闽灿坤B:2017年半年度财务报告(英文版)

来源:深交所 2017-08-05 15:18:00
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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

TSANN KUEN (CHINA) ENTERPRISE CO., LTD.

2017 Semi-annual Financial Report

(Unaudited)

August 2017

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

1. Consolidated balance sheet

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB

Item Closing balance Opening balance

Current Assets:

Monetary funds 610,480,711.93 749,497,115.33

Settlement reserves

Intra-group lendings

Financial assets measured at fair value of which changes

1,881,750.00

are recorded in current profits and losses

Derivative financial assets

Notes receivable 990,000.00 1,341,076.70

Accounts receivable 242,579,524.63 273,086,616.38

Accounts paid in advance 24,784,622.14 6,964,904.97

Premiums receivable

Reinsurance premiums receivable

Receivable reinsurance contract reserves

Interest receivable 1,038,777.61 5,519.56

Dividend receivable

Other accounts receivable 37,688,979.32 40,381,756.08

Financial assets purchased under agreements to resell

Inventories 190,784,550.61 223,569,121.90

Assets held for sale

Non-current assets due within 1 year

Other current assets 281,488,319.23 139,354,484.01

Total current assets 1,391,717,235.47 1,434,200,594.93

Non-current assets:

Loans by mandate and advances granted

Available-for-sale financial assets 40,000.00 40,000.00

Held-to-maturity investments

Long-term accounts receivable

Long-term equity investment

Investing real estate 39,431,574.89 42,158,120.51

Fixed assets 175,644,211.63 174,529,010.36

Construction in progress 495,974.59 269,633.08

Engineering materials

Disposal of fixed assets

Production biological assets

Oil-gas assets

Intangible assets 28,363,603.13 23,840,277.12

R&D expense

Goodwill

Long-term deferred expenses 3,446,437.48 4,142,242.19

Deferred income tax assets 13,735,365.16 17,104,853.57

Other non-current assets 3,052,537.50 1,248,273.23

Total of non-current assets 264,209,704.38 263,332,410.06

Total assets 1,655,926,939.85 1,697,533,004.99

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Closing balance Opening balance

Current liabilities:

Short-term borrowings 125,326,400.00

Borrowings from Central Bank

Customer bank deposits and due to banks and other

financial institutions

Intra-group borrowings

Financial liabilities measured at fair value of which

changes are recorded in current profits and losses

Derivative financial liabilities

Notes payable 10,517,009.49 23,251,704.93

Accounts payable 473,690,790.92 589,418,458.93

Accounts received in advance 14,843,333.11 11,187,023.96

Financial assets sold for repurchase

Handling charges and commissions payable

Payroll payable 39,070,453.37 45,671,498.70

Tax payable 3,384,970.78 16,965,068.11

Interest payable 170,592.29

Dividend payable

Other accounts payable 56,442,168.31 58,411,663.19

Reinsurance premiums payable

Liabilities held for sale

Non-current liabilities due within 1 year

Other current liabilities

Total current liabilities 723,445,718.27 744,905,417.82

Non-current liabilities:

Long-term borrowings

Bonds payable

Of which: preferred shares

Perpetual bonds

Long-term payables

Long-term payroll payables 250,205.83 187,928.74

Specific payables

Estimated liabilities

Deferred income

Deferred income tax liabilities 1,026,173.00 761,461.43

Other non-current liabilities

Total non-current liabilities 1,276,378.83 949,390.17

Total liabilities 724,722,097.10 745,854,807.99

Owners’ equity:

Share capital 185,391,680.00 185,391,680.00

Other equity instruments

Of which: preferred shares

Perpetual bonds

Capital reserves 296,808,965.79 296,808,965.79

Less: Treasury stock

Other comprehensive income 7,225,639.61 8,491,902.45

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Specific reserves

Surplus reserves 29,946,218.17 29,946,218.17

Provisions for general risks

Retained profits 79,037,077.41 90,217,504.90

Total equity attributable to owners of the Company 598,409,580.98 610,856,271.31

Minority interests 332,795,261.77 340,821,925.69

Total owners’ equity 931,204,842.75 951,678,197.00

Total liabilities and owners’ equity 1,655,926,939.85 1,697,533,004.99

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

2. Balance sheet of the Company

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB

Item Closing balance Opening balance

Current Assets:

Monetary funds 7,375,082.84 6,668,219.24

Financial assets measured at fair value of which changes are

recorded in current profits and losses

Derivative financial assets

Notes receivable 990,000.00 1,341,076.70

Accounts receivable 11,171,289.00 30,084,632.38

Accounts paid in advance 449,724.00 224,212.39

Interest receivable

Dividend receivable

Other accounts receivable 875,121.08 539,684.23

Inventories 12,043,765.15 13,862,241.50

Assets held for sale

Non-current assets due within 1 year

Other current assets 553,190.76 404,776.38

Total current assets 33,458,172.83 53,124,842.82

Non-current assets:

Available-for-sale financial assets 40,000.00 40,000.00

Held-to-maturity investments

Long-term accounts receivable

Long-term equity investment 922,914,701.56 922,914,701.56

Investing real estate 34,160,766.05 35,720,961.41

Fixed assets 1,759,189.75 1,985,546.98

Construction in progress

Engineering materials

Disposal of fixed assets

Production biological assets

Oil-gas assets

Intangible assets 69,749.99 83,249.99

R&D expense

Goodwill

Long-term deferred expenses 43,866.37 69,866.41

Deferred income tax assets 1,606,942.52 1,910,906.98

Other non-current assets

Total of non-current assets 960,595,216.24 962,725,233.33

Total assets 994,053,389.07 1,015,850,076.15

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Closing balance Opening balance

Current liabilities:

Short-term borrowings

Financial liabilities measured at fair value of which changes

are recorded in current profits and losses

Derivative financial liabilities

Notes payable

Accounts payable 59,092,653.96 83,598,309.18

Accounts received in advance 2,053,293.49 930,623.95

Payroll payable 1,851,697.45 2,912,637.07

Tax payable 462,224.08 647,392.73

Interest payable

Dividend payable

Other accounts payable 293,315,878.21 298,567,356.74

Liabilities held for sale

Non-current liabilities due within 1 year

Other current liabilities

Total current liabilities 356,775,747.19 386,656,319.67

Non-current liabilities:

Long-term borrowings

Bonds payable

Of which: preferred shares

Perpetual bonds

Long-term payables

Long-term payroll payables

Specific payables

Estimated liabilities

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 0.00 0.00

Total liabilities 356,775,747.19 386,656,319.67

Owners’ equity:

Share capital 185,391,680.00 185,391,680.00

Other equity instruments

Of which: preferred shares

Perpetual bonds

Capital reserves 271,490,289.82 271,490,289.82

Less: Treasury stock

Other comprehensive income

Specific reserves

Surplus reserves 29,946,218.17 29,946,218.17

Retained profits 150,449,453.89 142,365,568.49

Total owners’ equity 637,277,641.88 629,193,756.48

Total liabilities and owners’ equity 994,053,389.07 1,015,850,076.15

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

3. Consolidated income statement

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Item Reporting period Same period of last year

I. Total operating revenues 869,683,758.68 798,108,689.27

Including: Sales income 869,683,758.68 798,108,689.27

II. Total operating costs 859,363,439.15 776,558,722.21

Including: Cost of sales 739,507,468.93 662,817,165.10

Taxes and associate charges 5,695,363.61 2,975,879.16

Selling and distribution expenses 30,129,026.59 40,742,161.54

Administrative expenses 74,782,758.93 80,750,640.07

Financial expenses 9,184,381.52 -9,966,312.52

Asset impairment loss 64,439.57 -760,811.14

Add: Gain/(loss) from change in fair value (“-” means loss) 1,881,750.00 5,645,050.00

Gain/(loss) from investment (“-” means loss) 1,724,730.14 -4,434,437.95

Including: share of profits in associates and joint ventures 8,474.00

Foreign exchange gains (“-” means loss)

Other gains

III. Business profit (“-” means loss) 13,926,799.67 22,760,579.11

Add: non-operating income 3,353,082.90 4,349,049.40

Including: Gains on disposal of non-current assets 336,752.14 542,527.01

Less: non-operating expense 298,400.08 61,724.97

Including: Losses on disposal of non-current assets 205,501.99 17,353.82

IV. Total profit (“-” means loss) 16,981,482.49 27,047,903.54

Less: Income tax expense 3,416,067.76 2,757,325.93

V. Net profit (“-” means loss) 13,565,414.73 24,290,577.61

Net profit attributable to owners of the Company 11,066,574.11 17,789,801.36

Minority shareholders’ income 2,498,840.62 6,500,776.25

VI. After-tax net amount of other comprehensive incomes -1,688,350.45 2,056,156.39

After-tax net amount of other comprehensive incomes

-1,266,262.84 1,542,117.29

attributable to owners of the Company

(I) Other comprehensive incomes that will not be

15,614.61

reclassified into gains and losses

1. Changes in net liabilities or assets with a defined

15,614.61

benefit plan upon re-measurement

2. Enjoyable shares in other comprehensive incomes in

investees that cannot be reclassified into gains and losses under

the equity method

(II) Other comprehensive incomes that will be reclassified

-1,281,877.45 1,542,117.29

into gains and losses

1. Enjoyable shares in other comprehensive incomes in

investees that will be reclassified into gains and losses under the

equity method

2. Gains and losses on fair value changes of

available-for-sale financial assets

3. Gains and losses on reclassifying held-to-maturity

investments into available-for-sale financial assets

4. Effective hedging gains and losses on cash flows

5. Foreign-currency financial statement translation

-1,281,877.45 1,542,117.29

difference

6. Other

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Reporting period Same period of last year

After-tax net amount of other comprehensive incomes

-422,087.61 514,039.10

attributable to minority shareholders

VII. Total comprehensive incomes 11,877,064.28 26,346,734.00

Attributable to owners of the Company 9,800,311.27 19,331,918.65

Attributable to minority shareholders 2,076,753.01 7,014,815.35

VIII. Earnings per share

(I) Basic earnings per share 0.06 0.10

(II) Diluted earnings per share 0.06 0.10

Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before

the business mergers was RMB0, with the corresponding amount for the last period being RMB -2,204,397.97.

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

4. Income statement of the Company

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Item Reporting period Same period of last year

I. Total sales 37,935,863.38 64,284,182.16

Less: cost of sales 26,745,263.79 51,411,479.65

Business taxes and surcharges 1,034,131.00 376,508.47

Distribution expenses 4,655,640.49 4,712,679.84

Administrative expenses 6,256,545.30 6,407,301.54

Financial costs -77,973.23 9,027.92

Impairment loss -890,712.11 904,000.92

Add: gain/(loss) from change in fair value (“-” means loss)

Gain/(loss) from investment (“-” means loss) 30,310,250.78 107,582,142.80

Including: income from investment on associates and joint ventures 8,474.00

Other gains

II. Business profit (“-” means loss) 30,523,218.92 108,045,326.62

Add: non-operating income 111,632.54 173,232.50

Including: Gains on disposal of non-current assets

Less: non-operating expense

Including: Losses on disposal of non-current assets

III. Total profit (“-” means loss) 30,634,851.46 108,218,559.12

Less: Income tax expense 303,964.46 16,204,107.07

IV. Net profit (“-” means loss) 30,330,887.00 92,014,452.05

V. After-tax net amount of other comprehensive incomes

(I) Other comprehensive incomes that will not be reclassified into gains

and losses

1. Changes in net liabilities or assets with a defined benefit plan

upon re-measurement

2. Enjoyable shares in other comprehensive incomes in investees

that cannot be reclassified into gains and losses under the equity method

(II) Other comprehensive incomes that will be reclassified into gains

and losses

1. Enjoyable shares in other comprehensive incomes in investees

that will be reclassified into gains and losses under the equity method

2. Gains and losses on fair value changes of available-for-sale

financial assets

3. Gains and losses on reclassifying held-to-maturity investments

into available-for-sale financial assets

4. Effective hedging gains and losses on cash flows

5. Foreign-currency financial statement translation difference

6. Other

VI. Total comprehensive incomes 30,330,887.00 92,014,452.05

VII. Earnings per share

(I) Basic earnings per share

(II) Diluted earnings per share

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

5. Consolidated cash flow statement

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Same period of last

Item Reporting period

year

I. Cash flows from operating activities:

Cash received from sale of commodities and rendering of service 880,124,770.86 799,779,397.11

Tax refunds received 98,954,676.31 107,484,793.44

Other cash received relating to operating activities 31,713,946.31 34,806,311.83

Subtotal of cash inflows from operating activities 1,010,793,393.48 942,070,502.38

Cash paid for goods and services 774,245,705.02 764,993,901.10

Cash paid to and for employees 133,551,803.87 123,885,869.23

Various taxes paid 24,040,423.11 12,713,941.82

Other cash payment relating to operating activities 136,466,757.44 100,648,796.52

Subtotal of cash outflows from operating activities 1,068,304,689.44 1,002,242,508.67

Net cash flows from operating activities -57,511,295.96 -60,172,006.29

II. Cash flows from investing activities:

Cash received from withdrawal of investments 365,334,812.92 214,290,235.67

Cash received from return on investments 236,201.06

Net cash received from disposal of fixed assets, intangible assets and other

2,112,841.63 5,830,678.69

long-term assets

Net cash received from disposal of subsidiaries or other business units

Other cash received relating to investing activities 42,313,208.55 75,400,000.00

Subtotal of cash inflows from investing activities 409,997,064.16 295,520,914.36

Cash paid to acquire fixed assets, intangible assets and other long-term

38,298,093.66 30,738,906.49

assets

Cash paid for investment 503,252,795.01 375,011,646.84

Net increase of pledged loans

Net cash paid to acquire subsidiaries and other business units

Other cash payments relating to investing activities 377,386,926.35 169,327,000.00

Subtotal of cash outflows from investing activities 918,937,815.02 575,077,553.33

Net cash flows from investing activities -508,940,750.86 -279,556,638.97

III. Cash Flows from Financing Activities:

Cash received from capital contributions

Including: Cash received from minority shareholder investments by

subsidiaries

Cash received from borrowings 151,183,998.00 65,128,000.00

Cash received from issuance of bonds

Other cash received relating to financing activities 6,774,375.98 4,519,265.19

Subtotal of cash inflows from financing activities 157,958,373.98 69,647,265.19

Repayment of borrowings 24,730,160.00

Cash paid for interest expenses and distribution of dividends or profit 32,521,569.11 32,363,500.69

Including: dividends or profit paid by subsidiaries to minority

15,707,954.97 13,824,332.69

shareholders

Other cash payments relating to financing activities

Sub-total of cash outflows from financing activities 57,251,729.11 32,363,500.69

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Same period of last

Item Reporting period

year

Net cash flows from financing activities 100,706,644.87 37,283,764.50

IV. Effect of foreign exchange rate changes on cash and cash equivalents -8,511,122.49 6,554,846.72

V. Net increase in cash and cash equivalents -474,256,524.44 -295,890,034.04

Add: Opening balance of cash and cash equivalents 738,195,729.53 675,824,861.29

VI. Closing balance of cash and cash equivalents 263,939,205.09 379,934,827.25

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

6. Cash flow statement of the Company

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Item Reporting period Same period of last year

I. Cash flows from operating activities:

Cash received from sale of commodities and rendering of service 55,674,286.26 54,541,061.46

Tax refunds received

Other cash received relating to operating activities 21,418,487.10 21,305,861.45

Subtotal of cash inflows from operating activities 77,092,773.36 75,846,922.91

Cash paid for goods and services 53,556,689.27 69,402,417.98

Cash paid to and for employees 7,189,494.06 7,241,953.89

Various taxes paid 2,292,808.84 2,112,861.45

Other cash payment relating to operating activities 21,465,798.37 147,433,841.45

Subtotal of cash outflows from operating activities 84,504,790.54 226,191,074.77

Net cash flows from operating activities -7,412,017.18 -150,344,151.86

II. Cash flows from investing activities:

Cash received from retraction of investments 130,000,000.00

Cash received from return on investments

Net cash received from disposal of fixed assets, intangible assets and other

long-term assets

Net cash received from disposal of subsidiaries or other business units

Other cash received relating to investing activities

Subtotal of cash inflows from investing activities 0.00 130,000,000.00

Cash paid to acquire fixed assets, intangible assets and other long-term

25,500.00 13,798.00

assets

Cash paid for investment 1,000,000.00

Net cash paid to acquire subsidiaries and other business units

Other cash payments relating to investing activities

Subtotal of cash outflows from investing activities 25,500.00 1,013,798.00

Net cash flows from investing activities -25,500.00 128,986,202.00

III. Cash Flows from Financing Activities:

Cash received from capital contributions 30,310,250.78 41,472,998.07

Cash received from borrowings

Cash received from issuance of bonds

Other cash received relating to financing activities

Subtotal of cash inflows from financing activities 30,310,250.78 41,472,998.07

Repayment of borrowings

Cash paid for interest expenses and distribution of dividends or profit 22,247,001.60 18,539,168.00

Other cash payments relating to financing activities

Sub-total of cash outflows from financing activities 22,247,001.60 18,539,168.00

Net cash flows from financing activities 8,063,249.18 22,933,830.07

IV. Effect of foreign exchange rate changes on cash and cash equivalents 81,131.60 -6,803.16

V. Net increase in cash and cash equivalents 706,863.60 1,569,077.05

Add: Opening balance of cash and cash equivalents 6,668,219.24 7,750,025.58

VI. Closing balance of cash and cash equivalents 7,375,082.84 9,319,102.63

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

7. Consolidated statement of changes in owners’ equity

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Reporting period

Equity attributable to owners of the Company

Item

Other equity instruments Minority interests Total owners’ equity

Less: Other

Specific General risk

Share capital Preferred Perpetual Capital reserve treasur comprehensive Surplus reserve Retained profit

Other reserve reserve

shares bonds y stock incomes

I. Balance at the end of the previous year 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00

Add: change of accounting policy

Correction of errors in previous periods

Business mergers under the same control

Other

II. Balance at the beginning of the year 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00

III. Increase/ decrease in the period (“-” means decrease) -1,266,262.84 -11,180,427.49 -8,026,663.92 -20,473,354.25

(I) Total comprehensive incomes -1,266,262.84 11,066,574.11 2,076,753.01 11,877,064.28

(II) Capital increased and reduced by owners

1. Common shares increased by shareholders

2. Capital increased by holders of other equity instruments

3. Amounts of share-based payments recognized in owners’

equity

4. Other

(III) Profit distribution -22,247,001.60 -10,103,416.93 -32,350,418.53

1. Appropriations to surplus reserves

2. Appropriations to general risk provisions

3. Appropriations to owners (or shareholders) -22,247,001.60 -10,103,416.93 -32,350,418.53

4. Other

(IV) Internal carry-forward of owners’ equity

1. New increase of capital (or share capital) from capital public

reserves

2. New increase of capital (or share capital) from surplus

reserves

3. Surplus reserves for making up losses

4. Other

(V) Specific reserve

1. Withdrawn for the period

2. Used in the period

(VI) Other

IV. Closing balance 185,391,680.00 296,808,965.79 7,225,639.61 29,946,218.17 79,037,077.41 332,795,261.77 931,204,842.75

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(Continued) Unit: RMB

Same period of last year

Equity attributable to owners of the Company

Item Other equity instruments

Less:

Other comprehensive Specific

General Minority interests Total owners’ equity

Share capital Preferred Perpetual Capital reserve treasury Surplus reserve risk Retained profit

Other incomes reserve

shares bonds stock reserve

I. Balance at the end of the previous year 185,391,680.00 282,916,698.67 3,247,335.35 20,962,521.51 69,510,872.20 358,467,426.11 920,496,533.84

Add: change of accounting policy

Correction of errors in previous periods

Business mergers under the same control

Other

II. Balance at the beginning of the year 185,391,680.00 282,916,698.67 3,247,335.35 20,962,521.51 69,510,872.20 358,467,426.11 920,496,533.84

III. Increase/ decrease in the period (“-” means

13,892,267.12 5,244,567.10 8,983,696.66 20,706,632.70 -17,645,500.42 31,181,663.16

decrease)

(I) Total comprehensive incomes 5,244,567.10 48,229,497.36 16,469,280.00 69,943,344.46

(II) Capital increased and reduced by owners 13,892,267.12 -20,290,447.73 -6,398,180.61

1. Common shares increased by shareholders

2. Capital increased by holders of other

equity instruments

3. Amounts of share-based payments

recognized in owners’ equity

4. Other 13,892,267.12 -20,290,447.73 -6,398,180.61

(III) Profit distribution 8,983,696.66 -27,522,864.66 -13,824,332.69 -32,363,500.69

1. Appropriations to surplus reserves 8,983,696.66 -8,983,696.66

2. Appropriations to general risk provisions

3. Appropriations to owners (or shareholders) -18,539,168.00 -13,824,332.69 -32,363,500.69

4. Other

(IV) Internal carry-forward of owners’ equity

1. New increase of capital (or share capital)

from capital public reserves

2. New increase of capital (or share capital)

from surplus reserves

3. Surplus reserves for making up losses

4. Other

(V) Specific reserve

1. Withdrawn for the period

2. Used in the period

(VI) Other

IV. Closing balance 185,391,680.00 296,808,965.79 8,491,902.45 29,946,218.17 90,217,504.90 340,821,925.69 951,678,197.00

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

8. Statement of changes in owners’ equity of the Company

Prepared by: Tsann Kuen (China) Enterprise Co., Ltd Unit: RMB

Reporting period

Other equity instruments Less: Other

Item Specific

Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit Total owners’ equity

Other reserve

shares bonds stock incomes

I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48

Add: change of accounting policy

Correction of errors in previous periods

Other

II. Balance at the beginning of the year 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48

III. Increase/ decrease in the period (“-” means decrease) 8,083,885.40 8,083,885.40

(I) Total comprehensive incomes 30,330,887.00 30,330,887.00

(II) Capital increased and reduced by owners

1. Common shares increased by shareholders

2. Capital increased by holders of other equity

instruments

3. Amounts of share-based payments recognized in

owners’ equity

4. Other

(III) Profit distribution -22,247,001.60 -22,247,001.60

1. Appropriations to surplus reserves

2. Appropriations to owners (or shareholders) -22,247,001.60 -22,247,001.60

3. Other

(IV) Internal carry-forward of owners’ equity

1. New increase of capital (or share capital) from capital

public reserves

2. New increase of capital (or share capital) from

surplus reserves

3. Surplus reserves for making up losses

4. Other

(V) Specific reserve

1. Withdrawn for the period

2. Used in the period

(VI) Other

IV. Closing balance 185,391,680.00 271,490,289.82 29,946,218.17 150,449,453.89 637,277,641.88

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(Continued) Unit: RMB

Same period of last year

Other equity instruments

Item Less: Other

Specific

Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit Total owners’ equity

Other reserve

shares bonds stock incomes

I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 20,962,521.51 80,051,466.55 557,895,957.88

Add: change of accounting policy

Correction of errors in previous periods

Other

II. Balance at the beginning of the year 185,391,680.00 271,490,289.82 20,962,521.51 80,051,466.55 557,895,957.88

III. Increase/ decrease in the period (“-” means decrease) 8,983,696.66 62,314,101.94 71,297,798.60

(I) Total comprehensive incomes 89,836,966.60 89,836,966.60

(II) Capital increased and reduced by owners

1. Common shares increased by shareholders

2. Capital increased by holders of other equity

instruments

3. Amounts of share-based payments recognized in

owners’ equity

4. Other

(III) Profit distribution 8,983,696.66 -27,522,864.66 -18,539,168.00

1. Appropriations to surplus reserves 8,983,696.66 -8,983,696.66

2. Appropriations to owners (or shareholders) -18,539,168.00 -18,539,168.00

3. Other

(IV) Internal carry-forward of owners’ equity

1. New increase of capital (or share capital) from capital

public reserves

2. New increase of capital (or share capital) from surplus

reserves

3. Surplus reserves for making up losses

4. Other

(V) Specific reserve

1. Withdrawn for the period

2. Used in the period

(VI) Other

IV. Closing balance 185,391,680.00 271,490,289.82 29,946,218.17 142,365,568.49 629,193,756.48

Legal representative: Pan Zhirong Person-in-charge of the accounting work: Feng Zhiqing Chief of the accounting division: Feng Zhiqing

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Tsann Kuen (China) Enterprise Co., Ltd.

Notes to Financial Statements as of June 30, 2017

(All currency amounts herein are expressed, unless otherwise stated, in RMB.)

I. Company Profile

Tsann Kuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established in the

People’s Republic of China (“the PRC”) in 1988 as a wholly owned foreign investment enterprise,

the Company named in Tsann Kuen China (Xiamen) Ltd. firstly, invested by the Fordchee (Hong

Kong) Co., Ltd., EUPA Industry Corporation Limited and Hong Kong Fillman Investment Co., Ltd..

On February 16, 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

Tsann Kuen (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 June 30, 1993. In according to the 5th special Board of

Director in 2012, “Bill about Implementation of Drawing back Share” authorized by third special

General Meeting in 2012,document XTCS[2012] NO.698 “Subscriptions about Reduction of

Capital of TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Authorized by Xiamen Investment

Promotion Bureau” authorized by Commerce Department, the Company used the general capital of

1,112,350,077 shares as base number implementing the plan of share reduction at the ratio of 1:6 to

all the register share holders in December 28, 2012. Upon the completion of share reduction, the

general capital of the Company reduced from 1,112,350,077 shares to 185,391,680 shares. By June

30, 2017, the registered capital of the Company decreased to RMB185,391,680.

Follow The Ministry of Commerce of the People’s Republic of China approved (The No. [2005]

3107

shares traded sponsor of the approval>), On December 6, 2006, the Company received the [2006]

No. 266 file

non-listed foreign shares traded> from China Securities Regulatory Commission. The China

Securities Regulatory Commission agreed 700,476,830 unlisted shares (account for 62.97% of the

share capital) hold by the Company’s shareholders, EUPA Industry Corporation Limited, Fordchee

Development Limited and Fillman Investment Limited to transfer into B shares. In November 29,

2007 these B shares could be listed and exercised on Shenzhen Stock Exchange. Up to June 30,

2017, total B shares hold by the three legal shareholders (EUPA Industry Corporation Limited,

Fordchee Development Limited and Fillman Investment Limited) are 82,830,966 shares. (account

for 44.68% of the share capital).

Legal representative: Pan, Zhirong

Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province

The parent: Star Comgistic Capital Co. Ltd.

The industry of the company: electrical machinery and equipment manufacturing.

The approved business scope: the main business is to develop, manufacture household appliances,

electronics, light industrial products, modern office supplies. Design and manufacture of molds

associated with these products in domestic and international sales of the company’s products and

after-sales service. Wholesale and retail household appliances, electronic products, electrical

equipment, office supplies, kitchen utensils, pre-packaged food (limited to branches), import and

export related business and provide after-sales service (the above description do not involve state

trading commodity goods, involving quota license management products are according to the

relevant provisions of the State for the regulations application).

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

The Financial Report approved by the Board of the Directors of the Company and disclosed on

August 4, 2017.

There were 10 subsidiaries be included in 2017 of the Company with the details in Notes VIII

“Equities among other entities”. There was no change of consolidated scope during the Reporting

Period.

II. Basis for preparation of the financial statements

The financial statements of company have been prepared on basis of going concern in conformity

with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for

Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of

Finance issued order No. 33, the Ministry of Finance revised order No. 76) on February 15, 2006,

and revised Accounting Standards (order 41 of the Ministry of Finance) and 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).

According to the relevant accounting regulations in Chinese Accounting Standards for Business

Enterprises, the company has adopted the accrual basis of accounting. Except for certain financial

instruments which are measured by at fair value, the Company adopts the historical cost as the

principle of measurement in the financial statements. Where assets are impaired, provisions for

asset impairment are made in accordance with relevant requirements.

III. Statement of Compliance with Enterprise Accounting Standards

The financial statements of the company are recognized and measured in accordance with the

regulations in the Chinese Accounting Standards for Business Enterprises and they give a true and

fair view of the financial position, business result and cash flow of the Company as of June 30,

2017. In addition, the financial statements of the company comply, in all material respects, with the

revised disclosing requirements for financial statements and the Compilation Rules for Information

Disclosure by Companies Offering Securities to the Public No. 15—General Provisions on

Financial Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in

2014.

IV. Important Accounting Principles and Accounting Estimates

The Company and subsidiaries are principally engaged in the production and operation. The

Company and subsidiaries in accordance with the actual production and management features,

according to the relevant provisions of Accounting Standards, to make a number of specific

accounting policies and accounting estimates for other transactions and events of revenue

recognition, see Note IV. 22 “Revenue” for the description. For description of significant

accounting judgments and estimates made by management, see Note IV. 26 “Significant accounting

judgments and estimates”.

1. Accounting period

The accounting period of the Company is classified as interim period and annual period. Interim

period refers to the reporting period shorter than a complete annual period. The accounting period

of the Company is the calendar year from January 1 to December 31.

2. Operating cycle

Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of

assets for processing until. The company has a 12 -month operating cycle, and its assets and

liabilities as liquidity criteria for the classification.

3. Monetary Unit

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Yuan (RMB) is the currency of the primary economic environment in which the Company and its

domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose RMB

as their functional currency, the overseas subsidiaries decide the HKD, USD, NTD or Indonesian

Rupiah as their functional currency in accordance with the business in which currency of the

primary economic environment. The Company adopts RMB to prepare its functional statements.

4. Accounting treatments of business combination under common control and under not the

common control

A business combination is a transaction or event that brings together two or more separate entities

into one reporting entity. Business combinations are classified into business combinations involving

enterprises under common control and business combinations not involving enterprises under

common control.

(1) Business combination involving entities under common control

A business combination involving enterprises under common control is a business combination in

which all of the combining enterprises are ultimately controlled by the same party or parties both

before and after the combination, and that control is not transitory. For a business combination

involving enterprises under common control, the party that, on the combination date, obtains control

of another enterprise participating in the combination is the absorbing party, while that other

enterprise participating in the combination is a party being absorbed. Combination date is the date

on which the absorbing party effectively obtains control of the party being absorbed.

The assets and liabilities obtained are measured at the carrying amounts as recorded by the

enterprise being combined at the combination date. The difference between the carrying amount of

the net assets obtained and the carrying amount of consideration paid for the combination (or the

total face value of shares issued) is adjusted to the capital premium (or share premium) in the

capital reserve. If the balance of the capital premium (or share premium) is insufficient, any excess

is adjusted to retained earnings.

The cost of a combination incurred by the absorbing party includes any costs directly attributable to

the combination shall be recognized as an expense through profit or loss for the current period when

incurred.

(2) Business combination involving entities not under common control

A business combination involving enterprises not under common control is a business combination

in which all of the combining enterprises are not ultimately controlled by the same party or parties

both before and after the business combination. For a business combination not involving

enterprises under common control, the party that, on the acquisition date, obtains control of another

enterprise participating in the combination is the acquirer, while that other enterprise participating

in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively

obtains control of the acquiree.

For a business combination not involving enterprise under common control, the combination cost

including the sum of fair value, at the acquisition date, of the assets given, liabilities incurred or

assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the

acquirer in respect of auditing, legal services, valuation and consultancy services etc and other

associated administrative expenses attributable to the business combination are recognized in profit

or loss when they are incurred. The transaction cost arose from issuing of equity securities or

liability securities shall be initially recognized as equity securities or liability securities. The

contingent consideration related to the combination shall be booked as combination cost at the fair

value at the acquisition date. If, within the 12 months after acquisition, additional information can

prove the existence of related information at acquisition date and the contingent consideration need

to be adjusted, goodwill can be adjusted. Combination cost of the acquirer’s interest and identifiable

net assets of the acquirer acquired through the business combination shall be measured by the fair

value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

fair value of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill.

Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s

identifiable net assets, the difference shall be accounted for according to the following requirements:

(i) the acquirer shall reassess the measurement of the fair values of the acquiree’s identifiable assets,

liabilities and contingent liabilities and measurement of the cost of combination; (ii) if after that

reassessment, the cost of combination is still less than the acquirer’s interest in the fair values of the

acquiree’s identifiable net assets, the acquirer shall recognize the remaining difference

immediately in profit or loss for the current period.

Where the temporary difference obtained by the acquirer was not recognized due to inconformity

with the conditions applied for recognition of deferred income tax, if, within the 12 months after

acquisition, additional information can prove the existence of related information at acquisition date

and the expected economic benefits on the acquisition date arose from deductible temporary

difference by the acquiree can be achieved, relevant income tax assets can be recognized, and

goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the

current period. Apart from above, the differences shall be taken into profit or loss of the current

period if the recognition of deferred income tax assets is related to the combination.

For a business combination not involving enterprise under common control, which achieved in

stages that involves multiple exchange transactions, according to “The notice of the Ministry of

Finance on the issuance of Accounting Standards Interpretation No. 5” (Cai-Kuai [2012] No. 19)

and Article 51 of “Accounting Standards for Business Enterprises No. 33 - Consolidated Financial

Statements” on the “package deal” criterion (see Note IV. 5. (2)), to judge the multiple exchange

transactions whether they are the “package deal”. If it belong to the “package deal” in reference to

the preceding paragraphs of this section and the Notes described in IV. 12 “long-term investment”

accounting treatment, if it does not belong to the “package deal” to distinguish the individual

financial statements and the consolidated financial statements related to the accounting treatment:

In the individual financial statements, the total value of the book value of the acquiree’s equity

investment before the acquisition date and the cost of new investment at the acquisition date, as the

initial cost of the investment, the acquiree’s equity investment before the acquisition date involved

in other comprehensive income, in the disposal of the investment will be in other comprehensive

income associated with the use of infrastructure and the acquiree directly related to the disposal of

assets or liabilities of the same accounting treatment (that is, except in accordance with the equity

method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or

liabilities other than in the corresponding share of the lead, and the rest into the current investment

income).

In the combination financial statements, the equity interest in the acquiree previously held before

the acquisition date re-assessed at the fair value at the acquisition date, with any difference between

its fair value and its carrying amount is recorded as investment income. The previously-held equity

interest in the acquiree involved in other comprehensive income and other comprehensive income

associated with the purchase of the foundation should be used party directly related to the disposal

of assets or liabilities of the same accounting treatment (that is, except in accordance with the equity

method of accounting in the acquiree is remeasured defined benefit plans other than changes in net

liabilities or net assets due to a corresponding share of the rest of the acquisition date into current

investment income).

5. Preparation of the consolidated financial statements

(1) The scope of consolidation

The scope of consolidation for the consolidated financial statements is determined on the basis of

control. Control is the power to govern the financial and operating policies of an enterprise so as to

obtain benefits from its operating activities. The scope of consolidation includes the Company and

all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Once the change in the relevant facts and circumstances leading to the definition of the relevant

elements involved in the control of the change, the company will be re-evaluated.

(2) Preparation of the consolidated financial statements

The subsidiary of the Company is included in the consolidated financial statements from the date

when the control over the net assets and business decisions of the subsidiary is effectively obtained,

and excluded from the date when the control ceases. For a subsidiary disposed of by the Company,

the operating results and cash flows before the date of disposal (the date when control is lost) are

included in the consolidated income statement and consolidated statement of cash flows, as

appropriate. For a subsidiary disposed during the period, no adjustment is made to the opening

balance of the consolidated financial statements. For a subsidiary acquired through a business

combination not under common control, the operating results and cash flows from the acquisition

(the date when the control is obtained) are included in the consolidated income statement and

consolidated statement of cash flows, as appropriated; no adjustment is made to the opening balance

and comparative figures in the consolidated financial statements. Where a subsidiary was acquired

during the reporting period, through a business combination involving enterprises under common

control, the financial statements of the subsidiary are included in the consolidated financial

statements. The results of operations and cash flow are included in the consolidated balance sheet

and the consolidated income statement, respectively, based on their carrying amounts, from the date

that common control was established, and the opening balances and the comparative figures of the

consolidated financial statements are restated.

When the accounting period or accounting policies of a subsidiary are different from those of the

Company, the Company makes necessary adjustments to the financial statements of the subsidiary

based on the Company’ s own accounting period or accounting policies. Where a subsidiary was

acquired during the reporting period through a business combination not under common control, the

financial statements was reconciliated on the basis of the fair value of identifiable net assets at the

date of acquisition.

Intra-Group balances and transactions, and any unrealized profit or loss arising from intra-Group

transactions, are eliminated in preparing the consolidated financial statements.

Minority interest and the portion in the net profit or loss not attributable to the Company are

presented separately in the consolidated balance sheet within shareholders’/ owners’ equity and net

profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented

separately as minority interest in the consolidated income statement below the net profit line item.

When the amount of loss for the current period attributable to the minority shareholders of a

subsidiary exceeds the minority shareholders’ portion of the opening balance of

shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.

When the Company loses control of a subsidiary due to the disposal of a portion of an equity

investment or other reasons, the remaining equity investment is re-measured at its fair value at the

date when control is lost. The difference between 1) the total amount of consideration received from

the transaction that resulted in the loss of control and the fair value of the remaining equity

investment and 2) the carrying amounts of the interest in the former subsidiary’s net assets

immediately before the loss of the control is recognized as investment income for the current period

when control is lost. Other comprehensive income related to the former subsidiary’s equity

investment, using the foundation and the acquiree directly related to the disposal of the same assets

or liabilities are accounted when the control is lost(i.e., in addition to the former subsidiary is

remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the

rest are transferred to the current investment income). The retained interest is subsequently

measured according to the rules stipulated in the - “Chinese Accounting Standards for Business

Enterprises No. 2 - Long-term equity investment” or “Chinese Accounting Standards for Business

Enterprises No. 22 - Determination and measurement of financial instruments”. See Note IV. 12

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Long-term equity investments and Note IV. 9 Financial instruments for details.

The company through multiple transactions step deals with disposal of the subsidiary’ s equity

investment until the loss of control, need to distinguish between equity until the disposal of a

subsidiary’s loss of control over whether the transaction is package deal. Terms of the transaction

disposition of equity investment in a subsidiary, subject to the following conditions and the

economic impact of one or more of cases, usually indicates that several transactions should be

accounted for as a package deal: ① these transactions are considered simultaneously, or in the case

of mutual influence made, ② these transactions as a whole in order to achieve a complete business

results; ③ the occurrence of a transaction depends on occurs at least one other transaction; ④ a

transaction look alone is not economical, but when considered together with other transaction is

economical. If they does not belong to the package deal, each of them separately, as the case of a

transaction in accordance with “without losing control over the disposal of a subsidiary part of a

long-term equity investments“ (see Note IV. 12. (2), ④) and “due to the disposal of certain equity

investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)

principles applicable accounting treatment. Until the disposal of the equity investment loss of

control of a subsidiary of the transactions belonging to the package deal, the transaction will be

used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing

control of the price of each disposal entitled to share in the net assets of the subsidiary’ s investment

corresponding to the difference between the disposal, recognized in the consolidated financial

statements as other comprehensive income, loss of control over the transferred together with the

loss of control or loss in the period.

6. Joint arrangement

A joint arrangement is an arrangement of which two or more parties have joint control. A joint

arrangement is either a joint operation or a joint venture, depending on the rights and obligation of

the Company in the joint arrangement. A joint operation is a joint arrangement whereby the parties

that have joint control of the arrangement have rights to the assets, and obligations for the liabilities,

relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have

joint control of the arrangement have rights to the net assets of the arrangement.

The Company accounts for joint ventures using the equity method, see Note IV. 12. (2), ② for

details.

The company, a joint operator, recognises in relation to its interest in a jointoperation: (a) its assets,

including its share of any assets held jointly; (b) its liabilities, including its share of any liabilities

incurred jointly ;(c) its revenue from the sale of its share of the output arising from thejoint

operation ;(d) its share of the revenue from the sale of the output by the jointoperation; and (e) its

expenses, including its share of any expenses incurred jointly.

When the Company enters into a transaction with a joint operation in which it is a joint operator,

such as a sale or contribution of assets, the Company, prior to disposal of the assets to a third party,

recognises gains and losses resulting from such a transaction only to the extent of the other parties'

interests in the joint operation.When such transactions provide evidence of a reduction in the net

realizable value of the assets to be sold or contributed to the joint operation, which is in line with

provision stipulated by CAS 8 - Assets Impairment, those losses shall be recognised fully by the

Company. When there is evidence of a reduction in the net realizablevalue of the assets to be

purchased from the joint operation, the Company shall recognise its share of the losses.

7. Cash equivalent

Cash and cash equivalents of the Company include cash on hand, ready usable deposits and

investments having short holding term (normally will be due within three months from the day of

purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be

measured reliably and have low risks of change.

8. Foreign exchange

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(1) Translation in foreign exchange transactions

The foreign currency transactions are recorded, on initial recognition in the functional currency, by

applying [the spot exchange rate on the date of the transaction / an exchange rate that approximates

the actual spot exchange rate on the date of transaction]. The exchange of foreign currency and

transactions related to the foreign exchange are translated at the spot exchange rate.

(2) Translation of monetary foreign currency and non-monetary foreign currency

At the balance sheet date, foreign currency monetary items are translated using the spot exchange

rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss,

except for ①those relating to foreign currency borrowings specifically for construction and

acquisition of qualifying assets, which are capitalized in accordance with the principle of

capitalization of borrowing costs, ②hedging accounting, the exchange difference related to hedging

instruments for the purpose of net oversea operating investment is recorded in the comprehensive

income till the date of disposal and recognized in profit or loss of the period; exchange difference

from changes of other account balance of foreign currency monetary items, ③available-for-trade is

recorded into profit or loss except for amortized cost.

When prepared the consolidated financial statement involving in overseas business, if there was

foreign currency monetary program virtually constituting overseas business net investment, the

exchange difference caused from interests change should be recorded into other comprehensive

income. When an enterprise disposes of an overseas business, it should be converted into the profits

and losses of the current period.

Non-monetary foreign currency items measured at historical cost shall still be translated at the spot

exchange rate prevailing on the transaction date, and the amount denominated in the functional

currency is not changed. Non-monetary foreign currency items measured at fair value are translated

at the spot exchange rate prevailing at the date when the fair values are determined. The exchange

difference thus resulted are recognized in profit or loss for the current period or as capital reserve.

(3) The translation of financial statement in foreign currency

When the consolidated financial statements include foreign operation(s), if there is a foreign

currency monetary item constituting a net investment in a foreign operation, exchange difference

arising from changes in exchange rates are recognized as “exchange differences arising on

translation of financial statements denominated in foreign currencies” in owner’s equity, and in

profit or loss for the period upon disposal of the foreign operation.

The Group translates the financial statements of its foreign operations into RMB by following rules.

Assets and liabilities in the balance sheet are translated at the spot exchange rate prevailing at the

balance sheet date; all equity items except for retained earnings are translated at the spot exchange

rates at the dates on which such items occur; income and expenses in income statement are

translated at the spot exchange rates at the date of transaction; the opening retained earnings is the

closing retained earnings of the last period after translation; the closing balance of retained earnings

is calculates and presented in the basis of each translated income statements and profit distribution

item; the difference arising between the assets and liabilities and shareholders’ equity shall be

booked as translation difference of foreign currency statements, and shall be presented as a separate

component of equity in the balance sheet. On a loss of control over Group’s oversea operation due

to disposal, the Company transfers the accumulated or proportionate share of the accumulated

exchange difference arising on translation of financial statements of this oversea operation

attributable to the owners’ equity of the Company and presented under shareholders’ equity, to

profit or loss in the period in which the disposal occurs.

Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot

exchange rates on the date of cash flows.The effect of exchange rate changes on cash is separately

presented as an adjustment item in the cash flow statement.

The opening and actual amount of last year are presented in the financial statement after translation.

At the disposal of all of the company's ownership interest in a foreign operation, or due to the

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

disposal of part of the equity investment or other reasons, the loss of control over a foreign

operation, the project owner's equity in the balance sheet listed under the relevant overseas

operations attributable to statements of the parent company's shareholders' equity of foreign

currency translation differences, all transferred to the disposal of the income statement.

At the disposal of part of the equity investment or other causes lower hold percentage overseas

business interests, but does not lose control over a foreign operation, and disposal of the foreign

operation section related to foreign currency translation differences attributable to minority interests,

is not transferred to the income statement. At the disposal of a foreign operation as part of the equity

joint venture or joint ventures, foreign currency financial statements of the foreign operation and the

associated translation difference in proportion to dispose of the foreign operation into the disposal

of the income statement.

9. Financial instruments

When the Company becomes a party to a financial instrument, it shall recognize a financial asset or

financial liability. The financial assets and financial liabilities initially recognized by the Company

shall be measured at their fair values. For the financial assets and liabilities measured at their fair

values and of which the variation is recorded into the profits and losses of the current period, the

transaction expenses thereof shall be directly recorded into the profits and losses of the current

period and for other categories of financial assets and financial liabilities, the transaction expenses

thereof shall be included into the initially recognized amount.

(1) Determination of financial assets and liabilities’ fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled, between

knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has

an active market, the Company uses quoted price in the active market to establish its fair value. The

quoted price in the active market refers to the price that can be regularly obtained from exchange

market, agencies, industry associations, pricing authorities; it represents the fair market trading

price in the actual transaction. For a financial instrument which does not have an active market, the

Company establishes fair value by using a valuation technique. Valuation techniques include using

recent arm’s length market transactions between knowledgeable, willing parties, reference to the

current fair value of another instrument that is substantially the same, discounted cash flow analysis

and option pricing models.

(2) Classification, recognition and measurement of financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade

date basis. On initial recognition, the Company’s financial assets are classified into one of the four

categories, including financial assets at fair value though profit or loss, held-to maturity investments,

loans and receivables and available-for-trade financial assets. A financial asset is recognized

initially at fair value. In the case of financial assets at fair value through profit or loss, relevant

transaction costs are immediately charged to the profit and loss of the current period; transaction

costs relating to financial assets of other categories are included in the amount initially recognized.

① Financial assets at fair value through profit or loss:

Including financial assets held-for-trade and financial assets designated at fair value through profit

or loss.

Financial asset held-for-trade is the financial asset that meets one of the following conditions:

A. the financial asset is acquired for the purpose of selling it in a short term;

B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively

managed, and there is objective evidence indicating that the enterprise recently manages this

portfolio for the purpose of short-term profits;

C. the financial asset is a derivative, except for a derivative that is designated and effective hedging

instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by

delivery of an unquoted equity instrument (without a quoted price from an active market) whose

fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

subsequent measurement.

Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any

gains or losses arising from changes in the fair value and any dividends or interest income earned

on the financial assets are recognized in the profit or loss.

② Investment held-to maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable

payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.

Such kind of financial assets are subsequently measured at amortized cost using the effective

interest method. Gains or losses arising from derecognition, impairment or amortization are

recognized in profit or loss for the current period.

Effective interest rate is the rate that exactly discounted estimated future cash flows through the

expected life of the financial asset or financial liability or, where appropriate, a shorter period to the

net carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the Company shall estimate future cash flow

considering all contractual terms of the financial asset or financial liability without considering

future credit losses, and also consider all fees paid or received between the parties to the contract

giving rise to the financial asset and financial liability that are an integral part of the effective

interest rate, transaction costs, and premiums or discounts, etc.

③ Loans and receivables

Loans and receivables are non-derivative financial assets with fixed determinable payment that are

not quoted in an active market. Financial assets classified as loans and receivables by the Company

include note receivables, account receivables, interest receivable dividends receivable and other

receivables.

Loans and receivables are subsequently measured at amortized cost using the effective interest

method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit

or loss.

④ Financial assets available-for-trade

Financial assets available-for-trade include non-derivative financial assets that are designated on

initial recognition as available for trade, and financial assets that are not classified as financial

assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.

The closing cost from sellable debt instruments investment was confirmed by post-amortization

costs, that is initial confirmed amount deducting the paid prinpical, add or minus the accumulative

amount of amortization incurred from amortizing the balance between the initially recognized

amount and the amount of the maturity date by adopting the actual interest rate method, and

deducting the impairment losses that have actually incurred. The closing cost from sellable debt

instruments investment was its initial received cost.

Financial assets available-for-trade are subsequently measured at fair value, and gains or losses

arising from changes in the fair value are recognized as other comprehensive income and included

in the capital reserve, except that impairment losses and exchange differences related to amortized

cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss,

until the financial assets are derecognized, at which time the gains or losses are released and

recognized in profit or loss.

Interests obtained and dividends declared by the investee during the period in which the financial

assets available-for-trade are held, are recognized in investment gains.

(3) Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every financial asset except for

the financial assets that measured by the fair value. If there is objective evidence indicating a

financial asset may be impaired, a provision is provided for the impairment.

An impairment test shall be made on the financial assets with significant single amounts. If any

objective evidence shows that it has been impaired, the impairment-related losses shall be

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recognized and shall be recorded into the profits and losses of the current period. With regard to the

financial assets with insignificant single amounts, an independent impairment test may be carried

out, or they may be included in a combination of financial assets with similar credit risk features so

as to carry out an impairment-related test. Where, upon independent test, the financial asset

(including those financial assets with significant single amounts and those with insignificant

amounts) has not been impaired, it shall be included in a combination of financial assets with

similar risk features so as to conduct another impairment test. The financial assets which have

suffered from an impairment loss in any single amount shall not be included in any combination of

financial assets with similar risk features for any impairment test.

① Impairment on held-to maturity investment, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying value by the

estimated present value of future cash flow. The difference is recorded as impairment loss. If there

is objective evidence to indicate the recovery of value of financial assets after impairment, and it is

related with subsequent event after recognition of loss, the impairment loss recorded originally can

be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed

the amortized cost of the financial assets without provisions of impairment loss on the reserving

date.

② Impairment loss on available-for-trade financial assets

Where the fair value of the equity instrument investment drops significantly or not contemporarily

according to the integrated relevant factors, an available-for-trade financial asset is impaired.

When an available-for-trade financial asset is impaired, the cumulative loss arising from declining

in fair value that had been recognized in capital reserve shall be removed and recognized in profit or

loss. The amount of the cumulative loss that is removed shall be difference between the acquisition

cost with deduction of recoverable amount less amortized cost, current fair value and any

impairment loss on that financial asset previously recognized in profit or loss.

If, after an impairment loss has been recognized, there is objective evidence that the value of the

financial asset is recovered, and it is objectively related to an event occurring after the impairment

loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on

available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss

on available-for-trade debt instrument is recorded in the current profit or loss.

The equity instrument where there is no quoted price in an active market, and whose fair value

cannot be reliably measured, or impairment loss on a derivative asset that is linked to and must be

settled by delivery of such an unquoted equity instrument shall not be reversed.

(4) Recognition and measurement of financial assets transfer

The Group derecognizes a financial asset when one of the following conditions is met:

① the rights to receive cash flows from the asset have expired;

② the enterprise has transferred its rights to receive cash flows from the asset to a third party under

a pass-through arrangement; or

③ the enterprise has transferred its rights to receive cash flows from the asset and either (a) has

transferred substantially all the risks and rewards of the asset, or (b) has neither transferred

norretained substantially all the risks and rewards of the asset, but has transferred control of the

asset.

If the enterprise has neither retained all the risks and rewards from the financial asset nor control

over the asset, the asset is recognized according to the extent it exists as financial asset, and

correspondent liability is recognized. The extent of existence refers the level of risk by the financial

asset changes the enterprise is facing.

For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the

carrying amount of the financial asset transferred; and (b) the sum of the consideration received

from the transfer and any cumulative gain or loss that had been recognized in other comprehensive

income, is recognized in profit or loss.

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If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the

transferred financial asset is allocated between the part that continues to be recognized and the part

that is derecognized, based on the relative fair value of those parts. The difference between (a) the

carrying amount allocated to the part derecognized; and (b) the sum of the consideration received

for the part derecognized and any cumulative gain or loss allocated to the part derecognized which

has been previously recognized in other comprehensive income, is recognized in profit or loss.

If the Company endorses the financial assets sold by right of recourse and holding financial assets,

it needs to confirm that whether almost all risks and remuneration in the ownership of financial

assets have been transferred or not. Where an enterprise has transferred nearly all of the risks and

rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the

financial asset; If it retained nearly all of the risks and rewards related to the ownership of the

financial asset, it shall not stop recognizing the financial asset. If the Company does not transfer or

retain nearly all of the risks and rewards related to the ownership of the financial asset, then it

continuously judges that whether the Company retain the control of the assets, and conducts

accounting treatment according to the principles described in former paragraphs.

(5) Classification and measurement of financial liabilities

The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair

value through profit or loss and other financial liabilities. For financial liabilities at fair value

through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the

current period, and transaction costs relating to other financial liabilities are included in the initial

recognition amounts.

① Financial liabilities measured by the fair value and the changes recorded in profit or loss

The classification by which financial liabilities held-for-trade and financial liabilities designed at

the initial recognition to be measured by the fair value follows the same criteria as the classification

by which financial assets held-for-trade and financial assets designed at the initial recognition to be

measured by the fair value and their changes are recorded in the current profit or loss.

For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair

values are adopted for subsequent measurement. All the gains or losses on the change of fair value

and the expenses on dividends or interests related to these financial liabilities are recognized in

profit or loss for the current period.

② Other financial liabilities

Derivative financial liabilities that linked with equity instruments, which do not have a quoted price

in an active market and their fair value cannot be measured reliably, is subsequently measured by

cost Other financial liabilities are subsequently measured at amortized cost using the effective

interest method. Gains or losses arising from derecognition or amortization is recognized in profit

or loss for the current period.

③ Financial guarantee contract

For the financial guarantee contracts which are not designated as a financial liability measured at its

fair value and the variation thereof is recorded into the profits and losses of the current period, they

should be initially recognized by fair value. a subsequent measurement shall be made after they are

initially recognized according to the higher one between the amount as determined according to the

Accounting Standards for Enterprises No. 13 – Contingencies and the surplus after accumulative

amortization as determined according to the principles of the Accounting Standards for Enterprises

No. 14 - Revenues is subtracted from the initially recognized amount.

(6) Derecognition of financial liabilities

The Group derecognizes a financial liability (or part of it) when the underlying present obligation

(or part of it) is discharged or cancelled or has expired. An agreement between the Company (an

existing borrower) and existing lender to replace original financial liability with a new financial

liability with substantially different terms is accounted for as an extinguishment of the original

financial liability and the recognition of a new liability.

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When the Company derecognizes a financial liability or a part of it, it recognizes the difference

between the carrying amount of the financial liability (or part of the financial liability) derecognized

the consideration paid (including any non-cash assets transferred or new financial liabilities

assumed) in profit or loss.

(7) Derivatives and embedded derivatives

Derivative financial instruments include derivatives are initially measured at fair value at the date

when the derivative contracts are entered into and are substantially re-measured at fair value. The

resulting gain and loss is recognized in profit or loss.

An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not

designated as a financial asset or financial liability at fair value though profit or loss, and the treated

as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative

are not closely related to the economic characteristics and risks of the host contract; and (b) a

separate instrument with the same terms as the embedded derivative would meet the definition of a

derivative. If the Company is unable to measure the embedded derivative separately either at

acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a

financial asset or financial liability at fair value through profit or loss.

(8) Offsetting financial assets and financial liabilities

When the Company has a legal right that is currently enforceable to set off the recognized financial

assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial

asset and settle the financial liability simultaneously, a financial asset and a financial liability shall

be offset and the net amount is presented in the balance sheet. Except for the above circumstances,

financial assets and financial liabilities shall be presented separately in the balance sheet and shall

not be offset.

(9) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company

after deducting all of its liabilities. The consideration received from issuing equity instruments, net

of transaction costs, are added to shareholders’ equity. All types of distribution (excluding stock

dividends) made by the Company to holders of equity instruments are deducted from shareholders’

equity. The Group does not recognize any changes in the fair value of equity instruments.

10. Receivables

The receivables by the Company include account receivables, and other receivables.

(1) Criteria for recognition of bad debts:

The Company carries out an inspection on the balance sheet date. Where there is any objective

evidence proving that the receivables have been impaired, an impairment provision shall be made:

① A serious financial difficulty occurs to the issuer or debtor;

② The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the

payment of interests or the principal, etc.;

③ The debtor will probably become bankrupt or carry out other financial reorganizations;

④ Other objective evidences showing the impairment of the receivables.

(2) Method for bad debts provision

① Provisions of bad debts in account receivables that is individually significant.

Individual receivables equal to or higher than 10Proportion receivables are classified as receivables

of individual significance.

For an account receivable that is individually significant, the asset is individually assessed for

impairment, the impairment loss is recognized at the difference between the present value of future

cash flow less the carrying amount, and provision is made accordingly.

② Provisions of bad debts in account receivables that individually insignificant items with similar

credit risk characteristics that have significant risk:

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

A. Evidence of credit risk characteristics

Whether the financial asset is individually significant or not individually significant, it is included

in a group of financial assets with similar credit risk characteristics and collectively assessed for

impairment. Such credit risk reflects the repayment of all due amount under the contract, and is

related to the estimation of future cash flow expected to be derived from the assets.

Evidence of portfolios:

Item Basis

Age portfolios Age condition

Related party portfolios Related party relationship

B. Provision by credit risk characteristics

During the Company impairment test, the amount of bad debts provisions is determined by the

assessed result from the experience of historical loss and current economic status and the existing

loss in the estimated account receivables according to the set of account receivables and credit risk

characteristic.

Provision for different portfolios:

Item Provision

Age portfolios Age analysis method

Related party portfolios No allowance for bad debt, Unless the related party is insolvent

a. Portfolio by age analysis

Category Proportion for accounts receivable (%) Proportion for other receivable (%)

1-90 days 0.00 0.00

91-180 days 10.00 10.00

181-270 days 30.00 30.00

271-365 days 50.00 50.00

b. Adopt other methods for recognition of impairment allowances

Group name Proportion for accounts receivable (%) Proportion for other receivable (%)

Related party group 0.00 0.00

③ Provisions of bad debts that is individually insignificant.

The reason: if there is objective evidence indicating that the accountable receivable is individually

insignificant, and the credit risk does not conform to other accounts receivable’s credit risk, the

impairment test should be conducted.

The withdrawal method: the difference between the present value of future cash flow is less than the

carrying amount, the impairment test should be conducted and provision is made accordingly.

The Company conducted the impairment test for margin and deposit. If there is no objective

evidence indicating mpairmnet, then bad debts provision is not made.

(3) The reversal of bad debts provision

If there is objective evidence of recovery in value of account receivables, and the recovery can be

related to an event occurring after the impairment was recognized, the previously recognized

impairment loss is reversed and recognized in profit or loss. However, the reversal shall not result in

a carrying amount that exceeds what the amortized cost would have been had the impairment loss

not been recognized at the date the impairment is reversed.

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The Company transfer the accounts receivables to financial institutions by right of no recourse, the

difference between the book value that the transaction amount deduct the written off accounts

receivables and related taxes should be recorded into current profit or loss

11. Inventories

(1) Classification of inventory

Inventories are classified into materials in transit, raw materials, work-in-progress, finished goods,

materials and goods of consignment and revolving materials etc.

(2) Valuation method of inventories

Inventories are initially carried at the planed cost, to record the difference between planned cost and

actual cost through the cost variances account, and carryover the cost variances of issued inventory

on schedule, to adjust the planned cost to actual cost. Cost of issue is measured using the weighted

average method.

(3) Basis for determining net realizable value of inventories and provision methods for decline in

value of inventoriesNet realizable value is the estimated selling price in the ordinary course of

business less the estimated costs of completion, the estimated costs necessary to make the sale and

relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes

into consideration the purpose of holding inventories and effect of post balance sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.

If the net realizable value is below the cost of inventories, a provision for decline in value of

inventories is made. The provision for inventories decline in value is determined normally by the

difference of the cost of individual item less its realizable value. For large quantity and low value

items of inventories, Provision for decline in value is made based on categories of inventories. For

items of inventories relating to a product line that are produced and marketed in the same

geographical area, have the same or similar end users or purposes, and cannot be practicably

evaluated separately from other items in that product line provision for decline in value is

determined on an aggregate basis.

After the provision for decline in value of inventories is made, if the circumstances that previously

caused inventories to be written down below cost no longer exist so that the net realizable value of

inventories is higher than their cost, the original provision for decline in value is reversed and the

reversal is included in profit or loss for the period.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method for low cost and short-lived consumable items and packaging materials.

Low cost and short-lived consumable items are amortized using immediate write-off method,

packaging materials are amortized using immediate write-off method.

12. Long-term equity investments

Long-term equity investments referred to in this section refer to the Company invested entity has

control, joint control or significant influence over the long-term equity investments. The Company

invested does not have control, joint control or significant influence over the long-term equity

investments as financial assets available for sale or at fair value and the changes included financial

assets through profit or loss, which refer to the accounting policies in Note IV. 9 “financial

Instruments”.

Joint control is the Company control over an arrangement in accordance with the relevant

stipulations are common, related activities and the arrangement must be after sharing control

participants agreed to the decision-making. Significant influence is the Company s financial and

operating policies of the entity has the right to participate in decision-making, but can not control or

with other parties joint control over those policies.

(1) Determination of Investment cost

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

The cost of a long-term equity investment acquired through business combination under common

control is measured at the acquirer’s share of the combination date book value of the acquiree’s net

equity in the ultimate controller’s consolidated financial statements. The difference between the cost

and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to

capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is

transferred by way of issuing equity instruments, the face value of the equity instruments issued is

recognised in share capital and the difference between the costs of the face value of the equity

instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is

insufficient. Where a business combination under common control is achieved by multiple

acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to determine

whether the multiple acquisitions shall be viewed as one single transaction. If the multiple

acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be accounted

for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one

single transaction, the difference between the cost of combination and the sum of the book value of

the investment in the acquiree immediately before the combination and the book value of the

consideration transferred to acquire additional shareholding is adjusted to capital reserves, and to

retained earnings if capital reserves is insufficient. Cumulative other comprehensive income

associated with the investment recognised as a result of the treatment of equity method or

available-for-sale financial assets prior to the combination is not affected by the combination.

The cost of a long-term equity investment acquired through business combination not under

common control is the fair value of the assets transferred, liabilities incurred or assumed and equity

instruments issued. Where a business combination not under common control is achieved by

multiple acquisition of the acquiree’s shareholding, the multiple acquisitions shall be assessed to

determine whether the multiple acquisitions shall be viewed as one single transaction. If the

multiple acquisitions shall be viewed as one single transaction, the multiple acquisitions shall be

accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed

as one single transaction, the cost of combination is measured at the sum of book value of the

investment in the acquiree immediately before the combination and cost of acquisition of additional

shareholding. If the investment prior to the combination is measured by fair value, cumulative other

comprehensive income associated with the investment prior to the combination is not affected by

the combination. If the investment prior to the combination is measured as an available-for-sale

financial asset, the difference between the fair value and the book value of the investment

immediately before the combination and the associated cumulative other comprehensive income

recognised prior to the combination are carried to profit or loss.

All expenses incurred directly associated with the acquisition by the acquirer, including expenditure

of audit, legal services, valuation and consultancy and other administrative expenses, are recognised

in profit or loss for the period during which the acquisition occurs.

Long-term equity investments acquired not through business combination are measured at cost on

initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash

paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the

assets given away in the case of non-monetary asset exchange, or the fair value of the relevant

long-term equity investments. The cost of acquisition of a long-term equity investment acquired not

through business combination also includes all directly associated expenses, applicable taxes and

fees, and other necessary expenses. The cost of a long-term equity investment, which enables the

Company, has significant influence or joint control over the acquiree which is achieved through

additional investment, is measured as the fair value determined in accordance with CAS 22 -

Financial Instruments: Recognition and Measurement plus the cost of additional investment.

(2) Subsequent measurement

To be invested joint control (except constitute common operator) or long-term equity investments

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

significant influence are accounted for using the equity method. In addition, the Company’s

financial statements using the cost method of accounting for long-term equity can exercise control

over the investee.

① Cost method of accounting for long-term equity investments

Under the cost method, a long-term equity investment is measured at initial investment cost. Except

for cash dividends or profits declared but not yet paid that are included in the price or consideration

actually paid upon acquisition of the long-term equity investment, investment income is recognized

in the period in accordance with the attributable share of cash dividends or profit distributions

declared by the investee.

② Equity method of accounting for long-term equity investments

Where the initial investment cost of a long-term equity investment exceeds the investing

enterprise’s interest in the fair values of the investee’s identifiable net assets at the time of

acquisition, no adjustment shall be made to the initial investment cost.

The carrying amount of a long-term equity investment measured using the equity method is

adjusted by the Company’s share of the investee’s net profit and other comprehensive income,

which is recognized as investment income and other comprehensive income respectively. The

carrying amount of a long-term equity investment measured using the equity method is reduced by

profit distribution or cash dividends announced by the investee. The carrying amount of a long-term

equity investment measured using the equity method is also adjusted by the investee’s equity

movement other than net profit, other comprehensive income and profit distribution, which is

adjusted to capital reserves. The net profit of the investee is adjusted by the fair value of the

investee’s identifiable assets as at acquisition. The financial statements and hence the net profit and

other comprehensive income of an investee which does not adopt accounting policies or accounting

period uniform with the Company is adjusted by the Company’s accounting policies and accounting

period. The Company’s share of unrealized profit or loss arising from related party transactions

between the Company and an associate or joint venture is deducted from investment income.

Unrealized loss arising from related party transactions between the Company and an associate or

joint venture which is associated with asset impairment is not adjusted. Where assets transferred to

an associate or joint venture which form part of the Company’s investment in the investee but which

does not enable the Company obtain control over the investee, the cost of the additional investment

acquired is measured at the fair value of assets transferred and the difference between the cost of the

additional investment and the book value of the assets transferred is recognized in profit or loss.

Where assets transferred to an associate or joint venture form an operation, the difference between

the consideration received and the book value of the assets transferred in recognized in profit or loss.

Where assets transferred from an associate or joint venture form an operation, the transaction is

accounted for in accordance with CAS 20 - Business Combination, any gain or loss is recognized in

profit or loss.

The Company’s share of an investee’s net loss is limited by the sum of the book value of the

long-term equity investment and other net long-term investments in the investees. Where the

Company has obligation to share additional net loss of the investee, the estimated share of loss

would be recognized as accrued liabilities and investment loss. Where the Company has

unrecognized share of loss of the investee when the investee generates net profit, the Company’s

unrecognized share of loss is reduced by the Company’s share of net profit and when the

Company’s unrecognized share or loss is eliminated in full, the Company’s share of net profit, if any,

is recognized as investment income.

For long-term equity investments in associates and joint ventures which had been held by the

Company before its first time adoption of Accounting Standards for Business Enterprises, where the

initial investment cost of a long-term equity investment exceeds the Company’s interest in the

investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

loss on a straight line basis over the original remaining life.

③ Acquisition of minority interest

The difference between newly increased equity investment due to acquisition of minority interests

and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital

reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted

against returned earnings.

④ Disposal of long-term equity investment

Where the parent company disposes long-term investment in a subsidiary without a change in

control, the difference in the net asset between the amount of disposed long-term investment and the

amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of

long-term investment in a subsidiary involves loss of control over the subsidiary, the related

accounting policies in Note IV. 5. (2) applies. For disposal of long-term equity investments in any

situation other than the fore-mentioned situation, the difference between the book value of the

investment disposed and the consideration received is recognized in profit or loss.

For the disposal of long-term equity investments in other cases, the difference between the book

value of the disposed equity and its actual acquisition price is charged to the current profits and

losses.

Where a long-term equity investment is measured by the equity method both before and after part

disposal of the investment, cumulative other comprehensive income relevant to the investment

recognised prior to the acquisition is treated in the same manner that the investee disposes the

relevant assets or liabilities proportionate to the disposal. The investee’s equity movement other

than net profit, other comprehensive income and profit distribution is recognised in profit or loss

proportionate to the disposal.

Where a long-term equity investment is measured at cost both before and after part disposal of the

investment, cumulative other comprehensive income relevant to the investment recognised, as a

result of accounting by equity method or recognition and measurement principles applicable to

financial instruments, prior to the Company’s acquisition of control over the investee is treated in

the same manner that the investee disposes the relevant assets or liabilities and recognised in profit

or loss proportionate to the disposal. The investee’s equity movement other than net profit, other

comprehensive income and profit distribution, as a result of accounting by equity method, is

recognised in profit or loss proportionate to the disposal.

Where the Company’s control over an investee is lost due to partial disposal of investment in the

investee and the Company continues to have significant influence over the investee after the partial

disposal, the investment in measured by the equity method in the Company’s separate financial

statements; where the Company’s control over an investee is lost due to partial disposal of

investment in the investee and the Company ceases to have significant influence over the investee

after the partial disposal, the investment in measured in accordance with the recognition and

measurement principles applicable to financial instruments in the Company’s separate financial

statements and the difference between the fair value and the book value of the remaining investment

at the date of loss of control is recognized in profit or loss. Cumulative other comprehensive income

relevant to the investment recognised, as a result of accounting by equity method or recognition and

measurement principles applicable to financial instruments, prior to the Company’s acquisition of

control over the investee is treated in the same manner that the investee disposes the relevant assets

or liabilities on the date of loss of control. The investee’s equity movement other than net profit,

other comprehensive income and profit distribution, as a result of accounting by equity method, is

recognised in profit or loss when control is lost. Where the remaining investment is measured by

equity method, the fore-mentioned other comprehensive income and other equity movement are

recognised in profit or loss proportionate to the disposal; Where the remaining investment is

measured in accordance with the recognition and measurement principles applicable to financial

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

instruments, the fore-mentioned other comprehensive income and other equity movement are

recognised in profit or loss in full.

Where the Company’s joint control or significant influence over an investee is lost due to partial

disposal of investment in the investee, the remaining investment in the investee is measured in

accordance with the recognition and measurement principles applicable to financial instruments, the

difference between the fair value and the book value of the remaining investment at the date of loss

of joint control or significant influence is recognized in profit or loss.Cumulative other

comprehensive income relevant to the investment recognised, as a result of accounting by equity

method, prior to the partial disposal is treated in the same manner that the investee disposes the

relevant assets or liabilities on the date of loss of joint control or significant influence. The

investee’s equity movement other than net profit, other comprehensive income and profit

distribution is recognised in profit or loss when joint control or significant influence is lost.

Where the Company’s control over an investee is lost through multiple disposals and the multiple

disposals shall be viewed as one single transaction, the multiple disposals are accounted for one

single transaction which results in the Company’s loss of control over the investee. Each difference

between the consideration received and the book value of the investment disposed is recognized in

other comprehensive income and reclassified in full to profit or loss at the time when control over

the investee is lost.

13. Investment property

Investment property is held to earn rentals or for capital appreciation or for both. Investment

property includes leased or ready to transfer after capital appreciation land use rights and leased

buildings. In addition, the Company holds for future operating lease vacant buildings, if the board

of directors (or similar body) to make a written resolution, made it clear that their intention for rent

and shall not occur in the short term change, but also as an investment real estate

presentation .Investment property is initially measured at cost. Subsequent expenditures related to

an investment real estate are likely to flow about the economic benefits of the asset and its cost can

be measured reliably, is included in the cost of investment real estate. Other subsequent

expenditures should be recorded in the current profits or losses when incurred.

The Group uses the cost model for subsequent measurement of investment property, and in

accordance with the depreciation or amortization of buildings or land use rights policy.

Investment property impairment test method and impairment accrual method described in Note IV.

18 “Non-current and non-financial assets impairment”.

Occupied real estate for investment property or investment property is transferred to

owner-occupied real estate or stock conversion as the recorded value after the conversion, according

to the book value before the conversion.

When an investment property is changed for personal use, since the change of date, the investment

property is transferred to fixed assets or intangible assets. Owner-occupied property is changed to

earn rentals or for capital appreciation, change the date, will be converted to fixed assets or

intangible investment property. When the transition occurs, the conversion to the use of investment

property cost model, the carrying value before conversion as the book value after conversion,

convert to investment property measured at fair value model, the fair value of the conversion date as

the conversion after the recorded value.

When the investment property is disposed of or permanently withdrawn from use and no future

economic benefits are expected from the disposal, derecognition of the investment property.

Investment property is sold, transferred, retired or damaged, the disposal income after deducting the

book value and related taxes and profit or loss.

14. Fixed assets

(1) The conditions of recognition

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Fixed assets refers to the tangible assets that are held for the sake of producing commodities,

rendering labor service, renting or business management and their useful life is in excess of one

fiscal year. Fixed assets only in the economic benefits associated with it will flow to the company

and the cost can be measured reliably only are confirmed. Fixed assets are stated at cost and

considering the expected costs of abandoning the initial measurement.

(2) The method for depreciation

From the following month of state of intended use, depreciation method of the straight-line method

is used for different categories of fixed assets to take depreciation. The recognition of the

classification, useful life and estimated residual rate are as follows:

Category Estimated residual value (%) Expected useful life Depreciation (%)

Houses and building 7.00-10.00 20 4.50-4.65

Machineries 0.00 11-18 5.56-9.09

Electronic device、furniture and modules 0.00 5-6 16.67-20.00

Vehicles 0.00 6 16.67

Improvement expense of leased fixed assets 0.00 the shorter of lease term and beneficial lives

Expected net residual value of fixed assets is the balance of the Company currently obtained from

the disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of

useful life and state the expected service life in the end.

(3) Measurement and recognition of fixed assets impairment

Impairment and provisions of fixed assets are disclosed on Note IV. 19 Impairment of non-current

and non-financial assets.

(4) Fixed Assets under finance leases

A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership

of an asset. Title may or may not eventually be transferred. Fixed assets that are held under finance

leases shall be depreciated by applying the same policy as that for the fixed assets owned by the

Company. If it can be reasonably determined that the ownership of the leased assets can be obtained

at the end of the lease period, the leased assets are depreciated over their useful lives; otherwise, the

leased assets are depreciated over the shorter of the lease terms and the useful lives of the leased

assets.

(5) Others

A fixed asset is recognized only when the economic benefits associated with the asset will probably

flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure

incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the fixed

asset, and the carrying amount of the component of the fixed asset that is replaced shall be

derecognized. Otherwise, such expenditure shall be recognized in profit or loss in the period in

which they are incurred.

The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss

after deduction of carrying value and related tax.

The Company conducts a review of useful life, expected net realizable value and depreciation

methods of the fixed asset at least on an annual base. Any change is regarded as change in

accounting estimates.

15. Construction in progress

Construction in progress is measured at its actual cost. The actual costs include various construction

expenditures during the construction period, borrowing costs capitalized before it is ready for

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

intended use and other relevant costs. Construction in progress is transferred to a fixed asset when it

is ready for intended use.

Testing method for provision impairment of construction in progress and accrued method for

provision impairment please refer to Note IV. 19.

16. Borrowing costs

Borrowing costs include interest, amortization of discounts or premiums related to borrowings,

ancillary costs incurred in connection with the arrangement of borrowings, and exchange

differences arising from foreign currency borrowings.

The borrowing costs that are directly attributable to the acquisition, construction or production of a

qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an

expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,

investment property and inventories, etc.) that necessarily take a substantial period of time for

acquisition, construction or production to get ready for their intended use or sale.

Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the

actual interest expense incurred on that borrowing for the period less any bank interest earned from

depositing the borrowed funds before being used on the asset or any investment income on the

temporary investment of those funds.

Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such

borrowings is determined by applying a weighted average interest rate to the weighted average of

the excess amounts of accumulated expenditure on the asset over and above the amounts of

specific-purpose borrowings.

During the capitalization period, exchange differences related to a specific-purpose borrowing

denominating in foreign currency are all capitalized. Exchange differences in connection with

general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.

Assets qualified for capitalization are the fixed assets, investment properties or inventories which

need a long time of construction or production activities before ready for intended used or sale.

Capitalization of borrowing costs is suspended during periods in which the acquisition, construction

or production of a qualifying asset is interrupted by activities other than those necessary to prepare

the asset for its intended use or sale, when the interruption is for a continuous period of more than 3

months. Borrowing costs incurred during these periods recognized as an expense for the current

period until the acquisition, construction or production is resumed.

17. Intangible assets

(1) Intangible asset

The term “intangible asset” refers to the identifiable non-monetary assets without physical shape,

possessed or controlled by enterprises.

The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the

economic benefits related to intangible assets are likely to flow into the enterprise and the cost of

intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The

expenses other than this shall be booked in the profit or loss when they occur.

Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings,

such as plants that are developed and constructed by the Company, and relevant land use rights and

buildings, are accounted for as intangible assets and fixed assets, respectively. Payments for the

land and buildings purchased are allocated between the land use rights and the buildings; if they

cannot be reasonably allocated all of the land use rights and buildings are accounted for as fixed

assets.

When an intangible asset with a definite useful life is available for use, its original cost less net

residual value and any accumulate impairment losses is amortized over its estimated useful life

using the straight-line method. An intangible asset with an indefinite useful life is not amortized.

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

For an intangible asset with a definite useful life, the Company reviews the useful life and

amortization method at the end of the period, and makes adjustment when necessary. An additional

review is also carried out for useful life of the intangible assets with indefinite useful life. If there is

evidence showing the foreseeable limit period of economic benefits generated to the enterprise by

the intangible assets, then estimate its useful life and amortize according to the policy of intangible

assets with definite useful life.

(2) Research and development cost

Cost of research and development is distinguished into the research phase and the development

phases.

Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.

Unless the following conditions are satisfied, cost of the development phase is recognized in the

profit or loss in the period in which it is incurred:

It is technically feasible to complete the intangible asset so as to use it or sell it;

It is clearly invented to complete the intangible asset in order to use it or sell it;

it is probable that the intangible asset is capable of generating future economic benefit, such as

the market for the product produced by the intangible asset or the intangible asset itself, it is

objectively evidential that the intangible asset is economically usable if it is going to be used

internally;

There are sufficient technical, financial and other resources to complete the intangible asset and

to use it or sell it;

The cost of the development of the intangible can be measured reliably.

If the cost cannot be distinguished into the search phase and the development phase, it is recognized

in the profit or loss for the period in which it is incurred.

(3) Impairment of intangible assets

Impairment and provisions of intangible assets are disclosed on Note IV.19.

18. Long-term deferred expenditure

An item long-term deferred expenses is an expense which has been incurred and which has a

beneficial period (a period during which an expense is expected to bring economic benefits to an

entity) which is longer than one year and which includes at least part of the reporting period during

which the expense was incurred and subsequent reporting periods. An item of long-term deferred

expenses is recognized at the actual amount of the expense incurred and allocated in each month of

the beneficial period using the straight line method.

19. Impairment of long-term assets

Non-financial assets with non-current nature include fixed assets, construction in progress,

intangible assets with definite useful lives, investment properties measured by cost methods and

long-term equity investment on subsidiaries, jointly operations. The Company assesses whether

there are any indicators of impairment for all non-financial assets at the balance sheet date, and

impairment test is carried out and recoverable value is estimated if such an indicator exits. Goodwill

and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are

tested for impairment annually regardless of indicators of impairment.

Impairment of loss is calculated and provisions taken by the difference if the recoverable value of

the assets is lower than the book value. The recoverable value is the higher of estimated present

value of the future expected cash flows from the asset and net fair value of the asset less disposed

cost. The fair value of asset is determined by the sales agreement price within an arm’s length

transaction. In case there is no sales agreement, but there is active market of assets, the fair value

can be determined by the selling price. If there is neither sales agreement nor active market, the fair

value of the asset can be estimated based on the best information obtained. Disposal expenses

include expenses related to the legislation, taxes, transportations and the direct expense for the asset

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

to be ready for sale. When calculating the present value of expected future cash flows from an asset

or asset Group, the management shall estimate the expected future cash flows from the asset or

asset Group and choose a suitable discount rate in order to calculate the present value of those cash

flows. Provision for asset impairment is calculated and determined on the individual basis. If the

recoverable of individual asset is hard to estimate, the recoverable amount can be determined by the

asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have cash

flow in independently.

The Company determines whether goodwill is impaired at least on an annual basis. This requires an

estimation of the present value of the future expected cash flows from the asset Groups or sets of

asset Groups to which the goodwill is allocated. Estimating the present value requires the Company

to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups

and also choose a suitable discount rate in order to calculate the present value of those cash flows.

Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in

the subsequent periods.

After the asset impairment loss is determined, recoverable value amounts would not be returned in

future

20. Employee Benefits

The employee benefits of the company include short-term employee benefits, post-employment

benefits, termination benefits and other long-term employee benefits:

Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health

insurance , maternity insurance, work injury insurance, housing funds, labor union funds, employee

education funds, non-monetary benefits and etc. The company provides services accounting period

in which an employee of the company will be short-term employee benefits are recognized as

liabilities actually incurred and loss account or the costs associated with the asset. The non

-monetary benefits are measured at fair value.

Post-employment benefits mainly include basic old-age insurance, unemployment insuranceand

annuities. Post-employment benefits includedefined contribution plans and defined benefit plans.

Relevant contribution amount in the defined contribution plan shall be recognised as cost of related

assets or profit or loss during the year. The defined benefit plan in the company is old-age insurance.

Projected unit credit cost method (“PUC”) was used by independent actuaries engaged by the

Company to determine the present value of the defined benefit obligations with unbiased and

consistent actuarial assumptions regarding population variables and financial variables. Defined

benefit obligation was presented with the present value and the related current service cost was

accounted into current profit or loss.

When the Company terminates the labor relationship with employees prior to the employment

contracts, or encourages employees to accept voluntary redundancy compensation proposals in

this company, a provision shall be recognised for the compensation arising from the termination of

employment relationship with employees at the time when the Company can not unilaterally

withdraw layoff proposal termination benefits provided due to termination of employment, or the

company ensures the costs related to the payment for termination benefits related to the

restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or

loss. However, if termination benefits can not be fully paid after twelve months of the reporting

date,the liability shall be processed in accordance with other long-term employee benefits.

Retirement plan adopts the same principles as the termination benefits. The salaries and insurance

to be paid from the date when employees stop providing services to the date of normal

retirementshall be recognised in profit or loss (termination benefits) when satisfying the

requirements of a provision.

Other long-term employee benefits provided by the company to employees that is in line with

defined contribution plans shall adopt the accounting treatment in accordance with defined

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

contribution plans, otherwise the accounting treatment of defined benefit plans.

21. Accrued liabilities

Recognition of accrued liabilities:

Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute,

guarantee on quality of product, cut-down plan, loss of contract, recombine obligation, obligation

on abandon fixed asset, and meet the follow condition simultaneously would determined as

liabilities:

(1) This obligation is current obligation of the Company; and,

(2) The performance of this obligation will probably cause economic benefits outflow of the

Company; and,

(3) The amount of this obligation can be reliably measured.

On balance sheet date the Company performs relate obligation that consider risk, incertitude, time

value of currency of contingency factor. According to the best estimate of the expenditure required

to settle the present obligation for estimated liabilities measured.

If the expenditure required to settle the liability is expected to be fully or partly compensated by a

third party, to determine the amount of compensation will be received at the basic, separately

recognized as an asset, and is recognized in the amount of compensation does not exceed the

carrying value of estimated liabilities.

22. Revenue

(1) Revenue from sales of goods

Revenue from sales of goods is recognised when significant risks and rewards attached to the

ownership of the goods sold are passed to the buyer, when neither continual involvement in the

rights normally associated with the ownership of the goods sold nor effective control over the goods

controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow

of future economic benefits is probable, and when cost incurred or to be incurred associated with

the goods sold is reliably measurable.

For the export sales of the products of the Company, no matter what the sales pattern adopt,

recognition of revenue according to the sales contract or conventions listed in the orders, for those

product sales employ the FOB domestic ports settlement, revenue recognition upon the bill of

lading acquired from the shipping company and conducted the export declaration; for those product

sales employ the FOB oversea ports settlement, revenue recognition upon the export declaration

finished and shipment at the buyer’s receiving dock, as well as acquired the bill of lading from the

shipping company.

Accounting treatment for sales return: in accordance with the international trade prevailing rules,

the FOB settlement employed, indicate to the buyer has inspected and accepted those purchased

commodities at the shipment dock, after acceptance and shipping the relevant risks has been

transferred to buyer, therefore the Company has no individually recognized for the events, but the

amount shall be recognized when incurred and accounted through in profit and loss in current

period. Accounting treatment for product claims: calculate the claim indemnity rate, according to

the proportion of actually payment for those product claims during recently two years account for

the corresponding period sales revenue, at the end of period, on the basis of current period sales

revenue and the claim indemnity rate to recognize the claim indemnity expense.

(2) Revenue from rendering of service

Revenue arising from rendering of services is recognised on the balance date using the percentage

of completion method when the outcome of the services rendered can be reliably estimated. The

percentage of completion of the services rendered is calculated by dividing the cost to date by the

budgeted total cost.

The outcome of the services rendered can be reliably estimated when revenue from the services

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

render can be reliably measured, when the inflow of associated future economic benefits is probable,

when the percentage of completion can be reliably measure, and when the cost incurred or to be

incurred associated with the services can be reliably measured.

When the outcome of the services rendered cannot be reliably estimate, revenue is recognised as

cost reimbursement received or to be received, if any, and cost incurred is recognised in profit or

loss for the period in which the cost is incurred. No revenue is recognised if cost reimbursement is

not probable.

When a contract between the group and another entity involves both sales of goods and rendering

for services, the sales of goods and rendering of services are accounted for separately if they are

distinguishable and separately measurable; the contract is accounted for as if it is a contract

involves only sales of goods if the sales of goods and rendering of services are either

indistinguishable or distinguishable but not separately measurable.

(3) Revenue from construction contracts

When the outcome of a construction contract can be estimated reliably, contract revenue and

contract costs associated with the construction contract should be recognised as revenue and

expenses according to the percentage of completion.at the balance sheet date.

The outcome of a construction contract can be estimated reliably when all the following conditions

are satisfied: ①total contract revenue can be measured reliably; ②it is probable that the economic

benefits associated with the contract will flow to the enterprise; ③the contract costs attributable to

the contract can be clearly identified and measured reliably so that actual contract costs incurred can

be compared with prior estimates; and, ④both the contract costs to complete the contract and the

stage of contract completion at the balance sheet date can be measured reliably.

When the outcome of a construction contract cannot be estimated reliably, but revenue should be

recognised only to the extent of contract costs incurred that it is probable will be recoverable; and If

the cost cannot be recovered, contract costs should be recognised as an expense in the period in

which they are incurred and the contract revenue cannot be recognised. When the uncertainty that

makes the outcome of the construction unable to be estimated reliably disappears, the revenue and

cost are recognised according to the percentage of completion.

An expected loss on the construction contract should be recognised as an expense during the year

when the total contract cost is expected to be higher than the total contract revenue.

The incurred cost and accumulated gross profit (loss) and the settled price of the construction

contract are disclosed as a net amount in the balance sheet. The excess amount of the incurred cost

and accumulated gross profit (loss) over the settled price of the construction contract is disclosed as

inventory, while the excess amount of the settled price over the incurred cost and accumulated gross

profit (loss) of the construction contract is disclosed as advance from customers.

(4) Royalty Revenue

According to the contract or agreement, the revenue is recognized on an accrual basis.

(5) Interest Income

The amount of interest revenue should be measured and confirmed in accordance with the length of

time for which the enterprise's cash is used by others and the actual interest rate.

23. Government Grants

Government grants are transfer of monetary assets and non-monetary assets from the government to

the Company at no consideration, excluding the capital invested by the government as equity owner.

Government grant can be classified as grant related to the assets and grants related to the income.

The government grants which were acquired by the Company will be used to purchase or otherwise

form become long-term assets will be defined asgrant related to the assets; the others will be

defined asgrants related to the income. If the fileshave not clearly defined government grants

objects, it will be divided in the following manner compartmentalize the grantsrelated to the

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

assetsandgrants related to the income: (1) government documents defined specific projects targets,

according to the relative proportion of the budgets of specific items included the expenditure of to

form assets and the expenditure will be charged into expense to be divided, the division ratio

required at each balance sheet date for review and make changes if necessary; (2) government

documents to make a general presentation purposes only, does not specify a particular project, as

grants related to the income.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount

received or receivable. If a government grant is in the form of a non-monetary asset, it is measured

at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A

government grant measured at a nominal amount is recognized immediately in profit or loss for the

period.

When received the government grantsactually, recognized and measured them by the actual amount

received. However, there is strong evidence that the end of fiscal support policies able to meet the

conditions specified in the relevant funds are expected to be able to receive financial support,

measured at the amount receivable. Government grants are measured according to the amount

receivable shall also comply with the following conditions: (1)grantsreceivable of government

departments issued a document entitled have been confirmed, or could reasonably are estimated in

accordance with the relevant provisions of its own official release of financial resources

management approach, and the expected amount of a material uncertainty which does not exist; (2)

it is based on the local financial sector to be officially released and financial support for the project

and its financial fund management approach voluntarily disclosed in accordance with the provisions

of “Regulations on Disclosure Government Information”, and the management approach should be

(inclusive of any compliance business conditions may apply), and not specifically formulated for

specific businesses;(3) related grants approval has been clearly committed the deadline, and is

financed by the proceeds of a corresponding budget as a guarantee, so that will be received within

the prescribed period with the a reasonable assurance; (4) according to the specific circumstances of

the Company and the subsidy matter, should satisfy the other conditions (if any).

A government grant related to an asset is recognized as deferred income, and evenly amortized to

profit or loss over the useful life of the related asset. For a government grant related to income, if

the grant is a compensation for related expenses or losses to be incurred in subsequent period, the

grant is recognized as deferred income, and recognized in profit or loss over the periods in which

the related costs are recognized. If the grant is a compensation for related expenses or losses already

incurred, the grant is recognized immediately in profit or loss for the period.

For repayment of a government grant already recognized, if there is a related deferred income, the

repayment is offset against the carrying amount of the deferred income, and any excess is

recognized in profit or loss for the period. If there is no related deferred income, the repayment is

recognized immediately in profit or loss for the period.

24. Deferred tax assets and deferred tax liabilities

(1) Income tax for the current period

At the balance sheet date, current income tax liabilities or assets for the current and prior periods,

are measured at the amount expected to be paid (or recovered) according to the requirements of tax

laws. The calculation for income tax expenses in the current period is based on the taxable income

according to the related tax laws after adjustment to the accounting profit of the reporting period.

(2) Deferred income tax assets and liabilities

The difference between the book value of some assets and liabilities and their tax basis, and the

temporary difference which is not recognized as assets and liabilities but can be recognized by the

difference between the book value of tax basis items and their tax basis according to taxation

regulation, will be recognized as deferred income tax assets and deferred income tax liabilities by

adopting liabilities method of balance sheet.

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Related to the initial recognition of goodwill, taxable temporary difference related to the initial

recognition of assets and liabilities produced from the transaction that is not business merger also

will not influence accounting profit and taxable income(or deductible loss) when incurred, will not

be recognized as the related deferred income tax liabilities. In addition, the taxable temporary

difference related to subsidiaries, associated company, and joint venture will also be not recognized

as the related deferred income tax liabilities if the Company can control the time of temporary

difference reverse and the temporary difference may not be reversed in the foreseeable future.

Except the aboved exceptional examples, the Company recognizes deferred income tax liabilities

from all other taxable temporary difference.

Deductible temporary difference related to the initial recognition of assets and liabilities produced

from the transaction that is not business merger also will not influence accounting profit and taxable

income(or deductible loss) when incurred, will not be recognized as the related deferred income tax

assets. In addition, the deductible temporary difference related to subsidiaries, associated company,

and joint venture will also be not recognized as the related deferred income tax assets if the

temporary difference may not be reversed in the foreseeable future or taxable income of deductible

temporary difference used for deduction may not be gained in the future. Except the aboved

exceptional examples, the Company recognizes deferred income tax assets from other deductible

temporary difference with the limit that the Company probably gain taxable income used for

deducting deductible temporary difference.

The deductible loss tax deduction that can be carried forward to subsequent years, will be

recognized as deferred income tax assets with the limit that the Company probably gain future

taxable income used for deducting deductible loss tax deduction.

Deferred income tax assets and deferred income tax liabilities will be measured on the balance sheet

date by applicable tax rate during the period of receiving related assets and paying related liabilities

according to taxation regulation.

The Company rechecks the carrying amount of deferred tax asset at the balance sheet date. If it’s

probable that sufficient taxable profit will not be available against which the deductible temporary

difference can be utilized, the Company shall write down the carrying amount of deferred tax asset,

or reverse the amount written down later when it’s probable that sufficient taxable profit will be

available

(3) Income tax expenses

Income tax expenses consist of current income tax and deferred income tax.

The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded

into profit or loss in current accounting period, except expense for income tax of the current period

and deferred income tax that booked into other income or equity and adjusted carrying value of

deferred income tax goodwill arose from business combination.

(4) Income tax offset

When we have the legal right, and have intended to, to make settlement with net amount, or through

the asset acquisition and liability fulfillment simultaneously, the Company shall present the net

value from the offset between current income tax asset and current income tax liability in the

financial statement.

When the Company has the legal right to make a settlement with the current income tax asset and

current income tax liability, and the deferred income tax asset and deferred income tax liability are

related to the same taxable subject under the same tax payer, or related to different taxable subject,

but the intension of net value settlement in regard of the current income tax asset and current

income tax liability, the Company shall present net value after the offset of deferred income tax

asset and deferred income tax liability.

25 Leases

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership

of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a

finance lease.

(1) The Company as Lessee under operating Lease

Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the

lease term, and either included in the cost of the related asset or charged to profit or loss for the

current period. The contingent rents shall be recorded in the profit or loss of the period in which

they actually arise.

(2) The Company as Leasorunder operating Lease

Lease income from operating leases shall be recognized by the leasorin profit or loss on a

straight-line basis over the lease term. Initial direct cost of significance in amount shall be

capitalized when incurred. If another basis is more systematic and rational, that basis may be used.

Contingent rents are credited to profit or loss in the period in which they actually arise.

(3) Financial lease to which the Company is the leasee

At the commencement of a financial lease to which the Company is the Leasee, the lower of the

lease-commencement-date fair value of the leased asset and the present value of the minimum lease

payment is recognised as the cost of the leased asset; the minimum lease payment is recognised as a

long-term payable; and the excess of the long-term payable over the amount recognised as the cost

of the leased asset is recognised as unrecognised lease expenditure. Expenses incurred during the

negotiation and signing of the lease contract for activities directly attributable to the lease are

recognised as part of the cost of the leased asset. The residual amount after deducting the

unrecognised lease expenditure from the long-term payable is divided into non-current liability and

non-current liability due within one year depending on maturity and presented on (consolidated)

financial statements separately.

The unrecognised lease expenditure is amortised over the lease term using the effective interest rate

method and the amortisation is recognised as lease expense in profit or loss for the relevant period.

Contingency lease rental is recognised in profit or loss when it is incurred.

(4) Financial lease to which the Company is the leasor

At the commencement of a financial lease to which the Company is the leasor, the sum of the

minimum lease rental receivable and the initial expenses incurred for activities directly attributable

to the lease is recognised as the initial amount of the respective financial lease rental receivable;

unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the

minimum lease rental receivable, the initial expenses incurred for activities directly attributable to

the lease and the unguaranteed residual value over the sum itself is recognised as unrecognised

lease income. The residual amount after deducting the unrecognised lease income from the financial

lease rental receivable is divided into non-current receivable and non-current receivable due within

one year depending on maturity and presented on (consolidated) financial statements separately.

The unrecognised lease income is amortised over the lease term using the effective interest rate

method and the amortisation is recognised as lease income in profit or loss for the relevant period.

Contingency lease rental income is recognised in profit or loss when it is received or becomes

receivable.

26. Significant account judgment and estimates

The Company is required to make judgments, estimates and assumptions about the carrying

amounts of items in the financial statements that cannot be measured accurately, due to the internal

uncertainties of operation activities. These judgments, estimates and assumptions are based on

historical experiences of the Company’s management as well as other factors that are considered to

be relevant. These judgments, estimates and assumptions may affect value of the financial

statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the

43

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

balance sheet date. However, the result derived from those uncertainties in estimates may lead

significant adjustments to the carrying amounts of the assets or liabilities affected in the future.

The Company has reviews the judgments, estimates and assumptions regularly on the basis of going

concern. Where the changes in accounting estimates only affect the period when changes occurred,

and they are recognized within the same period. Where the changes in accounting estimates affect

both current period and future period, the changes are recognized within the period of change and

future period.

At balance sheet date, the followings are the significant areas where the Company needs to make

judgment, estimates and assumptions over the value of items in the financial statements:

(1) Revenue recognition of construction in progress

When the outcome of a construction contract can be estimated reliably, contract revenue and

contract costs associated with the construction contract should be recognised as revenue according

to the percentage of completion at the balance sheet date. The percentage of completion is

recognisedbased on the method in Notes IV.22 and is calculated accumulatively in the years when

the construction contract is executed.

There would be a great amount of judgement in thedetermination of the percentage of completion,

the incurred construction cost, the expected total construction revenue and total construction cost,

and the recoverability of the contract. The management of the project make the judgement based on

previous experience. The change of expected total contract revenue and total cost, and the change of

the estimated result of the contract may have huge impact on the revenue and cost of the current

period or the period afterwards

(2) Classification of lease

The Company classifies leases as operating lease and financing lease according to the rule

stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The management

shall make analysis and judgment on whether the risks and rewards related to the title of leased

assets has been transferred to the leaser, or whether the Company has substantially held the risks

and rewards related to the ownership of leased assets.

(3) Allowance for bad debts

According to the relevant accounting policies of the Company in receivables, allowance method is

used for bad debt’s calculation. The impairment of receivables is calculated based on the assessment

of recoverable of receivables. Assurance of receivable impairment needs judgments and estimations

from the management. The difference between actual results and original estimates shall have

impact on the carrying amount of receivables and receivable bad debt provisions or the reverse

during the change of estimation.

(4) Impairment of inventories

The Company measures inventories by the lower of cost and realizable net value according to the

accounting policies in regard of inventories and provisions for decline in value of inventories is

made if the cost is higher than their net realizable value, and obsolete and slow-movement

inventories. Inventories decline in value to net realizable value is the estimated selling price in the

ordinary course of business. Net realizable value is determined on the basis of clear evidence

obtained, and takes into consideration the purposes of holding inventories and effect of post balance

sheet events. The difference between the actual result and the original estimates shall have impact

on reverse of the carrying amount of the inventories and their decline in value or provisions during

the period of change.

(5) The fair value of financial instruments

For a financial instrument which has no active market, the Company establishes fair value by using

various valuation methods, including of discounted cash flow analysis model. The Company needs

to estimate future cash flow, credit risk, volatility and relationship during the valuation and choose

44

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact

on the fair value of financial instruments.

(6) Held-to-maturity investment

The non-derivative financial assets which meet the conditions of fixed or determinable repayment

amount and fixed maturity date and the company has a clear intention and ability to hold to maturity

classified as held-to-maturity investments. A large amount of judgmentis required to carry out this

classification. In the course of the judgment, the Company will evaluate the willingness and ability

to hold such investment to maturity. Unless the specific situation (For example, an investment that

is insignificant in the amount close to the due date), if the Company fails to hold the investment

until maturity, all such investments shall be reclassified to the available-for-sale financial assets,

And the financial assets shall not be divided into held-to-maturity investments within the two full

fiscal years of the current fiscal year and thereafter. In the event of such a situation, it may have a

material impact on the value of the underlying financial assets presented in the financial statements

and may affect the Company's financial instrument risk management strategy.

(7) Impairment of held-to maturity investment

Whether the impairment of held-to-maturity investments to a large extent depends on management's

judgment. The objective evidence of impairment includes the issuer's serious financial difficulties

that prevent the financial asset from continuing to be traded in an active market and is unable to

perform the terms of the contract (for example, to pay interest or default). In the course of the

judgment, the Company shall assess the impact of the objective evidence of impairment on the

expected future cash flow of the investment.

(8) Impairment of available-for-sale assets

Whether the impairment of available-for-sale financial assets to a large extent dependson the

judgment and assumptions of the management, in order to determine whether it is necessary to

recognise its impairment losses in the income statement. In the course of judging and making

assumptions, the Company shall assess the extent and duration of the fair value of the investment

and the financial position and short-term business outlook of the investee, including the industry

status, technological change, credit rating, The default rate and the risk of opponents.

(9) Impairment of non-financial, non-current assets

The Company assesses whether there are any indicators of impairment for all non-current assets

other than financial assets at the balance sheet date. For an intangible asset that has indefinite useful

life, impairment test is made in addition to the annual impairment test if there is any indication of

impairment. For non-current assets other than financial assets, impairment test is made when there

is any indication that its account balance cannot be recovered.

Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of

disposal and present value of the future cash flows expected to be derived from the asset.

Net value between the difference of fair value and disposal cost is determined by reference of the

price of similar product in a sale agreement in an arm’s length transaction or an observable market

price less the additional cost directly attributable to the disposal of the asset.

When estimating the present value of future cash flow, significant judgments are made over the

asset’s production, selling price and relevant operating expenses, and discount rate used to calculate

present value. All available materials that are considered to be relevant shall be used in the

estimation of recoverable value. These materials include estimations of production, selling price and

operating expenses based on reasonable and supportable assumptions.

The Company makes an impairment test for goodwill at least at each year end. This requires an

estimation of present value of future cash flow of the assets or assets group where goodwill has

been allocated. The Company shall makes estimation on the future cash flow derived from assets or

assets group and determine an appropriate discount rate for the present value of future cash flow

45

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

when the estimation of present value of future cash flow is made.

(10) Depreciation and amortization

Investment property, fixed assets and intangible assets are depreciated and amortized using the

straight-line method over their useful lives after taking into account residual value. The useful lives

are regularly reviewed to determine the depreciation and amortization costs charged in each

reporting period. The useful lives are determined based on historical experience of similar assets

and the estimated technical changes. If there is an indication that there has been a change in the

factor used to determine the depreciation or amortization, the rate of depreciation or amortization is

revised.

(11) Deferred tax assets

The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable

that future taxable profit will be available against which the unused tax losses and unused tax

credits can be utilized. This requires the management of the Company make a lot of judgments over

the estimation of time period, value and tax planning strategies when future taxable profit incurs so

that the value of deferred tax assets can be determined.

(12) Income tax

There are some transactions where ultimate tax treatments and calculations have uncertainties in the

Company’s everyday operation. Whether there are possible for some items to make expenditure

before tax needs approval from competent tax authorities. If there is any difference between

finalized determination value and their initial estimations value, the difference shall have the impact

on theincome tax and deferred income tax of the current period during the final determination.

(13) Accrued liabilities

According with the terms of the contract, the existing knowledge and historical experience, product

quality assurance and expected contract losses, delay in delivery of liquidated damages are

estimated and recognized as accrued liabilities. In these matters has been the formation of a current

obligation, and fulfilling the duty is likely to lead to the outflow of economic benefits of the

Company, the Company or the best estimate of the current obligation expenditure required

recognized as a accrued liabilities. Recognition and measurement of accrued liabilities is dependent

on the judgment of management. In the processing of judgment the company needed to appraise the

related risks, uncertainties and time value of money and other factors.

The Company will sell, repair and renovation of goods sold to provide customers with quality

after-sales service commitment is accrued liabilities. Accrued liabilities have considered the recent

experience in the maintenance data, but recent maintenance experience may not reflect future

maintenance. Any increase or decrease in the accrued liabilities may affect the profit or loss in

future.

(14) Fair value measurement

Some of the Company's assets and liabilities are measured at fair value in the financial

statements. In estimating the fair value of an asset or liability, the Company adopts available

observable market data. If you can not get the first level of input value, the company will hire

third-party qualified appraisers to perform the valuation.

V. Taxation

1. Taxes and surcharges applicable to the Company

Taxes and surcharges Tax base Tax rate (%)

According to the revenues from sales to calculate the output tax, and use the

Value added tax 5、6、11、13、17

balance afterdeduct the deductible input tax to pay the VAT

46

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Urban maintenance and Sum of VAT payable, consumption duty payable and business tax payable for the

construction surcharge reporting period, and exempt and deductible tax 7

Sum of VAT payable, consumption duty payable and business tax payable for the

Education surcharge 3

reporting period, and exempt and deductible tax

Sum of VAT payable, consumption duty payable and business tax payable for the

Local education surcharge 2

reporting period, and exempt and deductible tax

Corporate income tax Taxable profits 25

Notes: CS [2016] No. 36, which was about the Notice on the Comprehensively Launched Pilot for

Replacing Business Tax by VAT that be executed on 1 May 2016.

2 Taxes and surcharges applicable to the primary subsidiaries

(1) TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)

Taxes and surcharges Tax base Tax rate (%)

According to the revenues from sales to calculate the output tax, and use the 0、5、6、11、13、

Value added tax

balance after deduct the deductible input tax to pay the VAT 17

Business tax Business tax taxable revenue 5

Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the

5

and construction surcharge reporting period, and exempt and deductible tax

Sum of VAT payable, consumption duty payable and business tax payable for the

Education surcharge 3

reporting period, and exempt and deductible tax

Sum of VAT payable, consumption duty payable and business tax payable for the

Local education surcharge 2

reporting period, and exempt and deductible tax

Corporate income tax Taxable profits 15

Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT,

the rate is 0%.

(2) Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)

Taxes and surcharges Tax base Tax rate (%)

According to the revenues from sales to calculate the output tax, and use the

Value added tax 5、11、13、17

balance after deduct the deductible input tax to pay the VAT

Business tax Business tax taxable revenue 5

Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable

1

and construction surcharge for the reporting period, and exempt and deductible tax

Sum of VAT payable, consumption duty payable and business tax payable

Education surcharge 3

for the reporting period, and exempt and deductible tax

Local education surcharge Sum of VAT payable, consumption duty payable and business tax payable 2

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

for the reporting period, and exempt and deductible tax

Corporate income tax Taxable profits 25

(3) Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)

Taxes and surcharges Tax base Tax rate (%)

According to the revenues from sales to calculate the output tax, and use the

Value added tax 5

balance after deduct the deductible input tax to pay the VAT

Corporate income tax Taxable profits 17

(4) Pt.Star Comgistic Indonesia

Taxes and surcharges Tax base Tax rate (%)

According to the revenues from sales to calculate the output tax, and use the

Value added tax

balance after deduct the deductible input tax to pay the VAT 10

Corporate income tax Taxable profits 25

VI. Notes on major items in consolidated financial statements of the Company

1. Monetary funds

Item 2017.06.30 2016.12.31

Cash on hand 890,072.87 703,668.78

Bank deposits 609,590,639.06 748,793,446.55

Total 610,480,711.93 749,497,115.33

Of which: total amount deposited in overseas 15,048,762.42 19,034,720.76

Notes: the balance of fixed time deposit at financial institution for interest in the bank deposits at period-end was

RMB346,541,506.84.

2. Financial assets measured by fair value with changes in fair value recognised in profit or loss

Item 2017.06.30 2016.12.31

Trading financial assets 1,881,750.00 0.00

Including: Derivative financial assets 1,881,750.00 0.00

Total 1,881,750.00 0.00

(2) Explanation

The derivative financial asset is forward foreign exchange contract signed with financial institutions.

48

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

3. Notes receivable

(1) Disclosure by classification

Item 2017.06.30 2016.12.31

Bank acceptance bill 990,000.00 1,341,076.70

Total 990,000.00 1,341,076.70

(2) There is no notes receivable whice had pledged by the Company

(3) There is no notes receivable which had endorsed by the Company or had discounted and had not due on

the balance sheet date at the period-end

(4) There is no notes transferred to accounts receivable because drawer of the notes fails to executed the

contract or agreement

4. Accounts receivable

(1) Disclosure by classification

2017.06.30

Item Book balance Bad debt provision

Book value

Amount Proportion (%) Amount Withdrawal proportion (%)

Accounts receivable of

individual significance

0.00 0.00 0.00 0.00 0.00

subject to individually

assessment for impairment

Accounts receivable

portfolio subject to 252,843,881.35 100.00 10,264,356.72 4.06 242,579,524.63

impairment by credit risk:

Including: Portfolio by age 250,427,706.55 99.04 10,264,356.72 4.10 240,163,349.83

Portfolio by related parties 2,416,174.80 0.96 0.00 0.00 2,416,174.80

Accounts receivable of

individually insignificance

0.00 0.00 0.00 0.00 0.00

subject to individually

assessment for impairment

Total 252,843,881.35 100.00 10,264,356.72 4.06 242,579,524.63

2016.12.31

Item Book balance Bad debt provision

Book value

Amount Proportion (%) Amount Withdrawal proportion (%)

Accounts receivable of

individual significance

subject to individually 0.00 0.00 0.00 0.00 0.00

assessment for

impairment

Accounts receivable

portfolio subject to

285,221,438.01 100.00 12,134,821.63 4.25 273,086,616.38

impairment by credit

risk:

Including: Portfolio by

282,541,651.92 99.06 12,134,821.63 4.29 270,406,830.29

age

Portfolio by related

2,679,786.09 0.94 0.00 0.00 2,679,786.09

parties

Accounts receivable of

individually

insignificance subject

0.00 0.00 0.00 0.00 0.00

to individually

assessment for

impairment

Total 285,221,438.01 100.00 12,134,821.63 4.25 273,086,616.38

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

①In the groups, accounts receivable adopting aging analysis method for measurement of allowance for bad debt:

2017.06.30

Aging

Amount Bad debt provision Proportion (%)

Within 1 year 241,927,778.05 1,764,428.22 0.73

Including: 1-90 days 227,669,455.35 0.00 0.00

91-180 days 13,003,560.80 1,300,356.08 10.00

181-270 days 816,544.05 244,963.22 30.00

271-365 days 438,217.85 219,108.92 50.00

1-2years 8,359,638.64 8,359,638.64 100.00

2-3years 140,289.86 140,289.86 100.00

Total 250,427,706.55 10,264,356.72 4.10

②In the groups, accounts receivable using related party group method for measurement of allowance for bad debt

2017.06.30

Item

Account receivable Bad debt provision Withdrawal proportion (%)

Related party group 2,416,174.80 0.00 0.00

Total 2,416,174.80 0.00 0.00

(2) Recognisation, recovery and reversal of allowance for bad debt

The amount of allowance for bad debts recognised during the Reporting Period is RMB14,447.09; the amount of recovered or

reversed allowance for bad debts during the Reporting Period is of RMB1,494,519.39.

(3) Accounts receivable written off during the Reporting Period

Item Amount

Sporadic accounts receivable written off 375,945.52

(4) Details of top five accounts receivable

The total amount of top five accounts receivables summarized by debtors as at the end of the Reporting Period is

RMB144,581,493.74, accounting for 57.19% of the total accounts receivable as at the end of the Reporting Period,

the total corresponding allowance for bad debts is RMB413,034.06.

5. Advances to suppliers

(1) Disclosure by age

2017.06.30 2016.12.31

Item

Amount Proportion (%) Amount Proportion (%)

Within 1 year 24,784,622.14 100.00 6,964,904.97 100.00

Total 24,784,622.14 100.00 6,964,904.97 100.00

(2) Details of top five advance to suppliers

The total amount of top five advance to suppliers as at the end of Reporting Period is RMB23,582,222.49,

accounting for 95.14% of the total advance to suppliers.

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

6. Interest receivable

(1) Disclosure by classification

Item 2017.06.30 2016.12.31

Fixed deposit receipt 1,038,777.61 5,519.56

Total 1,038,777.61 5,519.56

7. Other receivable

(1) Disclosure by classification

2017.06.30

Item Book balance Bad debt provision

Book value

Amount Proportion (%) Amount Withdrawal proportion (%)

Other accounts receivable of

individual significance

0.00 0.00 0.00 0.00 0.00

subject to individually

assessment for impairment

Other accounts receivable

portfolio subject to 38,254,366.21 97.24 1,652,453.93 4.32 36,601,912.28

impairment by credit risk:

Including: Portfolio by age 38,010,355.12 96.62 1,652,453.93 4.35 36,357,901.19

Portfolio by related parties 244,011.09 0.62 0.00 0.00 244,011.09

Other accounts receivable of

individually insignificance

1,087,067.04 2.76 0.00 0.00 1,087,067.04

subject to individually

assessment for impairment

Total 39,341,433.25 100.00 1,652,453.93 4.20 37,688,979.32

2016.12.31

Item Book balance Bad debt provision

Book value

Amount Proportion (%) Amount Withdrawal proportion (%)

Other accounts receivable of

individual significance

0.00 0.00 0.00 0.00 0.00

subject to individually

assessment for impairment

Other accounts receivable

portfolio subject to 40,404,849.01 96.02 1,698,478.04 4.20 38,706,370.97

impairment by credit risk:

Including: Portfolio by age 40,156,836.65 95.43 1,698,478.04 4.23 38,458,358.61

Portfolio by related parties 248,012.36 0.59 0.00 0.00 248,012.36

Other accounts receivable of

individually insignificance

1,675,385.11 3.98 0.00 0.00 1,675,385.11

subject to individually

assessment for impairment

Total 42,080,234.12 100.00 1,698,478.04 4.04 40,381,756.08

①In the groups, other accounts receivable adopting aging analysis method for measurement of allowance for bad

debt:

2017.06.30

Aging

Other accounts receivable Bad debt provision Proportion (%)

Within 1 year 36,600,680.76 242,779.57 0.66

Including: 1-90 days 35,207,976.15 0.00 0.00

91-180 days 1,026,997.38 102,698.77 10.00

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

181-270 days 213,864.10 64,159.23 30.00

271-365 days 151,843.13 75,921.57 50.00

1-2years 1,404,674.36 1,404,674.36 100.00

Over 3 years 5,000.00 5,000.00 100.00

Total 38,010,355.12 1,652,453.93 4.35

② Other receivable of individually insignificance subject to individually assessment for impairment

Withdrawal Bad debt

Items Book balance Withdrawal reason

proportion (%) provision

China Export & Credit Insurance Guaranteed deposits, absence of

648,450.00

Corporation, Fujian Branch impairment

Guaranteed deposits, absence of

onghai People's Court 200,000.00

impairment

Alipay (China) Network Technology Guaranteed deposits, absence of

103,000.00

Co., Ltd. impairment

Guaranteed deposits, absence of

Shunhe Trading Co., Ltd. 35,617.04

impairment

Niuhai E-commerce ( Shanghai ) Co., Guaranteed deposits, absence of

30,000.00

Ltd. impairment

Guaranteed deposits, absence of

Jiangsu Suning E-Commerce Co., Ltd. 30,000.00

impairment

Beijing Dangdangkewen E-Commerce Guaranteed deposits, absence of

20,000.00

Co., Ltd. impairment

Shanghai Feiniujida E-commerce Co., Guaranteed deposits, absence of

10,000.00

Ltd. impairment

Guaranteed deposits, absence of

Gome Online E-Commerce Co., Ltd. 10,000.00

impairment

Total 1,087,067.04

(2) Recognisation, recovery and reversal of allowance for bad debt

The amount of allowance for bad debts recognised during the Reporting Period is RMB8,948.70; the amount of recovered or

reversed allowance for bad debts during the Reporting Period is of RMB54,972.81.

(3) Other accounts receivable written off during the Reporting Period

There was no actual write-off other accounts receivable.

(4)Disclosure by account nature

Nature 2017.06.30 2016.12.31

Non-related party 39,097,422.16 41,832,221.76

Related 244,011.09 248,012.36

Total 39,341,433.25 42,080,234.12

(5) Details of top five other receivables

Closing balance

Items Nature of OR Closing balance Aging % of total of bad debt

provision

No.1 Export tax refunds 18,000,000.00 Within 1 year 45.75

No.2 Electricity fees 4,399,636.31 Within 1 year 11.18

No. 3 Rental & water & electricity fees 1,761,289.95 Within 1 year 4.48

No. 4 Rental & water & electricity fees 1,701,287.13 Within 1 year 4.32

No. 5 Rental & water & electricity fees 1,145,124.46 Over 1 year 2.91 1,145,124.46

27,007,337.85 68.64 1,145,124.46

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

8. Inventory

(1) Disclosure by classification

2017.06.30 2016.12.31

Item Impairment Impairment

Book balance Book value Book balance Book value

allowance allowance

Raw materials 77,901,293.89 18,400,947.63 59,500,346.26 91,666,560.32 28,867,144.56 62,799,415.76

Goods in process 9,215,822.53 0.00 9,215,822.53 15,235,243.63 0.00 15,235,243.63

Self-manufacture

d semi-finished 19,971,102.69 1,572,057.26 18,399,045.43 14,871,592.53 1,572,057.26 13,299,535.27

goods

Finished goods 114,556,816.85 16,771,287.15 97,785,529.70 141,540,287.35 16,689,572.67 124,850,714.68

Low-value

2,671,053.19 0.00 2,671,053.19 5,214,202.94 0.00 5,214,202.94

consumables

Materials in

3,212,753.50 0.00 3,212,753.50 2,170,009.62 0.00 2,170,009.62

transit

Total 227,528,842.65 36,744,292.04 190,784,550.61 270,697,896.39 47,128,774.49 223,569,121.90

(2) Impairment allowance for inventories

Increased amount Decrease

Item 2016.12.31 2017.06.30

Withdrawal Others Reverse or write-off Others

Raw materials 28,867,144.56 1,423,925.33 0.00 11,890,122.26 0.00 18,400,947.63

Self-manufactured

1,572,057.26 0.00 0.00 0.00 0.00 1,572,057.26

semi-finished goods

Finished goods 16,689,572.67 181,057.74 0.00 99,343.26 0.00 16,771,287.15

Total 47,128,774.49 1,604,983.07 0.00 11,989,465.52 0.00 36,744,292.04

(3)The basis of recognizing impairment allowance and the reason of recovering or writing off the

impairment allowance for inventories

The basis of recognition of

The reason of recovering impairment The reasons for inventory

Item impairment allowance for

allowance for inventories impairment write-off

inventories

Market prices decrease, and

Raw materials resulting in raw material’s net Sale or disposal

realizable value lower than cost

Market prices decrease, and

Finished goods resulting in finished goods' net Sale or disposal

realizable value lower than cost

(4)Closing balance of the inventory which includes capitalized borrowing expenses was RMB0.

9. Other current assets

Item 2017.06.30 2016.12.31

Input tax to be deducted 11,488,319.23 8,708,135.99

Financial products 270,000,000.00 130,646,348.02

Total 281,488,319.23 139,354,484.01

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

10. Available-for-sale financial assets

(1) The situation of available-for-sale financial assets

2017.06.30 2016.12.31

Item Depreciation Depreciation

Book balance Book value Book balance Book value

reserves reserves

Available for sale equity instruments 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00

Including: measured by cost 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00

Total 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00

(2) Available-for-sale financial assets measured at cost at the period-end

Shareho

Book balance Depreciation reserves lding Cash

proporti bonus

on of the

Investee

Increa Decre Increa Decr among Report

2016.12.31 2017.06.30 2016.12.31 2017.06.30 the ing

se ase se ease

investee Period

s(%)

Xiamen

Association of

Enterprises with 40,000.00 40,000.00 1.48

Foreign

Investment

Total 40,000.00 40,000.00 1.48

11. Investment property

(1) Investment property adopted the cost measurement mode

Construction in

Item Houses and buildings Land use right Total

progress

I. Original book value

1.Opening balance 130,947,241.39 29,260,577.51 0.00 160,207,818.90

2. Increased amount of the period 0.00 0.00 0.00 0.00

3. Decreased amount of the period 0.00 0.00 0.00 0.00

4. Closing balance 130,947,241.39 29,260,577.51 0.00 160,207,818.90

II. Accumulated Depreciation and accumulated

amortization

1.Opening balance 105,016,148.68 13,033,549.71 0.00 118,049,698.39

2. Increased amount of the period 2,989,875.78 311,055.90 0.00 3,300,931.68

(1) Withdrawal or amortization 1,456,707.81 311,055.90 0.00 1,767,763.71

(2) Transferred from fixed assets 1,533,167.97 0.00 0.00 1,533,167.97

3.Decreased amount of the period 574,386.06 0.00 0.00 574,386.06

(1) Disposal 0.00 0.00 0.00 0.00

(2) Investment property transferred into fixed

574,386.06 0.00 0.00 574,386.06

assets

4. Closing balance 107,431,638.40 13,344,605.61 0.00 120,776,244.01

III. Depreciation reserves

1.Opening balance 0.00 0.00 0.00 0.00

2. Increased amount of the period 0.00 0.00 0.00 0.00

(1) Withdrawal 0.00 0.00 0.00 0.00

3.Decreased amount of the 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

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Construction in

Item Houses and buildings Land use right Total

progress

4. Closing balance 0.00 0.00 0.00 0.00

IV. Book value

1. Closing book value 23,515,602.99 15,915,971.90 0.00 39,431,574.89

2. Opening book value 25,931,092.71 16,227,027.80 0.00 42,158,120.51

(2) Investment property with pending ownership registration

Item Book value Reason for pending

Lvyuan three country villa 1,656,969.66 Notes

Notes: Lvyuan three country villa is a limited property house purchased by the Company’s subsidiary TKS in 1999 from Shanghai

Lvsheng Real Estate Development Co., Ltd. without expropriating and transferring the land. In January of 2006, the property was

certified to belong to TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and residents

committee of Lvyuan community of Huangdu Town in Jiading District.

12. Fixed assets

(1) List of fixed assets

Improvement

Houses and Machinery Electronic device, Transportation expense of

Item Total

buildings equipment modules and others equipment leased fixed

assets

I. Original book value

1.Opening balance 93,887,488.58 162,550,581.94 1,120,150,534.38 16,572,864.54 68,159,024.27 1,461,320,493.71

2. Increased amount

-818,017.63 609,420.67 17,894,470.30 2,318,418.51 94,944.84 20,099,236.69

of the period

(1) Purchase 0.00 324,902.53 14,998,691.95 2,287,222.90 238,507.11 17,849,324.49

(2)Transfered from

project under 0.00 981,600.00 3,299,419.24 50,000.00 0.00 4,331,019.24

construction

(3)Transfer from

0.00 0.00 0.00 0.00 0.00 0.00

investment property

(4) Impact of changes

-818,017.63 -697,081.86 -403,640.89 -18,804.39 -143,562.27 -2,081,107.04

in exchange rates

(5) Other 0.00 0.00 0.00 0.00 0.00 0.00

3.Decreased amount

0.00 10,743,991.27 33,189,532.30 721,666.39 1,371,246.15 46,026,436.11

of the period

(1) Disposal or Scrap 0.00 10,743,991.27 33,189,532.30 721,666.39 1,371,246.15 46,026,436.11

(2)Transferred from

0.00 0.00 0.00 0.00 0.00 0.00

investment property

4. Closing balance 93,069,470.95 152,416,011.34 1,104,855,472.38 18,169,616.66 66,882,722.96 1,435,393,294.29

II.Accumulative

depreciation

1.Opening balance 45,297,112.71 102,936,654.31 1,017,384,276.21 15,606,000.14 61,616,747.83 1,242,840,791.20

2. Increased amount

2,562,836.21 2,757,703.68 12,347,529.89 211,567.89 1,446,461.62 19,326,099.29

of the period

(1) Withdrawal 2,151,862.77 3,002,089.10 12,600,877.15 222,333.46 1,561,918.05 19,539,080.53

(2) Transfered from

574,386.06 0.00 0.00 0.00 0.00 574,386.06

investment property

(3) Impact of changes

-163,412.62 -244,385.42 -253,347.26 -10,765.57 -115,456.43 -787,367.30

in exchange rates

3.Decreased amount

1,533,167.97 8,045,698.59 31,060,381.66 656,730.17 1,276,974.32 42,572,952.71

of the period

(1) Disposal or Scrap 0.00 8,045,698.59 31,060,381.66 656,730.17 1,276,974.32 41,039,784.74

(2) Transfer from

1,533,167.97 0.00 0.00 0.00 0.00 1,533,167.97

investment property

4. Closing balance 46,326,780.95 97,648,659.40 998,671,424.44 15,160,837.86 61,786,235.13 1,219,593,937.78

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Improvement

Houses and Machinery Electronic device, Transportation expense of

Item Total

buildings equipment modules and others equipment leased fixed

assets

III.Depreciation

reserves

1.Opening balance 0.00 22,351,922.28 21,410,291.72 5,594.19 182,883.96 43,950,692.15

2. Increased amount

0.00 -38,206.90 -6,315.84 -122.79 0.00 -44,645.53

of the period

(1) Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00

(2) Impact of changes

0.00 -38,206.90 -6,315.84 -122.79 0.00 -44,645.53

in exchange rates

3.Decreased amount

0.00 2,577,072.01 1,094,216.31 142.18 79,471.24 3,750,901.74

of the period

(1) Disposal or Scrap 0.00 2,577,072.01 1,094,216.31 142.18 79,471.24 3,750,901.74

4. Closing balance 0.00 19,736,643.37 20,309,759.57 5,329.22 103,412.72 40,155,144.88

IV. Book value

1. Closing book value 46,742,690.00 35,030,708.57 85,874,288.37 3,003,449.58 4,993,075.11 175,644,211.63

2. Opening book

48,590,375.87 37,262,005.35 81,355,966.45 961,270.21 6,359,392.48 174,529,010.36

value

(2) Fixed assets with pending ownership registration

Item Book value Reason for pending

Lvyuan three country villa 589,019.02 Notes

Jingying garden 181,073.90 Under processing

Notes: Lvyuan three country villa is a limited property house purchased by the Company’s subsidiary TKS in 1999 from Shanghai

Lvsheng Real Estate Development Co., Ltd. without expropriating and transferring the land. In January of 2006, the property was

certified to belong to TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and residents

committee of Lvyuan community of Huangdu Town in Jiading District.

13. Construction in progress

2017.06.30 2016.12.31

Item

Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value

Sporadic project 495,974.59 0.00 495,974.59 269,633.08 0.00 269,633.08

Total 495,974.59 0.00 495,974.59 269,633.08 0.00 269,633.08

14. Intangible assets

Item Land use right Software Total

I. Original book value

1.Opening balance 18,402,842.68 23,523,906.41 41,926,749.09

2. Increased amount of the period 192,552.72 5,923,067.49 6,115,620.21

(1) Purchase 578,709.67 5,902,000.00 6,480,709.67

(2) Impact of changes in exchange rates -386,156.95 21,067.49 -365,089.46

3.Decreased amount of the period 0.00 9,191,967.69 9,191,967.69

(1) Disposal 0.00 9,191,967.69 9,191,967.69

(2) Impact of changes in exchange rates 0.00 0.00 0.00

4.Closing balance 18,595,395.40 20,255,006.21 38,850,401.61

II. Accumulated amortization

1.Opening balance 2,548,872.23 15,537,599.74 18,086,471.97

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Land use right Software Total

2. Increased amount of the period 235,616.25 1,356,677.95 1,592,294.20

(1) Withdrawal 295,133.07 1,346,167.67 1,641,300.74

(2) Impact of changes in exchange rates -59,516.82 10,510.28 -49,006.54

3.Decreased amount of the period 0.00 9,191,967.69 9,191,967.69

(1) Disposal 0.00 9,191,967.69 9,191,967.69

(2) Impact of changes in exchange rates 0.00 0.00 0.00

4.Closing balance 2,784,488.48 7,702,310.00 10,486,798.48

III. Depreciation reserves

1.Opening balance 0.00

2. Increased amount of the period 0.00 0.00 0.00

(1) Withdrawal 0.00 0.00 0.00

(2) Impact of changes in exchange rates 0.00 0.00 0.00

3.Decreased amount of the period 0.00 0.00 0.00

(1) Disposal 0.00 0.00 0.00

(2) Impact of changes in exchange rates 0.00 0.00 0.00

4.Closing balance 0.00 0.00 0.00

IV. Book value

1. Closing book value 15,810,906.92 12,552,696.21 28,363,603.13

2. Opening book value 15,853,970.45 7,986,306.67 23,840,277.12

15. Long-term deferred charge

Item 2016.12.31 Increased amount Amortization amount Decrease 2017.06.30

Telecommunications engineering 69,866.41 0.00 26,000.04 0.00 43,866.37

Houses and buildings renovation expenses 4,072,375.78 0.00 669,804.67 0.00 3,402,571.11

Total 4,142,242.19 0.00 695,804.71 0.00 3,446,437.48

16. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets had not been off-set

2017.06.30 2016.12.31

Item Deductible Deductible

Deferred income Deferred income

temporary temporary

tax assets tax assets

difference difference

Assets impairment provision 75,723,996.75 11,682,236.37 90,927,159.61 14,054,185.03

Accrued expenses 10,322,333.77 1,867,490.22 16,244,337.85 2,785,902.38

Transaction financial liabilities 0.00 0.00

Payroll liability 538,310.35 91,512.76 521,002.29 88,570.39

Depreciation of fixed assets 15,156.88 2,576.67 14,669.59 2,493.83

Unrealized profits from intragroup transactions 488,262.07 91,549.14 694,807.76 173,701.94

Undistributed deficit 0.00 0.00 0.00 0.00

Other 0.00 0.00 0.00 0.00

Total 87,088,059.82 13,735,365.16 108,401,977.10 17,104,853.57

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(2) Deferred income tax liabilities had not been off-set

2017.06.30 2016.12.31

Item

Deductible Deferred income tax Deductible temporary Deferred income

temporary difference liabilities difference tax liabilities

Depreciation of fixed assets 2,953,648.52 738,412.13 3,024,559.40 756,139.85

Trading financial assets 1,881,750.00 282,262.50 0.00 0.00

Other 32,343.35 5,498.37 31,303.41 5,321.58

Total 4,867,741.87 1,026,173.00 3,055,862.81 761,461.43

(3) List of unrecognized deferred income tax assets

Item 2017.06.30 2016.12.31

Impairment provision of the fixed assets 9,648,297.45 10,161,743.82

Bad debt provision 1,227,923.67 1,580,473.40

Accrued expenses 14,763,561.91 21,476,401.95

Impairment of inventories 2,216,029.70 2,243,389.48

Payroll liability 1,344,224.86 1,946,095.13

Undistributed deficit 101,374,634.02 98,961,110.41

Total 130,574,671.62 136,369,214.19

(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following years

Year 2017.06.30 2016.12.31

Year 2017 12,981,405.81 15,169,401.17

Year 2018 21,156,026.72 15,995,805.21

Year 2019 8,344,201.75 12,504,247.51

Year 2020 11,293,904.22 14,123,000.61

Year 2021 84,304,491.63 32,619,175.26

Year 2022 7,093,216.05 0.00

Year 2023 0.00 0.00

Year 2024 0.00 0.00

Year 2025 3,770,671.54 0.00

Year 2026 9,069,767.26 0.00

Year 2027 7,771,261.60 0.00

Total 165,784,946.58 90,411,629.76

17. Other non-current assets

Item 2017.06.30 2016.12.31

Prepaid mold fee 1,033,480.93 735,106.87

Prepayment for equipment 2,019,056.57 513,166.36

Total 3,052,537.50 1,248,273.23

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

18. Short-term borrowings

(1) Disclosure by classification

Item 2017.06.30 2016.12.31

Loan for export invoice financing 125,326,400.00 0.00

Total 125,326,400.00 0.00

19. Notes payable

Item 2017.06.30 2016.12.31

Bank acceptance bill 0.00 6,500,000.00

Trade acceptance 10,517,009.49 16,751,704.93

Total 10,517,009.49 23,251,704.93

There was no amount of the due but not pay notes payable at the period-end.

20. Accounts payable

(1) List of accounts payable

Item 2017.06.30 2016.12.31

Within 1 year 470,126,093.51 584,203,266.68

Over 1 years 3,564,697.41 5,215,192.25

Total 473,690,790.92 589,418,458.93

(2) Details of significant accounts payable remaining unsettled for more than one year

Unpaid/ Un-carry-over Repaid or not after balance sheet

Item 2017.06.30

reason date

Ningbo Chaochao Electrical Equipment Co.,

500,237.01 Quality disputes No

Ltd.

Ningbo Jiesiluo Electrical Equipment Co.,

979,964.67 Quality disputes No

Ltd.

Total 1,480,201.68

21. Advance from customers

(1) List of advance from customers

Item 2017.06.30 2016.12.31

Within 1 year 12,468,575.93 6,763,325.48

Over 1 years 2,374,757.18 4,423,698.48

Total 14,843,333.11 11,187,023.96

(2) Details of significant advance from customers aging over one year

Item Amount Unpaid/ Un-carry-over reason

Whirlpool EMEAS.p.A. 468,917.45 Receive in advance

BRITANIA 401,214.79 Receive in advance

Boost Vitality Asia Pte. Ltd. 272,563.32 Receive in advance

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Amount Unpaid/ Un-carry-over reason

ZO JIRUSHI 156,472.83 Receive in advance

Philip (China) Investment Co., Ltd. 138,171.29 Receive in advance

Total 1,437,339.68

22. Employee benefits payable

(1) List of employee benefits payable

Item 2016.12.31 Increase Decrease 2017.06.30

I. Short-term salary 45,457,345.85 120,358,630.78 127,418,051.40 38,397,925.23

II. Post-employment benefit-defined contribution plans 161,027.85 5,651,046.50 5,157,364.21 654,710.14

III. Termination benefits 53,125.00 1,171,146.67 1,206,453.67 17,818.00

Total 45,671,498.70 127,180,823.95 133,781,869.28 39,070,453.37

(2) List of Short-term employee benefits

Item 2016.12.31 Increase Decrease 2017.06.30

1. Salary, bonus, allowance, subsidy 33,840,441.21 107,270,197.78 116,215,870.34 24,894,768.65

2. Employee welfare 1,890.16 6,214,574.88 4,348,233.51 1,868,231.53

3. Social insurance 524,878.81 4,408,652.37 4,110,514.36 823,016.82

Including: Medical insurance 479,652.00 3,309,652.92 3,079,916.22 709,388.70

Employment injury insurance 407.65 875,735.94 809,165.93 66,977.66

Maternity insurance 44,819.16 223,263.51 221,432.21 46,650.46

4. Housing fund 9,090,565.22 2,563,412.76 2,576,753.99 9,077,223.99

5. Labor union budget and employee education budget 0.00 174,209.18 174,209.18 0.00

6.Short-term absence with payment 1,999,570.45 -272,416.19 -7,529.98 1,734,684.24

Total 45,457,345.85 120,358,630.78 127,418,051.40 38,397,925.23

(3) List of defined contribution plan

Item 2016.12.31 Increase Decrease 2017.06.30

1. Basic pension benefits 160,408.63 5,450,834.00 4,956,822.69 654,419.94

2. Unemployment insurance 619.22 200,212.50 200,541.52 290.20

Total 161,027.85 5,651,046.50 5,157,364.21 654,710.14

23. Taxes payable

Category of taxes 2017.06.30 2016.12.31

Business tax 0.00 784,938.20

Corporate income tax 234.87 12,621,020.07

VAT 818,869.41 0.00

Personal income tax 404,127.26 463,263.27

Education Surcharge 644,824.83 1,008,596.50

Urban maintenance and construction tax 628,929.62 966,427.13

Real estare tax 801,166.71 0.00

Stamp duty 86,818.08 1,120,822.94

Total 3,384,970.78 16,965,068.11

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

24. Interest payable

Item 2017.06.30 2016.12.31

Interests on short-term borrowings 170,592.29 0.00

Total 170,592.29 0.00

25. Other accounts payable

(1) Other accounts payable listed by nature of the account

Item 2017.06.30 2016.12.31

Within 1 year 49,567,165.77 50,629,928.01

Over 1 years 6,875,002.54 7,781,735.18

Total 56,442,168.31 58,411,663.19

(2) Other significant accounts payable with aging over one year

Item 2017.06.30 Unpaid/ Un-carry-over reason

Cash pledge 5,765,388.00 Repaid at the termination of contract

Payment of mold fee 670,841.53 Payment on behalf, unpaid

Total 6,436,229.53

26. Long-term payroll payable

Item 2017.06.30 2016.12.31

I. Post-employment benefit-net liability of defined benefit

250,205.83 187,928.74

plans

II. Termination benefits 0.00 0.00

III. Other long-term benefits 0.00 0.00

Total 250,205.83 187,928.74

27. Share capital

Increase/decrease

Item Opening balance Capitalization Closing balance

Issuing new Share

of public Other Subtotal

shares donation

reserves

Total shares 185,391,680.00 185,391,680.00

28. Capital reserves

Item 2016.12.31 Increase Decrease 2017.06.30

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

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

29. Other comprehensive income

Reporting Period

Less: recorded

in other

Item 2016.12.31 Amount comprehensive 2017.06.30

Less: Attributable Attributable

before income in

Income to owners of to minority

income tax in prior period

tax the Company shareholders

current and transferred

expense after tax after tax

period to profit or

loss in current

period

I. Other

comprehensive

income that will not

be reclassified into

profit/loss

Including: changes in

net liabilities or assets

with a defined benefit 15,614.61 0.00 15,614.61

plan upon

remeasurement

Share of other

comprehensive

income of investees

that cannot be

reclassified into

profit/loss under the

equity method

II. Other

comprehensive

income to be

subsequently

reclassified into

profit/loss

Including: shares of

other comprehensive

income of investees

that will be

reclassified into

profit/loss under the

equity method

Balance from the

translation of foreign

8,476,287.84 -1,688,350.45 -1,266,262.84 -422,087.61 7,210,025.00

currency financial

statements

Total 8,491,902.45 -1,688,350.45 0.00 0.00 -1,266,262.84 -422,087.61 7,225,639.61

30. Surplus reserves

Item 2016.12.31 Increase Decrease 2017.06.30

Statutory surplus reserves 29,946,218.17 0.00 0.00 29,946,218.17

Total 29,946,218.17 0.00 0.00 29,946,218.17

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

31. Retained earnings

Item 2017.06.30 2016.12.31

Opening balance of retained profits before adjustments 90,217,504.90 69,510,872.20

Total opening balance of retained profits before adjustments (Increase+,decrease-)

Opening balance of retained profits after adjustments 90,217,504.90 69,510,872.20

Add: Net profit attributable to owners of the Company 11,066,574.11 48,229,497.36

Less: Withdrawal of statutory surplus reserves 0.00 8,983,696.66

Withdrawal of discretionary surplus reserves 0.00 0.00

Withdrawal of generic risk reserve 0.00 0.00

Dividend of common stock payable 22,247,001.60 18,539,168.00

Dividend of common stock transfer into share capital 0.00 0.00

Closing retained profits 79,037,077.41 90,217,504.90

32. Revenue and Cost of Sales

Item Reporting Period Same period of last year

Revenue from main operations 840,312,489.24 770,647,435.81

Revenue from other operations 29,371,269.44 27,461,253.46

Total 869,683,758.68 798,108,689.27

Costs of main operations 723,287,830.92 653,194,377.94

Cost of other operations 16,219,638.01 9,622,787.16

Total 739,507,468.93 662,817,165.10

33. Business tax and surcharges

Item Reporting Period Same period of last year

Business tax 0.00 968,527.44

Education Surcharge 1,642,018.73 1,000,327.29

Urban maintenance and construction tax 1,657,297.65 1,006,737.00

Real estate tax 1,475,222.72 0.00

Land use tax 348,464.92 0.00

Stamp duty 572,220.24 0.00

Other 139.35 287.43

Total 5,695,363.61 2,975,879.16

34. Sales expenses

Item Reporting Period Same period of last year

Export fees 15,649,265.39 14,112,135.80

Employee remunerations 9,644,113.99 10,567,113.82

Claims for sales promotional expenses 992,673.57 10,541,659.04

Sales commission and after sales service fees 1,189,343.37 1,942,157.66

Assets lease expenses 192,646.13 465,396.72

Business travel charges 1,059,897.57 1,589,854.17

Office expenses 329,126.35 363,891.34

Transport fees 658,337.56 740,092.37

Others 413,622.66 419,860.62

Total 30,129,026.59 40,742,161.54

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

35. Administration expenses

Item Reporting Period Same period of last year

R&D expenses 36,181,239.58 36,526,821.94

Employee remuneration 16,404,001.41 15,003,011.98

Depreciation and amortization 5,736,884.90 6,319,391.07

Rental charges 8,178,777.89 9,747,380.98

Insurance expenses 1,149,100.21 574,767.94

Office expenses 1,093,362.53 1,456,109.90

Travel expenses 1,540,597.10 1,874,034.60

Consultant fees 910,423.05 1,657,306.91

Maintenance expenses 2,378,906.44 2,222,064.47

Taxes and surcharges 0.00 2,069,710.13

Others 1,209,465.82 3,300,040.15

Total 74,782,758.93 80,750,640.07

36. Financial costs

Item Reporting Period Same period of last year

Interest expenses 410,091.63 142,611.32

Less: interest income 3,529,133.78 3,684,238.09

Exchange gains and losses 11,511,175.66 -7,477,904.70

Bank charges 792,248.01 1,053,218.95

Total 9,184,381.52 -9,966,312.52

37. Impairment loss on assets

Item Reporting Period Same period of last year

Bad debt loss -1,540,543.50 -1,541,116.89

Impairment loss on inventories 1,604,983.07 780,305.75

Total 64,439.57 -760,811.14

38. Gains from changes in fair value

Reporting Same period of last

Source of fair value change

Period year

Financial assets measured by fair value and the changes be included in the current profits

1,881,750.00 27,300.00

and losses

Of which, gains on the changes in the fair value of derivative financial instruments 1,881,750.00 27,300.00

Financial liabilities measured by fair value and the changes included in the current gains

0.00 5,617,750.00

and losses

Total 1,881,750.00 5,645,050.00

39. Investment income

Item Reporting Period Same period of last year

Long-term equity investment income accounted by equity method 0.00 0.00

Investment income arising from disposal of long-term equity

0.00 0.00

investments

Investment income received from financial assets measured by fair

value and the changes be included in the current profits and losses during 0.00 0.00

holding period

Investment income received from disposal of financial assets measured

by fair value and the changes be included in the current profits and 576,100.00 -4,442,911.95

losses during holding period

Investment income from financial products 1,148,630.14 0.00

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Reporting Period Same period of last year

Others 0.00 8,474.00

Total 1,724,730.14 -4,434,437.95

40. Non-operating income

Amount recorded into the

Item Reporting Period Same period of last year non-recurring gains and

losses

Total gains from disposal of non-current assets 336,752.14 542,527.01 336,752.14

Including: Gains from disposal of fixed assets 336,752.14 542,527.01 336,752.14

Unpayable overdue accounts payable 844,169.97 357,502.62 844,169.97

Government subsidies 888,232.00 2,627,972.00 888,232.00

Other 1,283,928.79 821,047.77 1,283,928.79

Total 3,353,082.90 4,349,049.40 3,353,082.90

Of which, government subsidies recorded into current profits and losses:

Reporting Same period of Related to Whether non-current gains or

Item

Period last year assets/related income losses or not

Patents subsidies 40,600.00 0.00 Related to the income Yes

Award for improvement in Yes

0.00 100,000.00 Related to the income

production and efficiency

Transformation and upgrading of Yes

0.00 836,053.00 Related to the income

export industry

Government subsidy in export credit Yes

537,632.00 179,419.00 Related to the income

insurance

Award to municipal-level industries 0.00 1,000,000.00 Related to the income Yes

Subsidies for technological Yes

300,000.00 0.00 Related to the income

innovation

Fund subsidy for intelligent Yes

0.00 507,500.00 Related to the income

manufacturing items

Other 10,000.00 5,000.00 Related to the income Yes

Total 888,232.00 2,627,972.00

41. Non-operating expenses

Recorded in the amount

Item Reporting Period Same period of last year of the non-recurring

gains and losses

Loss on disposal of non-current assets 229,400.08 17,353.82 229,400.08

Including: Loss on disposal of fixed assets 18,235.42 0.00 18,235.42

Loss on scraped fixed assets 190,452.01 16,717.75 190,452.01

Fixed assets inventory loss 20,712.65 636.07 20,712.65

Fines 19,000.00 3,448.44 19,000.00

Donation 50,000.00 0.00 50,000.00

Other 0.00 40,922.71 0.00

Total 298,400.08 61,724.97 298,400.08

42. Income tax expense

(1) Lists of income tax expense

Item Reporting Period Same period of last year

Current income tax expense -238,708.37 2,015,929.23

Deferred income tax expense 3,654,776.13 741,396.70

Total 3,416,067.76 2,757,325.93

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(2) Reconciliation of account profit and income tax expenses:

Item Reporting Period

Total profits 16,981,482.49

Current income tax expense accounted by tax and relevant regulations 4,245,370.62

Impact of differing tax rates applicable to subsidiaries -2,788,992.50

Impact of adjustment for prior period tax expenses 0.00

Impact of non-taxable income 0.00

Impact of non-deductible costs, expenses and losses 73,481.75

Impact of utilisation of prior period deductible temporary differences and taxable temporary

0.00

differences for which no deferred tax asset has been recognised

Impact of current period deductible temporary differences and taxable temporary differences for

3,448,534.19

which no deferred tax asset has been recognised

Adjustment of deferred tax assets and deferred tax liabilities brought forward due to changes in tax

0.00

rates

Impact of additional deduction for R&D expenses -1,562,326.30

Income tax expense 3,416,067.76

43. Other comprehensive income

See Note VI 29 for more details.

44. Supplementary information to cash flow statement

(1) Other cash received relevant to operating activities:

Item Reporting Period Same period of last year

Government subsidies 888,232.00 2,627,972.00

Interest income 2,128,069.08 3,375,534.00

Rent income 15,875,926.97 13,693,655.65

Funds in current account and others 12,821,718.26 15,109,150.18

Total 31,713,946.31 34,806,311.83

(2) Other cash payments relating to operating activities

Item Reporting Period Same period of last year

Penalties and donations paid 69,000.00 448.44

Bank charges 791,760.75 1,043,931.11

Sales expenses and general and administrative expenses paid by cash 84,375,936.83 57,843,445.56

Funds in current account and others 51,230,059.86 41,760,971.41

Total 136,466,757.44 100,648,796.52

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(3) Other cash received relevant to investment activities

Item Reporting Period Same period of last year

To recover the maturity time deposits that for purpose to

42,313,208.55 75,400,000.00

earn interest income in financial institutions

Total 42,313,208.55 75,400,000.00

(4) Other cash paid relevant to investment activities

Item Reporting Period Same period of last year

Deposits in financial institutions for the purpose of earning interest income 377,386,926.35 169,327,000.00

Total 377,386,926.35 169,327,000.00

(5) Other cash received relevant to financing activities

Item Reporting Period Same period of last year

Inter-bank lending of capital of related parties 6,774,375.98 4,519,265.19

Total 6,774,375.98 4,519,265.19

45. Supplementary information to the statement of cash flows

(1) Supplementary information to the statement of cash flows

Same period of last

Supplemental information Reporting Period

year

1. Reconciliation of net profit to net cash flows generated from operating

activities

Net profit 13,565,414.73 24,290,577.61

Add: Provision for impairment of assets 64,439.57 -760,811.14

Depreciation of fixed assets, of oil-gas assets, of productive biological assets 21,306,844.24 24,386,736.40

Amortization of intangible assets 1,641,300.74 898,579.42

Long-term unamortized expenses 695,804.71 780,533.53

Losses on disposal of fixed assets, intangible assets and other long-term assets (gains:

-318,516.72 -542,527.01

negative)

Loss on retirement of fixed assets (gain presented by "-" prefix) 211,164.66 17,353.82

Losses from variation of fair value (gain presented by "-" prefix) -1,881,750.00 -5,645,050.00

Financial cost (gain presented by "-" prefix)) 8,316,196.20 7,938,507.95

Investment loss (gain presented by "-" prefix) -1,724,730.14 4,434,437.95

Decrease in deferred income tax assets ((gain presented by "-" prefix) 3,369,488.41 732,126.64

Increase in deferred income tax liabilities

264,711.57 9,270.06

(“-” means decrease)

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Decrease in inventory (gain presented by "-" prefix) 31,179,588.22 68,280,511.94

Decrease in accounts receivable from operating activities (gain presented by "-" prefix) 14,697,969.99 34,939,749.18

Increase in payables from operating activities (“-” means decrease) -148,899,222.14 -219,932,002.64

Others

Net cash flows generated from operating activities -57,511,295.96 -60,172,006.29

2. Significant investing and financing activities involve no cash:

Debt-to-capital conversion

Convertible bonds to be expired within one year

Fixed assets under finance lease

3. Movement of cash and cash equivalents:

Closing balance of cash equivalents 263,939,205.09 379,934,827.25

Less: cash at the beginning of the period 738,195,729.53 675,824,861.29

Add: Closing balance of cash equivalents

Less: Cash at the beginning of the period

Net increase in cash and cash equivalents -474,256,524.44 -295,890,034.04

(2) Net Cash paid for obtaining the subsidiary

□Applicable√Not applicable

(3) Net Cash receive from disposal of the subsidiary

□Applicable√Not applicable

(4) Cash and cash equivalents

Item Reporting Period Same period of last year

I. Cash 263,939,205.09 379,934,827.25

Including: Cash on hand 890,072.87 733,184.57

Bank deposit on demand 263,049,132.22 379,201,642.68

Other monetary funds on demand 0.00 0.00

Payable of due from central bank 0.00 0.00

Deposits in other banks 0.00 0.00

Call loans to banks 0.00 0.00

II. Cash and cash equivalents 0.00 0.00

Including: Debt instrument matured within three months 0.00 0.00

III. Closing balance of cash and cash equivalents 263,939,205.09 379,934,827.25

Of which, the restricted cash and cash equivalents of the Company and

the subsidiaries of the Group used

Note1: the cash and cash equivalents exclude the restricted cash and cash equivalents the Company and the subsidiaries of the Group

used.

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Note2: Time deposits for the purpose of earning interest income in financial institutions is RMB346,541,506.84. Cash served as

payment relating to investing activities shall be listed and deducted from the balance of cash and cash equivalents at the end of

current year.

46. The assets with the ownership or use right restricted

Item 2017.6.30 Restricted reason

Time deposits for the purpose of earning interest income in financial

Monetary capital 346,541,506.84

institutions

Total 346,541,506.84

47. Foreign currency monetary items

(1) Foreign currency monetary items

Item Closing foreign currency balance Exchange rate Closing convert to RMB balance

Monetary capital

Including: USD 53,064,417.83 6.7744 359,479,592.15

JPY 30,522,187.07 0.0605 1,846,134.48

IDR 4,937,289,376.13 0.0005 2,508,138.70

EUR 17,312.86 7.7496 134,167.74

GBP 9,519.60 8.8144 83,909.56

HKD 423,127.52 0.8679 367,240.84

HUF 81,016.00 0.0250 2,025.40

FRF 7.00 7.0886 49.62

TWD 5,606,394.00 0.2226 1,248,028.16

Total 365,669,286.65

Short-term loans

Including: USD 18,500,000.00 6.7744 125,326,400.00

Total 125,326,400.00

Account receivable

Including: USD 36,495,204.28 6.7744 247,233,111.78

IDR 24,308,640.00 0.0005 12,348.79

EUR 365,535.32 7.7496 2,832,752.51

JPY 37,273,971.00 0.0605 2,254,516.14

TWD 798,000.00 0.2226 177,641.18

Total 252,510,370.40

Account payable

Including: USD 7,912,250.89 6.7744 53,600,752.43

EUR 217,794.19 7.7496 1,687,817.85

HKD 920,031.98 0.8679 798,514.16

JPY 7,811,200.00 0.0605 472,460.43

IDR 1,040,790,881.85 0.0005 528,721.77

TWD 4,729,224.00 0.2226 1,052,763.10

Total 58,141,029.74

Other accounts receivable

Including: JPY 462,290.00 0.0605 27,961.61

USD 182,689.49 6.7744 1,237,611.68

IDR 1,048,137,849.00 0.0005 532,454.03

TWD 1,256,197.00 0.2226 279,639.50

Total 2,077,666.82

Other account payable

including: HKD 131,390.80 0.8679 114,036.71

JPY 102,246.00 0.0605 6,184.35

USD 1,520,800.17 6.7744 10,302,508.67

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Item Closing foreign currency balance Exchange rate Closing convert to RMB balance

IDR 832,934,040.00 0.0005 423,130.49

TWD 1,318,266.00 0.2226 293,456.56

Total 11,139,316.78

(2) Description of overseas operating entities including the disclosure of main overseas places of business,

recording currency and selection basis of significant overseas operating entities and disclosure reason for

the entity whose recording currency changes.

The Company's holding sub-subsidiaries company Pt.Star Comgistic Indonesia is located at West Java province in Indonesia, due to

Pt. Star Comgistic Indonesia are mostly settled in US dollars by usual purchases and sales, so that it adopt the US dollar as its

functional currency.

The Company's holding sub-subsidiaries company SCPDI is located at West Java province in Indonesia, due to SCPDI are mostly

settled in IDR by usual purchases and sales, so that it adopt the IDR as its functional currency.

The Company's holding sub-subsidiaries company TKEI is located at Taiwan, due to TKEI are mostly settled in TWD by usual

purchases and sales, so that it adopt the TWD as its functional currency.

The Company's holding sub-subsidiaries company East Sino is located at Hongkong, due to East Sino are mostly settled in HKD by

usual purchases and sales, so that it adopt the HKD as its functional currency.

The Company's holding sub-subsidiaries company ORIENT STAR INVESTMENTS LIMITED is located at Hongkong, due to

ORIENT STAR INVESTMENTS LIMITED are mostly settled in US dollas by usual purchases and sales, so that it adopt the US

dollas as its functional currency.

VII. Changes of scope of consolidation financial statements

1. Business combination not under the same control: naught

2. Business combination under the same control: naught

VIII. Equity in other main entities

1. The equity in subsidiaries

(1) The structure of the enterprise group

Holding percentage

Main operating Registration (%)

Name Nature of business Acquired method

place place Directl

Indirectly

y

Manufacture home

TsannKuen (Zhangzhou) Acquired through

Zhangzhou Zhangzhou electronic 75 75

Enterprise Co., Ltd. incorporation

appliance

Acquired through

Manufacture home business

TsannKuen (Shangha)

Shanghai Shanghai electronic 46.875 62.5 combination under

Enterprise Co., Ltd.

appliance common

control

TsannKuen (Zhangzhou) South Manufacture home

Acquired through

Port Electronics Enterprise Co., Zhangzhou Zhangzhou electronic 56.25 75

incorporation

Ltd. (TKN) appliance

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

Holding percentage

Main operating Registration (%)

Name Nature of business Acquired method

place place Directl

Indirectly

y

Shanghai Canxing Trading Sale of home Acquired through

Shanghai Shanghai 56.25 75

Co.,Ltd (STD) appliance incorporation

Acquired through

East Sino Development business

Investment,

Limited. Hong Kong Hong Kong 75 100 combination under

Trading

(East Sino) common

control

Acquired through

Manufacture home business

Pt.Star Comgistic

Indonesia Indonesia electronic 75 100 combination under

Indonesia(SCI)

appliance common

control

Pt.Star Comgistic Property

Real estate Acquired through

Development Indonesia Indonesia Indonesia 75 100

development incorporation

(“SCPDI”)

Acquired through

Orient Star Investments Limited Investment, business

Hong Kong Hong Kong 75 100

(Orient Star Investments) Trading combination under

uncommon control

Acquired through

Design Industry. business

Tsann Kuen Edge Intelligence

Taiwan Taiwan R&D Development 75 100 combination under

Co., Ltd.

Service Business common

control

Xiamen Tsannkuen Home

Professional design Acquired through

Appliance Design Co., Ltd. Xiamen Xiamen 100 100

services incorporation

(“TKCD”)

(2) Significant not wholly owned subsidiary

Holding proportion Profit and loss Dividends Total amount of

of minority attributable to attributable to minority equity at

Name

shareholders (%) minority equity minority the end of current

during current year shareholders year

TsannKuen (Zhangzhou) Enterprise Co., Ltd. 25 7,787,225.00 10,103,416.93 317,566,044.24

TsannKuen (Shangha) Enterprise Co., Ltd. 53.125 -1,623,409.03 44,855,487.78

Tsann Kuen Edge Intelligence Co., Ltd. 25 -1,962,415.75 1,769,786.82

Pt.Star Comgistic Indonesia(SCI) 25 -955,891.87 23,304,818.05

(3) The main financial information of significant not wholly owned subsidiary

Closing balance

Name of

subsidiaries Current Non-current

Current assets Non-current assets Total assets Total liabilities

liabilities liability

TsannKuen

(Zhangzhou) 1,575,965,099.85 371,689,118.26 1,947,654,218.11 677,107,778.65 282,262.50 677,390,041.15

Enterprise Co., Ltd.

TsannKuen

(Shangha) 70,363,652.02 17,344,065.29 87,707,717.31 3,273,857.96 3,273,857.96

Enterprise Co., Ltd.

Tsann Kuen Edge

Intelligence Co., 6,876,251.66 5,325,646.70 12,201,898.36 4,867,046.90 255,704.18 5,122,751.08

Ltd.

Pt.Star Comgistic

58,766,882.75 76,658,037.14 135,424,919.89 41,467,235.57 738,412.13 42,205,647.70

Indonesia(SCI)

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

(Continued)

Opening balance

Name of

subsidiaries Non-current Current Non-current

Current assets Total assets Total liabilities

assets liabilities liability

TsannKuen

(Zhangzhou)

1,624,051,073.12 364,451,512.20 1,988,502,585.32 708,973,640.65 708,973,640.65

Enterprise Co.,

Ltd.

TsannKuen

(Shangha)

72,271,032.35 18,580,465.06 90,851,497.41 3,361,809.30 3,361,809.30

Enterprise Co.,

Ltd.

Tsann Kuen

Edge

13,840,007.66 4,808,941.09 18,648,948.75 4,270,700.85 5321.58 4,276,022.43

Intelligence

Co., Ltd.

Pt.Star

Comgistic 50,276,296.04 76,114,006.87 126,390,302.91 26,310,784.21 756,139.85 27,066,924.06

Indonesia(SCI)

(Continued)

Reporting Period

Name Total comprehensive

Operation revenue Net profit Operating cash flow

income

TsannKuen (Zhangzhou)

819,506,110.82 31,148,900.00 -41,034,228.98

Enterprise Co., Ltd.

TsannKuen (Shangha)

429,020.81 -3,055,828.76 -2,883,754.57

Enterprise Co., Ltd.

Tsann Kuen Edge

3,528,954.02 -7,849,662.99 -7,771,230.43

Intelligence Co., Ltd.

Pt.Star Comgistic

49,326,459.51 -3,823,567.47 1,806,173.69

Indonesia(SCI)

(Continued)

Same period of last year

Name Total comprehensive

Operation revenue Net profit Operating cash flow

income

TsannKuen (Zhangzhou)

757,339,909.16 36,328,907.41 94,566,449.14

Enterprise Co., Ltd.

TsannKuen (Shangha)

1,319,683.80 1,615,462.46 2,516,500.80

Enterprise Co., Ltd.

Tsann Kuen Edge

2,322,933.29 -3,929,651.24 -4,130,727.32

Intelligence Co., Ltd.

Pt.Star Comgistic

30,021,531.63 -10,158,628.72 -2,690,472.42

Indonesia(SCI)

2. The transactions which change the owner’s equity of subsidiaries, and through the transactions that the

owner still control the subsidiaries

□Applicable√Not applicable

IX. The risk related financial instruments

The main financial instruments of the Company includes equity investments, debt investments,

loans, accounts receivable, accounts payable, convertible bond and so on. For more details about all

financial instruments, please see the relevant items in NoteVI. The risk associated with financial

instruments, and risk management policies which the company uses to reduce these risks are

described as follows. The management of the Company manages and supervises the risks to ensure

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

that the risks can be controlled within a limited range.

The Company analyzes the rationality of risk variables and possible impacts of possible changes on

current gain and loss or shareholders’ equity through sensivity analysis. All risk variables rarely can

change in isolation, and the correlation between variables has great influence on the ultimate

amount generated from the change of some risk variable. Thus, the following is done on the

assumption that each variable changes in isolation.

(I) The targets and policies of risks management

The target of risks management is to obtain the proper balance between the risks and benefits, to

reduce the negative impact that caused by the risk of the Company to the lowest level, and to

maximize the benefits of shareholders and other equity investors. Based on the targets of risk

management, the basic strategy of the Company’s risk management is to identify and analyze the

risks which are faced by the Company, establish suitable risk tolerance baseline and precede the risk

management, and supervise a variety of risks timely and reliably, and control the risk within a

limited range.

1. Market risk

(1) Foreign exchange risk

Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The

company bears the foreign exchange risk primarily concerned with USD, JYP, IDR, EUR, HKD and

TWD, in addition to the Company's subsidiary SCI purchases and sales used by USD, SCPDI by

IDR, TKEI by TWD, East Sino by HKD and Orient Star Investments by USD, the other main business

activities of the Company used by RMB. On 30 June 2017, except the following assets or liabilities

are recorded in foreign currency, the others are recorded in RMB. Foreign exchange risk of the

assets and liabilities in foreign currencies may have an impact on the Company's performance of

operation.

Item 2017.6.30 2016.12.31

Monetary capital 365,669,286.65 373,034,883.47

Account receivable 252,510,370.40 247,566,867.43

Other accounts receivable 2,077,666.82 991,675.55

Accounts payable 58,141,029.74 52,464,873.92

Other account payable 11,139,316.78 2,965,091.63

Short-term loans 125,326,400.00 0.00

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.

(2) Interest rate risk- cash flow change risk

Due to the risk of changes in cash flows of a financial instrument is mainly concerned with the

floating rate of bank borrowings. The company's policy is to maintain a floating interest rate on

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

the borrowings.

2. Credit risk

That could cause the Company’s maximum credit risk of financial losses mainly from the losses of

financial assets, which are resulted by the other party of contract fails to fulfill the obligations, as at

30 June 2017.

In order to reduce credit risk, the Company set up a team responsible for determination of credit

limits, credit approvals and other monitoring procedures to ensure that the necessary measures be

taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each

individual trade debt at each balance sheet date to ensure recognized fully provision for bad debts

for the money cannot be recovered. So that the Company's management believes the Company’s

credit risk has been greatly reduced.

The Company's circulating funds deposited in banks which with high credit ratings, so that the

lower credit risk of circulating funds.

3. Liquidity Risk

When managing liquidity risk, the Company’s management believes that maintaining adequate cash

and cash equivalents, and monitoring that at same time, in order to meet the needs of operation of

the Company, and to reduce the impact of fluctuations in cash flows. The management of the

Company monitors the use of bank borrowings and ensures to abide by loan agreements.

X. Disclosure of the fair value

1. Closing fair value of assets and liabilities calculated by fair value

Closing fair value

Item Fair value Fair value Fair value

measurement measurement measurement Total

items at level 1 items at level 2 items at level 3

I. Consistent fair value measurement

Financial assets measured by fair value and the

changes be included in the current profits and

losses

1. Trading financial assets

(1) Debt instruments investment

(2) Equity tool investment

(3) Derivative financial assets 1,881,750.00 1,881,750.00

Total assets of consistent fair value measurement 1,881,750.00 1,881,750.00

II. Trading financial liabilities

Including: tradable bond issued

Derivative financial liabilities

Others

Total liabilities of consistent fair value

measurement

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1

Based on the identical assets or liabilities acquired on unadjusted quoted in an active market at balance sheet day.

XI. Related party and related transaction

1.Details of the parent

Whether related Type of Legal

Name of parent company Registration place Nature of business

transaction incorporation Representative:

STAR COMGISTIC Manufacture and sales

Final control company INC Taiwan Chen Yanjun

CAPITAL CO.,LTD. electrical equipment

(Continued)

Proportion of share

Proportion of voting rights The ultimate

held by parent Organization

Name of parent company Registered capital owned by parent company controller of the

company against the code

against the Company (%) enterprise

Company (%)

STAR COMGISTIC TWD

42.90 44.68 Wu Cankun 28986660

CAPITAL CO.,LTD. 3,000,000,000.00

2. Subsidiaries of the Company

See Note VIII.1 “The equity in subsidiaries”.

3. Details of other related parties

Name Relationship

Sino Global Development Ltd. Under same actual controller

The company directly controlled by the key management and closed family

Xiamen Shengming Electronics Co., Ltd.

members

WU WHA MA RESTAURANT MANAGEMENT

Ultimate holding company have equity

CO., LTD. IN XIAMEN

TsannKuen Enterprise Co., Ltd. Under same actual controller

Fast Three E-commerce Service Co., Ltd. Under same actual controller

Gold Mine Chain Enterprise Co., Ltd. Under same actual controller

Star International Travel Co., Ltd. Same ultimate holding company

Starcomgistic Australia Pty Ltd Under same actual controller

4. Transactions with related parties

(1) Transactions through purchase or sell goods and accept or supply services

① The situation of purchases goods or accepts services

Reporting The approval Whether exceed trade Same period of

Related party Content

Period trade credit credit or not last year

Xiamen Shengming Electronics Purchase

16,738,518.44 40,000,000.00 No 14,355,901.32

Co., Ltd. of goods

Purchase

TsannKuen Enterprise Co., Ltd. 19,035.91 100,000.00 No 12,265.48

of goods

Gold Mine Chain Enterprise Co., Purchase

392.98 Yes

Ltd. of goods

STAR COMGISTIC CAPITAL Purchase

2,876.99 40,000.00 No

CO.,LTD. of goods

Total 16,760,824.32 14,368,166.80

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

②The situation of sells goods or rendering services

Related party Content Reporting Period Same period of last year

STAR COMGISTIC CAPITAL CO.,LTD. Sale of goods 7,922,076.14 7,864,689.34

TsannKuen Enterprise Co., Ltd. Sale of goods 570.82

Gold Mine Chain Enterprise Co., Ltd. Sale of goods 85,749.96

Total 8,008,396.92 7,864,689.34

(2) Information of related lease

① The Company is as the leasor

Category of leased Reporting Same period

Name of lessee

assets Period of last year

WU WHA MA RESTAURANT MANAGEMENT CO., LTD. IN XIAMEN House property 32,760.00 32,760.00

Total 32,760.00 32,760.00

②The Company is as the lessee

Name of lessor Category of leased assets Reporting Period Same period of last year

STAR COMGISTIC CAPITAL CO.,LTD. House property 691,394.42 78,672.13

Total 691,394.42 78,672.13

(3) Assets transfer, Debt restructuring between related parties

Related party Content Reporting Period Same period of last year

Starcomgistic Australia Pty Ltd Sale of fixed assets 17,664.40

TsannKuen Enterprise Co., Ltd. Sale of fixed assets 6,882.63

Total 17,664.40 6,882.63

TsannKuen Enterprise Co., Ltd. Purchase of fixed assets 177,486.58

Fast Three E-commerce Service Co., Ltd. Purchase of fixed assets 36,433.06

Total 213,919.64

(4) Inter-bank lending of capital of related parties

Related party Content Reporting Period Same period of last year

STAR COMGISTIC CAPITAL

Borrowing capital 4,519,265.19

CO.,LTD.

Sino Global Development Ltd. Borrowing capital 6,774,375.98

Interest from inter-bank

Sino Global Development Ltd. 115,259.48

borrowing and lending

Total 6,889,635.46 4,519,265.19

(5) Other related-party transactions

Related party Content Reporting Period Same period of last year

Star International Travel Co., Ltd. Receiving service 419,093.08

Fast Three E-commerce Service Co.,

Receiving labor service 34,565.61

Ltd.

STAR COMGISTIC CAPITAL CO.,

Receiving service 6,211.35

LTD.

TsannKuen Enterprise Co., Ltd. Offering labor service 33,151.76

Total 493,021.80

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2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

5. Receivables and payables of related parties

(1) Receivables

Closing balance Opening balance

Name of item Bad debt

Book balance Bad debt provision Book balance

provision

Accounts receivable:

STAR COMGISTIC CAPITAL CO., LTD. 2,416,174.80 2,658,068.80

Gold Mine Chain Enterprise Co., Ltd. 21,717.29

Total 2,416,174.80 2,679,786.09

Other accounts receivable:

TsannKuen Enterprise Co., Ltd. 5,818.27 17,478.11

STAR COMGISTIC CAPITAL CO., LTD. 207,870.22 201,186.60

Gold Mine Chain Enterprise Co., Ltd. 30,322.61 29,347.65

Total 244,011.10 248,012.36

(2) Payables

Name of item Closing balance Opening balance

Accounts payable:

Xiamen Shengming Electronics Co., Ltd. 9,966,993.00 11,632,531.94

Total 9,966,993.00 11,632,531.94

Prepayment:

WU WHA MA RESTAURANT MANAGEMENT CO., LTD.

IN XIAMEN 609.59

Total 609.59

Other account payable:

Xiamen Shengming Electronics Co., Ltd. 55,000.00

WU WHA MA RESTAURANT MANAGEMENT CO., LTD.

IN XIAMEN 23,776.60 23,776.60

TsannKuen Enterprise Co., Ltd. 1,914.91

STAR COMGISTIC CAPITAL CO., LTD. 38,812.61 15,423.37

Fast Three E-commerce Service Co., Ltd. 2,171.23

Sino Global Development Ltd. 6,831,280.73

Total 6,893,869.94 98,286.11

XII. Stock payment

No such cases in Reporting Period.

XIII. Commitments and contingency

1. Significant commitments

As of the end of balance sheet date, the irrevocable operating lease commitments that the Company signed were as followed:

Unit: RMB ten thousands

Item 2017.06.30 2016.12.31

Minimum lease payments of irrevocable operating lease

1 year after balance date 3,638 3,638

2 year after balance date 3,638 3,638

3 year after balance date 3,638 3,638

Future years 116,409 123,685

Total 127,323 134,599

77

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

2.Contingency

(1) The subsidiary of the Company - TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS) signed the Plant Leasing

contract with Shanghai Liangxin Industrial Co., Ltd. (hereafter, SHLX) at November 2007, and leased the plant (including plant

affiliated land, ground buildings and related ancillary equipment, etc) located in No. 4407 Caoan Road Jiading District, Shanghai to

SHLX. The real estate certificate of leasehold is Hu Fangdi Jia Zi (2006) No. 011945, the lease period is from November 2007 to

November 2019, the purpose to the lessee for the use of legitimate factory and storage. The provisions of contract point out if the

lessee need to build plant because of production should to obtain government and relevant authorities’ agreements. Except to

confiscate the deposit, the lessor can terminate the contract and does not have to undertake any responsibility if the lessee sublease

the leasehold, make improvement or addition to the leasehold without to obtain the written consent from lessor.

TKS submitted the civil action to Shanghai Jiading District People's Court by cause of action “the lessee SHLX decorated and

subleased the leasehold to Shanghai Hujia Fruit Sales Limited Company (hereafter, SHHJ) without to obtain the written consent from

lessor” on 28 October 2015, and required early termination of the Plant Leasing contract with SHLX, and required SHHJ to terminate

construction and to repristinate the leasehold.

On November 20, 2016, on the dispute between TKS and Hujia Fruit Co., Ltd., Shanghai Jiading District People's Court made ((2015)

Jia Min Er (Commerce) the first word No. 2661) civil judgment: the decision supports the claims of TKS and Hujia Fruit Co., Ltd.

shall immediately stop the infringement within 10 days after the court's judgment takes effect, cease construction and restore the

original appearance of the site.

Hujia Fruit Co., Ltd was not satisfied with the first instance verdict and appealed to the Shanghai Second Intermediate People’s

Court.. On June 23, 2017, Shanghai Second Intermediate People’s Court made ((2017) H 02 Civil Final Judgement No. 3007) and

rejected the appeal of Hujia Fruit Co., Ltd.

(2) As MTN Products, Inc./ Water Solutions (Hong Kong)Ltd.(“MTN/WSL”)didn’t pay relevant payment in time and fulfill the

order in accordance with the contract, on November 23, 2016, the subsidiary of the Company TKL submitted petition to SUPERIOR

COURT OF CALIFORNIA COUNTY OF LOS ANGELES suing MTN/WSL for payment of US $ 707,522.92 and US $ 1,402,940

for reserve losses, totaling US $ 2,110,462.92. As of the date of this report, the case is still pending.

(3) As Philips Lighting (China) Investment Co., Ltd. ("Philips Lighting") did not pay the relevant payment in accordance with the

relevant agreement, the company's subsidiary TKL submitted petition to Longhai People’s Court requesting Philips Lighting’s

payment of RMB2,499,658.4. As of the date of this report, the case is still pending.

(4) TsannKuen (Xiamen) Enterprise Co., Ltd. ("Xiamen Tsann Kuen") and Tianyuan (Xiamen) Assets management Co., Ltd.

("Tianyuan Company") signed the "Land Lease Contract (Northwest Corner)" and Housing Lease Contract (North Building) "on

June 26, 2013, the " Venue Lease Contract (Southeast Corner) " and " Housing Lease Contract (Huarong Road No.23) "(part of the

house) on July 29, 2013. Xiamen Tsann Kuen will lease part of ground and housing in plant located at Xinglong Road No.88. to

Tianyuan Company for business activities.

As Tian Yuan Company did not pay the rent in accordance with the contract in time and unauthorized use of the lease, the Company

filed a lawsuit to the Xiamen Huli District People's Court of to pay the relevant rent. On December 29, 2015, the Huli District

78

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

People's Court of Xiamen ruled to combine the four cases and hear them. On May 30, 2017, Xiamen Huli District People’s Court

made the first instance judgement: Tianyuan Company shall pay Xiamen Tsann Kuen the penalty due to overdue payment. Whether

the two sides have reached an agreement has not decided yet.

XIV. Events after balance sheet date

□ Applicable √ Not applicable

XV. Other significant events

□ Applicable √ Not applicable

XVI. Notes of main items in the financial statements of the Company

1. Accounts receivable

(1) Accounts receivable classified by category

2017.06.30

Item Book balance Bad debt provision

Book value

Amount Proportion(%) Amount Withdrawal proportion(%)

Accounts receivable with

insignificant single amount for

0.00 0.00 0.00 0.00 0.00

which bad debt provision

separately accrued

Accounts receivable withdrawal

of bad debt provision of by credit 11,675,968.35 100.00 504,679.35 4.32 11,171,289.00

risks characteristics:

Portfolio by age 11,458,667.65 98.14 504,679.35 4.40 10,953,988.30

Related party group 217,300.70 1.86 0.00 0.00 217,300.70

Accounts receivable with

insignificant single amount for

0.00 0.00 0.00 0.00 0.00

which bad debt provision

separately accrued

Total 11,675,968.35 100.00 504,679.35 4.32 11,171,289.00

(Continued)

2016.12.31

Item Book balance Bad debt provision

Book value

Amount Proportion(%) Amount Withdrawal proportion(%)

Accounts receivable with

insignificant single amount for

0.00 0.00 0.00 0.00 0.00

which bad debt provision

separately accrued

Accounts receivable withdrawal

of bad debt provision of by credit 31,635,877.38 100.00 1,551,245.00 4.90 30,084,632.38

risks characteristics:

Portfolio by age 30,918,276.22 97.73 1,551,245.00 5.02 29,367,031.22

Related party group 717,601.16 2.27 0.00 0.00 717,601.16

Accounts receivable with

insignificant single amount for

0.00 0.00 0.00 0.00 0.00

which bad debt provision

separately accrued

Total 31,635,877.38 100.00 1,551,245.00 4.90 30,084,632.38

79

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

①Accounts receivable using the age analysis method for measurement of allowance for bad debt

2017.06.30

Aging

Amount Bad debt provision Proportion (%)

Within 1 year 11,453,022.16 499,033.86 4.36

Including: 1-90 days 6,793,840.13 0.00 0.00

91-180 days 4,544,282.83 454,428.28 10.00

181-270 days 64,220.12 19,266.04 30.00

271-365 days 50,679.08 25,339.54 50.00

1-2 years 5,645.49 5,645.49 100.00

Total 11,458,667.65 504,679.35 4.40

②In the groups, accounts receivable using related party method for measurement of allowance for bad debt

2017.06.30

Item

Account receivable Bad debt provision Withdrawal proportion (%)

Related party group 217,300.70 0.00 0.00

Total 217,300.70 0.00 0.00

(2) Bad debt provision withdrawal, reversed or recovered in the report period

The amount of allowance for bad debts recognized during the Reporting Period is RMB0.; the amount of recovered or reversed

allowance for bad debts during the Reporting Period is of RMB1,046,565.65.

(3) Particulars of the actual verification of accounts receivable during the Reporting Period

(4) Details of top five accounts receivable

The total amount of top five accounts receivables summarized by debtors as at the end of the Reporting Period is

RMB11,903,213.49, accounting for 101.95% of the total accounts receivable as at the end of the Reporting Period,

the total corresponding allowance for bad debts is RMB457,608.28.

2. Other accounts receivable

(1) Disclosure by classification

2017.06.30

Bad debt

Book balance

provision

Item

Withdrawal Book value

Amount Proportion (%) Amount proportion

(%)

Other accounts receivable with

insignificant single amount for which 0.00 0.00 0.00 0.00 0.00

bad debt provision separately accrued

Other accounts receivable withdrawn

bad debt provision according to credit 704,387.43 77.63 32,266.35 4.58 672,121.08

risks characteristics

Portfolio by age 704,387.43 77.63 32,266.35 4.58 672,121.08

Related party group 0.00 0.00 0.00 0.00 0.00

Other accounts receivable with

insignificant single amount for which 203,000.00 22.37 0.00 0.00 203,000.00

bad debt provision separately accrued

Total 907,387.43 100.00 32,266.35 3.56 875,121.08

(Continued)

80

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

2016.12.31

Bad debt

Book balance

Item provision

Withdrawal Book value

Proportion

Amount Amount proportion

(%)

(%)

Other accounts receivable with

insignificant single amount for which 0.00 0.00 0.00 0.00 0.00

bad debt provision separately accrued

Other accounts receivable withdrawn

bad debt provision according to credit 331,154.78 55.46 57,470.55 17.35 273,684.23

risks characteristics

Portfolio by age 285,736.39 47.85 57,470.55 20.11 228,265.84

Related party group 45,418.39 7.61 0.00 0.00 45,418.39

Other accounts receivable with

insignificant single amount for which 266,000.00 44.54 0.00 0.00 266,000.00

bad debt provision separately accrued

Total 597,154.78 100.00 57,470.55 9.62 539,684.23

① In the groups, other receivable using the age analysis method for measurement of allowance for bad debt

2017.06.30

Aging

Other accounts receivable Bad debt provision Proportion(%)

Within 1 year 679,903.33 7,782.25 1.14

Including: 1-90 days 659,538.83 0.00 0.00

91-180 days 0.00 0.00 0.00

181-270 days 12,000.00 3,600.00 30.00

271-365 days 8,364.50 4,182.25 50.00

1-2years 24,484.10 24,484.10 100.00

Total 704,387.43 32,266.35 4.58

(2) Bad debt provision withdrawal, reversed or recovered in the report period

The withdrawal amount of the bad debt provision during the Reporting Period was of RMB0; the amount of the reversed or collected

part during the Reporting Period was of RMB25,204.20.

(3) Particulars of the actual verification of other accounts receivable during the Reporting Period

There was no actual write-off other accounts receivable

(4)Disclosure by account nature

Nature 2017.06.30 2016.12.31

Non-related party 907,387.43 551,736.39

Related 0.00 45,418.39

Total 907,387.43 597,154.78

(5) The top five other account receivable classified by debtor at period-end

Items Nature Closing balance Aging % of total Closing balance of bad debt provision

No.1 Central collection 595,547.02 0-30 days 65.63

No.2 Margin 103,000.00 Over 1 years 11.35

81

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

No. 3 Margin & annual fee 42,000.00 Over 1 years 4.63

No. 4 Margin 30,000.00 Over 1 years 3.31

No. 5 Daily suspense debit 30,000.00 0-30 days 3.31

Total 800,547.02 88.23

3. Long-term equity investment

(1) Long-term equity investment

2017.06.30 2016.12.31

Item

Depreciation Depreciatio

Book balance Book value Book balance Book value

reserves n reserves

Investment to

922,914,701.56 0.00 922,914,701.56 922,914,701.56 0.00 922,914,701.56

the subsidiary

Total 922,914,701.56 0.00 922,914,701.56 922,914,701.56 0.00 922,914,701.56

(2) Investment to the subsidiary

Withdrawn

Closing

impairment

balance of

Investee Opening balance Increase Decrease Closing balance provision in

impairment

the Reporting

provision

Period

TKL 921,914,701.56 0.00 0.00 921,914,701.56 0.00 0.00

Xiamen Tsannkuen Home

1,000,000.00 0.00 0.00 1,000,000.00 0.00 0.00

Appliance Design Co., Ltd.

Total 922,914,701.56 0.00 0.00 922,914,701.56 0.00 0.00

4.Revenues and operating costs

Item Reporting Period Same period of last year

Main operations 29,163,387.63 54,967,379.49

Other operations 8,772,475.75 9,316,802.67

Total 37,935,863.38 64,284,182.16

Costs of main operations 25,654,159.29 50,167,049.69

Other operation cost 1,091,104.50 1,244,429.96

Total 26,745,263.79 51,411,479.65

5. Investment income

Item Reporting Period Same period of last year

Long-term equity investment income accounted by cost method 30,310,250.78 41,472,998.07

Investment income arising from disposal of long-term equity

0.00 66,100,670.73

investments

Others 0.00 8,474.00

Total 30,310,250.78 107,582,142.80

82

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

XVII. Supplementary materials

1.Items and amounts of extraordinary gains and losses

Item Amount Explanation

Gains or losses arising from disposal of non-current assets(including assets Mainly was

131,250.15

impairment withdrawn had been offset) non-current assets

Tax return and relief approved ultra vires or without any official approval

documents

Tax rebates, reductions or exemptions due to approval beyond authority or the

888,232.00

lack of official approval documents

Capital occupation charges on non-financial enterprises that are recorded into

current gains and losses

Gains due to that the investment costs for the Company to obtain subsidiaries,

associates and joint ventures are lower than the enjoyable fair value of the

identifiable net assets of the investees when making the investments

Gain/loss on non-monetary asset swap

Gain/loss on entrusting others with investments or asset management

Asset impairment provisions due to acts of God such as natural disasters

Gains and losses from debt restructuring

Expenses on business reorganization, such as expenses on staff arrangements,

integration, etc.

Gain/loss on the part over the fair value due to transactions with distinctly

unfair prices

Current net gains and losses of subsidiaries acquired in business combination

under the same control from period-begin to combination date

Profit and loss from contingencies irrelative to the normal business operations

of company

Mainly was the income

from sale of forward

Gain/loss from change of fair value of transactional assets and liabilities, and foreign exchange

investment gains from disposal of transactional financial assets and liabilities contract investment,

3,606,480.14

and available-for-sale financial assets, other than valid hedging related to the change in fair value,

Company’s common businesses financial products and

other current assets

returns

Depreciation reserves returns of receivables with separate depreciation test

Gain/loss on entrustment loans

Gain/loss on change of the fair value of investing real estate of which the

subsequent measurement is carried out adopting the fair value method

Effect on current gains/losses when a one-off adjustment is made to current

gains/losses according to requirements of taxation, accounting and other

relevant laws and regulations

Custody fee income when entrusted with operation

Other non-operating income and expenses other than the above 2,035,200.67

Project confirmed with the definition of non-recurring gains and losses and

losses

Less: Income tax effects 960,213.95

Minority interests effects (after tax) 1,438,047.96

Total 4,262,901.05

83

2017 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.

2.Yield Rate of Net Assets and Earnings Per Share

EPS (Yuan/share)

Weighted average

Profit as of Reporting Period

yield rate of net assets% EPS-basic EPS-diluted

Net profit attributable to common

1.79 0.06 0.06

shareholders of the Company

Net profit attributable to common

shareholders of the Company after

1.11 0.04 0.04

deduction of non-recurring profit and

loss

3. Differences between accounting data under domestic and overseas accounting standards

(1) Differences of net profit and net assets disclosed in financial reports prepared under international and

Chinese accounting standards: naught

(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and

Chinese accounting standards: naught

(3) Explain reasons for the differences between accounting data under domestic and overseas accounting

standards, for audit data adjusting differences had been foreign audited, should indicate the name of the

foreign institutions: naught

84

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