Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2025
（All amounts in RMB Yuan unless otherwise stated）
(English Translation for Reference Only)
I.The basic information of company
TsannKuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was
established in the People’s Republic of China (“the PRC”) in 1988 as a wholly owned
foreign investment enterprise, the Company named in TsannKuen China (Xiamen) Ltd.,
firstly, invested by the Fordchee Development Limited, EUPA Industry Corporation
Limited and Fillman Investments Limited. On 16 February 1993, with the approval of the
Ministry of Foreign Trade and Economic Co-operation, the Company was reorganized
into an incorporated company and was renamed as TsannKuen (China) Enterprise Co.,
Ltd. In June 1993, the Company issued 40,000,000 new shares pursuant to an
international placing and public offer and these new shares (“B shares”“B shares”) were
then listed on the Shenzhen Stock Exchange on 30 June 1993. According to the “Intended
Implementation of Share Reducing Proposal”” of the 5th extraordinary board of director
of 2012 and the 3rd extraordinary shareholders’’ general meeting of 2012, obtained the
consent from the Investment Promotion Bureau of Xiamen which is authorized by the
Ministry of Commerce and the approval documents ”“The Approval by Investment
Promotion Bureau of Xiamen to Consent the Capital Reduction of TsannKuen (China)
Enterprise Co., Ltd”” (IPB audit [2012] NO. 698), as the base 1,112,350,077 shares of the
total original share capital, for implementation of share reducing model that all registered
shareholders who was recorded on 28 December 2012 with the proportion 6:1 to reduce
the shares. After the implementation of share reducing model, total share capital was
reduced from 1,112,350,077 shares to 185,391,680 shares of the company. Until 31
December 2025, the Company’’s share capital is CNY 185,391,680.
Following The Ministry of Commerce of the People’’s Republic of China approved (The
No. [2005]3107 “Agreed in Principle to the Ministry of Commerce on TsannKuen (China)
Enterprise Co., Ltd. Shares Traded Sponsor of the Approval”), On 6 December 2006, the
Company received the [2006] No.266 file “The notice of TsannKuen (China) Enterprise
Co., Ltd, concerning the Approval of non-listed Foreign Shares Traded” from China
Notes to the Financial Statements 1
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Securities Regulatory Commission. The China Securities Regulatory Commission agreed
Company’s shareholders, EUPA Industry Corporation Limited, Fordchee Development
Limited, and Fillman Investments Limited to transfer into B shares. On 29 November
December 2025, total B shares held by the three legal shareholders (EUPA Industry
Corporation Limited, Fordchee Development Limited, and Fillman Investments Limited)
are 82,830,966 shares after the implementation of share reducing model (Accounts for
Legal representative: CAI, Yuansong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian
Province
The parent company: STAR COMGISTIC CAPITAL CO., LTD.
The Company operates within the electrical machinery and equipment manufacturing
industry.
The industry of the company: electrical machinery and equipment manufacturing.
The company is actually engaged in the main business activities are: Develop, produce
and manufacture small home appliances of gourmet cooking, home helper, tea and coffee;
design and manufacture molds related to the above products, sell the products at home
and abroad, and provide after-sales service.
The financial statements approved by the resolution of the Board of Directors on 07
March 2026, in accordance with the Articles of Association, the financial statements will
be submitted to the shareholders meeting for consideration.
II.The basis for the preparation of financial statements
The financial statements have been prepared in accordance with the "Accounting
Standards for Business Enterprises - Basic Standards" and various specific accounting
standards, guidelines for the application of accounting standards for business
enterprises,interpretations of accounting standards for business enterprises and other
related regulations (hereinafter collectively referred to as "Accounting Standards for
Business Enterprises") issued by the Ministry of Finance, as well as the relevant
provisions of the "General Provisions on Financial Reporting, No. 15 of the Rules
Notes to the Financial Statements 2
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Governing the Preparation of Information Disclosures by Companies Issuing Public
Securities" of the China Securities Regulatory Commission.
These financial statements are prepared on a going concern basis.
The Company has assessed its ability to continually operate for the next twelve months
from the end of the reporting period, and no matters that may result in doubt on its ability
as a going concern were noted. Therefore, it is reasonable for the Company to prepare
financial statements on the going concern basis.
III.Significant Accounting Policies and Accounting Estimates
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truly and completely reflecting the
consolidate and company’s financial position as at 31 December 2025, and the
consolidated and company’s operating results, changes in shareholders' equity, cash flows
and other related information for the year then ended.
The accounting year of the Company is from 1 January to 31 December in calendar year.
The normal operating cycle of the Company is one year.
The Company takes Renminbi Yuan (“CNY”) as the functional currency.
The Company’s overseas subsidiaries choose the currency of the primary economic
environment in which the subsidiaries operate as the functional currency.
Business combinations under common control: Assets and liabilities acquired by the
consolidating party in a business combination (including goodwill resulting from the
acquisition of the consolidated party by the ultimate controlling party) are measured at the
carrying value of the consolidated party's assets and liabilities in the consolidated
Notes to the Financial Statements 3
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
financial statements of the ultimate controlling party at the date of the combination. The
difference between the book value of the net assets acquired in the merger and the book
value of the merger consideration paid (or the total nominal value of shares issued) is
adjusted against the equity premium in capital surplus, and if the equity premium in
capital surplus is not sufficient for elimination, retained earnings are adjusted.
Business combinations not under common control: The cost of the combination is the fair
value of the assets paid, liabilities incurred or assumed and equity securities issued by the
purchaser to obtain control of the acquiree at the date of acquisition. The difference
between the cost of the combination and the share of the fair value of the acquiree's
identifiable net assets acquired in the combination is recognized as goodwill; the
difference between the cost of the combination and the share of the fair value of the
acquiree's identifiable net assets acquired in the combination is recognized in profit or
loss for the period. Each identifiable asset, liability and contingent liability of the acquiree
acquired in a merger that meets the recognition criteria is measured at fair value at the
date of acquisition.
Directly related costs incurred for a business combination are recognized in profit or loss
as incurred; transaction costs for issuing equity securities or debt securities for a business
combination are included in the initial recognition amount of the equity securities or debt
securities.
statements
(1)Criteria for determining control
The scope of consolidation in the consolidated financial statements is determined
on the basis of control, and the scope of consolidation includes the Company and
all of its subsidiaries. Control means that the Company has power over the investee,
enjoys variable returns through its participation in the investee's related activities,
and has the ability to use its power over the investee to influence the amount of its
returns.
(2)Consolidation procedures
The Company considers the entire enterprise group as one accounting entity and
Notes to the Financial Statements 4
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
prepares consolidated financial statements in accordance with uniform accounting
policies to reflect the financial position, results of operations and cash flows of the
enterprise group as a whole. The effects of internal transactions that occur between
the Company and its subsidiaries and between subsidiaries are eliminated. If an
internal transaction indicates an impairment loss on the related asset, the full
amount of such loss is recognized. If the accounting policies and accounting
periods adopted by a subsidiary are not consistent with those of the Company, the
necessary adjustments are made in accordance with the Company's accounting
policies and accounting periods when preparing the consolidated financial
statements.The share of ownership equity, net profit or loss for the period and
comprehensive income for the period attributable to minority shareholders of the
subsidiaries arepresented separately in the consolidated balance sheet under the
item of ownership equity, in the consolidated income statement under the item of
net profit and in the consolidated statement of total comprehensive income,
respectively. The balance resulting from the subsidiary's minority share of current
loss exceeding the minority's share of the subsidiary's opening ownership interest is
eliminated to reduce shareholders'equity.
①Increase number of subsidiaries or operations
During the reporting period, if a subsidiary or business is added as a result of a
business combination under the same control, the operating results and cash flows
of the subsidiary or business from the beginning of the period in which the
subsidiary or business is combined to the end of the reporting period are included
in the consolidated financial statements,while the opening balance of the
consolidated financial statements and the relevant items in the comparative
statements are adjusted as if the consolidated reporting entity had existed since the
point when the ultimate controlling party began to control it.
If control over an investee under the same control can be exercised due to
additional investment, equity investments held prior to the acquisition of control
over the investee are eliminated from the opening retained earnings or current
profit or loss for the comparative statement period, respectively, for the relevant
gains or losses, other comprehensive income and other changes in net assets
recognized between the later of the date of acquisition of the original equity
interest and the date when the consolidated party and the investee are under the
Notes to the Financial Statements 5
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
same control and the date of consolidation.
During the reporting period, the addition of subsidiaries or operations as a result of
a business combination not under common control is included in the consolidated
financial statements from the date of acquisition based on the fair value of each
identifiable asset, liability and contingent liability determined at the date of
acquisition.
If, for example, additional investments enable the exercise of control over an
investee not under common control, the equity interest in the investee held prior to
the date of acquisition is remeasured at the fair value of that equity interest at the
date of acquisition, and the difference between the fair value and its carrying
amount is recognized as investment income for the current period. The difference
between the fair value and its
carrying amount is recognized as investment income for the period. The equity
interest in the investee held prior to the date of acquisition is transferred to
investment income for the period to which the equity interest is transferred under
the equity method.
②Disposal of subsidiaries
When control over an investee is lost due to disposal of part of the equity
investment or other reasons, the remaining equity investment after disposal is
remeasured at its fair value at the date of loss of control. The difference between
the sum of the consideration received for the disposal of the equity interest and the
fair value of the remaining equity interest,less the sum of the share of the net assets
of the original subsidiary calculated on a continuing basis from the date of
acquisition or the date of consolidation in proportion to the original shareholding
and goodwill, is recognized as investment income in the period in which control is
lost. Other comprehensive income and other changes in owners' equity under the
equity method of accounting related to the equity investment in the original
subsidiary that can be reclassified to profit or loss in the future are transferred to
investment income in the current period when control is lost.
Disposal of equity investments in subsidiaries through multiple transactions in
steps until the loss of control, the terms and conditions of the disposal of equity
Notes to the Financial Statements 6
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
investments in subsidiaries and the economic impact of each transaction is
consistent with one or more of the following, usually indicating that the multiple
transactions are a package deal:
i. The transactions are entered into simultaneously or after taking into account their
mutual effects;
Ⅱ. These transactions as a whole to achieve a complete business result;
ⅲ. The occurrence of one transaction depends on the occurrence of at least one
other transaction;
ⅳ. A transaction is not economical when viewed alone, but is economical when
considered together with other transactions.
If each transaction is a package transaction, each transaction is accounted for as a
disposal of a subsidiary and loss of control; the difference between the disposal
price and the share of the net assets of the subsidiary corresponding to the disposal
of the investment before the loss of control is recognized in the consolidated
financial statements as other comprehensive income and is transferred to profit or
loss in the period is lost when control is lost.
If each transaction is not a package transaction, the accounting treatment is based
on partial disposal of the equity investment in the subsidiary without loss of control
before the loss of control; upon the loss of control, the accounting treatment is
based on the general treatment of disposal of subsidiaries.
③Purchase of minority interests in subsidiaries
The difference between the newly acquired long-term equity investment due to the
purchase of minority interest and the share of net assets of the subsidiary calculated
in proportion to the newly acquired shareholding on an ongoing basis from the date
of acquisition or the date of consolidation is adjusted to the equity premium in
capital surplus in the consolidated balance sheet; if the equity premium in capital
surplus is not sufficient for elimination, it is adjusted to retained earnings.
(4) Partial disposal of equity investments in subsidiaries without loss of control
The difference between the disposal price and the share of net assets of the
subsidiary calculated on acontinuing basis from the date of acquisition or the date
of consolidation corresponding to the disposal of the long-term equity investment
is adjusted to the equity premium in capital surplus in the consolidated balance
Notes to the Financial Statements 7
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
sheet, and if the equity premium in capital surplus is not sufficient to offset it,
retained earnings are adjusted.
The cash listed on the cash flow statements of the Group refers to cash on hand and bank
deposit. The cash equivalents refer to short-term (normally with original maturities of
three months or less) and liquid investments which are readily convertible to known
amounts of cash and subject to an insignificant risk of changes in value.
(1)Foreign currency transaction
At the initial recognition of foreign currency transactions, the entity uses the spot
exchange rate on the date of the transaction or an approximate spot exchange rate
determined using a systematic and rational method that is close to the spot rate at
the date of the transaction (hereinafter referred to as the approximate spot rate) for
conversion into the functional currency.
On the balance sheet date, for foreign currency monetary items, the spot exchange
rate on the balance sheet date is used for conversion. The exchange differences
arising from the difference between the spot exchange rate on the balance sheet
date and the spot rate at the date of initial recognition or the previous balance sheet
date are recognized in profit or loss. For non-monetary foreign currency items
measured at historical cost, the spot exchange rate at the date of the transaction
continues to be used; for non-monetary foreign currency items measured at fair
value, the spot exchange rate on the date when the fair value is determined is used,
and the difference between the amount in the functional currency after conversion
and the original amount in the functional currency is recognized in profit or loss.
(2)Translation of foreign currency financial statements
Before translating the financial statements of a foreign operation, adjust the
accounting periods and accounting policies of the foreign operation to align with
those of the reporting entity. Then, prepare the financial statements in the relevant
currency (other than the functional currency) based on the adjusted accounting
policies and periods. The translation of the financial statements of the foreign
operation should be performed as follows:
Notes to the Financial Statements 8
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
①Assets and Liabilities in the Statement of Financial Position:
Assets and liabilities are translated at the spot exchange rate on the balance sheet
date.
For equity items, except for "retained earnings," other equity items are translated at
the spot exchange rates prevailing at the dates of the transactions.
②Income and Expense Items in the Statement of Profit or Loss:
Income and expense items are translated at the spot exchange rates on the dates of
the transactions or using an approximate exchange rate that is a reasonable
approximation of the spot rate on the transaction date.
③Foreign Currency Cash Flows and Cash Flows of Foreign Subsidiaries:
Foreign currency cash flows and cash flows of foreign subsidiaries are translated at
the spot exchange rates on the dates of the cash flows or using an approximate
exchange rate that is a reasonable approximation of the spot rate on the date of the
cash flow.
The effect of exchange rate changes on cash and cash equivalents should be
reported as a separate reconciling item in the statement of cash flows.
④Translation Differences Arising from the Translation of Foreign Financial
Statements:
In the preparation of consolidated financial statements, the resulting translation
differences are presented separately in the consolidated statement of financial
position under equity as "other comprehensive income."
When a foreign operation is disposed of and control is lost, the cumulative
translation differences related to that foreign operation, which are presented in the
equity section of the balance sheet, should be transferred to profit or loss in full or
proportionally, depending on the extent of the disposal.
The Company recognizes a financial asset, a financial liability or an equity instrument
when it becomes a party to a financial instrument contract.
(1)Classification of financial instruments
Based on the Company's business model for managing financial assets and the
contractual cash flow characteristics of financial assets, financial assets are
classified at initial recognition as financial assets carried at amortized cost,
financial assets at fair value through other comprehensive income, and financial
Notes to the Financial Statements 9
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
assets at fair value through profit or loss.
The Company classifies financial assets at amortized cost that are not designated as
financial assets at fair value through profit or loss if they both meet the following
criteria:
- The business model is to collect the contractual cash flows;
- The contractual cash flows are only payments of principal and interest based on
the outstanding principal amount.
The Company classifies financial assets as financial assets at fair value through
other comprehensive income (debt instruments) that are not designated as at fair
value through profit or loss if they also meet the following criteria:
- Operating model with the objective of both collecting the contractual cash flows
and selling the financial asset;
- The contractual cash flows are only payments on the principal and interest based
on the outstanding principal amount.
For investments in non-trading equity instruments, the Company may irrevocably
designate them at initial recognition as financial assets at fair value through other
comprehensive income (equity instruments). This designation is made on an
individual investment basis and the related investment meets the definition of an
equity instrument from the perspective of the issuer.
Except for the above-mentioned financial assets measured at amortized cost and
financial assets at fair value through other comprehensive income, the Company
classifies all remaining financial assets as financial assets at fair value through
profit or loss. On initial recognition, the Company may irrevocably designate
financial assets that would otherwise be classified as financial assets at amortized
cost or at fair value through other comprehensive income as financial assets at fair
value through profit or loss if it can eliminate or significantly reduce the
accounting mismatch.
Financial liabilities are classified at initial recognition as financial liabilities at fair
value through profit or loss and financial liabilities at amortized cost.
A financial liability maybe designated as a financial liability at fair value through
profit or loss at initial measurement if one of the following conditions is met:
①The designation eliminates or significantly reduces an accounting mismatch.
②The management and performance evaluation of a portfolio of financial
Notes to the Financial Statements 10
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
liabilities or a portfolio of financial assets and financial liabilities is performed on a
fair value basis in accordance with the enterprise's risk management or investment
strategy as set out in formal written documentation and reported to key
management personnel on this basis within the enterprise.
③The financial liability contains embedded derivatives that are subject to separate
splitting.
(2)Recognition basis and measurement method of financial instruments
①Financial assets measured at amortized cost
Financial assets measured at amortized cost, including notes receivable, accounts
receivable, other receivables, long-term receivables and debt investments, are
initially measured at fair value, with related transaction costs included in the initial
recognition amount; accounts receivable that do not contain significant financing
components and those that the Company has decided not to consider financing
components that do not exceed one year are initially measured at contractual
transaction prices.
Interest calculated using the effective interest rate method during the holding
period is recognized in profit or loss.
On recovery or disposal, the difference between the acquisition price and the
carrying amount of the financial asset is recognized in profit or loss for the current
period.
②Financial assets at fair value through other comprehensive income (debt
instruments)
Financial assets (debt instruments) at fair value through other comprehensive
income include receivables financing and other debt investments, which are
initially measured at fair value, with related transaction costs recognized in the
initial recognition amount. The financial assets are subsequently measured at fair
value, and changes in fair value are recognized in other comprehensive income,
except for interest, impairment loss or gain and exchange gain or loss calculated
using the effective interest rate method.
Upon derecognition, the cumulative gain or loss previously recognized in other
comprehensive income is transferred from other comprehensive income and
recognized in profit or loss for the current period.
Notes to the Financial Statements 11
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
③Financial assets at fair value through other comprehensive income (equity
instruments)
Financial assets (equity instruments) at fair value through other comprehensive
income,including investments in other equity instruments, are initially measured at
fair value, with related transaction costs recognized in the initial recognition
amount. The financial assets are subsequently measured at fair value, with changes
in fair value recognized in other comprehensive income. Dividends received are
recognized in current profit or loss.
Upon derecognition, the cumulative gain or loss previously recognized in other
comprehensive income is transferred from other comprehensive income and
recognized in retained earnings.
④Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for
trading, derivative financial assets and other non-current financial assets, which are
initially measured at fair value, with related transaction costs recognized in profit
or loss. The financial assets are subsequently measured at fair value, with changes
in fair value recognized in profit or loss for the period.
⑤Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities
held for trading and derivative financial liabilities, which are initially measured at
fair value, with related transaction costs recognized in profit or loss. The financial
liabilities are subsequently measured at fair value, with changes in fair value
recognized in profit or loss for the period.
Upon derecognition, the difference between the carrying amount and the
consideration paid is recognized in profit or loss for the current period.
⑥Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost include short-term borrowings,
notes payable, accounts payable, other payables, long-term borrowings, bonds
payable and long- term payables, which are initially measured at fair value, with
related transaction costs included in the initial recognition amount.
Interest calculated using the effective interest rate method during the holding
period is recognized in profit or loss.
Upon derecognition, the difference between the consideration paid and the carrying
Notes to the Financial Statements 12
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
amount of the financial liability is recognized in profit or loss for the current
period.
(3) Basis of recognition and measurement of financial asset derecognition and
financial asset transfers
The Company derecognizes a financial asset when one of the following conditions
is met:
- The contractual rights to receive cash flows from the financial asset are
terminated;
- The financial asset has been transferred and substantially all the risks and rewards
of ownership of the financial asset have been transferred to the transferring party;
- A financial asset has been transferred and control over the financial asset is not
retained, although the Company neither transfers nor retains substantially all the
risks and rewards of ownership of the financial asset.
When the Company modifies or renegotiates a contract with a counterparty and the
modification constitutes a material change, the original financial asset is
derecognized and a new financial asset is recognized in accordance with the
modified terms.
A financial asset is not derecognized if substantially all the risks and rewards of
ownership of the financial asset are retained when a transfer of the financial asset
occurs.
In determining whether a transfer of financial assets meets the above conditions for
derecognition of financial assets, the principle of substance over formis applied.
The Company distinguishes between transfers of financial assets as a whole and
partial transfers of financial assets. If the transfer of a financial asset as a whole
meets the derecognition condition, the difference between the following two
amounts is recognized in profit or loss for the current period:
①The carrying amount of the financial asset transferred;
②The sum of the consideration received for the transfer and the cumulative
amount of changes in fair value previously recognized directly in owners'equity
(in the case where the transferred financial asset is a financial asset (debt
instrument) measured at fair value through other comprehensive income).
If a partial transfer of a financial asset satisfies the derecognition condition, the
carrying amount of the financial asset transferred as a whole is apportioned
Notes to the Financial Statements 13
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
between the
derecognized portion and the unrecognized portion according to theirrespective
relative
fair values, and the difference between the following two amounts is recognized in
profit or loss:
①The carrying amount of the derecognized portion;
②The sum of the consideration for the derecognized portion and the amount
corresponding to the derecognized portion of the cumulative amount of changes in
fair value previously recognized directly in owners'equity (in the case where the
financial asset involved in the transfer is a financial asset (debt instrument)
measured at fair value through other comprehensive income).
If the transfer of a financial asset does not meet the derecognition condition, the
financial asset continues to be recognized and the consideration received is
recognized as a financial liability.
(4)Derecognition of financial liabilities
A financial liability or a portion thereof is derecognized when the present
obligation of the financial liability is discharged in whole or in part. If the
Company enters into an agreement with a creditor to replace an existing financial
liability by assuming a new financial liability, and the contractual terms of the new
financial liability are materially different from those of the existing financial
liability, the existing financial liability is derecognized and a new financial liability
is recognized at the sametime.
If all or part of the contractual terms of an existing financial liability are
substantially modified, the existing financial liability or part of it is derecognized,
and the modified financial liability is recognized as a new financial liability at the
sametime.
When a financial liability is derecognized in whole or in part, the difference
between the carrying amount of the derecognized financial liability and the
consideration paid (including non-cash assets transferred or new financial liabilities
assumed) is recognized in profit or loss for the period.
If the Company repurchases a portion of a financial liability, the carrying amount
of the financial liability as a whole is allocated on the repurchase date based on the
relative fair values of the portion that continues to be recognized and the portion
Notes to the Financial Statements 14
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
that is derecognized. The difference between the carrying amount allocated to the
derecognized portion and the consideration paid (including non-cash assets
transferred or new financial liabilities assumed) is recognized in profit or loss for
the period.
(5)Methods to determine the fair value of financial assets and financial liabilities
The fair value of financial instruments for which there is an active market is
determined by quoted prices in an active market. The fair value of financial
instruments for which no active market exists is determined using valuation
techniques. In valuation, the Company uses valuation techniques that are applicable
in the current circumstances and supported by sufficient available data and other
information, selects inputs that are consistent with the characteristics of the asset or
liability considered by market participants in transactions for the relevant asset or
liability, and gives preference to the use of relevant observable inputs.
Unobservable inputs are used only if the relevant observable inputs are not
available or not practicable to obtain.
(6)Methods of testing and accounting for impairment of financial instrument
The Company estimates the expected credit losses on financial assets measured at
amortized cost, financial assets at fair value through other comprehensive income
(debt instruments) and financial guarantee contracts, etc.
The Company recognizes expected credit losses by calculating the
probability-weighted amount of the present value of the difference between the
cash flows receivable under the contract and the cash flows expected to be received,
taking into account reasonable and substantiated information about past events,
current conditions and forecasts of future economic conditions, weighted by the
risk of default.
For receivables and contract assets resulting from transactions governed by ASBE
No. 14, Revenue, the Company always measures its allowance for losses at an
amount equal to the expected credit losses over the entire duration, regardless of
whether or not there is a significant financing component.
For lease receivables resulting from transactions regulated by ASBE No. 21,
"Leases," the Company has elected to always measure its allowance for losses at an
amount equal to the expected credit losses over the entire duration.
For other financial instruments, the Company assesses at each balance sheet date
Notes to the Financial Statements 15
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
the change in credit risk of the related financial instruments since initial
recognition.
The Company assesses whether the credit risk of a financial instrument has
increased significantly since initial recognition by comparing the risk of default of
the financial instrument at the balance sheet date with the risk of default at the date
of initial recognition to determine the relative change in the risk of default over the
expected life of the financial instrument. The Company generally considers that the
credit risk of a financial instrument has increased significantly if it is more than
financial instrument has not increased significantly since initial recognition.
If the credit risk of a financial instrument is low at the balance sheet date, the
Company considers that the credit risk of the financial instrument has not increased
significantly since initial recognition.
If the credit risk of a financial instrument has increased significantly since initial
recognition, the Company measures the allowance for losses at an amount equal to
the expected credit losses over the entire life of the financial instrument; if the
credit risk of a financial instrument has not increased significantly since initial
recognition, the Company measures the allowance for losses at an amount equal to
the expected credit losses of the financial instrument in the next 12 months. The
resulting increase or reversal amount of the loss allowance is recognized as an
impairment loss or gain in profit or loss. For financial assets (debt instruments) that
are measured at fair value through other comprehensive income, the allowance for
losses is recognized in other comprehensive income and the impairment loss or
gain is recognized in profit or loss for the current period and does not reduce the
carrying amount of the financial asset as stated in the balance sheet.
The Company classifies the remaining financial instruments into several groups
based on their credit risk characteristics and determines the expected credit losses
on a collective basis. The categories of groups for which the Company recognizes
expected credit losses, including notes receivable, accounts receivable, financing
receivables, other receivables, contract assets, and long-term receivables, and the
basis for determining these groups are as follows:
①Receivables
For the notes receivable, accounts receivable, other receivables, accounts
Notes to the Financial Statements 16
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
receivable financing, and long-term receivables which are demonstrated to be
impaired by any objective evidence, or applicable for individual assessment, the
Company shall individually assess for impairment and recognize the loss allowance
for expected credit losses. If the Company determines that no objective evidence of
impairment exists for notes receivable, accounts receivable, other receivables,
accounts receivable financing, and long-term receivables, or the expected credit
loss of a single financial asset cannot be assessed at reasonable cost, such notes
receivable, accounts receivable, other receivables, accounts receivable financing,
and long-term receivables shall be divided into several groups based on similar
credit risk characteristics and calculate collectively on the expected credit loss. The
determination basis of groups is as following:
For notes receivable classified as portfolios, the Company calculates expected
credit losses based on default exposure and expected credit loss rates throughout
the life of the Company, considering historical credit loss experience, combined
with current conditions and the forecast of the future economic conditions.
Item Basis for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk.
According to the credit risk of the acceptor, it should be the
Commercial acceptance bill
same as the portfolios of accounts receivable.
For receivables that do not contain significant financing components, our company
measures the loss provision based on the expected credit loss amount over the
entire duration of the receivable.
For receivables that contain significant financing components and lease receivables,
our company always measures the loss provision based on the expected credit loss
amount over the duration of the receivable.
Except for accounts receivable that are assessed individually for credit risk, they
are categorized into different groups based on their credit risk characteristics.：
Notes to the Financial Statements 17
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Item Basis for determining the groups
This group uses the accounts receivables aging as the credit
Aging of Accounts Receivables
risk characteristics.
Related party relationships (Unless there is evidence that a
Related parties
credit loss may occur).
The Company assesses whether the credit risk of other receivables has significantly
increased since initial recognition, and utilizes the amount equivalent to the
expected credit loss in the next 12 months or the whole duration to measures the
impairment loss accordingly. Besides the other receivables that have individually
assessed credit risk, the rest of the other receivables are classified into different
groups based on their credit risk characteristics:
Item Basis for determining the groups
This group of receivables includes deposit receivables, advances on
Deposit
behalf of others and quality guarantee deposits to be collected in daily
guarantee
activities.
This group is the declared export tax refund funds that have not been
Export tax refund
received.
This group uses the age of accounts receivable as the credit risk
Open credits
characteristics.
Related party relationships (Unless there is evidence that a credit loss
Related parties
may occur)
The Company's aging calculation method based on the combination of aging
recognition credit risk characteristics:
The aging of accounts receivables for the portfolio of credit risk features
recognized by aging is calculated as follows:
Notes to the Financial Statements 18
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Aging Accrual ratio（%）
Not overdue 0.50
More than 90 days overdue 100.00
The aging of other receivables for the portfolio of credit risk features recognized by
aging is calculated as follows:
Aging Accrual ratio（%）
More than one year 100.00
②Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the
expected credit loss through the default exposure and the 12-month or lifetime
expected credit loss rate based on the nature of the investment, counterparty and
the type of risk exposure.
If the financial instrument has a low risk of default, the borrower has a strong
capacity to meet its contractual cash flow obligations in the near term and adverse
changes in economic and business conditions in the longer term may, but will not
necessarily, reduce the ability of the borrower to fulfill its contractual cash flow
obligations.
The Company shall assess whether the credit risk on a financial instrument has
increased significantly since initial recognition, using the change in the risk of a
default occurring over the expected life of the financial instrument, through the
comparison of the risk of a default occurring on the financial instrument as at the
reporting date with the risk of a default occurring on the financial instrument as at
Notes to the Financial Statements 19
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable
information, that is available without undue cost or effort, and that is indicative of
significant increases in credit risk since initial recognition, including
forward-looking information. The information considered by the Company are as
following:
Significant changes in internal price indicators of credit risk as a result of a
change in credit risk since inception
Existing or forecast adverse change in the business, financial or economic
conditions of the borrower that results in a significant change in the borrower’s
ability to meet its debt obligations；
An actual or expected significant change in the operating results of the borrower;
An actual or expected significant adverse change in the regulatory, economic, or
technological environment of the borrower；
Significant changes in the value of the collateral supporting the obligation or in
the quality of third-party guarantees or credit enhancements, which are expected to
reduce the borrower’s economic incentive to make scheduled contractual payments
or to otherwise influence the probability of a default occurring;
Significant change that are expected to reduce the borrower’s economic
incentive to make scheduled contractual payments;
Expected changes in the loan documentation including an expected breach of
contract that may lead to covenant waivers or amendments, interest payment
holidays, interest rate step-ups, requiring additional collateral or guarantees, or
other changes to the contractual framework of the instrument；
Significant changes in the expected performance and behavior of the borrower；
Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess
whether the credit risk has increased significantly since initial recognition on an
individual financial instrument or a group of financial instruments. When assessed
based on a group of financial instruments, the Company can group financial
instruments on the basis of shared credit risk characteristics, for example, past due
information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has
Notes to the Financial Statements 20
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
increased significantly since initial recognition when contractual payments are
more than 30 days past due. The Company can only rebut this presumption if the
Company has reasonable and supportable information that is available without
undue cost or effort, that demonstrates that the credit risk has not increased
significantly since initial recognition even though the contractual payments are
more than 30 days past due.
If the company no longer reasonably expects to recover all or part of the
contractual cash flows of a financial asset, the carrying amount of that financial
asset shall be directly reduced.
(1)Category and cost of inventory
Inventories are classified as: raw materials, work-in-progress, in-house
semi-finished goods, finished goods, low-value consumables, and goods in transit,
etc.
Inventories are initially measured at cost, which includes purchase costs,
processing costs, and other expenditures incurred to bring the inventories to their
present location and condition.
(2)Valuation method of issued inventory
The cost of inventories used or sold is determined on the weighted average basis.
(3)inventory system
Adoption of perpetual inventory system.
(4)Amortization method of low-value consumables and packaging
① Low-value consumables are amortized using the one-time reversal method;
②The one-time reversal method is used for packaging.
(5)Recognition criteria and accrual method for provision for decline in value of
inventories
Inventories are stated at the lower of cost and net realizable value. The excess of
cost over net realizable value of the inventories is recognised as provision for
impairment of inventory, and recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable
evidence obtained, and factors such as purpose of holding the inventory and impact
of post balance sheet event shall be considered.
①In normal operation process, finished goods, products and materials for direct
Notes to the Financial Statements 21
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
sale, their net realizable values are determined at estimated selling prices less
estimated selling expenses and relevant taxes and surcharges; for inventories held
to execute sales contract or service contract, their net realizable values are
calculated based on contract price. If the quantities of inventories specified in sales
contracts are less than the quantities held by the Company, the net realizable value
of the excess portion of inventories shall be based on general selling prices. Net
realizable value of materials held for sale shall be measured based on market price.
②For materials in stock need to be processed, in the ordinary course of production
and business, net realisable value is determined at the estimated selling price less
the estimated costs of completion, the estimated selling expenses and relevant taxes.
If the net realisable value of the finished products produced by such materials is
higher than the cost, the materials shall be measured at cost; if a decline in the price
of materials indicates that the cost of the finished products exceeds its net
realisable value, the materials are measured at net realisable value and differences
shall be recognised at the provision for impairment.
③The company generally makes provision for inventory impairment based on an
individual basis. For inventories with large quantity and low unit price, the
provisions for inventory impairment are determined on a category basis. Provision
for impairment in the value of inventories is made for inventories held in stock for
more than 180 days based on the estimated realisable value of inventories sold by
material category group.
④If any factor rendering write-downs of the inventories has been eliminated at the
reporting date, the amounts written down are recovered and reversed to the extent
of the inventory impairment, which has been provided for. The reversal shall be
included in profit or loss.
(1)Methods and criteria for recognition of contract assets
The Company presents contract assets or contract liabilities in the balance sheet
based on the relationship between the performance obligations and payments from
customers. The right to receive consideration for goods transferred or services
provided by the Company to the customer (and which is dependent on factors other
than the passage of time) is presented as a contract asset. Contract assets and
contract liabilities under the same contract are shown on a net basis. The
Notes to the Financial Statements 22
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Company's unconditional (depending only on the passage of time) right to receive
consideration from customers is shown separately as receivables.
(2)Method of determining expected credit losses on contract assets and accounting
treatment
The methods of determining expected credit losses on contract assets and the
accounting treatment are described in detail in Note "III.9. (6)Methods of testing
and accounting treatment for impairment of Financial instrument" in this Note.
(1) Criteria for determining joint control and significant influence
Joint control refers to the control shared by an arrangement in accordance with the
relevant agreement, and the relevant activities of the arrangement can only be
decided with the unanimous consent of the participants sharing the control. If the
Company exercises joint control over an investee together with other joint venture
parties and has rights to the investee's net assets, the investee is a joint venture of
the Company.
Significant influence means having the power to participate in the financial and
operating decisions of the investee, but not being able to control or exercise joint
control with other parties over the formulation of those policies. Where the
Company is able to exercise significant influence over an investee, the investee is
an associate of the Company.
(2)Determination of initial investment
①Long-term equity investments resulting from business combinations
For long-term equity investments in subsidiaries formed by business combinations
under common control, the initial investment of long-term equity investments is
determined at the date of consolidation based on the acquisition of the share of the
ownership interest of the consolidated party in the book value of the consolidated
financial statements of the ultimate controlling party. The difference between the
initial investment cost of the long-term equity investment and the carrying value of
the consideration paid is adjusted against the equity premium in capital surplus; if
the equity premium in capital surplus is not sufficient for elimination, retained
earnings are adjusted. If the Company is able to exercise control over an investee
Notes to the Financial Statements 23
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
under the same control due to additional investment, the difference between the
initial investment cost of the long-term equity investment recognized in accordance
with the above principle and the sum of the book value of the long-term equity
investment before reaching the consolidation plus the book value of the
consideration paid for further acquisition of shares at the date of consolidation is
adjusted against equity premium, and if the equity premium is not sufficient for
elimination, it is reduced against retained earnings.
For long-term equity investments in subsidiaries formed through business
combinations not under common control, the initial investment cost of the
long-term equity investment is based on the cost of the combination determined at
the date of acquisition. If it is possible to exercise control over the investee under
non-same control due to additional investment, the sum of the book value of the
equity investment originally held plus the cost of the additional investment is used
as the initial investment cost.
②Long-term equity investments acquired through other means instead of business
combination
Long-term equity investments acquired by cash payment are recorded at initial
investment cost based on the actual purchase price paid.
Long-term equity investments acquired by issuing equity securities are recorded at
the initial investment cost based on the fair value of the equity securities issued.
(3)Subsequent measurement and profit or loss recognition methods
① Long-term equity investments accounted for under the cost method
The Company accounts for its long-term equity investments in subsidiaries using
the cost method unless the investments meet the conditions of being held for sale.
Except for the declared but unpaid cash dividends or profits included in the actual
price or consideration paid for the investment, the Company recognizes investment
income for the current period based on the Company's entitlement to the declared
cash dividends or profits of the investee.
②Long-term equity investments accounted for under the equity method
Long-term equity investments in associates and joint ventures are accounted for
using the equity method. The difference between the initial investment cost
and the share of the fair value of the identifiable net assets of the investee at the
time of investment is not adjusted to the initial investment cost of the long-term
Notes to the Financial Statements 24
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
equity investment; the difference between the initial investment cost and the share
of the fair value of the identifiable net assets of the
investee at the time of investment is recognized in profit or loss for the current
period and the cost of the long-term equity investment is also adjusted.
The Company recognizes investment income and other comprehensive income
according to the share of net profit or loss and other comprehensive income
realized by the investee, respectively, and adjusts the carrying value of the
long-term equity investment at the same time; the portion to which the Company is
entitled according to the profit or cash dividends declared by the investee is
calculated, and the carrying value of the long-term equity investment is reduced
accordingly; for the investee's ownership interest other than net profit or loss, other
comprehensive income and profit distribution For changes in the equity of the
investee other than net profit or loss, other comprehensive income and profit
distribution ("changes in other owners'equity"), the carrying amount of the
long-term equity investment is adjusted and recognized in owners' equity.
In recognizing the share of the investee's net profit or loss, other comprehensive
income and other changes in owners'equity, the fair value of the investee's
identifiable net assets at the time of acquisition is used as the basis for recognition,
and the net profit and other comprehensive income of the investee are adjusted in
accordance with the Company's accounting policies and accounting periods.
Unrealized gains or losses on internal transactions between the company and
associate and joint ventures that are attributable to the Company on the basis of
their proportionate share are offset and investment income is recognized on this
basis, except when the assets invested or sold constitute a business. Unrealized
losses on internal transactions with investees are recognized in full if there are
impairment losses on assets.
The net loss incurred by the company in a joint venture or an associate, except for
the obligation to assume additional losses, is limited to a write-down to zero of the
carrying amount of the long-term equity investment and other long-term interests
that substantially constitute the net investment in the joint venture or associate. If
the joint venture or associate subsequently realizes net profit, the Company
resumes recognition ofrevenue sharing after the revenue sharing amount makes up
for the unrecognized loss sharing amount.
Notes to the Financial Statements 25
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
③Disposal of long-term equity investments
The difference between the carrying amount and the actual acquisition price of a
long-term equity investment is recognized in profit or loss for the current period.
If a long-term equity investment accounted for under the equity method is partially
disposed of and the remaining equity interest is still accounted for under the equity
method, the other comprehensive income recognized under the former equity
method is carried forward in proportion to the corresponding percentage using the
same basis as the direct disposal of the related assets or liabilities by the investee,
and other changes in owners'equity are carried forward in proportion to the current
profit or loss.
If the common control or significant influence over the investee is lost due to the
disposal of equity investments, etc., other comprehensive income recognized as a
result of the adoption of the equity method of accounting for the original equity
investment is accounted for on the same basis as the direct disposal of the related
assets or liabilities of the investee upon the termination of the adoption of the
equity method of accounting, and all changes in other owners'equity are transferred
to current profit or loss upon the termination of the adoption of the equity method
of accounting.
If control over the investee is lost due to disposal of part of the equity investment,
the remaining equity interest that can exercise joint control or significant influence
over the investee is accounted for under the equity method in the preparation of
individual financial statements, and the remaining equity interest is adjusted as if it
had been accounted for under the equity method from the time of acquisition, and
other comprehensive income recognized prior to the acquisition of control over the
investee is accounted for on the same basis as if the investee had directly disposed
of the related assets or liabilities. If the remaining equity interest cannot exercise
joint control or significant influence over the investee, it is recognized as a
financial asset, and the difference between its fair value and its carrying amount at
the date of loss of control is recognized in profit or loss for the
current period, and for other comprehensive income and other owner's equity
recognized prior to the acquisition of control of the investee, the remaining equity
interest is recognized in profit or loss for the current period. All other
comprehensive income and other changes in owners'equity recognized prior to the
Notes to the Financial Statements 26
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
acquisition of control of the investee are carried forward.
If the disposal of an equity investment in a subsidiary through multiple transactions
until the loss of control is a package transaction, each transaction is accounted for
as a disposal of an equity investment in a subsidiary and the loss of control; the
difference between the disposal price and the carrying value of the long-term
equity investment corresponding to the equity interest disposed of before the loss
of control is recognized as other comprehensive income in the individual financial
statements, and then recognized as other comprehensive income when control is
lost. The difference between the disposal price and the carrying amount of the
long-term equity investment before the loss of control is recognized as other
comprehensive income in the individual financial statements, and then transferred
to profit or loss in the period in which control is lost. If it is not a package
transaction, each transaction is accounted for separately.
Investment property refers to real estate held to earn rentals or for capital appreciation, or
both. It includes land use rights that have been leased out, land use rights held and
intended to be transferred after appreciation, and buildings that have been leased out
(including buildings constructed or developed by the company for leasing purposes, as
well as buildings under construction or development intended for future leasing).
Subsequent expenditures related to investment property shall be included in the cost of the
investment property if it is probable that the associated economic benefits will flow to the
entity and the cost can be measured reliably; otherwise, they are recognized in profit or
loss for the period when incurred.
The company measures existing investment property using the cost model. For investment
property - leased buildings measured at cost, the same depreciation policy applied to the
company's fixed assets is used. The amortization policy for leased land use rights follows
the same approach as for intangible assets.
(1)Recognition and initial measurement of fixed assets
Fixed assets are tangible assets held for the production of goods, provision of
services, rental or management, and with a useful life of more than one fiscal year .
A fixed asset is recognized when both of the following conditions are met:
Notes to the Financial Statements 27
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
① It is probable that the economic benefits associated with the fixed asset will
flow to the enterprise;
② The cost of the fixed asset can be measured reliably.
Fixed assets are initially measured at cost (taking into account the effect of
expected disposal costs).
Subsequent expenditures related to fixed assets are included in the cost of fixed
assets when it is probable that the economic benefits associated with them will
flow to the enterprise and their cost can be measured reliably; for the replaced part,
the carrying amount is derecognized; all other subsequent expenditures are charged
to current profit or loss when incurred.
(2)Depreciation Method
Depreciation of fixed assets is provided using the average annual method, and the
depreciation rate is determined based on the category of fixed assets, estimated
useful life and estimated net residual value rate. For fixed assets with provision for
impairment, the depreciation amount is determined in future periods based on the
carrying amount after deducting the provision for impairment and based on the
remaining useful life. If each component of fixed assets has different useful lives or
provides economic benefits to the enterprise in different ways, different
depreciation rates or depreciation methods are selected and depreciated separately.
The depreciation methods, useful lifes, residual value rate and annual depreciation
rates of various types of fixed assets are as follows:
Depreciation Residual Estimated useful
Category Annual depreciation rates (%)
method rates (%) life (year)
Straight-line
Buildings and constructions 7.00-10.00 12-20 4.50-7.50
method
Straight-line
Machinery equipment 0.00 4-15 6.67-25.00
method
Electrical equipment, Model, Straight-line
and other method
Straight-line
Vehicles 0.00 6-11 9.09-16.67
method
Improvement expenditure of Straight-line Amortisation shall be made according to the
leased fixed assets method shorter of benefit period and lease period
Notes to the Financial Statements 28
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(3)Disposal of fixed assets
Fixed assets are derecognized when they are disposed of, or when no economic
benefits are expected to arise from their use or disposal. The disposal proceeds
from the sale, transfer,scrapping or destruction of fixed assets, net of their book
value and related taxes and fees, are recognized in profit or loss for the current
period.
Construction in progress is measured at its actual incurred costs. Actual costs include
construction costs, installation costs, borrowing costs eligible for capitalization, and other
necessary expenditures incurred to bring the construction in progress to its intended
usable state. When the construction in progress reaches its intended usable state, it is
transferred to property, plant, and equipment (fixed assets) and depreciation begins from
the following month.
For fixed assets that have reached their intended usable state but have not yet completed
final settlement procedures, they are provisionally transferred to fixed assets at estimated
values based on project budgets, cost estimates, or actual incurred costs from the date they
reach their intended usable state. Depreciation is calculated according to the company's
fixed asset depreciation policy. Once the final settlement procedures are completed, the
originally estimated provisional values are adjusted to reflect the actual costs, but
previously recognized depreciation amounts are not adjusted.
(1)Recognition Principles for Capitalization of Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of
qualifying assets are capitalized and included in the cost of those assets. Other
borrowing costs are recognized as an expense when they are incurred and included
in profit or loss for the period.
A qualifying asset is one that necessarily takes a substantial period of time to get
ready for its intended use or sale, such as property, plant, and equipment,
investment property, and inventories.
Notes to the Financial Statements 29
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Period of Capitalization of Borrowing Costs
The capitalization period refers to the duration from the start of capitalizing
borrowing costs until the cessation of capitalization, excluding periods when
capitalization is suspended.
Borrowing costs begin to be capitalized when all the following conditions are met:
①Expenditure on the asset has been incurred, which includes payments made in
cash, non-cash consideration, or liabilities bearing interest for the acquisition or
production of a qualifying asset.
②Borrowing costs have been incurred.
③Activities necessary to prepare the asset for its intended use or sale have
commenced. Capitalization of borrowing costs ceases when the qualifying asset is
ready for its intended use or sale.
(3)Suspension of Capitalization Period
If there is an abnormal interruption during the construction or production of a
qualifying asset and the interruption lasts continuously for more than three months,
the capitalization of borrowing costs should be suspended. However, if the
interruption is a necessary part of the process for preparing the asset for its
intended use or sale, borrowing costs continue to be capitalized. During the
suspension period, borrowing costs are recognized as an expense until the
construction or production activities resume.
(4)Calculation Methods for Capitalization Rate and Amount of Borrowing Costs
For specific borrowings taken out to acquire or construct a qualifying asset, the
amount of borrowing costs to be capitalized is determined by subtracting the
interest income earned from depositing unused funds in a bank or from temporary
investments from the actual borrowing costs incurred during the period.
For general borrowings used to acquire or construct a qualifying asset, the amount
of borrowing costs to be capitalized is calculated by multiplying the weighted
average of the expenditures exceeding the amount of specific borrowings by the
capitalization rate of the general borrowings. The capitalization rate is based on the
weighted average effective interest rate of the general borrowings.
During the capitalization period, exchange differences arising from foreign
currency denominated specific borrowings and their interest are capitalized and
Notes to the Financial Statements 30
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
included in the cost of qualifying assets. Exchange differences arising from other
foreign currency borrowings and their interest are recognized as expenses in profit
or loss.
(1)Valuation method of intangible assets
①The company initially measures intangible assets at cost when they are acquired;
The cost of an externally acquired intangible asset includes the purchase price,
related taxes and other expenses directly attributable to bringing the asset to its
intended use.
②Subsequent measurement
The useful life of an intangible asset is analyzed and determined at the time of
acquisition.For intangible assets with finite useful lives, they are amortized over
the period in which they bring economic benefits to the enterprise; if the period
in which the intangible assets bring economic benefits to the enterprise cannot be
foreseen, they are considered to be intangible assets with indefinite useful lives and
are not amortized.
(2)The useful life and amortisation of intangible assets
Category Estimated useful life Basis
Land use right 20-50years Legal right of use
The service life is determined by
reference to the period that can
Software 3-5years
bring economic benefits to the
Company
(3)Criteria for Judging Indefinite-Lived Intangible Assets and Procedures for
Reviewing Their Useful Lives Indefinite-Lived Intangible Assets
For intangible assets with an indefinite useful life, no amortization is recognized.
These assets are not amortized because their useful lives cannot be reliably
estimated.
At the end of each annual period, the useful life of indefinite-lived intangible assets
should be reviewed. If evidence indicates that the useful life of an intangible asset
is actually finite, its useful life should be estimated, and the asset should be
Notes to the Financial Statements 31
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
amortized systematically and rationally over its estimated useful life.
(4)Scope of Research and Development(R&D) expenditure Classification
The Company classifies all costs directly related to the conduct of research and
development activities as research and development expenses, including research
and development employee compensation, depreciation and amortisation expenses,
testing expenses, maintenance expenses, patent fees and other expenses.
(5)Specific criteria for classifying research and development phases
Expenditures on in-house research and development projects are categorized into
research stage expenditures and development stage expenditures.
Research stage: the stage of original and planned investigation and research
activities for the purpose of acquiring and understanding new scientific or
technological knowledge.
Development phase: the stage of applying research results or other knowledge to a
plan or design to produce new or substantially improved materials, devices,
products and other activities before commercial production or use.
(6)The specific conditions for capitalization of development stage expenditures
Expenditures in the research stage are recognized in profit or loss when they are
incurred. Expenditures in the development phase are recognized as intangible
assets if the following conditions are met. Expenditures in the development phase
that do not meet the following conditions are recognized in the current period's
profit or loss:
① It is technically feasible to complete the intangible asset so that it can be used
or sold;
② There is an intention to complete the intangible asset for use or sale;
③The manner in which the intangible asset will generate economic benefits,
including the ability to demonstrate the existence of a market for the products
produced by applying the intangible asset or the existence of a market for the
intangible asset itself, and the usefulness of the intangible asset if it will be used
internally;
④The availability of sufficient technical, financial and other resources to support
the completion of the development of the intangible asset and the ability to use or
sell the intangible asset;
⑤Expenditures attributable to the development phase of the intangible asset can
Notes to the Financial Statements 32
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
be measured reliably.
If it is not possible to distinguish between research-phase expenditures and
development-phase expenditures, all research and development expenditures
incurred are recognized in the current period's profit or loss.
Long-term equity investments, investment properties measured using the cost model,
fixed assets, construction in progress, right-of-use assets, intangible assets with finite
useful lifes,oil and gas assets and other long-term assets are tested for impairment if there
is an indication of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of an asset is less than its carrying amount, a
provision for impairment is made for the difference and an impairment loss is recorded.
The recoverable amount is the higher of the asset's fair value less costs of disposal and the
present value of estimated future cash flows of the asset. The provision for asset
impairment is calculated and recognized on an individual asset basis. If it is difficult to
estimate the recoverable amount of an individual asset, the recoverable amount of the
asset group is determined using the asset group to which the asset belongs. An asset group
is the smallest combination of assets that can generate cash inflows independently.
For goodwill resulting from business combinations, intangible assets with indefinite
useful lives, and intangible assets that have not yet reached a serviceable status,
impairment tests are performed once a year at the end of each year, regardless of whether
there is an indication of impairment.
The Company conducts goodwill impairment tests and apportions the carrying value of
goodwill formed as a result of a business combination to the relevant asset group from the
date of purchase in accordance with a reasonable method; if it is difficult to apportion to
the relevant asset group, it is apportioned to the relevant asset group combination. A
relevant asset group or a combination of asset groups is an asset group or a combination
of asset groups that can benefit from the synergistic effect of a business combination.
When impairment test of the relevant asset group or combination of asset groups that
contain goodwill, if there is an indication of impairment of the asset group or combination
of asset groups related to goodwill, the asset group or combination of asset groups that do
not contain goodwill is first tested for impairment, the recoverable amount is calculated
and compared with the relevant carrying amount, and a corresponding impairment loss is
recognized. If the recoverable amount is less than the carrying amount, the impairment
Notes to the Financial Statements 33
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
loss is first reduced by the carrying amount of goodwill apportioned to the asset group or
group of assets, and then reduced by the carrying amount of each asset group or group
of assets other than goodwill in proportion to its proportionate share of the carrying
amount of the other assets. The carrying value of each asset is then reduced by the
carrying value of each asset other than goodwill.
Once the above impairment loss is recognized, it will not be reversed in subsequent
accounting periods.
Long-term deferred expenses are various expenses already incurred, which shall be
amortized over current and subsequent periods with the amortization period exceeding
one year.
Long-term deferred expenses are amortized on a straight-line basis during the benefit
period.
An entity’s obligation to transfer goods or services to a customer for which the entity has
received consideration (or the amount is due) from the customer. Contract asset and
contract liability originate from same contact shall be listed at net amount.
(1)Accounting for short-term compensation
The Company recognizes actual short-term compensation incurred by employees
as a liability in the accounting period in which the employees provide services to
the Company, and recognizes it in the current profit or loss or the cost of related
assets.
The social insurance premiums and housing fund paid by the Company for its
employees, as well as the labor union funds and employee education funds
withdrawn in accordance with regulations, are used to determine the corresponding
amount of employee compensation in accordance with the prescribed accrual basis
and accrual ratio during the accounting period in which the employees provide
services to the Company.
Employee benefit expenses incurred by the Company are charged to current profit
or loss or the cost of related assets based on the actual amount incurred when
incurred, of which non-monetary benefits are measured at fair value.
Notes to the Financial Statements 34
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Accounting for post-employment benefits
①Defined contribution plan
The Company contributes to basic pension and unemployment insurance for
employees in accordance with the relevant local government regulations. During
the accounting period in which the employees provide services to the Company, the
amount payable is calculated based on the contribution base and ratio set by the
local regulations, recognized as a liability, and charged to current profit or loss or
cost of related assets. In addition, the Company participates in an enterprise annuity
plan/supplemental pension fund approved by the relevant state authorities. The
Company contributes a certain percentage of the employees' total salaries to the
annuity plans/local social insurance agencies, and the corresponding expenses are
recognized in the current profit or loss or cost of related assets.
② Defined benefit plans
The Company attributes the benefit obligations arising from the defined benefit
plans to the period in which the employees render services in accordance with the
formula determined by the expected accumulated benefit unit method, and
recognizes them in current profit or loss or cost of related assets.
The deficit or surplus resulting from the present value of the defined benefit plan
obligation less the fair value of the defined benefit plan assets is recognized as a
net defined benefit plan liability or net asset. If a defined benefit plan has a surplus,
the Company measures the net defined benefit plan asset at the lower of the surplus
or asset limit of the defined benefit plan.
All defined benefit plan obligations, including those expected to be paid within
twelve months after the end of the annual reporting period in which employees
render services, are discounted based on market yields on treasury bonds or
high-quality corporate bonds in active markets that match the maturity and
currency of the defined benefit plan obligations as of the balance sheet date.
The service cost incurred by the defined benefit plan and the net interest on the net
liabilities or net assets of the defined benefit plan are recognized in profit or loss or
the cost of the related assets; changes resulting from theremeasurement of the net
liabilities or net assets of the defined benefit plan are recognized in other
comprehensive income and are not reversed to profit or loss in subsequent
accounting periods, and the entire portion previously recognized in other
Notes to the Financial Statements 35
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
comprehensive income is carried forward to unrecognized earnings to the extent of
equity upon termination of the original defined benefit plan. The portion of other
comprehensive income withinequity is transferred to unappropriated earnings upon
termination of the defined benefit plan.
Upon settlement of a defined benefit plan, again or loss on settlement is recognized
as the difference between the present value of the defined benefit plan obligation
and the settlement price determined at the settlement date.
(3)Accounting for termination benefits
If the Company provides termination benefits to employees, it recognizes
employee compensation liabilities arising from termination benefits and recognizes
them in profit or loss at the earlier of: when the Company cannot unilaterally
withdraw termination benefits provided as a result of a termination plan or a
proposed reduction in force; and when the Company recognizes costs or expenses
related to a restructuring involving the payment of termination benefits.
The Company recognizes an obligation related to a contingent event as an accrued
liabilities when the following conditions are simultaneously mets:
①The obligation is a present obligation assumed by the Company;
② It is probable that the performance of the obligation will result in an outflow of
economic benefits to the Company;
③ The amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle
the related present obligation.
In determining the best estimate, the risks associated with the contingency, uncertainty
and the time value of money are considered. Where the effect of the time value of money
is material, the best estimate is determined by discounting the related future cash
outflows.
Where a continuous range of expenditures required exists and it is equally probable that
various outcomes will occur within that range, the best estimate is determined at the mid-
point of the range; in other cases, the best estimate is treated separately as follows:
- Where the contingency relates to a single item, the best estimate is determined in
accordance with the most probable occurrence amount.
- If the contingency involves multiple items, it is determined on the basis of various
Notes to the Financial Statements 36
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
possible outcomes and related probabilities.
If all or part of the expenditure required to settle the estimated liability is expected to be
reimbursed by athird party, the amount of reimbursement is recognized separately as an
asset when it is substantially certain that it will be received, and the amount of
reimbursement recognized does not exceed the carrying amount of the estimated liability.
The Company reviews the carrying amount of the estimated liability at the balance sheet
date, and if there is conclusive evidence that the carrying amount does not reflect the
current best estimate, the carrying amount is adjusted in accordance with the current best
estimate.
(1)Accounting policies used for revenue recognition and measurement
The Company recognizes revenue when it has fulfilled its performance obligations
under a contract, i.e., when the customer obtains control of the relevant goods or
services. The acquisition of control of the relevant goods or services is defined as
the ability to dominate the use of the goods or services and derive substantially all
of the economic benefits therefrom.
If a contract contains two or more performance obligations, the Company
apportions the transaction price to each individual performance obligation on the
contract commencement date in proportion to the relative share of the individual
selling price of the goods or services promised by each individual performance
obligation. The Company measures revenue based on the transaction price
apportioned to each individual performance obligation.
The transaction price is the amount of consideration to which the Company expects
to be entitled as a result of the transfer of goods or services to the customer,
excluding amounts collected on behalf of third parties and amounts expected to be
refunded to the customer. The Company determines the transaction price in
accordance with the terms of the contract, taking into account its past customary
practices, and considers the impact of variable consideration, the existence of
significant financing components in the contract, non-cash consideration, and
consideration payable to the customer in determining the transaction price. The
Company determines the transaction price that includes variable consideration by
Notes to the Financial Statements 37
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
an amount that does not exceed the amount for which it is highly probable that
there will be no material reversal of the cumulative recognized revenue at the time
the relevant uncertainty is removed. If there is a significant financing component
in the contract, the Company determines the transaction price based on the amount
payable in cash assuming that the customer will pay for the goods or services as
soon as control is obtained, and amortizes the difference between this transaction
price and the contract consideration using the effective interest rate method over
the term of the contract.
Performance obligations are fulfilled within a certain period of time if one of the
following conditions is met, otherwise, performance obligations are fulfilled at a
certain point in time:
- The customer obtains and consumes the economic benefits resulting from the
Company's performance at the sametime as the Company's performance.
- The customer is able to control the goods under construction in the course of the
Company's performance.
- The goods produced in the course of the Company's performance have
irreplaceable use and the Company is entitled to receive payment for the portion
of the performance that has been completed to date in the aggregate throughout the
term of the contract.
For performance obligations performed within a certain period of time, the
Company recognizes revenue in accordance with the progress of performance
during that period,
except when the progress of performance cannot be reasonably determined. The
Company uses the output method or input method to determine the progress of
performance, taking into account the nature of the goods or services. When the
progress of performance cannot be reasonably determined, the Company
recognizes revenue in the amount of costs already incurred until the progress of
performance can be reasonably determined, if the costs already incurred are
expected to be reimbursed.
For performance obligations performed at a point in time, the Company recognizes
revenue at the point in time when the customer obtains control of the related goods
or services. In determining whether the customer has acquired control of the goods
or services, the Company considers the following indications:
Notes to the Financial Statements 38
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
- The Company has a present right to receive payment for the goods or services, i.e.,
the customer has a present obligation to pay for the goods or services.
- The Company has transferred legal title to the goods to the customer, i.e., the
customer has legal title to the goods.
- The Company has transferred physical possession of the goods to the customer,
i.e. the customer has taken physical possession of the goods.
- The Company has transferred the principal risks and rewards of ownership of the
goods to the customer, i.e., the customer has acquired the principal risks and
rewards of ownership of the goods.
- The customer has accepted the goods or services, etc.
The Company determines whether its status is that of a principally liable person or
an agent at the time of engaging in a transaction based on whether it has control
over the goods or services prior to transferring them to the customer. If the
Company is able to control the goods or services prior to transferring them to the
customer, the Company is the principal and recognizes revenue based on the total
consideration received or receivable; otherwise, the Company is the agent and
recognizes revenue based on the amount of commissions or fees it expects to be
entitled to receive.
(2)Disclosure of specific revenue recognition and measurement methods by
business type
①Sale of goods
The sales contract between the Company and the customer includes the
performance obligation of transferring the goods, which belongs to the
performance obligation at a certain point in time.
Recognition of domestic sales product revenue must meet the following conditions:
the Company has delivered the products to the customer according to the contract
and the customer has accepted the products; the payment has been recovered or the
receipt of payment has been obtained, and the relevant economic benefits are likely
to flow in; the main risks and rewards of the ownership of the goods have been
transferred, and the legal ownership of the goods has been transferred.
Recognition of exporting revenue must meet the following conditions: The
Company recognizes revenue for exporting goods based on the sales contracts or
sales orders, regardless of the sales model adopted. For sales model of FOB, the
Notes to the Financial Statements 39
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
revenue is recognised after the products are shipped and the customs declaration
and export formalities are handled; For sales model of FCA, the revenue is
recognised when products are delivered to the carrier designated by the buyer
Treatment of sales return: according to the general rules of international trade, the
adoption of FOB and CIF settlement indicates that the buyer has accepted the
purchased goods at the place of shipment, and the relevant risks have been
undertaken by the buyer after the acceptance and shipment. Therefore, the
Company does not make provision for the above matters separately, but directly
records them into the profits and losses in the current period.
Processing of product claims: the estimated claim expense rate is calculated based
on the actual claim amount in the past two years (excluding special claims) as a
percentage of the annual sales revenue, and accrued at period end based on the
current sales revenue and the estimated claim expense rate to recognize the claim
expenses for products sold in the current period.
②Service contract
The performance obligation of the service contract between the Company and the
customer. Since the customer obtains and consumes the economic benefits brought
by the Company’s performance at the same time as the Company fulfills the
contract, the Company recognises it as a performance obligation performed within
a certain period of time, and amortized equally during the service provision period.
③Construction contract
For the performance obligation of the construction contract between the Company
and the customer, since the customer can control the goods under construction in
the process of the Company's performance, the Company takes it as the
performance obligation to perform in a certain period of time, and recognizes the
income according to the performance progress, except that the performance
progress cannot be reasonably determined. The Company determines the progress
of the performance of providing services in accordance with the output method.
The progress of the performance shall be determined according to the proportion of
the completed contract workload to the expected total contract workload. On the
balance sheet date, the Company re-estimates the progress of completed
performance or completed services to reflect the changes in performance.
Notes to the Financial Statements 40
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(1)Types
Government grants, which are monetary or non-monetary assets acquired by the
Company from the government without compensation, are classified as
asset-related government grants and revenue-related government grants.
Government grants related to assets are obtained by the Company for the
acquisition and construction or otherwise forming long-term assets.
Revenue-related government grants refer to government grants other than
asset-related government grants.
The specific criteria for the Company to classify government grants as asset-related
are: government grants obtained by the Company and used for the acquisition and
construction or otherwise forming long-term assets.
The Company's specific criteria for classifying government grants as
revenue-related are: government grants other than those related to assets.
(2)Recognition point
Government grants are recognized when the Company is able to meet the
conditions attached to them and when they can be received.
(3)Accounting treatment
Government grants related to assets are reduced to the carrying amount of the
relevant assets or recognized as deferred income. If recognized as deferred income,
it is recognized in profit or loss in accordance with a reasonable and systematic
method in installments over the useful life of the relevant assets (if it is related to
the Company's daily activities, it is recognized in other income; if it is not related
to the Company's daily activities, it is recognized in non-operating income);
Government grants related to revenue, which are used to compensate the Company
for relevant costs and expenses or losses in subsequent periods, are recognized as
deferred revenue and charged to current profit or loss (to other income if they are
related to the Company's ordinary activities; to non-operating income if they are
not related to the Company's ordinary activities) or offset against relevant costs and
expenses or losses in the period in which the relevant costs and expenses or losses
are recognized; to compensate the Company for If it is used to compensate the
Company for the related costs or losses incurred, it is directly recognized in profit
or loss (other income if it is related to the Company's daily activities; non-operating
Notes to the Financial Statements 41
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
income if it is not related to the Company's daily activities) or reduced by the
related costs or losses.
The company receives preferential loan subsidies under two distinct scenarios,
each requiring specific accounting treatment:
①If the fiscal authority provides the subsidy funds to the lending bank, which then
offers loans to the company at a preferential interest rate, we record the loan at the
actual amount received. The borrowing costs are calculated based on the principal
amount of the loan and the preferential interest rate.
②If the fiscal authority directly pays the subsidy funds to the company, we offset
the corresponding subsidy against the related borrowing costs.
Income taxes consist of current income taxes and deferred income taxes. The Company
recognizes current income tax and deferred income tax in profit or loss, except for income
tax arising from business combinations and transactions or events directly recognized in
owners'equity (including other comprehensive income).
Deferred income tax assets and deferred income tax liabilities are recognized based on the
difference between the tax basis of assets and liabilities and their carrying amounts
(temporary differences).
Deferred tax assets are recognized for deductible temporary differences to the extent that
it is probable that taxable income will be available in future periods against which the
deductible temporary differences can be utilized. For deductible losses and tax credits that
can be carried forward to future years, deferred tax assets are recognized to the extent that
it is probable that future taxable income will be available against which the deductible
losses and tax credits can be utilized.
Deferred income tax liabilities are recognized for taxable temporary differences, except
under special circumstances.
The special circumstances under which deferred tax assets or deferred tax liabilities are
not recognized include
- Initial recognition of goodwill;
- Transactions or events that are neither business combinations nor, at the time of their
occurrence, affect accounting profit and taxable income (or deductible losses), and for
which the initial recognition of assets and liabilities does not result in taxable temporary
Notes to the Financial Statements 42
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
differences and deductible temporary differences of an equivalent amount.
Deferred income tax liabilities are recognized for taxable temporary differences
associated with investments in subsidiaries, associates and joint ventures, unless the
Company is able to control the timing of the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. Deferred
income tax assets are recognized for deductible temporary differences associated with
investments in
subsidiaries, associates and joint ventures when it is probable that the temporary
differences will reverse in the foreseeable future and it is probable that future taxable
income will be available against which the deductible temporary differences can be
utilized.
At the balance sheet date, deferred income tax assets and deferred income tax liabilities
are measured at the tax rates applicable to the periods when the related assets are expected
to be recovered or the related liabilities settled, in accordance with the tax laws.
At the balance sheet date, the Company reviews the carrying amount of deferred tax
assets. The carrying amount of deferred tax assets is written down if it is more likely than
not that sufficient taxable income will not be available in future periods to offset the
benefit of the deferred tax assets. To the extent that it is probable that sufficient taxable
income will be available, the written down amount is reversed.
When there is a legal right to settle on a net basis and the intention is to settle on a net
basis or to acquire assets and settle liabilities simultaneously, current income tax assets
and current income tax liabilities are stated at the net amount after offsetting.
At the balance sheet date, deferred income tax assets and deferred income tax liabilities
are presented on a net basis after offsetting when both of the following conditions are met:
- The taxable entity has the legal right to settle current income tax assets and current
income tax liabilities on a net basis;
- Deferred income tax assets and deferred income tax liabilities relate to income taxes
levied by the same tax authority on the same taxable entity or to different taxable entities,
but in each future period in which it is significant that the deferred income tax assets and
liabilities reverse, the taxable entities involved intend to settle the current income tax
assets and liabilities on a net basis or to acquire the assets and The reversal of deferred
income tax assets and liabilities is a significant transaction.
Notes to the Financial Statements 43
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
A lease is a contract in which the lessor cedes the right to use an asset to the lessee for a
certain period of time for consideration. At the inception date of the contract, the
Company assesses whether the contract is a lease or contains a lease. A contract is a lease
or contains a lease if one party to the contract cedes the right to control the use of one or
more identified assets for a certain period of time in exchange for consideration.
If a contract contains several separate leases, the Company splits the contract and
accounts for each separate lease separately. If a contract contains both lease and non-lease
components, the lessee and the lessor split the lease and non-lease components.
(1)The Company as lessee
①Right-of-use assets
At the commencement date of the lease term, the Company recognizes right-of-use
assets for leases other than short-term leases and leases of low-value assets.
Right-of-use assets are initially measured at cost. This cost includes:
- the initial measurement amount of the lease liability;
- the amount of lease payments made on or before the commencement date of the
lease term, net of amounts related to lease incentives taken if lease incentives exist;
- the initial direct costs incurred by the Company;
- costs that the Company expects to incur to disassemble and remove the leased
asset,restore the site where the leased asset is located, or restore the leased asset to
the condition agreed upon under the terms of the lease, excluding costs that are part
of the costs incurred to produce the inventory.
The Company subsequently depreciates right-of-use assets using the straight-line
method. If it is reasonably certain that ownership of the leased asset will be
obtained at the end of the lease term, the Company depreciates the leased asset
over its remaining useful life;otherwise, the leased asset is depreciated over the
shorter of the lease term or the remaining useful life of the leased asset.
The Company determines whether a right-of-use asset is impaired and accounts for
the identified impairment loss in accordance with the principles described in Note
III.9, "Impairment of Long-lived Assets".
②Lease liabilities
Notes to the Financial Statements 44
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
The Company recognizes a lease liability for leases other than short-term leases
and leases of low-value assets at the commencement date of the lease term. Lease
liabilities are initially measured at the present value of the outstanding lease
payments. Lease payments consist of
- fixed payments (including material fixed payments), net of amounts related to
lease incentives, if lease incentives exist;
- variable lease payments that are dependent on an index or rate;
- payments expected to be payable based on the residual value of the guarantee
provided by the company;
- the exercise price of the purchase option, provided that the company reasonably
determines that it will exercise the option;
- the amount to be paid upon exercise of the option to terminate the lease, provided
that the lease term reflects that the Company will exercise the option to terminate
the lease.
The Company uses the interest rate embedded in the lease as the discount rate, but
if the interest rate embedded in the lease cannot be reasonably determined, the
Company'sincremental borrowing rate is used as the discount rate.
The Company calculates the interest expense on the lease liability for each period
of the lease term based on a fixed periodic interest rate, which is included in the
current profit or loss or the cost of the related asset.Variable lease payments that are
not included in the measurement of the lease liability are charged to current profit
or loss or the cost of the related assets when they are actually incurred.
After the commencement date of the lease term, the Company remeasures the lease
liability and adjusts the corresponding right-of-use asset if the carrying value of the
right- of-use asset has been reduced to zero, but the lease liability still needs to be
further reduced, the difference is recognized in profit or loss for the current period:
- When there is a change in the valuation of the purchase option, lease renewal
option or termination option, or when the actual exercise of the aforementioned
options is not consistent with the original valuation, the Company remeasures the
lease liability at the present value calculated by the changed lease payments and the
revised discount rate;
- When there is a change in the substantive fixed payment amount, a change in the
amount expected to be payable for the guaranteed residual value, or a change in the
Notes to the Financial Statements 45
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
index or rate used to determine the lease payment amount, the Company
remeasures the lease liability at the present value calculated from the changed lease
payment amount and the original discount rate. However, if the change in the lease
payment amount results from a change in the floating interest rate, the present
value is calculated using the revised discount rate.
③Short-term leases and leases of low-value assets
The Company has elected not to recognize right-of-use assets and lease liabilities
for short- term leases and leases of low-value assets, and to recognize the related
lease payments in current profit or loss or the cost of the related assets on a
straight-line basis over each period of the lease term. Short-term leases, which
areleases with a lease term of not more than 12 months at the commencement date
of the lease term and do not include a purchase option. Low-value asset leases,
which areleases with a lower value when the single leased asset is a brand-new
asset. If the company subleases or expects to sublease the leased assets, the original
lease is not a low-value asset lease.
④Change of lease
If a lease is changed and the following conditions are met at the sametime, the
company will account for the lease change as a separate lease:
- the lease modification expands the scope of the lease by adding the right to use
one or more leased assets;
- The increased consideration is equivalent to the separate price of the expanded
portion of the lease adjusted for the circumstances of that contract.
If a lease modification is not accounted for as a separate lease, at the effective date
of the lease modification, the company reapportioned the consideration of the
modified contract, redetermined the lease term, andremeasured the lease liability
based on the present value of the modified lease payments and the revised discount
rate.If a lease change results in a reduction in the scope of the lease or a shortening
of the lease term, the Company reduces the carrying value of the right-of-use asset
accordingly and recognizes the gain or loss related to partial termination or
complete termination of the lease in profit or loss for the current period. If other
lease changes result in the remeasurement of the lease liability, the Company
adjusts the carrying value of the right- of-use asset accordingly.
Notes to the Financial Statements 46
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)The Company as lessor
At the commencement date of the lease, the Company classifies leases into finance
leases and operating leases. A finance lease is a lease that transfers substantially
all the risks and rewards associated with ownership of the leased asset, regardless
of whether ownership is ultimately transferred. Operating leases refer to leases
other than finance leases. When the company acts as a sublease lessor, it classifies
the sublease based on the right-to-use assets arising from the original lease.
①Accounting for operating leases
Lease receipts under operating leases are recognized as rental income on a
straight-line basis over each period of the lease term. The Company capitalizes the
initial direct costs incurred in connection with operating leases and apportions them
to current profit or loss over the lease term on the same basis as rental income is
recognized. Variable lease payments that are not included in the lease receipts are
recognized in current profit or loss when they are actually incurred. If a change in
an operating lease occurs, the Company accounts for it as a new lease from the
effective date of the change, and the amount of lease payments received in advance
or receivable in connection with the lease before the change is regarded as the
amount of payments received under the new lease.
②Accounting for finance leases
On the commencement date of the lease, the Company recognizes finance lease
receivables for finance leases and derecognizes finance lease assets. When the
Company makes initial measurement of the finance lease receivable, the net lease
investment is used as the recorded value of the finance lease receivable. The net
lease investment is the sum of the unguaranteed residual value and the present
value of the lease receipts not yet received at the commencement date of the lease
term discounted at the interest rate embedded in the lease.
The Company calculates and recognizes interest income for each period of the
lease term based on a fixed periodic interest rate. Derecognition and impairment of
finance lease receivables are accounted for in accordance with Note III.9 "Financial
Instruments" of this note.Variable lease payments that are not included in the net
Notes to the Financial Statements 47
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
lease investment measurement are recognized in profit or loss when they are
actually incurred.
If a change in a finance lease occurs and the following conditions are met, the
Company accounts for the change as a separate lease:
- the change expands the scope of the lease by adding the right to use one or more
leased assets;
- the increased consideration is equivalent to the separate price of the expanded
portion of the lease adjusted for the circumstances of that contract.
If a change in a finance lease is not accounted for as a separate lease, the Company
treats the changed lease separately in the following circumstances:
- If the change becomes effective on the lease commencement date and the lease
would be classified as an operating lease, the Company accounts for it as a new
lease from the effective date of the lease change and uses the net investment in the
lease prior to the effective date of the lease change as the carrying amount of the
leased asset;
- If the change becomes effective on the lease commencement date and the lease is
classified as a finance lease, the Company accounts for the lease in accordance
with the policy on modification or renegotiation of contracts as described in Note
III.9 Financial Instruments.
Items Materiality Criteria
Significant debt investments Amount≥CNY 50,000,000.00
The Company identifies subsidiaries whose total revenue
Significant non-wholly owned
exceeds 50% of the total group profits as significant
subsidiaries
non-wholly owned subsidiaries
(1)Changes in significant accounting policies
Accounting Treatment for Standard Warehouse Receipt Transactions under the
Financial Instruments Standards Implementation Q&A
On July 8, 2025, the Ministry of Finance issued the Implementation Q&A
regarding the accounting treatment for standard warehouse receipt transactions. It
Notes to the Financial Statements 48
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
explicitly states that, in accordance with the Accounting Standards for Financial
Instruments (Recognition and Measurement), enterprises engaging in frequent
contracts to buy and sell standard warehouse receipts on futures exchanges for the
purpose of generating profits from price differentials, without taking physical
delivery of the underlying commodities, typically indicate a business practice of
acquiring contract assets and subsequently reselling them within a short period to
profit from short-term market fluctuations. Such contracts shall be treated as
financial instruments, and their accounting treatment shall follow the requirements
of the financial instruments standards.
When enterprises acquire standard warehouse receipts under such contracts and sell
them within a short period, sales revenue shall not be recognized. Instead, the
difference between the consideration received and the carrying amount of the sold
standard warehouse receipts shall be recognized in investment income. Standard
warehouse receipts held at the reporting period and not yet sold shall be classified
as other current assets.
Pursuant to the requirements of the Notice on Strictly Implementing Enterprise
Accounting Standards and Effectively Preparing Enterprise Annual Reports for
implementation of the above provisions shall require restatement of comparable
period information in the financial statements. The adoption of this regulation has
not had a material impact on the Company’s financial position or operating results.
(2)Changes in significant accounting estimates
There were no changes in the Company's significant accounting estimates during
the reporting period.
IV.Taxation
Tax Tax base Tax rate
The output tax is calculated on the basis of the income
from the sale of goods and taxable services calculated in
Value-added tax (VAT) accordance with the provisions of the tax law, and after
deducting the input tax allowed to be deducted in the
current period, the difference is the value-added tax
Notes to the Financial Statements 49
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Tax Tax base Tax rate
payable
City construction tax Payable turnover tax, tax exemption 7%、5%
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits
EIT rate for different taxpayer
Tax principles EIT rate
TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL) 15%
TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS) 25%
Xiamen TsannKuen Property Service Co., Ltd. (hereafter, TKW) 20%
Pt.Star Comgistic Indonesia 22%
（1）According to the principle of “The Second Batch of High-tech Enterprise Filing List
of Fujian Province's Accreditation Organisations for 2023 Accreditation Reporting”, TKL
was identified as Fujian Province High-tech Enterprise, and the certification was valid for
Tax Law of the People's Republic of China, the Implementation Regulations of the
Enterprise Income Tax Law of the People's Republic of China and other relevant
provisions, the income tax rate of Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. enjoys a
（ 2 ） According to the provisions of the Announcement on Further Supporting the
Development of Small and Micro Enterprises and Self-Employed Individuals with Tax
and Fee Policies (Announcement No. 12 of 2023 by the Ministry of Finance and the State
Administration of Taxation):"3. The policy allowing small and micro-profit enterprises to
calculate taxable income at 25% of the statutory rate and pay enterprise income tax at a
Services Co., Ltd., a subsidiary of the Company, is entitled to the above tax preferential
policies."
Notes to the Financial Statements 50
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
V.Notes to Consolidated Financial Statements
Items Closing balance Opening balance
Monetary Funds 814,719.21 887,987.84
Digital Currency
Cash in bank 460,016,679.73 440,872,233.11
Other cash and cash equivalents 16,377.06 2,617,722.57
Deposits with Financial Companies
Total 460,847,776.00 444,377,943.52
Including：The total amount deposited
overseas
Restricted Funds Held Overseas
CNY 16,377.06 is the balance of the company's Alipay account. In addition, there are no
funds other than the deposit for letter of credit in the monetary funds at the end of the
period that have restrictions on use and potential recovery risks due to mortgages, pledges
or freezes.
Items Closing balance Opening balance
Financial asset measured at fair value through P&L 50,942,083.33
Including：Equity instrument investment
Structured Deposit Investment 50,942,083.33
Total 50,942,083.33
(1)Category of accounts receivable listed by age
Aging Closing Balance Opening balance
Within1 year 142,623,608.17 205,640,866.11
Including：Within 90 days 126,361,373.98 190,204,917.49
Notes to the Financial Statements 51
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Aging Closing Balance Opening balance
Over 5 years 15,740.52 5,000.00
Subtotal 142,649,774.48 205,786,324.43
Less：provision for bad debt 2,680,451.35 1,830,424.63
Total 139,969,323.13 203,955,899.80
Notes to the Financial Statements 52
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Category of accounts receivable
Closing Balance Opening Balance
Provision
Items Booking balance Booking balance Provision
Booking value Booking value
Amount % Amount % Amount % Amount %
Accounts receivable
with individual bad
debt provision
Accounts receivable
with bad debt
provision based on 142,649,774.48 100.00 2,680,451.35 1.88 139,969,323.13 205,786,324.43 100.00 1,830,424.63 0.89 203,955,899.80
the characters of
credit risk portfolio
Including:
-Portfolio by age 139,200,837.18 97.58 2,680,451.35 1.93 136,520,385.83 204,835,409.81 99.54 1,830,424.63 0.89 203,004,985.18
-Portfolio by related
parties
Total 142,649,774.48 100.00 2,680,451.35 139,969,323.13 205,786,324.43 100.00 1,830,424.63 203,955,899.80
Notes to the Financial Statements 53
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Provision for Bad Debts Based on Aging Portfolio：
Closing Balance
Aging
Accounts receivable Provision for bad debts Proportion (%)
Not overdue 120,294,774.42 601,159.83 0.50
Overdue 1 - 30
days
Overdue 31 - 60
days
Overdue 61 - 90
days
Overdue more than
Total 139,200,837.18 2,680,451.35
(3)Provision for bad debts charged off, reversed or recovered during the period
Change during the year
Opening Closing
Category Collect/carry
balance Accrued Written-off others Balance
over
Accounts receivable
with individual bad
debt provision
Accounts receivable
with bad debt
provision based on the 1,830,424.63 2,680,451.35 4,510,875.98
characters of credit
risk portfolio
Including:Portfolio by
age
Portfolio by related
parties
Notes to the Financial Statements 54
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Change during the year
Opening Closing
Category Collect/carry
balance Accrued Written-off others Balance
over
Total 1,830,424.63 2,680,451.35 4,510,875.98
(4)Accounts receivable written off in current period
There Were No Actual Write-Offs of Accounts Receivable in the Current Period.
(5)Top five of closing balances of customers
The aggregated amount of the top five accounts receivable and contract assets
based on the balance owed by each debtor at the end of the period is CNY
receivable and contract assets. The corresponding aggregate bad debt provision at
the end of the period for these amounts is CNY 2,350,723.71.
(1)Advances to suppliers by aging
Closing Balance Opening Balance
Items
Amoun Percentage (%) Amoun Percentage (%)
Within 1 year 4,955,253.01 100.00 4,318,758.91 100.00
Total 4,955,253.01 100.00 4,318,758.91 100.00
(2)Top five of closing balances of suppliers
The total amount of the top five suppliers with the largest prepaid amounts at the
end of the year is CNY 1,903,219.05, accounting for 38.41% of the total amount of
the prepayment at the end of the year.
Items Closing Balance Opening Balance
Interest receivable
Dividend receivable
Other receivable 21,608,192.98 27,902,480.51
Notes to the Financial Statements 55
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing Balance Opening Balance
Total 21,608,192.98 27,902,480.51
(1)Other receivables
①Disclosure by aging
Aging Closing Balance Closing Balance
Within 1 year (including 1year) 20,499,731.51 26,709,851.91
Including: Within 90 days 20,311,115.49 26,401,440.21
Over 5 years 1,026,725.63 1,048,404.94
Subtotal 22,088,251.57 28,418,971.13
Less: provision for bad debt 480,058.59 516,490.62
Total 21,608,192.98 27,902,480.51
Notes to the Financial Statements 56
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
②Categories of other receivable
Closing Balance Opening Balance
Items Book balance Provision Carrying Booking balance Provision Carrying
Amount % Amount % amount Amount % Amount % amount
Provision for bad
debts is made on an 326,422.64 1.48 326,422.64 100.00 326,422.64 1.15 326,422.64 100.00
individual basis
Including:
Other current
balances
Provision for bad
debts by portfolio
Including:
Export tax refund 12,000,000.00 54.33 12,000,000.00 18,000,000.00 63.34 18,000,000.00
Other current
balances
Deposit 1,127,725.63 5.11 1,127,725.63 1,205,404.94 4.24 1,205,404.94
Total 22,088,251.57 100.00 480,058.59 21,608,192.98 28,418,971.13 100.00 516,490.62 27,902,480.51
Notes to the Financial Statements 57
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Provision for bad debts is made on an individual basis:
Closing Balance Opening Balance
Items Booking Accrual Reason for Booking
Bad debts bad debts
balance rate(%) accrual balance
The financial
situation of
Guangdong the trading
Songqing partner has
Intelligent 326,422.64 326,422.64 100.00 deteriorated 326,422.64 326,422.64
Technology and the
Co., Ltd amount is
expected to be
unrecoverable
Total 326,422.64 326,422.64 326,422.64 326,422.64
Provision for Bad Debts Based on Portfolio:
Closing Balance
Items
Other receivables Bad debts Accrual rate(%）
Other current
balances
Total 8,634,103.30 153,635.95
③Bad debt provision of other receivable
Expected
Expected credit Expected credit
credit loss
Provision for bad debt loss within loss within life Total
within life
following 12 time
time
months (unimpaired)
(impaired)
Notes to the Financial Statements 58
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Expected
Expected credit Expected credit
credit loss
Provision for bad debt loss within loss within life Total
within life
following 12 time
time
months (unimpaired)
(impaired)
Balance on January 1, 2024 190,067.98 326,422.64 516,490.62
On January 1, 2024 Other
receivable carrying amount
on the book
transfer to 2nd stage
transfer to 3rd stage
reverse to 2nd stage
reverse to 1st stage
Accrued 141,983.73 141,983.73
Reversed 178,415.76 178,415.76
Recollected
Written off
Others
Closing Balance 153,635.95 326,422.64 480,058.59
④Provision for bad debts charged off, reversed or recovered during the period
Opening Change during the year Closing
Items
balance Accrued Collected/reversed Written-off others Balance
Other
current 190,067.98 141,983.73 178,415.76 153,635.95
balances
Total 190,067.98 141,983.73 178,415.76 153,635.95
⑤The categories of other receivable by nature
Notes to the Financial Statements 59
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing Balance Opening balance
Export tax refund 12,000,000.00 18,000,000.00
Other current balances 8,960,525.95 9,213,566.19
Deposit 1,127,725.63 1,205,404.94
Total 22,088,251.58 28,418,971.13
⑥Other receivables from the top 5 debtors
Rate of other
Company name Category closing balance Againg Bad debts
receivables
Zhangzhou Taiwan
investment zone State Export tax 1-90
Administration of refund days
Taxation
State Grid Fujian Other
Longhai Power Supply current 2,824,073.65 12.79
days
Co., Ltd balances
China Export & Credit
Security over
Insurance Corporation 648,450.00 2.94
deposit 5years
Fujian Branch
Sunshine Property Other
Insurance Co., Ltd., current 437,550.00 1.98
days
Xiamen Branch balances
Security over
PT. PLN (PERSERO) 378,275.63 1.71
deposit 5years
Total 16,288,349.28 73.75
Notes to the Financial Statements 60
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(1)Inventories by category
Closing Balance Closing Balance
Provision for
Provision for
decline in value
decline in value of
of inventories /
inventories /
Items provision for
Book value Net book value Book value provision for Net book value
impairment of
impairment of
contract
contract
performance
performance costs
costs
Raw materials 74,015,782.16 14,946,461.02 59,069,321.14 74,560,733.28 13,095,705.30 61,465,027.98
Materials in transit 7,796,782.08 - 7,796,782.08 3,073,604.45 - 3,073,604.45
Self-manufactured semi-finished goods 16,516,601.91 1,876,938.57 14,639,663.34 27,333,598.54 3,193,768.90 24,139,829.64
Work in process 31,803,251.23 - 31,803,251.23 29,574,402.53 - 29,574,402.53
Finished goods 69,675,139.12 5,282,134.24 64,393,004.88 78,687,157.30 6,285,683.77 72,401,473.53
Low-value consumables 16,016,038.78 - 16,016,038.78 3,745,185.65 - 3,745,185.65
Total 215,823,595.28 22,105,533.83 193,718,061.45 216,974,681.75 22,575,157.97 194,399,523.78
Notes to the Financial Statements 61
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Provision for impairment
Increase Decrease
Items Opening Balance Reverse/Written Closing Balance
Accrual other other
-off
Raw materials 13,095,705.30 3,143,935.72 -109,391.73 1,183,788.27 - 14,946,461.02
Self-manufactured semi-finished
goods
Finished goods 6,285,683.77 3,378,000.10 -9,556.14 4,371,993.49 - 5,282,134.24
Total 22,575,157.97 7,236,217.75 -130,876.22 7,574,965.67 22,105,533.83
Notes to the Financial Statements 62
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing balance Opening balance
Debt investments due within one year 555,877,899.74 51,260,694.44
Total 555,877,899.74 51,260,694.44
Items Closing balance Opening balance
Financial investment 279,745,858.28 544,439,535.72
Reclassification of VAT debit balances, etc. 8,540,179.76 9,897,443.29
Total 288,286,038.04 554,336,979.01
(1)Situation of debt investment
Closing balance Opening balance
Provision Provision
Items Carrying Carrying
Book balance for Book balance for
amount amount
impairment impairment
Large
certificate of 736,100,000.00 736,100,000.00 581,500,000.00 581,500,000.00
deposit
Interest
Accrual for
Large 28,380,048.42 28,380,048.42 10,295,355.13 10,295,355.13
certificate of
deposit
Subtotal 764,480,048.42 764,480,048.42 591,795,355.13 591,795,355.13
Less: Debt
investments
due within
one year
Total 208,602,148.68 208,602,148.68 540,534,660.69 540,534,660.69
Notes to the Financial Statements 63
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Significant debt investments at the end of the period
Closing balance Opening balance
Items Coupon Maturity Principal Coupon Maturity Principal
Face Value Actual Rate Face Value Actual Rate
Rate Date Due Rate Date Due
Quanzhou Bank Time
Deposit Certificate
Xiamen Bank Large
Certificates of Deposit
Xiamen Bank Large
Certificates of Deposit
Xiamen International
Bank Time Deposit 50,000,000.00 2.85% 2.85% 2026/4/9
Certificate
Chiyu Bank Time Deposit
Certificate
Xiamen International
Bank Time Deposit 50,000,000.00 2.75% 2.75% 2026/5/23
Certificate
Quanzhou Bank Time 30,000,000.00 2.85% 2.85% 2026/6/25
Notes to the Financial Statements 64
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Closing balance Opening balance
Items Coupon Maturity Principal Coupon Maturity Principal
Face Value Actual Rate Face Value Actual Rate
Rate Date Due Rate Date Due
Deposit Certificate
Quanzhou Bank Time
Deposit Certificate
Quanzhou Bank Time
Deposit Certificate
Quanzhou Bank Time
Deposit Certificate
Quanzhou Bank Time
Deposit Certificate
Quanzhou Bank Time
Deposit Certificate
Xiamen Bank Large
Certificates of Deposit
Quanzhou Bank Time
Deposit Certificate
Quanzhou Bank Time 74,600,000.00 2.50% 2.50% 2027/1/16
Notes to the Financial Statements 65
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Closing balance Opening balance
Items Coupon Maturity Principal Coupon Maturity Principal
Face Value Actual Rate Face Value Actual Rate
Rate Date Due Rate Date Due
Deposit Certificate
Total 204,600,000.00 531,500,000.00
Notes to the Financial Statements 66
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Changes in the current period
Opening Opening Investment Declaration Closing
Adjustment of Changes Closing
balance(Ca balance of gains or losses of issuing Accrual of balance of
Invested entity Follow-on Reduce other in other balance(Carr
rrying depreciatio recognized cash impairment Other depreciatio
investment investment comprehensive rights and ying amount)
amount) n reserves under equity dividends or provision n reserves
income interests
method profits
Associate
Company
Shanghai Upa
Smart Chain
Home 9,800,000.00 -1,713,478.49 -201,582.69 7,884,938.82
Appliances
Co., Ltd.
Notes to the Financial Statements 67
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing balance Opening balance
Non-trading investments in equity instruments 40,000.00 40,000.00
Total 40,000.00 40,000.00
(1)Investment property measured as cost method
Building and
Items Land use rights Total
plants
（1）Opening Balance 80,814,358.80 29,260,577.51 110,074,936.31
（2） Increase 39,000.00 39,000.00
—Purchase 39,000.00 39,000.00
—Transferred from fixed
assets
（3）Decrease
—Disposal
（4）Closing Balance 80,853,358.80 29,260,577.51 110,113,936.31
（1）Opening Balance 72,758,196.24 18,028,984.84 90,787,181.08
（2）Opening Balance 144,524.76 622,111.80 766,636.56
—Accrued 144,524.76 622,111.80 766,636.56
—Transfer from fixed assets
（3）Decrease
—Disposal
（4）Closing Balance 72,902,721.00 18,651,096.64 91,553,817.64
（1）Opening Balance
（2） Increase
Notes to the Financial Statements 68
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Building and
Items Land use rights Total
plants
—Accrued
（3）Decrease
—Decrease
（4）Closing Balance
（1）Closing book value 7,950,637.80 10,609,480.87 18,560,118.67
（2）Opening book value 8,056,162.56 11,231,592.67 19,287,755.23
(2)Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 742,403.57
Total 742,403.57
Note: Lvyuan three country villa is the houses with limited property rights
purchased by the TsannKuen China (Shanghai) Enterprise Co., Ltd. which is the
subsidiary of the Company from Shanghai Lvsheng Real State Development Co.,
Ltd. in 1999. In January 2006, Shanghai Lvsheng Real State Development Co., Ltd.
and Shanghai Jiading district, Huangdu town Lvyuan community residents'
committees issued the certificate jointly to prove the right of this property belongs
to TsannKuen China (Shanghai) Enterprise Co., Ltd.
(1)Fixed assets and fixed assets liquidation
Items Closing balance Opening balance
Fixed assets 162,861,863.08 146,795,190.83
Disposal of fixed assets
Total 162,861,863.08 146,795,190.83
Notes to the Financial Statements 69
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Fixed assets detail
Houses and Electronic devices, modules Improvement expense
Items Machinery Vehicles Total
buildings and others of leased fixed assets
（1）Opening Balance 89,810,823.21 154,643,353.55 849,500,172.53 16,444,897.00 20,762,399.27 1,131,161,645.56
（2）Increase 3,762,005.54 21,079,322.79 23,735,476.41 1,352,877.09 805,430.92 50,735,112.75
—Purchase 288,755.29 11,889,687.37 20,851,515.12 1,084,735.52 805,430.92 34,920,124.22
—Transferred from
construction- in-progress
—Impact of changes
in exchange rates
（3）Decrease 1,134,427.87 7,071,340.63 1,897,975.50 115,394.07 234,017.67 10,453,155.74
—Disposal 5,994,708.96 794,598.00 2,861.50 6,792,168.46
—Transfer out to
investment property
—Impact of
changes in exchange rates
（4）Closing Balance 92,438,400.88 168,651,335.71 871,337,673.44 17,682,380.02 21,333,812.52 1,171,443,602.57
Notes to the Financial Statements 70
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Houses and Electronic devices, modules Improvement expense
Items Machinery Vehicles Total
buildings and others of leased fixed assets
（1）Opening Balance 56,173,349.46 89,331,263.33 777,633,498.27 15,424,464.62 18,962,663.07 957,525,238.75
（2）Increase 3,195,990.73 10,069,529.47 19,014,925.94 350,726.54 301,314.07 32,932,486.75
—Accrued 3,195,990.73 10,069,529.47 19,014,925.94 350,726.54 301,314.07 32,932,486.75
—Impact of changes
in exchange rates
（3）Decrease 534,339.53 5,157,408.59 1,345,398.52 97,583.03 182,860.70 7,317,590.37
—Disposal 4,581,616.61 575,728.28 2,344.66 5,159,689.55
—Transfer out to
investment property
—Impact of
changes in exchange rates
（4）Closing Balance 58,835,000.66 94,243,384.21 795,303,025.69 15,677,608.13 19,081,116.44 983,140,135.13
（1） Opening Balance 6,971,735.34 19,849,759.00 8,499.92 11,221.72 26,841,215.98
（2） Increase 130,586.68 47,471.57 178,058.25
—Accrued 130,586.68 47,471.57 178,058.25
Notes to the Financial Statements 71
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Houses and Electronic devices, modules Improvement expense
Items Machinery Vehicles Total
buildings and others of leased fixed assets
—Impact of
changes in exchange rates
（3）Decrease 1,479,092.95 97,682.04 645.70 249.18 1,577,669.87
—Disposal 1,413,092.35 46,646.04 516.84 1,460,255.23
—Impact of changes
in exchange rates
（4）Closing Balance 5,623,229.07 19,799,548.53 7,854.22 10,972.54 25,441,604.36
（1）Closing book value 33,603,400.22 68,784,722.43 56,235,099.22 1,996,917.67 2,241,723.54 162,861,863.08
（2）Opening book value 33,637,473.75 58,340,354.88 52,016,915.26 1,011,932.46 1,788,514.48 146,795,190.83
Notes to the Financial Statements 72
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(3)Temporary idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Electronic device 1,795,904.21 1,725,799.51 70,104.70
Improvement expense of
leased fixed assets
Machinery euipment 6,390,364.61 6,390,364.61
Machinery euipment 7,881,387.12 5,346,129.04 1,854,341.69 680,916.39
Total 16,112,539.93 13,506,699.83 1,924,923.71 680,916.39
(4)Fixed assets as pending certificate of ownership
Carrying amount on 31
Item Reason
December 2024
Telecommunications project
expenses
Houses and buildings
renovation expenses
(1)Construction in progress and construction materials
Closing balance Opening balance
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Construction
in progress
Engineering
materials
Total 14,770,911.87 14,770,911.87 3,462,300.89 3,462,300.89
Notes to the Financial Statements 73
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Construction in progress details
Closing balance Opening balance
Provision
Items Provision for Carrying Carrying
Book balance Book balance for
impairment amount amount
impairment
Sporadic
project
Equipment to
be inspected
Total 14,770,911.87 14,770,911.87 3,462,300.89 3,462,300.89
Notes to the Financial Statements 74
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Houses and buildings Total
（ 1） Opening Balance 408,735,436.56 408,735,436.56
（2）Increase 1,374,156.36 1,374,156.36
—New Leases 1,374,156.36 1,374,156.36
（3）Decrease
—Transferred to Fixed Assets
—Disposal
（ 4） Closing Balance 410,109,592.92 410,109,592.92
（ 1） Opening Balance 54,791,566.64 54,791,566.64
（2）Increase 14,930,816.06 14,930,816.06
—Accrued 14,930,816.06 14,930,816.06
（3）Accrued
—Transferred to Fixed Assets
—Disposal
（ 4） Closing Balance 69,722,382.70 69,722,382.70
（ 1） Opening Balance
（2）Increase
—Accrued
（3）Decrease
—Transferred to Fixed Assets
—Disposal
（ 4） Closing Balance
（1）Closing book value 340,387,210.22 340,387,210.22
（2）Opening book value 353,943,869.92 353,943,869.92
Notes to the Financial Statements 75
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Land use rights Software Total
（1）Opening balance 19,423,602.68 53,847,562.20 73,271,164.88
（2）Increase 61,495.51 27,477.88 88,973.39
—Purchase 27,477.88 27,477.88
—Impact of changes in exchange rates 61,495.51 61,495.51
（3） Decrease 707,100.09 707,100.09
—Disposal
—Impact of changes in exchange rates 707,100.09 707,100.09
（4） Closing balance 18,777,998.10 53,875,040.08 72,653,038.18
（1）Opening balance 7,589,198.59 53,734,647.63 61,323,846.22
（2）Increase 645,020.94 122,073.85 767,094.79
—Accrual 645,020.94 122,073.85 767,094.79
—Impact of changes in exchange rates
（3） Decrease 243,995.00 243,995.00
—Disposal
Notes to the Financial Statements 76
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Land use rights Software Total
—Impact of changes in exchange rates 243,995.00 243,995.00
（4） Closing balance 7,990,224.53 53,856,721.48 61,846,946.01
（1）Opening balance
（2）Increase
—Accrual
（3） Decrease
—Disposal
（4） Closing balance
（1） Closing Book value 10,787,773.57 18,318.60 10,806,092.17
（2）Opening Book value 11,834,404.09 112,914.57 11,947,318.66
Notes to the Financial Statements 77
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Closing Other Opening
Items Increase Amortization
balance Decrease balance
Building
improvement 5,487,181.12 300,229.17 2,438,208.26 3,349,202.03
expenses
Telecommunications
project expenses
Total 5,571,380.26 300,229.17 2,475,696.14 3,395,913.29
(1)Deferred tax assets before offsetting
Closing balance Opening balance
Deductible Deductible
Items Deferred tax Deferred tax
temporary temporary
assets assets
differences differences
Deductible losses 7,227,889.86 1,084,183.48
Provision for asset
impairment
Provision for credit
impairment
Unrealized intragroup
profit
Accrued expenses 6,777,249.76 1,064,770.17 8,188,555.64 1,301,408.77
Lease liabilities 402,036,188.94 60,305,428.34 396,776,679.42 59,538,736.82
Total 455,059,256.49 68,564,894.68 444,243,476.52 67,033,253.41
(2)Deferred tax liabilities before offsetting
Items Closing balance Opening balance
Notes to the Financial Statements 78
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Deductible Deductible
Deferred tax Deferred tax
temporary temporary
liabilities liabilities
differences differences
Financial assets held
for trading
Depreciation of fixed
assets accelerates
Right-of-use Assets 340,387,210.22 51,058,081.53 353,943,869.92 53,091,580.49
合计 351,482,054.23 52,722,308.13 367,736,337.08 55,160,450.56
(3)Deferred tax assets or liabilities on a net basis after elimination
Closing balance Opening balance
Offset Amount Offset Amount
Items Between Deferred Balance after Between Deferred Balance after
Tax Assets and offsetting Tax Assets and offsetting
Liabilities Liabilities
Deferred tax
assets
Deferred tax
liabilities
(4)Unrecognized deferred tax assets
Items Closing balance Opening balance
Provision for asset impairment 10,949,534.40 12,501,998.30
Provision for credit impairment 845,781.10 259,531.91
Accrued expenses 7,502,466.81 16,484,156.08
Payroll liability 4,674,110.43 2,119,054.60
Undistributed deficit 33,440,943.64 24,592,204.05
Total 57,412,836.38 55,956,944.94
Notes to the Financial Statements 79
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(5)Deductible losses not recognised as deferred tax assets will expire in the
following periods
Year Closing balance Opening balance Memo
Total 33,440,943.64 24,592,204.05
Closing balance Opening balance
Provision Provision
Items Book for Carrying for Carrying
Book balance
balance impairmen amount impairmen amount
t t
Prepaid
mold fee
and
equipmen
t fee
Total
Notes to the Financial Statements 80
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Closing balance Opening balance
Items
Book Balance Book Value Restricted assets Book Balance Book Value Restricted assets
Monetary funds 2,487,216.02 2,487,216.02 Letter of credit margin
Total 2,487,216.02 2,487,216.02
Notes to the Financial Statements 81
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Classification Closing balance Opening balance
Bank acceptance notes 2,224,816.88 19,418,627.35
Total 2,224,816.88 19,418,627.35
Items Closing balance Opening balance
Within 1 year 380,458,300.99 513,873,164.01
Over 1 year 3,410,092.35 3,448,353.28
Total 383,868,393.34 517,321,517.29
Items Closing balance Opening balance
Within 1 year 2,250,671.08 2,803,884.45
Over 1 year 131,374.50 120,448.80
Total 2,382,045.58 2,924,333.25
Items Closing balance Opening balance
Advance from merchandise 23,384,580.98 15,988,527.98
Advance for Management Fees 233,082.20 308,211.67
Total 23,617,663.18 16,296,739.65
(1)Details of employee benefits payable
Decrease Impact of
Increase during
Opening during the changes in Closing
Items the reporting
balance reporting exchange balance
period
period rate
Short-term 53,950,714.15 292,297,404.43 289,887,426.86 -104,169.99 56,256,521.73
Notes to the Financial Statements 82
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Decrease Impact of
Increase during
Opening during the changes in Closing
Items the reporting
balance reporting exchange balance
period
period rate
benefits
Post-employment
benefits –
Defined
contribution plan
Termination
benefits
Total 53,957,022.40 318,901,516.39 314,434,734.15 -104,180.19 58,319,624.45
(2)Details of short-term employee benefits
Decrease during Impact of
Increase during the
Items Opening balance the reporting changes in Closing balance
reporting period
period exchange rate
（1）Wages or
salaries, bonuses,
allowances and
subsidies
（2）Staff welfare 16,177,008.48 16,177,008.48
（3）Social
security 4,662.77 12,665,588.72 12,667,190.31 -20.35 3,040.83
contributions
Include: Medical
insurance
Work
injury insurance
Maternity 723,989.88 723,989.88
insurance
Notes to the Financial Statements 83
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Decrease during Impact of
Increase during the
Items Opening balance the reporting changes in Closing balance
reporting period
period exchange rate
（4） Housing
funds
（5）Labor union
and employee 855,623.03 855,623.03
education costs
（6） Short-term
paid leave
Total 53,950,714.15 292,297,404.43 289,887,426.86 -104,169.99 56,256,521.73
(3)Details of defined contribution plans
Decrease
Increase during Impact of
Opening during the Closing
Items the reporting changes in
balance reporting balance
period exchange rate
period
Basic pension
insurance
Unemployment
insurance
Total 6,308.25 24,133,339.41 24,134,544.74 -10.20 5,092.72
Items Closing balance Opening balance
Value-added tax 467,002.43 952,185.68
Enterprise income tax 3,642,909.01 13,505,915.29
Individual income tax 562,112.35 809,831.82
City maintenance and construction tax 315,000.00 601,276.22
Education surcharge 189,000.00 360,765.73
Notes to the Financial Statements 84
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing balance Opening balance
local education surcharge 126,000.00 240,510.49
Real estate tax 1,428,496.70 1,456,280.69
Land use tax 175,232.82 175,232.78
Stamp duty 157,324.77 202,995.02
Other 4,242.05 5,401.04
Total 7,067,320.13 18,310,394.76
Items Closing balance Opening balance
Interest payable
Dividend payable
Other payables 28,579,322.67 40,877,557.33
Total 28,579,322.67 40,877,557.33
(1)Other accounts payable
①Other payables categorized by payments nature
Items Closing balance Opening balance
Bid security deposits 7,983,586.79 8,735,043.85
Current payments and others 5,351,553.34 7,474,779.27
Accrued expenses 15,244,182.54 24,667,734.21
Total 28,579,322.67 40,877,557.33
②Material Other Payables with Aging Over One Year or Overdue
Items Closing balance Reason for Unrepaid or Unsettled
Bid security deposits 7,371,222.79 To be returned upon contract termination
Notes to the Financial Statements 85
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Closing balance Opening balance
Lease liabilities due within one year 476,624.15 922,678.70
Total 476,624.15 922,678.70
Items Closing balance Opening balance
Lease payments 687,431,273.71 698,687,752.67
Less：unrecognized financing charges 285,395,084.77 301,760,453.00
Less：Lease liabilities due within one year 476,624.15 922,678.70
Total 401,559,564.79 396,004,620.97
Change forcurrent period
Opening New Capitalization Closing
Items Share
Balance shares of capital Others Subtotal balance
donation
issued reserve
Number
of total 185,391,680.00 185,391,680.00
shares
Increase in the Decrease in the
Items Opening Balance Closing balance
current period current period
Capital premium (share
premium)
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 296,808,965.79
Notes to the Financial Statements 86
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year
Less:
Less: previously
previously
recognized in
recognized in After tax
Opening other After tax Closing
Items Amount for the other Less: Income attributable to
Balance comprehensive attributable to balance
year before tax comprehensive tax expense minority
income the company
income shareholders
transferred into
transferred into
retained earnings
profit or loss
that will not be reclassified to 41,036.56 41,036.56
profit or loss
Including：Remeasurement
gains or losses of a defined 41,036.56 41,036.56
benefit plan
Other comprehensive income
using the equity method that will
not be reclassified to profit or
Notes to the Financial Statements 87
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year
Less:
Less: previously
previously
recognized in
recognized in After tax
Opening other After tax Closing
Items Amount for the other Less: Income attributable to
Balance comprehensive attributable to balance
year before tax comprehensive tax expense minority
income the company
income shareholders
transferred into
transferred into
retained earnings
profit or loss
loss
Changes in fair value of other
equity instrument investments
Changes in fair value of
enterprise's own credit risk
to be reclassified to profit or loss
Including：Under equity
method, proportionate
share of other
comprehensive
Notes to the Financial Statements 88
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year
Less:
Less: previously
previously
recognized in
recognized in After tax
Opening other After tax Closing
Items Amount for the other Less: Income attributable to
Balance comprehensive attributable to balance
year before tax comprehensive tax expense minority
income the company
income shareholders
transferred into
transferred into
retained earnings
profit or loss
income invested company
FV change of other debt
investment
Financial instrument
reclassified into other
comprehensive income
Credit impairment provision
of other debt investment
Cash flow hedges effective
portion
Foreign currency translation 11,211,709.96 -3,954,027.00 -2,965,520.25 -988,506.75 8,246,189.71
Notes to the Financial Statements 89
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year
Less:
Less: previously
previously
recognized in
recognized in After tax
Opening other After tax Closing
Items Amount for the other Less: Income attributable to
Balance comprehensive attributable to balance
year before tax comprehensive tax expense minority
income the company
income shareholders
transferred into
transferred into
retained earnings
profit or loss
difference
Total 11,252,746.52 -3,954,027.00 -2,965,520.25 -988,506.75 8,287,226.27
Notes to the Financial Statements 90
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Increase in the Decrease in the
Items Opening Balance Closing balance
current period current period
Statutory surplus
reserve
Total 81,427,732.56 5,352,894.75 86,780,627.31
Items Current year Prior year
Closing balance of prior year 527,518,517.81 507,010,039.53
Adjustments for the opening balance (increase
/(decrease))
Balance at the beginning of the reporting period
after adjustments
Add: net profit attributable to owners of the
company for the reporting period
Less: Provision for statutory surplus reserves 5,352,894.75 5,926,244.20
Provision for any surplus reservesC
Provision of general risk
Dividends payable for common shares 33,370,502.40 46,347,920.00
Share dividends
Closing balance of current year 512,340,440.03 527,518,517.81
(1)Operating income and cost
Current year Prior year
Items
Revenue Costs of sales Revenue Costs of sales
Principal
operating 1,297,894,653.32 1,152,791,463.09 1,648,161,362.22 1,428,347,528.54
activities
Others 46,880,902.92 11,856,078.57 52,954,088.34 13,956,531.45
Total 1,344,775,556.24 1,164,647,541.66 1,701,115,450.56 1,442,304,059.99
Notes to the Financial Statements 91
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Revenue from principal activities (by industry or business)
Industry Current year Prior year
(business) Revenue Costs of sales Revenue Costs of sales
Household
appliances 1,297,894,653.32 1,152,791,463.09 1,648,161,362.22 1,428,347,528.54
industry
Total 1,297,894,653.32 1,152,791,463.09 1,648,161,362.22 1,428,347,528.54
(3)Revenue from principal activities (by product)
Current year Prior year
Product
Revenue Costs of sales Revenue Costs of sales
Catering and
Cooking
Home helper 369,884,920.65 330,792,146.03 450,085,933.70 397,179,916.97
Tea/Coffee
makers
Other 7,462,762.58 3,943,852.29 14,667,794.07 7,600,860.42
Total 1,297,894,653.32 1,152,791,463.09 1,648,161,362.22 1,428,347,528.54
(4)Revenue from principal activities (by region)
Current year Prior year
Region
Revenue Costs of sales Revenue Costs of sales
Australia 15,643,467.49 12,598,553.83 20,751,971.71 16,716,180.90
Africa 2,953,785.89 2,792,390.70 15,758,618.31 12,986,861.43
America 595,844,245.75 541,878,569.80 847,408,182.11 744,335,500.91
Europe 391,841,744.63 341,404,334.99 483,962,735.10 414,623,825.78
Asia 291,611,409.56 254,117,613.77 280,279,854.99 239,685,159.52
Total 1,297,894,653.32 1,152,791,463.09 1,648,161,362.22 1,428,347,528.54
Notes to the Financial Statements 92
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Current year Prior year
City construction tax 2,131,395.21 2,673,626.01
Education surcharge 1,224,129.01 1,560,402.93
Local Education surcharge 817,043.13 1,040,268.65
Property tax 2,988,346.37 2,953,530.94
Property tax 398,846.80 398,846.80
Stamp duty 687,684.95 905,265.36
Others 62,222.21 43,315.39
Total 8,309,667.68 9,575,256.08
Items Current year Prior year
Employee benefit 14,069,531.81 16,454,435.95
Advertisements charges and sales
promotion
Sales commission and after sales service
fees
Travel expenses 620,068.05 1,110,026.40
Administrative expenses 152,129.82 128,595.30
Leasing 21,842.16 22,718.34
Claims experiment expenses 960,771.13 1,401,804.99
Travel expense 4,310,620.71 4,207,806.76
Total 22,681,766.27 32,229,714.35
Items Current year Prior year
Employee benefit 47,908,724.21 42,423,111.23
Depreciation and amortization of assets 7,979,119.02 10,137,390.28
Employee benefit 3,391,599.30 2,975,629.69
Notes to the Financial Statements 93
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Current year Prior year
Consultant fees 2,440,849.27 2,122,571.44
Maintenance expenses 3,801,226.60 3,745,323.37
Insurance expenses 1,947,554.90 2,402,559.65
Administrative expenses 1,707,776.06 1,676,235.64
Rental expenses 184,983.65 306,785.03
Other expense 7,289,400.16 5,686,296.38
Total 76,651,233.17 71,475,902.71
Items Current year Prior year
Employee remunerations 44,742,516.32 47,317,568.07
Depreciation and amortization of assets 2,742,821.79 3,827,800.32
Test expenses 6,274,061.42 6,578,389.27
Maintenance expenses 2,094,668.66 1,837,472.13
Certification expenses 1,810,373.01 1,539,557.35
Patent expenses 903,881.82 705,579.71
Travel expenses 575,609.06 551,259.50
Consultant fees 342,498.96 256,246.64
Rental expenses 38,287.43 40,310.01
Others 1,969,793.25 2,278,083.81
Total 61,494,511.72 64,932,266.81
Items Current year Prior year
Interest expenses 21,174,939.96 21,700,670.25
Including: interest expense on lease
liabilities
Less: Interest income 6,644,317.40 9,148,448.06
Foreign exchange losses -1,583,059.60 -11,924,910.07
Notes to the Financial Statements 94
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Current year Prior year
Add: Others expenditure 708,051.38 760,380.35
Total 13,655,614.34 1,387,692.47
Items Current year Prior year
Government grant 7,683,398.57 2,373,328.56
Withholding of personal income
tax handling fee
Total 7,797,792.60 2,474,270.98
Items Current year Prior year
Income from long-term equity investments accounted for
-1,713,478.49
using the equity method
Investment income earned during the holding period of a
trading financial asset
Investment income from the disposal of trading financial
-33,700.00 321,250.00
assets
Other current assets’ investment and wealth management 29,282,206.64 22,565,233.90
Total 29,022,384.02 37,678,574.75
Sources of gains on changes in fair value Current year Prior year
Tradable financial asset -942,083.33 -2,066,950.01
Including: Changes in fair value of derivatives -432,800.00
Financial products -942,083.33 -1,634,150.01
Total -942,083.33 -2,066,950.01
Notes to the Financial Statements 95
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Current year Prior year
Bad debt of accounts receivables 864,743.88 -1,300,562.02
Bad debt of other receivables -36,432.03 52,587.96
Total 828,311.85 -1,247,974.06
Items Current year Prior year
Inventory impairment loss & Impairment
loss on contract performance costs
Fixed asset impairment loss 177,933.89 2,358,907.09
Total 3,642,607.37 9,171,148.75
Amount included in
Items Current year Prior year non-recurring profit or loss in
the current period
Income from the
disposal of fixed 756,104.15
assets
Total 756,104.15
Amount included in
non-recurring profit
Items Current year Prior year
or loss in the current
period
Other 2,062,990.74 488,343.55 2,062,990.74
Total 2,062,990.74 488,343.55 2,062,990.74
Notes to the Financial Statements 96
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Amount included in
non-recurring profit
Items Current year Prior year
or loss in the current
period
Donations 61,242.81
Loss from damage or scrapping
of non-current assets
Penalty and late payment 116,848.25 25,750.00 116,848.25
others
Total 121,321.05 86,992.81 121,321.05
(1)Income tax expenses
Items Current year Prior year
Current income tax expenses 6,305,118.13 17,927,037.97
Deferred income tax expenses -3,969,783.70 -3,487,994.18
Total 2,335,334.43 14,439,043.79
(2)Reconciliation of income tax expenses to the accounting profit
Items Current year
Total profit 30,684,065.16
Income tax expense at the statutory [or applicable] tax rate 7,671,016.29
Effect of different tax rates applied to subsidiaries -1,444,080.93
Effect of adjustments to income taxes of prior periods 928,579.71
Impact of non-taxable income 287,259.18
Effect of non-deductible costs, expenses and losses 981,015.41
Effect of non-deductible costs, expenses and losses -2,561,168.09
Notes to the Financial Statements 97
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Current year
Effect of deductible temporary differences or deductible losses on
deferred income tax assets not recognized in the period
R&D expenses plus deduction -6,550,970.17
Income tax expense 2,335,334.43
(1)Basic earnings per share
Basic earnings per share is calculated by dividing consolidated net income
attributable to ordinary shareholders of the company by the weighted average
number of ordinary shares of the Company in issue:
Item Current year Prior year
Consolidated net income attributable to ordinary
shareholders of the company
Weighted average number of common shares of the
Company issued and outstanding
Basic earnings per share 0.13 0.39
Include: Basic earnings per share from continuing
operations
Basic earnings per share from discontinued
operations
(2)Diluted earnings per share
Diluted earnings per share is calculated by dividing the consolidated net income
attributable to ordinary shareholders of the company (diluted) by the weighted
average number of ordinary shares of the Company in issue (diluted):
Item Current year Prior year
Consolidated net income attributable to ordinary
shareholders of the company (diluted)
Notes to the Financial Statements 98
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Item Current year Prior year
Weighted average number of common shares of the
company issued and outstanding (diluted)
Diluted earnings per share 0.13 0.39
Include: Diluted earnings per share from continuing
operations
Diluted earnings per share from discontinued
operations
(1)Cash relating to operating activities
①Cash received relating to other operating activities
Item Current year Prior year
Government grants 7,683,398.57 2,373,328.56
Interest income 6,644,317.43 9,148,448.06
Rent income 40,130,936.58 35,225,301.36
Funds in current account and others 68,382,204.93 58,998,534.03
Total 122,840,857.51 105,745,612.01
②Other cash payments relating to operating activities
Item Current year Prior year
Penalties and donations 116,848.25 86,992.81
Bank charges 708,051.41 760,380.35
Sales expenses, general and administrative
expenses, and research and development 53,328,190.19 34,510,721.88
expenses paid by cash
Current accounts and others 68,683,022.87 60,758,272.65
Total 122,836,112.72 96,116,367.69
Notes to the Financial Statements 99
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Cash relating to investing activities
①Cash received relating to other investing activities
Item Current year Prior year
A term deposit deposited with a financial
institution to earn interest income at maturity
Total 635,349,329.98 546,076,871.65
②Cash paid relating to other investing activities
Item Current year Prior year
A term deposit deposited with a financial
institution for earning interest income
Total 325,728,783.59 699,587,632.10
(3)Cash relating to financing activities
①Cash receipts relating to other financing activities
Item Current year Prior year
Letter of credit margin 4,748,170.39 11,360,910.42
Total 4,748,170.39 11,360,910.42
②Cash payments relating to other financing activities
Item Current year Prior year
Lease payments of right-of-use assets 13,294,352.52 12,950,682.48
Letter of credit deposit 2,260,954.37 8,495,821.20
Total 15,555,306.89 21,446,503.68
Notes to the Financial Statements 100
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(1)Supplementary information to the cash flow statement
additional materials Current year Prior year
Net profit 28,348,730.73 96,091,690.28
Add: Impairment loss of credit 828,311.85 -1,247,974.06
Provision for impairment losses of assets 3,642,607.37 9,171,148.75
Depreciation of fixed assets, Investments
properties
Depreciation of right-of-use assets 14,930,816.06 14,620,121.76
Amortisation of intangible assets 755,060.01 1,651,783.01
Amortisation of Long-term prepaid expenses 2,475,696.14 2,968,396.31
Gain on disposal of fixed assets, intangible assets,
-756,104.15
and other long-term assets (Gain expressed with “-”)
Loss on scrapping of fixed assets (Gain expressed
with “-”)
Loss on changes in fair value (Gain expressed with
“-”)
Financial expense (Income expressed with “-”) 19,591,880.37 9,775,760.26
Investment loss (Income expressed with “-”) -29,022,384.02 -37,678,574.75
Decreases in deferred tax assets (Increase
-3,969,783.70 -3,487,994.18
expressed with “-”)
Increases in deferred tax liabilities (Decrease
expressed with “-”)
Decrease in inventories (Increase expressed with
“-”)
Decrease in operating receivables (Increase
expressed with “-”)
Increases in operating payables (Decrease
-148,232,929.07 13,154,370.28
expressed with “-”)
Notes to the Financial Statements 101
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
additional materials Current year Prior year
Others
Net cash flows from operating activities -14,987,121.90 136,383,412.09
Cash at the end of the reporting period 460,847,776.00 441,890,727.50
Less: Cash at the beginning of the reporting period 441,890,727.50 561,810,271.53
Add: Cash equivalents at the end of the reporting period
Less: Cash equivalents at the beginning of the reporting
period
Net increase in cash and cash equivalents 18,957,048.50 -119,919,544.03
(2)Composition of cash and cash equivalents
Item Current year Prior year
Including: Cash on hand 814,719.21 887,987.84
Digital Currency
Bank deposits 460,016,679.73 440,872,233.11
Other monetary funds 16,377.06 130,506.55
Deposits with the central bank
Deposits with other banks
Placements with banks
Including: Investments in debt securities due within
three months
Including: Restricted cash and cash equivalents of the
Company and subsidiaries within the Group
Monetary Funds Not Belonging to Cash and Cash Equivalents:
Item Closing balance Opening balance Reasons
Notes to the Financial Statements 102
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Item Closing balance Opening balance Reasons
Not withdrawable at
Letter of credit margin 2,487,216.02
any time
Total 2,487,216.02
(1)Foreign currency monetary items
Converted Closing balance converted
Items Closing balance
exchange rate CNY
Money funds 130,186,633.20
Include：USD 17,351,446.60 7.03 121,959,847.86
Euro 26,368.20 8.24 217,155.31
HKD 208,447.78 0.90 188,274.20
JPY 144,238,105.42 0.04 6,461,434.41
HUF 81,016.00 0.02 1,728.80
IDR 3,075,782,176.71 1,291,828.51
GBP 7,034.12 9.43 66,364.11
Accounts receivables 137,352,795.82
Include：USD 19,116,456.38 7.03 134,365,528.63
IDR 639,959,400.00 269,887.53
JPY 60,659,858.00 0.04 2,717,379.66
Accounts payables 43,825,342.58
Include：USD 5,794,801.72 7.03 40,730,502.33
Euro 66,306.00 8.24 546,063.06
JPY 1,666,084.47 0.04 74,635.59
IDR 5,887,596,790.50 2,472,790.65
HKD 1,495.70 0.90 1,350.95
Other receivables 1,036,138.74
Notes to the Financial Statements 103
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Converted Closing balance converted
Items Closing balance
exchange rate CNY
Include：USD 8,089.73 7.03 56,861.09
IDR 2,331,613,442.00 979,277.65
HKD
Other payables 2,897,152.27
Include：USD 316,548.47 7.03 2,224,955.89
HKD 73,851.42 0.90 66,704.08
IDR 1,358,227,347.52 570,455.49
JPY 782,124.00 0.04 35,036.81
(2)Description of foreign operations: for significant foreign operations, major
domicile and functional currency and its basis of selection shall be disclosed,
and reasons for foreign operations changing their functional currencies shall
also be disclosed.
Name of the overseas operating entity: Pt.Star Comgistic Indonesia
Main business area: Indonesia
Accounting standard currency: US dollars
(1)The Company as the lessee
Items Current year Prior year
Interest Expense on Lease Liabilities 16,441,826.74 16,253,615.68
Short-term Lease Expenses Recognized in
Related Asset Costs or Simplified as Current 270,908.41 441,127.08
Period Gains and Losses
Income from Subleasing Right-of-Use Assets 14,263,468.92 13,758,179.15
Total Cash Outflows Related to Leases 12,707,093.83 12,950,682.48
Notes to the Financial Statements 104
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
The future potential cash outflows not included in the lease liability measurement
mainly arise from leases committed to by the lessee but not yet commenced.
The expected future cash outflows for leases committed to but not yet commenced
are as follows：
Unamortized Lease Payment
Remaining Lease Term
Amount
Within 1 Year 12,460,484.07
Over 3 Years 637,436,715.87
Total 687,431,273.72
(2)The company shall be the lessor
Operation lease
Current year Prior year
Operating Lease Income 17,151.696.10 18,876,240.86
Notes to the Financial Statements 105
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
VI.R&D expenditures (Research and Development)
Current year Prior year
Research and Research and
Items Development Development
Development Total Development Total
expenditures expenditures
Expenses Expenses
Employee
remunerations
Depreciation
and
amortization
of assets
Test expenses 6,274,061.42 6,274,061.42 6,578,389.27 6,578,389.27
Maintenance
expenses
Certification
expenses
Patent
expenses
Travel
expenses
Consultant
fees
Rental
expenses
Others 1,969,793.25 1,969,793.25 2,278,083.81 2,278,083.81
Total 61,494,511.72 61,494,511.72 64,932,266.81 64,932,266.81
VII.Changes in the scope of consolidation
The company did not experience any changes in the scope of consolidation during the
current period.
In October 2025, the Company established an indirect subsidiary, Xiamen Yipengxin
Trading Co., Ltd., with a registered capital of RMB 2,000,000. As of December 31, 2025,
Notes to the Financial Statements 106
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
no capital contribution had been made to the subsidiary, and it had not commenced
operations. Therefore, it was not included in the consolidation scope.
Notes to the Financial Statements 107
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
VIII.Interest in other entity
(1)Organization structure of group company
Principal place Place of Shareholding (%)
Name of Subsidiary Registered capital Business Nature Acquisition method
of business Registration Direct Indirect
Tsann Kuen (Zhangzhou) 160 million US Manufactures home Acquired through
Zhangzhou Zhangzhou 75.00
Enterprise Co., Ltd. dollars electronic appliance establishment
Acquired through business
Tsann Kuen China (Shanghai) Manufactures home
Enterprise Co., Ltd. electronic appliance
common control
Xiamen Tsannkuen Property Acquired through
Services Co., Ltd. establishment
Acquired through business
East Sino Development Limited 412.39 million HKD Hong Kong Hong Kong Investment, Trading 75.00 combination under
common control
Acquired through business
Manufactures home
Pt.StarComgistic Indonesia 53 million US dollars Indonesia Indonesia 75.00 combination under
electronic appliance
common control
Pt.Star Comgistic Property 5.01 million US Real estate Acquired through
Indonesia Indonesia 75.00
Development Indonesia dollars development establishment
Notes to the Financial Statements 108
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Principal place Place of Shareholding (%)
Name of Subsidiary Registered capital Business Nature Acquisition method
of business Registration Direct Indirect
Orient Star Investments Limited 185,000 US dollars Hong Kong Hong Kong Investment, Trading 75.00 Acquired through business
Notes to the Financial Statements 109
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Significant non-wholly owned subsidiaries
Dividends
Profit or loss
declared to
Shareholding attributable to Non-controlling
distribute to
ratio of non- non- controlling interests at the
Name of subsidiary non-controlling
controlling interests during end of the
interests during
interests the reporting reporting period
the reporting
period
period
Tsann Kuen (Zhangzhou)
Enterprise Co., Ltd.
Pt.StarComgistic Indonesia 25.00% -2,430,463.78 50,930,578.97
Notes to the Financial Statements 110
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(3)Main financial information of significant non-wholly owned subsidiaries
Closing balance Opening balance
Name of
Non-current Current Non-current Non-current Current Non-current
subsidiary Current assets Total assets Total liabilities Current assets Total assets Total liabilities
assets liabilities liabilities assets liabilities liabilities
Tsann Kuen
(Zhangzhou)
Enterprise Co.,
Ltd.
Pt.StarComgistic
Indonesia
Current year Prior year
Total Net cash flows Total Net cash flows
Name of subsidiary Net
Revenue Net profit/(loss) comprehensive from operating Revenue comprehensive from operating
profit/(loss)
income activities income activities
Tsann Kuen
(Zhangzhou) 1,199,152,943.42 25,804,692.63 25,804,692.63 9,790,353.55 59,763,648.46 59,763,648.46 170,908,401.59
Enterprise Co., Ltd.
Notes to the Financial Statements 111
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year Prior year
Total Net cash flows Total Net cash flows
Name of subsidiary Net
Revenue Net profit/(loss) comprehensive from operating Revenue comprehensive from operating
profit/(loss)
income activities income activities
Pt.StarComgistic
Indonesia
Notes to the Financial Statements 112
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(4)Aggregated Financial Information of Non-material Joint Ventures and Associate
Companies
Closing balance/Current Opening balance/Prior
year year
Associate Company：
Total Carrying Amount of Investments 9,800,000.00
Total Amounts Adjusted Based on Equity
Interest
—Net Profit -1,285,108.87
—Other Comprehensive Income
—Total Comprehensive Income -1,285,108.87
IX.Government Grants
Item in P&L statement Current year Prior year
asset-related government grants
revenue-related government grants 7,683,398.57 2,373,328.56
Total 7,683,398.57 2,373,328.56
No refunds of government grants occurred during the current period.
X.Risk Related to Financial Instruments
The company faces various financial risks during its operations, including credit
risk, liquidity risk, and market risk (including foreign exchange risk, interest rate
risk, and other price risks). The following describes these financial risks and the
risk management policies adopted by the company to mitigate them:
The Board of Directors is responsible for planning and establishing the company's
risk management framework, formulating risk management policies and related
guidelines, and overseeing the implementation of risk management measures. The
Notes to the Financial Statements 113
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
company has established risk management policies to identify and analyze the risks
it faces. These policies provide clear regulations for specific risks, covering aspects
such as market risk, credit risk, and liquidity risk management. The company
regularly assesses changes in the market environment and its business activities to
determine whether updates to its risk management policies and systems are
necessary. Risk management is conducted by the Risk Management Committee
according to policies approved by the Board of Directors. The Risk Management
Committee collaborates closely with other business departments to identify,
evaluate, and mitigate relevant risks. The company’s internal audit department
conducts regular reviews of risk management controls and procedures and reports
the results to the Audit Committee.
The company diversifies financial instrument risks through appropriate investment
and business portfolio strategies and reduces concentration risks associated with
single industries, specific regions, or particular counterparties by implementing
corresponding risk management policies.
(1)Credit Risk
Credit risk refers to the risk of financial loss arising from a counterparty's failure to
fulfill its contractual obligations.
The main sources of credit risk for the company include cash and bank balances,
notes receivable, accounts receivable, receivables financing, contract assets, other
receivables, debt investments, other debt investments, and financial guarantee
contracts, as well as debt instruments measured at fair value through profit or loss
and derivative financial assets that are not subject to impairment assessment. As of
the balance sheet date, the carrying amount of the company's financial assets
represents its maximum exposure to credit risk.
The company's cash and bank balances are primarily held with state-owned banks
and other large and medium-sized listed banks with high credit ratings. The
company believes there is no significant credit risk, and it is unlikely that major
losses will arise from bank defaults.
For notes receivable, accounts receivable, receivables financing, contract assets,
and other receivables, the company has established policies to control credit risk
exposure. The company assesses the creditworthiness of customers based on their
financial condition, the possibility of obtaining guarantees from third parties, credit
Notes to the Financial Statements 114
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
history, and other factors such as current market conditions, and sets appropriate
credit terms accordingly. The company monitors customer credit records regularly.
For customers with poor credit records, the company may take actions such as
written reminders, shortening credit periods, or canceling credit periods to ensure
that its overall credit risk remains within a manageable range.
(2)Liquidity Risk
Liquidity risk refers to the risk of a shortage of funds when a company needs to
settle obligations denominated in cash or other financial assets.
The company's policy is to maintain sufficient cash to repay maturing debts.
Liquidity risk is centrally controlled by the finance department. The finance
department monitors cash balances, readily marketable securities, and rolling
forecasts of cash flows for the next 12 months to ensure that the company has
adequate funds to meet its debt obligations under all reasonable scenarios.
Additionally, the company continuously monitors compliance with loan
agreements and secures commitments from major financial institutions to provide
sufficient standby funding to meet both short-term and long-term capital
requirements.
(3)Market Risk
Market risk refers to the risk that the fair value or future cash flows of financial
instruments will fluctuate due to changes in market prices, including foreign
exchange risk, interest rate risk, and other price risks.
①Interest Rate Risk
Interest rate risk refers to the risk that the fair value or future cash flows of
financial instruments will fluctuate due to changes in market interest rates.
Fixed-rate and floating-rate interest-bearing financial instruments expose the
company to fair value interest rate risk and cash flow interest rate risk, respectively.
The company determines the proportion of fixed-rate versus floating-rate
instruments based on market conditions and maintains an appropriate mix of fixed
and floating rate instruments through regular reviews and monitoring. When
necessary, the company uses interest rate swaps to hedge interest rate risks.
②Foreign Exchange Risk
Foreign exchange risk refers to the risk that the fair value or future cash flows of
financial instruments will fluctuate due to changes in foreign exchange rates.
Notes to the Financial Statements 115
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
The company continuously monitors foreign currency transactions and the scale of
foreign currency assets and liabilities to minimize its exposure to foreign exchange
risks. Additionally, the company may enter into forward foreign exchange contracts
or currency swap contracts to hedge against foreign exchange risks. During the
current and previous periods, the company did not enter into any forward foreign
exchange contracts or currency swap contracts.
The company's exposure to foreign exchange risk mainly arises from financial
assets and liabilities denominated in US dollars. The amounts of foreign currency
financial assets and liabilities converted into CNY are listed below:
Items Closing balance Opening balance
Cash and cash equivalent 130,186,633.20 112,054,855.83
Accounts receivable 137,352,795.82 203,496,159.10
Other receivables 1,036,138.74 609,593.63
Accounts payable 43,825,342.58 46,143,775.01
Other payables 2,897,152.27 1,274,139.73
Total 315,298,062.61 363,578,523.30
XI.Fair value disclosures
The inputs used in fair value measurements are divided into three levels:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or
liabilities that are available at the measurement date.
Level 2 inputs are inputs other than Level 1 inputs that are directly or indirectly
observable for the related asset or liability.
Level 3 inputs are unobservable inputs for the relevant asset or liability.
The level to which the fair value measurement results belong is determined by the lowest
level to which the inputs that are significant to the fair value measurement as a whole
belong.
F V at the year end
Items 1st Level FV 2nd Level FV 3rd Level FV
Total
Measurement Measurement Measurement
Notes to the Financial Statements 116
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
F V at the year end
Items 1st Level FV 2nd Level FV 3rd Level FV
Total
Measurement Measurement Measurement
◆Other equity instrument
investment
Total assets measured at fair
value on an ongoing basis
Recurring or Nonrecurring Basis
The fair value measurement of derivative financial assets is based on the valuation
provided by the bank for the outstanding forward foreign exchange on the balance sheet
date; The fair value of debt instrument investment is measured on the basis of the
principal of the structural deposit that is not due on the balance sheet date and the interest
rate agreed with the bank.
XII.Related Parties Relationship and Transactions
Voting
Shareholding
Parent Registered Business power
Registered capital percentage
company address nature percentage
（%）
（%）
STAR Manufactures
COMGISTIC and sales NTD
Taiwan(China) 42.90 44.68
CAPITAL CO., electrical 3,000,000,000.00
LTD. equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL
CO., LTD.
For details of the Company's subsidiaries, please refer to "VIII. Interests in other entities"
in this note.
Notes to the Financial Statements 117
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Name of related party Related party relationship
Shanghai Upa Smart Chain Home Appliances Co., Ltd. Associates of the Company's Subsidiaries
Name of related party Related party relationship
The company is directly controlled by the
Thermaster Electronic (Xiamen) Ltd. key management and closed family
members
Tsann Kuen Enterprise Co., Ltd. Same actual controller
Tsann Kuen (Japan) Electric Co., Ltd. Same actual controller
(1)Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Nature of the
Related parties Current year Prior year
transaction(s)
Thermaster Electronic
Purchase of goods 24,452,903.82 31,150,562.96
(XIAMEN) Limited
Thermaster Electronic
Accept labor service 1,200.00
(XIAMEN) Limited
STAR COMGISTIC CAPITAL Quality claim
CO., LTD. payment
Tsann Kuen (Japan) Electric Co.,
Accept labor service 1,419,763.92 1.385.755.32
Ltd.
Notes to the Financial Statements 118
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Sales of goods/provide labour services
Nature of the
Related parties Current year Prior year
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Sales of goods 3,217,115.49 3,417,248.26
Shanghai Upa Smart Chain Home
Sales of goods 7,200,207.60
Appliances Co., Ltd.
Note: Shanghai Upa Smart Chain Home Appliances Co., Ltd. is an associate
company in which the Company's subsidiary, Tsann Kuen (Zhangzhou) Enterprise
Co., Ltd., holds an equity interest.
(2)Management remuneration
Unit: Ten thousand yuan
Items Current year Prior year
Management remuneration 355.24 422.85
(1)Receivables
Closing balance Opening balance
Items Related party Book Book
Provision Provision
balance balance
Shanghai Upa
Accounts Smart Chain Home
receivable Appliances Co.,
Ltd.
STAR
COMGISTIC
CAPITAL CO.,
LTD.
Note: Shanghai Upa Smart Chain Home Appliances Co., Ltd. is an associate
company in which the Company's subsidiary, Tsann Kuen (Zhangzhou) Enterprise
Co., Ltd., holds an equity interest.
Notes to the Financial Statements 119
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Payables
Items Related party Closing Balance Opening balance
Thermaster Electronic
Accounts payable 5,975,170.05 6,936,867.52
(Xiamen) Ltd.
XIII.Commitments and contingencies
As of December 31, 2025, the company has issued but not yet fulfilled irrevocable letters
of credit amounting to CNY 59,795,039.28 and USD 5,275,505.28.
As of December 31, 2025, the outstanding balance of guarantees provided by Tsann Kuen
(Zhangzhou) Enterprise Co., Ltd. as a joint liability guarantor for its subsidiary PT. Star
Comgistic Indonesia amounted to USD 721,008.00.
Apart from the above, there are no other significant commitments that the company is
required to disclose.
As of 31st December 2025, The Company has no significant contingencies need to be
disclosed.
XIV.Events after the Balance Sheet Date
The company has no significant non-adjusting events.
On 7 March 2026, the first Board Meeting of 2026 held by the Company reviewed and
approved the profit distribution plan for 2025. Based on the total share capital of
distributed to all shareholders of the Company (tax included). The profit for distribution
of the Company is CNY 18,539,168.00 The proposal still needs to be approved by the
shareholders' general meeting of the Company.
XV.Notes to the Main Items of Company’s Financial Statements
(1)Accounts receivable with the bad debt provisions under accounting aging
analysis method
Notes to the Financial Statements 120
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Aging Closing Balance Opening balance
Within1 year 4,480.88 117,163.04
Including：Within 90 days 4,480.88 102,845.83
Over 5 years 15,740.52 5,000.00
Subtotal 30,006.79 262,621.36
Less：provision for bad debt 25,635.62 60,840.92
Total 4,371.17 201,780.44
Notes to the Financial Statements 121
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
(2)Category of accounts receivable
Closing Balance Opening Balance
Provision
Items Booking balance Booking balance Provision Booking
Booking value
value
Amount % Amount % Amount % Amount %
Accounts receivable
with individual bad
debt provision
Accounts receivable
with bad debt
provision based on 30,006.79 100.00 25,635.62 85.43 4,371.17 262,621.36 100.00 60,840.92 23.17 201,780.44
the characters of
credit risk portfolio
Including:
-Portfolio by age 27,963.91 100.00 25,635.62 23.17 2,328.29 262,621.36 98.24 60,840.92 2.11 201,780.44
-Portfolio by related
parties
Total 30,006.79 100.00 25,635.62 4,371.17 262,621.36 100.00 60,840.92 201,780.44
Notes to the Financial Statements 122
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Provision for Bad Debts Based on Aging Portfolio：
Closing Balance
Aging
Accounts receivable Provision for bad debts Proportion (%)
Not overdue
Overdue 1 - 30
days
Overdue 31 - 60
days
Overdue 61 - 90
days
Overdue more than
Total 27,963.91 25,635.62
(3)Provision for bad debts charged off, reversed or recovered during the period
Change during the year
Opening Closing
Category Collect/carry
balance Accrued Written-off others Balance
over
Accounts
receivable with
individual bad debt
provision
Accounts
receivable with
bad debt provision
based on the
characters of credit
risk portfolio
Including:Portfolio
by age
Notes to the Financial Statements 123
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Change during the year
Opening Closing
Category Collect/carry
balance Accrued Written-off others Balance
over
Portfolio by
related parties
Total 60,840.92 -35,205.30 25,635.62
(4)Top five of closing balances of customers
The aggregated amount of the top five accounts receivable and contract assets
based on the balance owed by each debtor at the end of the period is CNY
receivable and contract assets. The corresponding aggregate bad debt provision at
the end of the period for these amounts is CNY 25,635.62.
Items Closing Balance Opening Balance
Interest receivable
Dividend receivable
Other receivable 5,020,385.44 6,555,310.24
Total 5,020,385.44 6,555,310.24
(1)Other receivables
①Disclosure by aging
Aging Closing Balance Closing Balance
Within 1 year 4,933,605.68 6,472,526.44
Including: 1 – 90 days 4,888,067.24 6,435,216.14
Notes to the Financial Statements 124
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Aging Closing Balance Closing Balance
Subtotal 5,107,941.34 6,618,526.44
Less: provision for bad debt 87,555.90 63,216.20
Total 5,020,385.44 6,555,310.24
Notes to the Financial Statements 125
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
②Categories of other receivable
Closing Balance Opening Balance
Items Book balance Provision Booking Booking balance Provision Booking
Amount % Amount % value Amount % Amount % value
Provision for bad
debts is made on an
individual basis
Provision for bad
debts by portfolio
Including:
balances
parties
Total 5,107,941.34 100.00 87,555.90 5,020,385.44 6,618,526.44 100.00 63,216.20 6,555,310.24
Notes to the Financial Statements 126
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Provision for Bad Debts Based on Portfolio:
Closing Balance
Items
Other receivables Bad debts Accrual rate(%）
Other current balances 3,391,221.61 87,555.90 2.58
Total 3,391,221.61 87,555.90
③Bad debt provision of other receivable
Expected credit Expected credit
Expected credit
Provision for bad debt loss within loss within life Total
loss within life
following 12 time
time (impaired)
months (unimpaired)
Balance on January 1,
On January 1, 2041 Other
receivable carrying
amount on the book
transfer to 2nd stage
transfer to 3rd stage
reverse to 2nd stage
reverse to 1st stage
Accrued 141,983.73 141,983.73
Reversed 117,644.03 117,644.03
Recollected
Written off
Others
Closing Balance 87,555.90 87,555.90
④Provision for bad debts charged off, reversed or recovered during the period
Items Opening Change during the year Closing
balance Balance
Notes to the Financial Statements 127
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Accrued Collected/reversed Written-off others
Other
current 87,555.90 87,555.90
balances
Total 87,555.90 87,555.90
⑤The categories of other receivable by nature
Items Closing Balance Opening balance
Other current balances 3,391,221.61 3,036,610.37
Deposit 101,000.00 87,000.00
Total 3,492,221.61 3,123,610.37
⑥The top significant other receivable categorized by debtors
Rate of other
Company name Category closing balance Againg receivables Bad debts
（%）
TsannKuen (Zhangzhou) Related Within
Enterprise Co., Ltd.(TKL) party 90 days
Accounts Within 2
XIAO GUANG LIU 109,806.20 2.15
Receivable years
JD Self-operated Flagship Accounts Within
Store Receivable 180 days
State Grid Fujian Electric
Accounts Within
Power Co., Ltd. Xiamen 89,164.87 1.75
Receivable 90 days
Power Supply Company
Xiamen Lurenjia Sports Accounts Within
Culture Co., Ltd. Receivable 90 days
Total 1,990,179.10 38.97
Notes to the Financial Statements 128
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Closing balance Opening balance
Provision Provision
Items Carrying Carrying
Book balance for Book balance for
amount amount
impairment impairment
Subsidiaries 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
Total 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
Notes to the Financial Statements 129
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Investments in subsidiaries
Increase in Decrease in Impairment Reserve
Balance at the End Impairment Reserve Balance at Balance at the End Impairment Provision for
Investee Company Current Current Balance at the End of
of Last Year the End of Last Year of Current Period Current Period
Period Period Current Period
TsannKuen (Zhangzhou) Enterprise
Co., Ltd. (TKL)
Xiamen Tsannkuen Property Services
Co., Ltd. (TKW)
Total 923,414,701.56 923,414,701.56
Notes to the Financial Statements 130
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Current year Prior year
Items
Revenue Costs of sales Revenue Costs of sales
Principal operating
activities
Others 63,155,206.16 38,800,465.07 60,416,530.32 36,827,096.77
Total 65,033,846.93 40,233,757.88 62,577,021.03 38,198,806.71
Items Current year Prior year
Investment income from long-term equity investments
under cost method
Total 40,989,673.41 50,748,305.69
XVI.Supplementary Information
Items Amounts Instruction
Gains and losses on disposal of non-current assets,
including the offsetting portion of the provision for asset
impairment already made
Government grants recognized in profit or loss for the
current period,except for government grants that are
closely related to the Company's normal business
operations, in compliance with national policies and in
accordance with defined criteria, and that have a
sustainable impact on the Company's profit or loss
In addition to the effective hedging business related to
the normal operation of the company, the fair value -1,401,348.54
change gains and losses arising from the holding of
Notes to the Financial Statements 131
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December, 2025
(English Translation for Reference Only)
Items Amounts Instruction
financial assets and financial liabilities by non-financial
enterprises and the gains and losses arising from the
disposal of financial assets and financial liabilities
Other profit or loss items that meet the definition of
non-recurring profit or loss
Subtotal 8,338,113.75
Income tax effect 1,264,519.35
Minority interests impact amount (after tax) 1,720,848.00
Total 5,352,746.40
Weighted Earnings per share (EPS)
average return
Profit of report period
on net assets Basic EPS Diluted EPS
(%)
Net profit attributable to shareholders of
parent company
Net profit after deducting non-recurring
gains and losses attributable to 1.66 0.10 0.10
shareholders of parent company
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements 132
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