2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2023 Semi-annual Financial REPORT
(Unaudited)
1
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
August 2023
1. Consolidated Statement of Financial Position as at 30 June 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Item Note 2023-6-30 2022-12-31 Item Note 2023-6-30 2022-12-31
Current assets: Current liabilities
Cash and cash equivalents 5.1 436,873,140.87 576,867,829.77 Short-term borrowings 5.17 21,732,664.00
Held-for-trading financial 5.2 570,878,663.89 569,493,788.89 Held-for-trading financial 5.18 2,869,500.00
assets liabilities
Derivative financial assets Derivative financial liabilities
Notes receivable Notes payable 5.19 4,134,280.48 2,630,056.46
Accounts receivable 5.3 145,680,789.53 95,950,882.88 Accounts payable 5.20 335,789,553.42 398,955,150.23
Accounts receivable financing Advances from customers 5.21 5,839,961.02 7,880,418.84
Advances to suppliers 5.4 2,516,447.40 4,050,633.59 Contract liabilities 5.22 19,103,643.04 21,522,608.04
Other receivables 5.5 13,483,847.76 15,425,312.61 Employee benefits payable 5.23 40,183,650.50 41,947,199.38
Including: Interests receivable Taxes payable 5.24 35,330,825.89 39,426,557.19
Dividend receivable Other payables 5.25 32,946,785.01 36,311,863.30
Inventories 5.6 160,997,393.37 180,065,428.49 Including: Interests payables
Contract assets Dividend payables
Assets classified as held for Liabilities classified as held for
sale sale
Non-current assets maturing Non-current liabilities maturing
within one year within one year 5.26 42,524,948.56 9,494,026.90
Other current assets 5.7 483,933,510.71 428,851,919.37 Other current liabilities
Total current assets 1,814,363,793.53 1,870,705,795.60 Total current liabilities 540,455,811.92 558,167,880.34
Non-current assets: Non-current liabilities:
Debt investments Long-term borrowings
Other debt investments Bonds payable
Long-term receivables Including: Preference share
Long-term equity investments Perpetual capital securities
Other equity instrument
5.8 40,000.00 40,000.00 Lease liabilities 5.27 513,600,116.67 534,850,528.45
investment
2
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Note 2023-6-30 2022-12-31 Item Note 2023-6-30 2022-12-31
Other non-current financial
Long-term payables
assets
Long-term employee benefits
Investment properties 5.9 18,806,253.74 19,148,198.30
payable
Fixed assets 5.10 140,513,039.95 147,946,111.81 Estimated liabilities 5.28 480,930.00
Construction in progress 5.11 10,200,641.01 2,656,954.05 Deferred income
Productive biological assets Deferred tax liabilities 5.15 24,090,509.24 24,232,846.42
Oil and gas assets Other non-current liabilities
Right-of-use assets 5.12 516,485,804.72 525,637,136.84 Total non-current liabilities 537,690,625.91 559,564,304.87
Intangible assets 5.13 16,095,143.67 17,968,888.40 Total liabilities 1,078,146,437.83 1,117,732,185.21
Research and development
expenditure Owners’ equity
Goodwill Share capital 5.29 185,391,680.00 185,391,680.00
Long-term deferred expenses 5.14 8,266,975.72 8,946,053.72 Other equity instruments
Deferred tax assets 5.15 11,646,306.82 13,678,256.72 Including: Preference shares
Other non-current assets 5.16 420,115.64 813,512.56 Perpetual capital securities
Total non-current assets 722,474,281.27 736,835,112.40 Capital reserves 5.30 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income 5.31 12,732,755.36 8,130,895.08
Specific reserves
Surplus reserves 5.32 68,925,849.64 68,925,849.64
Retained earnings 5.33 453,966,264.30 481,265,907.40
Total owner’s equity attributable 1,017,825,515.09 1,040,523,297.91
to parent company
Non-controlling interests 440,866,121.88 449,285,424.88
Total owners’ equity 1,458,691,636.97 1,489,808,722.79
Total assets 2,536,838,074.80 2,607,540,908.00 Total liabilities and owners' 2,536,838,074.80 2,607,540,908.00
equity
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager：Wu Jianhua
3
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Statement of Financial Position of Parent Company as at 30 June 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Assets Note 2023-6-30 2022-12-31 Liabilities and owners' equity Note 2023-6-30 2022-12-31
Current assets: Current liabilities
Cash and cash equivalents 8,507,523.76 7,931,576.16 Short-term borrowings
Held-for-trading financial Held-for-trading financial
assets liabilities
Derivative financial assets Derivative financial liabilities
Notes receivable Notes payable
Accounts receivable 13.1 169,916.06 333,503.79 Accounts payable 1,760,298.65 3,968,243.67
Accounts receivable financing Advances from customers 2,441,314.51 2,041,705.86
Advances to suppliers 100,416.28 51,777.23 Contract liabilities 168,618.44 149,436.26
Other receivables 13.2 4,172,842.12 3,268,524.27 Employee benefits payable 4,824,731.49 6,777,516.33
Including: Interests receivable Taxes payable 5,216,266.31 4,438,418.71
Dividend receivable Other payables 34,468,934.23 36,906,239.73
Inventories 3,369,562.15 2,698,240.54 Including: Interests payables
Contract asset Dividend payables
Assets classified as held for Liabilities classified as held for
sale sale
Non-current assets maturing Non-current liabilities maturing
within one year within one year 140,510.09 281,020.19
Other current assets Other current liabilities
Total current assets 16,320,260.37 14,283,621.99 Total current liabilities 49,020,673.72 54,562,580.75
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
40,000.00 40,000.00 Lease liabilities
investment
Other non-current financial
Long-term payables
assets
4
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Assets Note 2023-6-30 2022-12-31 Liabilities and owners' equity Note 2023-6-30 2022-12-31
Long-term employee benefits
Investment properties 20,926,645.31 21,468,328.32 payable
Fixed assets 474,111.18 250,663.84 Estimated liabilities
Construction in progress 244,253.46 Deferred income
Productive biological assets Deferred tax liabilities
Oil and gas assets Other non-current liabilities
Right-of-use assets 134,359.30 268,718.44 Total non-current liabilities 0.00 0.00
Intangible assets Total liabilities 49,020,673.72 54,562,580.75
Research and development
expenditure Owners’ equity
Goodwill Share capital 185,391,680.00 185,391,680.00
Long-term deferred expenses 1,540,208.49 1,638,462.29 Other equity instruments
Deferred tax assets 1,513,732.60 2,562,810.80 Including: Preference shares
Other non-current assets Perpetual capital securities
Total non-current assets 948,043,758.44 949,887,938.71 Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 68,925,849.64 68,925,849.64
Retained earnings 389,535,525.63 383,801,160.49
Total owners’ equity 915,343,345.09 909,608,979.95
Total liabilities and owners'
Total assets 964,364,018.81 964,171,560.70 964,364,018.81 964,171,560.70
equity
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager：Wu Jianhua
5
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Consolidated Statement of Profit or Loss and Other Comprehensive Income
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Same period of
Item Note Reporting period
last year
I. Revenue 5.34 625,410,489.15 868,292,253.36
Including: operating revenue 5.34 625,410,489.15 868,292,253.36
II. Cost of sales 597,572,257.73 821,574,501.83
Including: operating cost 5.34 505,795,106.23 736,996,045.50
Taxes and surcharges 5.35 3,448,295.80 3,794,795.19
Selling and distribution expenses 5.36 13,161,232.97 10,916,746.80
General and administrative expenses 5.37 35,172,437.10 35,970,062.66
Research and development expenses 5.38 29,119,021.28 34,752,012.95
Finance costs 5.39 10,876,164.35 -855,161.27
Including: Interest expense 14,346,616.80 13,625,662.64
Interest income 2,383,878.11 2,772,581.93
Add: Other income 5.40 2,623,900.61 7,279,492.62
Investmentincome/(losses) 5.41 12,065,498.80 8,634,076.34
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 -1,484,625.00 -1,558,033.33
Impairment loss of credit 5.43 171,286.00 831,404.12
Impairment loss of asset 5.44 -3,071,317.80 -6,622,600.99
Gains/ (losses) from disposal of assets 5.45 316,839.99 125,025.90
III. Profit/(loss) from operations 38,459,814.02 55,407,116.19
Add: Non-operating income 5.46 4,510,900.90 3,060,539.00
Less: Non-operating expenses 5.47 40,912.34 12,120.97
IV. Profit/(loss) before tax 42,929,802.58 58,455,534.22
Less: Income tax expenses 5.48 5,159,974.62 6,035,903.34
V. Net profit/(loss) 37,769,827.96 52,419,630.88
(I) Net profit/(loss) by continuity
Net profit/(loss) from continuing operation 37,769,827.96 52,419,630.88
Net profit/(loss) from discontinued operation
(II) Net profit/(loss) by ownership attribution
Attributable to owners of the parent 28,317,860.90 39,629,273.60
Attributable to non-controlling interests 9,451,967.06 12,790,357.28
VI. Other comprehensive income, after tax 5.49 6,135,813.71 6,505,491.39
(a) Attributable to owners of the parent 5.49 4,601,860.28 4,879,118.54
6
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of
Item Note Reporting period
last year
(i) Items that will not be reclassified subsequently to profit or 5.49 -9,453.29
loss
1.Remeasurement of the net defined benefit liability (asset) 5.49 -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
(ii) Items that may be reclassified subsequently to profit or 5.49 4,601,860.28 4,888,571.83
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 5.49 4,601,860.28 4,888,571.83
(b) Attributable to non-controlling interests 5.49 1,533,953.43 1,626,372.85
VII. Total comprehensive income 43,905,641.67 58,925,122.27
Attributable to owners of the parent 32,919,721.18 44,508,392.14
Attributable to non-controlling interests 10,985,920.49 14,416,730.13
VIII. Earnings per share:
Basic earnings per share 14.2 0.15 0.21
Diluted earnings per share 14.2 0.15 0.21
Where business mergers under the same control occurred in the Reporting Period, net profit achieved by the merged parties before
the business mergers was CNY 0.00, with the corresponding amount for the same period of last year being CNY 0.00.
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager: Wu Jianhua
7
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Statement of Profit or Loss and Other Comprehensive Income of Parent Company
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Same period of
Item Note Reporting period last year
I. Revenue 13.4 29,022,331.37 25,895,111.22
Less: Costs of sales 13.4 17,978,788.66 17,964,672.31
Taxes and surcharges 1,521,776.23 1,271,058.42
Selling and distribution expenses 2,438,519.11 1,612,268.17
Administrative expenses 1,784,917.72 1,656,889.59
Research and development expenses
Finance costs 531,170.44 -228,226.91
Including: Interest expense 3,489.90 9,733.32
Interest income 292,389.64 120,824.23
Add: Other income 88,976.54 56,458.41
Investment income/(losses) 13.5 58,215,670.49 69,465,344.64
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 62,852.61 20,266.93
Impairment loss of asset -851,905.61 -366,899.55
Gains/(losses) from disposal of assets
II. Profit/(loss) from operations 62,282,753.24 72,793,620.07
Add: Non-operating income 129,230.00 38,394.22
Less: Non-operating expenses 327.38
III. Profit/(loss) before tax 62,411,983.24 72,831,686.91
Less: Income tax expenses 1,060,114.10 664,099.67
IV. Net profit/(loss) 61,351,869.14 72,167,587.24
Net profit/(loss) from continuing operation 61,351,869.14 72,167,587.24
Net profit/(loss) from discontinued operation
V. Other comprehensive income, 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
8
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of
Item Note Reporting period last year
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 61,351,869.14 72,167,587.24
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager: Wu Jianhua
9
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Consolidated Statement of Cash Flows
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Same period of last
Item Note Reporting period
year
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
services 541,005,360.91 904,979,489.80
Cash received from tax refund 39,806,393.56 56,898,423.31
Other cash received relating to operating activities 5.50 49,360,930.71 53,260,628.45
Subtotal of cash inflows from operating activities 630,172,685.18 1,015,138,541.56
Cash payments for goods purchased and services received 460,257,977.11 735,854,080.25
Cash payments to and on behalf of employees 124,584,413.89 139,522,504.55
Payments of taxes 15,848,581.83 23,004,263.95
Other cash payments relating to operating activities 5.50 59,229,209.75 63,328,776.09
Subtotal of cash outflows from operating activities 659,920,182.58 961,709,624.84
Net cash flows from operating activities -29,747,497.40 53,428,916.72
II. Cash flows from investing activities
Cash received from disposal and redemption of investments 150,281,850.00 171,935,616.45
Cash received from returns on investments 12,579,336.44 8,089,157.93
Net cash received from disposals of fixed assets, intangible
854,004.23 2,442,202.09
assets and other long-term assets
Net cash received from disposals of subsidiaries and other
business units
Other cash received relating to investing activities 5.50 253,023,312.02 207,120,664.36
Subtotal of cash inflows from investing activities 416,738,502.69 389,587,640.83
Cash payments to acquire fixed, intangible and other long-term
19,144,947.17 23,308,781.04
assets
Cash payments to acquire investments 150,000,000.00 367,283,876.13
Net cash payments to acquire subsidiaries and other business
0.00 0.00
units
Other cash payments relating to investing activities 5.50 304,493,112.02 327,030,464.36
Subtotal of cash outflows from investing activities 473,638,059.19 717,623,121.53
Net cash flows from investing activities -56,899,556.50 -328,035,480.70
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 21,469,800.00 119,470,618.00
Other cash received relating to financing activities 5.50 2,440,824.50 4,400,029.09
Subtotal of cash inflows from financing activities 23,910,624.50 123,870,647.09
Cash repayments of debts 33,554,500.00
Cash payments for dividends, distribution of profit and interest 75,022,727.49 41,811,721.95
expenses
Including: Dividends, distribution of profit paid by 19,405,223.49 23,155,114.88
subsidiaries to minority shareholders
Other cash payments relating to financing activities 5.50 4,369,335.92 6,672,741.56
Subtotal of cash outflows from financing activities 79,392,063.41 82,038,963.51
10
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Note Reporting period
year
Net cash flows from financing activities -55,481,438.91 41,831,683.58
IV. Effect of foreign exchange rate changes on cash and cash
equivalents 686,059.36 6,165,963.07
V. Net increase / (decrease) in cash and cash equivalents -141,442,433.45 -226,608,917.33
Plus: Cash and cash equivalents at the beginning of the period 575,511,846.95 770,851,173.58
VI. Cash and cash equivalents at the end of the period 434,069,413.50 544,242,256.25
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager: Wu Jianhua
11
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
6. Statement of Cash Flows of Parent Company
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Same period of
Item Note Reporting period
last year
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
services 2,264,442.48 3,373,919.40
Cash received from tax refund 17,976.54 266,068.83
Other cash received relating to operating activities 30,909,811.64 25,674,939.91
Subtotal of cash inflows from operating activities 33,192,230.66 29,314,928.14
Cash payments for goods purchased and services received 5,268,234.43 2,378,212.04
Cash payments to and on behalf of employees 2,876,032.08 2,389,555.63
Payments of taxes 5,258,320.56 2,015,867.77
Other cash payments relating to operating activities 22,842,197.56 76,217,382.35
Subtotal of cash outflows from operating activities 36,244,784.63 83,001,017.79
Net cash flows from operating activities -3,052,553.97 -53,686,089.65
II. Cash flows from investing activities
Cash received from disposal and redemption of investments
Cash received from returns on investments 58,215,670.49 69,465,344.64
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 58,215,670.49 69,465,344.64
Cash payments to acquire fixed, intangible and other long-
term assets
Cash payments to acquire investments
Net cash payments to acquire subsidiaries and other business
units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities -
Net cash flows from investing activities 58,215,670.49 69,465,344.64
III. Cash flows from financing activities
Cash received from capital contributions -
Cash received from borrowings -
Other cash received relating to financing activities 1,802,497.32 1,802,497.32
Subtotal of cash inflows from financing activities 1,802,497.32 1,802,497.32
Cash repayments of debts -
Cash payments for dividends, distribution of profit and interest 55,617,504.00 18,539,168.00
expenses
12
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of
Item Note Reporting period
last year
Other cash payments relating to financing activities 156,960.00 156,960.00
Subtotal of cash outflows from financing activities 55,774,464.00 18,696,128.00
Net cash flows from financing activities -53,971,966.68 -16,893,630.68
IV. Effect of foreign exchange rate changes on cash and cash
equivalents -615,202.24 187,913.10
V. Net increase / (decrease) in cash and cash equivalents 575,947.60 -926,462.59
Plus: Cash and cash equivalents at the beginning of the period 7,931,576.16 6,601,322.99
VI. Cash and cash equivalents at the end of the period 8,507,523.76 5,674,860.40
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager: Wu Jianhua
13
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
7. Consolidated Statement of Changes in Owners' Equity
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Reporting period
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
I. Balance brought forward 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
Add:Changes in accounting policy
Correction of prior period errors
Business combination under common
control
Others
II. Balance as at 1 January 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
III. Changes in equity during the
4,601,860.28 -27,299,643.10 -22,697,782.82 -8,419,303.00 -31,117,085.82
reporting period
(i) Total comprehensive income 4,601,860.28 28,317,860.90 32,919,721.18 10,985,920.49 43,905,641.67
(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 -55,617,504.00 -55,617,504.00 -19,405,223.50 -75,022,727.50
1．Withdrawal of surplus reserves
2．Profit distribution to owners (or
-55,617,504.00 -55,617,504.00 -19,405,223.50 -75,022,727.50
shareholders)
3．Others
(iv) Transfer between owners' equity
1． Capital reserves transfer to share
capital
14
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting period
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
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 0.01 0.01
IV. Balance carried forward 185,391,680.00 296,808,965.79 12,732,755.36 68,925,849.64 453,966,264.30 1,017,825,515.09 440,866,121.88 1,458,691,636.97
15
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
The same period of last year
Owners’ equity attributable to the parent company
Other equity instruments
Item
Non-controlling Total owners’
Perpe Less: Other interests equity
tual Capital Specific Surplus Retained
Share capital Preferen Treasury comprehensive Subtotal
capita reserves reserves reserves earnings
ce Others stock income
l
shares
securi
ties
I. Balance brought forward 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
Add:Changes in accounting policy
Correction of prior period errors
Business combination under common
control
Others
II. Balance as 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
III. Changes in equity during the
4,879,118.54 21,090,105.60 25,969,224.14 -8,738,384.76 17,230,839.38
reporting period
(i) Total comprehensive income 4,879,118.54 39,629,273.60 44,508,392.14 14,416,730.13 58,925,122.27
(ii) Capital contributions or withdrawals by
owners
1. Ordinary shares contributed by
shareholders
2．Capital contributed by holders of other
equity instruments
3．Share-based payments recognised in
owners’ equity
4．Others
(iii) Profit distribution -18,539,168.00 -18,539,168.00 -23,155,114.88 -41,694,282.88
1．Withdrawal of surplus reserves
2．Profit distribution to owners (or
-18,539,168.00 -18,539,168.00 -23,155,114.88 -41,694,282.88
shareholders)
3．Others
(iv) Transfer between owners' equity
1． Capital reserves transfer to share
capital
2．Surplus reserves transfer to share
capital
16
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The same period of last year
Owners’ equity attributable to the parent company
Other equity instruments
Item
Non-controlling Total owners’
Perpe Less: Other interests equity
tual Capital Specific Surplus Retained
Share capital Preferen Treasury comprehensive Subtotal
capita reserves reserves reserves earnings
ce Others stock income
l
shares
securi
ties
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 -0.01 -0.01
IV. Balance carried forward 185,391,680.00 296,808,965.79 4,557,585.06 61,371,246.13 434,166,481.58 982,295,958.56 430,136,254.58 1,412,432,213.14
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager：Wu Jianhua
17
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
8. Statement of Changes in Owners' Equity of Parent Company
Prepared by: TsannKuen (China) Enterprise Co., Ltd Unit：Yuan Currency: CNY
Reporting period
Other equity instruments
Item Less: Other
Perpetual Specific Total owners’
Share capital Preference Capital reserves Treasury comprehensive Surplus reserves Retained earnings
capital Others reserves equity
shares stock income
securities
I. Balance brought forward 185,391,680.00 271,490,289.82 68,925,849.64 383,801,160.49 909,608,979.95
Add:Changes in accounting policy
Correction of prior period errors
Others
II. Balance as at 1 January 185,391,680.00 271,490,289.82 68,925,849.64 383,801,160.49 909,608,979.95
III. Changes in equity during the reporting period 5,734,365.14 5,734,365.14
(i) Total comprehensive income 61,351,869.14 61,351,869.14
(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 -55,617,504.00 -55,617,504.00
1．Withdrawal of surplus reserves
2．Profit distribution to owners (or shareholders) -55,617,504.00 -55,617,504.00
3．Others
(iv) Transfer between owners' equity
1． Capital reserves transfer to share capital
18
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Reporting period
Other equity instruments
Item Less: Other
Perpetual Specific Total owners’
Share capital Preference Capital reserves Treasury comprehensive Surplus reserves Retained earnings
capital Others reserves equity
shares stock income
securities
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 carried forward 185,391,680.00 271,490,289.82 68,925,849.64 389,535,525.63 915,343,345.09
19
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Same period of last year
Other equity instruments
Item Other
Less: Treasury Total owners’
Share capital Perpetual Capital reserves comprehensive Specific reserves Surplus reserves Retained earnings
Preference stock equity
capital Others income
shares
securities
I. Balance brought forward 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 as at 1 January 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 period 53,628,419.24 53,628,419.24
(i) Total comprehensive income 72,167,587.24 72,167,587.24
(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 -18,539,168.00 -18,539,168.00
1．Withdrawal of surplus reserves
2．Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00
3．Others
(iv) Transfer between owners' equity
1． Capital reserves transfer to share capital
20
2022 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last year
Other equity instruments
Item Other
Less: Treasury Total owners’
Share capital Perpetual Capital reserves comprehensive Specific reserves Surplus reserves Retained earnings
Preference stock equity
capital Others income
shares
securities
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 carried forward 185,391,680.00 271,490,289.82 61,371,246.13 387,977,316.13 906,230,532.08
Legal Representative: Cai Yuansong Chief Financial Officer：Wu Jianhua Finance Manager：Wu Jianhua
21
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements for H1 2023
(All amounts are expressed in Renminbi Yuan (“CNY”) unless otherwise stated)
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
Tsann Kuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established
in the People’s Republic of China (“the PRC”) in 1988 as a wholly owned foreign investment
enterprise, the Company named in TsannKuen China (Xiamen) Ltd., firstly, invested by the
Fordchee (Hongkong) Co., Ltd., EUPA Industry Corporation Limited and Hong Kong Fillman
investment Co., Ltd.. On 16 February 1993, with the approval of the Ministry of Foreign
Trade and Economic Co-operation, the Company was reorganized into an incorporated
company and was renamed as TsannKuen (China) Enterprise Co., Ltd. In June 1993, the
Company issued 40,000,000 new shares pursuant to an international placing and public
offer and these new shares (“B shares”) were then listed on the Shenzhen Stock Exchange
on 30 June 1993. According to the “Intended Implementation of Share Reducing Proposal”
of the 5th extraordinary board of director of 2012 and the 3rd extraordinary shareholders’
general meeting of 2012, obtained the consent from the Investment Promotion Bureau of
Xiamen which is authorized by the Ministry of Commerce and the approval
documents ”The Approval by Investment Promotion Bureau of Xiamen to Consent the
Capital Reduction of TsannKuen (China) Enterprise Co., Ltd”(IPB audit [2012] NO. 698), as
the base 1,112,350,077 shares of the total original share capital, for implementation of
share reducing model that all registered shareholders who was recorded on 28 December
2012 with the proportion 6:1 to reduce the shares. After the implementation of share
reducing model, total share capital was reduced from 1,112,350,077 shares to 185,391,680
shares of the company. Until 30 June 2023, the Company’s share capital is CNY 185,391,680.
Following The Ministry of Commerce of the People’s Republic of China approved (The No.
[2005]3107 “Agreed in Principle to the Ministry of Commerce on TsannKuen (China)
Enterprise Co., Ltd. Shares Traded Sponsor of the Approval”), On 6 December 2006, the
Company received the [2006] No.266 file “The notice of TsannKuen (China) Enterprise Co.,
Ltd, concerning the Approval of non-listed Foreign Shares Traded” from China Securities
Regulatory Commission. The China Securities Regulatory Commission agreed 700,476,830
22
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
unlisted shares (account for 62.97% of the share capital) held by the Company’s
shareholders, EUPA Industry Corporation Limited, Fordchee Development Limited, and
Fillman Investment Limited to transfer into B shares. On 29 November 2007, these B shares
could be listed and exercised on Shenzhen Stock Exchange. Up to 30 June 2023, total B
shares held by the three legal shareholders (EUPA Industry Corporation Limited, Fordchee
Development Limited, and Fillman Investment Limited) are 82,830,966 shares after the
implementation of share reducing model (Accounts for 44.68% of the share capital).
Legal representative: Cai Yuansong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province
The parent: STAR COMGISTIC CAPITAL CO.,LTD.
The Company operates within the electrical machinery and equipment manufacturing
industry.
The industry of the company: electrical machinery and equipment manufacturing.
The Company was involved in the following operating activities: developing, manufacturing
household appliances, electronics, light industrial products, modern office supplies. Design
and manufacture of molds associated with these products in domestic and international
sales of the company's products and after-sales service. Wholesale and retail household
appliances, electronic products, electrical equipment, office supplies, kitchen utensils, pre-
packaged food (limited to branches), import and export related business and provide after-
sales service (the above description do not involve state trading commodity goods,
involving quota license management products are according to the relevant provisions of
the State for the regulations application).
The financial statements approved by the resolution of the Board of Directors on 8 August
2023.
1.2 Scope and changes of consolidated financial statements
8 subsidiaries were included in the scope of consolidation as of 30 June 2023, please see
Note 7 INTEREST IN OTHER ENTITIES for details.
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
23
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
for Business Enterprises – Basic standards and concrete accounting standards, Accounting
Standards for Business Enterprises – Application Guidelines, Accounting Standards for
Business Enterprises – Interpretations and other relevant provisions (collectively known as
“Accounting Standards for Business Enterprises, issued by Ministry of Finance of PRC”). In
addition, the Company complies with the Compilation Rules for Information Disclosure by
Companies Offering Securities to the Public No.15 – General Provisions on Financial
Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC) to
disclose its financial information.
2.2 Going Concern
The Company has assessed its ability to continually operate for the next twelve months
from the end of the reporting period, and no matters that may result in doubt on its ability
as a going concern were noted. Therefore, it is reasonable for the Company to prepare
financial statements on the going concern basis.
3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises.
Businesses not mentioned are complied with relevant accounting policies of the
Accounting Standards for Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truthfully and completely reflecting the
Company’s financial position as of 30 June 2023, and its operating results, changes in
shareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting Period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
Normal business cycle is realised by the Company as the period starting from the purchase
of processing assets to the realization of cash or cash equivalents. The company has a 12-
month operating cycle, and its assets and liabilities as liquidity criteria for the classification.
3.4 Functional Currency
The Company takes Renminbi Yuan (“CNY”) as the functional currency.
The Company’s overseas subsidiaries choose the currency of the primary economic
environment in which the subsidiaries operate as the functional currency.
24
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.5 Accounting Treatment of Business Combinations under and not under Common
Control
3.5.1 Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under
common control shall be measured at their carrying amount of the acquired entity at the
combination date. If the accounting policy adopted by the acquired entity is different from
that adopted by the acquiring entity, the acquiring entity shall, according to accounting
policy it adopts, adjust the relevant items in the financial statements of the acquired party
based on the principal of materiality. As for the difference between the carrying amount of
the net assets obtained by the acquiring entity and the carrying amount of the
consideration paid by it, the capital reserve (capital premium or share premium) shall be
adjusted. If the capital reserve (capital premium or share premium) is not sufficient to
absorb the difference, any excess shall be adjusted against retained earnings.
Refer to Note 3.6 (6) for accounting treatment of business combination under common
control by step acquisitions.
3.5.2 Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under
common control shall be measured at their fair value at the acquisition date. If the
accounting policy adopted by the acquired entity is different from that adopted by the
acquiring entity, the acquiring entity shall, according to accounting policy it adopts, adjust
the relevant items in the financial statements of the acquired entity based on the principal
of materiality. The acquiring entity shall recognise the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains from the
acquired entity as goodwill. The acquiring entity shall, pursuant to the following provisions,
treat the negative balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquired entity:
3.5.2.1 It shall review the measurement of the fair values of the identifiable assets,
liabilities and contingent liabilities it obtains from the acquired entity as well as the
combination costs;
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.
25
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Refer to Note 3.6.6 or the accounting treatment of business combination under the same
control by step acquisitions.
3.5.3 Treatment of business combination related costs
The intermediary costs such as audit, legal services and valuation consulting and other
related management costs that are directly attributable to the business combination shall
be charged in profit or loss in the period in which they are incurred. The costs to issue
equity or debt securities for the consideration of business combination shall be recorded
as a part of the value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
3.6.1 Scope of consolidation
The scope of consolidated financial statements shall be determined on the basis of control.
It not only includes subsidiaries determined based on voting power (or similar) or other
arrangement, but also structured entities under one or several contract arrangements.
Control exists when the Company has all the following: power over the investee; exposure,
or rights to variable returns from the Company’s involvement with the investee; and the
ability to use its power over the investee to affect the amount of the investor’s returns.
Subsidiaries are the entities that controlled by the Company (including enterprise, a
divisible part of the investee, and structured entity controlled by the enterprise). A
structured entity (sometimes called a Special Purpose Entity) is an entity that has been
designed so that voting or similar rights are not the dominant factor in deciding who
controls the entity.
3.6.2 Special requirement as the parent company is an investment entity
If the parent company is an investment entity, it should measure its investments in
particular subsidiaries as financial assets at fair value through profit or loss instead of
consolidating those subsidiaries in its consolidated and separate financial statements.
However, as an exception to this requirement, if a subsidiary provides investment-related
services or activities to the investment entity, it should be consolidated.
The parent company is defined as investment entity when meets following conditions:
3.6.2.1 Obtains funds from one or more investors for the purpose of providing those
investors with investment management services;
3.6.2.2 Commits to its investors that its business purpose is to invest funds solely for
returns from capital appreciation, investment income or both; and
26
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.2.3 Measures and evaluates the performance of substantially all of its investments on a
fair value basis.
If the parent company becomes an investment entity, it shall cease to consolidate its
subsidiaries at the date of the change in status, except for any subsidiary which provides
investment-related services or activities to the investment entity shall be continued to be
consolidated. The deconsolidation of subsidiaries is accounted for as though the
investment entity partially disposed subsidiaries without loss of control.
When the parent company previously classified as an investment entity ceases to be an
investment entity, subsidiary that was previously measured at fair value through profit or
loss shall be included in the scope of consolidated financial statements at the date of the
change in status. The fair value of the subsidiary at the date of change represents the
transferred deemed consideration in accordance with the accounting for business
combination not under common control.
3.6.3 Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the
financial statements of the Company and its subsidiaries, and using other related
information.
When preparing consolidated financial statements, the Company shall consider the entire
group as an accounting entity, adopt uniform accounting policies and apply the
requirements of Accounting Standard for Business Enterprises related to recognition,
measurement and presentation. The consolidated financial statements shall reflect the
overall financial position, operating results, and cash flows of the group.
3.6.3.1 Like items of assets, liabilities, equity, income, expenses, and cash flows of the
parent are combined with those of the subsidiaries.
3.6.3.2 The carrying amount of the parent’s investment in each subsidiary is eliminated
(off-set) against the parent’s portion of equity of each subsidiary.
3.6.3.3 Eliminate the impact of intragroup transactions between the Company and the
subsidiaries or between subsidiaries, and when intragroup transactions indicate an
impairment of related assets, the losses shall be recognised in full.
3.6.3.4 Adjust special transactions from the perspective of the group.
3.6.4 Method of preparation of the consolidated financial statements when subsidiaries
are acquired or disposed in the reporting period
27
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.4.1 Acquisition of subsidiaries or business
3.6.4.1.1 Subsidiaries or business acquired through business combination under common
control
a. When preparing consolidated statements of financial position, the opening balance of
the consolidated balance sheet shall be adjusted. Related items of comparative financial
statements shall be adjusted as well, deeming that the combined entity has always existed
ever since the ultimate controlling party began to control.
b. Incomes, expenses, and profits of the subsidiary incurred from the beginning of the
reporting period to the end of the reporting period shall be included into the consolidated
statement of profit or loss. Related items of comparative financial statements shall be
adjusted as well, deeming that the combined entity has always existed ever since the
ultimate controlling party began to control.
c. Cash flows from the beginning of the reporting period to the end of the reporting period
shall be included into the consolidated statement of cash flows. Related items of
comparative financial statements shall be adjusted as well, deeming that the combined
entity has always existed ever since the ultimate controlling party began to control.
3.6.4.1.2 Subsidiaries or business acquired through business combination not under
common control
a. When preparing the consolidated statements of financial position, the opening balance
of the consolidated statements of financial position shall not be adjusted.
b. Incomes, expenses, and profits of the subsidiary incurred from the acquisition date to
the end of the reporting period shall be included into the consolidated statement of profit
or loss.
c. Cash flows from the acquisition date to the end of the reporting period shall be included
into the consolidated statement of cash flows.
3.6.4.3 Disposal of subsidiaries or business
3.6.4.3.1 When preparing the consolidated statements of financial position, the opening
balance of the consolidated statements of financial position shall not be adjusted.
3.6.4.3.2 Incomes, expenses, and profits incurred from the beginning of the subsidiary to
the disposal date shall be included into the consolidated statement of profit or loss.
3.6.4.3.3 Cash flows from the beginning of the subsidiary to the disposal date shall be
included into the consolidated statement of cash flows.
28
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.5 Special consideration in consolidation elimination
3.6.5.1 Long-term equity investment held by the subsidiaries to the Company shall be
recognised as treasury stock of the Company, which offsets with the owner’s equity,
represented as “treasury stock” under “owner’s equity” in the consolidated statement of
financial position.
Long-term equity investment held by subsidiaries between each other is accounted for
taking long-term equity investment held by the Company to its subsidiaries as reference.
That is, the long-term equity investment is eliminated (off- set) against the portion of the
corresponding subsidiary’s equity.
3.6.5.2 Due to not belonging to paid-in capital (or share capital) and capital reserve, and
being different from retained earnings and undistributed profit, “Specific reserves” and
“General risk provision” shall be recovered based on the proportion attributable to owners
of the parent company after long-term equity investment to the subsidiaries is eliminated
with the subsidiaries’ equity.
3.6.5.3 If temporary timing difference between the book value of the assets and liabilities
in the consolidated statement of financial position and their tax basis is generated as a
result of elimination of unrealized inter-company transaction profit or loss, deferred tax
assets of deferred tax liabilities shall be recognised, and income tax expense in the
consolidated statement of profit or loss shall be adjusted simultaneously, excluding
deferred taxes related to transactions or events directly recognised in owner’s equity or
business combination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Company
selling assets to its subsidiaries shall be eliminated against “net profit attributed to the
owners of the parent company” in full. Unrealized inter-company transactions profit or loss
generated from the subsidiaries selling assets to the Company shall be eliminated between
“net profit attributed to the owners of the parent company” and “non-controlling interests”
pursuant to the proportion of the Company in the related subsidiaries. Unrealized inter-
company transactions profit or loss generated from the assets sales between the
subsidiaries shall be eliminated between “net profit attributed to the owners of the parent
company” and “non-controlling interests” pursuant to the proportion of the Company in
the selling subsidiaries.
3.6.5.5 If loss attributed to the minority shareholders of a subsidiary in current period is
29
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
more than the proportion of non-controlling interest in this subsidiary at the beginning of
the period, non-controlling interest is still to be written down.
3.6.6 Accounting for Special Transactions
3.6.6.1 Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate
financial statements of the Company, the cost of the long-term equity investment obtained
in purchasing non-controlling interests is measured at the fair value of the consideration
paid. In the consolidated financial statements, difference between the cost of the long-
term equity investment newly obtained in purchasing non-controlling interests and share
of the subsidiary’s net assets from the acquisition date or combination date continuingly
calculated pursuant to the newly acquired shareholding proportion shall be adjusted into
capital reserve (capital premium or share premium). If capital reserve is not enough to be
offset, surplus reserve and undistributed profit shall be offset in turn.
3.6.6.2 Gaining control over the subsidiary in stages through multiple transactions
3.6.6.2.1 Business combination under common control in stages through multiple
transactions
On the combination date, in the separate financial statement, initial cost of the long-term
equity investment is determined according to the share of carrying amount of the
acquiree’s net assets in the ultimate controlling entity’s consolidated financial statements
after combination. The difference between the initial cost of the long-term equity
investment and the carrying amount of the long-term investment held prior of control plus
book value of additional consideration paid at acquisition date is adjusted into capital
reserve (capital premium or share premium). If the capital reserve is not enough to absorb
the difference, any excess shall be adjusted against surplus reserve and undistributed profit
in turn.
In the consolidated financial statements, the assets and liabilities acquired during the
combination should be recognized at their carrying amount in the ultimate controlling
entity’s consolidated financial statements on the combination date unless any adjustment
is resulted from the difference in accounting policies. The difference between the carrying
amount of the investment held prior of control plus book value of additional consideration
paid on the acquisition date and the net assets acquired through the combination is
adjusted into capital reserve (capital premium or share premium). If the capital reserve is
30
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
not enough to absorb the difference, any excess shall be adjusted against retained
earnings.
If the acquiring entity holds equity investment in the acquired entity prior to the
combination date and the equity investment is accounted for under the equity method,
related profit or loss, other comprehensive income and other changes in equity which have
been recognised during the period from the later of the date of the Company obtaining
original equity interest and the date of both the acquirer and the acquiree under common
control of the same ultimate controlling party to the combination date should be offset
against the opening balance of retained earnings at the comparative financial statements
period respectively.
3.6.6.2.2 Business combination not under common control in stages through multiple
transactions
On the consolidation date, in the separate financial statements, the initial cost of long-
term equity investment is determined according to the carrying amount of the original
long-term investment plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held
prior to the acquisition date shall be re-measured at its fair value on the acquisition date.
Difference between the fair value of the equity interest and its book value is recognised as
investment income. The other comprehensive income related to the equity interest held
prior to the acquisition date calculated through equity method, should be transferred to
current investment income of the acquisition period, excluding other comprehensive
income resulted from the remeasurement of the net assets or net liabilities under defined
benefit plan. The Company shall disclose acquisition-date fair value of the equity interest
held prior to the acquisition date, and the related gains or losses due to the
remeasurement based on fair value.
3.6.6.3 Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of
control, when the Company prepares consolidated financial statements, difference
between consideration received from the disposal and the corresponding share of
subsidiary’s net assets cumulatively calculated from the acquisition date or combination
date shall be adjusted into capital reserve (capital premium or share premium). If the
capital reserve is not enough to absorb the difference, any excess shall be offset against
retained earnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
31
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.6.4.1 Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity
investment, when the consolidated financial statements are prepared, the retained equity
interest should be re-measured at fair value at the date of loss of control. The difference
between i) the fair value of consideration received from the disposal plus non-controlling
interest retained; ii) share of the former subsidiary’s net assets cumulatively calculated
from the acquisition date or combination date according to the original proportion of
equity interest, shall be recognised in current investment income when control is lost.
Moreover, other comprehensive income and other changes in equity related to the equity
investment in the former subsidiary shall be transferred into current investment income
when control is lost, excluding other comprehensive income resulted from the
remeasurement of the movement of net assets or net liabilities under defined benefit plan.
3.6.6.4.2 Disposal in stages
In the consolidated financial statements, whether the transactions should be accounted for
as “a single transaction” needs to be decided firstly.
If the disposal in stages should not be classified as “a single transaction”, in the separate
financial statements, for transactions prior of the date of loss of control, carrying amount
of each disposal of long-term equity investment need to be recognized, and the difference
between consideration received and the carrying amount of long-term equity investment
corresponding to the equity interest disposed should be recognized in current investment
income; in the consolidated financial statements, the disposal transaction should be
accounted for according to related policy in “Disposal of long-term equity investment in
subsidiaries without a loss of control”.
If the disposal in stages should be classified as “a single transaction”, these transactions
should be accounted for as a single transaction of disposal of subsidiary resulting in loss of
control. In the separate financial statements, for each transaction prior of the date of loss
of control, difference between consideration received and the carrying amount of long-
term equity investment corresponding to the equity interest disposed should be
recognised as other comprehensive income firstly, and transferred to profit or loss as a
whole when control is lost; in the consolidated financial statements, for each transaction
prior of the date of loss of control, difference between consideration received and
proportion of the subsidiary’s net assets corresponding to the equity interest disposed
should be recognised in profit or loss as a whole when control is lost.
32
Tsann Kuen (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:
a. The transactions are entered into simultaneously or in contemplation of one another.
b. The transactions form a single transaction designed to achieve an overall commercial
effect.
c. The occurrence of one transaction depends on the occurrence of at least one other
transaction.
d. One transaction, when considered on its own merits, does not make economic sense,
but when considered together with the other transaction or transactions would be
considered economically justifiable.
3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional
capital injection by the subsidiaries’ minority shareholders.
Other shareholders (minority shareholders) of the subsidiaries inject additional capital in
the subsidiaries, which resulted in the dilution of equity interest of parent company in
these subsidiaries. In the consolidated financial statements, difference between share of
the corresponding subsidiaries’ net assets calculated based on the parent’s equity interest
before and after the capital injection shall be adjusted into capital reserve (capital
premium or share premium). If the capital reserve is not enough to absorb the difference,
any excess shall be adjusted against retained earnings.
3.7 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents include short-term (generally within three months of maturity at acquisition),
highly liquid investments that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in value.
3.8 Foreign Currency Transactions and Translation of Foreign Currency Financial
Statements
3.8.1 Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the
foreign currency shall be translated into the amount in the functional currency at the spot
exchange rate of the transaction date, or at an exchange rate which is determined through
a systematic and reasonable method and is approximate to the spot exchange rate of the
33
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
transaction date (hereinafter referred to as the approximate exchange rate).
3.8.2 Translation of monetary items denominated in foreign currency on the balance
sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the
balance sheet date. The balance of exchange arising from the difference between the spot
exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses
at the current period. The foreign currency non-monetary items measured at the historical
cost shall still be translated at the spot exchange rate on the transaction date; for the
foreign currency non-monetary items restated to a fair value measurement, shall be
translated into the at the spot exchange rate at the date when the fair value was
determined, the difference between the restated functional currency amount and the
original functional currency amount shall be recorded into the profits and losses at the
current period.
3.8.3 Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period
and accounting policy shall be adjusted so as to conform to the Company. The adjusted
foreign operation financial statements denominated in foreign currency (other than
functional currency) shall be translated in accordance with the following method:
3.8.3.1 The asset and liability items in the statement of financial position shall be
translated at the spot exchange rates at the date of that statement of financial position.
The owners’ equity items except undistributed profit shall be translated at the spot
exchange rates when they are incurred.
3.8.3.2 The income and expense items in the statement of profit and other
comprehensive income shall be translated at the spot exchange rates or approximate
exchange rate at the date of transaction.
3.8.3.3 Foreign currency cash flows and cash flows of foreign subsidiaries shall be
translated at the spot exchange rate or approximate exchange rate when the cash flows
are incurred. The effect of exchange rate changes on cash is presented separately in the
statement of cash flows as an adjustment item.
3.8.3.4 The differences arising from the translation of foreign currency financial statements
shall be presented separately as “other comprehensive income” under the owners’ equity
34
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 purchase or sale of financial assets is a transaction
under a contract whose terms require delivery of the asset within the time frame
established generally by regulations or convention in the marketplace concerned. Trade
date is the date at which the entity commits itself to purchase or sell an asset.
3.9.2 Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business
model for managing the financial asset and the contractual cash flow characteristics of the
financial asset: financial asset at amortised cost, financial asset at fair value through profit
or loss (FVTPL) and financial asset at fair value through other comprehensive income
35
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
(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
amortisation under effective interest rate method or impairment are recognised in current
profit or loss.
3.9.2.2 Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are
solely payment of principal and interest on the principal amount outstanding. All changes
in fair value are recognised in other comprehensive income except for gain or loss arising
from impairment or exchange differences, which should be recognised in current profit or
loss. At derecognition, cumulative gain or loss previously recognised under OCI is
36
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
reclassified to current profit or loss. However, interest income calculated based on the
effective interest rate is included in current profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity
instrument investments as measured through FVTOCI. All changes in fair value are
recognised in other comprehensive income except for dividend income recognised in
current profit or loss. At derecognition, cumulative gain or loss are reclassified to retained
earnings.
3.9.2.3 Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for abovementioned financial asset at amortised cost or financial
asset at fair value through other comprehensive income (FVTOCI), should be classified as
financial asset at fair value through profit or loss (FVTPL). These financial assets should be
subsequently measured at fair value. All the changes in fair value are included in current
profit or loss.
3.9.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through
profit or loss (FVTPL), loan commitments at a below-market interest rate and financial
guarantee contracts and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
3.9.3.1 Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and
financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After
initial recognition, any gain or loss (including interest expense) are recognised in current
profit or loss except for those hedge accounting is applied. For financial liability that is
designated as at FVTPL, changes in the fair value of the financial liability that is attributable
to changes in the own credit risk of the issuer shall be presented in other comprehensive
income. At derecognition, cumulative gain or loss previously recognised under OCI is
reclassified to retained earnings.
3.9.3.2 Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under
specified contract terms. The provision of impairment losses of loan commitments shall be
recognised based on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified
37
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the original or modified terms of a debt
instrument. Financial guarantee contracts liability shall be subsequently measured at the
higher of: The amount of the loss allowance recognised according to the impairment
principles of financial instruments; and the amount initially recognised less the cumulative
amount of income recognised in accordance with the revenue principles.
3.9.3.3 Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost
using the effective interest method.
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
3.9.3.3.1 If the Company has no unconditional right to avoid delivering cash or another
financial instrument to fulfill a contractual obligation, this contractual obligation meets the
definition of financial liabilities. Some financial instruments do not comprise terms and
conditions related to obligations of delivering cash or another financial instrument
explicitly, yet they may include contractual obligation indirectly through other terms and
conditions.
3.9.3.3.2 If a financial instrument must or may be settled in the Company's own equity
instruments, it should be considered that the Company’s own equity instruments are
alternatives of cash or another financial instrument, or to entitle the holder of the equity
instruments to sharing the remaining rights over the net assets of the issuer. If the former
is the case, the instrument is a liability of the issuer; otherwise, it is an equity instrument of
the issuer. Under some circumstances, it is regulated in the contract that the financial
instrument must or may be settled in the Company's own equity instruments, where the
amount of contractual rights and obligations are calculated by multiplying the number of
the equity instruments to be available or delivered by its fair value upon settlement. Such
contracts shall be classified as financial liabilities, regardless whether the amount of
contractual rights and liabilities is fixed, or fluctuate totally or partially with variables other
than market price of the entity’s own equity instruments (such as interest rate, price of
some kind of goods or some kind of financial instrument).
3.9.4 Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative
38
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
contracts are signed and subsequently measured at fair value. The derivative with a
positive fair value shall be recognized as an asset, and with a negative fair value shall be
recognised as a liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised
directly into current profit or loss except for the effective portion of cash flow hedges
which shall be recognised in other comprehensive income and reclassified into current
profit or loss when the hedged items affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a
host, the Company shall apply the requirements of financial asset classification to the
entire hybrid contract. If a host that is not a financial asset and the hybrid contract is not
measured at fair value with changes in fair value recognised in profit or loss, and the
economic characteristics and risks of the embedded derivative are not closely related to
the economic characteristics and risks of the host, and a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative, the
embedded derivative shall be separated from the hybrid instrument and accounted for as
a separate derivative instrument. If the Company is unable to measure the fair value of the
embedded derivative at the acquisition date or subsequently at the balance sheet date,
the entire hybrid contract is designated as financial assets or financial liabilities at fair
value through profit or loss.
3.9.5 Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses for financial
asset that is measured at amortised cost, debt investment at fair value through other
comprehensive income, contract asset, lease receivable, loan commitment, and financial
guarantee contract.
3.9.5.1 Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial
instruments with the respective risks of a default occurring as the weights. Credit loss is
the difference between all contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the Company expects to receive,
which is all cash 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
39
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that
represent the expected credit losses that result from default events on a financial
instrument that are possible within the 12 months after the reporting date (or the
expected lifetime if the expected life of a financial instrument is less than 12 months).
At each reporting date, the Company classifies financial instruments into three stages and
makes provisions for expected credit losses accordingly. A financial instrument of which
the credit risk has not significantly increased since initial recognition is at stage 1. The
Company shall measure the loss allowance for that financial instrument at an amount
equal to 12-month expected credit losses. A financial instrument with a significant increase
in credit risk since initial recognition but is not considered to be credit-impaired is at stage
2. The Company shall measure the loss allowance for that financial instrument at an
amount equal to the lifetime expected credit losses. A financial instrument is considered to
be credit impaired as at the end of the reporting period is at stage 3. The Company shall
measure the loss allowance for that financial instrument at an amount equal to the
lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low
credit risk at the reporting date and measure the loss allowance for that financial
instrument at an amount equal to 12-month expected credit losses.
For financial instruments at stage 1, stage 2 and those have low credit risk, the interest
revenue shall be calculated by applying the effective interest rate to the gross carrying
amount of a financial asset (ie, impairment loss not been deducted). For financial
instruments at stage 3, interest revenue shall be calculated by applying the effective
interest rate to the amortised costs after deducting of impairment loss.
For notes receivable, accounts receivable and accounts receivable financing, no matter it
contains a significant financing component or not, the Company shall measure the loss
allowance at the amount that equals to the lifetime expected credit losses.
3.9.5.1.1 Receivables/Contract Assets
For the notes receivable, accounts receivable, other receivables, accounts receivable
financing, contract assets and long-term receivables which are demonstrated to be
impaired by any objective evidence, or applicable for individual assessment, the Company
40
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
shall individually assess for impairment and recognise the loss allowance for expected
credit losses. If the Company determines that no objective evidence of impairment exists
for notes receivable, accounts receivable, other receivables, accounts receivable financing,
contract assets, and long-term receivables, or the expected credit loss of a single financial
asset cannot be assessed at reasonable cost, such notes receivable, accounts receivable,
other receivables, accounts receivable financing, contract assets, and long-term
receivables shall be divided into several groups based on similar credit risk characteristics
and calculate collectively on the expected credit loss. The determination basis of groups is
as following:
a. Notes Receivables
The Company measures the loss impairment in accordance with the amount equivalent to
the lifetime expected credit losses for notes receivables. The notes receivables are divided
into different groups based on credit risk characteristics:
Item Basis for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk.
According to the credit risk of the acceptor, it should be the same as
Commercial acceptance bill
the “accounts receivable” combination.
b. Accounts Receivables
For accounts receivables that do not contain significant financing components, the
Company measures the loss impairment in accordance with the amount equivalent to the
expected credit loss in the whole duration.
For accounts receivables and lease receivables that contain significant financing
components, the Company continuously chooses to measure the loss impairment in
accordance with the amount equivalent to the expected credit loss in the whole duration.
Other than the accounts receivable whose credit risk is assessed individually, the other
accounts receivables are grouped based on their credit risk characteristics:
Group Basis for determining the groups
This group uses the accounts receivables aging as the credit risk
Aging of Accounts Receivables
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be received).
41
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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 groups based on their credit risk
characteristics:
Group Basis for determining the groups
This group of receivables includes deposit receivables, advances on
Deposit guarantee
behalf of others and quality guarantee deposits to be collected in
daily activities.
This group is the declared export tax refund funds that have not
Export tax refund
been received.
This group uses the age of accounts receivable as the credit risk
Open credits
characteristics.
Related party relationships (except for evidencing that they cannot
Related parties
be covered)
3.9.5.1.2 Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected
credit loss through the default exposure and the 12-month or lifetime expected credit loss
rate based on the nature of the investment, counterparty, and the type of risk exposure.
3.9.5.2 Low credit risk
If the financial instrument has a low risk of default, and the borrower has a strong capacity
to meet its contractual cash flow obligations in the near term and adverse changes in
economic and business conditions in the longer term may, but will not necessarily, reduce
the ability of the borrower to fulfill its contractual cash flow obligations, then the financial
instrument is considered to have low credit risk.
3.9.5.3 Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased
significantly since initial recognition, using the change in the risk of a default occurring over
the expected life of the financial instrument, through the comparison of the risk of a
default occurring on the financial instrument as at the reporting date with the risk of a
42
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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:
a) Significant changes in internal price indicators of credit risk as a result of a change
in credit risk since inception;
b) Existing or forecast adverse change in the business, financial or economic
conditions of the borrower that results in a significant change in the borrower’s
ability to meet its debt obligations;
c) An actual or expected significant change in the operating results of the borrower;
An actual or expected significant adverse change in the regulatory, economic, or
technological environment of the borrower；
d) Significant changes in the value of the collateral supporting the obligation or in the
quality of third-party guarantees or credit enhancements, which are expected to
reduce the borrower’s economic incentive to make scheduled contractual
payments or to otherwise have an effect on the probability of a default occurring;
e) Significant change that are expected to reduce the borrower’s economic incentive
to make scheduled contractual payments;
f) Expected changes in the loan documentation including an expected breach of
contract that may lead to covenant waivers or amendments, interest payment
holidays, interest rate step-ups, requiring additional collateral or guarantees, or
other changes to the contractual framework of the instrument；
g) Significant changes in the expected performance and behaviour of the borrower；
h) Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether
the credit risk has increased significantly since initial recognition on an individual financial
instrument or a group of financial instruments. When assessed based on a group of
financial instruments, the Company can group financial instruments on the basis of shared
credit risk characteristics, for example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments are more than 30 days
43
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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. Evidence that a financial asset is credit-impaired include observable data
about the following events:
Significant financial difficulty of the issuer or the borrower; a breach of contract, such as a
default or past due event; the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower’s financial difficulty, having granted to the borrower a
concession(s) that the lender(s) would not otherwise consider；it is becoming probable
that the borrower will enter bankruptcy or other financial reorganization; the
disappearance of an active market for that financial asset because of financial difficulties;
the purchase or origination of a financial asset at a deep discount that reflects the incurred
credit losses.
3.9.5.5 Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition,
the Company shall at each reporting date remeasure the expected credit loss and recognise
in profit or loss, as an impairment gain or loss, the amount of expected credit losses or
addition (or reversal). For financial asset at amortised cost, the loss allowance shall reduce
the carrying amount of the financial asset in the statement of financial position; for debt
investment at fair value through other comprehensive income, the loss allowance shall be
recognised in other comprehensive income and shall not reduce the carrying amount of
the financial asset in the statement of financial position.
3.9.5.6 Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering the contractual cash flow of a
financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition
44
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
of the financial asset. This circumstance usually occurs when the Company determines that
the debtor has no assets or sources of income that could generate sufficient cash flow to
repay the write-off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of
impairment loss.
3.9.6 Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to
receive the cash flows of the financial asset, but assumes a contractual obligation to
pay the cash flows to one or more recipients.
3.9.6.1 Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the
financial asset, or neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset but has not retained control of the financial asset, the
financial asset shall be derecognised.
Whether the Company has retained control of the transferred asset depends on the
transferee’s ability to sell the asset. If the transferee has the practical ability to sell the
asset in its entirety to an unrelated third party and is able to exercise that ability
unilaterally and without needing to impose additional restrictions on the transfer, the
Company has not retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition
based on the substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference
between the following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
The sum of consideration received and the part derecognised of the cumulative
changes in fair value previously recognised in other comprehensive income (The
financial assets involved in the transfer are classified as financial assets at fair value
through other comprehensive income in accordance with Article 18 of the Accounting
Standards for Business Enterprises - Recognition and Measurement of Financial
Instruments).
45
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
If the transferred asset is a part of a larger financial asset and the part transferred qualifies
for derecognition, the previous carrying amount of the larger financial asset shall be
allocated between the part that continues to be recognised (For this purpose, a retained
servicing asset shall be treated as a part that continues to be recognised) and the part that
is derecognised, based on the relative fair values of those parts on the date of the transfer.
The difference between following two amounts shall be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part
derecognised；
The sum of the consideration received for the part derecognised and part
derecognised of the cumulative changes in fair value previously recognised in other
comprehensive income (The financial assets involved in the transfer are classified as
financial assets at fair value through other comprehensive income in accordance with
Article 18 of the Accounting Standards for Business Enterprises - Recognition and
Measurement of Financial Instruments).
3.9.6.2 Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of
ownership of a transferred asset, and retains control of the transferred asset, the Company
shall continue to recognise the transferred asset to the extent of its continuing involvement
and also recognise an associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent
to which it is exposed to changes in the value of the transferred asset.
3.9.6.3 Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the
transferred financial asset, the Company shall continue to recognise the transferred asset
in its entirety and the consideration received shall be recognised as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent
accounting period, the Company shall continuously recognise any income (gain) arising
from the transferred asset and any expense (loss) incurred on the associated liability.
3.9.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of
financial position and shall not offset each other. When the following conditions are met,
financial assets and financial liabilities shall be offset and the net amount presented in the
46
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
statement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts.
The Company intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the
Company shall not offset the transferred asset with the associated liability.
3.9.8 Determination of fair value of financial instruments
Refer to Note 3.10 for determination of financial assets and financial liabilities.
3.10 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market
value in the principal market, or in the absence of a principal market, in the most
advantageous market price for the related asset or liability. The fair value of an asset or a
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,
47
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
the income approach, and the cost approach. The Company shall use valuation techniques
consistent with one or more of those approaches to measure fair value. If multiple
valuation techniques are used to measure fair value, the results shall be evaluated
considering the reasonableness of the range of values indicated by those results. A fair
value measurement is the point within that range that is most representative of fair value
in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant
observable inputs. The unobservable inputs can only be used when relevant observable
inputs are not available or practically would not be obtained. Observable inputs refer to
the information which is available from market and reflects the assumptions that market
participants would use when pricing the asset or liability. Unobservable Inputs refer to the
information which is not available from market and it has to be developed using the best
information available in the circumstances from the assumptions that market participants
would use when pricing the asset or liability.
3.10.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises the inputs to valuation
techniques used to measure fair value into three levels. The fair value hierarchy gives the
highest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to
Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date. Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or
liability.
3.11 Inventories
3.11.1 Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business,
in the process of production for such sale, or in the form of materials or supplies to be
consumed in the production process or in the rendering of services, including raw
materials, work in progress, semi-finished goods, finished goods, low value consumption
goods, goods in transit, etc.
3.11.2 Measurement method of cost of inventories sold or used
The cost of inventories used or sold is determined on the weighted average basis.
48
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.11.3 Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least
once a year, and surplus or losses of inventory stocktaking shall be included in current
profit and loss.
3.11.4 Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over
net realizable value of the inventories is recognised as provision for impairment of
inventory, and recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable
evidence obtained, and factors such as purpose of holding the inventory and impact of
post balance sheet event shall be considered.
3.11.4.1 The net realizable value of finished goods, products and materials for direct sale is
determined at estimated selling prices less estimated selling expenses and relevant taxes
and surcharges in normal operation process. The net realizable value for inventories held
to execute sales contract or service contract is calculated on the basis of contract price. If
the quantities of inventories specified in sales contracts are less than the quantities held by
the Company, the net realizable value of the excess portion of inventories shall be based
on general selling prices. Net realizable value of materials held for sale shall be measured
based on market price.
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
49
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
inventory impairment, which has been provided for. The reversal shall be included in profit
or loss.
3.11.5 Amortisation method of low-value consumables
Low-value consumables: One-off writing off method is adopted.
Package material: One-off writing off method is adopted.
3.12 Contract Assets and Contract Liabilities
The Company presents contract assets or contract liabilities in the balance sheet in
accordance with the relationship between performance obligations and customer
payments. The Company has the right to charge for the transfer of goods or services to
customers (and the right depends on factors other than the passage of time) are presented
as contract assets. The company's obligations to transfer goods or provide services to
customers for consideration received or receivable from customers are presented as
contract liabilities.
Refer to Note 3.9 for the determination and accounting treatments of the company's
expected credit loss of contract assets.
Contract assets and contract liabilities are presented separately in the balance sheet.
Contract assets and contract liabilities under the same contract are presented as net
amount. If the netted amount has the debit balance, then it is reported as "contract
assets" or "other non-current assets" based on its liquidity; if the netted amount has a
credit balance, it is listed in the item of "contract liabilities" or "other non-current
liabilities" based on its liquidity. Contract assets and contract liabilities under different
contracts shall not offset each other.
3.13 Contract Cost
Contract costs contain contract enforcement costs and contract acquisition costs.
The cost incurred by the Company for the enforcement of the contract is recognized as an
asset as the contract enforcement cost when the following conditions are simultaneously
met:
3.13.1 The cost is directly related to a current or anticipated contract, including direct labor,
direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the
customer, and other costs incurred solely due to the contract.
3.13.2 The cost increases the company's future resources for fulfilling contract
enforcement obligations.
50
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.13.3 The cost is expected to be recovered.
The incremental cost incurred by the Company in order to obtain the contract is expected
to be recovered, and shall be recognized as an asset as the cost of obtaining the contract.
Assets related to contract costs are amortised on the same basis as the revenue
recognition of goods or services related to the asset; however, if the amortisation period of
contract acquisition costs does not exceed one year, the Company will include the contract
costs in the current profits and losses at occurrence.
If the book value of the assets related to the contract cost is higher than the difference
between the following two items, the Company will make provision for impairment of the
excess part and recognize it as an asset impairment loss, and further consider whether to
withdraw losses related to the contract estimated liabilities:
3.13.3.1 The remaining consideration expected to be obtained due to the transfer of goods
or services related to the asset;
3.13.3.2 Estimate the cost that will incur for the transfer of the related goods or services.
If the aforementioned asset impairment provision is subsequently reversed, the book value
of the asset after the reversal shall not exceed the book value of the asset on the date of
reversal under the assumption that no impairment provision is made.
For the contract enforcement cost recognized as an asset, the amortisation period shall
not exceed one year or a normal business cycle at initial recognition, and shall be
presented in the "inventory" item. The amortisation period exceeds one year or a normal
business cycle at the initial recognition, shall be presented in “other non-current assets”.
The contract acquisition cost recognized as an asset shall be reported in "other current
assets" when the amortisation period does not exceed one year or one normal business
cycle at the time of initial recognition, and reported in the item of "other non-current
assets" when the amortisation period exceeds one year or one normal business cycle at
the time of initial recognition.
3.14 Long-term Equity Investments
Long-term equity investments refer to equity investments where the Company has control
of, or significant influence over, an investee, as well as equity investments in joint ventures.
Associates of the Company are those entities over which the Company has significant
influence.
3.14.1 Determination basis of joint control or significant influence over the investee
51
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Joint control is the relevant agreed sharing of control over an arrangement, and the
arranged relevant activity must be decided under unanimous consent of the parties
sharing control. In assessing whether the Company has joint control of an arrangement,
the Company shall assess first whether all the parties, or a group of the parties, control the
arrangement. When all the parties, or a group of the parties, considered collectively, are
able to direct the activities of the arrangement, the parties control the arrangement
collectively. Then the Company shall assess whether decisions about the relevant activities
require the unanimous consent of the parties that collectively control the arrangement. If
two or more groups of the parties could control the arrangement collectively, it shall not
be assessed as have joint control of the arrangement. When assessing the joint control, the
protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control of those policies. In
determination of significant influence over an investee, the Company should consider not
only the existing voting rights directly or indirectly held but also the effect of potential
voting rights held by the Company and other entities that could be currently exercised or
converted, including the effect of share warrants, share options and convertible corporate
bonds that issued by the investee and could be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting
power of the investee, it is presumed that the Company has significant influence of the
investee, unless it can be clearly demonstrated that in such circumstance, the Company
cannot participate in the decision-making in the production and operating of the investee.
3.14.2 Determination of initial investment cost
3.14.2.1 Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company
makes payment in cash, transfers non-cash assets, or bears liabilities as the consideration
for the business combination, the share of carrying amount of the owners’ equity of the
acquiree in the consolidated financial statements of the ultimate controlling party is
recognised as the initial cost of the long-term equity investment on the combination date.
The difference between the initial investment cost and the carrying amount of cash paid,
non-cash assets transferred, and liabilities assumed shall be adjusted against the capital
reserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in
52
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
turn.
For a business combination involving enterprises under common control, if the Company
issues equity securities as the consideration for the business combination, the share of
carrying amount of the owners’ equity of the acquiree in the consolidated financial
statements of the ultimate controlling party is recognised as the initial cost of the long-
term equity investment on the combination date. The total par value of the shares issued
is recognised as the share capital. The difference between the initial investment cost and
the carrying amount of the total par value of the shares issued shall be adjusted against
the capital reserve; if capital reserve is not enough to be offset, undistributed profit shall
be offset in turn.
For business combination not under common control, the assets paid, liabilities incurred or
assumed, and the fair value of equity securities issued to obtain the control of the acquiree
at the acquisition date shall be determined as the cost of the business combination and
recognised as the initial cost of the long-term equity investment. The audit, legal, valuation
and advisory fees, other intermediary fees, and other relevant general administrative costs
incurred for the business combination, shall be recognised in profit or loss as incurred.
3.14.2.2 For long-term equity investments acquired not through the business combination,
the investment cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the
actually paid purchase cost, including the expenses, taxes and other necessary
expenditures directly related to the acquisition of long-term equity investments.
For long-term equity investments acquired through issuance of equity securities, the initial
cost is the fair value of the issued equity securities.
For the long-term equity investments obtained through exchange of non-monetary assets,
if the exchange has commercial substance, and the fair values of assets traded out and
traded in can be measured reliably, the initial cost of long-term equity investment traded
in with non-monetary assets are determined based on the fair values of the assets traded
out together with relevant taxes. Difference between fair value and book value of the
assets traded out is recorded in current profit or loss. If the exchange of non-monetary
assets does not meet the above criterion, the book value of the assets traded out and
relevant taxes are recognised as the initial investment cost.
For long-term equity investment acquired through debt restructuring, the book value is
53
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
determined based on the fair value of waived debts and the taxes and other costs directly
attributable to the assets. Difference between fair value and carrying amount of waived
debts shall be recorded in current profit or loss.
3.14.2.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control
shall be accounted for at cost method. Long-term equity investment to a joint venture or
an associate shall be accounted for at equity method.
3.14.2.3.1 Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment
shall be adjusted when additional amount is invested or a part of it is withdrawn. The
Company recognises its share of cash dividends or profits which have been declared to
distribute by the investee as current investment income.
3.14.2.3.2 Equity method
For Long-term equity investment recognised at equity method, cost of the long-term
equity investment shall be recognized based on the following conditions:
If the initial cost of the investment is in excess of the share of the fair value of the net
identifiable assets in the investee at the date of investment, the difference shall not be
adjusted to the initial cost of long-term equity investment; if the initial cost of the
investment is in short of the share of the fair value of the net identifiable assets in the
investee at the date investment, the difference shall be included in the current profit or
loss and the initial cost of the long-term equity investment shall be adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its
share of the investee’s other comprehensive income, as investment income or losses and
other comprehensive income respectively, and adjusts the carrying amount of the
investment accordingly. The carrying amount of the investment shall be reduced by the
share of any profit or cash dividends declared to distribute by the investee. The investor’s
share of the investee’s owners’ equity changes, other than those arising from the
investee’s net profit or loss, other comprehensive income, or profit distribution, shall be
recognised in the investor’s equity, and the carrying amount of the long-term equity
investment shall be adjusted accordingly. The Company recognises its share of the
investee’s net profits or 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
54
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
date. If the accounting policy and accounting period adopted by the investee is not in
consistency with the Company, the financial statements of the investee shall be adjusted
according to the Company’s accounting policies and accounting period, based on which,
investment income or loss and other comprehensive income, etc., shall be adjusted. The
unrealized profits or losses resulting from inter-company transactions between the
company and its associate or joint venture are eliminated in proportion to the company’s
equity interest in the investee, based on which investment income or losses shall be
recognised. Any losses resulting from inter-company transactions between the investor
and the investee, which belong to asset impairment, shall be recognised in full.
Where the Company obtains the power of joint control or significant influence, but not
control, over the investee, due to additional investment or other reason, the relevant long-
term equity investment shall be accounted for by using the equity method, initial cost of
which shall be the fair value of the original investment plus the additional investment.
Where the original investment is classified as other equity instrument investment, the
difference between the fair value and the book value, as well as the accumulated gains or
losses previously recorded in other comprehensive income, shall be transferred out of
other comprehensive income, and recognized into retained earnings in the current period
when the equity method is adopted.
If the Company loses the joint control or significant influence of the investee for some
reasons such as disposal of equity investment, the retained interest shall be measured at
fair value and the difference between the carrying amount and the fair value at the date of
loss the joint control or significant influence shall be recognised in profit or loss. When the
Company discontinues the use of the equity method, the Company shall account for all
amounts previously recognised in other comprehensive income under equity method in
relation to that investment on the same basis as would have been required if the investee
had directly disposed of the related assets or liabilities.
3.14.2.4 Methods of impairment and provision for impairment
The asset impairment method for the investment in subsidiaries, joint ventures and joint
ventures is shown in Note 3.20.
3.15 Investment Property
3.15.1 Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both,
including:
3.15.1.1 Land use right leased out
3.15.1.2 Land held for transfer upon appreciation
55
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.15.1.3 Buildings leased out
3.15.2 The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment
properties. Refer to Note 3.20 for provision for impairment.
The Company calculates the depreciation or amortisation based on the net amount of
investment property cost less the accumulated impairment and the net residual value
using straight-line method. Investment property is depreciated or amortised in accordance
with the policy consistent with that of buildings or land use rights.
3.16 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of
producing commodities, rendering services, renting or business management with useful
lives exceeding one year.
3.16.1 Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the
following criteria are satisfied:
3.16.1.1 It is probable that the economic benefits relating to the fixed assets will flow into
the Company;
3.16.1.2 The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if
recognition criteria of fixed assets are satisfied, otherwise the expenditure shall be
recorded in current profit or loss when incurred.
3.16.2 Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available
for intended use using the straight-line-method. The estimated useful life and annual
depreciation rates which are determined according to the categories, estimated economic
useful lives, and estimated net residual rates of fixed assets are listed as followings:
Depreciation Residual Estimated useful Annual depreciation
Category
method rates (%) life (year) rates (%)
Buildings and Straight-line
7.00-10.00 20 4.50-4.65
constructions method
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
56
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Depreciation Residual Estimated useful Annual depreciation
Category
method rates (%) life (year) rates (%)
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.
The Company reviews 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
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
57
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
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 capitalization rate
will be the weighted average of the borrowing costs applicable to the general borrowing.
3.19 Intangible Assets
3.19.1 Intangible assets
Intangible asset refers to the identifiable non-monetary assets without physical shape,
possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets,
58
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
if the economic benefits related to intangible assets are likely to flow into the enterprise
and the cost of intangible assets can be measured reliably, shall be recorded as cost of
intangible assets. The expenses other than this shall be booked in the profit or loss when
they occur.
Land use rights purchased by the Company are accounted as intangible assets. Buildings
such as plants that are developed and constructed by the Company, and relevant land use
rights and buildings, are accounted as intangible assets and fixed assets, respectively.
Payments for the land and buildings purchased are allocated between the land use rights
and the buildings; if they cannot be reasonably allocated, all the land use rights and
buildings are accounted as fixed assets.
When intangible assets with definite useful lives are available for use, the original cost less
net residual value and any accumulate impairment losses is amortised over its estimated
useful life using the straight-line method. Intangible assets with indefinite useful life are not
amortised.
For intangible assets with finite useful life, the estimated useful life and amortisation
method are reviewed annually at the end of each reporting period and adjusted when
necessary. An additional review is also carried out for useful life of the intangible assets
with indefinite useful life. If there is evidence to indicate that the useful lives of those
assets become finite, the useful lives shall be estimated, and the intangible assets shall be
amortised systematically and reasonably within the estimated useful lives.
3.19.2 Research and development costs
The company's internal research and development project expenditures are categorized
into research phase expenditures and development phase expenditures.
Expenditures arising from development phase on internal research and development
projects shall be recognised as intangible assets only if all of the following conditions have
been met, otherwise shall be recognised in profit or loss when incurred:
3.19.2.1 Technical feasibility of completing the intangible assets so that they will be
available for use or sale;
3.19.2.2 Its intention to complete the intangible asset and use or sell it;
3.19.2.3 The method that the intangible assets generate economic benefits, including the
Company can demonstrate the existence of a market for the output of the intangible assets
or the intangible assets themselves or, if it is to be used internally, the usefulness of the
59
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
intangible assets;
3.19.2.4 The availability of adequate technical, financial, and other resources to complete
the development and to use or sell the intangible asset;
3.19.2.5 Its ability to measure reliably the expenditure attributable to the intangible asset.
The costs cannot be distinguished into the search phase and the development phase is
recognised in profit or loss for the period in which it incurred.
3.19.3 Impairment of intangible assets
Refer to Note 3.20 for impairment and provisions of intangible assets.
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint
ventures, investment properties, fixed assets and constructions in progress subsequently
measured at cost, productive biological assets, intangible assets, goodwill, the rights and
interests of proved mining areas of petroleum and natural gas and wells and other relevant
facilities measured at cost (excluding inventories, investment properties measured at fair
value, deferred tax assets, financial assets), shall be determined according to following
method:
The Company shall assess at the end of each reporting period whether there is any
indication that an asset may be impaired. If any such indication exists, the Company shall
estimate the recoverable amount of the asset and test for impairment. Irrespective of
whether there is any indication of impairment, the Company shall test for impairment of
goodwill acquired in a business combination, intangible assets with an indefinite useful life
or intangible assets not yet available for use annually.
The recoverable amounts of the long-term assets are the higher of their fair values less
costs to dispose and the present values of the estimated future cash flows of the long-term
assets. The Company estimate the recoverable amounts on an individual basis. If it is
difficult to estimate the recoverable amount of the individual asset, the Company
estimates the recoverable amount of the groups of assets that the individual asset belongs
to. Identification of a group of asset is based on whether the cash inflows from it are
largely independent of the cash inflows from other assets or groups of assets.
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.
60
Tsann Kuen (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, goodwill shall be allocated
to relevant combination of asset groups. The relevant group of assets or combination of
asset groups is a group of assets or combination of asset groups that is benefit from the
synergies of the business combination and is not larger than the reporting segment
determined by the Company.
When test for impairment, if there is an indication that relevant group of assets or
combination of asset groups may be impaired, impairment testing for group of assets or
combination of asset groups excluding goodwill shall be conducted first, and calculate the
recoverable amount and recognize the impairment loss. Then the group of assets or
combination of asset groups including goodwill shall be tested for impairment, by
comparing the carrying amount with its recoverable amount. If the recoverable amount is
less than the carrying amount, the Company shall recognise the impairment loss.
The mentioned impairment loss will not be reversed in subsequent accounting period once
it had been recognised.
3.21 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be
amortised over current and subsequent periods with the amortisation period exceeding
one year. Long-term deferred expenses are amortized on a straight-line basis during the
expected benefit period.
3.22 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the
Company in exchange for service rendered by employees or for the termination of
employment relationship. Employee benefits include short-term employee benefits, post-
employment benefits, termination benefits and other long-term employee benefits.
Benefits provided to an employee's spouse, children, dependents, family members of
decreased employees, or other beneficiaries are also employee benefits.
According to liquidity, employee benefits are presented in the statement of financial
position as “Employee benefits payable” and “Long-term employee benefits payable”.
3.22.1 Short-term employee benefits
61
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.1.1 Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service,
actually occurred short-term employee benefits as a liability, with a corresponding charge
to current profit except for those recognised as capital expenditure based on the
requirement of accounting standards.
3.22.1.2 Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred
into current profit or loss or related capital expenditure. Employee welfare shall be
measured at fair value if it is a non-monetary benefits.
3.22.1.3 Social insurance such as medical insurance, work injury insurance and maternity
insurance, housing funds, labor union fund and employee education fund
Payments made by the Company of social insurance for employees, such as medical
insurance, work injury insurance and maternity insurance, payments of housing funds, and
labor union fund and employee education fund accrued in accordance with relevant
requirements, in the accounting period in which employees provide services, is calculated
according to required accrual bases and accrual ratio in determining the amount of
employee benefits and the related liabilities, which shall be recognised in current profit or
loss or the cost of relevant asset.
3.22.1.4 Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid
absences when the employees render service that increases their entitlement to future
paid absences. The additional payable amounts shall be measured at the expected
additional payments as a result of the unused entitlement that has accumulated. The
Company shall recognise relevant employee benefit of non-accumulating paid absences
when the absences actually occurred.
3.22.1.5 Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing
plan when both of the following conditions are satisfied:
3.22.1.5.1 The Company has a present legal or constructive obligation to make such
payments as a result of past events;
3.22.1.5.2 A reliable estimate of the amounts of employee benefits obligation arising from
the profit- sharing plan can be made.
62
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.22.2 Post-employment benefits
3.22.2.1 Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides
service, the contribution payable to a defined contribution plan as a liability, with a
corresponding charge to the current profit or loss or the cost of a relevant asset.
When contributions to a defined contribution plan are not expected to be settled wholly
before twelve months after the end of the annual reporting period in which the employees
render the related service, they shall be discounted using relevant discount rate (market
yields at the end of the reporting period on high quality corporate bonds in active market
or government bonds with the currency and term which shall be consistent with the
currency and estimated term of the defined contribution obligations) to measure employee
benefits payable.
3.22.2.2 Defined benefit plan
3.22.2.2.1 The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method, the Company shall make
estimates about demographic variables and financial variables in adopting the unbiased
and consistent actuarial assumptions and measure defined benefit obligation, and
determine the obligation period. The Company shall discount the obligation arising from
defined benefit plan using relevant discount rate (market yields at the end of the reporting
period on high quality corporate bonds in active market or government bonds with the
currency and term which shall be consistent with the currency and estimated term of the
defined benefit obligations) in order to determine the present value of the defined benefit
obligation and the current service cost.
3.22.2.2.2 The net defined benefit liability or asset
The net defined benefit liability or asset is the deficit or surplus recognised as the present
value of the defined benefit obligation less the fair value of plan assets.
When the Company has a surplus in a defined benefit plan, it shall measure the net defined
benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.
3.22.2.2.3 The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on
settlement. Other service cost shall be recognised in profit or loss unless accounting
standards require or allow the inclusion of current service cost within the cost of assets.
63
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Net interest on the net defined benefit liability or asset comprising interest income on plan
assets, interest cost on the defined benefit obligation and interest on the effect of the asset
ceiling, shall be included in profit or loss.
3.22.2.2.4 The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the
remeasurements including:
Actuarial gains and losses, which are the changes in the present value of the defined
benefit obligation resulting from experience adjustments or the effects of changes in
actuarial assumptions;
Return on plan assets, excluding amounts included in net interest on the net defined
benefit liability or asset;
Any change in the effect of the asset ceiling, excluding amounts included in net interest
on the net defined benefit liability or asset.
Remeasurements of the net defined benefit liability or asset recognised in other
comprehensive income shall not be reclassified to profit or loss in a subsequent period.
However, the Company may transfer those amounts recognised in other comprehensive
income within equity.
3.22.3 Termination benefits
The Company providing termination benefits to employees shall recognise an employee
benefits liability for termination benefits, with a corresponding charge to the profit or loss
of the reporting period, at the earlier of the following dates:
3.22.3.1 When the Company cannot unilaterally withdraw the offer of termination benefits
because of an employment termination plan or a curtailment proposal.
3.22.3.2 When the Company recognises costs or expenses related to a restructuring that
involves the payment of termination benefits.
If the termination benefits are not expected to be settled wholly before twelve months
after the end of the annual reporting period, the Company shall discount the termination
benefits using relevant discount rate (market yields at the end of the reporting period on
high quality corporate bonds in active market or government bonds with the currency and
term which shall be consistent with the currency and estimated term of the defined benefit
obligations) to measure the employee benefits.
3.22.4 Other long-term employee benefits
64
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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
3.23.1.3 The amount of the obligation can be measured reliably.
3.23.2 Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of
expenses required for the performance of relevant present obligations. The Company,
when determining the best estimate, has had a comprehensive consideration of risks with
respect to contingencies, uncertainties, and the time value of money. The carrying amount
of the estimated liabilities shall be reviewed at the end of every reporting period. If
conclusive evidence indicates that the carrying amount fails to be the best estimate of the
estimated liabilities, the carrying amount shall be adjusted based on the updated best
estimate.
3.24 Revenue recognition principle and measurement
3.24.1 General principle
65
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Revenue is the total inflow of economic benefits formed in the company's daily activities
that will increase shareholders' equity and does not relate to the capital invested by
shareholders.
The Company has fulfilled the performance obligation in the contract, that is, the revenue
is recognised when the customer obtains the control right of relevant goods. To obtain the
control right of the relevant commodity means to be able to dominate the use of the
commodity and obtain almost all the economic benefits from it.
If there are two or more performance obligations in the contract, the Company will
allocate the transaction price to each performance obligation based on the relative
proportion of the separate selling price of the goods or services promised by each
performance obligation on the start date of the contract, and measure the income based
on the transaction price allocated to each single performance obligation.
The transaction price refers to the amount of consideration that the Company is expected
to be entitled to receive due to the transfer of goods or services to customers, excluding
payments collected on behalf of third parties. When determining the transaction price of
the contract, the Company determines the transaction price according to the terms of the
contract and in combination with its historical practices. When determining the transaction
price, the Company takes into account the influence of variable considerations, significant
financing elements in the contract, the non-cash considerations, the considerations
payable to customers and other factors. The Company determines the transaction price
including variable consideration at an amount that does not exceed the amount at which
the accumulated recognized income is unlikely to have a significant reversal when the
relevant uncertainty is eliminated. If there is a significant financing component in the
contract, the Company will determine the transaction price based on the amount payable
in cash when the customer obtains the control right of the commodity. The difference
between the transaction price and the contract consideration will be amortised by the
effective interest method during the contract period. If the interval between the control
right transfer and the customer's payment is less than one year, the company will not
consider the financing component.
If one of the following conditions is met, the performance obligation shall be fulfilled
within a certain period of time; otherwise, the performance obligation shall be fulfilled at a
certain point of time:
66
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.24.1.1 The customer obtains and consumes the economic benefits brought by the
Company's fulfillment of contract when the Company performs the obligations;
3.24.1.2 The customer can control the commodities under construction during the
Company's execution of the contract;
3.24.1.3 The commodities produced by the Company during the performance of the
contract have irreplaceable uses, and the Company has the right to collect payment for the
cumulative performance part that has been completed so far during the entire contract
period.
For performance obligations fulfilled within a certain period of time, the Company
recognises revenue in accordance with the performance progress during that period,
except where the performance progress cannot be reasonably determined. The Company
determines the progress of the performance of services in accordance with the input
method (or output method). When the progress of the contract performance cannot be
reasonably determined, if the cost incurred by the Company is expected to be
compensated, the revenue shall be recognised according to the amount of the cost
incurred until the progress of the contract performance can be reasonably determined.
For performance obligations fulfilled at a certain point in time, the Company recognises
revenue at the point when the customer obtains control of the relevant commodities. The
Company considers the following signs when judging whether a customer has obtained
control of goods or services:
3.24.1.4 The Company has the current right to receive payment for the goods or services,
that is, the customer has the current obligation to pay for the goods;
3.24.1.5 The Company has transferred the legal ownership of the goods to the customer,
that is, the customer has the legal ownership of the goods;
3.24.1.6 The Company has transferred the goods in kind to the customer, that is, the
customer has possessed the goods in kind;
3.24.1.7 The company has transferred the main risks and rewards of the ownership of the
goods to the customers, that is, the customers have obtained the main risks and rewards
of the ownership of the goods;
3.24.1.8 The customer has accepted the goods or services.
3.24.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
67
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.24.2.1 Commodity sales contract
The sales contract between the Company and the customer includes the performance
obligation of transferring the goods, which belongs to the performance obligation at a
certain point in time.
Recognition of exporting revenue must meet the following conditions: The Company
recognizes revenue for exporting goods based on the sales contracts or sales orders,
regardless of the sales model adopted.
The Company has shipped the products according to the contract and gone through the
customs declaration and export procedures; the payment for goods has been recovered or
the receipt has been obtained, and the relevant economic benefits are likely to flow in; the
main risks and rewards of the ownership of the goods have been transferred, and the legal
ownership of the goods has been transferred.
Recognition of domestic sales product revenue must meet the following conditions: the
Company has delivered the products to the customer according to the contract and the
customer has accepted the products; the payment has been recovered or the receipt of
payment has been obtained, and the relevant economic benefits are likely to flow in; the
main risks and rewards of the ownership of the goods have been transferred, and the legal
ownership of the goods has been transferred.
Treatment of sales return: according to the general rules of international trade, the
adoption of FOB and CIF settlement indicates that the buyer has accepted the purchased
goods at the place of shipment, and the relevant risks have been undertaken by the buyer
after the acceptance and shipment. Therefore, the Company does not make provision for
the above matters separately, but directly records them into the profits and losses in the
current period.
Processing of product claims: the estimated claim expense rate is calculated based on the
actual claim amount in the past two years (excluding special claims) as a percentage of the
annual sales revenue, and accrued at period end based on the current sales revenue and
the estimated claim expense rate to recognize the claim expenses for products sold in the
current period.
3.24.2.2 Service contract
The performance obligation of the service contract between the Company and the
customer. Since the customer obtains and consumes the economic benefits brought by the
Company’s performance at the same time as the Company fulfills the contract, the
Company recognises it as a performance obligation performed within a certain period of
68
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
time, and amortized equally during the service provision period.
3.24.2.3 Construction contract
For the performance obligation of the construction contract between the Company and
the customer, since the customer can control the goods under construction in the process
of the Company's performance, the Company takes it as the performance obligation to
perform in a certain period of time, and recognizes the income according to the
performance progress, except that the performance progress cannot be reasonably
determined. The Company determines the progress of the performance of providing
services in accordance with the output method. The progress of the performance shall be
determined according to the proportion of the completed contract workload to the
expected total contract workload. On the balance sheet date, the Company re-estimates
the progress of completed performance or completed services to reflect the changes in
performance.
3.25 Government Grants
3.25.1 Recognition of government grants
A government grant shall not be recognized until there is reasonable assurance that:
3.25.1.1 The Company will comply with the conditions attaching to them; and
3.25.1.2 The grants will be received.
3.25.2 Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable.
The non-monetary grants from the government shall be measured at their fair value or at
the nominal value of CNY 1.00 when reliable fair value is not available.
3.25.3 Accounting for government grants
3.25.3.1 Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by
the Company used for purchase or construction, or forming the long-term assets by other
ways. The government subsidies related to assets offset the book value of related assets,
and shall be recognised in profit or loss on a systematic basis over the useful lives of the
relevant assets. Grants measured at their nominal value shall be directly recognised in
profit or loss of the period when the grants are received. When the relevant assets are sold,
transferred, written off or damaged before the assets are terminated, the remaining
deferred income shall be transferred into profit or loss of the period of disposing relevant
assets.
69
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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.
3.25.3.3 Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount
of the asset if the book value of the asset has been written down, or reducing the balance
of relevant deferred income if deferred income balance exists, any excess will be
recognised into current profit or loss; or directly recognised into current profit or loss for
other circumstances.
3.26 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability
in the statement of financial position and its tax base at the balance sheet date. The
Company recognise and measure the effect of taxable temporary differences and
deductible temporary differences on income tax as deferred tax liabilities or deferred tax
assets using liability method. Deferred tax assets and deferred tax liabilities shall not be
discounted.
3.26.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the
70
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
carryforward of unused tax losses and the carryforward of unused tax credits to the extent
that it is probable that taxable profit will be available against which the deductible
temporary differences, the carryforward of unused tax losses and the carryforward of
unused tax credits can be utilised at the tax rates that are expected to apply to the period
when the asset is realized, unless the deferred tax asset arises from the initial recognition
of an asset or liability in a transaction that:
Is not a business combination; and
At the time of the transaction, affects neither accounting profit nor taxable profit
(tax loss)
The Company shall recognise a deferred tax asset for all deductible temporary differences
arising from investments in subsidiaries, associates, and joint ventures, only to the extent
that, it is probable that:
The temporary difference will reverse in the foreseeable future; and
Taxable profit will be available against which the deductible temporary difference
can be utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that
taxable profit will be available against which the deductible temporary difference can be
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
71
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
accounting profit nor tax loss.
3.26.2.2 An entity shall recognise a deferred tax liability for all taxable temporary
differences associated with investments in subsidiaries, associates, and joint ventures,
except to the extent that both of the following conditions are satisfied:
The Company is able to control the timing of the reversal of the temporary
difference; and
It is probable that the temporary difference will not reverse in the foreseeable
future.
3.26.3 Recognition of deferred tax liabilities or assets involved in special transactions
or events
3.26.3.1 Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a
business combination not under common control, a deferred tax liability or a deferred tax
asset shall be recognised, and simultaneously, goodwill recognised in the business
combination shall be adjusted based on relevant deferred tax expense (or income).
3.26.3.2 Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair
value fluctuation of available for sale investments; an adjustment to the opening balance
of retained earnings resulting from either a change in accounting policy that is applied
retrospectively or the correction of a prior period (significant) error; amounts arising on
initial recognition of the equity component of a compound financial instrument that
contains both liability and equity component.
3.26.3.3 Unused tax losses and unused tax credits
3.26.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of the
Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of
tax law that can be offset against taxable income in future periods. The criteria for
recognising deferred tax assets arising from the carryforward of unused tax losses and tax
credits are the same as the criteria for recognising deferred tax assets arising from
deductible temporary differences. The Company recognises a deferred tax asset arising
from unused tax losses or tax credits only to the extent that there is convincing other
72
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
evidence that sufficient taxable profit will be available against which the unused tax losses
or unused tax credits can be utilised by the Company. Income taxes in current profit or loss
shall be deducted as well.
3.26.3.3.2 Unsused tax losses and unused tax credits arising from business combination
Under a business combination, the acquiree’s deductible temporary differences which do
not satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not
be recognised. Within 12 months after the acquisition date, if new information regarding
the facts and circumstances exists at the acquisition date and the economic benefit of the
acquiree’s deductible temporary differences at the acquisition is expected to be realised,
the Company shall recognise acquired deferred tax benefits and reduce the carrying
amount of any goodwill related to this acquisition. If goodwill is reduced to zero, any
remaining deferred tax benefits shall be recognised in profit or loss. All other acquired
deferred tax benefits realised shall be recognised in profit or loss.
3.26.3.4 Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between
carrying value of the assets and liabilities in the consolidated financial statements and their
taxable bases is generated from elimination of inter-company unrealized profit or loss,
deferred tax assets or deferred tax liabilities shall be recognised in the consolidated
financial statements, and income taxes expense in current profit or loss shall be adjusted
as well except for deferred tax related to transactions or events recognised directly in
equity and business combination.
3.26.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the
period in which the expenses are recognised according to the accounting standards, the
Company estimates the tax base in accordance with available information at the end of the
accounting period and the temporary difference arising from it. Deferred tax shall be
recognised when criteria of recognition are satisfied. If the amount of estimated future tax
deduction exceeds the amount of the cumulative expenses related to share-based
payment recognised according to the accounting standards, the tax effect of the excess
amount shall be recognised directly in equity.
3.27 Leases
3.27.1 Identification of a lease
73
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
At inception of a contract, the Company assesses whether the contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control the use
of an identified asset 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 assesses 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
the right to direct the use of the identified asset
3.27.2 Identification of separate leases
If a contract contains multiple separate leases, the Company divides the contract and
perform separate accounting treatment for each separate lease. The right to use an
identified asset is a separate lease component if simultaneously:
a) the lessee can benefit from use of the asset either on its own or together with other
resources that are readily available to the lessee; and
b) the asset is neither highly dependent on, nor highly interrelated with, other assets in the
contract.
3.27.3 Accounting treatment of a lease in which the Company is the lessee
On its commencement date, the Company recognizes a lease that has a lease term of 12
months or less and does not contain a purchase option as a short-term lease, and
recognizes a lease for which the underlying asset is of low value when it is brand new as a
lease of a low-value asset. If the Company subleases an asset leased, or expects to
sublease an asset leased, the head lease does not qualify as a lease of a low-value asset.
For short-term leases and leases of a low-value asset, the Company chooses not to
recognize the right-of-use assets and lease liabilities, and to, within the lease term,
recognize such leases in the costs of relevant assets or profit or loss for the current period.
Except for short-term leases and leases of low-value assets, which are treated using a
simplified approach, for each lease, the Company recognizes the right-of-use assets and
lease liabilities on the commencement date of the lease term.
a) Right-of-use assets
A right-of-use asset refers to the lessee's right to use the leased asset during the lease
term.
On the commencement date of the lease term, a right-of-use asset is initially measured at
cost. The cost comprises:
74
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
A. the amount of the initial measurement of the lease liability;
B. any lease payments made on or before the commencement date, less any lease
incentives received;
C. any initial direct costs incurred by the lessee; and
D. 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
recognizes and measures the costs according to the recognition standard and
measurement method applicable to expected liabilities. Costs that are incurred to produce
inventories are included into the cost of inventories.
A right-of-use asset is depreciated on a straight-line basis. If it is impossible to reasonably
determine that the ownership of the leased asset will be acquired when the lease term
expires, the depreciation life of a right-of-use asset shall be the lease term or the
remaining service life of the leased asset, whichever is shorter.
b) Lease liabilities
Lease liabilities shall be initially measured at the present value of the lease payments
which have not been made by the lease commencement date. Lease payments include:
A. fixed payments and in-substance fixed payments, less any lease incentives receivable;
B. variable lease payments that depend on an index or a rate;
C. the exercise price of a purchase option if the lessee is reasonably certain to exercise that
option;
D. payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease; and
E. amounts expected to be payable under residual value guarantees provided by the lessee.
When the present value of lease payments is calculated, the lease payments are
discounted using the interest rate implicit in the lease, or, if that rate can be determined,
using the Company's incremental borrowing rate / the loan interest rate quoted in the
market in the same period. The difference between the amount of lease payments and
their present value is regarded as unrecognized financing expenses, and interest expenses
are recognized using the discount rate of the recognized present value of lease payments
during each period of the lease term and recognized in profit and loss for the current
period. Variable lease payments not included in the measurement of the lease liability are
75
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
recognized in profit and loss for the current period when actually incurred.
After the lease commencement date, the Company remeasures the lease liability at the
changed present value of lease payments and adjusts the book value of the right-of-use
asset when any change occurs in in-substance fixed payments, in amounts expected to be
payable under residual value guarantees, in the index or rate used to determine the lease
payments, or in the result of assessment or actual exercise of the purchase option, renewal
option or termination option.
3.27.4 Accounting treatment of a lease in which the Company is the lessor
On the lease commencement date, the lease amount is recognized in profit or loss for the
current period in stages on a straight-line basis during the lease term.
3.27.5 Accounting treatment of lease modifications
a) Lease modifications accounted for as a separate lease
The Company accounts for a lease modification as a separate lease if simultaneously:
A. the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
B. the consideration for the lease increases by an amount commensurate with the stand-
alone price for the increase in scope and any appropriate adjustments to that stand-alone
price.
b) Lease modifications not accounted for as a separate lease
A. The Company is the lessee
On the effective date of the lease modification, the Company re-determines the lease term
and remeasure the lease liability by discounting the revised lease payments after the
modification using a revised discount rate. When the present value of lease payments after
the modification is calculated, the discount rate is determined as the interest rate implicit
in the lease for the remainder of the lease term, or, if that rate can be determined, the
incremental borrowing rate on the effective date of the lease modification.
As for the impact of the said adjustment to the lease liability, accounting treatment shall
be conducted as follows:
The Company decreases the carrying amount of the right-of-use asset for lease
modifications that decrease the scope of the lease or shorten the lease term, and
recognize in profit or loss for the current period any gain or loss relating to the partial or
full termination of the lease;
76
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company makes corresponding adjustment to the carrying amount of the right-of-use
asset for all other lease modifications.
B. The Company is the lessor
The Company accounts 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.
3.28 Significant account judgment and estimates
The Company continuously evaluates the important accounting estimates and key
assumptions adopted based on historical experience and other factors, including
reasonable expectations of future events. Important accounting estimates and key
assumptions that are likely to lead to significant adjustment risk of the book value of assets
and liabilities in the next accounting year are listed as follows:
3.28.1 Classification of financial assets
The significant judgments involved in determining the classification of financial assets
include the analysis of business model and contract cash flow characteristics.
The Company determines the business model of managing financial assets at the level of
financial asset portfolio, which considers factors including the price evaluation and the
reporting method of the performance of financial assets to key management personnel,
the risks affecting the performance of financial assets and their management methods, as
well as the method for relevant business management personnel to obtain remuneration,
and so on.
When evaluating whether the contractual cash flow of financial assets is consistent with
the basic lending arrangement, the Company has the following significant judgments:
whether the principal may be due to early repayment and other reasons, which may lead
to changes in the time distribution or amount during the duration; whether the interest
only includes the time value of money, credit risk, other basic borrowing risks, and the
consideration of costs and profits. For example, does the early repayment reflect only the
unpaid principal and the interest based on the unpaid principal, as well as the reasonable
compensation paid for early termination of the contract.
3.28.2 Measurement of expected credit losses of accounts receivable
The company uses accounts receivable default exposure and expected credit loss rate to
calculate the expected credit loss of accounts receivable, and determines the expected
77
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
credit loss rate based on the default probability and default loss rate. When determining
the expected credit loss rate, the Company uses internal historical credit loss and other
data, combined with current conditions and forward-looking information to adjust the
historical data. When considering forward-looking information, the indicators used by the
Company include the risk of economic downturn, changes in the external market
environment, technological environment, and customer conditions. The Company regularly
monitors and reviews assumptions related to the calculation of expected credit losses.
3.28.3 Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according
to the accounting policies in regards of inventories, and makes impairment provision for
the inventories that have higher costs than net realizable value, as well as obsolete and
slow-movement inventories. Inventory impairment to net realizable value is based on
assessing the saleability of inventories and their net realizable value. Appraisal of inventory
impairment requires management to make judgments and estimates on the basis of
obtaining conclusive evidence, and considering the purpose of holding inventory, the
impact of post balance sheet events and other factors. The difference between the actual
results and the original estimates shall have impact on the book value of the inventories
and the reversal of the impairment provisions during the period when the estimates are
change.
3.28.4 The fair value of financial instruments
For financial instruments without active trading market, the Company determines their fair
value through various valuation methods. The valuation methods include discounted cash
flow model analysis and other. During the valuation, the Company shall estimate the
future cash flows, credit risks, market volatility and correlation, and select the appropriate
discount rate. Such assumptions are uncertain and their changes shall have impact on the
fair value of financial instruments. If the equity instrument investment or contract has a
public offer, the Company does not take the cost as the best estimate of its fair value.
3.28.5 Impairment of non-current assets
The Company accesses whether there are signs of possible impairment of non-current
assets other than financial assets on the balance sheet date. For intangible assets with
uncertain service lives, additional impairment tests are carried out in addition to the
annual impairment test when there are signs of impairment. Other non-current assets
78
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
other than financial assets shall be tested for impairment when there are indications that
their book value are not recoverable.
Impairment exists when the book value of the asset or asset group is higher than the
recoverable amount, that is, the higher of the net amount of the fair value minus the
disposal expenses and the present value of the estimated future cash flow.
Net value between the difference of fair value and disposal cost is determined by
reference of the price of similar product in a sale agreement in an arm’s length transaction
or an observable market price less the additional cost directly attributable to the disposal
of the asset.
When estimating the present value of future cash flow, significant judgments are made on
the output, selling price, related operating costs of the asset (or asset group) and the
discount rate used in calculating the present value. The Company shall use all relevant
information available, including the forecast of production, selling price and related
operating costs based on reasonable and supportable assumptions to estimate the
recoverable amount.
The Company tests for goodwill impairment at least annually. This requires estimations of
the present value of the future cash flow of the asset group or combination of asset groups
to which goodwill is allocated. When predicting the present value of the future cash flows,
the Company needs to predict the cash flows generated by the future asset group or the
combination of asset groups, and select the appropriate discount rate to determine the
present value of the future cash flow.
3.28.6 Depreciation and amortization
The Company shall depreciate or amortise the investment properties, fixed assets and
intangible assets using the straight-line method within their service lives after considering
their residual value. The Company regularly reviews their service lives to determine the
depreciation and amortization expenses charged in each reporting period. The Company
determines the useful lives based on historical experience of similar assets and the
estimated technical update. If there is indication that there has been a significant change
in the factor used to determine the depreciation or amortization, the depreciation and
amortization expenses will be adjusted in future periods.
3.28.7 Deferred tax assets
The group shall recognise all unused tax losses as deferred tax assets to the extent that it is
79
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
probable that future taxable profit will be available against which the unused tax losses
and unused tax credits can be utilized. This requires the management of the Company
make a lot of judgments over the estimation of time period, value and tax planning
strategies when future taxable profit incurs so that the value of deferred tax assets can be
determined.
3.28.8 Income tax
In the Company's normal operating activities, there are some transactions where ultimate
tax treatments and calculations are uncertain. Whether there are possible for some items
to make expenditure before tax needs approval from competent tax authorities. If there is
any difference between finalized determination value and their initial estimations value,
the difference shall have the impact on the income tax and deferred income tax of the
current period during the final determination.
3.28.9 Internal retirement benefits and supplementary retirement benefits
The amount of internal retirement benefits and supplementary retirement benefits
expenses and liabilities of the Company is determined based on various assumptions.
These assumptions include discount rates, growth rates for average medical expenses,
growth rates for retired and retired personnel subsidies, and other factors. Differences
between the actual results and assumptions will be confirmed immediately when incurred
and included in the current year's expenses. Although the management believes that
reasonable assumptions have been adopted, changes in actual experience values and
assumptions will still affect the Company's internal retirement benefits and supplementary
retirement benefits expenses and balance of liabilities.
3.29 Changes in Significant Accounting Policies and Accounting Estimates
3.29.1 Significant changes in accounting polices
Carrying out the provisions 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" stipulated in "Interpretation of Accounting
Standards for Business Enterprises No. 16".
Carrying out the provisions regarding the accounting treatment of the modification by an
enterprise of share-based payments settled in cash to share-based payments settled in
80
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
equity, as stipulated in Accounting Standards for Business Enterprises No.16.
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.
3.29.2 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 value-added tax based on 0, 1, 5, 6, 9,
Value added tax (VAT)
the difference after deducting the deductible input 10, 11, 13
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 of taxable
income, and calculates the value-added tax based on
Value added tax 5, 6, 9, 13
the difference after deducting the deductible input
tax in the current period
81
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Categories of tax Basis of tax assessment Tax rate %
Urban maintenance and
Payable turnover tax, tax exemption 5
construction tax
Educational surcharge Payable turnover tax, tax exemption 3
Local education surcharge Payable turnover tax, tax exemption 2
Enterprise income tax Taxable profits 15
The export sales of products and raw materials are subject to tax exemption, credit and
refund policies, and the value-added tax rate is 0%.
4.2.2 TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Categories of tax Basis of tax assessment Tax rate %
Calculates output tax based on the tax rate of taxable income,
Value added tax and calculates the 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 Services Co., Ltd. (hereafter, TKW)
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 based on
Value added tax 0, 1, 5
the difference after deducting the deductible input
tax in the current period
Enterprise income tax Taxable profits 20
4.2.4 Pt.Star Comgistic Indonesia (hereafter, SCI)
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 based on
Value added tax 11
the difference after deducting the deductible input
tax in the current period
Enterprise income tax Taxable profits 22
4.3 Preferential tax policy
According to the Announcement of the Ministry of Finance and the State Administration of
82
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Taxation on Clarifying the Policies of VAT Exemption for Small-scale Taxpayers
(Announcement No. 1 [2023] of the Ministry of Finance and the State Taxation
Administration), TKW will be subject to a VAT tax rate of 3% and a tax rate of 1% during the
period from 1 January 2023 to 31 December 2023.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
Items 30 June 2023 1 January 2023
Cash on hand 694,389.02 843,413.66
Cash in bank 433,304,758.29 574,436,355.52
Other monetary funds 2,873,993.56 1,588,060.59
Total 436,873,140.87 576,867,829.77
Including：The total amount deposited overseas 42,081,503.73 45,070,898.68
Of the other monetary funds, CNY 2,803,727.37 is the margin deposited by TKL for opening a letter of credit, and CNY
70,266.19 is the balance of the company's Alipay account. Except for the margin deposited for opening a letter of credit,
there are no other funds in monetary funds at the end of the period with restricted use rights or potential recovery risks
due to mortgage, pledge or freeze.
5.2 Held-for-trading financial assets
Items 30 June 2023 1 January 2023
Financial assets measured at fair value through Profit or Loss 570,878,663.89 569,493,788.89
Including: Derivative financial assets 25,900.00 1,138,900.00
Structured Deposit Investment 570,852,763.89 568,354,888.89
Total 570,878,663.89 569,493,788.89
Note: Derivative financial is forward foreign exchange settlement and sale contracts signed by the
Company with financial institutions.
5.3 Accounts Receivables
5.3.1 Accounts receivable by aging
Aging 30 June 2023 1 January 2023
Within one year 146,771,575.87 97,042,217.74
Including: Within 90 days 138,715,953.14 92,464,137.64
91 – 180 days 8,023,977.92 4,291,123.54
181 – 270 days 11,644.81 286,956.56
271 – 365 days 20,000.00 0.00
1-2 years 0.00 9,677.56
2-3 years 20,418.08 110,740.52
3-4 years 100,000.00 0.00
4-5 years 0.00 0.00
Over 5 years 5,000.00 5,000.00
Subtotal 146,896,993.95 97,167,635.82
Less: provision for bad debt 1,216,204.42 1,216,752.94
Total 145,680,789.53 95,950,882.88
83
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.3.2 Accounts receivable by bad debt provision method
30 June 2023
Category Book balance Provision for bad debt
Proportio Provision Carrying amount
Amount Amount
n (%) ratio (%)
Provision for bad debt
0.00 0.00 0.00 0.00 0.00
recognised individually
Provision for bad debt
146,896,993.95 100.00 1,216,204.42 0.83 145,680,789.53
recognized collectively
Including: Portfolio by age 146,338,556.67 99.62 1,216,204.42 0.83 145,122,352.25
Portfolio by related
558,437.28 0.38 0.00 0.00 558,437.28
parties
Total 146,896,993.95 100.00 1,216,204.42 0.83 145,680,789.53
(Continued)
1 January 2023
Category Book balance Provision for bad debt
Proportio Provision Carrying amount
Amount Amount
n (%) ratio (%)
Provision for bad debt
0.00 0.00 0.00 0.00 0.00
recognised 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
1,096,717.65 1.13 0.00 0.00 1,096,717.65
parties
Total 97,167,635.82 100.00 1,216,752.94 1.25 95,950,882.88
Specific instructions for provision for bad debts:
Accounts receivables with bad debt provision are recognised by portfolio by age
30 June 2023
Aging
Book balance Provision for bad debt Provision ratio (%)
Not overdue 136,936,228.55 687,819.78 0.50
Overdue 1 – 30 days 8,854,696.23 398,461.36 4.50
Overdue 31 – 60 days 522,084.21 104,416.85 20.00
Overdue 61 – 90 days 75.00 33.75 45.00
Overdue more than 90 days 25,472.68 25,472.68 100.00
Total 146,338,556.67 1,216,204.42 0.83
(Continued)
1 January 2023
Aging
Book balance Provision for bad debt Provision ratio (%)
Not overdue 88,212,429.63 441,062.13 0.50
Overdue 1 – 30 days 6,748,662.10 303,689.81 4.50
Overdue 31 – 60 days 797,281.80 159,456.36 20.00
Overdue 61 – 90 days
Overdue more than 90 days 312,544.64 312,544.64 100.00
Total 96,070,918.17 1,216,752.94 1.27
Accounts receivables with bad debt provision are recognised by portfolio by related parties
84
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
30 June 2023
Accounts Receivables
Book balance Provision for bad debt Provision ratio (%) Reason for provision
Portfolio by related parties 558,437.28 0.00 0.00
Total 558,437.28 0.00 0.00
(Continued)
1 January 2023
Accounts Receivables
Book balance Provision for bad debt Provision ratio (%) Reason for provision
Portfolio by related parties 1,096,717.65 0.00 0.00
Total 1,096,717.65 0.00 0.00
Basis for the amount of bad debt provision in the current period:
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
based on groups.
5.3.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category 1 January 2023 Recovery or 30 June 2023
Provision Write-off Other
reversal
Provision for bad debt by
1,216,752.94 2,526,787.07 2,539,808.21 0.00 -12,472.62 1,216,204.42
group
Total 1,216,752.94 2,526,787.07 2,539,808.21 0.00 -12,472.62 1,216,204.42
5.3.4 There is no accounts receivable written-off during the reporting period
5.3.5 Top five closing balances by entity
Entity Accounts receivable Proportion (%) Bad debt provision
No. 1 37,825,500.06 25.75 194,455.77
No. 2 25,629,687.05 17.45 169,036.13
No. 3 21,798,732.57 14.84 108,993.67
No. 4 15,873,052.21 10.81 79,365.26
No. 5 7,536,764.54 5.13 255,976.26
Total 108,663,736.43 73.98 807,827.09
5.4 Advances to Suppliers
5.4.1 Advances to suppliers by aging
30 June 2023 1 January 2023
Aging
Amount Proportion (%) Amount Proportion (%)
Within one year 2,495,039.63 99.15 4,050,633.59 100.00
1-2 years 21,407.77 0.85 0.00 0.00
Total 2,516,447.40 100.00 4,050,633.59 100.00
5.4.2 Top five closing balances by entity
The total amount of the top five vendors with the largest prepaid amounts by the Company
at the end of the reporting period is CNY 1,549,266.81, accounting for 61.57% of the total
amount of the prepayment at the end of the reporting period.
5.5 Other Receivables
5.5.1 Other receivables by category
85
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 30 June 2023 1 January 2023
Interest receivable 0.00 0.00
Dividend receivable 0.00 0.00
Other receivables 13,483,847.76 15,425,312.61
Total 13,483,847.76 15,425,312.61
5.5.2 Interest receivable
None
5.5.3 Dividends receivable
None
5.5.4 Other Receivables
5.5.4.1 Other receivables by aging
Aging 30 June 2023 1 January 2023
Within one year 12,432,954.84 14,220,711.94
Including: Within 90 days 11,926,091.80 14,054,615.52
91 – 180 days 309,408.04 125,742.31
181 – 270 days 111,700.00 30,000.00
271 – 365 days 85,755.00 10,354.11
1-2 years 81,560.16 325,368.70
2-3 years 40,000.00 15,000.00
3-4 years 0.00
4-5 years 0.00 50,000.00
Over 5 years 1,124,088.06 1,167,252.13
Subtotal 13,678,603.06 15,778,332.77
Less: provision for bad debt 194,755.30 353,020.16
Total 13,483,847.76 15,425,312.61
5.5.4.2 Other receivables by nature
Nature 30 June 2023 1 January 2023
Export tax refund 6,500,000.00 8,000,401.16
Other open credits 5,944,292.62 6,301,879.48
Deposit 1,234,310.44 1,476,052.13
Due from related parties 0.00 0.00
Subtotal 13,678,603.06 15,778,332.77
Less: Provision for bad debt 194,755.30 353,020.16
Total 13,483,847.76 15,425,312.61
5.5.4.3 Other receivables by provision for bad debt
Stage 1 Stage 2 Stage 3
Expected credit loss for
Provision for bad debt Expected credit Expected credit loss for Total
the whole duration
loss for the next the whole duration (no
(Credit impairment has
12 months credit impairment)
occurred)
Closing balance as of
353,020.16 0.00 0.00 353,020.16
1/1/2023
Carrying amount of other
receivables in current period —— —— —— ——
on 1/1/2023
86
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Provision for bad debt Stage 1 Stage 2 Stage 3 Total
Transfer to stage 2 0.00 0.00 0.00 0.00
Transfer to stage 3 0.00 0.00 0.00 0.00
Transfer back to stage 2 0.00 0.00 0.00 0.00
Transfer back to stage 1 0.00 0.00 0.00 0.00
Recognition 89,553.67 0.00 0.00 89,553.67
Reversal 247,818.53 0.00 0.00 247,818.53
Used 0.00 0.00 0.00 0.00
Written off 0.00 0.00 0.00 0.00
Other movements 0.00 0.00 0.00 0.00
Closing balance as of
194,755.30 0.00 0.00 194,755.30
30/6/2023
5.5.4.4 Provision for bad debt recognized, recovered or reversed
Changes during the reporting period
1 January
Category 30 June 2023
2023 Recovery or
Provision Write-off Other
reversal
Provision for bad debt
0.00 0.00 0.00 0.00 0.00 0.00
recognized individually
Provision for bad debt
353,020.16 89,553.67 247,818.53 0.00 0.00 194,755.30
recognized by portfolio
Total 353,020.16 89,553.67 247,818.53 0.00 0.00 194,755.30
5.5.4.5 There are no other receivables write-off during the reporting period
5.5.4.6 Top five closing balances by entity
Proportion of
Balance at 30 the balance to Provision for
Entity name Nature Aging
June 2023 the total other bad debt
receivables (%)
Zhangzhou Taiwan Investment Export tax
6,500,000.00 0-90 days 47.52
zone Tax Bureau of SAT refund
China Export & Credit
Insurance Corporation Fujian Deposit 648,450.00 Over 3 years 4.74
Branch
PT. PLN (PERSERO) Deposit 419,961.06 Over 3 years 3.07
Zhangzhou Xincheng Metal
Utility rent 339,056.05 0-90 days 2.48
Products Co., Ltd.
Tsann Kuen (China) Enterprise Other open
284,755.00 0-180 days 2.08 6,275.50
Co., Ltd. (Alipay account) credits
Total 8,192,222.11 59.89 6,275.50
5.6 Inventories
5.6.1 Inventories by category
30 June 2023 1 January 2023
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Raw materials 69,387,581.67 8,551,078.64 60,836,503.03 81,697,745.57 10,439,601.05 71,258,144.52
Work in process 11,181,191.56 0.00 11,181,191.56 5,826,097.72 0.00 5,826,097.72
Self-
manufactured
34,035,271.08 3,190,665.10 30,844,605.98 25,687,483.15 2,723,371.49 22,964,111.66
semi-finished
goods
87
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
30 June 2023 1 January 2023
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Finished goods 52,427,009.47 7,493,485.04 44,933,524.43 87,375,174.01 9,397,802.00 77,977,372.01
Low-value
10,116,611.96 0.00 10,116,611.96 566,890.42 0.00 566,890.42
consumables
Materials in
3,084,956.41 0.00 3,084,956.41 1,472,812.16 0.00 1,472,812.16
transit
Total 180,232,622.15 19,235,228.78 160,997,393.37 202,626,203.03 22,560,774.54 180,065,428.49
5.6.2 Provision for impairment
Increase in current year Decrease in current year
Item 1 January 2023 Impact of Impact of 30 June 2023
Recovered or
Accrual changes in changes in
Written off
exchange rates exchange rates
Raw materials 10,439,601.05 19,330.53 0.00 1,992,578.69 -84,725.75 8,551,078.64
Work in process 0.00 0.00 0.00 0.00 0.00 0.00
Self-manufactured
2,723,371.49 467,293.61 0.00 0.00 0.00 3,190,665.10
semi-finished goods
Finished goods 9,397,802.00 1,994,999.33 0.00 3,909,972.06 -10,655.77 7,493,485.04
Low-value
0.00 0.00 0.00 0.00 0.00 0.00
consumables
Materials in transit 0.00 0.00 0.00 0.00 0.00 0.00
Total 22,560,774.54 2,481,623.47 0.00 5,902,550.75 -95,381.52 19,235,228.78
5.7 Other Current Assets
30 June 2023 1 January 2023
Items
Input tax to be deducted 13,855,022.41 11,522,932.71
Financial investment 470,078,488.30 417,328,986.66
Total 483,933,510.71 428,851,919.37
5.8 Other equity instrument investment
5.8.1 General information of other equity instrument investment
30 June 2023 1 January 2023
Items
Non-trading equity instrument investment 40,000.00 40,000.00
Total 40,000.00 40,000.00
5.9 Investment Properties
5.9.1 Investment properties accounted for using cost model
Building and Land use rights Construction in
Items Total
plants progress
Initial cost:
Balance on 1 January 2023 65,737,686.21 29,260,577.51 0.00 94,998,263.72
Increase during the reporting period 0.00 0.00 0.00 0.00
1. Acquisition 0.00 0.00 0.00 0.00
2. Transfer from inventories /fixed assets
0.00 0.00 0.00 0.00
/construction in progress
3. Impact of changes in exchange rate 0.00 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00 0.00
88
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Building and Land use rights Construction in
Items Total
plants progress
1. Disposal 0.00 0.00 0.00 0.00
2. Other transferred out 0.00 0.00 0.00 0.00
3. Impact of changes in exchange rate 0.00 0.00 0.00 0.00
Balance on 30 June 2023 65,737,686.21 29,260,577.51 0.00 94,998,263.72
Accumulated depreciation and
amortisation:
Balance on 1 January 2023 59,065,304.18 16,784,761.24 0.00 75,850,065.42
Increase during the reporting period 30,888.66 311,055.90 0.00 341,944.56
1. Accrual or amortization 30,888.66 311,055.90 0.00 341,944.56
2. Transfer from fixed assets 0.00 0.00 0.00 0.00
3. Impact of changes in exchange rate 0.00 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00 0.00
1. Disposal 0.00 0.00 0.00 0.00
2. Other transferred out 0.00 0.00 0.00 0.00
3. Impact of changes in exchange rate 0.00 0.00 0.00
Balance on 30 June 2023 59,096,192.84 17,095,817.14 0.00 76,192,009.98
Provision for impairment:
Balance on 1 January 2023 0.00 0.00 0.00 0.00
Increase during the reporting period 0.00 0.00 0.00 0.00
1. Accrual or amortization 0.00 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00 0.00
1. Disposal 0.00 0.00 0.00 0.00
2. Other 0.00 0.00 0.00 0.00
Balance on 30 June 2023 0.00 0.00 0.00 0.00
Carrying amount:
Balance on 30 June 2023 6,641,493.37 12,164,760.37 0.00 18,806,253.74
Balance on 1 January 2023 6,672,382.03 12,475,816.27 0.00 19,148,198.30
5.9.2 Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 710,583.91
Total 710,583.91
Note: Lvyuan three country villa is the houses with limited property rights purchased by the TsannKuen
China (Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company from Shanghai Lvsheng Real
Estate Development Co., Ltd. in 1999, and there has no land expropriation. Shanghai Lvsheng Real Estate
Development Co., Ltd. and Shanghai Jiading district, Huangdu town Lvyuan community residents'
committees issued the certificate jointly to prove the right of this property belongs to TsannKuen China
(Shanghai) Enterprise Co., Ltd. in January 2006.
5.10 Fixed Assets
5.10.1 Fixed assets by category
Items 30 June 2023 1 January 2023
Fixed assets 140,513,039.95 147,946,111.81
Disposal of fixed assets 0.00 0.00
Total 140,513,039.95 147,946,111.81
89
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.10.2 Fixed assets
5.10.2.1 General information of fixed assets
Improvement
Electronic devices,
Items Houses and buildings Machineries Vehicles expense of fixed Total
modules and others
assets
Initial cost:
Balance on 1 January 2023 103,409,644.08 177,943,487.51 810,401,422.35 19,232,932.60 49,787,095.13 1,160,774,581.67
Increase during the reporting period 1,725,109.85 4,328,453.16 7,081,820.03 415,563.03 302,170.78 13,853,116.85
(i) Acquisition 0.00 0.00 126,960.19 265,486.72 0.00 392,446.91
(ii) Transfer from construction in
0.00 2,963,403.74 5,621,825.70 0.00 0.00 8,585,229.44
progress
(iii) Transfer from investment properties 0.00 0.00 0.00 0.00 0.00 0.00
(iv) Impact of changes in exchange rates 1,725,109.85 1,365,049.42 1,333,034.14 150,076.31 302,170.78 4,875,440.50
Decrease during the reporting period 0.00 42,818,740.98 2,344,937.44 403,709.50 6,630,632.46 52,198,020.38
(i) Disposal 0.00 42,818,740.98 2,344,937.44 403,709.50 6,630,632.46 52,198,020.38
(ii) Transfer to investment properties 0.00 0.00 0.00 0.00 0.00 0.00
(iii) Impact of changes in exchange rates 0.00 0.00 0.00 0.00 0.00 0.00
Balance on 30 June 2023 105,134,753.93 139,453,199.69 815,138,304.94 19,244,786.13 43,458,633.45 1,122,429,678.14
Accumulated depreciation:
Balance on 1 January 2023 62,230,094.09 102,710,195.33 740,635,516.96 17,816,288.05 49,033,472.80 972,425,567.23
Increase during the reporting period 2,387,763.03 4,971,171.77 11,999,731.64 610,905.53 378,621.01 20,348,192.98
(i) Provision 1,746,379.00 4,037,386.47 10,975,052.95 472,724.07 100,991.07 17,332,533.56
(ii) Transfer from investment properties 0.00 0.00 0.00 0.00 0.00 0.00
(iii) Impact of changes in exchange rates 641,384.03 933,785.30 1,024,678.69 138,181.46 277,629.94 3,015,659.42
Decrease during the reporting period 0.00 26,331,889.84 2,158,473.25 403,709.50 6,603,250.58 35,497,323.17
(i) Disposal 0.00 26,331,889.84 2,158,473.25 403,709.50 6,603,250.58 35,497,323.17
(ii) Transfer from investment properties 0.00 0.00 0.00 0.00 0.00 0.00
(iii) Impact of changes in exchange rates 0.00 0.00 0.00 0.00 0.00 0.00
Balance on 30 June 2023 64,617,857.12 81,349,477.26 750,476,775.35 18,023,484.08 42,808,843.23 957,276,437.04
Provision for impairment:
90
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Improvement
Electronic devices,
Items Houses and buildings Machineries Vehicles expense of fixed Total
modules and others
assets
Balance on 1 January 2023 0.00 21,850,745.19 18,505,584.02 8,319.24 38,254.18 40,402,902.63
Increase during the reporting period 0.00 418,226.22 397,007.66 210.91 407.88 815,852.67
(i) Provision 0.00 274,771.55 314,922.78 0.00 0.00 589,694.33
(ii) Impact of changes in exchange rates 0.00 143,454.67 82,084.88 210.91 407.88 226,158.34
Decrease during the reporting period 0.00 16,454,039.14 97,133.13 0.00 27,381.88 16,578,554.15
(i) Disposal 0.00 16,454,039.14 97,133.13 0.00 27,381.88 16,578,554.15
Balance on 30 June 2023 0.00 5,814,932.27 18,805,458.55 8,530.15 11,280.18 24,640,201.15
Carrying amount:
Balance on 30 June 2023 40,516,896.81 52,288,790.16 45,856,071.04 1,212,771.90 638,510.04 140,513,039.95
Balance on 1 January 2023 41,179,549.99 53,382,546.99 51,260,321.37 1,408,325.31 715,368.15 147,946,111.81
5.10.2.2 Idle fixed assets
Item Initial cost Accumulated depreciation Provision for impairment Carrying amount
Machineries 3,590,508.66 1,995,491.49 1,104,214.70 490,802.47
Electronic device, modules, and others 2,263,753.31 1,938,299.05 319,807.62 5,646.64
Vehicles 295,047.59 295,047.59 0.00 0.00
Improvement expense of fixed assets 6,812,379.58 6,812,379.58 0.00 0.00
Total 12,961,689.14 11,041,217.71 1,424,022.32 496,449.11
5.10.2.3 Fixed assets without certificate of title
Items Carrying amount Reason
Jingying garden 95,034.46 Legal procedures in process
Lvyuan three country villa 129,197.08
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 Estate Development Co., Ltd. in 1999, and there has no land expropriation. Shanghai Lvsheng Real Estate Development
Co., Ltd. and Shanghai Jiading district, Huangdu town Lvyuan community residents' committees issued the certificate jointly to prove the right of this property
belongs to TsannKuen China (Shanghai) Enterprise Co., Ltd. in January 2006.
91
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11 Construction in Progress
5.11.1 Construction in progress by category
Items 30 June 2023 1 January 2023
Construction in progress 10,200,641.01 2,656,954.05
Total 10,200,641.01 2,656,954.05
5.11.2 Construction in progress
5.11.2.1 General information of construction in progress
30 June 2023 1 January 2023
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Sporadic project 628,204.10 0.00 628,204.10 772,770.46 0.00 772,770.46
Equipment
pending 9,572,436.91 0.00 9,572,436.91 1,884,183.59 0.00 1,884,183.59
acceptance
Total 10,200,641.01 0.00 10,200,641.01 2,656,954.05 0.00 2,656,954.05
5.12 Right-of-use Assets
Items Houses and buildings Vehicles Total
Initial cost:
Balance on 1 January 2023 560,915,515.04 0.00 560,915,515.04
Increase during the reporting period 0.00 0.00 0.00
(i) Leases 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 560,915,515.04 0.00 560,915,515.04
Accumulated depreciation:
Balance on 1 January 2023 35,278,378.20 0.00 35,278,378.20
Increase during the reporting period 9,151,332.12 0.00 9,151,332.12
(i) Provision 9,151,332.12 0.00 9,151,332.12
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 44,429,710.32 0.00 44,429,710.32
Accumulated depreciation:
Balance on 1 January 2023 0.00 0.00 0.00
Increase during the reporting period 0.00 0.00 0.00
(i) Provision 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 0.00 0.00 0.00
Carrying amount:
92
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Houses and buildings Vehicles Total
Balance on 30 June 2023 516,485,804.72 0.00 516,485,804.72
Balance on 1 January 2023 525,637,136.84 0.00 525,637,136.84
5.13 Intangible Assets
5.13.1 General information of intangible assets
Items Land use rights Software Total
Initial cost:
Balance on 1 January 2023 18,877,216.55 53,703,759.54 72,580,976.09
Increase during the reporting period 1,038,648.54 77,669.90 1,116,318.44
(i) Acquisition 0.00 77,669.90 77,669.90
(ii) Impact of changes in exchange rates 1,038,648.54 0.00 1,038,648.54
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 19,915,865.09 53,781,429.44 73,697,294.53
Accumulated depreciation:
Balance on 1 January 2023 6,151,357.80 48,460,729.89 54,612,087.69
Increase during the reporting period 621,403.12 2,368,660.05 2,990,063.17
(i) Provision 416,820.22 2,368,660.05 2,785,480.27
(ii) Impact of changes in exchange rates 204,582.90 0.00 204,582.90
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 6,772,760.92 50,829,389.94 57,602,150.86
Accumulated depreciation:
Balance on 1 January 2023 0.00 0.00 0.00
Increase during the reporting period 0.00 0.00 0.00
(i) Provision 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Decrease during the reporting period 0.00 0.00 0.00
(i) Disposal 0.00 0.00 0.00
(ii) Impact of changes in exchange rates 0.00 0.00 0.00
Balance on 30 June 2023 0.00 0.00 0.00
Carrying amount:
Balance on 30 June 2023 13,143,104.17 2,952,039.50 16,095,143.67
Balance on 1 January 2023 12,725,858.75 5,243,029.65 17,968,888.40
5.14 Long-term Deferred Expenses
Increase during
Items 1 January 2023 the reporting Amortisation Other decrease 30 June 2023
period
Telecommunications
14,306.74 0.00 8,584.08 0.00 5,722.66
project expenses
Houses and buildings
8,931,746.98 1,106,373.67 1,776,867.59 0.00 8,261,253.06
renovation expenses
Total 8,946,053.72 1,106,373.67 1,785,451.67 0.00 8,266,975.72
93
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.15 Deferred Tax Assets and Deferred Tax Liabilities
5.15.1 Deferred tax assets before offsetting
30 June 2023 1 January 2023
Items Deductible temporary Deferred tax assets Deductible temporary Deferred tax assets
differences differences
Provision for asset impairment 34,802,016.25 5,497,927.21 54,779,559.38 9,123,516.27
Provision for credit impairment 1,063,789.69 170,172.22 1,350,615.63 219,481.38
Use rights assets 23,075,170.76 3,460,917.47 18,670,852.22 2,800,627.82
Unrealized intragroup profit 447,611.92 111,902.95 360,395.40 90,098.85
Accrued expenses 9,120,495.61 1,491,231.65 8,960,731.00 1,444,532.40
Undistributed deficit 1,934,921.26 483,730.32
Financial liabilities held for
2,869,500.00 430,425.00
trading
Total 73,313,505.49 11,646,306.82 84,122,153.63 13,678,256.72
5.15.2 Deferred tax liabilities before offsetting
30 June 2023 1 January 2023
Deductible Deferred tax assets Deductible temporary Deferred tax assets
Items
temporary differences
differences
Policy relocation 84,032,696.08 21,008,174.02 84,032,696.08 21,008,174.02
Financial assets held for trading 4,011,386.11 601,707.92 4,493,788.89 750,939.17
Accelerated depreciation of fixed
16,537,515.30 2,480,627.30 16,491,554.88 2,473,733.23
assets
Total 104,581,597.49 24,090,509.24 105,018,039.85 24,232,846.42
5.15.3 Unrecognized deferred tax assets
30 June 2023 1 January 2023
Items
Provision for asset impairment 9,073,413.68 8,184,117.80
Provision for credit impairment 347,170.03 219,157.47
Accrued expenses 5,674,054.96 7,015,412.51
Payroll liability 12,321,581.16 11,247,362.19
Undistributed deficit 70,208,609.05 70,208,609.05
Total 97,624,828.88 96,874,659.02
5.16.4 Deductible losses not recognised as deferred tax assets will expire in the following
periods:
30 June 2023 1 January 2023
Items
Year 2023 15,495,274.18 15,495,274.18
Year 2024 14,387,986.24 14,387,986.24
Year 2025 1,829,557.47 1,829,557.47
Year 2026 7,540,562.18 7,540,562.18
Year 2027 to year 2032 30,955,228.98 30,955,228.98
Total 70,208,609.05 70,208,609.05
94
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.16 Other Non-current Assets
30 June 2023 1 January 2023
Items Book Provision for Carrying Book Provision for Carrying
balance impairment amount balance impairment amount
Prepaid mold fee 5,025.64 0.00 5,025.64 11,500.00 0.00 11,500.00
Prepaid
415,090.00 0.00 415,090.00 802,012.56 0.00 802,012.56
equipment fee
Total 420,115.64 0.00 420,115.64 813,512.56 0.00 813,512.56
5.17 Short-term Borrowings
5.17.1 Disclosure of short-term borrowings by category
Items 30 June 2023 1 January 2023
Credit loan 21,732,664.00 0.00
Total 21,732,664.00 0.00
5.18 Held-for-Trading Financial Liabilities
Items 30 June 2023 1 January 2023
Held-for-trading financial liabilities 2,869,500.00 0.00
Including: Derivative financial liabilities 2,869,500.00 0.00
Total 2,869,500.00 0.00
Note: Derivative financial liabilities are forward foreign exchange settlement/sale contracts signed by
the Company with the financial institutions.
5.19 Notes Payable
Items 30 June 2023 1 January 2023
Bank acceptance bills 4,134,280.48 2,630,056.46
Total 4,134,280.48 2,630,056.46
Note: There are no expired notes payable that have not been paid as at the end of current year.
5.20 Accounts Payable
5.20.1 Accounts payable by nature
Items 30 June 2023 1 January 2023
Within 1 year 331,679,017.28 392,695,758.24
Over 1 year 4,110,536.14 6,259,391.99
Total 335,789,553.42 398,955,150.23
5.20.2 Significant accounts payable with aging of over one year
30 June 2023
Items Reason
Ningbo Chaochao Electrical Equipment
Co., Ltd. 500,237.01 Quality disputes
Total
500,237.01
5.21 Advances from Customers
5.21.1 Details of advances from customers
Items 30 June 2023 1 January 2023
Within 1 year 4,248,474.36 4,555,321.32
Over 1 year 1,591,486.66 3,325,097.52
Total 5,839,961.02 7,880,418.84
95
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.22 Contract Liabilities
5.22.1 Details of contract liabilities
Items 30 June 2023 1 January 2023
Within 1 year 11,895,219.15 17,341,385.46
Over 1 year 7,208,423.89 4,181,222.58
Total 19,103,643.04 21,522,608.04
5.23 Employee Benefits Payable
5.23.1 Details of employee benefits payable
Increase during the Decrease during the
Items 1 January 2023 30 June 2023
reporting period reporting period
Short-term employee benefits 41,875,000.77 118,075,837.68 119,777,401.25 40,173,437.20
Post-employment benefits-
72,198.61 7,649,573.18 7,711,558.49 10,213.30
defined contribution plans
Termination benefits 0.00 0.00 0.00 0.00
Other benefits due within one
0.00 0.00 0.00 0.00
year
Total 41,947,199.38 125,725,410.86 127,488,959.74 40,183,650.50
5.23.2 Short-term employee benefits
Increase during the Decrease during the
Items 1 January 2023 30 June 2023
reporting period reporting period
Salaries, bonuses, allowances and
28,306,162.35 102,096,480.15 105,317,903.93 25,084,738.57
subsidies
Employee benefits 0.00 6,197,853.08 5,043,390.73 1,154,462.35
Social insurance 20,381.60 5,591,042.61 5,604,877.71 6,546.50
Including: Health insurance 6,931.52 4,125,309.28 4,126,050.90 6,189.90
Injury insurance 13,450.08 1,173,265.90 1,186,359.38 356.60
Birth insurance 0.00 292,467.43 292,467.43 0.00
Housing accumulation fund 11,252,090.19 3,974,226.52 2,900,446.55 12,325,870.16
Labour union funds and employee
0.00 201,452.50 201,452.50 0.00
education funds
Short-term absence pay 2,296,366.63 14,782.82 709,329.83 1,601,819.62
Total 41,875,000.77 118,075,837.68 119,777,401.25 40,173,437.20
5.23.3 Defined contribution plans
Increase during the Decrease during the
Items 1 January 2023 30 June 2023
reporting period reporting period
Basic endowment insurance 71,856.51 7,252,891.98 7,314,844.69 9,903.80
Unemployment insurance 342.10 396,681.20 396,713.80 309.50
Total 72,198.61 7,649,573.18 7,711,558.49 10,213.30
Note: The Company participates in the endowment insurance and unemployment insurance plan
established by the government, according to these plans, the Company pays planed fees to the
Company’s location. In addition to the monthly fee deposit, the Company no longer bears further
payment obligations. Corresponding expenses are expensed as incurred or costs related assets.
5.24 Taxes Payable
Items 30 June 2023 1 January 2023
Enterprise income tax 28,680,649.70 35,271,667.38
96
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 30 June 2023 1 January 2023
Value added tax (VAT) 758,932.65 1,286,227.97
Individual income tax 464,080.50 556,713.88
Educational surcharge 434,650.52 362,185.92
City construction tax 434,650.54 376,322.10
Other 4,557,861.98 1,573,439.94
Total 35,330,825.89 39,426,557.19
5.25 Other Payables
5.25.1 Other payables by category
Items 30 June 2023 1 January 2023
Interest payable 0.00 0.00
Dividend payable 0.00 0.00
Other payable 32,946,785.01 36,311,863.30
Total 32,946,785.01 36,311,863.30
5.25.2 Other payables
5.25.2.1 Other payables by nature
Items 30 June 2023 1 January 2023
Within 1 year 19,855,923.62 23,690,913.19
Over 1 year 13,090,861.39 12,620,950.11
Total 32,946,785.01 36,311,863.30
5.25.2.2 Significant other payables with aging over one year
Items 30 June 2023 Reason
Deposit 13,216,056.05 Return upon termination of contract
Total 13,216,056.05
5.26 Non-current Liabilities Maturing within One Year
Items 30 June 2023 1 January 2023
Lease liabilities maturing within one year 42,524,948.56 9,494,026.90
Total 42,524,948.56 9,494,026.90
5.27 Lease Liabilities
30 June 2023 1 January 2023
Items
Lease liabilities 513,600,116.67 534,850,528.45
Total 513,600,116.67 534,850,528.45
5.28 Estimated liabilities
30 June 2023 1 January 2023
Reason
Items
Pending litigation 0.00 480,930.00 Litigation
Total 0.00 480,930.00
97
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.29 Share Capital
Changes during the reporting period (+,-)
Item 1 January 2023 Bonus Capitalisation 30 June 2023
New issues Others Subtotal
issues of reserves
Number of
185,391,680.00 185,391,680.00
total shares
98
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.30 Capital Reserves
Item 1 January 2023 Increase during the reporting period Decrease during the reporting period 30 June 2023
Capital premium (share premium) 210,045,659.80 0.00 0.00 210,045,659.80
Other capital reserves 86,763,305.99 0.00 0.00 86,763,305.99
Total 296,808,965.79 0.00 0.00 296,808,965.79
5.31 Other Comprehensive Income
Current year
Less: previously
Less: previously
recognised in
recognised in
other After tax After tax
other
Item 1 January 2023 Amount for the comprehensive Less: Income attributable to attributable to 30 June 2023
comprehensive
year before tax income tax expense the parent minority
income
transferred into company shareholders
transferred into
retained
profit or loss
earnings
1. Other comprehensive income will
41,036.56 0.00 0.00 0.00 0.00 0.00 0.00 41,036.56
not be reclassified to profit or loss
Including: Changes of remeasurement
41,036.56 0.00 0.00 0.00 0.00 0.00 0.00 41,036.56
of the defined benefit plan
2. Items will be reclassified to profit or
8,089,858.52 0.00 0.00 0.00 0.00 4,601,860.28 1,533,953.43 12,691,718.80
loss
Other comprehensive income will not
be reclassified into profit or loss under
equity method
Exchange differences on translating
8,089,858.52 0.00 0.00 0.00 0.00 4,601,860.28 1,533,953.43 12,691,718.80
foreign operations
Total 8,130,895.08 0.00 0.00 0.00 0.00 4,601,860.28 1,533,953.43 12,732,755.36
99
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.32 Surplus Reserves
Increase during the Decrease during the
Item 1 January 2023 30 June 2023
reporting period reporting period
Statutory surplus
68,925,849.64 0.00 0.00 68,925,849.64
reserves
Total 68,925,849.64 0.00 0.00 68,925,849.64
Note: Pursuant to the Company Law of the People's Republic of China and Articles of Association, the Company
appropriates 10% of net profit to the statutory surplus reserves. If the accumulated amount of the statutory
surplus reserve reaches more than 50% of the registered capital of the Company, it shall not be withdrawn.
After the Company accrues the statutory surplus reserve, the Company can accrue any surplus reserve fund.
Upon approval, the discretionary surplus reserve fund may be used to cover future losses or increase in share
capital.
5.33 Retained Earnings
Items Reporting period Same period of last year
Balance at the end of last period before adjustments 481,265,907.40 413,076,375.98
Adjustments for the opening balance (increase /(decrease) 0.00 0.00
Balance at the beginning of the reporting period after adjustments 481,265,907.40 413,076,375.98
Add: net profit attributable to owners of the parent company for the reporting
28,317,860.90 94,283,302.93
period
Less: appropriation to statutory surplus reserves 0.00 7,554,603.51
Appropriation to discretionary surplus reserves 0.00 0.00
Provision for general risk reserves 0.00 0.00
Payment of ordinary share dividends 55,617,504.00 18,539,168.00
Common stock dividends converted to share capital 0.00 0.00
Balance at the end of the reporting period 453,966,264.30 481,265,907.40
5.34 Revenue and Cost of Sales
Reporting period Same period of last year
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 588,434,864.79 499,219,639.42 822,686,550.74 719,680,110.72
Other activities 36,975,624.36 6,575,466.81 45,605,702.62 17,315,934.78
Total 625,410,489.15 505,795,106.23 868,292,253.36 736,996,045.50
5.34.1 Revenue from principal activities (by industry or business)
Reporting period Same period of last year
Industry (business) Revenue Costs of sales Revenue Costs of sales
Household appliances
588,434,864.79 499,219,639.42 822,686,550.74 719,680,110.72
industry
Total 588,434,864.79 499,219,639.42 822,686,550.74 719,680,110.72
5.34.2 Revenue from principal activities (by product)
Reporting period Same period of last year
Products Revenue Costs of sales Revenue Costs of sales
Catering and Cooking 357,869,438.26 302,538,598.25 525,208,182.23 460,595,374.40
Home helper 165,067,913.46 144,579,440.71 173,901,314.63 157,079,442.37
Tea/Coffee makers 61,696,249.75 50,340,030.43 110,782,328.41 93,468,479.22
Others 3,801,263.32 1,761,570.03 12,794,725.47 8,536,814.73
100
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Reporting period Same period of last year
Products Revenue Costs of sales Revenue Costs of sales
Total 588,434,864.79 499,219,639.42 822,686,550.74 719,680,110.72
5.34.3 Revenue from principal activities (by region)
Reporting period Same period of last year
Region Revenue Costs of sales Revenue Costs of sales
Australia 6,233,318.04 5,051,733.22 19,961,933.58 17,627,481.02
Africa 16,241,597.10 12,666,001.06 16,361,919.27 13,679,562.07
America 239,862,232.02 206,546,351.96 378,440,562.36 331,959,192.33
Europe 204,613,214.53 171,004,608.28 214,658,631.62 185,178,790.24
Asia 121,484,503.10 103,950,944.90 193,263,503.91 171,235,085.06
Total 588,434,864.79 499,219,639.42 822,686,550.74 719,680,110.72
5.35 Taxes and Surcharges
Items Reporting period Same period of last year
City construction tax 815,562.58 1,073,003.16
Educational surcharge 788,050.52 1,042,782.76
Property tax 1,309,712.58 1,045,369.07
Land use tax 199,423.38 178,544.88
Stamp duty 328,022.77 450,065.02
Other 7,523.97 5,030.30
Total 3,448,295.80 3,794,795.19
5.36 Selling and Distribution Expenses
Reporting period Same period of last year
Items
Employee remunerations 7,471,952.56 7,020,872.78
Claims experiment expenses 475,994.68 567,972.05
Sales commission and after sales service fees 1,216,845.74 1,313,350.89
Rental expenses 11,669.70 11,897.98
Travel expenses 302,543.62 114,065.20
Advertisements charges and sales promotion 1,768,788.97 239,315.43
Administrative expenses 62,930.82 59,273.82
Transportation expenses 0.00 0.00
Others 1,850,506.88 1,589,998.65
Total 13,161,232.97 10,916,746.80
5.37 General and Administrative Expenses
Items Reporting period Same period of last year
Employee remunerations 18,936,775.53 17,842,373.06
Depreciation and amortization of assets 5,862,732.27 6,052,411.49
Rental expenses 109,552.16 550,938.90
Insurance expenses 790,887.51 1,296,439.94
Administrative expenses 817,159.55 641,665.02
Travel expenses 2,054,728.01 1,920,406.51
Consultant fees 1,448,284.62 2,438,359.63
Maintenance expenses 1,907,381.29 2,043,320.72
Others 3,244,936.16 3,184,147.39
Total 35,172,437.10 35,970,062.66
101
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.38 Research and Development Expenses
Items Reporting period Same period of last year
Employee remunerations 19,869,956.56 24,326,053.12
Test expenses 2,169,153.45 2,104,962.67
Depreciation and amortization of assets 3,595,330.05 4,508,008.47
Certification expenses 771,492.96 396,685.68
Rental expenses 20,728.30 26,009.67
Patent expenses 252,733.12 719,321.12
Travel expenses 263,678.25 211,238.43
Maintenance expenses 848,037.44 1,317,107.05
Consultant fees 63,783.09 267,163.52
Others 1,264,128.06 875,463.22
Total 29,119,021.28 34,752,012.95
5.39 Finance Expenses
Reporting period Same period of last year
Items
Interest expenses 14,346,616.80 13,625,662.64
Less: Interest income 2,383,878.11 2,772,581.93
Foreign exchange losses -1,507,013.42 -12,188,363.10
Bank charges 420,439.08 480,121.12
Total 10,876,164.35 -855,161.27
5.40 Other Income
Same period of last Related to assets
Reporting period
Items year /income
1. Government grant recognised in other income 2,623,900.61 7,273,591.28 Related to income
Including: Government grant related to deferred income
Government grant related to deferred income
Government grant directly recognised in current profit or loss 2,623,900.61 7,273,591.28 Related to income
2. Others related to daily operation activities and recognised in
0.00 5,901.34
other income
Including: Charges of withholding individual income tax
Additional deduction of input tax 0.00 5,901.34 Related to income
Income from debt restructuring
Total 2,623,900.61 7,279,492.62
Details of government grant recognised in other income:
Recognized in
Same period of last current
Reporting period
Items year extraordinary gains
and losses
Enterprise R&D investment subsidies 0.00 2,004,300.00 0.00
Export credit insurance subsidy 105,188.00 1,110,988.00 105,188.00
Reward for increasing production and efficiency 0.00 1,050,700.00 0.00
Patent subsidies 20,000.00 377,500.00 20,000.00
Employment stabilization subsidies 237,725.64 500.00 237,725.64
Commissions on the three authorized tax collection commissions 73,418.97 106,745.09 73,418.97
Social security subsidies for labors 1,824,068.00 1,000,000.00 1,824,068.00
Subsidies for stabilizing foreign trade 0.00 1,000,000.00 0.00
102
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Recognized in
Same period of last current
Reporting period
Items year extraordinary gains
and losses
Incremental subsidies for key enterprises 0.00 500,000.00 0.00
Reward for foreign investment and cooperation 208,000.00 0.00 208,000.00
Others 155,500.00 122,858.19 155,500.00
Total 2,623,900.61 7,273,591.28 2,623,900.61
5.41 Investment Income
Items Reporting period Same period of last year
Investment income of trading financial assets during the holding period 5,017,031.52 834,643.60
Investment income from disposal of trading financial assets 281,850.00 1,676,600.00
Interest income from time deposits 6,766,617.28 6,122,832.74
Total 12,065,498.80 8,634,076.34
5.42 Gains on Changes in Fair Values
Reporting period Same period of last year
Items
Held-for-trading financial assets 1,384,875.00 460,466.67
Including: gains on changes in fair value of derivatives -1,113,000.00 -4,059,700.00
Bank’s financial products 2,497,875.00 4,520,166.67
Held-for-trading financial liabilities -2,869,500.00 -2,018,500.00
Total -1,484,625.00 -1,558,033.33
5.43 Impairment Loss of Credit
Reporting period Same period of last year
Items
Bad debt of accounts receivables 13,021.14 976,052.61
Bad debt of other receivables 158,264.86 -144,648.49
Total 171,286.00 831,404.12
5.44 Impairment Loss of Assets
Items Reporting period Same period of last year
Impairment of inventories -2,481,623.47 -6,196,535.70
Impairment of fixed assets -589,694.33 -426,065.29
Total -3,071,317.80 -6,622,600.99
5.45 Gains from Disposal of Assets
Recognized in current
Same period of last
Reporting period extraordinary gains
Items year
and losses
Gains or losses from the disposal of fixed assets,
construction in progress, productive biological assets, and 316,839.99 125,025.90 316,839.99
intangible assets that are not classified as held for sale
Including:fixed assets 316,839.99 125,025.90 316,839.99
Total 316,839.99 125,025.90 316,839.99
103
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.46 Non-operating Income
5.46.1 Details of non-operating income
Recognized in current extraordinary
Reporting period Same period of last year
Items gains and losses
Other 4,510,900.90 3,060,539.00 4,510,900.90
Total 4,510,900.90 3,060,539.00 4,510,900.90
5.47 Non-operating Expenses
Recognized in current extraordinary gains
Items Reporting period Same period of last year
and losses
Loss from damage or scrapping of non-
40,912.34 4,505.94 40,912.34
current assets
Including: fixed assets 40,912.34 4,505.94 40,912.34
Donations 0.00 4,563.67 0.00
Others 0.00 3,051.36 0.00
Total 40,912.34 12,120.97 40,912.34
5.48 Income Tax Expenses
5.48.1 Details of income tax expenses
Reporting period Same period of last year
Items
Current tax expenses 3,078,184.82 7,197,847.52
Deferred tax expenses 2,081,789.80 -1,161,944.18
Total 5,159,974.62 6,035,903.34
5.48.2 Reconciliation of accounting profit and income tax expenses
Items Reporting period Same period of last year
Profit before tax 42,929,802.58 58,455,534.22
Income tax expense at the statutory /applicable tax rate 10,732,450.65 14,649,729.03
Effect of different tax rate of subsidiaries -4,110,269.59 -3,465,016.90
Adjustments of impact from prior period income tax -124,467.09 3,375.39
Effect of income that is exempt from taxation
Effect of non-deductible costs, expenses or losses 129,723.59 384,542.74
Effect of previously unrecognized deductible losses recognised
-112,328.80
as deferred tax assets
Effect of deductible temporary differences and deductible losses
1,367,360.25 40,630.19
not recognised as deferred tax assets
Changes in balance of the beginning of the year deferred tax
asset/liabilities due to tax rate adjustment
R&D expenses plus deduction -2,834,823.19 -5,465,028.31
Income tax expenses 5,159,974.62 6,035,903.34
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.
104
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.50 Notes to the Statement of Cash Flow
5.50.1 Other cash received relating to operating activities
Items Reporting period Same period of last year
Government grants 2,623,900.61 7,273,591.28
Interests income 1,894,309.52 2,116,274.21
Rent income 29,921,425.49 25,612,626.59
Funds in current account and others 14,921,295.09 18,258,136.37
Total 49,360,930.71 53,260,628.45
5.50.2 Other cash payments relating to operating activities
Items Reporting period Same period of last year
Penalties and donations 0.00 4,652.99
Bank charges 424,247.98 487,521.32
Sales expenses, general and administrative expenses, and research and
58,099,734.76 61,812,137.82
development expenses paid by cash
Current accounts and others 705,227.01 1,024,463.96
Total 59,229,209.75 63,328,776.09
5.50.3 Other cash received relating to investing activities
Reporting period Same period of last year
Items
Time deposits recovered after maturity for the purpose to earn interest income in
253,023,312.02 207,120,664.36
financial institutions
Total 253,023,312.02 207,120,664.36
5.50.4 Other cash payments relating to investing activities
Items Reporting period Same period of last year
Time deposits in financial institutions for the purpose of earning interest income 304,493,112.02 327,030,464.36
Total 304,493,112.02 327,030,464.36
5.50.5 Other cash received relating to financing activities
Reporting period Same period of last year
Items
Security deposit of L/C 2,440,824.50 4,400,029.09
Security deposit of pledged loan 0.00 0.00
Total 2,440,824.50 4,400,029.09
5.50.6 Other cash payments relating to financing activities
Items Reporting period Same period of last year
Lease payment for use rights assets 480,960.00 330,000.00
Security deposit of L/C 3,888,375.92 6,342,741.56
Total 4,369,335.92 6,672,741.56
5.51 Supplementary Information to the Statement of Cash Flows
5.51.1 Supplementary information to the statement of cash flows
Supplementary information Reporting period Same period of last year
1. Adjustments of net profit to cash flows from operating activities:
Net profit 37,769,827.96 52,419,630.88
Add: Provisions for impairment of assets -3,071,317.80 -6,622,600.99
Impairment loss of credit 171,286.00 831,404.12
105
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Supplementary information Reporting period Same period of last year
Depreciation of fixed assets, oil and gas asset and productive biological assets 17,674,478.12 19,397,511.37
Depreciation of use rights assets 9,151,332.12 8,597,173.23
Amortisation of intangible assets 2,785,480.27 3,825,882.48
Amortisation of long-term deferred expenses 1,785,451.67 1,931,948.75
Gains on disposal of fixed assets, intangible assets, and other long-term assets -316,839.99 -200,484.29
Loss on scrapping of fixed assets 40,912.34 4,505.94
Gains on changes in fair value 1,484,625.00 1,558,033.33
Finance income 9,107,498.07 7,605,297.59
Investment income -12,065,498.80 -8,634,076.34
Decreases in deferred tax assets 2,031,949.90 -1,066,228.76
Increases in deferred tax liabilities -142,337.18 -296,930.70
Increases in inventories 22,393,580.88 58,955,054.46
Increases in operating receivables -46,254,255.61 61,502,133.51
Increases in operating payables -72,293,670.35 -146,379,337.86
Others 0.00 0.00
Net cash flows from operating activities -29,747,497.40 53,428,916.72
2. Significant investing and financing activities not involving cash receipts and
payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets acquired under finance leases
3. Net increases in cash and cash equivalents:
Cash equivalents at the end of the reporting period 434,069,413.50 544,242,256.25
Less: Cash equivalents at the beginning of the reporting period 575,511,846.95 770,851,173.58
Add: Cash equivalents at the end of the reporting period
Less: Cash equivalents at the beginning of the reporting period
Net increase in cash and cash equivalents -141,442,433.45 -226,608,917.33
5.51.2 The components of cash and cash equivalents
Reporting period Same period of last year
Items
1. Cash 434,069,413.50 544,242,256.25
Including: Cash on hand 694,389.02 928,614.06
Cash in bank available for immediate use 433,304,758.29 543,313,642.19
Other monetary funds available for immediate use 70,266.19 0.00
Deposit in the central banks available for immediate use 0.00 0.00
Deposit in peer firms 0.00 0.00
Loan to peer firms 0.00 0.00
2. Cash equivalents 0.00 0.00
Including: Bond investments maturing within three months 0.00 0.00
3. Cash and cash equivalents at the end of the reporting period 434,069,413.50 544,242,256.25
Note 1: Cash and cash equivalents exclude the restricted cash and cash equivalents in parent company or
subsidiary.
Note 2: On 30 June 2023, the amount of cash and cash equivalents in the statement of cash flows was CNY
434,069,413.50 and the balance of monetary funds of balance sheet was CNY 436,873,140.87. The difference
is CNY 2,803,727.37, which is the security deposit for the letter of credit of TKL.
106
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.52 Restricted Assets
Item Carrying amount on 30 June 2023 Reason
Other monetary funds 2,803,727.37 Security deposit for L/C
Total 2,803,727.37
5.53 Foreign Currency Monetary Items
5.53.1 Details for foreign currency monetary items:
Carrying amount in foreign Carrying amount in CNY on
Items Exchange rate
currency on 30 June 2023 30 June 2023
Cash and cash equivalents
Including: USD 15,606,428.84 7.2258 112,768,933.51
JPY 277,573,438.42 0.050094 13,904,763.82
IDR 4,625,861,358.79 0.000483 2,234,291.04
EUR 11,644.49 7.8771 91,724.81
GBP 9,419.61 9.1432 86,125.38
HKD 3,429,176.97 0.92198 3,161,632.58
HUF 81,016.00 0.021221 1,719.24
Total 132,249,190.38
Short-term borrowings
Including: USD 3,000,000.00 7.2258 21,677,400.00
Total 21,677,400.00
Accounts receivables
Including: USD 19,804,054.79 7.2258 143,100,139.10
IDR 430,267,968.00 0.000483 207,819.43
JPY 31,313,757.00 0.050094 1,568,631.34
Total 144,876,589.87
Accounts payables
Including: USD 4,228,307.77 7.2258 30,552,906.28
EUR 137,294.80 7.8771 1,081,484.87
GBP 199.56 9.1432 1,824.62
HKD 1,495.70 0.92198 1,379.01
JPY 2,139,955.62 0.050094 107,198.94
IDR 2,563,721,177.14 0.000483 1,238,277.33
Total 32,983,071.05
Other receivables
Including: USD 24,638.06 7.2258 178,029.69
IDR 1,313,784,000.00 0.000483 634,557.67
Total 812,587.36
Other payables
Including: USD 124,312.36 7.2258 898,256.25
IDR 424,547,748.13 0.000483 205,056.56
Total 1,103,312.81
5.54 Government Grants
5.54.1 Government grants related to assets
107
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items presented Recognised in current profit or loss or directly as Presented items that
in the statement deduct of related cost recognised in current profit or
Item Amount
of financial loss or directly as deduct of
Reporting period Same period of last year
position related cost
Equipment
Fixed assets 37,281.82 37,281.82 Cost of sales
investment subsidies
5.54.2 Government grants related to income
Presented
items that
Items Recognised in current profit or loss
recognised in
presented in or directly as deduct of related
cost current profit
Item Amount the statement
or loss or
of financial
directly as
position Reporting
Reporting period deduct of
period related cost
R&D expenses subsidies 0.00 Other income 0.00 2,004,300.00 Other income
Export credit insurance subsidies 105,188.00 Other income 105,188.00 1,110,988.00 Other income
Reward for increasing production and
0.00 Other income 0.00 1,050,700.00 Other income
efficiency
Patent subsidy 20,000.00 Other income 20,000.00 377,500.00 Other income
Employment stabilization subsidies 237,725.64 Other income 237,725.64 500.00 Other income
Commissions on the three authorized tax
73,418.97 Other income 73,418.97 106,745.09 Other income
collection commissions
Subsidies for stabilizing foreign trade 1,824,068.00 Other income 1,824,068.00 1,000,000.00 Other income
Incremental subsidies for key enterprises 0.00 Other income 0.00 1,000,000.00 Other income
Subsidies for foreign trade enterprises to
0.00 Other income 0.00 500,000.00 Other income
build their own brands
Reward for external investment and
208,000.00 Other income 208,000.00 0.00 Other income
cooperation
Other 155,500.00 Other income 155,500.00 122,858.19 Other income
Total 2,623,900.61 2,623,900.61 7,273,591.28
6. CHANGES IN THE SCOPE OF CONSOLIDATION
In June 2023, the Company deregistered its subsidiary Tsannkuen Edge Intelligence Co., Ltd., which was no longer
included into the consolidated financial statements since the date of deregistration.
7. INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
7.1.1 Composition of corporate group
Percentage of
Principal
Registere Nature of equity interests by
Name of subsidiary place of Methods of acquisition
d City business the Company (%)
business
Direct Indirect
108
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Principal Percentage of
Registere Nature of
Name of subsidiary place of equity interests by Methods of acquisition
d City business
business the Company (%)
Manufactures
TsannKuen (Zhangzhou) Zhangzho home Acquired through
Zhangzhou 75.00
Enterprise Co., Ltd.(TKL) u electronic establishment
appliance
Manufactures
Acquired through
TsannKuen China (Shanghai) home
Shanghai Shanghai 46.875 business combination
Enterprise Co., Ltd. (TKS) electronic
under common control
appliance
Xiamen Tsannkuen Property Property Acquired through
Xiamen Xiamen 100.00
Services Co., Ltd. (TKW) services establishment
Acquired through
East Sino Development Hong Investment,
Hong Kong 75.00 business combination
Limited. (East Sino) Kong Trading
under common control
Manufactures
Acquired through
Pt.Star Comgistic Indonesia home
Indonesia Indonesia 75.00 business combination
(SCI) electronic
under common control
appliance
Pt.Star Comgistic Property
Real estate Acquired through
Development Indonesia Indonesia Indonesia 75.00
development establishment
(SCPDI)
Acquired through
Orient Star Investments Hong Investment, business
Hong Kong 75.00
Limited (OSI) Kong Trading combination not under
common control
Acquired through
Tsannkuen Edge Intelligence Industrial
Taiwan Taiwan 75.00 business combination
Co., Ltd. (TKEI) design
under common control
109
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
7.1.2 Significant non-wholly owned subsidiaries
Dividends declared to
Proportion of ownership Profit or loss attributable to
Name of distribute to non-controlling Non-controlling
interest held by non- non- controlling interests during
subsidiary interests during the interests at the end of the
controlling interest the reporting period
reporting period reporting period
TKL 25 9,293,701.15 19,405,223.50 333,171,667.84
TKS 53.125 1,604,280.06 133,127,010.16
SCI 25 -1,506,547.07 37,285,989.47
7.1.3 Main financial information of significant non-wholly owned subsidiaries
30 June 2023
Name of
Non-current
subsidiary Current assets Non-current assets Total assets Current liabilities Total liabilities
liabilities
TKL 1,412,935,153.26 915,274,567.09 2,328,209,720.35 478,840,597.10 516,682,451.89 995,523,048.99
TKS 293,816,375.93 5,661,328.25 299,477,704.18 27,877,511.03 21,008,174.02 48,885,685.05
SCI 105,567,586.98 68,941,663.68 174,509,250.66 25,365,292.72 0.00 25,365,292.72
(Continued)
1 January 2023
Name of
Non-current Non-current
subsidiary Current assets Total assets Current liabilities Total liabilities
assets liabilities
TKL 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
TKS 292,168,697.67 5,878,922.81 298,047,620.48 29,275,071.53 21,200,351.10 50,475,422.63
SCI 99,235,623.97 69,820,920.41 169,056,544.38 19,283,426.63 0.00 19,283,426.63
(Continued)
Reporting period
Name of subsidiary Total comprehensive Net cash flows from
Revenue Net profit/(loss)
income operating activities
TKL 576,468,523.96 37,174,804.59 -21,617,536.02
TKS 685,238.07 3,019,821.28 -1,127,445.49
SCI 50,391,155.36 -6,026,188.28 -4,420,257.60
(Continued)
The same period of last year
Name of subsidiary Total comprehensive Net cash flows from
Revenue Net profit/(loss)
income operating activities
TKL 768,693,948.44 47,399,102.40 96,245,469.57
TKS 521,651.76 1,641,853.04 -791,513.54
SCI 102,898,244.18 170,598.75 15,344,498.99
7.2 Transactions which Resulted in Change of Equity Interests in a Subsidiary without Loss of
Control
None
110
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
8. RISKS RELATED TO FINANCIAL INSTRUMENTS
The main financial instruments of the Company include equity investments, debt investments,
loans, accounts receivable, accounts payable and etc., please see Note 5 for detail of related items.
The risks associated with financial instruments and the risk management policies which the
Company uses to reduce these risks are described below. The management of the Company
manages and supervises the risks to ensure that the risks can be controlled within a limited range.
The Company uses sensitivity analysis techniques to analyze the possible impact of reasonable and
possible changes in risk variables on current profits and losses or shareholder equity. Since any risk
variable rarely changes in isolation, and the correlation between variables will have a significant
effect on the final impact of the change of a certain risk variable, the following contents are based
on the assumption that the change of each variable is carried out independently.
8.1 The targets and policies of risks management
The target of the Company's risk management is to achieve an appropriate balance between risks
and returns, reduce the negative impact of risks on the Company's operating performance to the
lowest level, and maximize the interests of shareholders and other equity investors. Based on this
risk management objective, the basic strategy of the Company’s risk management is to determine
and analyze the various risks faced by the Company, to establish suitable risk tolerance baseline
and conduct risk management, and to supervise various risks timely and reliably, so the risks are
controlled within a limited range.
8.1.1 Market risk
8.1.1.1 Foreign exchange risk
The main exchange rate risk of the Company comes from the foreign currency assets and liabilities
held by the Company and its subsidiaries that are not denominated in its functional currency. The
Company bears the foreign exchange risk primarily concerned with USD, JPY, IDR, EUR, HKD and
NTD. Three of the Company’s subsidiaries use foreign currencies for purchasing and sales,
including SCI using USD for purchasing and sales, SCPDI using IDR for purchasing and sales, TKEI
usin NTD for purchasing and sale. Other than the three subsidiaries mentioned above, other major
business activities of the Company are priced and settled in CNY.
8.1.1.1.1 As of 30 June 2023, 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):
111
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 30 June 2023 1 January 2023
Cash and cash equivalent 132,249,190.38 180,922,873.80
Accounts receivable 144,876,589.87 96,920,556.63
Other receivables 812,587.36 567,689.72
Short-term loan 21,677,400.00
Accounts payable 32,983,071.05 45,588,213.27
Other payables 1,103,312.81 3,077,517.25
The Group purchases foreign currency forward contracts to reduce the foreign exchange risk, and
foreign currency forward contracts shall be based on the amount of foreign currency assets.
8.2 Credit Risk
On 30 June 2023, the maximum credit risk exposure that may cause financial loss of the Company
mainly comes from the loss of financial assets of the company caused by the failure of the other
party to perform its obligations and the financial guarantee undertaken by the Company, including:
The book amount of financial assets recognized in the consolidated balance sheet; for financial
instruments at fair value, the book value reflects their risk exposure, but not the maximum risk
exposure, and the maximum risk exposure will change as their fair value changes in the future.
To reduce credit risks, the Company has established a team responsible for determining the credit
limit, conducting credit approval, and implementing other monitoring procedures to ensure that
necessary measures are taken to recover overdue claims. In addition, the Company reviews the
recovery of each single receivable on each balance sheet date to ensure that adequate provision
for bad debt is made for uncollectible amounts. As a result of the implemented procedures, the
management of the Company believes that the credit risk assumed by the company has been
greatly reduced.
The Company's circulating funds are deposited in banks with higher credit ratings, so the credit risk
of circulating funds is low.
8.2.1 Aging analysis of financial assets that are overdue and not impaired
The Company does not have any financial assets that are overdue and not impaired.
8.2.2 Analysis of financial assets that have suffered an individual impairment
The Company does not have any single impairment financial assets.
8.3 Liquidity Risk
When managing liquidity risk, the Company’s management believes that maintaining adequate
cash and cash equivalents, and monitoring that at the same time, in order to meet the needs of
112
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
operation of the Company, and to reduce the impact of fluctuations in cash flows. The
management of the Company monitors the use of bank borrowings and ensures to abide by the
loan agreements.
9. FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the level of the
hierarchy in which the lowest level input that is significant to the measurement is classified.
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or
liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either
directly or indirectly observable.
Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Assets and Liabilities Measured at Fair Value as at 30 June 2023
Items Fair value at 30 June 2023
Level 1 Level 2 Level 3 Total
Recurring fair value measurements
(a) Held-for-trading financial assets
(i) Financial assets at fair value through profit or
570,878,663.89 570,878,663.89
loss
Debt instruments 570,852,763.89 570,852,763.89
Equity instruments
Derivatives 25,900.00 25,900.00
(b) Other investments in equity instruments
(c) Other non-current financial assets
Total assets measured at fair value on a recurring
570,878,663.89 570,878,663.89
basis
(d) Held-for-trading financial liabilities
(i) Financial liabilities at fair value through profit
2,869,500.00 2,869,500.00
or loss
Including: Held-for-trading bonds
Derivatives 2,869,500.00 2,869,500.00
Others
Total liabilities measured at fair value on a
2,869,500.00 2,869,500.00
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 is based on the valuation provided by the bank where the unsettled
forward foreign exchange is located on the balance sheet date.
113
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
10. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
10.1 General Information of the Parent Company
Percentage of
Registered capital
Registered Nature of the equity interests Voting rights in the
Name of the parent (NTD ten
address business in the Company Company (%)
thousand)
(%)
Manufactures and
STAR COMGISTIC
Taiwan sales electrical 300,000.00 42.90 44.68
CAPITAL CO., LTD.
equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL CO., LTD.
10.2 General Information of Subsidiaries
Refer to Notes 7 INTERESTS IN OTHER ENTITIES for details of the subsidiaries.
10.3 Other Related Parties of the Company
Name Relationship with the Company
Thermaster Electronic (Xiamen) Ltd. The company is directly controlled by the key management and closed family
members
TsannKuen Enterprise Co., Ltd. Same actual controller
10.4 Related Party Transactions
10.4.1 Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Approval trade Whether exceed trade Same period of last
Related parties Content of transaction Reporting period
credit credit or not year
Thermaster Electronic
Purchase of goods 11,667,909.26 35,000,000.00 No 13,185,591.40
(Xiamen) Ltd.
Total 11,667,909.26 13,185,591.40
Sales of goods and rendering of services:
Related parties Content Reporting period Same period of last year
of transaction
STAR COMGISTIC CAPITAL CO., LTD. Sales of goods 1,556,281.63 4,425,123.37
Thermaster Electronic (Xiamen) Ltd. Sales of goods 0.00 29,129.50
Total 1,556,281.63 4,454,252.87
10.4.2 Leases
The Company as lessor:
Type of assets Lease rental recognized in Lease rental recognized in
The lessee
current period prior period
STAR COMGISTIC CAPITAL CO., LTD. Property 0.00 586,263.66
Total 0.00 586,263.66
114
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
10.4.3 Transfers of assets and debt restructuring
Content of
Related parties Reporting period Same period of last year
transaction
TsannKuen Enterprise Co., Ltd. Sales of fixed assets 0.00 15,382.96
STAR COMGISTIC CAPITAL CO., LTD. Sales of fixed assets 0.00 35,493.89
Total 0.00 50,876.85
10.4.4 Key management personnel compensation
Currency: Ten thousand yuan
Item Reporting period Same period of last year
Key management personnel compensation 207.01 203.84
10.4.5 Other related party transactions
Related parties Content of transaction Reporting period Same period of last year
STAR COMGISTIC CAPITAL CO., LTD. Quality claim payment 3,407.71 29,904.82
TsannKuen Enterprise Co., Ltd. Receive labor service 0.00 39,749.72
STAR COMGISTIC CAPITAL CO., LTD. Accept service 0.00 69,481.81
Total 3,407.71 139,136.35
10.5 Receivables and Payables with Related Parties
10.5.1 Receivables
30 June 2023 1 January 2023
Related parties Bad debt Bad debt
Items Book balance Book balance
provision provision
Accounts receivable STAR COMGISTIC CAPITAL CO., LTD. 558,437.28 1,096,717.65
Total 558,437.28 1,096,717.65
10.5.2 Payables
Related parties 30 June 2023 1 January 2023
Items
Accounts payable Thermaster Electronic (Xiamen) Ltd 6,762,751.74 5,955,654.84
Total 6,762,751.74 5,955,654.84
11. COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
Other Significant Commitments
As of June 30, 2023, the Company has no significant commitments to disclose.
11.2 Contingencies
Significant contingencies existing at the balance sheet date:
As of 30 June 2023, The Company has no significant contingencies need to be disclosed.
115
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
12. EVENTS AFTER THE REPORTING PERIOD
On July 12, 2023, the Company's holding subsidiary, TKL, signed the "Supplementary Memorandum of
Understanding on Tsann Kuen Group's Investment and Cooperation in Zhangzhou" and the "Lease Contract for
Transitional Plant Transformation in Tsann Kuen Industrial Park" with the local government and relevant
departments. For details, please refer to the announcement "Announcement on TKL, a Holding Subsidiary,
Signing the Supplementary Memorandum of Understanding on Tsann Kuen Group's Investment in Zhangzhou
and the Lease Contract for Transitional Plant Transformation in Tsann Kuen Industrial Park" disclosed by the
Company on July 13 in the Shenzhen Stock Exchange's website.
According to "Enterprise Accounting Standard No. 21 - Leases", due to changes in the lease that resulted in a
reduction in the lease scope, the carrying amount of the right-of-use assets will be reduced, and the related
gains from the partial termination will be included in the current period’s profit and loss. This adjustment will
increase the annual income of the subsidiary Zhangzhou Cankun by about cny 10 million, and will have a certain
impact on assets and liabilities, subject to the annual audit figure.
13. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT COMPANY
13.1 Accounts Receivable
13.1.1 Accounts receivable by aging
30 June 2023 1 January 2023
Aging
Within 1 year 75,574.63 240,067.21
Including: 1 – 90 days 55,445.03 219,897.21
91 – 180 days 129.60 20,170.00
181 – 270 days
271 – 365 days 20,000.00
1-2 years 9,677.56
2-3 years 20,418.08 110,740.52
3-4 years 100,000.00
4-5 years
Over 5 years 5,000.00 5,000.00
Subtotal 200,992.71 365,485.29
Less: Provision for bad debt 31,076.65 31,981.50
Total 169,916.06 333,503.79
13.1.2 Accounts receivable by bad debt provision method
30 June 2023
Category Book balance Provision for bad debt
Carrying amount
Amount Proportion (%) Amount Proportion (%)
Provision for bad debt recognised individually
Provision for bad debt recognised collectively 200,992.71 100.00 31,076.65 15.46 169,916.06
Including: Portfolio by age 200,992.71 100.00 31,076.65 15.46 169,916.06
Portfolio by related parties
Total 200,992.71 100.00 31,076.65 15.46 169,916.06
116
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
(Continued)
1 January 2023
Category Book balance Provision for bad debt
Carrying amoun
Amount Proportion (%) Amount Proportion (%)
Provision for bad debt recognised individually
Provision for bad debt recognised collectively 365,485.29 100.00 31,981.50 8.75 333,503.79
Including: Portfolio by age 365,485.29 100.00 31,981.50 8.75 333,503.79
Portfolio by related parties
Total 365,485.29 100.00 31,981.50 8.75 333,503.79
Specific instructions for provision for bad debts: accounts receivable with bad debt provision
recognised collectively by aging
30 June 2023
Aging
Book balance Provision for bad debt Provision ratio (%)
Not overdue 132,555.00 662.78 0.50
Overdue 1 – 30 days 23,681.03 1,065.64 4.50
Overdue 31 – 60 days 19,209.00 3,841.80 20.00
Overdue 61 – 90 days 75.00 33.75 45.00
Overdue more than 90 days 25,472.68 25,472.68 100.00
Total 200,992.71 31,076.65 15.46
(Continued)
Aging 1 January 2023
Book balance Provision for bad debt Provision ratio (%)
Not overdue 294,654.84 1,473.27 0.50
Overdue 1 – 30 days 26,634.37 1,198.55 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
days
Total 365,485.29 31,981.50 8.75
Accounts receivable with bad debt provision recognised collectively by related parties
None
Refer to Note 3.9 for the recognition criteria and explanation of the provision for bad debts
collectively by groups.
13.1.3 Bad debt provision recognized, recovered or reversed during the reporting period
1 January Changes during the reporting period 30 June
Category 2023 2023
Provision Recovery or reversal Write-off Others
Provision for bad debt recognised collectively 31,981.50 22,068.46 22,973.31 0.00 0.00 31,076.65
Total 31,981.50 22,068.46 22,973.31 0.00 0.00 31,076.65
13.1.4 Top five closing balances by entity
117
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Proportion of the balance to the total
Entity name Balance at 30 June 2023 Provision for bad debt
accounts receivable (%)
No. 1 100,000.00 49.75 500.00
No. 2 72,218.23 35.93 5,087.27
No. 3 20,418.08 10.16 20,418.08
No. 4 5,000.00 2.49 5,000.00
No. 5 3,297.00 1.64 3,297.00
Total 200,933.31 99.97 34,302.35
13.2 Other Receivables
13.2.1 Other receivables by category
Items 30 June 2023 1 January 2023
Interest receivable
Dividend receivable
Other receivables 4,172,842.12 3,268,524.27
Total 4,172,842.12 3,268,524.27
13.2.2 Interest receivable
None
13.2.3 Dividends receivable
None
13.2.4 Other receivables
13.2.4.1 Other receivables by aging
Aging 30 June 2023 1 January 2023
Within 1 year 4,121,003.12 3,230,581.33
Including: 1 – 90 days 3,998,137.12 3,121,427.22
91 – 180 days 73,055.00 68,800.00
181 – 270 days 20,000.00 30,000.00
271 – 365 days 29,811.00 10,354.11
1-2 years 76,800.00 124,851.70
2-3 years
3-4 years
4-5 years
Over 5 years 50,000.00 50,000.00
Subtotal 4,247,803.12 3,405,433.03
Less: Provision for bad debt 74,961.00 136,908.76
Total 4,172,842.12 3,268,524.27
13.2.4.2 Other receivables by nature
Nature 30 June 2023 1 January 2023
Other open credits 2,126,694.36 1,619,871.38
Deposit 80,500.00 308,800.00
Due from related parties 2,040,608.76 1,476,761.65
Subtotal 4,247,803.12 3,405,433.03
Less: Provisions for bad debt 74,961.00 136,908.76
Total 4,172,842.12 3,268,524.27
118
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
13.2.4.3 Bad debt provision
Bad debt provision Stage 1 Stage 2 Stage 3
12-month Lifetime expected credit Total
Lifetime expected credit
expected losses (not credit-
losses (credit-impaired)
credit losses impaired)
Balance at 1 January 2023 136,908.76 136,908.76
Balance at 1 January 2023 recognised in the
—— —— —— ——
reporting period
Transfer to stage 2 0.00
Transfer to stage 3 0.00
Transfer back to stage 2 0.00
Transfer back to stage 1 0.00
Provision 33,212.46 33,212.46
Recovery 95,160.22 95,160.22
Reversal 0.00
Write-off 0.00
Other changes 0.00
Balance on 30 June 2023 74,961.00 0.00 0.00 74,961.00
13.2.4.4 Bad debt provision recognized, recovered or reversed during the reporting period
Changes during the reporting period
1 January
Category Recovery or 30 June 2023
2023 Provision Write-off Others
reversal
Provision for bad debt recognised individually
Accounts receivable with provision for bad debt
136,908.76 33,212.46 95,160.22 0.00 0.00 74,961.00
recognised collectively
Total 136,908.76 33,212.46 95,160.22 0.00 0.00 74,961.00
13.2.4.5 Other receivables write-off during the reporting period
Proportion of the
Allowance for
Balance as of 30 balance to the
Entity name Nature Aging bad debts as at 30
June 2023 total other
June 2023
receivables (%)
Tsann Kuen (China) Enterprise Co., Ltd. Other open
284,755.00 0-180 days 6.70 6,275.50
(Alipay Account) credits
Other open
Xiamen Yiding Technology Co., Ltd. 125,322.11 0-90 days 2.95
credits
Central Treasury Special Account of the 270 days to 2
Litigation 55,600.00 1.31
Ministry of Finance years
Alipay account of flagship store of Tsann
Deposit 50,000.00 Over 5 years 1.18
Kuen (China) Enterprise Co., Ltd.
Xiamen Yishan Sports Technology Co.,
Utility 34,385.84 0-90 days 0.81
Ltd.
Total 550,062.95 12.95 6,275.50
13.3 Long-term Equity Investments
30 June 2023 1 January 2023
Provision
Items Provision for
Book Carrying amount Book balance for Carrying amount
balance impairment
impairment
Investments in 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
119
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
30 June 2023 1 January 2023
Provision
Items Provision for
Book Carrying amount Book balance for Carrying amount
balance impairment
impairment
subsidiaries
Investment in Joint
ventures and associates
Total 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
13.3.1 Investments in subsidiaries
Provision
Increase Decrease for Provision for
during the during the impairment impairment
Investees 1 January 2023 30 June 2023
reporting reporting during the at 30 June
period period reporting 2023
period
TKL 921,914,701.56 921,914,701.56
TKW 1,500,000.00 1,500,000.00
Total 923,414,701.56 923,414,701.56
13.4 Revenue and Cost of Sales
Items The Reporting period The same period of last year
Revenue Costs of sales Revenue Costs of sales
Principal activities 1,685,572.73 1,264,301.23 2,351,627.08 1,773,530.34
Other activities 27,336,758.64 16,714,487.43 23,543,484.14 16,191,141.97
Total 29,022,331.37 17,978,788.66 25,895,111.22 17,964,672.31
13.5 Investment Income
Items The Reporting period The same period of last year
Investment income from long-term equity investments under equity
58,215,670.49 69,465,344.64
method
Total 58,215,670.49 69,465,344.64
14. SUPPLEMENTARY INFORMATION
14.1 Extraordinary Gains or Losses
Items Amount Description
Losses on disposal of non-current assets (inclusive of impairment allowance
316,839.99
write-offs)
Tax refunds or reductions with ultra vires approval or without official approval
documents
Government grants recognised in current profit or loss (except government
grants that is closely related to operations and determined based on a fixed scale 2,623,900.61
according to the national unified standard)
Funds occupation fee recognised in current profit or loss from non-financial
120
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Amount Description
companies
The excess of attributable fair value of net identifiable assets over the
consideration paid for subsidiaries, associates, or joint ventures recognised by
the Company
Gains/(losses) generated from non-monetary asset exchange
Gains /(losses) on entrusted investments or asset managements
Provision for impairment of each asset due to force majeure such as a natural
disaster
Gains /(losses) on debt restructuring
Corporate restructuring charge, such as expenditure for staff resettlement and
integration cost
Gains /(losses) from excess of fair value in non-arm’s length transactions
Net gains /(losses) of subsidiaries arising from business combination under
common control from the beginning of the reporting period till the combination
date
Gains /(losses) arising from contingencies other than those related to principal
activities of the Company
Mainly investment income
Gains /(losses) arising from changes in fair value of held-for-trading financial from sale of forward
assets and held-for-trading financial liabilities during the holding period and foreign exchange
investment income arising from disposal of held-for-trading financial assets, held- 10,580,873.80 contracts, gains on changes
for-trading financial liabilities and assets classified as held for sale except effective of fair value, income of
hedging transactions related to the Company's principal activities financial products and
interest of time deposits
Reversal of provision for impairment of accounts receivable tested for
impairment individually
Gains /(losses) arising from entrusted loans to other entities
Gains /(losses) arising from changes in fair value of investment properties
adopting fair value model for subsequent measurement
Impact of one-off adjustment to current profit or loss based on the requirements
of taxation and accounting laws and regulations
Custody fee income from entrusted operations
Other non-operating income/expenses except for items mentioned above 4,469,988.56
Other extraordinary gains/(losses) defined
Less: Income tax effects 3,766,676.49
Non-controlling interests effects (after tax) 4,518,286.97
Total 9,706,639.50
Note: The symbol"+" in the non-recurring profit and loss item represents income, and "-" represents loss or
expenditure.
The Company recognised the extraordinary gains or losses in accordance with the Explanatory Announcement
regarding Information Disclosure by Publicly Listed Company No. 1 - Non-recurring Profit and Loss (CSRC
announcement [2008] No.43).
121
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
14.2 Return on Net Assets and Earnings Per Share (‘EPS’)
Weighted average EPS
Profit for the reporting period return on net
assets (%) Basic (Yuan per share) Diluted (Yuan per share)
Net profit attributable to ordinary
2.68 0.15 0.15
shareholders
Net profit attributable to ordinary
shareholders after extraordinary gains and 1.77 0.10 0.10
losses
14.3 Supplementary Information on Changes in Accounting Policies
Please see Note 3.29 “Changes in Significant Accounting Policies and Accounting Estimates” for
details.
Name of the Company: TsannKuen (China) Enterprise Co., Ltd.
Date: 8 August 2023
122
