 57 2019-10-22 0 0 0 0 0 0 0
Supervisor
Hongming
2023-04-23
Zheng Incumbent Female 47 2016-06-01 0 0 0 0 0 0 0
Supervisor
Caiyun
Financial Incumbent Male 43 2019-03-29 0 0 0 0 0 0 0
Wu Jianhua
Chief
Sun Board Incumbent Female 49 2011-04-23 0 0 0 0 0 0 0
Meimei Secretary
Total -- -- -- -- -- -- --
34
2022 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
Changes in directors, supervisors and executive officers
Applicable Inapplicable
Name Office title Type of change Date Reason
Cai Bingfeng Director Elected 2022-05-13 By-election
2. Brief biographies
Main working experience of current directors, supervisors and senior management staff
Educational
Name Position Main working experience and chief responsibilities in the Company
background
Manager, General
Tsann Kuen (Taiwang) Enterprise Co., Manager, Home
1978.11.02-1987.12
Ltd. Appliances/R&D
Department
Tsann Kuen (Xiamen) Electric Appliance
1988.01.01-1993.02.16 GM
Co., Ltd.
1993.02.16-2002.05.21 Tsann Kuen (China) Enterprise Co., Ltd. Managing director
1997.09.02-now Thermaster Electronic (Xiamen) Ltd. Director
2002.05.22-2008.05.24 Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
Tsann Kuen (Zhangzhou) Enterprise Co.,
2002.07.24-2008.07.25 Chairman of the Board
Ltd.
Sekond Creative Design Co., Ltd.
2011.06-now Chairman of the Board
(Taiwan)
2017.04.06-2021.05.19 Tsann Kuen (China) Enterprise Co., Ltd. Director
Graduated
from Tsann Kuen (Zhangzhou) Enterprise Co.,
2017.04.21-2021.07.05 Director
Ltd.
Manchester
State 2018.08.14-now EUPA Industry Corporation Limited (HK) Director
Chairman
University, 2018.08.14-now Fillman Investments Limited (HK) Director
Cai of the
Minnesota
Yuansong Board 2018.08.14-now FORDCHEE Development Limited (HK) Director
with a
&GM
degree in STAR COMGISTIC CAPITAL CO.,
2020.02.25-now Director
Business LTD. (Taiwan)
Administrati 2018.08.22-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Director
on Tsann Kuen China (Shanghai) Enterprise
2020.04.01-now Director
Co., Ltd.
2020.04.09-2022.05.30 Tsann Kuen Japan Co., Ltd. Chairman of the Board
2020.04.24-2021.10.25 Gold Mine Chain Enterprise Co., Ltd Director
WISE LAND PROPERTIES LIMITED
2020.04.29-now Director
(HK)
WORLD KINGDOM PROPERTIES
2020.04.29-now Director
LIMITED (HK)
2020.04.29-now East Sino Development Limited (HK) Director
2021.05.19-now Orient Star Investments Limited (HK) Director
Chairman of the Board
2021.05.19-now Tsann Kuen (China) Enterprise Co., Ltd.
& GM
Tsann Kuen (Zhangzhou) Enterprise Co.,
2021.07.05-now Chairman of the Board
Ltd.
35
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Educational
Name Position Main working experience and chief responsibilities in the Company
background
Tsann Kuen (Zhangzhou) South Port
2021.07.05-2022.07.27 Chairman of the Board
Electronics Enterprise Co., Ltd.
2021.07.19-2022.03.17 Shanghai Canxing Trading Co., Ltd. Chairman of the Board
2021.08.04-now PT.STAR COMGISTIC INDONESIA Chairman of the Board
Tsann Kuen Investment Co., Ltd.
2018.06.23-now Director
(Taiwan)
Special assistant to
1996.06-1999.08 Changjia Construction Co., Ltd.
GM, Audit specialist
Manager of Auditing
Department, assistant
1999.08-2000.10 ADDA CORPORATION
to Chairman of the
Board
Manager of Auditing
2000.10-2002.10 Royal DSM Department, Special
assistant to GM
Special assistant to
GM, manager of
2002.10-2004.02 GO-IN Technology Co., Ltd.
Administrative
Department, speaker
General auditor of Yuen Foong Yu Paper Mfg. Co., Ltd, Chief
Administration Officer of YFY Packaging Inc. in East China,
Director of SinoPac Financial Holdings Company Limited, SinoPac
Paper Corporation, Union Paper Corporation, China Color Printing
Co., Ltd., Mitsukoshi Enterprise Co., Ltd., Yeon Technologies Co.,
Ltd., Huaci Bills Co., Ltd., FOONGTONE TECHNOLOGY CO.,
LTD., Belton Co., Ltd. (Taiwan, Japan), YFY Capital Co., Ltd., YFY
2004.04-2013.04 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.,
Graduated Ltd., Senior manager of BOARDTEK ELECTRONICS
from CORPORATION, supervisor of Applied Wireless IDentifications
Department Group,Inc.(US) , HOPAX
Lin Jidian Director of Business
Management Planning Research Department and
2013.04-2019.01 Vice GM
Tatung Auditing Department of TaiPei 101
University Vice GM of
Planning Department of HSIN TUNG
2019.04-2019.12 E-commerce of
YANG Co., LTD. (Taiwan)
Business
Canxing International Travel Service Co.,
2019.12-2020.05 Chairman of the Board
Ltd (Taiwan)
2019.12-2020.3.30 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM
Wing Yi International Investment
2019.12.27-now Chairman of the Board
Corporation (Taiwan)
2020.3.31-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Chairman of the Board
2020.4.28-2022.12.31 Tsann Kuen Enterprise Co., Ltd. (Taiwan) CEO
STAR COMGISTIC CAPITAL CO.,
2020.3.31-now Chairman of the Board
LTD. (Taiwan)
Tsannkuen Edge Intelligence Co., Ltd.
2020.1.8-2021.4.1 Supervisor
(Taiwan)
2020.4.1-2022.5.31 Tsann Kuen Japan Co., Ltd. Director
Tsann Kuen (Zhangzhou) South Port
2020.4.1-2022.7.27 Supervisor
Electronics Enterprise Co., Ltd.
Tsann Kuen China (Shanghai) Enterprise
2020.4.1-now Director
Co., Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
2020.4.1-now
Ltd. Board
STARCOMGISTIC SINGAPORE
2020.4.21-2022.6.1 Director
PTE.LTD.
36
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Educational
Name Position Main working experience and chief responsibilities in the Company
background
STARCOMGISTIC AUSTRALIA PTY
2020.4.21-2022.6.17 Director
LTD
Wu Wha Ma International Co., Ltd.
2020.4.20-now Director
(Taiwan)
Sino Global Development Ltd. (HK) Directort
2020.4.21-now
Gold mine chain enterprise Co., Ltd Chairman of the Board
2020.4.24-now
Dali Investment Co., Ltd. (Taiwan) Chairman of the Board
2021.3.11-now
Tsann Kuen (China) Enterprise Co., Ltd. Directort
2020.4.24-now
Tsann Kuen Japan Co., Ltd. Chairman of the Board
2022.6.1-now
Accountant specialist,
2001.12-2007.06 Tsann Kuen Enterprise Co., Ltd. (Taiwan)
section head
Assistant accounting
2007.06-2020.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) manager & Acting
speaker
2010.10-2016.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Financial manager
2011.06-2021.3.10 Dali Investment Co., Ltd. (Taiwan) Director
Graduated Senior manager of
from Griffith 2016.10-2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan)
Finance Department
University
2018.06-now AXA Insurance Agent Co., Ltd. (Taiwan) Director
Wang with a
Director Assistant manager of
Youliang degree in 2018.12-now Tsann Kuen Enterprise Co., Ltd. (Taiwan)
Accounting, Finance Department
Finance and Wu Wha Ma International Co., Ltd.
2019.09.25-now Supervisor
Economics (Taiwan)
Wing Yi International Investment
2019.1.31-now Supervisor
Corporation (Taiwan)
2020.4.24-now Gold mine chain enterprise Co., Ltd Supervisor
2021.3.11-now Dali Investment Co., Ltd. (Taiwan) Supervisor
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2022.11.18-now Tsann Kuen Japan Co., Ltd. Director
2013.4.22-2013.12.31 Thermaster Electronic (Xiamen) Ltd. Project staff
Tsann Kuen (Zhangzhou) Enterprise Co., Deputy Director of
2014.1.02-2016.12.31 Ltd. Ministry of Commerce
Graduated in European Region
with an MSc Tsannkuen Edge Intelligence Co., Ltd. Deputy Director of
in 2017.1.01-2022.3.21 Ministry of Commerce
International in European Region
Business and Xiamen Tsannkuen Property Chairman and GM
Cai 2020.4.30-now
Bingfeng
Director Management Services Co., Ltd.
from 2020.5.9-2022.3.17 Shanghai Canxing Trading Co., Ltd. Director
Bradford
Tsann Kuen (Zhangzhou) Enterprise Co., Director
University, 2020.5.12-now
Ltd.
Bradford,
UK Tsann Kuen (Zhangzhou) South Port Director
2020.5.13-2022.7.27 Electronics Enterprise Co., Ltd.
2021.8.19-now Tsannkuen Edge Intelligence Co., Ltd. Chairman of the Board
2022.5.13-now Tsann Kuen (China) Enterprise Co., Ltd. Director
Graduated 1980.12-1986.11 Hubei Electric Accountant
Ge Independe from 1986.11-1989.06 Fuzhou Camera Co., Ltd. Internal auditor
Xiaoping nt director Zhongnan
PLA Military Academy of Finance and Teacher
University 1989.06-1997.01
Economics
37
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Educational
Name Position Main working experience and chief responsibilities in the Company
background
of 1997.01-2000.09 Fujian Mindu CPA Department manager
Economics
2000.09-2007.03 Xiamen Andexin CPA Chief accountant
and Law
with a Fujian Mindu BDO CPA and vice director
2007.03-2010.03
degree in accountant
Finance and 2008.05-2014.05 Tsann Kuen (China) Enterprise Co., Ltd. Independent director
Accounting China Shengmu Organic Milk Limited Independent director
2014.06-2018.06.29
Fujian Xunxing Zipper Science & Independent director
2017.2.10-2019.01.16
Technology Co., Ltd.
BDO-Xiamen Branch Partner and the head of
2010.03-2019.05
Xiamen Branch
2019.05-now BDO-Xiamen Branch Senior consultant
2017.04.06-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
2020.11.20-now Fujian Yuanxiang New Materials Co. Independent director
1991.09-1992.12 Xiamen Intermediate People’s Court Clerk
1992.12-1993.06 Orient (Xiamen) Golf Co., Ltd. Legal manager
Graduated 1993.06.now Fujian Tianyi Law Firm Partner, vice director
from
Xiamen 2002.03-now Xiamen Arbitration Commission Arbitrator
University 2009.08-2016.03 Xiamen XGMA Machinery Co., Ltd. Independent director
Independe with a
Liu Luhua Part-time associate
nt director master 2012.05-now Xiamen University Tan Kah Kee College
professor
degree in
DAZHOU XINGYE HOLDINGS
Civil and 2013.04-2016.12 Independent director
CO.,LTD
Commerce
Law 2014.04-2020.01 Xiamen Port Development Co.,Ltd Independent director
2020.07.31-now Xiamen Chengtun Mining Co., Ltd. Independent director
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
Accounting Department of School of
2010.8.26-2014.8.1 Assistant professor
Management, Xiamen University
Accounting Department of School of
Graduated 2014.8.1-now Associate professor
Management, Xiamen University
from Fudan
University 2019.12.30-2022.4.1 Shanghai Kinlita Chemical Co., Ltd. Independent director
Wu Independe
with a 2019.7.18-now Leedarson IoT Technology Inc. Independent director
Yibing nt director
doctor
degree in KUK RESOURCES-SAVING
2019.12.28-now Independent director
Accounting TECHNOLOGY CO., LTD.
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
G-bits Network Technology (Xiamen)
2022.1.13-now Independent director
Co., Ltd.
1996.07-2003.06 Deloitte Taiwan Audit manager
2003.06-2003.10 Deloitte Taiwan Audit manager
GM of Accounting
2003.10-2005.02 Tsann Kuen Enterprise Co., Ltd. (Taiwan)
Department
Graduated Senior manager of
from School 2005.03-2006.07 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accounting
of Department
Yang Accounting Assistant manager of
Supervisor 2006.08-2007.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accounting
Yongquan Department,
National Department
Taiwan Senior assistant
University manager of
2007.11-2009.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan)
Accounting
Department
Vice GM of
2009.12- 2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accounting
Department
38
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Educational
Name Position Main working experience and chief responsibilities in the Company
background
2012.07.24-2019.10.22 Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
2014.06.11-2019.09.13 PT.STAR COMGISTIC INDONESIA Supervisor
2014.07.08-2019.09.09 Shanghai Canxing Trading Co., Ltd. Director
Tsann Kuen China (Shanghai) Enterprise
2015.01.21-2019.09.09 Director
Co., Ltd.
Tsannkuen Edge Intelligence Co., Ltd.
2016.04.07-2020.01.07 Supervisor
(Taiwan)
PT.STAR COMGISTIC PRORERTY
2016.08.04-2019.09.13 Supervisor
DEVELOPMENT INDONESIA
Tsann Kuen (Zhangzhou) South Port
2017.05.28-2019.09.09 Director
Electronics Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) Investment Co.,
2018.06.15-2019.09.09 Supervisor
Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co.,
2018.08.15-2019.04.08 Supervisor
Ltd.
Vice GM of Business
2018.12.14-2019.09.30 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Management
Department
Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
2019.04.08-2019.09.09
Ltd. Board
Xiamen Tsannkuen Property Services Co.,
2019.06.21-2019.09.05 Chairman of the Board
Ltd.
Vice GM of
2020.1.16-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accounting
Department
Vice GM of Business
STAR COMGISTIC CAPITAL CO.,
2019.12.23-now Management
LTD. (Taiwan)
Department
Supervisory Board
2020.4.24-now Tsann Kuen (China) Enterprise Co., Ltd.
chairman
Ding Supervisor Graduated 1991.8.13-2002.10.9 Tsann Kuen Enterprise Co., Ltd. (Taiwan) QRA section manager
Hongming from
Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of glass
Department 2002.10.10-2003.8.31
factory
of Industrial
Tsann Kuen China (Shanghai) Enterprise Vice manager of
Engineering
2003.9.1-2005.5.26 Co., Ltd. Motor business
and
department
Management
Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of
of STUST 2005.5.27-2007.1.12
Ltd. Cuisinart factory
Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Iron
2008.1.13-2009.8.31
Ltd. business department
Tsann Kuen (Zhangzhou) Enterprise Co., Manager of Central
2009.9.1-2014.8.31
Ltd. Lab
2014.9.1-2015.8.31 PT.STAR COMGISTIC INDONESIA Operations manager
Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of
2015.9.1-2016.12.31
Ltd. QRA
Tsann Kuen (Zhangzhou) Enterprise Co., Operations assistant
2017.1.1-2017.12.31
Ltd. manager of PSO
Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of
2018.1.1-now Ltd. QRA/Purchasing
Department/laboratory
2019.10.22—now Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
Graduated 2021.07.01-now Tsann Kuen (China) Enterprise Co., Ltd. Associate in Finance
from School Tsann Kuen (China) Enterprise Co., Ltd. Financial manager
of 2011.06- 2021.07.01
Zheng Economics Tsann Kuen (China) Enterprise Co., Ltd. Vice Financial
Supervisor 2008.07-2011.05.31
Caiyun and Manager
Management 1998.08-2008.06.30 Tsann Kuen (China) Enterprise Co., Ltd. Account Specialist
, Fujian East Sino Development Limited (HK)
2014.03.05-2020.4.28 Director
39
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Educational
Name Position Main working experience and chief responsibilities in the Company
background
Forestry 2017.04.28-now Orient Star Investments Limited (HK) Director
College
Xiamen Tsann Kuen Home Appliance Supervisor
2016.03.02-2018.10.30
Design Co., Ltd.
Tsann Kuen (Zhangzhou) Investment Co.,
2018.06.15-2020.4.20 Director
Ltd.
Tsann Kuen (China) Enterprise Co., Ltd. Staff-representative
2016.06.01-now
Supervisor
Tsann Kuen (Zhangzhou) South Port
2019.9.10-2022.07.27 Electronics Enterprise Co., Ltd. Director
Tsann Kuen (Zhangzhou) Enterprise Co., Vice chairman of the
2019.9.10-2020.4.1
Ltd. Board
Tsann Kuen (Zhangzhou) Enterprise Co.,
2020.4.1-now Director
Ltd.
2019.09.10-2020.4.1 Shanghai Canxing Trading Co., Ltd. Director
2020.4.1-2022.3.17 Shanghai Canxing Trading Co., Ltd. Supervisor
2019.10.14-now PT.STAR COMGISTIC INDONESIA Supervisor
PT.STAR COMGISTIC PRORERTY
2019.10.14-now Supervisor
DEVELOPMENT INDONESIA
Wu Financial Graduated Tsann Kuen (Zhangzhou) Enterprise Co., Accounting
2003.9.1-2006.6.30
Jianhua Chief from Ltd. Department clerk
Department Tsann Kuen (Zhangzhou) Enterprise Co., Head of Cost Section
of 2006.7.1-2006.12.31 Ltd. of Accounting
Accounting Department
of Fuzhou Tsann Kuen (Zhangzhou) Enterprise Co., Head of General
University Ltd. Account Section of
2007.1.1-2008.6.30
Accounting
Department
Tsann Kuen (Zhangzhou) Enterprise Co., Head of Sales Section
2008.7.1-2010.5.31 Ltd. of Accounting
Department
Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Cost
Ltd. /Accounts Payable in
2010.6.1-2014.4.30
Accounting
Department
Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of Cost
/Accounts Payable in
2014.5.1-2019.3.21
Accounting
Department
Tsann Kuen (China) Enterprise Co., Ltd. Accounting
2019.3.22-now
Department manager
2019.3.29-now Tsann Kuen (China) Enterprise Co., Ltd. Financial Chief
Xiamen Tsann Kuen Property Service
2019.5.14-now Supervisor
Co.,Ltd.
Tsann Kuen (Zhangzhou) Investment Co.,
2019.9.10-2020.4.20 Supervisor
Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co.,
2019.9.10-now Supervisor
Ltd.
China Tsann Kuen (China) Enterprise Co., Ltd.
Institute of Securities
Information 2005.07-2011.04
Representative
Management
Sun Board
with a
Meimei Secretary Tsann Kuen (China) Enterprise Co., Ltd.
degree in
Business 2011.04.23-now Board Secretary
Administrati
on
Posts concurrently held in shareholding entities
40
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Applicable Inapplicable
Allowance from
Starting date of Ending date of the shareholding
Name Shareholding entity Post 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)
Cai STAR COMGISTIC CAPITAL CO.,
Yuansong LTD. (Taiwan) Director 2020-02-25 Yes
Cai Tsann Kuen (Taiwan) Investment Director 2018-06-23 No
Yuansong Co., Ltd.
Lin Jidian China Global Limited (HK) Chairman of 2020-03-31 Yes
the Board
Lin Jidian Sino Global Development Ltd. (HK) Directort 2020-04-21 No
Deputy
General
Yang STAR COMGISTIC CAPITAL CO., Manager,
Yongquan LTD. (Taiwan) Operations 2019-12-23 Yes
and
Management
Remark: N/A
Posts held concurrently in other entities
Applicable Inapplicable
Allowance
Starting date Ending date
Name Other entity Post from other
of tenure of tenure
entity
Cai
Thermaster Electronic (Xiamen) Ltd. Director 1997-09-02 No
Yuansong
Cai Sekond Creative Design Co., Ltd.
Chairman of the Board 2011-06-01 Yes
Yuansong (Taiwan)
Cai Tsann Kuen (Zhangzhou) Enterprise Co.,
Chairman of the Board 2021-07-05 No
Yuansong Ltd.
Cai
Tsann Kuen Enterprise Co., Ltd. (Taiwan) Director 2020-02-25 Yes
Yuansong
Cai Tsann Kuen China (Shanghai) Enterprise
Director 2020-04-01 No
Yuansong Co., Ltd.
Cai
Tsann Kuen Japan Co., Ltd. Chairman of the Board 2020-04-09 2022-05-30 No
Yuansong
Cai WISE LAND PROPERTIES LIMITED Director
2020-04-29 No
Yuansong (HK)
Cai WORLD KINGDOM PROPERTIES Director 2020-04-29 No
Yuansong LIMITED (HK)
Cai
East Sino Development Limited (HK) Director 2020-04-29 No
Yuansong
Wing Yi International Investment
Lin Jidian Chairman of the Board 2019-12-27 No
Corporation (Taiwan)
41
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowance
Starting date Ending date
Name Other entity Post from other
of tenure of tenure
entity
Tsannkuen Edge Intelligence Co., Ltd.
Lin Jidian Supervisor 2020-01-08 2022-04-01 No
(Taiwan)
Lin Jidian Tsann Kuen Japan Co., Ltd. Director 2020-04-01 2022-05-31 No
Lin Jidian Tsann Kuen Japan Co., Ltd. Chairman of the Board 2022-06-01 No
Tsann Kuen (Zhangzhou) South Port
Lin Jidian Supervisor 2020-04-01 2022-07-27 No
Electronics Enterprise Co., Ltd.
Tsann Kuen China (Shanghai) Enterprise
Lin Jidian Director 2020-04-01 No
Co., Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co., Vice chairman of the
Lin Jidian 2020-04-01 No
Ltd. Board
STARCOMGISTIC SINGAPORE
Lin Jidian Director 2020-04-21 2022-06-01 No
PTE.LTD.
STARCOMGISTIC AUSTRALIA PTY
Lin Jidian Director 2020-04-21 2021-06-17 No
LTD
Wu Wha Ma International Co., Ltd.
Lin Jidian Director 2020-04-20 No
(Taiwan)
Gold mine chain enterprise Co., Ltd
Lin Jidian Director 2020-04-24 No
(Taiwan)
Lin Jidian Dali Investment Co., Ltd. (Taiwan) Chairman of the Board 2021-03-11 No
STAR COMGISTIC CAPITAL CO.,
Lin Jidian Chairman of the Board 2020-03-31 Yes
LTD. (Taiwan)
Lin Jidian Tsann Kuen (Taiwan) Enterprise Co., Ltd. Supervisor 2020-04-28 2022-12-31 Yes
Wang
AXA Insurance Agents Limited (Taiwan) Director 2018-06-01 No
Youliang
Wang
Tsann Kuen (Taiwan) Enterprise Co., Ltd. Associate in Finance 2018-12-01 Yes
Youliang
Wang Wu Wha Ma International Co., Ltd.
Supervisor 2019-09-25 No
Youliang (Taiwan)
Wang Wing Yi International Investment
Supervisor 2019-01-31 No
Youliang Corporation (Taiwan)
Wang Gold mine chain enterprise Co., Ltd
Supervisor 2020-04-24 No
Youliang (Taiwan)
Wang
Dali Investment Co., Ltd. (Taiwan) Supervisor 2021-03-11 No
Youliang
Cai Xiamen Tsannkuen Property Services Co., Chairman and Managing
2020-04-30 No
Bingfeng Ltd. Director
Cai
Shanghai Canxing Trading Co., Ltd. Director 2020-05-09 2022-03-17 No
Bingfeng
Cai Tsann Kuen (Zhangzhou) Enterprise Co.,
Director 2020-05-12 No
Bingfeng Ltd.
Cai Tsann Kuen (Zhangzhou) South Port
Director 2020-05-13 2022-07-27 No
Bingfeng Electronics Enterprise Co., Ltd.
Cai
Tsannkuen Edge Intelligence Co., Ltd. Chairman of the Board 2021-08-19 No
Bingfeng
Ge Xiaoping BDO-Xiamen Branch Senior consultant 2019-05-01 Yes
Ge Xiaoping Fujian Yuanxiang New Materials Co. Independent Director 2020-11-20 Yes
Liu Luhua Fujian Tianyi Law Firm Partner, vice director 1993-06-01 Yes
42
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Allowance
Starting date Ending date
Name Other entity Post from other
of tenure of tenure
entity
Liu Luhua Xiamen Arbitration Commission Arbitrator 2002-03-01 Yes
Part-time associate
Liu Luhua Xiamen University Tan Kah Kee College 2012-05-01 Yes
professor
Liu Luhua Xiamen Chengtun Mining Co., Ltd. Independent director 2020-07-31 Yes
Accounting Department of School of
Wu Yibing Associate professor 2014-08-01 Yes
Management, Xiamen University
Wu Yibing Shanghai Kinlita Chemical Co., Ltd. Independent director 2019-12-30 2022-04-01 No
Wu Yibing Leedarson IoT Technology Inc. Independent director 2019-07-18 Yes
KUK RESOURCES-SAVING Independent director
Wu Yibing 2019-12-28 Yes
TECHNOLOGY CO., LTD.
G-bits Network Technology (Xiamen) Independent director
Wu Yibing 2022-01-13 Yes
Co., Ltd.
Yang Vice GM of Accounting
Tsann Kuen Enterprise Co., Ltd. (Taiwan) 2019-12-23 Yes
Yongquan Department
Assistant manager of
Ding Tsann Kuen (Zhangzhou) Enterprise Co., Quality Assurance
2018-01-01 Yes
Hongming Ltd. Department/Purchasing
Department/Laboratory
Zheng
Orient Star Investments Limited (HK) Director 2017-04-28 No
Caiyun
Zheng Tsann Kuen (Zhangzhou) South Port
Director 2019-09-10 2022-07-27 No
Caiyun Electronics Enterprise Co., Ltd.
Zheng Tsann Kuen (Zhangzhou) Enterprise Co.,
Director 2020-04-01 No
Caiyun Ltd.
Zheng Supervisor
Shanghai Canxing Trading Co., Ltd. 2020-04-01 2022-03-17 No
Caiyun
Zheng Supervisor
PT.STAR COMGISTIC INDONESIA 2019-10-14 No
Caiyun
Zheng PT.STAR COMGISTIC PRORERTY
Supervisor 2019-10-14 No
Caiyun DEVELOPMENT INDONESIA
Tsann Kuen (Zhangzhou) Enterprise Co.,
Wu Jianhua Director 2019-09-10 No
Ltd.
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
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
43
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
Cai Chairman of the Board &
Male 66 Incumbent 229.8 Yes
Yuansong GM
Lin Jidian Director Male 54 Incumbent 3.6 Yes
Wang Director
Male 54 Incumbent 3.6 Yes
Youliang
Cai Bingfeng Director Male 38 Incumbent 2.3 No
Femal
Ge Xiaoping Independent director 60 Incumbent 15 No
e
Liu Luhua Independent director Male 53 Incumbent 12 No
Wu Yibing Independent director Male 41 Incumbent 12 No
Yang Supervisor Board Chairman
Male 58 Incumbent 2.4 Yes
Yongquan
Ding Supervisor
Male 57 Incumbent 53.8 No
Hongming
Zheng Supervisor
Male 47 Incumbent 27.1 No
Caiyun
Wu Jianhua Financial Chief Male 43 Incumbent 26.4 No
Femal
Sun Meimei Board Secretary 49 Incumbent 23.3 No
e
Total -- -- -- -- 411.3 --
VI. Performance of directors in this reporting period
1. Board meetings convened during this reporting period
Meeting Convened date Disclosure date Resolutions
The First Special Board Meeting in
2022-02-23 2022-02-24 See www.cninfo.com.cn
2022
The First Board Meeting in 2022 2022-03-12 2022-03-15 See www.cninfo.com.cn
The Second Board Meeting in 2022 2022-04-26 2022-04-27 See www.cninfo.com.cn
44
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Meeting Convened date Disclosure date Resolutions
The Third Board Meeting in 2022 2022-08-04 2022-08-05 See www.cninfo.com.cn
The Fourth Board Meeting in 2022 2022-10-28 2022-10-29 See www.cninfo.com.cn
The Fifth Board Meeting in 2022 2022-12-09
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)
Cai Yuansong 6 5 1 0 0 NO 1
Lin Jidian 6 0 6 0 0 NO 1
Wang Youliang 6 0 6 0 0 NO 1
Cai Bingfeng 3 0 3 0 0 NO 0
Ge Xiaoping 6 4 2 0 0 NO 1
Liu Luhua 6 5 1 0 0 NO 1
Wu Yibing 6 5 1 0 0 NO 1
Explanation of failure to attend two consecutive Board meetings in person: None
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
4. Other details about the performance of duties by directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
45
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Yes No
In accordance with the provisions of the Company Law, the Securities Law, the Articles of Association, the Rules
of Procedure of the Board of Directors, the Listing Rules of the Shenzhen Stock Exchange and other laws,
regulations and systems, the directors of the Company diligently and conscientiously performed their duties and
obligations, and the relevant suggestions on the daily operation and management of the Company as well as the
regular reports were adopted. On the basis of detailed understanding and full communication with relevant
personnel, the Company actively expressed its own opinions and suggestions and exercised its powers on various
proposals of the Board of Directors, which played a positive role in promoting the formulation of various
decisions of the Company. The independent directors gave independent and impartial opinions on the company's
renewal of the CPA firm, profit distribution plan, annual daily related party transaction forecast and other matters
during the reporting period, and supervised and checked the information disclosure and other information, thus
safeguarding the legitimate rights and interests of the company and small and medium-sized shareholders.
VII. Performance of duties by specialized committees under the Board during this reporting
period
Important Other details Details about
Number of
opinions and about the issues with
Committee Members meetings Convened date Content
suggestions performance objections
convened
raised of duties (if any)
Cai Yuansong,
Reporting matter:
Wang
Discussion of the
Strategy Youliang,
1 2022-12-09 Company's business
Committee Ge Xiaoping,
development strategy and
Liu Luhua,
operational planning
Wu Yibing
Projected day-to-day
2022-02-23 connected transactions for
the year 2022
1. 2021 Annual
Ge Xiaoping,
Audit Self-Assessment Report on
Liu Luhua, 6
Committee Internal Control
Wu Yibing
2022-03-12 2. Full Annual Report 2021
and Summary Report
3. Annual Financial
Statements for the year 2021
46
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Important Other details Details about
Number of
opinions and about the issues with
Committee Members meetings Convened date Content
suggestions performance objections
convened
raised of duties (if any)
4. Proposed profit
distribution for the year
2021
5. Summary report on the
audit work of Rongcheng
CPAs engagement in the
company’s audit work for
the year 2021
6. Proposal to re-appoint the
accounting firm
7. Proposal on financial
derivatives trading by
(Zhangzhou) Tsann Kuen, a
holding subsidiary
8. Proposal on the financial
management quota entrusted
by (Zhangzhou) Tsann
Kuen, a holding subsidiary
9. Proposal on the amount of
financial management
entrusted to (Shanghai)
Tsann Kuen, the controlling
subsidiary
Company's First Quarter
2022-04-26
Report 2022
Full text and summary
2022-08-04 report of the Company's
half-yearly report for 2022
Company's third quarterly
2022-10-28
report for 2022
47
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Important Other details Details about
Number of
opinions and about the issues with
Committee Members meetings Convened date Content
suggestions performance objections
convened
raised of duties (if any)
2022-12-09 2023 Annual Audit Plan
Nomination,
Ge Xiaoping, Proposal for preliminary
Remuneration
Liu Luhua, 1 2022-03-12 vetting of director
and Appraisal
Lin Jidian candidates
Committee
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 167
Number of in-service employees of main subsidiaries 2,992
Total number of in-service employees 3,159
Total number of employees with remuneration in this reporting
3,391
period
Number of retirees to whom the Company or its main subsidiaries
0
need to pay retirement pension
Function
Category Number of employees
Production 1,997
Sales 92
Technical 383
Financial 46
Administrative 641
Total 3,159
Educational background
Category Number of employees
Doctor 0
Master 8
48
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Bachelor 209
College graduates 294
Below college 2,648
Total 3,159
2. Employee remuneration policy
The Company has established its remuneration system and formulated Remuneration Management Measures and
Performance Appraisal Management Rules based position division according to the Labor Law, the internal HR
Administrative Rules and relevant laws and regulations in line with the Company’s strategic planning, the HR
allocation on the market, the talent demand, job responsibilities and job qualifications. The staff’s remuneration
level has comprehensively taken the Company’s operating conditions, profitability and internal fairness into
consideration based on the position’s value, job performance and personal ability.
3. Employee training plans
1. New staff training (on-site staff/cadres/managers/recruits boot camp).
2. Management cadre training and construction.
3. Job skills upgrading training for employees in various positions.
4. General studies courses to improve the overall quality of staff.
5. Internal instructor training team building and management.
4. Labor outsourcing
Applicable Inapplicable
Total man-hours (hour) 33,801
Total remuneration paid (RMB Yuan) 541,316.00
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 2021 has been reviewed and approved on the third board meeting in
2022 and been reviewed and approved on the shareholders’ meeting on 13 May 2022. And the formulation of the
profit distribution policies conformed to the Company’s Shareholder Return Plan for Next Three Years
(2021-2023). The distribution has been completed on 21 June 2022.
49
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Special explanation of cash dividend policy
Yes. The Company’s profit distribution preplan for
2021 has been reviewed and approved on the third
board meeting in 2022 and been reviewed and
Whether conformed to the regulations of the Articles of association or the
approved on the shareholders’ meeting on 13 May
requirements of the resolutions of the shareholders’ meeting:
2022. And the formulation of the profit distribution
policies conformed to the Company’s Shareholder
Return Plan for Next Three Years (2021-2023).
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper
Yes
function:
Whether the medium and small shareholders had the chances to fully express
their suggestions and appeals, of which their legal interest had gained fully Yes
protection:
Whether the conditions and the process met the regulations and was
Yes
transparent of the adjustment or altered of the cash dividend 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) 3.00
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) 55,617,504.00
Amount of cash dividend by other methods (like share repurchase) (RMB
-
Yuan)
Total cash dividends (including those by other methods) (RMB Yuan) 55,617,504.00
Distributable profit (RMB Yuan) 383,801,160.49
Percentage of total cash bonus (including those by other methods) of the
100%
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 2022, the Company intended to distribute a cash dividend of RMB 3 (tax included) for every 10 shares held by its shareholders,
and the estimated distributable profits of the Company was RMB55,617,504 with the retained profits of RMB328,183,656.49 for
carry-forward to the next year. There was no turn from capital reserve to share capital for the year.
50
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
XIV. Internal control self-evaluation report and auditor’s report on internal control
1. Internal control self-evaluation report
Disclosure date of the internal control
2023-03-07
self-evaluation report
Index to the disclosed internal control
self-evaluation report www.cninfo.com.cn
Total assets of the evaluated entities as
a percentage in the consolidated total 100.00%
assets
Operating revenues of the evaluated
entities as a percentage in the 100.00%
consolidated operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
Serious defect:
Serious defect:
Safety-a number of employee
Refer to one or several controlling defects groups in
fatalities
the enterprise which lead to the enterprise's serious
deviation from controlling target. Company reputation- negative
Nature standard news spread around, the
Important defect:
government or regulators
Refer to one or several controlling defects groups, investigated which lead to public
its severity and economic results lower than great attention, and cause huge loss of
defect which may lead to the enterprise’s deviation customers, or need be report.
from controlling target.
Important defect:
51
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Common defect: Safety-lead to a employ or citizen
disability or fatality
Refer to any financial-report related internal control
defect that does not constitute serious defect or Company reputation- negative
important defect. news spread around the state, had
complained the media or lead to the
contract will be cancelled by the
customers.
Common defect:
Has occurred or is about to cause
harm to the health of workers or
citizens
Company reputation-negative news
spread around certain region
damaging the Company’s
reputation to some extent
Serious defect:
>5% of total profits of consolidated statements in
recent period
>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 Serious defect: RMB5 million
and the government's policy, was restricted enter (including RMB5 million) or
industry, suspended business licenses, forced to above.
shut down.
Important defect: Within RMB1
Important defect: million (including RMB1 million)
Within 3%~5% of total profits of consolidated to RMB5 million (including RMB5
Quantitative standard
statements in recent period million)
Within 0.5%~1% of total assets of consolidated Common defect: less than RMB1
statements in recent period 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
0
Number of serious
non-financial-report-related defects
0
52
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Number of important
financial-report-related defects
0
Number of important
non-financial-report-related defects
0
2. Auditor’s report on internal control
Applicable Inapplicable
Opinion paragraph in the auditor’s report on internal control
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. has maintained effective internal control on financial report
in all significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on
31 Dec. 2022.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 2023-03-07
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
53
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
There were no administrative penalties for environmental issues.
II. Social responsibilities
None
II. Poverty alleviation or rural revitalization activities
None
Section VI. Significant Events
I. Performance of commitments
1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as
the Company and other commitment makers, fulfilled in this reporting period or ongoing at the period-end
Applicable Inapplicable
Time of
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
Commitment committed to increase Dec. 2012,
Other commitments FILLMAN
on the shareholding if Long-term but the
made to minority INVESTMENTS 12/28/2012
shareholding the Company’s stock effective Company’s
shareholders LIMITED
increase price lower than stock price
HKD2.40 per share hasn’t met
after the the condition
implementation of the (closing
shares contraction price was
and trading lower than
54
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
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
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 Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
Applicable Inapplicable
III. Illegal provision of guarantees for external parties
Applicable Inapplicable
No such cases in this reporting period.
55
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 “auditor’s non-standard report” issued by the CPAs firm for
this reporting period
Applicable Inapplicable
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
In March 2022, the Company cancelled its subsidiary Shanghai Canxing Trading Co. Ltd., which was no longer
included in the scope of consolidated statements from the date of cancellation.
In July 2022, the Company cancelled its subsidiary Tsann Kuen (Zhangzhou) South Port Electronics Enterprise
Co., Ltd.., which was no longer included in the scope of consolidated statements from the date of cancellation.
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
3 years
CPAs firm
Names of the certified public accountants from the domestic
Wu Xiaolei, Guo Chunlin, Li Chunyuan
CPAs firm
Consecutive years of the audit service provided by the certified
1 year
public accountants from the domestic CPAs firm
Indicate by tick mark whether the CPAs firm was changed in this reporting period
Yes No
CPAs firm, financial advisor or sponsor engaged for internal control audit
56
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
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
57
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Related Relationship Types Contents Principles Price Amount Proportion in Amount of Whether Settlements Market Date of Disclosure
for pricing the amount of transactions the value of Disclosure Index
parties similar limit approved approved comparable
transactions limit is transactions
(%) exceeded available
Thermaster Companies Purch Purchase
Electronic controlled by ase of of raw
(Xiamen) the actual goods material Pricing is 2,550.16 2.57 4,300.00 NO
Ltd. controller and parts and based on
his close family machine market
members parts prices, Settlement
with both according to
STAR Ultimate Sale Sale of
parties the contract http://ww
COMGISTI holding of parts and
following None 871.76 0.58 850.00 NO signed by both None 2022-3-15 w.cninfo.c
C CAPITAL company goods finished
the parties om.cn
CO., LTD. products
principle
Thermaster Companies Sale Sale of of fairness
Electronic controlled by of parts and and
(Xiamen) the actual goods finished reasonable
ness 2.91 0.00 0.00 YES
Ltd. controller and products
his close family
members
Total 3,424.83 5,150.00
Details of significant sales returns None
Actual performance during the reporting period for None
related-party transactions relevant to routine operation
expected to occur during the period and estimated by
category
Reasons for significant differences in transaction prices None
from market reference prices
2. Related-party transactions regarding purchase or sales of assets or equity interests
Applicable Inapplicable
58
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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
(2) Contracting
Applicable Inapplicable
(3) Leasing
Applicable Inapplicable
59
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Significant guarantees
Applicable Inapplicable
Unit: RMB’0,000
Guarantees between subsidiaries
Actual
Disclosure date
occurrence date Actual Guarantee for a
Guaranteed of the guarantee Line of Type of Term of
(date of guarantee Due or not related party or
party line guarantee guarantee guarantee
agreement amount not
announcement
signing)
PT.STAR
2022/9/26-2022/
COMGISTIC 2021/8/3 3,750.00 390.50 Pledged 1 year NO NO
12/22
INDONESIA
PT.STAR
COMGISTIC 2022/8/4 2,611.73 None 0.00 Pledged 1 year NO NO
INDONESIA
Total guarantee line for subsidiaries approved during Total actual guarantee amount for
2,611.73 subsidiaries during this Reporting 1,280.80
this Reporting Period (C1) Period (C2)
Total approved guarantee line for subsidiaries at the Total actual guarantee balance for
6,361.73 subsidiaries at the end of this Reporting 115.01
end of this Reporting Period (C3)
Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during this Reporting 2,611.73 Total actual guarantee amount during 1,280.80
60
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Period (C1) this Reporting Period (C2)
Total approved guarantee line at the end of this Total actual guarantee balance at the end
6,361.73 115.01
Reporting Period (C3) of this Reporting Period (C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets of the
0.11%
Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and their related
parties (D) 0.00
Amount of debt guarantees provided directly or indirectly for entities with a
liability-to-asset ratio over 70% (E) 0.00
Portion of the total guarantee amount in excess of 50% of net assets (F) 0.00
Total amount of the three kinds of guarantees above (D+E+F) 0.00
Explanation on undue guarantee or possible joint liquidated liability undertaken None
Explanation on providing external guarantee violating established procedures None
Specific notes on the use of composite guarantees
None
61
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Entrusted cash management
(1) Entrusted asset management
Applicable Inapplicable
Overview of entrusted assets management in Reporting Period
Unit: RMB’0,000
Impaired amount for
Type Resource of funds Amount incurred Undue balance Amount overdue overdue financial
management
Bank financial
Self-owned fund 66,500 56,500 0 0
product
Total 66,500 56,500 0 0
Particular information of high-risk entrusted asset management with individual significant amount or low security and poor liquidity
Applicable Inapplicable
62
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB’0,000
Whether
there is
Actual Whethe Overview
Amount of wealth
Type Reso recovery of Amount r go of the item
Type of Break-even actual profits managem
Name of the of the urce Use of Annual yield Estimate profits or withdrawn through and the
the Amount Initial date Ended Date floating or losses in ent
trustee truste of fund for reference profit losses in impairmen stator related
product proceeds reporting entrustme
e funds reporting t provision procedu index for
period nt plan in
period res inquiring
future or
not
BEA (Xiamen) 5,000 2021/12/30 2022/6/30 3.50% 88.47 88.47
Xiamen
International 6,000 2021/8/19 2022/8/19 3.50% 212.92 212.92
Bank
Xiamen
International 5,500 2021/8/24 2022/8/24 3.50% 195.17 195.17
Bank
Xiamen
International 5,000 2021/9/8 2022/9/8 3.50% 177.43 177.43
Bank
Xiamen
International 5,000 2021/9/9 2022/9/9 3.50% 177.43 177.43 Recovered
Bank Subject to
Break-e upon
Self- Payment of the future
ven maturity http://www
Xiamen owne Structural interest and market
Bank floating N/A Yes .cninfo.co
International 5,000 d 2021/11/23 2022/11/23 deposit principal at 3.50% 177.43 177.43 yield and
proceed m.cn
Bank fund maturity fund
s
condition
BEA (Xiamen) 5,000 2021/12/9 2022/12/9 3.48% 176.42 176.42
BEA (Xiamen) 5,000 2021/12/16 2022/12/16 3.48% 176.42 176.42
Xiamen
International 5,000 2022/1/6 2022/12/20 3.50% 169.17 169.17
Bank
Xiamen
Bank(Zhangzho 5,000 2022/1/14 2021/9/3 3.50% 168.68 168.68
u)
Xiamen Undue
Bank(Zhangzho 5,000 2022/3/10 2023/3/10 3.50% 177.43 72.19
u)
63
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether
there is
Actual Whethe Overview
Amount of wealth
Type Reso recovery of Amount r go of the item
Type of Break-even actual profits managem
Name of the of the urce Use of Annual yield Estimate profits or withdrawn through and the
the Amount Initial date Ended Date floating or losses in ent
trustee truste of fund for reference profit losses in impairmen stator related
product proceeds reporting entrustme
e funds reporting t provision procedu index for
period nt plan in
period res inquiring
future or
not
Xiamen
International 5,000 2022/4/1 2023/4/1 3.50% 177.43 72.57
Bank
Xiamen
International 5,000 2022/5/6 2023/5/5 3.50% 176.94 63.33
Bank
Xiamen
International 6,000 2022/8/24 2023/8/24 3.50% 212.92 41.17
Bank
Xiamen
International 5,500 2022/8/31 2023/8/31 3.50% 195.17 35.7
Bank
Xiamen
International 5,000 2022/9/15 2023/9/15 3.50% 177.43 28.5
Bank
Xiamen
International 5,000 2022/11/17 2023/11/17 3.40% 172.36 11.88
Bank
Xiamen
Bank(Zhangzho 5,000 2022/12/14 2023/12/14 3.45% 174.9 4.38
u)
Xiamen
Bank(Zhangzho 5,000 2022/12/21 2023/12/21 3.45% 174.9 2.67
u)
Xiamen
International 5,000 2022/12/23 2023/12/23 3.40% 172.36 2.38
Bank
Xiamen
Bank(Zhangzho 5,000 2022/12/29 2023/12/29 3.45% 174.9 0.73
u)
Total 108,000 3,706.28 2,055.04
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
64
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Applicable Inapplicable(2) Entrusted loans
Applicable Inapplicable
4. Other significant contracts
Applicable Inapplicable
XVI. Other significant events
Applicable Inapplicable
XVII. Significant events of subsidiaries
Applicable Inapplicable
65
2022 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 shares 0 0.00% 0 0 0 0 0 0 0.00%
1.1 Shares held by state
1.2 Shares held by state-owned
corporations
1.3 Shares held by other
domestic investors
Among which: Shares held by
domestic corporations
Shares held by
domestic individuals
1.4 Shares held by foreign
investors
Among which: Shares held by
foreign corporations
Shares held by foreign
individuals
2. Unrestricted shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
2.1 RMB ordinary shares
2.2 Domestically listed foreign
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
66
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
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
67
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
3. Existing staff-held shares
Applicable Inapplicable
III. Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total number
of preference
Total number of
shareholders
common
Total number of with resumed
Total number of shareholders at
preference shareholders voting rights
common shareholders 14,262 the prior 14,204 0 0
with resumed voting rights at the prior
at the period-end month-end before
at the period-end month-end
the disclosure of
before the
this Report
disclosure of
this Report
5% or greater shareholders or the top 10 shareholders
Number Pledged, marked
Shareholdin Total shares Increase/decreas Number of
Nature of of or frozen shares
Name of shareholder g percentage held at the e during this unrestricted
shareholder restricte
(%) period-end reporting period shares Status Number
d shares
FORDCHEE
Foreign
DEVELOPMENT 29.10% 53,940,530.00 Unchanged 0 53,940,530.00 0
corporation
LIMITED
EUPA INDUSTRY
Foreign
CORPORATION 13.09% 24,268,840.00 Unchanged 0 24,268,840.00 0
corporation
LIMITED
GUOTAI JUNAN
Foreign
SECURITIES(HONG 4.91% 9,101,882.00 -7,300 0 9,101,882.00 0
corporation
KONG) LIMITED
FILLMAN
Foreign
INVESTMENTS 2.49% 4,621,596.00 Unchanged 0 4,621,596.00 0
corporation
LIMITED
Domestic
CHEN YONGQUAN 1.04% 1,929,476.00 28,700 0 1,929,476.00 0
individual
SHENWAN
HONGYUAN Foreign
0.95% 1,752,135.00 -456,379 0 1,752,135.00 0
SECURITIES (HK) corporation
LIMITED
Foreign
CHEN YONGQING 0.87% 1,608,078.00 Unchanged 0 1,608,078.00 0
individual
Foreign
CHEN LIJUAN 0.81% 1,503,668.00 Unchanged 0 1,503,668.00 0
individual
Domestic
YANG WENLIANG 0.74% 1,377,066.00 1,293,666 0 1,377,066.00 0
individual
Domestic
DING XIAOLUN 0.61% 1,130,000.00 Unchanged 0 1,130,000.00 0
individual
Strategic investor or general
corporation becoming a top ten
None
shareholder due to placing of new
shares
68
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
The first, the second and the fourth shareholders are the Company’s corporate controlling
Related or acting-in-concert parties shareholders. It is unknown whether the other public shareholders are related parties or
among the shareholders above acting-in-concert parties as prescribed in the Administrative Methods for Disclosure of the
Shareholding Changes of the Listed Company’s Shareholders.
Above shareholders involved in
entrusting/being entrusted with voting None
rights and giving up voting rights
Special account for share repurchases None
Top ten unrestricted common shareholders
Number of unrestricted common Type of shares
Name of shareholder
shares held at the period-end Type Number
FORDCHEE DEVELOPMENT Domestically listed foreign
53,940,530.00 53,940,530.00
LIMITED share
EUPA INDUSTRY CORPORATION Domestically listed foreign
24,268,840.00 24,268,840.00
LIMITED share
GUOTAI JUNAN
Domestically listed foreign
SECURITIES(HONGKONG) 9,101,882.00 9,101,882.00
share
LIMITED
FILLMAN INVESTMENTS Domestically listed foreign
4,621,596.00 4,621,596.00
LIMITED share
Domestically listed foreign
CHEN YONGQUAN 1,929,476.00 1,929,476.00
share
SHENWAN HONGYUAN Domestically listed foreign
1,752,135.00 1,752,135.00
SECURITIES (HK) LIMITED share
Domestically listed foreign
CHEN YONGQING 1,608,078.00 1,608,078.00
share
Domestically listed foreign
CHEN LIJUAN 1,503,668.00 1,503,668.00
share
Domestically listed foreign
YANG WENLIANG 1,377,066.00 1,377,066.00
share
Domestically listed foreign
DING XIAOLUN 1,130,000.00 1,130,000.00
share
Related or acting-in-concert parties
The first, the second and the fourth shareholders are the Company’s corporate controlling
among the top ten unrestricted public
shareholders. It is unknown whether the other public shareholders are related parties or
shareholders and between the top ten
acting-in-concert parties as prescribed in the Administrative Methods for Disclosure of the
unrestricted public shareholders and
Shareholding Changes of the Listed Company’s Shareholders.
the top ten 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 repurchase during the Reporting Period?
Yes No
2. Information about the controlling shareholder
Nature of controlling shareholder: foreign investment holding
Type of controlling shareholder: corporation
69
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Legal
Name of controlling representative / Date of
Organization code Business scope
shareholder company establishment
principal
Fordchee Development
Cai Yuansong 1990-01-03 14676920-000-01-22-5 Investment
Limited
EUPA Industry
Cai Shuhui 1989-07-21 12959659-000-07-22-0 Investment
Corporation Limited
Fillman Investments
Cai Shuhui 1992-07-21 16269694-000-07-22-4 Investment
Limited
Shareholdings of the
controlling shareholder
in other listed
None
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 Self Taiwan, China None
Main occupation and duty Promoter of TSANN KUEN Group in China and Taiwan
Used-to-be-holding listed Actual controller of Tsann Kuen (Taiwan) Enterprise Co., Ltd. STAR COMGISTIC
companies at home and abroad CAPITAL (Taiwan) CO., LTD. and Star International Travel Service (Taiwan) Co.,
in the last ten years Ltd.
Change of the actual controller during this reporting period
Applicable Inapplicable
Ownership and control relations between the actual controller and the Company
70
2022 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.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of
asset management.
Applicable Inapplicable
4. Accumulative pledged shares held by the Company’s 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 Company’s 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
71
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Section VIII. Preference Shares
Applicable Inapplicable
No preference shares in this reporting period.
Section IX. Bonds
Applicable Inapplicable
No bonds in this reporting period.
Section X. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 2023-03-04
Name of audit institution RSM China CPA LLP
No. of audit report RSM Shen Zi [2023] NO. 518Z0159
Name of CPA Wu Xiaolei, Guo Chunlin, Li Chunyuan
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
72
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Board Chairman: Cai Yuansong
The Board of Directors of Tsann Kuen (China)
Enterprise Co., Ltd.
04 March 2023
73
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Auditor’s Report
Tsann Kuen (China) Enterprise Co., Ltd.
RSM Shen Zi [2023] NO.518Z0159
RSM CHINA CPA LLP
CHINABEIJING
74
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Contents
NO. Content Page
1 Auditor’s report 3 -10
2 Consolidated Statement of Financial Position 11-12
Consolidated Statement of Profit or Loss and Other
3 13
Comprehensive Income
4 Consolidated Statement of Cash Flows 14
5 Consolidated Statement of Changes in Owners' Equity 15- 18
6 Statement of Financial Position of Parent Company 19-20
Statement of Profit or Loss and Other Comprehensive
7 21
Income of Parent Company
8 Statement of Cash Flows of Parent Company 22
Statement of Changes in Owners' Equity of Parent
9 23- 26
Company
10 Notes to the Financial Statements 27- 152
75
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Auditor’s Report
RSM Shen Zi [2023] NO.518Z0159
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 2022, 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 2022, and of their financial performance and cash flows for the year the n
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
76
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Key audit matters are those matters that, in our professional judgment, are of the most
significance in our audit of the financial statements of the current period. These matters
are addressed in the context of our audit of the financial statements as a whole, and
informing our opinion thereon, and we do not provide a separate opinion on these
matters.
i) Impairment allowance of inventories
a. Description
Please refer to Note 3.11 “Inventories” of the accounting policies and please refer to
Note 5.6 “Inventories” to the financial statement of the relevant disclosures.
As of 31 December 2022, the closing balance of inventories in the Company’s
consolidated statement is CNY 202,626,203.03, and impairment allowance of
inventories is CNY 22,560,774.54. 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.
b) To obtain the aging list of inventory and review the aging list and turn over situation,
77
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
and to discuss the accounting esti mation 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.
The operating revenue of the consolidated financial statement for the year 2022
amounted to CNY 1,584,267,529.08, decreasing of 32.51% compared with last year.
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:
a) To understand and evaluate the effectiveness of the design and operation of
78
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 control
of goods, evaluate the timing of ownership transfer related to product sales recognition,
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 2022, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
79
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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 Manage ment 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. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with CSAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could
80
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
v) Evaluate the overall presentation, structure and content of the financial
81
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
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.
82
2022 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 Shen Zi
[2023] NO.518Z0159 of the Company.)
RSM China CPA LLP CICPA:
WU, Xiaolei (Partner)
CICPA:
GUO, Chunlin
ChinaBeijing CICPA:
LI, Chunyuan
04 March 2023
83
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Financial Position
as at 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2022/12/31 2021/12/31 Item Note 2022/12/31 2021/12/31
Current assets: Current liabilities:
Cash and cash equivalents 5.1 576,867,829.77 779,404,127.58 Short-term borrowings
Held-for-trading financial assets 5.2 569,493,788.89 420,721,027.78 Held-for-trading financial liabilities
Derivative financial assets Derivative financial liabilities
Notes receivable Notes payable 5.18 2,630,056.46 7,709,123.54
Accounts receivable 5.3 95,950,882.88 258,128,493.77 Accounts payable 5.19 398,955,150.23 637,575,276.70
Accounts receivable financing Advances from customers 5.20 7,880,418.84 6,771,786.99
Advances to suppliers 5.4 4,050,633.59 3,862,095.12 Contract liabilities 5.21 21,522,608.04 24,030,988.10
Other receivables 5.5 15,425,312.61 18,463,787.27 Employee benefits payable 5.22 41,947,199.38 45,462,900.33
Including: Interests receivable Taxes payable 5.23 39,426,557.19 46,692,538.61
Dividend
Other payables 5.24 36,311,863.30 47,498,375.30
receivable
Inventories 5.6 180,065,428.49 252,434,003.44 Including: Interests payables
Contract assets Dividend payables
Assets classified as held for sale Liabilities classified as held for sale
Non-current assets maturing within Non-current liabilities maturing within one
5.7 21,845,333.33 5.25 9,494,026.90 10,147,932.67
one year year
Other current assets 5.8 428,851,919.37 266,300,137.82 Other current liabilities
Total current assets 1,870,705,795.60 2,021,159,006.11 Total current liabilities 558,167,880.34 825,888,922.24
Non-current assets: Non-current liabilities:
Debt investments Long-term borrowings
Other debt investments Bonds payable
Long-term receivables Including: Preference share
Perpetual capital
Long-term equity investments
securities
Other equity instrument investment 5.9 40,000.00 40,000.00 Lease liabilities 5.26 534,850,528.45 542,514,317.35
Other non-current financial assets Long-term payables
84
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Item Note 2022/12/31 2021/12/31 Item Note 2022/12/31 2021/12/31
Investment properties 5.10 19,148,198.30 20,380,947.36 Long-term employee benefits payable 5.27 350,926.82
Fixed assets 5.11 147,946,111.81 151,647,083.48 Estimated liabilities 5.28 480,930.00
Construction in progress 5.12 2,656,954.05 1,102,833.08 Deferred income
Productive biological assets Deferred tax liabilities 5.16 24,232,846.42 21,946,814.30
Oil and gas assets Other non-current liabilities
Right-of-use assets 5.13 525,637,136.84 543,070,792.39 Total non-current liabilities 559,564,304.87 564,812,058.47
Intangible assets 5.14 17,968,888.40 24,281,537.26 Total liabilities 1,117,732,185.21 1,390,700,980.71
Research and development
Owners’ equity:
expenditure
Goodwill Share capital 5.29 185,391,680.00 185,391,680.00
Long-term deferred expenses 5.15 8,946,053.72 9,914,564.44 Other equity instruments
Deferred tax assets 5.16 13,678,256.72 12,701,830.53 Including: Preference shares
Other non-current assets 5.17 813,512.56 1,603,759.82 Perpetual capital securities
Total non-current assets 736,835,112.40 764,743,348.36 Capital reserves 5.30 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income 5.31 8,130,895.08 -321,533.48
Specific reserves
Surplus reserves 5.32 68,925,849.64 61,371,246.13
Retained earnings 5.33 481,265,907.40 413,076,375.98
Total owner’s equity attributable to parent
1,040,523,297.91 956,326,734.42
company
Non-controlling interests 449,285,424.88 438,874,639.34
Total owners’ equity 1,489,808,722.79 1,395,201,373.76
Total assets 2,607,540,908.00 2,785,902,354.47 Total liabilities and owners' equity 2,607,540,908.00 2,785,902,354.47
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
85
2022 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 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2022 2021
I. Revenue 5.34 1,584,267,529.08 2,347,280,300.56
Including: operating revenue 1,584,267,529.08 2,347,280,300.56
II. Cost of sales 1,471,182,914.16 2,215,147,036.43
Including: operating cost 5.34 1,306,015,031.40 2,015,430,296.43
Taxes and surcharges 5.35 8,207,085.30 10,080,351.89
Selling and distribution expenses 5.36 22,718,269.59 21,045,003.77
General and administrative expenses 5.37 71,930,327.01 73,921,676.82
Research and development expenses 5.38 61,922,089.98 64,037,360.74
Finance costs 5.39 390,110.88 30,632,346.78
Including: Interest expense 28,205,548.36 26,060,552.41
Interest income 6,913,345.47 9,890,980.23
Add: Other income 5.40 7,999,361.25 4,786,030.51
Investment income/(losses) 5.41 25,925,914.30 63,493,757.14
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 -1,227,238.89 -15,100,872.22
Impairment loss of credit 5.43 1,883,894.53 1,295,024.60
Impairment loss of asset 5.44 -12,371,666.30 -9,275,519.35
Gains/(losses) from disposal of assets 5.45 742,730.95 2,101,750.59
III. Profit/(loss) from operations 136,037,610.76 179,433,435.40
Add: Non-operating income 5.46 3,161,103.92 5,236,403.37
Less: Non-operating expenses 5.47 104,951.52 359,939.97
IV. Profit/(loss) before tax 139,093,763.16 184,309,898.80
Less: Income tax expenses 5.48 13,445,056.84 20,883,176.71
V. Net profit/(loss) for the year 125,648,706.32 163,426,722.09
(I) Net profit/(loss) by continuity
1.Net profit/(loss) from continuing operation 125,648,706.32 163,426,722.09
2.Net profit/(loss) from discontinued operation
(II) Net profit/(loss) by ownership attribution
1.Attributable to owners of the parent 94,283,302.93 122,249,955.82
2.Attributable to non-controlling interests 31,365,403.39 41,176,766.27
VI. Other comprehensive income for the year, after tax 5.49 11,269,904.75 -2,859,462.01
(I) Attributable to owners of the parent 8,452,428.56 -2,144,596.51
1. Items that will not be reclassified subsequently to profit or
loss 9,453.29
（1）Remeasurement of the net defined benefit liability (asset) 9,453.29
（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 8,452,428.56 -2,154,049.80
（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 8,452,428.56 -2,154,049.80
(II) Attributable to non-controlling interests 2,817,476.19 -714,865.50
VII. Total comprehensive income for the year 136,918,611.07 160,567,260.08
(I) Attributable to owners of the parent 102,735,731.49 120,105,359.31
(II) Attributable to non-controlling interests 34,182,879.58 40,461,900.77
VIII. Earnings per share
(I) Basic earnings per share 0.51 0.66
(II) Diluted earnings per share 0.51 0.66
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
86
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2022 2021
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
1,713,576,512.45 2,467,884,094.36
services
Cash received from tax refund 105,536,334.92 176,598,405.86
Other cash received relating to operating activities 5.50 90,269,998.24 66,077,494.67
Subtotal of cash inflows from operating activities 1,909,382,845.61 2,710,559,994.89
Cash payments for goods purchased and services received 1,380,854,782.39 2,161,935,854.62
Cash payments to and on behalf of employees 266,640,531.04 310,074,818.82
Payments of taxes 32,523,572.64 35,006,772.54
Other cash payments relating to operating activities 5.50 64,588,350.28 55,016,977.03
Subtotal of cash outflows from operating activities 1,744,607,236.35 2,562,034,423.01
Net cash flows from operating activities 164,775,609.26 148,525,571.88
II. Cash flows from investing activities
Cash received from disposal and redemption of investments 686,493,233.63 1,095,335,804.49
Cash received from returns on investments 11,416,282.71 26,751,128.55
Net cash received from disposals of fixed assets, intangible
3,601,213.12 3,990,381.19
assets and other long-term assets
Net cash received from disposals of subsidiaries and other
- -
business units
Other cash received relating to investing activities 5.50 483,165,710.00 8,177,394.14
Subtotal of cash inflows from investing activities 1,184,676,439.46 1,134,254,708.37
Cash payments to acquire fixed, intangible and other
40,233,962.61 50,372,910.09
long-term assets
Cash payments to acquire investments 808,277,718.70 782,906,043.05
Net cash payments to acquire subsidiaries and other
- -
business units
Other cash payments relating to investing activities 5.50 624,630,729.27 262,620,000.00
Subtotal of cash outflows from investing activities 1,473,142,410.58 1,095,898,953.14
Net cash flows from investing activities -288,465,971.12 38,355,755.23
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 212,415,836.00 108,345,140.00
Other cash received relating to financing activities 5.50 10,734,861.05 52,022,663.06
Subtotal of cash inflows from financing activities 223,150,697.05 160,367,803.06
Cash repayments of debts 212,415,836.00 124,463,640.00
Cash payments for dividends, distribution of profit and interest
44,984,605.45 66,781,457.47
expenses
Including: Dividends, distribution of profit paid by
23,155,114.88 38,273,165.53
subsidiaries to minority shareholders
Other cash payments relating to financing activities 5.50 43,904,510.71 56,064,010.42
Subtotal of cash outflows from financing activities 301,304,952.16 247,309,107.89
Net cash flows from financing activities -78,154,255.11 -86,941,304.83
IV. Effect of foreign exchange rate changes on cash and cash
6,505,097.21 -1,890,055.38
equivalents
V. Net increase / (decrease) in cash and cash equivalents -195,339,519.76 98,049,966.90
Plus: Cash and cash equivalents at the beginning of the period 770,851,173.58 672,801,206.68
VI. Cash and cash equivalents at the end of the period 575,511,653.82 770,851,173.58
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
87
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2022
Owners’ equity attributable to the parent company
Item Other equity instruments
Less: Speci Non-controlling Total owners’
Other
Prefe Trea fic Surplus Retained interests equity
Share capital Perpetual Capital reserves comprehensiv Subtotal
rence Othe sury reser reserves earnings
capital e income
share rs stock ves
securities
s
I. Balance at 31
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
December 2021
Add：Changes in
- -
accounting policy
Correction of
- -
prior period errors
Business
combination under - -
common control
Others - -
II. Balance at 1 January
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
2022
III. Changes in equity
during the reporting - - - - - - 8,452,428.56 - 7,554,603.51 68,189,531.42 84,196,563.49 10,410,785.54 94,607,349.03
period
(I) Total comprehensive
8,452,428.56 94,283,302.93 102,735,731.49 34,182,879.58 136,918,611.07
income
(II) Capital contributions
- - - - - - - - - - - -616,979.16 -616,979.16
or withdrawals by owners
1.Ordinary shares
contributed by - -616,979.16 -616,979.16
shareholders
2.Capital contributed by
holders of - -
other equity instruments
3.Share-based payments
recognised in owners’ - -
equity
4.Others - -
(III) Profit distribution - - - - - - - - 7,554,603.51 -26,093,771.51 -18,539,168.00 -23,155,114.88 -41,694,282.88
88
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2022
Owners’ equity attributable to the parent company
Item Other equity instruments
Less: Speci Non-controlling Total owners’
Other interests equity
Prefe Trea fic Surplus Retained
Share capital Perpetual Capital reserves comprehensiv Subtotal
rence Othe sury reser reserves earnings
capital e income
share rs stock ves
securities
s
1.Withdrawal of surplus
7,554,603.51 -7,554,603.51 - -
reserves
2.Profit distribution to
-18,539,168.00 -18,539,168.00 -23,155,114.88 -41,694,282.88
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 - - - 296,808,965.79 - 8,130,895.08 - 68,925,849.64 481,265,907.40 1,040,523,297.91 449,285,424.88 1,489,808,722.79
December 2022
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
89
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2021
Owners’ equity attributable to the parent company
Other equity instruments
Item
Less: Speci Non-controlling Total owners’
Perpet Other
Trea fic Surplus Retained interests equity
Share capital Prefere ual Capital reserves comprehensive Subtotal
Othe sury reser reserves earnings
nce capital income
rs stock ves
shares securiti
es
I. Balance at 31
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
December 2020
Add：Changes in
- -
accounting policy
Correction of
- -
prior period errors
Business
combination under - -
common control
Others - -
II. Balance at 1 January
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
2021
III. Changes in equity
during the reporting - - - - - - -2,144,596.51 - 12,283,583.45 82,157,620.37 92,296,607.31 2,188,735.24 94,485,342.55
period
(I) Total comprehensive
-2,144,596.51 122,249,955.82 120,105,359.31 40,461,900.77 160,567,260.08
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 - - - - - - - - 12,283,583.45 -40,092,335.45 -27,808,752.00 -38,273,165.53 -66,081,917.53
90
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
2021
Owners’ equity attributable to the parent company
Other equity instruments
Item
Less: Speci Non-controlling Total owners’
Perpet Other
Trea fic Surplus Retained interests equity
Share capital Prefere ual Capital reserves comprehensive Subtotal
Othe sury reser reserves earnings
nce capital income
rs stock ves
shares securiti
es
1.Withdrawal of surplus
12,283,583.45 -12,283,583.45 - -
reserves
2.Profit distribution to
-27,808,752.00 -27,808,752.00 -38,273,165.53 -66,081,917.53
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 - - - 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
December 2021
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
91
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Financial Position of Parent Company
as at 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Assets Note 2022/12/31 2021/12/31 Liabilities and owners' equity Note 2022/12/31 2021/12/31
Current assets: Current liabilities:
Cash and cash equivalents 7,931,576.16 6,601,322.99 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 13.1 333,503.79 797,988.71 Accounts payable 3,968,243.67 2,015,215.89
Accounts receivable financing Advances from customers 2,041,705.86 1,106,121.34
Advances to suppliers 51,777.23 22,478.60 Contract liabilities 149,436.26 242,002.25
Other receivables 13.2 3,268,524.27 3,982,081.71 Employee benefits payable 6,777,516.33 6,411,378.97
Including: Interests receivable Taxes payable 4,438,418.71 1,795,825.37
Dividend receivable Other payables 36,906,239.73 99,269,544.28
Inventories 2,698,240.54 799,320.40 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 281,020.19 268,533.41
Other current assets Other current liabilities
Total current assets 14,283,621.99 12,203,192.41 Total current liabilities 54,562,580.75 111,108,621.51
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
92
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Assets Note 2022/12/31 2021/12/31 Liabilities and owners' equity Note 2022/12/31 2021/12/31
Other non-current financial assets Long-term payables
Investment properties 21,468,328.32 23,190,348.63 Long-term employee benefits payable
Fixed assets 250,663.84 309,133.46 Estimated liabilities
Construction in progress 244,253.46 253,211.02 Deferred income
Productive biological assets Deferred tax liabilities
Oil and gas assets Other non-current liabilities
Right-of-use assets 268,718.44 537,436.72 Total non-current liabilities 281,020.17
Intangible assets Total liabilities 54,562,580.75 111,389,641.68
Research and development expenditure Owners’ equity:
Goodwill Share capital 185,391,680.00 185,391,680.00
Long-term deferred expenses 1,638,462.29 1,190,863.62 Other equity instruments
Deferred tax assets 2,562,810.80 2,852,867.10 Including: Preference shares
Other non-current assets - - Perpetual capital securities
Total non-current assets 949,887,938.71 951,788,562.11 Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 68,925,849.64 61,371,246.13
Retained earnings 383,801,160.49 334,348,896.89
Total owners’ equity 909,608,979.95 852,602,112.84
Total assets 964,171,560.70 963,991,754.52 Total liabilities and owners' equity 964,171,560.70 963,991,754.52
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
93
2022 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 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2022 2021
I. Revenue 15.4 52,534,730.04 52,917,749.30
Less: Costs of sales 15.4 34,941,862.54 37,678,865.36
Taxes and surcharges 2,740,675.82 2,430,150.76
Selling and distribution expenses 4,030,945.26 2,074,987.95
Administrative expenses 3,681,000.24 3,181,940.73
Research and development expenses
Finance costs -239,961.39 -199,996.12
Including: Interest expense 19,466.61 31,398.58
Interest income 154,778.14 185,192.21
Add: Other income 189,026.77 212,981.13
Investment income/(losses) 15.5 69,465,344.64 114,819,496.58
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 -16,586.10 -82,768.03
Impairment loss of asset -670,777.78 -193,305.88
Gains/(losses) from disposal of assets
II. Profit/(loss) from operations 76,347,215.10 122,508,204.42
Add: Non-operating income 1,226,044.22 1,462,072.76
Less: Non-operating expenses 327.38 26,229.85
III. Profit/(loss) before tax 77,572,931.94 123,944,047.33
Less: Income tax expenses 2,026,896.83 1,108,212.87
IV. Net profit/(loss) for the year 75,546,035.11 122,835,834.46
(I) Net profit/(loss) from continuing operation 75,546,035.11 122,835,834.46
(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 75,546,035.11 122,835,834.46
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
2022 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd
Statement of Cash Flows of Parent Company
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2022 2021
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of services 10,206,274.70 11,899,388.22
Cash received from tax refund 266,068.83
Other cash received relating to operating activities 49,697,929.40 48,546,537.34
Subtotal of cash inflows from operating activities 60,170,272.93 60,445,925.56
Cash payments for goods purchased and services received 3,883,818.95 34,852,194.59
Cash payments to and on behalf of employees 3,234,395.24 4,025,294.45
Payments of taxes 4,861,046.77 5,051,486.33
Other cash payments relating to operating activities 96,494,540.50 103,317,339.66
Subtotal of cash outflows from operating activities 108,473,801.46 147,246,315.03
Net cash flows from operating activities -48,303,528.53 -86,800,389.47
II. Cash flows from investing activities
Cash received from disposal and redemption of investments
Cash received from returns on investments 69,465,344.64 114,819,496.58
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 69,465,344.64 114,819,496.58
Cash payments to acquire fixed, intangible and other long-term assets 1,004,394.94 1,088,037.05
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 1,004,394.94 1,088,037.05
Net cash flows from investing activities 68,460,949.70 113,731,459.53
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 expenses 18,539,168.00 27,808,752.00
Other cash payments relating to financing activities 288,000.00 288,000.00
Subtotal of cash outflows from financing activities 18,827,168.00 28,096,752.00
Net cash flows from financing activities -18,827,168.00 -28,096,752.00
IV. Effect of foreign exchange rate changes on cash and cash equivalents
V. Net increase / (decrease) in cash and cash equivalents 1,330,253.17 -1,165,681.94
Plus: Cash and cash equivalents at the beginning of the period 6,601,322.99 7,767,004.93
VI. Cash and cash equivalents at the end of the period 7,931,576.16 6,601,322.99
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
95
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2022
Other equity instruments Less: Other
Item
Capital Treasu compre Specific Surplus Retained Total owners’
Share capital Perpetual
Preferenc reserves ry hensive reserves reserves earnings equity
capital Others
e shares stock income
securities
I. Balance at 31 December 2021 185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
Add：Changes in accounting policy -
Correction of prior period errors -
Others -
II. Balance at 1 January 2022 185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
III. Changes in equity during the reporting
- - - - - - - - 7,554,603.51 49,452,263.60 57,006,867.11
period
(I) Total comprehensive income - 75,546,035.11 75,546,035.11
(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 - - - - - - - - 7,554,603.51 -26,093,771.51 -18,539,168.00
1.Withdrawal of surplus reserves 7,554,603.51 -7,554,603.51 -
2.Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00
3.Others -
(IV) Transfer between owners' equity - - - - - - - - - - -
96
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2022
Other equity instruments Less: Other
Item
Capital Treasu compre Specific Surplus Retained Total owners’
Share capital Perpetual
Preferenc reserves ry hensive reserves reserves earnings equity
capital Others
e shares stock income
securities
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 2022 185,391,680.00 - - - 271,490,289.82 - - - 68,925,849.64 383,801,160.49 909,608,979.95
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
97
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2022
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2021
Other equity instruments
Item Less: Other
Perpet
Capital Treasu comprehe Specific Surplus Retained Total owners’
Share capital ual
Preferenc reserves ry nsive reserves reserves earnings equity
capital Others
e shares stock income
securiti
es
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 the reporting period - - - - - - - - 12,283,583.45 82,743,499.01 95,027,082.46
(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 reserves 12,283,583.45 -12,283,583.45 -
2.Profit distribution to owners (or shareholders) -27,808,752.00 -27,808,752.00
3.Others -
98
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2021
Other equity instruments
Item Less: Other
Perpet
Capital Treasu comprehe Specific Surplus Retained Total owners’
Share capital ual
Preferenc reserves ry nsive reserves reserves earnings equity
capital Others
e shares stock income
securiti
es
(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 2021 185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
99
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
TsannKuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2022
(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 2022,
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 (C hina)
100
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 2022, 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 prod ucts 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 04 March
2023, in accordance with the Articles of Association, the financial statements will be
submitted to the shareholders meeting for consideration.
1.2 Scope and changes of consolidated financial statements
101
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(1)Subsidiaries included in the scope of consolidation at the end of the reporting period
10 subsidiaries were included in the scope of consolidation as of December 31 2022, please
see Note 7 INTEREST IN OTHER ENTITIES for details.
(2) Changes in the scope of the consolidated financial statements during the reporting period
Reduction of subsidiaries during the reporting period:
Abbreviation of
No. Full name of the subsidiary Reporting period Reasons
the subsidiary
1 Shanghai Canxing Trading Co., Ltd. Shanghai Canxing 2022 Logout
Tsann Kuen (Zhangzhou) South Port Electronics
2 Nangang Electric 2022 Logout
Enterprise Co., Ltd.
See Note 6 Changes in the scope of consolidation for details of the reduction of subsidiaries
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.
102
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises. Businesses
not mentioned are complied with relevant accounting policies of the Accounting Standards for
Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, 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
103
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(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.
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
104
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
3.6.1 Scope of consolidation
The scope of consolidated financial statements shall be determined based on 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 sho uld 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
investment-related services or activities to the investment entity shall be continued to be
105
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
3.6.4.1 Acquisition of subsidiaries or business
Subsidiaries or business acquired through business combination under common control
106
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 state ment 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.
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
107
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 o ther is accounted for taking
long-term equity investment held by the Company to its subsidiaries as reference. That is, the
long-term equity investment is eliminated (off- set) against the portion of the corresponding
subsidiary’s equity.
3.6.5.2 Due to not belonging to paid-in capital (or share capital) and capital reserve, and being
different from retained earnings and undistributed profit, “Specific reserves” and “General
risk provision” shall be recovered based on the proportion attributable to owners of the parent
company after long-term equity investment to the subsidiaries is eliminated with the
subsidiaries’ equity.
3.6.5.3 If temporary timing difference between the book value of the assets and liabilities in
the consolidated statement of financial position and their tax basis is generated as a result of
elimination of unrealized inter-company transaction profit or loss, deferred tax assets of
deferred tax liabilities shall be recognised, and income tax expense in the consolidated
statement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related
to transactions or events directly recognised in owner’s equity or business combination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Company
selling assets to its subsidiaries shall be eliminated against “net profit attributed to the owners
of the parent company” in full. Unrealized inter-company transactions profit or loss generated
from the subsidiaries selling assets to the Company shall be eliminated between “net profit
attributed to the owners of the parent company” and “non-controlling interests” pursuant to
the proportion of the Company in the related subsidiaries. Unrealized inter-company
transactions profit or loss generated from the assets sales between the subsidiaries shall be
eliminated between “net profit attributed to the owners of the parent company” and
“non-controlling interests” pursuant to the proportion of the Company in the selling
subsidiaries.
3.6.5.5 If loss attributed to the minority shareholders of a subsidiary in current period is more
than the proportion of non-controlling interest in this subsidiary at the beginning of the period,
108
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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.
109
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 determi ned according to the carrying amount of the original long-term
investment plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held prior to
the acquisition date shall be re-measured at its fair value on the acquisition date. Difference
between the fair value of the equity interest and its book value is recognised as investment
income. The other comprehensive income related to the equity interest held prior to the
acquisition date calculated through equity method, should be transferred to current
investment income of the acquisition period, excluding other comprehensive income resulted
from the remeasurement of the net assets or net liabilities under defined benefit plan. The
Company shall disclose acquisition-date fair value of the equity interest held prior to the
acquisition date, and the related gains or losses due to the remeasurement based on fair value.
3.6.6.3 Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of
control, when the Company prepares consolidated financial statements, difference between
consideration received from the disposal and the corresponding share of subsidiary’s net
assets cumulatively calculated from the acquisition date or combination date shall be adjusted
into capital reserve (capital premium or share premium). If the capital reserve is not enough to
absorb the difference, any excess shall be offset against retained earnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment,
110
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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.
111
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
112
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 tra nsaction date
(hereinafter referred to as the approximate exchange rate).
3.8.2 Translation of monetary items de nominated in foreign currency on the balance
sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the
balance sheet date. The balance of exchange arising from the difference between the spot
exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses at
the current period. The foreign currency non-monetary items measured at the historical cost
shall still be translated at the spot exchange rate on the transaction date; for the foreign
currency non-monetary items restated to a fair value measurement, shall be translated into the
at the spot exchange rate at the date when the fair value was determined, the difference
between the restated functional currency amount and the original functional currency amount
shall be recorded into the profits and losses at the current period.
3.8.3 Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and
accounting policy shall be adjusted so as to conform to the Compa ny. 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
113
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
effect of exchange rate changes on cash is presented separately in the statement of cash flows
as an adjustment item.
3.8.3.4 The differences arising from the translation of foreign currency financial statements
shall be presented separately as “other comprehensive income” under the owners’ equity
items of the consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the
exchange differences relating to that foreign operation recognised under other comprehensive
income in the statement of financial position, shall be reclassified into current profit or loss
according to the proportion disposed.
3.9 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity and
a financial liability or equity instrument of another entity.
3.9.1 Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial
position when, and only when, an entity becomes party to the contractual provisions of the
instrument.
A financial asset can only be derecognised when meets one of the following conditions:
3.9.1.1 The rights to the contractual cash flows from a financial asset expire
3.9.1.2 The financial asset has been transferred and meets one of the following derecognition
conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is
extinguished—i.e., when the obligation specified in the contract is discharged or cancelled 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
114
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
(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
115
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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
116
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
to changes in the own credit risk of the issuer shall be presented in other comprehens ive
income. At derecognition, cumulative gain or loss previously recognised under OCI is
reclassified to retained earnings.
3.9.3.2 Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to custo mer 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
117
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
must or may be settled in the Company's own equity instruments, where, amount of
contractual rights and obligations are calculated by multiplying the number of the equity
instruments to be available or delivered by its fair value upon settlement. Such contracts 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
asset that is measured at amortised cost, a debt investment at fair value through other
118
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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.
119
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
For notes receivable classified as portfolios, the Company calculates expected credit losses
based on default exposure and expected credit loss rates throughout the life of the Company,
considering historical credit loss experience, combined with current conditions and the
forecast of the future economic conditions.
Item Basis for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk.
Commercial acceptance According to the credit risk of the acceptor, it should be the same as the
120
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item Basis for determining the groups
bill portfolios of accounts receivable.
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 party relationships (Unless there is evidence that a credit loss may
Related parties
occur).
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 (Unless there is evidence that a credit loss may occur)
3.9.5.1.2 Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected
121
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
credit loss through the default exposure and the 12-month or lifetime expected credit loss rate
based on the nature of the investment, counterparty and the type of risk exposure.
3.9.5.2 Low credit risk
If the financial instrument has a low risk of default, 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;
122
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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:
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)
123
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 ge nerate sufficient cash flow to repay the
write-off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of
impairment loss.
3.9.6 Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to
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
124
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 shal l
be derecognised.
Whether the Company has retained control of the transferred asset depends on the transferee’s
ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and is able to exercise that ability unilaterally and without needing
to impose additional restrictions on the transfer, the Company has not retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition based
on the substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference
between the following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
The sum of consideration received and the part derecognised of the cumulative changes
in fair value previously recognised in other comprehensive income (The financial assets
involved in the transfer are classified as financial assets at fair value through other
comprehensive income in accordance with Article 18 of the Accounting Standards for
Business Enterprises - Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies for
derecognition, the previous carrying amount of the larger financial asset shall be allocated
between the part that continues to be recognised (For this purpose, a retained servicing asset
shall be treated as a part that continues to be recognised) and the part that is derecognised,
based on the relative fair values of those parts on the date of the transfer. The difference
between following two amounts shall be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part
derecognised；
The sum of the consideration received for the part derecognised and part derecognised of
the cumulative changes in fair value previously recognised in other comprehensive income
125
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(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
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
126
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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.
127
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
128
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 impairme nt 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 based on 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.
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
129
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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.
130
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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:
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
131
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 arrange d
relevant activity must be decided under unanimous consent of the parties sharing control. In
assessing whether the Company has joint control of an arrangement, the Company shall assess
first whether all the parties, or a group of the parties, control the arrangement. When all the
parties, or a group of the parties, considered collectively, are able to direct the activities of the
arrangement, the parties control the arrangement collectively. Then the Company shall assess
whether decisions about the relevant activities require the unanimous consent of the parties
that collectively control the arrangement. If two or more groups of the parties could control
the arrangement collectively, it shall not be assessed as have joint control of the arrangement.
When assessing the joint control, the protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control of those policies. In determination of
significant influence over an investee, the Company should consider not only the existing
voting rights directly or indirectly held but also the effect of potential voting rights held by the
Company and other entities that could be currently exercised or converted, including the
effect of share warrants, share options and convertible corporate bonds that issued by the
investee and could be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting
power of the investee, it is presumed that the Company has significant influence of the
investee, unless it can be clearly demonstrated that in such circumstance, the Company cannot
participate in the decision-making in the production and operating of the investee.
3.14.2 Determination of initial investment cost
3.14.2.1 Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company
makes payment in cash, transfers non-cash assets or bears liabilities as the consideration for
132
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 c apital
reserve is not enough to be offset, undistributed profit shall be offset in turn.
For a business combination involving enterprises under common control, if the Company
issues equity securities as the consideration for the business combination, the s hare 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 cos ts
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
133
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
134
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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.
135
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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;
136
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
3.17 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
137
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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.
138
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
139
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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;
140
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, investment properties
subsequently measured at cost, fixed assets, constructions in progress, right-of-use assets,
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.
141
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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”.
142
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.1 Short-term employee benefits
3.22.1.1 Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service,
actually occurred short-term employee benefits as a liability, with a corresponding charge to
current profit except for those recognised as capital expenditure based on the requirement of
accounting standards.
3.22.1.2 Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred
into current profit or loss or related capital expenditure. Employee welfare shall be measured
at fair value 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:
The Company has a present legal or constructive obligation to make such payments as a
143
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 val ue
of the defined benefit obligation less the fair value of plan assets (if any).
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
144
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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:
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
145
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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.
146
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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, if
the contract includes a variable consideration, the Company shall determine the best estimate
of the variable consideration based on the expected value or the most likely amount and
include in the transaction price only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty
associated with the variable consideration is subsequently resolved. If there is a significant
financing component in the contract, the Company will determine the transaction price based
147
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 o f 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
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;
148
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(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, 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 domestic sales product revenue must meet the following conditions: the
Company has delivered the products to the c ustomer 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.
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. For sales model of FOB, the revenue is recognised after the
products are shipped and the customs declaration and export formalities are handled; For sales
model of FCA, the revenue is recognised when products are delivered to the carrier
designated by the buyer
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
149
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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
150
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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,. Grants
measured at their nominal value shall be directly recognised in profit or loss of the period
when the grants are received. When the relevant assets are sold, transferred, written off or
damaged before the assets are terminated, the remaining deferred income shall be transferred
into profit or loss of the period of disposing relevant assets.
3.25.3.2 Government grants related to income
Government grants not related to assets are classified as government grants related to income.
Government grants related to income are accounted for in accordance with the following
criteria:
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses in future periods, such government grants shall be recognised as deferred
income and included into profit or loss in the same period as the relevant expenses or losses
are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses incurred, such government grants are directly recognised into current profit
or loss (or write down related expenses).
For government grants comprised of part related to assets as well as part related to income,
each part is accounted for separately; if it is difficult to identify different parts, the
government grants are accounted for as government grants related to income as a whole.
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
151
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Repayment of the government grants shall be recorded by increasing the carrying amount of
the asset if the book value of the asset has been written down, or reducing the balance of
relevant deferred income if deferred income balance exists, any excess will be recognised into
current profit or loss; or directly recognised into current profit or loss for other circumstances.
3.26 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in
the statement of financial position and its tax base at the balance sheet date. The Company
recognise and measure the effect of taxable temporary differences and deductible temporary
differences on income tax as deferred tax liabilities or deferred tax assets using liability
method. Deferred tax assets and deferred tax liabilities shall not be discounted.
3.26.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the
carryforward of unused tax losses and the carryforward of unused tax credits to the extent that
it is probable that taxable profit will be available against which the deductible temporary
differences, the carryforward of unused tax losses and the carryforward of unused tax credits
can be utilised at the tax rates that are expected to apply to the period when the asset is
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
152
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
153
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
154
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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
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 o f
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
155
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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 all short-term leases and for lease 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
156
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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:
Depreciation Estimated useful Residual Annual depreciation
Category
method life (year) rates (%) rates (%)
Buildings and
straight-line basis Lease period - -
constructions
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.
157
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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
158
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 r eadily
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.
Making a corresponding adjustment to the carrying amount of the right-of-use asset for
all other lease modifications.
The Company as a lessor
159
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
3.28 Changes in Significant Accounting Policies and Accounting Estimates
3.28.1 Significant changes in accounting polices
Imple ment 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 provision of "Accounting treatment of sales of
products or by-products produced before the fixed assets is available for its intended use or in
the research and development phase" (hereinafter referred to as "Accounting treatment of
sales during trial operation") and "Judgment on onerous contract" shall be implemented as of
1 January 2022. There are not any significant impacts on the Company’s financial statements
during the reporting period for the implementation of Interpretation No.15.
Imple mentation of the provisions of AS 16 "Accounting for the income tax effects of
dividends relating to financial instrume nts classified as equity instruments by the
issuer" and "Accounting for the modification of cash-settled share-based payme nts to
160
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
equity-settled share-based payments by an enterprise".
On 30 November 2022, the Ministry of Finance issued Interpretation of Accounting Standards
for Business Enterprises No.16 (Caikuai[2022] No.31) (hereinafter referred to as
"Interpretation No.16"), in which the provision of "Accounting treatment for the income tax
impact of dividends from financial instruments classified as equity instruments by the issuer"
and "Accounting treatment on the modification of cash-settled share-based payment to
equity-settled share-based payment" shall be implemented at the date of issuance.
There are not any significant impacts on the Company’s financial statements during the
reporting period for the implementation of Interpretation No.16.
3.28.2 Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
4. TAXATION
4.1 Major Categories of Tax and Tax Rates Applicable to the Company
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate
of taxable income, and calculates the
0%、1%、5%、6%、
Value added tax (VAT) value-added tax based on the difference
9%、10%、11%、13%
after deducting the deductible input tax in
the current period
Urban maintenance and
Payable turnover tax, tax exemption 7%、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 25%、22%、20%、15%
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
Value added tax of taxable income, and calculates the 5%、6%、9%、13%
value-added tax based on the difference
161
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Categories of tax Basis of tax assessment Tax rate
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%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 15%
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 based on the difference 5%、9%、13%
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%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 25%
4.2.3 Xiamen TsannKuen Property Service Co., Ltd.
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 based on the difference 0%、1%、5%
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
162
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 based on the difference 10%、11%
after deducting the deductible input tax in
the current period
Enterprise income tax Taxable profits 22%
Note: After 1 April 2022, the VAT rate for Pt. Star Comgistic Indonesia changes to 11%.
4.3 Preferential tax policy
(1) Tsann Kuen (Zhangzhou) Enterprise Co., Ltd
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, and the certification was valid for 3 years
(Certification No. GR202035002032), in accordance with the Enterprise Income Tax Law of
the People's Republic of China, the Implementation Regulations of the Enterprise Income Tax
Law of the People's Republic of China and other relevant provisions, the income tax rate of
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. enjoys a 10% reduction for three years from
2020, that is, the income tax rate is 15%.
(2) Xiamen Tsannkuen Property Services Co., Ltd.
According to the relevant provisions of the State Administration of Taxation No. 5 of 2020
"Announcement of the State Administration of Taxation on Tax Collection and Management
Matters in Support of Resumption of Work and Business by Individual Enterprises" and the
Ministry of Finance The State Administration of Taxation No. 7 of 2021 "Announcement of
the Ministry of Finance The State Administration of Taxation on the Renewal of the
Implementation of Some Preferential Policies on Taxes and Fees in Response to the
Epidemic", for Xiamen Cancom Property Services Limited, the taxable sales income
applicable to the 3% tax rate will be levied at a reduced rate of 1% from 1 January 2022 to 31
March 2022,
According to the relevant provisions of the Announcement of the Ministry of Finance and the
State Administration of Taxation on the Exemption of Small-scale VAT Taxpayers from VAT,
163
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
No. 15 of 2022, for Xiamen Tsannkuen Property Services Co., Ltd, the taxable sales income
applicable to the 3% tax rate is exempted from value-added tax from 1 April 2022 to 31
December 2022.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
Items 31 December 2022 31 December 2021
Cash on hand 843,413.66 903,610.79
Cash in bank 574,436,355.52 769,947,562.79
Other monetary funds 1,588,060.59 8,552,954.00
Total 576,867,829.77 779,404,127.58
Including：The total amount deposited overseas 45,070,898.68 25,902,620.39
Among the other monetary funds, CNY 1,356,175.95 represents the margin deposited by the
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. for the opening of the letter of credit, CNY
231,884.64 is the balance of the company's Alipay account. In addition, there are no funds
other than the deposit for letter of credit in the monetary funds at the end of the period that
have restrictions on use and potential recovery risks due to mortgages, pledges or freezes.
5.2 Held-for-trading financial assets
Items 31 December 2022 31 December 2021
Financial assets measured at fair value through Profit or Loss 569,493,788.89 420,721,027.78
Including: Derivative financial assets 1,138,900.00 4,152,000.00
Structured Deposit Investment 568,354,888.89 416,569,027.78
Total 569,493,788.89 420,721,027.78
5.3 Accounts Receivables
5.3.1 Accounts receivable by aging
Aging 31 December 2022 31 December 2021
Within 1 year 97,042,217.74 261,066,287.73
Including：Within 90 days 92,464,137.64 225,242,974.51
91 days to 180 days 4,291,123.54 35,746,963.54
181 days to 270 days 286,956.56 70,001.04
271 days to 365 days 6,348.64
164
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2022 31 December 2021
1 year to 2 years 9,677.56 110,740.52
2 years to 3 years 110,740.52
Over 5 years 5,000.00 5,000.00
Subtotal 97,167,635.82 261,182,028.25
Less：provision for bad debt 1,216,752.94 3,053,534.48
Total 95,950,882.88 258,128,493.77
5.3.2 Accounts receivable by bad debt provision method
31 December 2022
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt
recognized individually
Provision for bad debt
97,167,635.82 100.00 1,216,752.94 1.25 95,950,882.88
recognized collectively
Including: Portfolio by age 96,070,918.17 98.87 1,216,752.94 1.27 94,854,165.23
Portfolio by related parties 1,096,717.65 1.13 1,096,717.65
Total 97,167,635.82 100.00 1,216,752.94 1.25 95,950,882.88
31 December 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 age 258,884,698.08 99.12 3,053,534.48 1.18 255,831,163.60
Portfolio by related parties 2,297,330.17 0.88 2,297,330.17
Total 261,182,028.25 100.00 3,053,534.48 1.17 258,128,493.77
Specific instructions for provision for bad debts:
165
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
①At 31 December 2022, accounts receivable prepared for bad debts were accrued on an
ageing basis
31 December 2022 31 December 2021
Bad Bad
Aging Provision for debt Provision for debt
Book balance Book balance
bad debt ration bad debt ration
(%) (%)
Not overdue 88,212,429.63 441,062.13 0.50 225,050,726.04 1,125,253.64 0.50
Overdue 1 - 30
6,748,662.10 303,689.81 4.50 32,618,158.66 1,467,817.14 4.50
days
Overdue 31 - 60
797,281.80 159,456.36 20.00 549,207.74 109,841.55 20.00
days
Overdue 61 - 90
574,515.44 258,531.95 45.00
days
Overdue more
312,544.64 312,544.64 100.00 92,090.20 92,090.20 100.00
than 90 days
Total 96,070,918.17 1,216,752.94 1.27 258,884,698.08 3,053,534.48 1.18
②As at 31 December 2022, accounts receivable provided for bad debts were accrued on a
related party basis
31 December 2022 31 December 2021
Provision
Aging Bad debt Provision Bad debt
Book balance for bad Book balance
ration (%) for bad debt ration (%)
debt
Portfolio by
1,096,717.65 2,297,330.17
related parties
Total 1,096,717.65 2,297,330.17
See Note 3.9 for the recognition criteria and instructions for the provision for bad debts by
groups.
5.3.3 Changes of provision for bad debt during the reporting period
Category 31 December Changes during the reporting period 31 December
166
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2021 Recovery or 2022
Provision Write-off Other
reversal
Provision for
bad debt by 3,053,534.48 4,016,277.45 5,986,147.65 133,088.66 1,216,752.94
group
Total 3,053,534.48 4,016,277.45 5,986,147.65 133,088.66 1,216,752.94
Note: Other changes represent the effect of changes in exchange rates.
5.3.4 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 65,874,383.04, accounting for 67.79% 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
483,996.64.
5.4 Advances to Suppliers
5.4.1 Advances to suppliers by aging
31 December 2022 31 December 2021
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 4,050,633.59 100.00 3,862,095.12 100.00
Total 4,050,633.59 100.00 3,862,095.12 100.00
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 1,933,952.52, accounting for 47.74% 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 2022 31 Decmber 2021
Interest receivable
Dividend receivable
Other receivables 15,425,312.61 18,463,787.27
167
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 31 Decmber 2022 31 Decmber 2021
Total 15,425,312.61 18,463,787.27
5.5.2 Other Receivables
5.5.4.1 Other receivables by ageing
Aging 31 December 2022 31 December 2021
Within 1 year 14,220,711.94 17,226,134.38
Including: Within 90 days 14,054,615.52 17,032,996.98
91 days to 180 days 125,742.31 38,300.00
181 days to 270 days 30,000.00 18,118.30
271 days to 365 days 10,354.11 136,719.10
1year to 2 years 325,368.70 181,507.30
2 years to 3 years 15,000.00 15,669.11
3 years to 4 years 50,000.00
4 years to 5years 50,000.00
Over 5 years 1,167,252.13 1,257,520.97
Subtotal 15,778,332.77 18,730,831.76
Less: provision for bad debt 353,020.16 267,044.49
Total 15,425,312.61 18,463,787.27
5.5.4.2 Other receivables by nature
Nature 31 December 2022 31 December 2021
Export tax refund 8,000,401.16 9,244,471.36
Other current balances 6,301,879.48 7,987,728.04
Deposit 1,476,052.13 1,295,528.25
Due from related parties 203,104.11
Subtotal 15,778,332.77 18,730,831.76
Less: Provision for bad debt 353,020.16 267,044.49
Total 15,425,312.61 18,463,787.27
5.5.4.3 Other receivables by bad debt provision method
A. On 31 December 2022, provision for bad debt recognized based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 15,778,332.77 353,020.16 15,425,312.61
168
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Stages Book balance Provision for bad debt Carrying amount
Stage 2
Stage 3
Total 15,778,332.77 353,020.16 15,425,312.61
On 31 December 2022, provision for bad debt at stage 1:
Provision Provision Carrying
Category Book balance Reason
ratio (%) for bad debt amount
Provision for bad debt
recognized
individually
Provision for bad debt
recognized by 15,778,332.77 2.24 353,020.16 15,425,312.61
portfolio
Credit risk has not
1. Export tax refund 8,000,401.16 8,000,401.16 increased
significantly
Credit risk has not
2. Other current
6,301,879.48 5.60 353,020.16 5,948,859.32 increased
account
significantly
Credit risk has not
3. Deposit 1,476,052.13 1,476,052.13 increased
significantly
Total 15,778,332.77 2.24 353,020.16 15,425,312.61
As at 31 December 2022, the Company had no provision for bad debts in Stage 2.
As at 31 December 2022, the Company had no provision for bad debts in Stage 3.
B. 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:
169
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Provision
Provision Carrying
Category Book balance for bad Reason
ratio (%) amount
debt
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
2. Other current Credit risk has not
7,987,728.04 3.34 267,044.49 7,720,683.55
account increased significantly
Credit risk has not
3. Deposit 1,295,528.25 1,295,528.25
increased significantly
4. Due from related Credit risk has not
203,104.11 203,104.11
parties increased significantly
Total 18,730,831.76 1.43 267,044.49 18,463,787.27
As at 31 December 2021, the Company had no provision for bad debts in Stage 2.
As at 31 December 2021, the Company had no provision for bad debts in Stage 3.
The basis for the provision for bad debts in the current period is:
See Note 3.9 for the recognition criteria and instructions for the provision for bad debts by
groups.
5.5.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
Expected credit Expected credit loss
Expected
loss for the for the whole
Provision for bad debt credit loss Total
whole duration duration (Credit
for the next
(no credit impairment has
12 months
impairment) occurred)
Closing balance as of 12/31/2021 267,044.49 267,044.49
Carrying amount of other — — — —
170
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Stage 1 Stage 2 Stage 3
Expected credit Expected credit loss
Expected
loss for the for the whole
Provision for bad debt credit loss Total
whole duration duration (Credit
for the next
(no credit impairment has
12 months
impairment) occurred)
receivables in current period on
12/31/2021
--Turn to stage 2
--Turn to stage 3
--Turn back to stage 2
--Turn back to stage 1
Recognition 622,458.26 622,458.26
Reversal 536,482.59 536,482.59
Used
Written off
Other movements
Closing balance as of 31/12/2022 353,020.16 353,020.16
5.5.4.5 Top five closing balances by entity
Proportion of the
Balance at 31 Provision
balance to the
Entity name Nature December Ageing for bad
total other
2022 debt
receivables (%)
Zhangzhou Taiwan
investment zone
Export tax refund 1- 90 days 50.70
State Administration 8,000,401.16
of Taxation
China Export &
Credit Insurance
Deposit 648,450.00 Over 3 years 4.11
Corporation Fujian
Branch
PT. PLN Deposit 518,802.13 Over 3 years 3.29
171
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Proportion of the
Balance at 31 Provision
balance to the
Entity name Nature December Ageing for bad
total other
2022 debt
receivables (%)
/PERSERO
Zhangzhou
Xincheng Metal Utilities rentals 495,252.88 1- 90 days 3.14
Products Co., Ltd
SEB Asia Ltd Mold fund 254,004.23 1- 90 days 1.61
Total 9,916,910.40 62.85
5.6 Inventories
5.6.1 Inventories by category
31 December 2022 31 December 2021
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Raw materials 81,697,745.57 10,439,601.05 71,258,144.52 78,663,566.37 11,302,881.31 67,360,685.06
Work in process 5,826,097.72 5,826,097.72 19,972,180.33 19,972,180.33
Self-manufactured
semi-finished 25,687,483.15 2,723,371.49 22,964,111.66 29,460,145.63 1,840,187.56 27,619,958.07
goods
Finished goods 87,375,174.01 9,397,802.00 77,977,372.01 143,632,446.12 7,923,776.50 135,708,669.62
Low-value
566,890.42 566,890.42 583,732.05 583,732.05
consumables
Materials in
1,472,812.16 1,472,812.16 1,188,778.31 1,188,778.31
transit
Total 202,626,203.03 22,560,774.54 180,065,428.49 273,500,848.81 21,066,845.37 252,434,003.44
5.6.2 Provision for impairment
31 December Decrease in current 31 December
Item Increase in current year
2021 year 2022
172
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Impact of
Recovered or
Accrual changes in Other
Written-off
exchange rates
Raw materials 11,302,881.31 5,049,998.28 152,322.30 6,065,600.84 10,439,601.05
Work in process
Self-manufactured
semi-finished 1,840,187.56 883,183.93 2,723,371.49
goods
Finished goods 7,923,776.50 5,331,585.33 12,110.39 3,869,670.22 9,397,802.00
Low-value
consumables
Materials in
transit
Total 21,066,845.37 11,264,767.54 164,432.69 9,935,271.06 22,560,774.54
5.7 Non current assets due within one year
Item 31 December 2022 31 December 2021
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 2022 31 December 2021
Input tax to be deducted 11,522,932.71 14,466,364.00
Financial investment 417,328,986.66 251,833,773.82
Total 428,851,919.37 266,300,137.82
173
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.9 Other equity instrument investment
Item 31 December 2022 31 December 2021
Non-trading investments in equity instruments 40,000.00 40,000.00
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 2021 64,984,461.13 29,260,577.51 94,245,038.64
2. Increase during the period 759,585.08 759,585.08
(1) Acquisition
(2) Transfer from fixed assets 759,585.08 759,585.08
3. Decrease during the period 6,360.00 6,360.00
(1) Disposal
(2) Other transferred out 6,360.00 6,360.00
4. Balance on 31 December 2022 65,737,686.21 29,260,577.51 94,998,263.72
Accumulated depreciation and
amortization:
1. Balance on 31 December 2021 57,701,441.84 16,162,649.44 73,864,091.28
2. Increase during the period 1,364,864.04 622,111.80 1,986,975.84
(1) Accrual or amortization 746,059.83 622,111.80 1,368,171.63
(2) Transfer from fixed assets 618,804.21 618,804.21
3. Decrease during the period 1,001.70 1,001.70
(1) Disposal
(2) Other transferred out 1,001.70 1,001.70
4. Balance on 31 December 2022 59,065,304.18 16,784,761.24 75,850,065.42
Provision for impairment:
1. Balance on 31 December 2021
2. Increase during the period
(1) Accrual
(2) Other
3. Decrease during the period
174
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Building and plants Land use rights Total
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2022
Carrying amount:
1. Balance on 31 December 2022 6,672,382.03 12,475,816.27 19,148,198.30
2. Balance on 31 December 2021 7,283,019.29 13,097,928.07 20,380,947.36
5.10.2 Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 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. 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 2022 31 December 2021
Fixed assets 147,946,111.81 151,647,083.48
Disposal of fixed assets
Total 147,946,111.81 151,647,083.48
175
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2 Fixed assets
5.11.2.1 General information of fixed assets
Items Houses and Machinery Electronic devices, Vehicles Improvement expense Total
buildings modules and others of leased fixed assets
Initial cost:
1. 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
2. Increase during the period 3,894,205.17 22,153,427.42 17,533,095.08 96,722.68 680,996.17 44,358,446.52
48,672.57 12,695,848.62 31,519.19 12,776,040.38
(1) Acquisition
6,360.00 19,127,075.90 2,069,743.35 21,203,179.25
(2) Transfer from construction in progress
(3) Impact of changes in exchange rates 3,887,845.17 2,977,678.95 2,767,503.11 65,203.49 680,996.17 10,379,226.89
3. Decrease during the period 765,945.08 3,519,159.12 8,921,632.85 51,193.37 1,514,709.03 14,772,639.45
(1) Disposal 6,360.00 3,486,108.61 8,890,648.23 48,985.02 1,492,961.74 13,925,063.60
(2) Other transferred out 759,585.08 759,585.08
(3) Impact of changes in exchange rate 33,050.51 30,984.62 2,208.35 21,747.29 87,990.77
4. Balance on 31 December 2022 103,409,644.08 177,943,487.51 810,401,422.35 19,232,932.59 49,787,095.13 1,160,774,581.66
Accumulated depreciation:
1. 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
2. Increase during the reporting period 4,657,943.54 9,086,027.10 26,516,072.39 1,124,901.70 882,626.65 42,267,571.38
(1) Provision 3,324,546.76 7,112,584.64 24,336,610.15 1,075,533.82 270,672.50 36,119,947.87
(2) Other
(3) Impact of changes in exchange rate 1,333,396.78 1,973,442.46 2,179,462.24 49,367.88 611,954.15 6,147,623.51
3. Decrease during the period 620,044.41 2,359,520.09 5,141,586.62 48,178.39 1,121,746.71 9,291,076.22
176
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Houses and Machinery Electronic devices, Vehicles Improvement expense Total
buildings modules and others of leased fixed assets
(1) Disposal 1,240.20 2,354,383.97 5,133,736.62 43,008.83 1,117,315.37 8,649,684.99
(2) Other 618,804.21 618,804.21
(3) Impact of changes in exchange rate 5,136.12 7,850.00 5,169.56 4,431.34 22,587.02
4. Balance on 31 December 2022 62,230,094.09 102,710,195.33 740,635,516.96 17,816,288.03 49,033,472.80 972,425,567.21
Provision for impairment:
1. Balance on 31 December 2021 21,722,152.85 17,931,675.89 8,493.03 430,297.29 40,092,619.06
2. Increase during the period 879,958.55 701,646.04 1,104.62 919.21 1,583,628.42
(1) Provision 578,369.80 527,899.67 629.29 1,106,898.76
(2) Impact of changes in exchange rate 301,588.75 173,746.37 475.33 919.21 476,729.66
3. Decrease during the period 751,366.21 127,737.90 1,278.41 392,962.32 1,273,344.84
(1) Disposal 749,075.32 127,601.68 1,274.28 391,409.98 1,269,361.26
(2) Other
(3) Impact of changes in exchange rate 2,290.89 136.22 4.13 1,552.34 3,983.58
4. Balance on 31 December 2022 21,850,745.19 18,505,584.03 8,319.24 38,254.18 40,402,902.64
Carrying amount:
1. Balance on 31 December 2022 41,179,549.99 53,382,546.99 51,260,321.36 1,408,325.32 715,368.15 147,946,111.81
2. 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
177
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2.2 Idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Machinery 42,528,295.60 24,786,350.28 17,741,945.32
Electronic device,
119,987,081.30 111,379,683.37 8,570,028.41 37,369.52
modules, and others
Vehicles 88,801.89 86,104.80 2,697.09
Improvement expense
85,000.00 57,618.12 27,381.88
of fixed assets
Total 162,689,178.79 136,309,756.57 26,342,052.70 37,369.52
Fixed assets without certificate of title
Item Carrying amount on 31 December 2022 Reason
Lvyuan three country villa 129,197.08
Qingying garden 96,113.66 Legal procedures in process
Total 225,310.74
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. 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 2022 31 December 2021
Construction in progress 2,656,954.05 1,102,833.08
Total 2,656,954.05 1,102,833.08
5.12.2 Construction in progress
31 December 2022 31 December 2021
Provision Provision
Items Book Carrying Book Carrying
for for
balance amount balance amount
impairment impairment
Sporadic project 772,770.46 772,770.46 1,102,833.08 1,102,833.08
178
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2022 31 December 2021
Provision Provision
Items Book Carrying Book Carrying
for for
balance amount balance amount
impairment impairment
Equipment to be
1,884,183.59 1,884,183.59
inspected
Total 2,656,954.05 2,656,954.05 1,102,833.08 1,102,833.08
5.13 Right-of-use Assets
Item Houses and buildings Total
Initial cost:
1. Balance on 31 December 2021 562,201,602.78 562,201,602.78
2. Increase during the reporting period 3,538,533.89 3,538,533.89
3. Decrease during the reporting period 4,811,759.05 4,811,759.05
4. Impact of changes in exchange rates -12,862.58 -12,862.58
5. Balance on 31 December 2022 560,915,515.04 560,915,515.04
Accumulated depreciation:
1. Balance on 31 December 2021 19,130,810.39 19,130,810.39
2. Increase during the reporting period 18,581,182.05 18,581,182.05
2.1 Accrual 18,581,182.05 18,581,182.05
3. Decrease during the reporting period 2,433,614.24 2,433,614.24
3.1 Disposal 2,429,326.71 2,429,326.71
3.2Impact of changes in exchange rates 4,287.53 4,287.53
4. Balance on 31 December 2022 35,278,378.20 35,278,378.20
Provision for impairment:
1. Balance on 31 December 2021
2. Increase during the period
2.1 Accrual
3. Decrease during the reporting period
3.1 Disposal
4. Balance on 31 December 2022
Carrying amount:
1. Carrying amount on 31 December 2022 525,637,136.84 525,637,136.84
2. Carrying amount on 31 December 2021 543,070,792.39 543,070,792.39
179
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.14 Intangible Assets
Items Land use rights Software Total
Initial cost:
1. Balance on 31 December 2021 17,864,386.82 53,669,697.59 71,534,084.41
2. Increase during the period 1,248,363.67 34,061.95 1,282,425.62
(1) Acquisition 34,061.95 34,061.95
(2) Transfer from inventories /fixed assets
/construction in progress
(3) Impact of changes in exchange rates 1,248,363.67 1,248,363.67
3. Decrease during the reporting period 235,533.94 235,533.94
(1) Disposal
(2) Impact of changes in exchange rates 235,533.94 235,533.94
4. Balance on 31 December 2022 18,877,216.55 53,703,759.54 72,580,976.09
Accumulated amortization:
1. Balance on 31 December 2021 5,148,405.57 42,104,141.58 47,252,547.15
2. Increase during the period 1,007,825.79 6,356,588.31 7,364,414.10
(1) Accrual 616,024.19 6,356,588.31 6,972,612.50
(2) Impact of changes in exchange rates 391,801.60 391,801.60
3. Decrease during the period 4,873.56 4,873.56
(1) Disposal
(2) Impact of changes in exchange rates 4,873.56 4,873.56
4. Balance on 31 December 2022 6,151,357.80 48,460,729.89 54,612,087.69
Provision for impairment:
1. Balance on 31 December 2021
2. Increase during the period
(1) Accrual
(2) Impact of changes in exchange rates
3. Decrease during the period
(1) Disposal
(2) Impact of changes in exchange rates
4. Balance on 31 December 2022
Carrying amount:
1. Carrying amount on 31 December 2022 12,725,858.75 5,243,029.65 17,968,888.40
2. Carrying amount on 31 December 2021 12,715,981.25 11,565,556.01 24,281,537.26
180
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.15 Long-term Deferred Expenses
Decrease during the
Increase during
31 December reporting period 31 December
Items the reporting
2021 Other 2022
period Amortization
decrease
Houses and buildings
9,846,359.35 2,964,446.88 3,879,059.25 8,931,746.98
renovation expenses
Wall projects of 3
36,730.19 36,730.19
phases
Telecommunications
31,474.90 17,168.16 14,306.74
project expenses
Total 9,914,564.44 2,964,446.88 8,946,053.72
3,932,957.60
5.16 Deferred Tax Assets and Deferred Tax Liabilities
5.16.1 Deferred tax assets before offsetting
31 December 2022 31 December 2021
Items Deductible
Deferred tax Deductible temporary Deferred tax
temporary
assets differences assets
differences
Provision for asset
54,779,559.38 9,123,516.27 53,252,980.48 8,909,644.41
impairment
Provision for credit
1,350,615.63 219,481.38 2,633,777.35 410,297.02
impairment
Unrealized intragroup
360,395.40 90,098.85 274,902.60 68,725.65
profit
Accrued expenses 8,960,731.00 1,444,532.40 10,481,585.03 1,704,218.05
Undistributed deficit 710,270.92 177,567.73
Right-of-use Assets 18,670,852.22 2,800,627.82 9,542,517.80 1,431,377.67
Total 84,122,153.63 76,896,034.18 12,701,830.53
13,678,256.72
181
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.16.2 Deferred tax liabilities before offsetting
31 December 2022 31 December 2021
Items
Deductible temporary Deferred tax Deductible temporary Deferred tax
differences liabilities differences liabilities
Policy relocation 84,032,696.08 21,008,174.02 84,032,696.08 21,008,174.02
Financial assets held 4,493,788.89 750,939.17 5,721,027.78 938,640.28
for trading
Depreciation of fixed 16,491,554.88 2,473,733.23
assets accelerates
Total 105,018,039.85 24,232,846.42 89,753,723.86 21,946,814.30
5.16.3 Unrecognized deferred tax assets
Items 31 December 2022 31 December 2021
Provision for asset impairment 8,184,117.80 7,906,483.95
Provision for credit impairment 219,157.47 686,801.62
Accrued expenses 7,015,412.51 11,340,751.50
Payroll liability 11,247,362.19 9,961,756.20
Undistributed deficit 70,208,609.05 68,961,157.80
Total 96,874,659.02 98,856,951.07
5.16.4 Deductible losses not recognised as deferred tax assets will expire in the following
periods:
Year 31 December 2022 31 December 2021 Note
Year 2022 4,118,107.97
Year 2023 15,495,274.18 16,003,668.47
Year 2024 14,387,986.24 14,837,857.89
Year 2025 1,829,557.47 2,056,192.96
Year 2026 7,540,562.18 7,621,210.04
Year 2027 to 2032 30,955,228.98 24,324,120.47
Total 70,208,609.05 68,961,157.80
5.17 Other Non-current Assets
Items 31 December 2022 31 December 2021
Prepaid mold fee 11,500.00 5,025.64
Prepaid equipment fee 802,012.56 1,598,734.18
Total 813,512.56 1,603,759.82
182
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.18 Notes Payable
Type 31 December 2022 31 December 2021
Bank acceptance bills 2,630,056.46 7,709,123.54
Total 2,630,056.46 7,709,123.54
5.19 Accounts Payable
Items 31 December 2022 31 December 2021
Within 1 year 392,695,758.24 632,406,578.98
Over 1 year 6,259,391.99 5,168,697.72
Total 398,955,150.23 637,575,276.70
5.20 Advances from Customers
Items 31 December 2022 31 December 2021
Within 1 year 4,555,321.32 3,403,313.55
Over 1 year 3,325,097.52 3,368,473.44
Total 7,880,418.84 6,771,786.99
5.21 Contract Liabilities
Item 31 December 2022 31 December 2021
Advance from merchandise 21,522,608.04 24,030,988.10
Total 21,522,608.04 24,030,988.10
5.22 Employee Benefits Payable
5.22.1 Details of employee benefits payable
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2021 reporting exchange 2022
period
period rate
1. Short-term employee
45,427,111.36 246,124,079.63 249,838,024.40 161,834.18 41,875,000.77
benefits
2. Post-employment
benefits-defined 35,788.97 13,560,174.58 13,523,385.64 -379.30 72,198.61
contribution plans
3. Termination benefits
4. Other benefits due
within one year
Total 45,462,900.33 259,684,254.21 263,361,410.04 161,454.88 41,947,199.38
183
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.22.2 Details of short-term employee benefits
Decrease Impact of
Increase during
during the changes in 31 December
Item 31 December 2021 the reporting
reporting exchange 2022
period
period rate
1. Salaries, bonuses,
allowances and 32,540,653.52 213,888,294.90 218,285,476.50 162,690.43 28,306,162.35
subsidies
2. Employee
14,522,368.09 14,522,368.09
benefits
3. Social insurance 722,580.21 10,411,901.25 11,113,243.61 -856.25 20,381.60
Including: (1)
688,507.23 7,685,517.27 8,366,236.71 -856.27 6,931.52
Health insurance
(2) Work-related
327.30 2,170,360.10 2,157,237.34 0.02 13,450.08
injury insurance
(3) Birth insurance 33,745.68 556,023.88 589,769.56
4. Housing
9,965,589.20 6,620,262.55 5,333,761.56 11,252,090.19
accumulation fund
5. Labour union
funds and employee 500,866.21 500,866.21
education funds
6. Short-term
2,198,288.43 180,386.63 82,308.43 2,296,366.63
absence pay
Total 45,427,111.36 246,124,079.63 249,838,024.40 161,834.18 41,875,000.77
5.22.3 Details of defined contribution plans
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2021 reporting exchange 2022
period
period rate
Post-employment
benefits
1. Basic endowment
35,504.87 13,225,514.85 13,188,783.91 -379.30 71,856.51
insurance
184
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Decrease Impact of
Increase during
31 December during the changes in 31 December
Item the reporting
2021 reporting exchange 2022
period
period rate
Post-employment
benefits
2. Unemployment
284.10 334,659.73 334,601.73 342.10
insurance
Total 35,788.97 13,560,174.58 13,523,385.64 -379.30 72,198.61
5.23 Taxes Payable
Item 31 December 2022 31 December 2021
Value added tax (VAT) 1,286,227.97 678,457.84
Enterprise income tax 35,271,667.38 42,807,959.02
Individual income tax 556,713.88 514,904.85
City construction tax 376,322.10 736,427.92
Educational surcharge 362,185.92 731,734.24
Other 1,573,439.94 1,223,054.74
Total 39,426,557.19 46,692,538.61
5.24 Other Payables
5.24.1 Other payables by category
Item 31 December 2022 31 December 2021
Interest payable
Dividend payable
Other payable 36,311,863.30 47,498,375.30
Total 36,311,863.30 47,498,375.30
5.24.2 Other payables
5.24.2.1 Other payables by ageing
Item 31 December 2022 31 December 2021
Within 1 year 23,690,913.19 32,029,517.15
Over 1 year 12,620,950.11 15,468,858.15
Total 36,311,863.30 47,498,375.30
185
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.24.2.2 Other payables by nature
Item 31 December 2022 31 December 2021
Security deposit 13,859,235.05 13,238,941.75
Accrued expenses 15,976,143.51 23,575,153.78
Current payments and others 6,476,484.74 10,684,279.77
Total 36,311,863.30 47,498,375.30
5.24.2.3 Significant other payables with ageing over one year
Item 31 December 2022 Reason
Deposit 11,850,418.75 Return upon termination of contract
Total 11,850,418.75
5.25 Non current liabilities due within one year
Item 31 December 2022 31 December 2021
Lease liabilities due within one year 9,494,026.90 10,147,932.67
Total 9,494,026.90 10,147,932.67
5.26 Lease liabilities
Item 31 December 2022 31 December 2021
Lease payments 995,018,122.73 1,028,022,895.46
Less：unrecognized financing charges 450,673,567.38 475,360,645.44
Subtotal 544,344,555.35 552,662,250.02
Less：Lease liabilities due within one year 9,494,026.90 10,147,932.67
Total 534,850,528.45 542,514,317.35
5.27 Long-term Employee Benefits Payable
5.27.1 General information of long-term employee benefits payable
Item 31 December 2022 31 December 2021
1. Post-employment benefits-net liability
350,926.82
under defined benefit plans
Total 350,926.82
186
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.27.2 Changes in defined benefit plans
Present value of the defined benefit obligation:
Item 2022 2021
1. Balance at the beginning of the reporting period 350,926.82 312,775.91
2. Defined benefit cost recognised in current profit or loss 46,029.34
3. Defined benefit cost recognised in other comprehensive income -2,886.57
4. Other changes: -350,926.82 -4,991.86
(1) Consideration paid in settlements
(2) Payment of benefits -350,926.82 -6,349.72
(3) Others 1,357.86
5. Balance at the end of the reporting period 350,926.82
5.28 Estimated liabilities
Project 31 December 2022 31 December 2021 Reasons
Pending litigation 480,930.00 litigation
Total 480,930.00
5.29 Share Capital
Changes during the reporting period (+,-)
31 December 31 December
Item New Bonus Capitalization
2021 Other Subtotal 2022
issues issues of reserves
Number of
185,391,680.00 185,391,680.00
total shares
5.30 Capital Reserves
31 December Increase during the Decrease during the 31 December
Item
2021 reporting period reporting period 2022
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
187
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
2021 comprehensive income comprehensive income 2022
year before tax tax expense the parent minority
transferred into profit transferred into retained
company shareholders
or loss earnings
1. Other comprehensive income will
41,036.56 41,036.56
not be reclassified to profit or loss
Including：Remeasurement of
41,036.56 41,036.56
changes in defined benefit plans
2. Items will be reclassified to profit
-362,570.04 11,269,904.75 8,452,428.56 2,817,476.19 8,089,858.52
or loss
Including: Other comprehensive
income will be reclassified into
profit or loss under equity method
Exchange differences on translating
-362,570.04 11,269,904.75 8,452,428.56 2,817,476.19 8,089,858.52
foreign operations
Total -321,533.48 11,269,904.75 8,452,428.56 2,817,476.19 8,130,895.08
188
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.32 Surplus Reserves
Decrease
Increase during the during the
Item 31 December 2021 31 December 2022
reporting period reporting
period
Statutory surplus
61,371,246.13 7,554,603.51 68,925,849.64
reserves
Total 61,371,246.13 7,554,603.51 68,925,849.64
The increase in surplus reserve in the current period is due to the withdrawal of the statutory
surplus reserve fund by the Company at 10% of the net profit of the current period in
accordance with the relevant provisions of the Company Law and the articles of association of
the Company.
5.33 Retained Earnings
Item 2022 2021
Balance at the end of last period before adjustments 413,076,375.98 330,918,755.61
Adjustments for the opening balance (increase /(decrease))
Balance at the beginning of the reporting period after
413,076,375.98 330,918,755.61
adjustments
Add: net profit attributable to owners of the parent
94,283,302.93 122,249,955.82
company for the reporting period
Less: appropriation to statutory surplus reserves 7,554,603.51 12,283,583.45
Appropriation to discretionary surplus reserves
Provision for general risk reserves
Payment of ordinary share dividends 18,539,168.00 27,808,752.00
Payment of ordinary share dividends
Retained Earnings at the end of this period 481,265,907.40 413,076,375.98
5.34 Revenue and Cost of Sales
2021 2022
Item
Revenue Costs of sales Revenue Costs of sales
Principal activities 1,500,156,144.12 1,280,524,186.68 2,267,468,882.08 1,989,093,799.41
Other activities 84,111,384.96 25,490,844.72 79,811,418.48 26,336,497.02
Total 1,584,267,529.08 1,306,015,031.40 2,347,280,300.56 2,015,430,296.43
189
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.34.1 Revenue from principal activities (by industry or business)
2022 2021
Industry (business)
Revenue Costs of sales Revenue Costs of sales
Household appliances
1,500,156,144.12 1,280,524,186.68 2,267,468,882.08
industry 1,989,093,799.41
Total 1,500,156,144.12 1,280,524,186.68 2,267,468,882.08 1,989,093,799.41
5.34.2 Revenue from principal activities (by product)
2022 2021
Product
Revenue Costs of sales Revenue Costs of sales
Catering and Cooking 944,835,478.47 808,741,287.29 1,593,009,945.48 1,387,183,234.62
Home helper 366,208,675.06 319,155,173.77 453,992,911.28 412,983,229.49
Tea/Coffee makers 169,414,501.98 140,499,683.64 207,555,003.70 181,085,113.39
Other 19,697,488.61 12,128,041.98 12,911,021.62 7,842,221.91
Total 1,500,156,144.12 1,280,524,186.68 2,267,468,882.08 1,989,093,799.41
5.34.3 Revenue from principal activities (by region)
2022 2021
Region
Revenue Costs of sales Revenue Costs of sales
Australia 36,160,110.01 30,347,478.22 72,781,067.49 62,180,251.00
Africa 35,772,966.67 28,464,470.69 17,004,158.12 14,500,206.92
America 622,677,921.09 537,370,246.55 1,212,559,936.12 1,062,954,014.22
Europe 419,003,051.04 349,905,513.15 535,993,134.94 472,001,850.88
Asia 386,542,095.31 334,436,478.07 429,130,585.41 377,457,476.39
Total 1,500,156,144.12 1,280,524,186.68 2,267,468,882.08 1,989,093,799.41
5.35 Taxes and Surcharges
Item 2022 2021
City construction tax 2,400,175.74 3,295,350.34
Educational surcharge 2,341,816.56 3,241,836.46
Property tax 2,184,363.22 2,019,682.27
Land use tax 440,317.41 392,026.92
Stamp duty 825,856.56 1,106,232.75
Other 14,555.81 25,223.15
190
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021
Total 8,207,085.30 10,080,351.89
5.36 Selling and Distribution Expenses
Item 2022 2021
Employee remunerations 13,569,924.31 13,099,186.83
Sales commission and after sales service fees 2,418,261.29 2,933,615.97
Claims experiment expenses 1,043,138.90 1,082,657.21
Travel expenses 761,211.78 228,157.42
Advertisements charges and sales promotion 1,452,784.28 188,454.51
Administrative expenses 113,848.66 159,359.79
Rental expenses 23,461.14 26,082.79
Other expenses 3,335,639.23 3,327,489.25
Total 22,718,269.59 21,045,003.77
5.37 General and Administrative Expenses
Item 2022 2021
Employee remunerations 38,756,709.78 36,170,158.34
Depreciation and amortization 12,360,833.24 12,281,145.89
Insurance expenses 2,285,813.04 5,556,605.51
Maintenance expenses 4,443,704.91 5,008,950.70
Consultant fees 4,053,590.78 3,002,980.81
Travel expenses 3,813,708.03 2,113,129.43
Administrative expenses 963,568.28 1,299,812.02
Rental expenses 209,563.01 251,395.76
Other 5,042,835.94 8,237,498.36
Total 71,930,327.01 73,921,676.82
5.38 Research and Development Expenses
Item 2022 2021
Employee remunerations 41,658,361.64 38,445,308.13
Depreciation and amortization 8,494,707.66 9,546,509.88
Test expenses 3,426,697.09 7,617,991.59
Patent expenses 1,027,477.20 2,030,309.02
Maintenance expenses 3,217,804.82 1,645,792.35
191
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021
Certification expenses 1,021,969.20 1,543,882.51
Consultant fees 30,681.29 876,714.62
Travel expenses 408,579.37 157,859.52
Rental expenses 49,805.57 153,684.69
Others 2,586,006.14 2,019,308.43
Total 61,922,089.98 64,037,360.74
5.39 Finance Expenses
Item 2022 2021
Interest expenses 28,205,548.36 26,060,552.41
Including: interest expense on lease liabilities 24,915,064.28 25,361,013.05
Less: Interest income 6,913,345.47 9,890,980.23
Foreign exchange losses -21,831,663.76 13,019,296.30
Bank charges 929,571.75 1,443,478.30
Total 390,110.88 30,632,346.78
5.40 Other Income
Item 2022 2021 Related to assets /income
1. Government grant recognized in other
7,993,459.91 4,669,583.18
income
Including: Government grant related to
Related to income
deferred income
Government grant related to deferred
Related to income
income
Government grant directly recognised in
7,993,459.91 4,669,583.18 Related to income
current profit or loss
2. Others related to daily operation
5,901.34 116,447.33
activities and recognized in other income
Including: Charges of withholding
individual income tax
192
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021 Related to assets /income
Additional deduction of input tax 5,901.34 116,447.33
Total 7,999,361.25 4,786,030.51
5.41 Investment Income
Item 2022 2021
Investment income obtained during the holding period of
16,222,024.54 25,182,036.14
trading financial assets
Investment income from disposal of trading financial assets -4,069,250.00 32,565,100.00
Interest income from fixed deposit 13,773,139.76 5,746,621.00
Total 25,925,914.30 63,493,757.14
5.42 Gains on Changes in Fair Values
Sources of gains on changes in fair value 2022 2021
Held-for-trading financial assets -1,227,238.89 -15,100,872.22
Including: Changes in fair value of derivatives -3,013,100.00 -16,669,900.00
Financial products 1,785,861.11 1,569,027.78
Total -1,227,238.89 -15,100,872.22
5.43 Impairment Loss of Credit
Item 2022 2021
Bad debt of accounts receivables 1,969,870.20 1,372,287.48
Bad debt of other receivables -85,975.67 -77,262.88
Total 1,883,894.53 1,295,024.60
5.44 Impairment Loss of Assets
Item 2022 2021
Impairment of inventories -11,264,767.54 -6,304,119.40
Impairment of fixed assets -1,106,898.76 -2,971,399.95
Total -12,371,666.30 -9,275,519.35
5.45 Gains from Disposal of Assets
Item 2022 2021
Disposal is not classified as gain or loss on the disposal of 742,730.95 2,101,750.59
193
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021
fixed assets held for sale, construction in progress, bearer
biological assets and intangible assets
Fixed assets 742,730.95 2,101,750.59
Total 742,730.95 2,101,750.59
5.46 Non-operating Income
Recognized in current extraordinary
Item 2022 2021
gains and losses
Other 3,161,103.92 5,236,403.37 3,161,103.92
Total 3,161,103.92 5,236,403.37 3,161,103.92
5.47 Non-operating Expenses
Recognized in current
Item 2022 2021
extraordinary gains and losses
Loss from damage or scrapping
12,015.10 1,262.19 -12,015.10
of non-current assets
Including: loss from scrapping
12,015.10 1,262.19 -12,015.10
of fixed assets
Donations 29,765.53 140,260.92 -29,765.53
Penalty and late payment 9,000.00 30,209.55 -9,000.00
Other 54,170.89 188,207.31 -54,170.89
Total 104,951.52 359,939.97 -104,951.52
5.48 Income Tax Expenses
5.48.1 Details of income tax expenses
Item 2022 2021
Current tax expenses 12,135,450.91 47,475,660.56
Deferred tax expenses 1,309,605.93 -26,592,483.85
Total 13,445,056.84 20,883,176.71
5.48.2 Reconciliation of accounting profit and income tax expenses
Item 2022 2021
Profit before tax 139,093,763.16 184,309,898.80
194
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021
Income tax expense at the statutory /applicable tax rate 34,773,440.79 46,077,474.70
Effect of different tax rate of subsidiaries -12,848,881.94 -17,567,267.26
Adjustments of impact from prior period income tax 3,368.83 -508,460.84
Effect of income that is exempt from taxation -559,083.05 -274,277.62
Effect of non-deductible costs, expenses or losses 291,085.80 1,903,266.93
Effect of previously unrecognized deductible losses
-648,800.85 -2,803,292.66
recognized as deferred tax assets
Effect of deductible temporary differences and deductible
1,535,695.73 760,022.07
losses not recognized as deferred tax assets
R&D expenses plus deduction -6,621,141.17 -6,704,288.61
Depreciation of fixed assets (accelerates) -2,480,627.30
Income tax expenses 13,445,056.84 20,883,176.71
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 2022 2021
Government grants 7,993,459.91 4,669,583.18
Interest income 6,822,525.97 6,933,567.34
Rent income 61,897,576.19 45,450,868.76
Funds in current account and others 13,556,436.17 9,023,475.39
Total 90,269,998.24 66,077,494.67
5.50.2 Other cash payments relating to operating activities
Item 2022 2021
Penalties and donations 38,765.53 170,470.47
195
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2022 2021
Bank charges 929,571.75 1,443,479.00
Sales expenses, general and administrative expenses,
35,773,564.34 43,675,026.22
and research and development expenses paid by cash
Current accounts and others 27,846,448.66 9,728,001.34
Total 64,588,350.28 55,016,977.03
5.50.3 Other cash received relating to investing activities
Item 2022 2021
Fixed deposits recovered after maturity for the
purpose to earn interest income in financial 483,165,710.00 8,177,394.14
institutions
Total 483,165,710.00 8,177,394.14
5.50.4 Other cash payments relating to investing activities
Item 2022 2021
Fixed deposits in financial institutions for the purpose
624,630,729.27 262,620,000.00
to earn interest income
Total 624,630,729.27 262,620,000.00
5.50.5 Other cash received relating to financing activities
Item 2022 2021
Deposit for letter of credit 10,734,861.05 29,272,663.06
Security deposit of pledged loan 22,750,000.00
Total 10,734,861.05 52,022,663.06
5.50.6 Other cash payments relating to financing activities
Item 2022 2021
Lease payments of right-of-use assets 34,451,792.72 35,779,376.08
Letter of credit deposit 8,835,738.83 20,284,634.34
Return of investment 616,979.16
Total 43,904,510.71 56,064,010.42
5.51 Supplementary Information to the Statement of Cash Flows
196
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.51.1 Supplementary information to the statement of cash flows
Supplementary information 2022 2021
1. Adjustments of net profit to cash flows from operating
activities:
Net profit 125,648,706.32 163,426,722.09
Add: Provisions for impairment of assets 12,371,666.30 9,275,519.35
Impairment loss of credit -1,883,894.53 -1,295,024.60
Depreciation of fixed assets, investment properties 37,488,119.50 42,393,022.37
Depreciation of right-of-use assets 18,581,182.05 20,010,047.98
Amortisation of intangible assets 6,972,612.50 8,359,090.30
Amortisation of long-term deferred expenses 3,932,957.60 3,761,796.14
Gain on disposal of fixed assets, intangible assets, and other
-742,730.95 -2,101,750.59
long-term assets (Gain expressed with “-”)
Loss on scrapping of fixed assets (Gain expressed with “-”) 12,015.10 1,262.19
Loss on changes in fair value (Gain expressed with “-”) 1,227,238.89 15,100,872.22
Financial expense (Income expressed with “-”) 18,181,928.86 23,103,306.62
Investment loss (Income expressed with “-”) -25,925,914.30 -63,493,757.14
Decreases in deferred tax assets (Increase expressed with “-”) -976,426.19 2,888,491.96
Increases in deferred tax liabilities (Decrease expressed with “-”) 2,286,032.12 -29,478,737.27
Decrease in inventories (Increase expressed with “-”) 60,939,374.72 -3,618,087.75
Decrease in operating receivables (Increase expressed with “-”) 169,748,051.83 179,876,843.62
Increases in operating payables (Decrease expressed with “-”) -263,085,310.56 -219,684,045.61
Other
Net cash flows from operating activities 164,775,609.26 148,525,571.88
2. Significant investing and financing activities not involving cash
receipts and payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Leased assets (except for simplified processing)
3. Net increases in cash and cash equivalents:
Cash at the end of the reporting period 575,511,653.82 770,851,173.58
Less: Cash at the beginning of the reporting period 770,851,173.58 672,801,206.68
Add: Cash equivalents at the end of the reporting period
Less: Cash equivalents at the beginning of the reporting period
197
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Supplementary information 2022 2021
Net increase in cash and cash equivalents -195,339,519.76 98,049,966.90
198
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.51.2 The components of cash and cash equivalents
31 December 31 December
Item
2022 2021
1. Cash 575,511,653.82 770,851,173.58
Including: Cash on hand 843,413.66 903,610.79
Cash in bank available for immediate use 574,436,355.52 769,947,562.79
Other monetary funds available for immediate use 231,884.64
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 575,511,653.82 770,851,173.58
Note 1: Cash and cash equivalents exclude the restricted cash and cash equivalents in parent
company or subsidiary.
Note 2: On 31 December 2022, the amount of cash and cash equivalents in the statement of
cash flows was CNY 575,511,653.82, and the balance of monetary funds of balance sheet was
CNY 576,867,829.77. The difference of CNY 1,356,175.95 was caused by deducting the
deposit for letter of credit of CNY 1,356,175.95, which failed 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 2022 Reason for restriction
Monetary funds 1,356,175.95 Security deposits
Total 1,356,175.95
Note: The assets with restricted ownership or right-of-use are the deposit for letter of credit of
Tsann Kuen (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:
199
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Carrying amount in foreign Exchange Carrying amount in CNY
Item
currency on 31 December 2022 rate on 31 December 2022
Cash and cash equivalents
Including: HKD 34,530.65 0.89327 30,845.19
USD 25,280,338.79 6.9646 176,067,447.54
JPY 42,724,729.42 0.052358 2,236,981.38
EUR 190,797.16 7.4229 1,416,268.24
GBP 9,419.65 8.3941 79,069.48
IDR 652,648,413.21 0.000446 291,081.19
HUF 81,016.00 0.018576 1,504.95
NTD 3,526,965.00 0.226732 799,675.83
Total 180,922,873.80
Accounts receivables
Including: USD 13,484,745.69 6.9646 93,915,859.83
JPY 50,541,062.00 0.052358 2,646,228.92
IDR 803,739,638.00 0.000446 358,467.88
Total 96,920,556.63
Accounts payables
Including: USD 5,753,718.88 6.9646 40,072,350.51
EUR 345,689.60 7.4229 2,566,019.33
HKD 1,495.70 0.89327 1,336.06
JPY 47,131,017.93 0.052358 2,467,685.84
IDR 738,245,885.50 0.000446 329,257.66
GBP 18,056.00 8.3941 151,563.87
Total 45,588,213.27
Other receivables
Including: USD 1,200.00 6.9646 8,357.52
IDR 1,237,458,000.00 0.000446 551,906.27
NTD 32,752.00 0.226732 7,425.93
Total 567,689.72
Other payables
Including: HKD 56,143.68 0.89327 50,151.47
USD 418,606.52 6.9646 2,915,426.97
IDR 250,983,869.13 0.000446 111,938.81
200
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Carrying amount in foreign Exchange Carrying amount in CNY
Item
currency on 31 December 2022 rate on 31 December 2022
Total 3,077,517.25
5.53.2 Description of overseas business entities
Name of the overseas operating entity: Pt.StarComgisticIndonesia
Main business area: Indonesia
Accounting standard currency: US dollars
201
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
2022 2021
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 2022 2021
related cost
R&D expenses subsection subsidies 2,004,300.00 Not applicable 2,004,300.00 1,714,500.00 Other income
Export credit insurance subsidy 1,110,988.00 Not applicable 1,110,988.00 1,676,564.00 Other income
Rewards for stable operation of industrial production
1,050,700.00 Not applicable 1,050,700.00 Other income
during the "two festivals"
Support and subsidies for stabilizing foreign trade 1,000,000.00 Not applicable 1,000,000.00 Other income
Foreign Trade Development Subsidy 1,000,000.00 Not applicable 1,000,000.00 Other income
Subsidy for independent brand construction of foreign
500,000.00 Not applicable 500,000.00 Other income
trade enterprises
Patent subsidies 402,000.00 Not applicable 402,000.00 20,500.00 Other income
Enterprise foreign exchange hedge subsidies 253,087.00 Not applicable 253,087.00 415,000.00 Other income
202
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 2022 2021
related cost
Three-year action award of "focusing on industry and
200,000.00 Not applicable 200,000.00 Other income
grasping major industry"
Employment stabilization subsidies 131,618.39 Not applicable 131,618.39 45,313.24 Other income
Third generation service charge 106,745.09 Not applicable 106,745.09 64,934.41 Other income
Reward for increasing production and efficiency for
Not applicable 319,000.00 Other income
the first quarter of 2021
Subsidies for scientific and technological innovation Not applicable 200,000.00 Other income
Cross-provincial employment subsidies for people
Not applicable 191,625.00 Other income
lifted out of poverty
Other 234,021.43 Not applicable 234,021.43 22,146.53 Other income
Total 7,993,459.91 7,993,459.91 4,669,583.18
203
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.55 Lease
5.55.1 The Company as the lessee
Current profit and loss and cash flow related to the lease
Project 2022
Short-term lease expenses included in the profit and loss of the current period
Lease expense of low-value assets included in current period (except short-term lease) 345,690.90
Interest expense of the lease liability 24,915,064.28
Variable lease payments not included in the measurement of lease liabilities as
included in current profits and losses
Income obtained from the sublease of the use right assets 50,773,769.67
Total cash outflow related to leasing 34,451,792.72
5.55.2 The company shall be the lessor
Operation lease
Lease income
Project 2022
Lease income 11,123,806.52
Including: income related to variable lease payments not included in the
measurement of lease receipts
6. CHANGES IN THE SCOPE OF CONSOLIDATION
Other reasons for change of consolidated scope
In March 2022, the company cancelled its subsidiary, Shanghai Canxing Trading Co., LTD.
From the date of cancellation, Shanghai Canxing Trading Co., Ltd. will no longer be included
in the scope of consolidated statements.
In July 2022, the company cancelled its subsidiary, Tsann Kuen (Zhangzhou) South Port
Electronics Enterprise Co., Ltd. From the date of cancellation, Tsann Kuen (Zhangzhou)
South Port Electronics Enterprise Co., Ltd. will no longer be included in the scope of
consolidated statements.
204
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
7. INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
7.1.1 Composition of corporate group
Percentage of equity
Principal place of Registered interests by the
Name of subsidiary Abbreviation Nature of business Methods of acquisition
business City Company (%)
Direct Indirect
Tsann Kuen (Zhangzhou) Manufactures home
TKL Zhangzhou Zhangzhou 75.00 Acquired through establishment
Enterprise Co., Ltd. electronic appliance
Tsann Kuen China (Shanghai) Manufactures home Acquired through business
TKS Shanghai Shanghai 46.875
Enterprise Co., Ltd. electronic appliance combination under common control
Tsann Kuen (Zhangzhou) South
Manufactures home
Port Electronics Enterprise Co., TKN Zhangzhou Zhangzhou 56.25 Acquired through establishment
electronic appliance
Ltd.
Shanghai Canxing Trading Co., Sales of home
STD Shanghai Shanghai 56.25 Acquired through establishment
Ltd. electronic
Xiamen Tsannkuen Property
TKW Xiamen Xiamen Property services 100.00 Acquired through establishment
Services Co., Ltd.
Acquired through business
East Sino Development Limited East Sino Hong Kong Hong Kong Investment, Trading 75.00
combination under common control
Pt.Star Comgistic Indonesia SCI Indonesia Indonesia Manufactures home 75.00 Acquired through business
205
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Percentage of equity
Principal place of Registered interests by the
Name of subsidiary Abbreviation Nature of business Methods of acquisition
business City Company (%)
Direct Indirect
electronic appliance combination under common control
Pt.Star Comgistic Property Real estate
SCPDI Indonesia Indonesia 75.00 Acquired through establishment
Development Indonesia development
Acquired through business
Orient Star Investments Limited OSI Hong Kong Hong Kong Investment, Trading 75.00 combination not under common
control
Tsannkuen Edge Intelligence Acquired through business
TKEI Taiwan Taiwan Industrial design 75.00
Co., Ltd. combination under common control
Note: The indirect shareholding ratio is the ultimate shareholding ratio of the ultimate parent company.
7.1.2 Significant non-wholly owned subsidiaries
Dividends declared to
Profit or loss attributable to Non-controlling
Shareholding ratio of non- distribute to
Name of subsidiary non- controlling interests interests at the end of the
controlling interests non-controlling interests
during the reporting period reporting period
during the reporting period
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. 25.00 21,561,359.44 23,155,114.88 343,283,190.19
Tsann Kuen China (Shanghai) Enterprise Co., Ltd. 53.13 3,166,132.93 131,522,730.11
Pt.Star Comgistic Indonesia 25.00 -1,699,709.99 37,443,279.44
7.1.3 Main financial information of significant non-wholly owned subsidiaries
206
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2022
Name of subsidiary Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities
Tsann Kuen (Zhangzhou)
1,482,227,964.03 928,152,276.64 2,410,380,240.67 498,883,526.15 538,363,953.77 1,037,247,479.92
Enterprise Co., Ltd.
Tsann Kuen China (Shanghai)
292,168,697.67 5,878,922.81 298,047,620.48 29,275,071.53 21,200,351.10 50,475,422.63
Enterprise Co., Ltd.
Pt.Star Comgistic Indonesia 99,235,623.96 69,820,920.41 169,056,544.38 19,283,426.63 19,283,426.63
(Continued)
31 December 2021
Name of subsidiary Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities
Tsann Kuen (Zhangzhou)
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
Enterprise Co., Ltd.
Tsann Kuen China (Shanghai)
285,418,969.52 6,353,285.01 291,772,254.53 28,950,447.01 21,209,389.30 50,159,836.31
Enterprise Co., Ltd.
Pt.Star Comgistic Indonesia 104,039,232.69 68,583,223.01 172,622,455.70 29,097,088.51 29,097,088.51
2022
Name of subsidiary Net cash flows from operating
Revenue Net profit/(loss) Total comprehensive income
activities
207
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2022
Name of subsidiary Net cash flows from operating
Revenue Net profit/(loss) Total comprehensive income
activities
Tsann Kuen (Zhangzhou)
1,422,956,876.66 86,245,437.76 191,129,189.64
Enterprise Co., Ltd.
Tsann Kuen China (Shanghai)
1,143,842.08 5,959,779.63 -1,115,344.62
Enterprise Co., Ltd.
Pt.Star Comgistic Indonesia 163,879,757.25 -6,798,839.94 32,402,057.65
(Continued)
2021
Name of subsidiary Net cash flows from operating
Revenue Net profit/(loss) Total comprehensive income
activities
Tsann Kuen (Zhangzhou)
2,118,181,090.43 102,911,621.69 225,975,983.15
Enterprise Co., Ltd.
Tsann Kuen China (Shanghai)
969,174.51 8,766,155.95 -399,273.30
Enterprise Co., Ltd.
Pt.Star Comgistic Indonesia 241,383,474.27 744,976.91 2,963,140.71
208
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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.
209
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
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
210
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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;
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 67.79% of
the total (31 December 2021: 69.10 %); for the other receivables, the amount of the top five
entities represents 62.85% of the total (31 December 2021: 84.08%).
211
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
As of December 31, 2022, 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 2022 31 December 2021
Cash and cash equivalent 180,922,873.80 200,454,207.05
Accounts receivable 96,920,556.63 261,004,280.30
Other receivables 567,689.72 890,875.66
Accounts payable 45,588,213.27 50,002,345.34
Other payables 3,077,517.25 5,293,562.68
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
212
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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 2022
Fair value at 31 December 2022
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
569,493,788.89 569,493,788.89
profit or loss
Debt instruments 568,354,888.89 568,354,888.89
Equity instruments
Derivatives 1,138,900.00 1,138,900.00
Total assets measured at fair value on a 569,493,788.89 569,493,788.89
213
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Fair value at 31 December 2022
Items
Level 1 Level 2 Level 3 Total
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 2 on a
Recurring or Nonrecurring Basis
The fair value measurement of derivative financial assets is based on the valuation provided
by the bank for the outstanding forward foreign exchange on the balance sheet date; The fair
value of debt instrument investment is measured on the basis of the principal of the structural
deposit that is not due on the balance sheet date and the interest rate agreed with the bank.
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 Voting rights
Registered Nature of the
Name of the parent Registered capital equity interests in in the
address business
the Company (%) 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.
214
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
10.3 Other Related Parties of the Company
Name Relationship with the Company
The company is directly
Thermaster Electronic (Xiamen) Ltd. controlled by the key management
and closed family members
Tsann Kuen Enterprise Co., Ltd. Same actual controller
Gold mine chain enterprise 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) 2022 2021
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 25,501,621.08 41,613,744.13
Tsann Kuen Enterprise Co., Ltd. Purchase of goods 4,469.14
Gold mine chain enterprise Co., Ltd Purchase of goods 439.33
STAR COMGISTIC CAPITAL CO.,
Purchase of goods 1,866.97
LTD.
Total 25,501,621.08 41,620,519.57
Sales of goods and rendering of services:
Nature of the
Related parties 2022 2021
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Sales of goods 8,717,630.50 9,607,312.58
Thermaster Electronic (Xiamen) Ltd. Sales of goods 29,129.50
Total 8,746,760.00 9,607,312.58
10.4.2 Leases
The Company as lessee:
2022
Rental charges for Variable Interest
Type of Increase in
The lessor short term leases lease Rental expense
assets right-of-use
and leases of low payments not payments on lease
assets
value assets included in liabilities
215
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
The lessor Type of 2022
assets processed on a the assumed
simplified basis measurement
of lease
liabilities
STAR
COMGISTIC
Property 586,752.71 39,146.36 -3,209,286.63
CAPITAL CO.,
LTD.
(Continued)
2021
Variable
lease
Rental charges for payments
Interest
short term leases not
Type of expense on Increase in
The lessor and leases of low included Rental
assets lease right-of-use
value assets in the payments
liabilities assets
processed on a measurem
assumed
simplified basis ent of
lease
liabilities
STAR
COMGISTIC
Property 1,166,230.15 127,134.72 3,256,034.75
CAPITAL CO.,
LTD.
10.4.3 Transfers of assets and debt restructuring
Nature of the
Related parties 2022 2021
transaction(s)
Gold mine chain enterprise Co., Ltd Sale of fixed assets 1,644.86
Tsann Kuen Enterprise Co., Ltd. Sale of fixed assets 15,580.58
STAR COMGISTIC CAPITAL CO.,
Sale of fixed assets 35,949.98
LTD.
Thermaster Electronic (Xiamen) Ltd. Puchase of fixed assets 79,646.02
216
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Nature of the
Related parties 2022 2021
transaction(s)
Total 131,176.58 1,644.86
10.4.4 Key management personnel compensation
Unit: Ten thousand yuan
Item 2022 2021
Key management personnel compensation 411.30 401.44
10.4.5 Other related party transactions
Nature of the
Related parties 2022 2021
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Quality claim payment 32,196.78 368,818.81
STAR COMGISTIC CAPITAL CO., LTD. Accept service 104,743.56 106,528.65
Tsann Kuen Enterprise Co., Ltd. Accept labor service 40,260.53 39,536.23
Total 177,200.87 514,883.69
10.5 Receivables and Payables with Related Parties
10.5.1 Receivables
31 December 2022 31 December 2021
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Accounts STAR COMGISTIC
1,096,717.65 2,297,330.17
receivable CAPITAL CO., LTD.
Other STAR COMGISTIC
203,104.11
receivables CAPITAL CO., LTD.
Total 1,096,717.65 2,500,434.28
10.5.2 Payables
Items Related parties 31 December 2022 31 December 2021
Accounts payable Thermaster Electronic (Xiamen) Ltd. 5,955,654.84 7,408,747.24
Total 5,955,654.84 7,408,747.24
11. COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
217
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
As at 31 December 2022, 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 2022, The Company has no significant contingencies need to be
disclosed.
12. Events after the balance sheet date
12.1 Profit Distribution
On 4 March 2023, the first Board Meeting of 2023 held by the Company reviewed and
approved the profit distribution plan for 2022. Based on the total share capital of 185,391,680
shares as at the end of 2022, cash dividend of CNY 3.00 per 10 shares will be distributed to
all shareholders of the Company (tax included). The profit for distribution of the Company is
CNY 55,617,504.00. The proposal still needs to be approved by the shareholders' general
meeting of the Company.
12.2 Other events after the balance sheet date
Until 4 March 2023 (Report date approved by the Board of Directors), 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
13.1 Accounts Receivable
13.1.1 Accounts receivable by ageing
Aging 31 December 2022 31 December 2021
Within 1 year 240,067.21 732,884.86
Including: 1 – 90 days 219,897.21 723,207.30
91 – 180 days 20,170.00
181 – 270 days 3,328.92
271 – 365 days 6,348.64
1-2 years 9,677.56 110,740.52
2-3 years 110,740.52
Over 3 years 5,000.00 5,000.00
Subtotal 365,485.29 848,625.38
218
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2022 31 December 2021
Less: Provision for bad debt 31,981.50 50,636.67
Total 333,503.79 797,988.71
13.1.2 Accounts receivable by bad debt provision method
31 December 2022
Book balance Provision for bad debt
Category Carrying
Proportion Provision
Amount Amount amount
(%) ratio (%)
Provision for bad debt
recognised individually
Provision for bad debt
365,485.29 100.00 31,981.50 8.75 333,503.79
recognised collectively
Including: Portfolio by
365,485.29 100.00 31,981.50 8.75 333,503.79
age
Portfolio by related parties
Total 365,485.29 100.00 31,981.50 8.75 333,503.79
(Continued)
31 December 2021
Book balance Provision for bad debt
Category Carrying
Proportion Provision ratio
Amount Amount amount
(%) (%)
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
Specific instructions for provision for bad debts:
As of 31 December 2022 and 31 December 2021, accounts receivable with bad debt provision
recognised collectively by aging
Aging 31 December 2022 31 December 2021
219
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Book Provision Provision Book Provision Provision
balance for bad debt ratio (%) balance for bad debt ratio (%)
Not overdue 294,654.84 1,473.27 0.50 295,643.50 1,478.22 0.50
Overdue 1 – 30 days 26,634.37 1,198.55 4.50 527,563.80 23,740.37 4.50
Overdue 31 – 60 days 18,608.00 3,721.60 20.00
Overdue 61 – 90 days
Overdue more than 90
25,588.08 25,588.08 100.00 25,418.08 25,418.08 100.00
days
Total 365,485.29 31,981.50 8.75 848,625.38 50,636.67 5.97
See Note 3.9 for the recognition criteria and instructions for the provision for bad debts by
groups.
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
2021 Provision Write-off 2022
reversal
Provision for bad debt
50,636.67 76,500.18 95,155.35 31,981.50
recognised collectively
Total 50,636.67 76,500.18 95,155.35 31,981.50
13.1.4 Top five closing balances by entity at the reporting date
Proportion of the
Balance at 31 Provision for
Entity name balance to the total
December 2022 bad debt
accounts receivable (%)
Shenzhen Pinluo Innovation Industry
146,559.84 40.10 887.36
Co., Ltd.
Electrolux (China) Electric Co., Ltd.
100,000.00 27.36 500.00
Shanghai Branch
Haoyigou Family Shopping Ltd 93,144.37 25.49 5,174.25
Suning Procurement Center of
20,418.08 5.59 20,418.08
SUNING.COMCO.,LTD.
Xi'an Renrenle Supermarket Co., LTD 5,000.00 1.37 5,000.00
Total 365,122.29 99.91 31,979.69
13.2 Other Receivables
13.2.1 Other receivables by category
220
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 31 December 2022 31 December 2021
Interest receivable
Dividend receivable
Other receivables 3,268,524.27 3,982,081.71
Total 3,268,524.27 3,982,081.71
13.2.2 Other Receivables
13.2.2.1 Other receivables by aging
Aging 31 December 2022 31 December 2021
Within 1 year 3,230,581.33 3,953,247.20
Including: 1 – 90 days 3,121,427.22 3,899,828.90
91 – 180 days 68,800.00 7,300.00
181 – 270 days 30,000.00 13,118.30
271 – 365 days 10,354.11 33,000.00
1-2 years 124,851.70 80,502.00
2-3 years
Over 3 years 50,000.00 50,000.00
Subtotal 3,405,433.03 4,083,749.20
Less: Provision for bad debt 136,908.76 101,667.49
Total 3,268,524.27 3,982,081.71
13.2.4.2 Other receivables by nature
Nature 31 December 2022 31 December 2021
Deposit 308,800.00 50,000.00
Due from related parties 1,476,761.65 2,859,918.55
Other current balances 1,619,871.38 1,173,830.65
Subtotal 3,405,433.03 4,083,749.20
Less: Provisions for bad debt 136,908.76 101,667.49
Total 3,268,524.27 3,982,081.71
13.2.4.3 Other receivables by bad debt provision method
A. As at 31 December 2022, provision for bad debt recognised based on three stages model:
Stages Book balance Provision for bad debt Carrying acount
Stage 1 3,405,433.03 136,908.76 3,268,524.27
221
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Stages Book balance Provision for bad debt Carrying acount
Stage 2
Stage 3
Total 3,405,433.03 136,908.76 3,268,524.27
As at 31 December 2022, 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
3,405,433.03 4.02 136,908.76 3,268,524.27
recognised collectively
Deposit 308,800.00 308,800.00
Due from related parties 1,476,761.65 1,476,761.65
Other current balances 1,619,871.38 8.45 136,908.76 1,482,962.62
Total 3,405,433.03 4.02 136,908.76 3,268,524.27
On December 31,2022, the Company had no bad debt provision in Stage 2.
On December 31,2022, the Company had no bad debt provision in Stage 3.
B. As of 31 December 2021, provision for bad debt recognised based on three stages model:
Stages Book balance Provision for bad debt Carrying amount
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
As at 31 December 2021, 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
4,083,749.20 2.49 101,667.49 3,982,081.71
recognised collectively
222
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
12-month
Provision for Carrying
Category Book balance expected credit Reason
bad debt amount
losses rate (%)
Deposit 50,000.00 50,000.00
Due from related parties 2,859,918.55 2,859,918.55
Other current balances 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
On December 31,2021, the Company had no bad debt provision in the Stage 2.
On December 31,2021, the Company had no bad debt provision in Stage 3.
Basis for the amount of bad debt provisions for the current period:
See Note 3.9 for the recognition criteria and instructions for the provision for bad debts by
groups.
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 31 December 2021 101,667.49 101,667.49
Balance at 31 December 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 116,209.86 116,209.86
Recovery 80,968.59 80,968.59
Reversal
Write-off
Other changes
Balance on 31 December
136,908.76 136,908.76
2022
223
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.2.4.5 Other receivables of the top five ending balances collected by the debtor party
Proportion of the
Balance as of Provision
balance to the total
Entity name Nature 31 December Aging for bad
other receivables
2022 debt
(%)
TsannKuen (Zhangzhou) Current 1,476,761.65 43.36
Within 90 days
Enterprise Co., Ltd.(TKL) balances
LeYu Times (Xiamen 162,000.00 Within 270 4.76
Deposit
Sports) days
Xiamen Longshengzhi
Current
Bang Information 113,992.62 Within 90 days 3.35
balances
Technology Co., LTD
Tmall Xiamen TsannKuen 60,000.00 1.76
Deposit Within 90 days
flagship store
Xiamen TsannKuen 60,000.00 1.76
Deposit 1 – 2 years
Flagship Store Alipay
Total 1,872,754.27 54.99
224
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.3 Long-term Equity Investments
31 December 2022 31 December 2021
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
Investments in subsidiaries
Provision for Provision for
Increase during the Decrease during the
Investees 31 December 2021 31 December 2022 impairment during impairment at 31
reporting period reporting period
the reporting period December 2022
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
225
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.4 Revenue and Cost of Sales
2022 2021
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 5,021,963.53 3,493,646.19 8,384,224.17 6,417,190.60
Other activities 47,512,766.51 31,448,216.35 44,533,525.13 31,261,674.76
Total 52,534,730.04 34,941,862.54 52,917,749.30 37,678,865.36
13.5 Investment Income
Items 2022 2021
Investment income from long-term equity investments
69,465,344.64 114,819,496.58
under cost method
Total 69,465,344.64 114,819,496.58
14. SUPPLEMENTARY INFORMATION
14.1 Extraordinary Gains or Losses
Items 2022 2021 Description
Losses on disposal of non-current assets 730,715.85 2,101,750.59
Government grants recognised in current profit or loss
(except government grants that is closely related to
7,993,459.91 4,786,030.51
operations and determined based on a fixed scale
according to the national unified standard)
Gains /(losses) arising from changes in fair value of
held-for-trading financial assets, derivative financial
assets, other non-current financial assets,
held-for-trading financial liabilities and derivative
financial liabilities during the holding period and
investment income arising from disposal of
24,698,675.41 48,392,884.92
held-for-trading financial assets, derivative financial
assets,other non-current 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
Other non-operating income/expenses except for 3,068,167.50 4,876,463.40
226
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 2022 2021 Description
items mentioned above
Other extraordinary gains/(losses) defined 5,901.34
Total extraordinary gains/(losses) 36,496,920.01 60,157,129.42
Less: tax effect 6,436,822.09 10,199,627.23
Net extraordinary gains/(losses) 30,060,097.92 49,957,502.19
Less: net extraordinary gains/(losses) attributable to
8,949,212.27 14,347,148.91
non-controlling interest
Net extraordinary gains/(losses) attributable to ordinary
21,110,885.65 35,610,353.28
shareholders
14.2 Return on Net Assets and Earnings Per Share (‘EPS’)
14.2.1 2022
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders 9.46 0.51 0.51
Net profit attributable to ordinary shareholders
7.34 0.39 0.39
after extraordinary gains and losses
14.2.2 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
Name of the Company: TsannKuen (China) Enterprise Co., Ltd.
Date: 4 March 2023
227
