Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

（All amounts in RMBYuan 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 40000000 new shares pursuant to an

international placing and public offer and these new shares (“B shares”“B shares”) werethen listed on the Shenzhen Stock Exchange on 30 June 1993. According to the “IntendedImplementation 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 theMinistry of Commerce and the approval documents ”“The Approval by InvestmentPromotion Bureau of Xiamen to Consent the Capital Reduction of TsannKuen (China)Enterprise Co. Ltd”” (IPB audit [2012] NO. 698) as the base 1112350077 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 1112350077 shares to 185391680 shares of the company. Until 31

December 2025 the Company’’s share capital is CNY 185391680.Following The Ministry of Commerce of the People’’s Republic of China approved (TheNo. [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 theCompany received the [2006] No.266 file “The notice of TsannKuen (China) EnterpriseCo. Ltd concerning the Approval of non-listed Foreign Shares Traded” from China

Notes to the Financial Statements 1Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Securities Regulatory Commission. The China Securities Regulatory Commission agreed

700476830 unlisted shares (account for 62.97% of the share capital) held by the

Company’s shareholders EUPA Industry Corporation Limited Fordchee Development

Limited and Fillman Investments Limited to transfer into B shares. On 29 November

2007 these B shares could be listed and exercised on Shenzhen Stock Exchange. Up to 31

December 2025 total B shares held by the three legal shareholders (EUPA Industry

Corporation Limited Fordchee Development Limited and Fillman Investments Limited)

are 82830966 shares after the implementation of share reducing model (Accounts for

44.68% of the share capital).

Legal representative: CAI Yuansong

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

Province

The parent 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

1.Basis of preparation

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

enterprisesinterpretations 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 2Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Governing the Preparation of Information Disclosures by Companies Issuing Public

Securities" of the China Securities Regulatory Commission.

2.Going concern

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

1.Declaration for compliance with Accounting Standards for Business Enterprises

The Company prepares its financial statements in accordance with the requirements of the

Accounting Standards for Business Enterprises truly and completely reflecting the

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.

2.Accounting period

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

3.Operating cycle

The normal operating cycle of the Company is one year.

4.Functional Currency

The Company takes Renminbi Yuan (“CNY”) as the functional currency.The Company’s overseas subsidiaries choose the currency of the primary economic

environment in which the subsidiaries operate as the functional currency.

5.Accounting for business combination under same control and not under same control

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 3Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

6.Criteria for determining control and Method of preparation of consolidated financial

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 4Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Increase 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 statementswhile 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 5Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Disposal of subsidiaries

1)General treatment

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 interestless 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.

2)Step-by-step disposal of subsidiaries

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 6Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Purchase 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 7Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

sheet and if the equity premium in capital surplus is not sufficient to offset it

retained earnings are adjusted.

7.Cash and cash equivalent

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.

8.Translation of foreign currency

(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 8Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* Assets 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.* Income 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.* Foreign 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.* Translation 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.

9.Financial instrument

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 9Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* The designation eliminates or significantly reduces an accounting mismatch.* The management and performance evaluation of a portfolio of financial

Notes to the Financial Statements 10Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* The financial liability contains embedded derivatives that are subject to separate

splitting.

(2)Recognition basis and measurement method of financial instruments

* Financial 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.* Financial 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 11Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* Financial assets at fair value through other comprehensive income (equity

instruments)

Financial assets (equity instruments) at fair value through other comprehensive

incomeincluding 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.* Financial 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.* Financial 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.* Financial 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 12Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* The carrying amount of the financial asset transferred;

* The 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 13Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* The carrying amount of the derecognized portion;

* The 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 14Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 15Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

30 days past due unless there is conclusive evidence that the credit risk of the

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:

* Receivables

For the notes receivable accounts receivable other receivables accounts

Notes to the Financial Statements 16Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

1)Notes Receivables

For notes receivable classified as portfolios the Company calculates expected

credit losses based on default exposure and expected credit loss rates throughout

the life of the Company considering historical credit loss experience combined

with current conditions and the forecast of the future economic conditions.Item Basis for determining the groups

Bank acceptance bill The acceptor is a bank with less credit risk.According to the credit risk of the acceptor it should be the

Commercial acceptance bill

same as the portfolios of accounts receivable.

2)Accounts Receivables

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 17Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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).

3) Other Receivables

The Company assesses whether the credit risk of other receivables has significantly

increased since initial recognition and utilizes the amount equivalent to the

expected credit loss in the next 12 months or the whole duration to measures the

impairment loss accordingly. Besides the other receivables that have individually

assessed credit risk the rest of the other receivables are classified into different

groups based on their credit risk characteristics:

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 18Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Aging Accrual ratio（%）

Not overdue 0.50

1-30 days overdue 4.50

31-60 days overdue 20.00

61-90 days overdue 45.00

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（%）

1-90 days 0.00

90-180 days 10.00

180-270 days 30.00

270-360 days 50.00

More than one year 100.00

* Debt investment and other debt investment

For debt investment and other debt investment the Company shall calculate the

expected credit loss through the default exposure and the 12-month or lifetime

expected credit loss rate based on the nature of the investment counterparty and

the type of risk exposure.

1)Low credit risk

If the financial instrument has a low risk of default the borrower has a strong

capacity to meet its contractual cash flow obligations in the near term and adverse

changes in economic and business conditions in the longer term may but will not

necessarily reduce the ability of the borrower to fulfill its contractual cash flow

obligations.

2)Significant increase in credit risk

The Company shall assess whether the credit risk on a financial instrument has

increased significantly since initial recognition using the change in the risk of a

default occurring over the expected life of the financial instrument through the

comparison of the risk of a default occurring on the financial instrument as at the

reporting date with the risk of a default occurring on the financial instrument as at

Notes to the Financial Statements 19Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 20Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

10. Inventory

(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

* Low-value consumables are amortized using the one-time reversal method;

* The 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.* In normal operation process finished goods products and materials for direct

Notes to the Financial Statements 21Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* For materials in stock need to be processed in the ordinary course of production

and business net realisable value is determined at the estimated selling price less

the estimated costs of completion the estimated selling expenses and relevant taxes.If the net realisable value of the finished products produced by such materials is

higher than the cost the materials shall be measured at cost; if a decline in the price

of materials indicates that the cost of the finished products exceeds its net

realisable value the materials are measured at net realisable value and differences

shall be recognised at the provision for impairment.* The 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.* If any factor rendering write-downs of the inventories has been eliminated at the

reporting date the amounts written down are recovered and reversed to the extent

of the inventory impairment which has been provided for. The reversal shall be

included in profit or loss.

11.Contract assets

(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 22Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

12. Long-term equity investments

(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

* Long-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 23Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Long-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

* 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.* Long-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 24Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 25Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* Disposal 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 26Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

13.The measurement model of investment property

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.

14. Fixed 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 27Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* It is probable that the economic benefits associated with the fixed asset will

flow to the enterprise;

* 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

0.005-616.67-20.00

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

0.00

leased fixed assets method shorter of benefit period and lease period

Notes to the Financial Statements 28Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 transferscrapping 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.

15.Construction in progress

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.

16.Borrowing Costs

(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 29Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* Expenditure 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.* Borrowing costs have been incurred.* Activities 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 30Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

17.Intangible assets

(1)Valuation method of intangible assets

* The 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.* Subsequent 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 31Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* It is technically feasible to complete the intangible asset so that it can be used

or sold;

* There is an intention to complete the intangible asset for use or sale;

* The 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;

* The 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;

* Expenditures attributable to the development phase of the intangible asset can

Notes to the Financial Statements 32Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

18.Impairment of long term assets

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 lifesoil 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 33Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

19.Long-term Deferred Expenses

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.

20.Contract liability

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.

21. Employee compensation

(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 34Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

(2)Accounting for post-employment benefits

* Defined 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.* 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 35Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

22.Accrued liabilities

The Company recognizes an obligation related to a contingent event as an accrued

liabilities when the following conditions are simultaneously mets:

* The obligation is a present obligation assumed by the Company;

* It is probable that the performance of the obligation will result in an outflow of

economic benefits to the Company;

* 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 36Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

23.Revenue

(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 37Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 38Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

* Sale 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 39Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Service contract

The performance obligation of the service contract between the Company and the

customer. Since the customer obtains and consumes the economic benefits brought

by the Company’s performance at the same time as the Company fulfills the

contract the Company recognises it as a performance obligation performed within

a certain period of time and amortized equally during the service provision period.* Construction contract

For the performance obligation of the construction contract between the Company

and the customer since the customer can control the goods under construction in

the process of the Company's performance the Company takes it as the

performance obligation to perform in a certain period of time and recognizes the

income according to the performance progress except that the performance

progress cannot be reasonably determined. The Company determines the progress

of the performance of providing services in accordance with the output method.The progress of the performance shall be determined according to the proportion of

the completed contract workload to the expected total contract workload. On the

balance sheet date the Company re-estimates the progress of completed

performance or completed services to reflect the changes in performance.Notes to the Financial Statements 40Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

24.Government grants

(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 41Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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:

* If 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.* If the fiscal authority directly pays the subsidy funds to the company we offset

the corresponding subsidy against the related borrowing costs.

25.Deferred income tax assets and deferred income tax liabilities

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 42Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

26.Lease

Notes to the Financial Statements 43Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

* Right-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

assetrestore 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".* Lease liabilities

Notes to the Financial Statements 44Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 45Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Short-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.* Change 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 46Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Accounting 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.* Accounting 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 47Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.

27.Methodology for determining materiality criteria and basis for selection

Items Materiality Criteria

Significant debt investments Amount≥CNY 50000000.00

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

28.Changes in significant accounting policies and accounting estimates

(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 48Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

2025 (Caihui [2025] No. 33) adjustments to accounting policies due to the

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

1.The main applicable tax and rate to the Group as follows

Tax Tax base Tax rate

The output tax is calculated on the basis of the income

0%、1%、from the sale of goods and taxable services calculated in

5%、6%、Value-added tax (VAT) accordance with the provisions of the tax law and after

9%、11%、deducting the input tax allowed to be deducted in the

13%

current period the difference is the value-added tax

Notes to the Financial Statements 49Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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%

25%、22%、Enterprise income tax Taxable profits

20%、15%

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%

2.Tax preference

（1）According to the principle of “The Second Batch of High-tech Enterprise Filing Listof Fujian Province's Accreditation Organisations for 2023 Accreditation Reporting” TKL

was identified as Fujian Province High-tech Enterprise and the certification was valid for

3 years (Certification No. GR202335003031) in accordance with the Enterprise Income

Tax Law of the People's Republic of China the Implementation Regulations of the

Enterprise Income Tax Law of the People's Republic of China and other relevant

provisions the income tax rate of Tsann Kuen (Zhangzhou) Enterprise Co. Ltd. enjoys a

10% reduction for three years from 2023 which the income tax rate is 15%.（ 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

20% tax rate has been extended until December 31 2027.Xiamen Cankun Property

Services Co. Ltd. a subsidiary of the Company is entitled to the above tax preferential

policies."

Notes to the Financial Statements 50Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

V.Notes to Consolidated Financial Statements

1.Cash at bank and on hand

Items Closing balance Opening balance

Monetary Funds 814719.21 887987.84

Digital Currency

Cash in bank 460016679.73 440872233.11

Other cash and cash equivalents 16377.06 2617722.57

Deposits with Financial Companies

Total 460847776.00 444377943.52

Including：The total amount deposited

42799561.1037357738.79

overseas

Restricted Funds Held Overseas

CNY 16377.06 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.

2.Financial assets held for trading

Items Closing balance Opening balance

Financial asset measured at fair value through P&L 50942083.33

Including：Equity instrument investment

Structured Deposit Investment 50942083.33

Total 50942083.33

3.Account receivable

(1)Category of accounts receivable listed by age

Aging Closing Balance Opening balance

Within1 year 142623608.17 205640866.11

Including：Within 90 days 126361373.98 190204917.49

91 days to 180 days 16260251.66 15422144.41

Notes to the Financial Statements 51Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Aging Closing Balance Opening balance

181 days to 270 days 13804.21

271 days to 365 days 1982.53

1 year to 2 years 748.23 40.24

2 years to 3 years 20000.00

3 years to 4 years 9677.56

4 years to 5 years 9677.56 110740.52

Over 5 years 15740.52 5000.00

Subtotal 142649774.48 205786324.43

Less：provision for bad debt 2680451.35 1830424.63

Total 139969323.13 203955899.80

Notes to the Financial Statements 52Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 142649774.48 100.00 2680451.35 1.88 139969323.13 205786324.43 100.00 1830424.63 0.89 203955899.80

the characters of

credit risk portfolio

Including:

-Portfolio by age 139200837.18 97.58 2680451.35 1.93 136520385.83 204835409.81 99.54 1830424.63 0.89 203004985.18

-Portfolio by related

3448937.302.423448937.30950914.620.46950914.62

parties

Total 142649774.48 100.00 2680451.35 139969323.13 205786324.43 100.00 1830424.63 203955899.80

Notes to the Financial Statements 53Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 120294774.42 601159.83 0.50

Overdue 1 - 30

11130636.17500878.634.50

days

Overdue 31 - 60

7744043.751548808.7520.00

days

Overdue 61 - 90

3234.001455.3045.00

days

Overdue more than

28148.8428148.84100.00

90 days

Total 139200837.18 2680451.35

(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 1830424.63 2680451.35 4510875.98

characters of credit

risk portfolio

Including:Portfolio by

1830424.632680451.354510875.98

age

Portfolio by related

parties

Notes to the Financial Statements 54Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Change during the year

Opening Closing

Category Collect/carry

balance Accrued Written-off others Balance

over

Total 1830424.63 2680451.35 4510875.98

(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

99647986.06 representing 69.85% of the total combined balances of accounts

receivable and contract assets. The corresponding aggregate bad debt provision at

the end of the period for these amounts is CNY 2350723.71.

4. Advances to Suppliers

(1)Advances to suppliers by aging

Closing Balance Opening Balance

Items

Amoun Percentage (%) Amoun Percentage (%)

Within 1 year 4955253.01 100.00 4318758.91 100.00

Total 4955253.01 100.00 4318758.91 100.00

(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 1903219.05 accounting for 38.41% of the total amount of

the prepayment at the end of the year.

5.Other receivables

Items Closing Balance Opening Balance

Interest receivable

Dividend receivable

Other receivable 21608192.98 27902480.51

Notes to the Financial Statements 55Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Closing Balance Opening Balance

Total 21608192.98 27902480.51

(1)Other receivables

* Disclosure by aging

Aging Closing Balance Closing Balance

Within 1 year (including 1year) 20499731.51 26709851.91

Including: Within 90 days 20311115.49 26401440.21

91 days to 180 days 93830.21 290303.70

181 days to 270 days 21629.94 18108.00

271 days to 365 days 73155.87

1year to 2 years 180171.75 625214.28

2 years to 3 years 376622.68 35500.00

3 years to 4 years 5000.00

Over 5 years 1026725.63 1048404.94

Subtotal 22088251.57 28418971.13

Less: provision for bad debt 480058.59 516490.62

Total 21608192.98 27902480.51

Notes to the Financial Statements 56Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* Categories 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 326422.64 1.48 326422.64 100.00 326422.64 1.15 326422.64 100.00

individual basis

Including:

Other current

326422.641.48326422.64100.00326422.641.15326422.64100.00

balances

Provision for bad

21761828.9398.52153635.950.7121608192.9828092548.4998.85190067.980.6827902480.51

debts by portfolio

Including:

Export tax refund 12000000.00 54.33 12000000.00 18000000.00 63.34 18000000.00

Other current

8634103.3039.09153635.951.788480467.358887143.5531.27190067.982.148697075.57

balances

Deposit 1127725.63 5.11 1127725.63 1205404.94 4.24 1205404.94

Total 22088251.57 100.00 480058.59 21608192.98 28418971.13 100.00 516490.62 27902480.51

Notes to the Financial Statements 57Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 326422.64 326422.64 100.00 deteriorated 326422.64 326422.64

Technology and the

Co. Ltd amount is

expected to be

unrecoverable

Total 326422.64 326422.64 326422.64 326422.64

Provision for Bad Debts Based on Portfolio:

Closing Balance

ItemsOther receivables Bad debts Accrual rate(%）

Other current

8634103.30153635.951.78

balances

Total 8634103.30 153635.95

* Bad debt provision of other receivable

1st stage 2nd stage 3rd stage

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 58Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

1st stage 2nd stage 3rd stage

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 190067.98 326422.64 516490.62

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 141983.73 141983.73

Reversed 178415.76 178415.76

Recollected

Written off

Others

Closing Balance 153635.95 326422.64 480058.59

* Provision 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 190067.98 141983.73 178415.76 153635.95

balances

Total 190067.98 141983.73 178415.76 153635.95

* The categories of other receivable by nature

Notes to the Financial Statements 59Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Closing Balance Opening balance

Export tax refund 12000000.00 18000000.00

Other current balances 8960525.95 9213566.19

Deposit 1127725.63 1205404.94

Total 22088251.58 28418971.13

* Other 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

12000000.0054.33

Administration of refund days

Taxation

State Grid Fujian Other

Longhai Power Supply current 2824073.65 12.79

days

Co. Ltd balances

China Export & Credit

Security over

Insurance Corporation 648450.00 2.94

deposit 5years

Fujian Branch

Sunshine Property Other

Insurance Co. Ltd. current 437550.00 1.98

days

Xiamen Branch balances

Security over

PT. PLN (PERSERO) 378275.63 1.71

deposit 5years

Total 16288349.28 73.75

6.Inventories

Notes to the Financial Statements 60Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 74015782.16 14946461.02 59069321.14 74560733.28 13095705.30 61465027.98

Materials in transit 7796782.08 - 7796782.08 3073604.45 - 3073604.45

Self-manufactured semi-finished goods 16516601.91 1876938.57 14639663.34 27333598.54 3193768.90 24139829.64

Work in process 31803251.23 - 31803251.23 29574402.53 - 29574402.53

Finished goods 69675139.12 5282134.24 64393004.88 78687157.30 6285683.77 72401473.53

Low-value consumables 16016038.78 - 16016038.78 3745185.65 - 3745185.65

Total 215823595.28 22105533.83 193718061.45 216974681.75 22575157.97 194399523.78

Notes to the Financial Statements 61Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

(2)Provision for impairment

Increase Decrease

Items Opening Balance Reverse/Written Closing Balance

Accrual other other

-off

Raw materials 13095705.30 3143935.72 -109391.73 1183788.27 - 14946461.02

Self-manufactured semi-finished

3193768.90714281.93-11928.352019183.91-1876938.57

goods

Finished goods 6285683.77 3378000.10 -9556.14 4371993.49 - 5282134.24

Total 22575157.97 7236217.75 -130876.22 7574965.67 22105533.83

Notes to the Financial Statements 62Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

7.Current portion of non-current assets

Items Closing balance Opening balance

Debt investments due within one year 555877899.74 51260694.44

Total 555877899.74 51260694.44

8.Other current assets

Items Closing balance Opening balance

Financial investment 279745858.28 544439535.72

Reclassification of VAT debit balances etc. 8540179.76 9897443.29

Total 288286038.04 554336979.01

9.Debt investment

(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 736100000.00 736100000.00 581500000.00 581500000.00

deposit

Interest

Accrual for

Large 28380048.42 28380048.42 10295355.13 10295355.13

certificate of

deposit

Subtotal 764480048.42 764480048.42 591795355.13 591795355.13

Less: Debt

investments

555877899.74555877899.7451260694.4451260694.44

due within

one year

Total 208602148.68 208602148.68 540534660.69 540534660.69

Notes to the Financial Statements 63Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

51500000.002.75%2.75%2026/9/12

Deposit Certificate

Xiamen Bank Large

50000000.003.30%3.30%2026/12/21

Certificates of Deposit

Xiamen Bank Large

50000000.003.30%3.30%2026/12/26

Certificates of Deposit

Xiamen International

Bank Time Deposit 50000000.00 2.85% 2.85% 2026/4/9

Certificate

Chiyu Bank Time Deposit

50000000.002.85%2.85%2026/5/11

Certificate

Xiamen International

Bank Time Deposit 50000000.00 2.75% 2.75% 2026/5/23

Certificate

Quanzhou Bank Time 30000000.00 2.85% 2.85% 2026/6/25

Notes to the Financial Statements 64Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

50000000.002.85%2.85%2026/7/4

Deposit Certificate

Quanzhou Bank Time

50000000.002.75%2.75%2026/9/9

Deposit Certificate

Quanzhou Bank Time

50000000.002.75%2.75%2026/9/11

Deposit Certificate

Quanzhou Bank Time

50000000.002.75%2.75%2026/9/12

Deposit Certificate

Quanzhou Bank Time

30000000.002.50%2.50%2027/1/16

Deposit Certificate

Xiamen Bank Large

50000000.002.40%2.40%2027/1/17

Certificates of Deposit

Quanzhou Bank Time

50000000.002.15%2.15%2028/9/5

Deposit Certificate

Quanzhou Bank Time 74600000.00 2.50% 2.50% 2027/1/16

Notes to the Financial Statements 65Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 204600000.00 531500000.00

Notes to the Financial Statements 66Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

10.Long-term equity investment

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 9800000.00 -1713478.49 -201582.69 7884938.82

Appliances

Co. Ltd.Notes to the Financial Statements 67Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

11.Other equity instrument investment

Items Closing balance Opening balance

Non-trading investments in equity instruments 40000.00 40000.00

Total 40000.00 40000.00

12.Investment property

(1)Investment property measured as cost method

Building and

Items Land use rights Total

plants

1．Initial Cost

（1）Opening Balance 80814358.80 29260577.51 110074936.31

（2） Increase 39000.00 39000.00

—Purchase 39000.00 39000.00

—Transferred from fixed

assets

（3）Decrease

—Disposal

（4）Closing Balance 80853358.80 29260577.51 110113936.31

2．Accumulated Depreciation

（1）Opening Balance 72758196.24 18028984.84 90787181.08

（2）Opening Balance 144524.76 622111.80 766636.56

—Accrued 144524.76 622111.80 766636.56

—Transfer from fixed assets

（3）Decrease

—Disposal

（4）Closing Balance 72902721.00 18651096.64 91553817.64

3．Impairment Reserve

（1）Opening Balance

（2） Increase

Notes to the Financial Statements 68Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Building and

Items Land use rights Total

plants

—Accrued

（3）Decrease

—Decrease

（4）Closing Balance

4．Book Value

（1）Closing book value 7950637.80 10609480.87 18560118.67

（2）Opening book value 8056162.56 11231592.67 19287755.23

(2)Investment properties without certificate of title

Item Carrying amount Reason

Lvyuan three country villa 742403.57

Total 742403.57

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.

13.Fixed assets

(1)Fixed assets and fixed assets liquidation

Items Closing balance Opening balance

Fixed assets 162861863.08 146795190.83

Disposal of fixed assets

Total 162861863.08 146795190.83

Notes to the Financial Statements 69Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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．Initial Cost

（1）Opening Balance 89810823.21 154643353.55 849500172.53 16444897.00 20762399.27 1131161645.56

（2）Increase 3762005.54 21079322.79 23735476.41 1352877.09 805430.92 50735112.75

—Purchase 288755.29 11889687.37 20851515.12 1084735.52 805430.92 34920124.22

—Transferred from

3473250.259189635.422883961.29268141.5715814988.53

construction- in-progress

—Impact of changes

in exchange rates

（3）Decrease 1134427.87 7071340.63 1897975.50 115394.07 234017.67 10453155.74

—Disposal 5994708.96 794598.00 2861.50 6792168.46

—Transfer out to

investment property

—Impact of

1134427.871076631.671103377.50112532.57234017.673660987.28

changes in exchange rates

（4）Closing Balance 92438400.88 168651335.71 871337673.44 17682380.02 21333812.52 1171443602.57

Notes to the Financial Statements 70Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Houses and Electronic devices modules Improvement expense

Items Machinery Vehicles Total

buildings and others of leased fixed assets

2.Accumulated Depreciation

（1）Opening Balance 56173349.46 89331263.33 777633498.27 15424464.62 18962663.07 957525238.75

（2）Increase 3195990.73 10069529.47 19014925.94 350726.54 301314.07 32932486.75

—Accrued 3195990.73 10069529.47 19014925.94 350726.54 301314.07 32932486.75

—Impact of changes

in exchange rates

（3）Decrease 534339.53 5157408.59 1345398.52 97583.03 182860.70 7317590.37

—Disposal 4581616.61 575728.28 2344.66 5159689.55

—Transfer out to

investment property

—Impact of

534339.53575791.98769670.2495238.37182860.702157900.82

changes in exchange rates

（4）Closing Balance 58835000.66 94243384.21 795303025.69 15677608.13 19081116.44 983140135.13

3．Impairment Reserve

（1） Opening Balance 6971735.34 19849759.00 8499.92 11221.72 26841215.98

（2） Increase 130586.68 47471.57 178058.25

—Accrued 130586.68 47471.57 178058.25

Notes to the Financial Statements 71Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 1479092.95 97682.04 645.70 249.18 1577669.87

—Disposal 1413092.35 46646.04 516.84 1460255.23

—Impact of changes

66000.6051036.00128.86249.18117414.64

in exchange rates

（4）Closing Balance 5623229.07 19799548.53 7854.22 10972.54 25441604.36

4．Book value

（1）Closing book value 33603400.22 68784722.43 56235099.22 1996917.67 2241723.54 162861863.08

（2）Opening book value 33637473.75 58340354.88 52016915.26 1011932.46 1788514.48 146795190.83

Notes to the Financial Statements 72Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

(3)Temporary idle fixed assets

Accumulated Provision for Carrying

Item Initial cost Note

depreciation impairment amount

Electronic device 1795904.21 1725799.51 70104.70

Improvement expense of

44883.9944406.67477.32

leased fixed assets

Machinery euipment 6390364.61 6390364.61

Machinery euipment 7881387.12 5346129.04 1854341.69 680916.39

Total 16112539.93 13506699.83 1924923.71 680916.39

(4)Fixed assets as pending certificate of ownership

Carrying amount on 31

Item Reason

December 2024

Telecommunications project

53052.16 In Process

expenses

Houses and buildings

297722.28 In Process

renovation expenses

14.Construction-in-progress

(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

14770911.8714770911.873462300.893462300.89

in progress

Engineering

materials

Total 14770911.87 14770911.87 3462300.89 3462300.89

Notes to the Financial Statements 73Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

4818922.514818922.512107628.322107628.32

project

Equipment to

9951989.369951989.361354672.571354672.57

be inspected

Total 14770911.87 14770911.87 3462300.89 3462300.89

Notes to the Financial Statements 74Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

15.Right-of-use assets

Items Houses and buildings Total

1．Initial Cost（ 1） Opening Balance 408735436.56 408735436.56

（2）Increase 1374156.36 1374156.36

—New Leases 1374156.36 1374156.36

（3）Decrease

—Transferred to Fixed Assets

—Disposal（ 4） Closing Balance 410109592.92 410109592.92

2.Accumulated Depreciation（ 1） Opening Balance 54791566.64 54791566.64

（2）Increase 14930816.06 14930816.06

—Accrued 14930816.06 14930816.06

（3）Accrued

—Transferred to Fixed Assets

—Disposal（ 4） Closing Balance 69722382.70 69722382.70

3．Impairment Reserve（ 1） Opening Balance

（2）Increase

—Accrued

（3）Decrease

—Transferred to Fixed Assets

—Disposal（ 4） Closing Balance

4．Book value

（1）Closing book value 340387210.22 340387210.22

（2）Opening book value 353943869.92 353943869.92

Notes to the Financial Statements 75Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

16.Intangible assets

Items Land use rights Software Total

1．Initial cost

（1）Opening balance 19423602.68 53847562.20 73271164.88

（2）Increase 61495.51 27477.88 88973.39

—Purchase 27477.88 27477.88

—Impact of changes in exchange rates 61495.51 61495.51

（3） Decrease 707100.09 707100.09

—Disposal

—Impact of changes in exchange rates 707100.09 707100.09

（4） Closing balance 18777998.10 53875040.08 72653038.18

2．Amortization

（1）Opening balance 7589198.59 53734647.63 61323846.22

（2）Increase 645020.94 122073.85 767094.79

—Accrual 645020.94 122073.85 767094.79

—Impact of changes in exchange rates

（3） Decrease 243995.00 243995.00

—Disposal

Notes to the Financial Statements 76Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Land use rights Software Total

—Impact of changes in exchange rates 243995.00 243995.00

（4） Closing balance 7990224.53 53856721.48 61846946.01

3．Provision for impairment

（1）Opening balance

（2）Increase

—Accrual

（3） Decrease

—Disposal

（4） Closing balance

4．Book value

（1） Closing Book value 10787773.57 18318.60 10806092.17

（2）Opening Book value 11834404.09 112914.57 11947318.66

Notes to the Financial Statements 77Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

17.Long-term prepaid expenses

Closing Other Opening

Items Increase Amortization

balance Decrease balance

Building

improvement 5487181.12 300229.17 2438208.26 3349202.03

expenses

Telecommunications

84199.1437487.8846711.26

project expenses

Total 5571380.26 300229.17 2475696.14 3395913.29

18.Deferred tax assets and deferred tax liabilities

(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 7227889.86 1084183.48

Provision for asset

2314728.83358528.4836745296.245756204.14

impairment

Provision for credit

36428524.385683315.532087383.34325513.21

impairment

Unrealized intragroup

274674.7268668.68445561.88111390.47

profit

Accrued expenses 6777249.76 1064770.17 8188555.64 1301408.77

Lease liabilities 402036188.94 60305428.34 396776679.42 59538736.82

Total 455059256.49 68564894.68 444243476.52 67033253.41

(2)Deferred tax liabilities before offsetting

Items Closing balance Opening balance

Notes to the Financial Statements 78Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Deductible Deductible

Deferred tax Deferred tax

temporary temporary

liabilities liabilities

differences differences

Financial assets held

942083.33141312.50

for trading

Depreciation of fixed

11094844.011664226.6012850383.831927557.57

assets accelerates

Right-of-use Assets 340387210.22 51058081.53 353943869.92 53091580.49

合计351482054.2352722308.13367736337.0855160450.56

(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

52722308.1315842586.5555160450.5611872802.85

assets

Deferred tax

52722308.1355160450.56

liabilities

(4)Unrecognized deferred tax assets

Items Closing balance Opening balance

Provision for asset impairment 10949534.40 12501998.30

Provision for credit impairment 845781.10 259531.91

Accrued expenses 7502466.81 16484156.08

Payroll liability 4674110.43 2119054.60

Undistributed deficit 33440943.64 24592204.05

Total 57412836.38 55956944.94

Notes to the Financial Statements 79Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

2026

20276631108.516631108.51

20285538094.865538094.86

202912423000.6812423000.68

2030-20358848739.59

Total 33440943.64 24592204.05

19.Other non-current assets

Closing balance Opening balance

Provision Provision

Items Book for Carrying for Carrying

Book balance

balance impairmen amount impairmen amount

t t

Prepaid

mold fee

6273764.96273764.910099186.110099186.1

and

4411

equipmen

t fee

6273764.96273764.910099186.110099186.1

Total

4411

Notes to the Financial Statements 80Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

20.Assets with restricted ownership or use

Closing balance Opening balance

Items

Book Balance Book Value Restricted assets Book Balance Book Value Restricted assets

Monetary funds 2487216.02 2487216.02 Letter of credit margin

Total 2487216.02 2487216.02

Notes to the Financial Statements 81Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

21.Notes payable

Classification Closing balance Opening balance

Bank acceptance notes 2224816.88 19418627.35

Total 2224816.88 19418627.35

22.Accounts Payable

Items Closing balance Opening balance

Within 1 year 380458300.99 513873164.01

Over 1 year 3410092.35 3448353.28

Total 383868393.34 517321517.29

23.Received in advance

Items Closing balance Opening balance

Within 1 year 2250671.08 2803884.45

Over 1 year 131374.50 120448.80

Total 2382045.58 2924333.25

24.Contractual liability

Items Closing balance Opening balance

Advance from merchandise 23384580.98 15988527.98

Advance for Management Fees 233082.20 308211.67

Total 23617663.18 16296739.65

25.Employee Benefits Payable

(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 53950714.15 292297404.43 289887426.86 -104169.99 56256521.73

Notes to the Financial Statements 82Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 –

6308.2524133339.4124134544.74-10.205092.72

Defined

contribution plan

Termination

2470772.55412762.552058010.00

benefits

Total 53957022.40 318901516.39 314434734.15 -104180.19 58319624.45

(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

34998217.81253982472.24254028807.88-104149.6434847732.53

allowances and

subsidies

（2）Staff welfare 16177008.48 16177008.48

（3）Social

security 4662.77 12665588.72 12667190.31 -20.35 3040.83

contributions

Include: Medical

3512.859455899.289456556.74-9.642845.75

insurance

Work

1149.922485699.562486643.69-10.71195.08

injury insurance

Maternity 723989.88 723989.88

insurance

Notes to the Financial Statements 83Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

15982742.508883565.186158797.1618707510.52

funds

（5）Labor union

and employee 855623.03 855623.03

education costs

（6） Short-term

2965091.07-266853.222698237.85

paid leave

Total 53950714.15 292297404.43 289887426.86 -104169.99 56256521.73

(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

6122.5423376350.8123377519.61-10.204943.54

insurance

Unemployment

185.71756988.60757025.13149.18

insurance

Total 6308.25 24133339.41 24134544.74 -10.20 5092.72

26.Taxes payable

Items Closing balance Opening balance

Value-added tax 467002.43 952185.68

Enterprise income tax 3642909.01 13505915.29

Individual income tax 562112.35 809831.82

City maintenance and construction tax 315000.00 601276.22

Education surcharge 189000.00 360765.73

Notes to the Financial Statements 84Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Closing balance Opening balance

local education surcharge 126000.00 240510.49

Real estate tax 1428496.70 1456280.69

Land use tax 175232.82 175232.78

Stamp duty 157324.77 202995.02

Other 4242.05 5401.04

Total 7067320.13 18310394.76

27.Other payables

Items Closing balance Opening balance

Interest payable

Dividend payable

Other payables 28579322.67 40877557.33

Total 28579322.67 40877557.33

(1)Other accounts payable

* Other payables categorized by payments nature

Items Closing balance Opening balance

Bid security deposits 7983586.79 8735043.85

Current payments and others 5351553.34 7474779.27

Accrued expenses 15244182.54 24667734.21

Total 28579322.67 40877557.33

* Material Other Payables with Aging Over One Year or Overdue

Items Closing balance Reason for Unrepaid or Unsettled

Bid security deposits 7371222.79 To be returned upon contract termination

28.Current portion of non-current liabilities

Notes to the Financial Statements 85Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Closing balance Opening balance

Lease liabilities due within one year 476624.15 922678.70

Total 476624.15 922678.70

29.Lease liabilities

Items Closing balance Opening balance

Lease payments 687431273.71 698687752.67

Less：unrecognized financing charges 285395084.77 301760453.00

Less：Lease liabilities due within one year 476624.15 922678.70

Total 401559564.79 396004620.97

30.Share Capital

Change forcurrent period

Opening New Capitalization Closing

Items Share

Balance shares of capital Others Subtotal balance

donation

issued reserve

Number

of total 185391680.00 185391680.00

shares

31.Capital reserve

Increase in the Decrease in the

Items Opening Balance Closing balance

current period current period

Capital premium (share

210045659.80210045659.80

premium)

Other capital reserves 86763305.99 86763305.99

Total 296808965.79 296808965.79

Notes to the Financial Statements 86Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

32.Other Comprehensive Income

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

1.Other comprehensive income

that will not be reclassified to 41036.56 41036.56

profit or loss

Including：Remeasurement

gains or losses of a defined 41036.56 41036.56

benefit plan

Other comprehensive income

using the equity method that will

not be reclassified to profit or

Notes to the Financial Statements 87Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

2.Other comprehensive income

11211709.96-3954027.00-2965520.25-988506.758246189.71

to be reclassified to profit or loss

Including：Under equity

method proportionate

share of other

comprehensive

Notes to the Financial Statements 88Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 11211709.96 -3954027.00 -2965520.25 -988506.75 8246189.71

Notes to the Financial Statements 89Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 11252746.52 -3954027.00 -2965520.25 -988506.75 8287226.27

Notes to the Financial Statements 90Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

33.Surplus reserves

Increase in the Decrease in the

Items Opening Balance Closing balance

current period current period

Statutory surplus

81427732.565352894.7586780627.31

reserve

Total 81427732.56 5352894.75 86780627.31

34.Retained earnings

Items Current year Prior year

Closing balance of prior year 527518517.81 507010039.53

Adjustments for the opening balance (increase

/(decrease))

Balance at the beginning of the reporting period

527518517.81507010039.53

after adjustments

Add: net profit attributable to owners of the

23545319.3772782642.48

company for the reporting period

Less: Provision for statutory surplus reserves 5352894.75 5926244.20

Provision for any surplus reservesC

Provision of general risk

Dividends payable for common shares 33370502.40 46347920.00

Share dividends

Closing balance of current year 512340440.03 527518517.81

35.Operating income and costs of sales

(1)Operating income and cost

Current year Prior year

Items

Revenue Costs of sales Revenue Costs of sales

Principal

operating 1297894653.32 1152791463.09 1648161362.22 1428347528.54

activities

Others 46880902.92 11856078.57 52954088.34 13956531.45

Total 1344775556.24 1164647541.66 1701115450.56 1442304059.99

Notes to the Financial Statements 91Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 1297894653.32 1152791463.09 1648161362.22 1428347528.54

industry

Total 1297894653.32 1152791463.09 1648161362.22 1428347528.54

(3)Revenue from principal activities (by product)

Current year Prior year

Product

Revenue Costs of sales Revenue Costs of sales

Catering and

834493669.53742912713.791046951475.35904917723.90

Cooking

Home helper 369884920.65 330792146.03 450085933.70 397179916.97

Tea/Coffee

86053300.5675142750.98136456159.10118649027.25

makers

Other 7462762.58 3943852.29 14667794.07 7600860.42

Total 1297894653.32 1152791463.09 1648161362.22 1428347528.54

(4)Revenue from principal activities (by region)

Current year Prior year

Region

Revenue Costs of sales Revenue Costs of sales

Australia 15643467.49 12598553.83 20751971.71 16716180.90

Africa 2953785.89 2792390.70 15758618.31 12986861.43

America 595844245.75 541878569.80 847408182.11 744335500.91

Europe 391841744.63 341404334.99 483962735.10 414623825.78

Asia 291611409.56 254117613.77 280279854.99 239685159.52

Total 1297894653.32 1152791463.09 1648161362.22 1428347528.54

Notes to the Financial Statements 92Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

36.Taxes and Surcharges

Items Current year Prior year

City construction tax 2131395.21 2673626.01

Education surcharge 1224129.01 1560402.93

Local Education surcharge 817043.13 1040268.65

Property tax 2988346.37 2953530.94

Property tax 398846.80 398846.80

Stamp duty 687684.95 905265.36

Others 62222.21 43315.39

Total 8309667.68 9575256.08

37.Selling and Distribution Expenses

Items Current year Prior year

Employee benefit 14069531.81 16454435.95

Advertisements charges and sales

2503856.952875696.67

promotion

Sales commission and after sales service

42945.646028629.94

fees

Travel expenses 620068.05 1110026.40

Administrative expenses 152129.82 128595.30

Leasing 21842.16 22718.34

Claims experiment expenses 960771.13 1401804.99

Travel expense 4310620.71 4207806.76

Total 22681766.27 32229714.35

38.Administrative expenses

Items Current year Prior year

Employee benefit 47908724.21 42423111.23

Depreciation and amortization of assets 7979119.02 10137390.28

Employee benefit 3391599.30 2975629.69

Notes to the Financial Statements 93Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Current year Prior year

Consultant fees 2440849.27 2122571.44

Maintenance expenses 3801226.60 3745323.37

Insurance expenses 1947554.90 2402559.65

Administrative expenses 1707776.06 1676235.64

Rental expenses 184983.65 306785.03

Other expense 7289400.16 5686296.38

Total 76651233.17 71475902.71

39.Research and Development Expenses

Items Current year Prior year

Employee remunerations 44742516.32 47317568.07

Depreciation and amortization of assets 2742821.79 3827800.32

Test expenses 6274061.42 6578389.27

Maintenance expenses 2094668.66 1837472.13

Certification expenses 1810373.01 1539557.35

Patent expenses 903881.82 705579.71

Travel expenses 575609.06 551259.50

Consultant fees 342498.96 256246.64

Rental expenses 38287.43 40310.01

Others 1969793.25 2278083.81

Total 61494511.72 64932266.81

40.Financial expenses

Items Current year Prior year

Interest expenses 21174939.96 21700670.25

Including: interest expense on lease

16441826.7416253615.68

liabilities

Less: Interest income 6644317.40 9148448.06

Foreign exchange losses -1583059.60 -11924910.07

Notes to the Financial Statements 94Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Current year Prior year

Add: Others expenditure 708051.38 760380.35

Total 13655614.34 1387692.47

41.Other income

Items Current year Prior year

Government grant 7683398.57 2373328.56

Withholding of personal income

114394.03100942.42

tax handling fee

Total 7797792.60 2474270.98

42.Investment income

Items Current year Prior year

Income from long-term equity investments accounted for

-1713478.49

using the equity method

Investment income earned during the holding period of a

1487355.8714792090.85

trading financial asset

Investment income from the disposal of trading financial

-33700.00321250.00

assets

Other current assets’ investment and wealth management 29282206.64 22565233.90

Total 29022384.02 37678574.75

43.Gains from changes in fair value

Sources of gains on changes in fair value Current year Prior year

Tradable financial asset -942083.33 -2066950.01

Including: Changes in fair value of derivatives -432800.00

Financial products -942083.33 -1634150.01

Total -942083.33 -2066950.01

Notes to the Financial Statements 95Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

44.Credit impairment losses

Items Current year Prior year

Bad debt of accounts receivables 864743.88 -1300562.02

Bad debt of other receivables -36432.03 52587.96

Total 828311.85 -1247974.06

45.Assets impairment losses

Items Current year Prior year

Inventory impairment loss & Impairment

3464673.486812241.66

loss on contract performance costs

Fixed asset impairment loss 177933.89 2358907.09

Total 3642607.37 9171148.75

46.Gains from disposal of assets

Amount included in

Items Current year Prior year non-recurring profit or loss in

the current period

Income from the

disposal of fixed 756104.15

assets

Total 756104.15

47.Non-operating income

Amount included in

non-recurring profit

Items Current year Prior year

or loss in the current

period

Other 2062990.74 488343.55 2062990.74

Total 2062990.74 488343.55 2062990.74

Notes to the Financial Statements 96Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

48.Non-operating expenses

Amount included in

non-recurring profit

Items Current year Prior year

or loss in the current

period

Donations 61242.81

Loss from damage or scrapping

4472.804472.80

of non-current assets

Penalty and late payment 116848.25 25750.00 116848.25

others

Total 121321.05 86992.81 121321.05

49.Income tax expenses

(1)Income tax expenses

Items Current year Prior year

Current income tax expenses 6305118.13 17927037.97

Deferred income tax expenses -3969783.70 -3487994.18

Total 2335334.43 14439043.79

(2)Reconciliation of income tax expenses to the accounting profit

Items Current year

Total profit 30684065.16

Income tax expense at the statutory [or applicable] tax rate 7671016.29

Effect of different tax rates applied to subsidiaries -1444080.93

Effect of adjustments to income taxes of prior periods 928579.71

Impact of non-taxable income 287259.18

Effect of non-deductible costs expenses and losses 981015.41

Effect of non-deductible costs expenses and losses -2561168.09

Notes to the Financial Statements 97Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Items Current year

Effect of deductible temporary differences or deductible losses on

3023683.03

deferred income tax assets not recognized in the period

R&D expenses plus deduction -6550970.17

Income tax expense 2335334.43

50.Earnings per share

(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

23545319.3772782642.48

shareholders of the company

Weighted average number of common shares of the

185391680.00185391680.00

Company issued and outstanding

Basic earnings per share 0.13 0.39

Include: Basic earnings per share from continuing

0.130.39

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

23545319.3772782642.48

shareholders of the company (diluted)

Notes to the Financial Statements 98Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Item Current year Prior year

Weighted average number of common shares of the

185391680.00185391680.00

company issued and outstanding (diluted)

Diluted earnings per share 0.13 0.39

Include: Diluted earnings per share from continuing

0.130.39

operations

Diluted earnings per share from discontinued

operations

51.Notes to the Statement of Cash Flow

(1)Cash relating to operating activities

* Cash received relating to other operating activities

Item Current year Prior year

Government grants 7683398.57 2373328.56

Interest income 6644317.43 9148448.06

Rent income 40130936.58 35225301.36

Funds in current account and others 68382204.93 58998534.03

Total 122840857.51 105745612.01

* Other cash payments relating to operating activities

Item Current year Prior year

Penalties and donations 116848.25 86992.81

Bank charges 708051.41 760380.35

Sales expenses general and administrative

expenses and research and development 53328190.19 34510721.88

expenses paid by cash

Current accounts and others 68683022.87 60758272.65

Total 122836112.72 96116367.69

Notes to the Financial Statements 99Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

(2)Cash relating to investing activities

* Cash received relating to other investing activities

Item Current year Prior year

A term deposit deposited with a financial

635349329.98546076871.65

institution to earn interest income at maturity

Total 635349329.98 546076871.65

* Cash paid relating to other investing activities

Item Current year Prior year

A term deposit deposited with a financial

325728783.59699587632.10

institution for earning interest income

Total 325728783.59 699587632.10

(3)Cash relating to financing activities

* Cash receipts relating to other financing activities

Item Current year Prior year

Letter of credit margin 4748170.39 11360910.42

Total 4748170.39 11360910.42

* Cash payments relating to other financing activities

Item Current year Prior year

Lease payments of right-of-use assets 13294352.52 12950682.48

Letter of credit deposit 2260954.37 8495821.20

Total 15555306.89 21446503.68

Notes to the Financial Statements 100Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

52.Supplementary information to the cash flow statement

(1)Supplementary information to the cash flow statement

additional materials Current year Prior year

1.Adjust net profit to cash flow from operating

Net profit 28348730.73 96091690.28

Add: Impairment loss of credit 828311.85 -1247974.06

Provision for impairment losses of assets 3642607.37 9171148.75

Depreciation of fixed assets Investments

33635783.3034045644.99

properties

Depreciation of right-of-use assets 14930816.06 14620121.76

Amortisation of intangible assets 755060.01 1651783.01

Amortisation of Long-term prepaid expenses 2475696.14 2968396.31

Gain on disposal of fixed assets intangible assets

-756104.15

and other long-term assets (Gain expressed with “-”)

Loss on scrapping of fixed assets (Gain expressed

4472.80

with “-”)

Loss on changes in fair value (Gain expressed with

942083.332066950.01

“-”)

Financial expense (Income expressed with “-”) 19591880.37 9775760.26

Investment loss (Income expressed with “-”) -29022384.02 -37678574.75

Decreases in deferred tax assets (Increase

-3969783.70-3487994.18

expressed with “-”)

Increases in deferred tax liabilities (Decrease

expressed with “-”)

Decrease in inventories (Increase expressed with

153722.73-4097528.45

“-”)

Decrease in operating receivables (Increase

60928810.20105722.03

expressed with “-”)

Increases in operating payables (Decrease

-148232929.0713154370.28

expressed with “-”)

Notes to the Financial Statements 101Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

additional materials Current year Prior year

Others

Net cash flows from operating activities -14987121.90 136383412.09

2.Net increases in cash and cash equivalents

Cash at the end of the reporting period 460847776.00 441890727.50

Less: Cash at the beginning of the reporting period 441890727.50 561810271.53

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 18957048.50 -119919544.03

(2)Composition of cash and cash equivalents

Item Current year Prior year

1.Cash 460847776.00 441890727.50

Including: Cash on hand 814719.21 887987.84

Digital Currency

Bank deposits 460016679.73 440872233.11

Other monetary funds 16377.06 130506.55

Deposits with the central bank

Deposits with other banks

Placements with banks

2.Cash equivalents

Including: Investments in debt securities due within

three months

3.Closing balance of cash and cash equivalents 460847776.00 441890727.50

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 102Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Item Closing balance Opening balance Reasons

Not withdrawable at

Letter of credit margin 2487216.02

any time

Total 2487216.02

53.Foreign currency monetary items

(1)Foreign currency monetary items

Converted Closing balance converted

Items Closing balance

exchange rate CNY

Money funds 130186633.20

Include：USD 17351446.60 7.03 121959847.86

Euro 26368.20 8.24 217155.31

HKD 208447.78 0.90 188274.20

JPY 144238105.42 0.04 6461434.41

HUF 81016.00 0.02 1728.80

IDR 3075782176.71 1291828.51

GBP 7034.12 9.43 66364.11

Accounts receivables 137352795.82

Include：USD 19116456.38 7.03 134365528.63

IDR 639959400.00 269887.53

JPY 60659858.00 0.04 2717379.66

Accounts payables 43825342.58

Include：USD 5794801.72 7.03 40730502.33

Euro 66306.00 8.24 546063.06

JPY 1666084.47 0.04 74635.59

IDR 5887596790.50 2472790.65

HKD 1495.70 0.90 1350.95

Other receivables 1036138.74

Notes to the Financial Statements 103Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Converted Closing balance converted

Items Closing balance

exchange rate CNY

Include：USD 8089.73 7.03 56861.09

IDR 2331613442.00 979277.65

HKD

Other payables 2897152.27

Include：USD 316548.47 7.03 2224955.89

HKD 73851.42 0.90 66704.08

IDR 1358227347.52 570455.49

JPY 782124.00 0.04 35036.81

(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

54.Lease

(1)The Company as the lessee

Items Current year Prior year

Interest Expense on Lease Liabilities 16441826.74 16253615.68

Short-term Lease Expenses Recognized in

Related Asset Costs or Simplified as Current 270908.41 441127.08

Period Gains and Losses

Income from Subleasing Right-of-Use Assets 14263468.92 13758179.15

Total Cash Outflows Related to Leases 12707093.83 12950682.48

Notes to the Financial Statements 104Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 12460484.07

1 to 2 Years 11979524.07

2 to 3 Years 25554549.71

Over 3 Years 637436715.87

Total 687431273.72

(2)The company shall be the lessor

Operation lease

Current year Prior year

Operating Lease Income 17151.696.10 18876240.86

Notes to the Financial Statements 105Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

44742516.3244742516.3247317568.0747317568.07

remunerations

Depreciation

and

2742821.792742821.793827800.323827800.32

amortization

of assets

Test expenses 6274061.42 6274061.42 6578389.27 6578389.27

Maintenance

2094668.662094668.661837472.131837472.13

expenses

Certification

1810373.011810373.011539557.351539557.35

expenses

Patent

903881.82903881.82705579.71705579.71

expenses

Travel

575609.06575609.06551259.50551259.50

expenses

Consultant

342498.96342498.96256246.64256246.64

fees

Rental

38287.4338287.4340310.0140310.01

expenses

Others 1969793.25 1969793.25 2278083.81 2278083.81

Total 61494511.72 61494511.72 64932266.81 64932266.81

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 2000000. As of December 31 2025

Notes to the Financial Statements 106Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 107Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

VIII.Interest in other entity

1.Equity of subsidiaries

(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

40 million US dollars Shanghai Shanghai 46.875 combination under

Enterprise Co. Ltd. electronic appliance

common control

Xiamen Tsannkuen Property Acquired through

1.5 million CNY Xiamen Xiamen Property services 100.00

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 108Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 185000 US dollars Hong Kong Hong Kong Investment Trading 75.00 Acquired through business

Notes to the Financial Statements 109Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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)

25.00%6451173.1613446820.90333654327.07

Enterprise Co. Ltd.Pt.StarComgistic Indonesia 25.00% -2430463.78 50930578.97

Notes to the Financial Statements 110Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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)

1317356645.48873294984.742190651630.22454474757.15401559564.79856034321.941228298524.911154739765.972383038290.88624433770.65396004620.971020438391.62

Enterprise Co.Ltd.Pt.StarComgistic

150489209.26106466891.84256956101.1053233785.2453233785.24102474804.8372771781.63175246586.4643364035.3843364035.38

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

1596844436.8

(Zhangzhou) 1199152943.42 25804692.63 25804692.63 9790353.55 59763648.46 59763648.46 170908401.59

7

Enterprise Co. Ltd.Notes to the Financial Statements 111Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

212799909.87-9721855.11-9721855.11-35877985.13116123437.72-14284130.44-14284130.4416832872.96

Indonesia

Notes to the Financial Statements 112Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 9800000.00

Total Amounts Adjusted Based on Equity

Interest

—Net Profit -1285108.87

—Other Comprehensive Income

—Total Comprehensive Income -1285108.87

IX.Government Grants

1.Government grants recognized in profit or loss

Item in P&L statement Current year Prior year

asset-related government grants

revenue-related government grants 7683398.57 2373328.56

Total 7683398.57 2373328.56

2.Refund of Government Grants

No refunds of government grants occurred during the current period.X.Risk Related to Financial Instruments

1.Types of risks arising from 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 113Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 114Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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.* Interest 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.* Foreign 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 115Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 130186633.20 112054855.83

Accounts receivable 137352795.82 203496159.10

Other receivables 1036138.74 609593.63

Accounts payable 43825342.58 46143775.01

Other payables 2897152.27 1274139.73

Total 315298062.61 363578523.30

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.

1.Closing fair value of assets and liabilities measured at fair value

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 116Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

40000.0040000.00

investment

Total assets measured at fair

40000.0040000.00

value on an ongoing basis

2.Determination for the Quoted Prices of Fair Value Measurement in Level 2 on a

Recurring or Nonrecurring Basis

The fair value measurement of derivative financial assets is based on the valuation

provided by the bank for the outstanding forward foreign exchange on the balance sheet

date; The fair value of debt instrument investment is measured on the basis of the

principal of the structural deposit that is not due on the balance sheet date and the interest

rate agreed with the bank.XII.Related Parties Relationship and Transactions

1.Status of the Wafangdian Bearing Company Limited's parent company

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 3000000000.00

LTD. equipment

Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL

CO. LTD.

2.Status of the Company's subsidiaries

For details of the Company's subsidiaries please refer to "VIII. Interests in other entities"

in this note.Notes to the Financial Statements 117Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

3.Joint Ventures and Associates

Name of related party Related party relationship

Shanghai Upa Smart Chain Home Appliances Co. Ltd. Associates of the Company's Subsidiaries

4.Other related parties

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

5.Related Party Transactions

(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 24452903.82 31150562.96

(XIAMEN) Limited

Thermaster Electronic

Accept labor service 1200.00

(XIAMEN) Limited

STAR COMGISTIC CAPITAL Quality claim

278.98939.26

CO. LTD. payment

Tsann Kuen (Japan) Electric Co.Accept labor service 1419763.92 1.385.755.32

Ltd.Notes to the Financial Statements 118Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 3217115.49 3417248.26

Shanghai Upa Smart Chain Home

Sales of goods 7200207.60

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

6.Unsettled receivables and payables from related parties

(1)Receivables

Closing balance Opening balance

Items Related party Book Book

Provision Provision

balance balance

Shanghai Upa

Accounts Smart Chain Home

2837533.62

receivable Appliances Co.Ltd.STAR

COMGISTIC

611403.68950914.62

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 119Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

(2)Payables

Items Related party Closing Balance Opening balance

Thermaster Electronic

Accounts payable 5975170.05 6936867.52

(Xiamen) Ltd.XIII.Commitments and contingencies

1.Significant Commitments

As of December 31 2025 the company has issued but not yet fulfilled irrevocable letters

of credit amounting to CNY 59795039.28 and USD 5275505.28.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 721008.00.Apart from the above there are no other significant commitments that the company is

required to disclose.

2.Contingencies

As of 31st December 2025 The Company has no significant contingencies need to be

disclosed.XIV.Events after the Balance Sheet Date

1.Significant Non-Adjusting Events

The company has no significant non-adjusting events.

2.Profit Distribution

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

185391680 shares as at the end of 2025 cash dividend of CNY1.00 per 10 shares will be

distributed to all shareholders of the Company (tax included). The profit for distribution

of the Company is CNY 18539168.00 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

(1)Accounts receivable with the bad debt provisions under accounting aging

analysis method

Notes to the Financial Statements 120Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Aging Closing Balance Opening balance

Within1 year 4480.88 117163.04

Including：Within 90 days 4480.88 102845.83

91 days to 180 days 513.00

181 days to 270 days 13804.21

271 days to 365 days

1 year to 2 years 107.83 40.24

2 years to 3 years 20000.00

3 years to 4 years 9677.56

4 years to 5 years 9677.56 110740.52

Over 5 years 15740.52 5000.00

Subtotal 30006.79 262621.36

Less：provision for bad debt 25635.62 60840.92

Total 4371.17 201780.44

Notes to the Financial Statements 121Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 30006.79 100.00 25635.62 85.43 4371.17 262621.36 100.00 60840.92 23.17 201780.44

the characters of

credit risk portfolio

Including:

-Portfolio by age 27963.91 100.00 25635.62 23.17 2328.29 262621.36 98.24 60840.92 2.11 201780.44

-Portfolio by related

2042.882042.881.76

parties

Total 30006.79 100.00 25635.62 4371.17 262621.36 100.00 60840.92 201780.44

Notes to the Financial Statements 122Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

2438.00109.714.50

days

Overdue 31 - 60

days

Overdue 61 - 90

days

Overdue more than

25525.9125525.91100.00

90 days

Total 27963.91 25635.62

(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

60840.92-35205.3025635.62

based on the

characters of credit

risk portfolio

Including:Portfolio

60840.92-35205.3025635.62

by age

Notes to the Financial Statements 123Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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 60840.92 -35205.30 25635.62

(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

30006.79 representing 100% of the total combined balances of accounts

receivable and contract assets. The corresponding aggregate bad debt provision at

the end of the period for these amounts is CNY 25635.62.

2.Other receivables

Items Closing Balance Opening Balance

Interest receivable

Dividend receivable

Other receivable 5020385.44 6555310.24

Total 5020385.44 6555310.24

(1)Other receivables

* Disclosure by aging

Aging Closing Balance Closing Balance

Within 1 year 4933605.68 6472526.44

Including: 1 – 90 days 4888067.24 6435216.14

91 – 180 days 21372.44 37310.30

181 – 270 days

271 – 365 days 24166.00

1-2 years 174335.66 115500.00

Notes to the Financial Statements 124Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Aging Closing Balance Closing Balance

2-3 years 30500.00

4-5 years

Subtotal 5107941.34 6618526.44

Less: provision for bad debt 87555.90 63216.20

Total 5020385.44 6555310.24

Notes to the Financial Statements 125Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

* Categories 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

5107941.34100.0087555.901.715020385.446618526.44100.0063216.200.966555310.24

debts by portfolio

Including:

1.Export tax refund

2.Other current

3391221.6166.3987555.902.583303665.713036610.3745.8863216.202.082973394.17

balances

3.Deposit 101000.00 1.98 101000.00 87000.00 1.31 87000.00

4.Due from related

1615719.7331.631615719.733494916.0752.813494916.07

parties

Total 5107941.34 100.00 87555.90 5020385.44 6618526.44 100.00 63216.20 6555310.24

Notes to the Financial Statements 126Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Provision for Bad Debts Based on Portfolio:

Closing Balance

ItemsOther receivables Bad debts Accrual rate(%）

Other current balances 3391221.61 87555.90 2.58

Total 3391221.61 87555.90

* Bad debt provision of other receivable

1st stage 2nd stage 3rd stage

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

63216.2063216.20

2024

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 141983.73 141983.73

Reversed 117644.03 117644.03

Recollected

Written off

Others

Closing Balance 87555.90 87555.90

* Provision 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 127Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

Accrued Collected/reversed Written-off others

Other

current 87555.90 87555.90

balances

Total 87555.90 87555.90

* The categories of other receivable by nature

Items Closing Balance Opening balance

Other current balances 3391221.61 3036610.37

Deposit 101000.00 87000.00

Total 3492221.61 3123610.37

* The top significant other receivable categorized by debtors

Rate of other

Company name Category closing balance Againg receivables Bad debts

（%）

TsannKuen (Zhangzhou) Related Within

1615719.7331.63

Enterprise Co. Ltd.(TKL) party 90 days

Accounts Within 2

XIAO GUANG LIU 109806.20 2.15

Receivable years

JD Self-operated Flagship Accounts Within

100000.001.96

Store Receivable 180 days

State Grid Fujian Electric

Accounts Within

Power Co. Ltd. Xiamen 89164.87 1.75

Receivable 90 days

Power Supply Company

Xiamen Lurenjia Sports Accounts Within

75488.301.48

Culture Co. Ltd. Receivable 90 days

Total 1990179.10 38.97

Notes to the Financial Statements 128Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

3.Long-term Equity Investments

Closing balance Opening balance

Provision Provision

Items Carrying Carrying

Book balance for Book balance for

amount amount

impairment impairment

Subsidiaries 923414701.56 923414701.56 923414701.56 923414701.56

Total 923414701.56 923414701.56 923414701.56 923414701.56

Notes to the Financial Statements 129Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

921914701.56921914701.56

Co. Ltd. (TKL)

Xiamen Tsannkuen Property Services

1500000.001500000.00

Co. Ltd. (TKW)

Total 923414701.56 923414701.56

Notes to the Financial Statements 130Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(English Translation for Reference Only)

4.Revenue and Cost of Sales

Current year Prior year

Items

Revenue Costs of sales Revenue Costs of sales

Principal operating

1878640.771433292.812160490.711371709.94

activities

Others 63155206.16 38800465.07 60416530.32 36827096.77

Total 65033846.93 40233757.88 62577021.03 38198806.71

5.Investment Income

Items Current year Prior year

Investment income from long-term equity investments

40989673.4150748305.69

under cost method

Total 40989673.41 50748305.69

XVI.Supplementary Information

1.Non-operating profit or loss in current year

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 periodexcept for government grants that are

closely related to the Company's normal business

7797792.60

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 -1401348.54

change gains and losses arising from the holding of

Notes to the Financial Statements 131Tsann Kuen (China) Enterprise Co. Ltd.Notes to the Financial Statements

(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

1941669.69

non-recurring profit or loss

Subtotal 8338113.75

Income tax effect 1264519.35

Minority interests impact amount (after tax) 1720848.00

Total 5352746.40

2.Return on equity and earnings per share

Weighted Earnings per share (EPS)

average return

Profit of report period

on net assets Basic EPS Diluted EPS

(%)

Net profit attributable to shareholders of

2.150.130.13

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.

7 March 2026

Notes to the Financial Statements 132