Elitegroup Computer Systems Co., Ltd. and Subsidiaries

Transcription

Elitegroup Computer Systems Co., Ltd.
and Subsidiaries
Consolidated Financial Statements for the
Years Ended December 31, 2014 and 2013 and
Independent Auditors’ Report
DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES
The companies required to be included in the consolidated financial statements of affiliates in accordance
with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and
Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2014 are
all the same as the companies required to be included in the consolidated financial statements of parent
and subsidiary companies as provided in International Accounting Standard 27 “Consolidated and
Separate Financial Statements”.
Relevant information that should be disclosed in the consolidated
financial statements of affiliates has all been disclosed in the consolidated financial statements of parent
and subsidiary companies.
Hence, we have not prepared a separate set of consolidated financial
statements of affiliates.
Very truly yours,
ELITEGROUP COMPUTER SYSTEMS CO., LTD.
By:
March 23, 2015
-1-
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
We have audited the accompanying consolidated balance sheets of Elitegroup Computer Systems
Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of
December 31, 2014 and 2013, and the related consolidated statements of comprehensive income,
changes in equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. However, we did not
audit the financial statements of ECS Holding (America) Co.; Elitegroup Computer Systems (HK)
Co., Ltd.; Elitegroup Computer Systems (Japan) Co., Ltd.; Elitegroup Computer Systems EU B.V.;
and Elitegroup Computer Systems (Korea) Co., Ltd. as of and for the years ended December 31,
2014 and 2013. These subsidiaries’ total assets were 7% (NT$2,198,733 thousand) and 6%
(NT$2,131,524 thousand) of the total consolidated assets as of December 31, 2014 and 2013,
respectively. The related revenues were 7% (NT$3,845,868 thousand) and 11% (NT$6,704,573
thousand) of the total consolidated revenues for 2014 and 2013, respectively. The financial
statements of these subsidiaries were audited by other auditors, whose reports have been furnished
to us, and our opinion, insofar as it relates to these subsidiaries’ amount included herein, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with the Rules Governing the Auditing and Atestation of
Financial Statements by Certified Public Accountants and auditing standards generally accepted in
the Republic of China. Those rules and standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial
position of Elitegroup Computer Systems Co., Ltd. and its subsidiaries as of December 31, 2014
and 2013, and their consolidated financial performance and their consolidated cash flows for the
years then ended, in conformity with the Regulations Governing the Preparation of Financial
Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)
endorsed by the Financial Supervisory Commission of the Republic of China.
-2-
We have also audited the parent company only financial statements of Elitegroup Computer
Systems Co., Ltd., as of and for the years ended December 31, 2014 and 2013 on which we have
issued a modified unqualified report.
March 23, 2015
Notice to Readers
The accompanying consolidated financial statements are intended only to present the financial
position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in the Republic of China and not those of any other jurisdictions.
The standards, procedures and practices to audit such consolidated financial statements are those
generally accepted and applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying
consolidated financial statements have been translated into English from the original Chinese
version prepared and used in the Republic of China. If there is any conflict between the English
version and the original Chinese version or any difference in the interpretation of the two versions,
the Chinese-language independent auditors’ report and consolidated financial statements shall
prevail.
-3-
ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars)
2014
Amount
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Notes receivable (Note 10)
Accounts receivable (Notes 4, 5 and 10)
Accounts receivable from related parties (Notes 4, 5, 10 and 31)
Other receivables (Notes 4, 10, 31 and 32)
Inventories (Notes 4 and 11)
Prepayments
Other financial assets - current (Note 12)
Other current assets - others
Total current assets
NON-CURRENT ASSETS
Available-for-sale financial assets - non-current (Notes 4 and 8)
Financial assets measured at cost - non-current (Notes 4 and 9)
Property, plant and equipment (Notes 4, 13 and 31)
Investment properties (Notes 4 and 14)
Goodwill (Notes 4, 5 and 15)
Other intangible assets (Notes 4, 16 and 31)
Deferred tax assets (Notes 4, 5 and 25)
Prepayments for equipment (Note 31)
Refundable deposits (Note 28)
Overdue receivables (Note 10)
Prepaid pension cost - non-current (Notes 4 and 22)
Prepayments from lease - non-current (Note 17)
Other non-current assets
Total non-current assets
TOTAL
2013
Amount
%
%
$ 5,599,168
340,466
535
6,898,598
147
1,186,247
6,269,300
649,023
3,746,419
38,699
17
1
21
4
19
2
12
-
$ 7,189,233
3,909,684
9,788
9,896,022
415,428
4,984,259
206,766
6,099
21
11
29
1
14
1
-
24,728,602
76
26,617,279
77
367,447
44,106
4,387,859
467,049
615,272
26,334
644,490
32,497
219,768
47,475
101,579
748,896
41,617
1
14
2
2
2
1
2
-
313,529
51,419
4,720,559
405,611
602,434
26,488
891,811
8,001
225,384
45,967
103,096
724,726
14,732
1
14
1
2
2
1
2
-
7,744,389
24
8,133,757
23
$ 32,472,991
100
$ 34,751,036
100
$ 3,778,754
87
8,171,899
79,344
1,759,059
427,226
996,355
432,248
12
25
6
1
3
1
$ 1,629,117
121
10,272,358
76,843
1,898,556
427,344
1,221,024
204,378
5
30
5
1
3
1
15,644,972
48
15,729,741
45
63,597
23,778
522,165
470
2
-
28,542
4,085
20,711
580,340
1,312
2
-
610,010
2
634,990
2
16,254,982
50
16,364,731
47
5,571,230
6,485,780
17
20
7,335,801
6,461,790
21
18
656,285
87,939
2,902,470
3,646,694
380,877
2
1
9
12
1
293,857
539,714
3,633,768
4,467,339
(87,939)
1
2
10
13
-
16,084,581
50
18,176,991
52
133,428
-
209,314
1
16,218,009
50
18,386,305
53
$ 32,472,991
100
$ 34,751,036
100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 18)
Financial liabilities at fair value through profit or loss - current (Notes 4 and 7)
Accounts payable (Note 19)
Accounts payable to related parties (Notes 19 and 31)
Other payables (Notes 20 and 31)
Current tax liabilities (Notes 4 and 25)
Provisions - current (Notes 4 and 21)
Other current liabilities (Note 20)
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 25)
Accrued pension liabilities (Notes 4, 5 and 22)
Guarantee deposits received (Note 28)
Unrealized gain on sale and leaseback (Note 13)
Other non-current liabilities (Note 20)
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 22, 23, 25 and 27)
Share capital
Common shares
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Total equity attributable to owners of the Company
NON-CONTROLLING INTERESTS
Total equity
TOTAL
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 23, 2015)
-4-
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2014
Amount
OPERATING REVENUE (Notes 4, 21 and 31)
Sales
Sales returns
Sales allowances
2013
Amount
%
%
$ 56,297,378
254,500
147,571
101
1
-
$ 64,630,013
269,029
919,081
102
2
55,895,307
100
63,441,903
100
50,321,751
90
57,777,772
91
GROSS PROFIT
5,573,556
10
5,664,131
9
OPERATING EXPENSES (Notes 22, 24 and 31)
Marketing
General and administrative
Research and development
1,257,199
1,478,687
1,223,341
2
3
2
1,621,197
1,861,847
1,047,285
2
3
2
Total operating expenses
3,959,227
7
4,530,329
7
PROFIT FROM OPERATIONS
1,614,329
3
1,133,802
2
126,108
-
(283,034)
(1)
12,926
(17,383)
94,028
206,902
-
2,930,056
(28,343)
89,285
187,949
5
-
422,581
-
2,895,913
4
2,036,910
3
4,029,715
6
734,782
1
520,731
1
1,302,128
2
3,508,984
5
518,489
45,423
1
-
Total operating revenue
COST OF GOODS SOLD (Notes 11, 24 and 31)
NON-OPERATING INCOME AND EXPENSES
(Note 24)
Other gains and losses (Notes 4 and 8)
Gain on disposal of property, plant and equipment
(Note 13)
Finance costs
Interest income (Note 4)
Other income
Total non-operating income and expenses
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4, 5 and 25)
NET PROFIT
OTHER COMPREHENSIVE INCOME (LOSS)
(Notes 4, 22, 23 and 25)
Exchange differences on translating foreign
operations
Unrealized gain on available-for-sale financial assets
-5-
475,607
1
65,655
(Continued)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2014
Amount
Actuarial gain (loss) arising from defined benefit
plans
Income tax relating to components of other
comprehensive income
$
NET PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
%
-
-
(80,375)
-
470,897
1
465,138
1
$
1,773,025
3
$
3,974,122
6
$
1,386,390
(84,262)
2
-
$
3,624,282
(115,298)
6
-
$
1,302,128
2
$
3,508,984
6
$
1,848,911
(75,886)
3
-
$
4,078,349
(104,227)
6
-
$
1,773,025
3
$
3,974,122
6
EARNINGS PER SHARE (NEW TAIWAN
DOLLARS; Note 26)
Basic
Diluted
$
$
(7,584)
-
(85,431)
2.09
2.05
$
%
4,251
Other comprehensive income for the year, net
of income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
2013
Amount
$
$
3.44
3.37
-6-
(Concluded)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
BALANCE AT JANUARY 1, 2013
Appropriation of the 2012 earnings
Legal reserve
Special reserve
Cash dividends distributed by the Company
Reduction of cash capital
Equity Attributable to Shareholders of the Parent (Notes 4, 22, 23, 25 and 27)
Other Equity
Exchange
Unrealized
Differences on
Gain (Loss) on
Retained Earnings
Translating
Available-forUnappropriated
Foreign
sale Financial
Legal Reserve
Special Reserve
Earnings
Operations
Assets
Share Capital
Capital Surplus
$ 11,831,937
$ 7,011,975
-
-
36,471
-
297,378
-
-
-
-
-
(4,496,136)
$
257,386
$
242,336
$
381,786
$
(36,471)
(297,378)
(41,412)
(638,431)
$
99,386
Total
$ 19,186,375
Non-controlling
Interests
(Note 23)
$
313,541
Total Equity
$ 19,499,916
-
-
(41,412)
-
(41,412)
-
-
-
(4,496,136)
-
(4,496,136)
-
-
-
-
(550,185)
-
(550,185)
Other changes in capital surplus
Distribution of cash dividends from capital surplus
-
Net profit (loss) for the year ended December 31, 2013
-
-
-
-
3,624,282
-
-
3,624,282
Other comprehensive income (loss) for the year ended
December 31, 2013, net of income tax
-
-
-
-
2,961
385,451
65,655
454,067
Total comprehensive income (loss) for the year ended
December 31, 2013
-
-
-
-
3,627,243
385,451
65,655
4,078,349
(104,227)
3,974,122
7,335,801
6,461,790
293,857
539,714
3,633,768
(252,980)
165,041
18,176,991
209,314
18,386,305
-
-
362,428
-
(451,775)
-
(362,428)
451,775
(2,200,740)
-
-
-
32,700
23,990
-
Net profit (loss) for the year ended December 31, 2014
-
-
Other comprehensive income (loss) for the year ended
December 31, 2014, net of income tax
-
Total comprehensive income (loss) for the year ended
December 31, 2014
BALANCE, DECEMBER 31, 2013
Appropriation of the 2013 earnings
Legal reserve
Reversal of special reserve
Cash dividends distributed by the Company
Reduction of cash capital
Other changes in capital surplus
Employee stock option exercised
BALANCE, DECEMBER 31, 2014
(550,185)
(115,298)
11,071
3,508,984
465,138
-
-
(2,200,740)
-
(2,200,740)
-
-
-
(1,797,271)
-
(1,797,271)
-
-
-
-
56,690
-
-
1,386,390
-
-
1,386,390
-
-
-
423,393
45,423
462,521
-
-
-
-
1,380,095
423,393
45,423
1,848,911
$ 5,571,230
$ 6,485,780
87,939
$ 2,902,470
210,464
$ 16,084,581
(1,797,271)
$
656,285
$
-7-
(6,295)
$
170,413
$
(84,262)
8,376
(75,886)
$
133,428
56,690
1,302,128
470,897
1,773,025
$ 16,218,009
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation expenses
Amortization expenses
Impairment loss recognized on accounts/other/overdue receivables
Net gain on fair value change of financial assets designated as at fair
value through profit or loss
Finance costs
Interest income
Dividend income
Gain on disposal of property, plant and equipment, net
Gain on disposal of investment properties
Gain on disposal of available-for-sale financial assets, net
(Gain) loss on disposal of investments
Impairment loss on financial assets carried at cost
Impairment loss on non-financial assets
Reversal of impairment loss on non-financial assets
Net (gain) loss on foreign currency exchange
Amortization of unrealized gain on sale and leaseback
Net changes in operating assets/liabilities
Financial assets held for trading
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Other financial assets
Prepaid pension cost
Accounts payable
Other payables
Provisions
Other current liabilities
Accrued pension liabilities
Receivable on demand
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash generated from operating activities
2014
2013
$ 2,036,910
$ 4,029,715
780,738
77,733
39,485
914,204
73,392
49,803
(9,290)
17,383
(94,028)
(5,090)
(12,926)
(130)
(178,964)
(49,243)
243,684
(1,530)
(4,488)
(58,175)
(889)
28,343
(89,285)
(1,826)
(2,930,056)
10,624
5,855
296,764
(37,732)
83,177
(1,407)
3,578,474
9,253
2,956,348
(770,201)
(1,378,163)
(462,789)
(32,600)
(3,746,419)
(6,067)
(2,097,958)
(161,943)
(224,669)
226,951
(4,085)
6,182
674,383
92,395
(13,115)
(558,586)
(3,547,055)
(9,780)
(1,237,840)
502,429
1,859,385
187,145
16,482
(5,627)
287,566
677,678
253,610
9,245
1,021
1,424,941
95,675
(29,923)
(435,150)
195,077
-8-
1,055,543
(Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
2014
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets
Payments for property, plant and equipment
Proceeds of the disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Payments for intangible assets
Payments for investment properties
Proceeds from disposal of investment properties
Increase in other non-current assets
Increase in prepayments for equipment
Proceeds from dividend income
Net cash generated from (used in) investing activities
$
186,277
(345,715)
28,998
(1,718)
8,417
(15,534)
(3,154)
3,315
(31,138)
(80,618)
5,090
(245,780)
2013
$
(176,730)
6,575,791
(208,544)
4,398
(7,151)
(8,990)
(28,608)
1,826
6,151,992
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Proceeds of long-term borrowings
Repayment of long-term borrowings
Increase in guarantee deposits received
Decrease in guarantee deposits received
Increase (decrease) in other non-current liabilities
Cash dividends paid to owners of the Company
Cash return through capital reduction
Employee stock option exercised
2,103,632
16,518
(14,456)
(842)
(2,200,740)
(1,797,271)
56,690
(548,883)
2,885,120
(5,001,040)
975
(1,009)
140
(591,597)
(4,496,136)
-
Net cash used in financing activities
(1,836,469)
(7,752,430)
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
297,107
(1,590,065)
165,426
(379,469)
7,189,233
7,568,702
$ 5,599,168
$ 7,189,233
-9-
(Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. GENERAL INFORMATION
Elitegroup Computer Systems Co., Ltd. (the “Company”) was established in May 1987 and began
operations in June 1987. The Company designs, develops, and sells motherboards, desktop computers,
notebook computers, tablet computers barebone systems and add-on cards.
The common stock of the Company has been listed on the Taiwan Stock Exchange since September 21,
1994.
The functional currency of the Company is the New Taiwan dollar and the consolidated financial
statements are presented in the Company’s functional currency.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the board of directors and authorized for issue on
March 23, 2015.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. The amendments to the Regulations Governing the Preparation of Financial Reports by Securities
Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC)
endorsed by the FSC not yet effective
Rule No. 1030029342 and Rule No. 1030010325 issued by the Financial Supervisory Commission
(FSC) on April 3, 2014 stipulated that the Company and its subsidiaries (collectively, the Group) should
apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC
and the related amendments to the Regulations Governing the Preparation of Financial Reports by
Securities Issuers starting January 1, 2015.
New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Improvements to IFRSs (2009) - amendment to IAS 39
Effective Date
Announced by IASB (Note)
January 1, 2009 and January 1,
2010, as appropriate
Amendment to IAS 39 “Embedded Derivatives”
Effective for annual periods
ended on or after June 30,
2009
Improvements to IFRSs (2010)
July 1, 2010 and January 1,
2011, as appropriate
Annual Improvements to IFRSs 2009-2011 Cycle
January 1, 2013
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7 July 1, 2010
Disclosures for First-time Adopters”
Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed July 1, 2011
Dates for First-time Adopters”
(Continued)
- 10 -
New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Amendment to IFRS 1 “Government Loans”
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
Financial Liabilities”
Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets”
IFRS 10 “Consolidated Financial Statements”
IFRS 11 “Joint Arrangements”
IFRS 12 “Disclosure of Interests in Other Entities”
Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated
Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance”
Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment
Entities”
IFRS 13 “Fair Value Measurement”
Amendment to IAS 1 “Presentation of Other Comprehensive Income”
Amendment to IAS 12 “Deferred Tax: Recovery of Underlying
Assets”
IAS 19 (Revised 2011) “Employee Benefits”
IAS 28 (Revised 2011) “Investments in Associates and Joint
Ventures”
Amendment to IAS 32 “Offsetting Financial Assets and Financial
Liabilities”
IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”
Effective Date
Announced by IASB (Note)
January 1, 2013
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
(Concluded)
Note:
Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or
after their respective effective dates.
Except for the following, whenever applied, the initial application of the above 2013 IFRSs version and
the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities
Issuers would not have any material impact on the Group’s accounting policies:
1) IFRS 10 “Consolidated Financial Statements”
IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12
“Consolidation - Special Purpose Entities.” The Group considers whether it has control over other
entities for consolidation. The Group has control over an investee only if it has (i) power over the
investee; (ii) exposure, or rights, to variable returns from its involvement with the investee and (iii)
the ability to use its power over the investee to affect the amount of its returns. Additional
guidance has been included in IFRS 10 to explain when an investor has control over an investee.
2) IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 is a new disclosure standard that applies to entities with interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities. In general, the disclosure
requirements in IFRS 12 are more extensive than in the current standards.
- 11 -
3) Revision to IAS 28 “Investments in Associates and Joint Ventures”
The revised IAS 28 requires that when a portion of an investment in an associate meets the criteria
to be classified as held for sale, that portion so classified is accounted for in accordance with IFRS5
“Non-current Assets Held for Sale and Discontinued Operation”. Any retained portion that has not
been classified as held for sale is accounted for using the equity method. Under the current IAS
28, when a portion of an investment in an associate meets the criteria to be classified as held for
sale, the entire investment is classified as held for sale and the equity method is not applied to the
investment.
4) IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value,
establishes a framework for measuring fair value, and requires disclosures about fair value
measurements. The disclosure requirements in IFRS 13 are more extensive than those required in
the current relevant standards. For example, quantitative and qualitative disclosures based on the
three-level fair value hierarchy currently required for financial instruments only will be extended by
IFRS 13 to cover all assets and liabilities within its scope.
IFRS 13 will be applied prospectively from January 1, 2015.
5) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendments to IAS 1 require the grouping of the items of other comprehensive income (OCI)
into those items that (1) will not be reclassified subsequently to profit or loss; and (2) may be
reclassified subsequently to profit or loss. Income taxes on OCI items are grouped on the same
basis. Under the previous IAS 1, there were no such requirements.
The Group will retrospectively apply the above amendments starting from 2015. Items expected
to be reclassified to profit or loss are the exchange differences on translating foreign operations and
unrealized gains (loss) on available-for-sale financial assets. However, the application of the IAS1
amendments will not have any impact on the net profit for the year, other comprehensive income for
the year (net of income tax), and total comprehensive income for the year.
6) Revision to IAS 19 “Employee Benefits”
The revised IAS 19 requires the immediate recognition of all changes in defined benefit obligations
and in the fair value of plan assets in the period in which they occur, thus eliminating the “corridor
approach” permitted under the previous IAS 19; in addition, all past service cost are recognized
immediately in the period of plan amendments. The revision requires all remeasurements of the
defined benefit plans to be recognized immediately in other comprehensive income so that the net
pension asset or liability will reflect the full value of the plan deficit or surplus.
Further, the interest cost and expected return on plan assets used in previous IAS 19 have been
replaced with net interest on net defined liability or asset, which is calculated by applying the
discount rate to the net defined benefit liability or asset. In addition, the revised IAS 19 introduces
certain changes in the presentation of the defined benefit cost as well as requires more extensive
disclosures.
- 12 -
The anticipated impact of the initial application of the revised IAS 19 is shown as follows:
Carrying
Amount
Adjustments
Arising from
Initial
Application
Adjusted
Carrying
Amount
Note
Impact on assets, liabilities and equity
December 31, 2014
Prepaid pension
Net defined benefit assets
$
101,579
-
$
(101,579)
101,579
$
101,579
6
6
(103,096)
103,096
103,096
6
6
332
(56)
(276)
$ 3,959,559
$ 734,726
$ 1,301,852
January 1, 2014
Prepaid pension
Net defined benefit assets
103,096
-
Impact on total comprehensive
income for the year ended
December 31, 2014
Operating expense
Income tax expense
Total effect on net profit for the year
Items that will not be reclassified to
profit or loss:
Remeasurements of defined benefit
plan
Income tax relating to items that
will not be reclassified
$ 3,959,227
$ 734,782
$ 1,302,128
$
5
$
(7,584)
$
1,289
$
Total effect on other comprehensive
income for the year, net of income
tax
$
(6,295)
$ 1,773,025
332
$
(56)
$
276
$
-
(7,252)
1,233
$
(6,019)
$ 1,773,025
7) Amendments to IFRS 7 “Disclosure - Offsetting Financial Assets and Financial Liabilities”
The amendments to IFRS 7 require disclosure of information about rights of offset and related
arrangements (such as collateral posting requirements) for financial instruments under enforceable
master netting arrangements and similar arrangements.
8) Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities”
The amendments to IAS 32 clarify the requirements for the offset of financial assets and financial
liabilities. Specifically, the amendments clarify the meaning of “currently has a legally
enforceable right of set-off” and “simultaneous realization and settlement.”
- 13 -
b. New IFRSs in issue but not yet endorsed by the FSC
The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the
FSC. As of the date the consolidated financial statements were authorized for issue, the FSC had not
announced their effective dates.
Effective Date
Announced by IASB (Note 1)
New IFRSs
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”
Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 1 “Disclosure Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
IFRIC 21 “Levies”
July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 4)
January 1, 2018
January 1, 2018
January 1, 2016 (Note 3)
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The amendment to IFRS 2 “Share-based Payment” applies to share-based payment
transactions with grant dates of or after July 1, 2014; the amendment to IFRS 3 “Business
Combinations” applies to business combinations with acquisition dates of or after July 1, 2014;
the amendment to IFRS 13 “Fair Value Measurement” is effective immediately; and the
remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: The amendments apply to transactions occurring in annual periods beginning on or after
January 1, 2016.
Note 4: The amendment to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”
is applied prospectively to changes in a method of disposal that occur in annual periods
beginning on or after January 1, 2016; the remaining amendments are effective for annual
periods beginning on or after January 1, 2016.
- 14 -
The initial application of the above New IFRSs, whenever applied, would not have any material impact
on the Group’s accounting policies, except for the following:
1) IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
All recognized financial assets that are within the scope of IAS 39 “Financial Instruments:
Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under
IFRS 9, the requirement for the classification of financial assets is stated below.
For the Group’s debt instruments with contractual cash flows that are solely payments of principal
and its interest, their classification and measurement are as follows:
a) If the debt instruments are held within a business model whose objective is to collect the
contractual cash flows, the financial assets are measured at amortized cost and are assessed for
impairment continually, with any impairment loss recognized in profit or loss. Interest
revenue is recognized in profit or loss by using the effective interest method;
b) If the debt instruments are held within a business model whose objective is to both collect
contractual cash flows and sell financial assets, the financial assets are measured at fair value
through other comprehensive income (FVTOCI) and are assessed for impairment. Interest
revenue is recognized in profit or loss by using the effective interest method, and other gain or
loss is recognized in other comprehensive income, except for impairment gains or losses and
foreign exchange gains and losses. When the debt instruments are derecognized or
reclassified, the cumulative gain or loss previously recognized in other comprehensive income
is reclassified from equity to profit or loss.
Except for the above, all other financial assets are measured at fair value through profit or loss.
However, the Group may, on the initial recognition of an equity instrument that is within the scope
of IFRS 9 and is not held for trading, irrevocably designate this instrument as at fair value through
other comprehensive income, with only dividend income generally recognized in profit or loss.
No impairment assessment is required, and the cumulative gain or loss previously recognized in
other comprehensive income cannot be reclassified from equity to profit or loss.
The impairment of financial assets
IFRS 9 requires the recognition of impairment loss on financial assets is recognized by using the
expected credit loss model. The expected credit loss allowance is required for financial assets
measured at amortized cost, financial assets mandatorily measured at FVTOCI, certain lease
receivables, contract assets within the scope of IFRS 15 “Revenue from Contracts with Customers,”
and certain written loan commitments and financial guarantee contracts. A loss allowance for
12-month expected credit losses is required for a financial asset if its credit risk has not increased
significantly since initial recognition. A loss allowance for full lifetime expected credit losses is
required for a financial asset if its credit risk has increased significantly since initial recognition.
A loss allowance for full lifetime expected credit losses is required for certain trade receivables that
do not constitute a financing transaction.
For purchased or originated credit-impaired financial assets, the Group takes into account the
expected credit losses on initial recognition, and these losses should be discounted using the
credit-adjusted effective interest rate. Subsequently, any changes from the initial credit expected
losses are recognized as a loss allowance, with the corresponding gain or loss recognized in profit or
loss.
- 15 -
2) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”
In issuing IFRS 13 “Fair Value Measurement,” the IASB made a consequential amendment to the
disclosure requirements in IAS 36 “Impairment of Assets,” introducing a requirement to disclose in
every reporting period the recoverable amount of an asset or each cash-generating unit only when
an impairment loss has been recognized or reversed during the reporting period. The Group is also
required to disclose the discount rate used in determining impairments or reversals if the
recoverable amount based on fair value less costs of disposal is measured using a present value
technique.
3) Annual Improvements to IFRSs:
2010-2012 Cycle
Several standards, including IFRS 2 “Share-based Payment,” IFRS 3 “Business Combinations” and
IFRS 8 “Operating Segments,” were amended in this annual improvement.
The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and
adds definitions of “performance condition” and “service condition”. The amendment clarifies
that a performance target can be based on the operations of an entity or another entity in the same
group (i.e., a non-market condition) or the market price of the equity instruments of an entity or
another entity in the same group (i.e., a market condition); that a performance target can relate to
the performance of an entity as a whole or to some part of it (e.g., a division or an employee); and
that the period for achieving a performance condition must not extend beyond the end of the related
service period. In addition, a share market index target is not a performance condition because it
not only reflects the performance of an entity, but also of other entities outside the Group.
IFRS 3 was amended to clarify that contingent consideration should be measured at fair value at
each reporting date, irrespective of whether the contingent consideration is a financial instrument
within the scope of IFRS 9 or IAS 39 or is a nonfinancial asset or liability. Changes in fair value
(other than measurement period adjustments) should be recognized in profit or loss.
The amended IFRS 8 requires an entity to disclose the judgments made by management in applying
the aggregation criteria to operating segments, including a description of the operating segments
aggregated and the economic indicators assessed in determining whether the operating segments
have “similar economic characteristics.” The amendment also clarifies that a reconciliation of the
total of the reportable segments’ assets to the entity’s assets should only be provided if information
on the segments’ assets is regularly provided to the chief operating decision-maker.
IFRS 13 was amended to clarify that the issuance of IFRS 13 and consequential amendments to IAS
39 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no
stated interest rate at their invoice amounts without discounting, if the effect of not discounting is
immaterial.
IAS 24 was amended to clarify that a management entity providing key management personnel
services to the Group is a related party of the Group. Thus, the Group should disclose as related
party transactions the amounts incurred for the service paid or payable to the management entity for
the provision of key management personnel services. However, disclosure of the components of
this compensation is not required.
4) Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”
The Group should use appropriate depreciation and amortization method to reflect the pattern in
which the future economic benefits of the property, plant and equipment and intangible assets are
expected to be consumed by the entity.
- 16 -
The amended IAS 16 states that a depreciation method based on revenue generated by an activity
that includes the use of an asset is not appropriate. The amended standard does not provide any
exemption from this requirement.
The amended IAS 38 “Intangible Assets” states that there is a rebuttable presumption that an
amortization method that is based on revenue that is generated by an activity that includes the use of
an intangible asset is not appropriate. This presumption can be overcome only in the following
limited circumstances:
a) The intangible asset is expressed as a measure of revenue (for example, the contract that
specifies the entity’s use of the intangible asset will expire upon achievement of a revenue
threshold); or
b) It can be demonstrated that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated.
The Group should apply the aforementioned amendments prospectively for annual periods
beginning on or after the effective date.
5) Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
The amendments stipulate that, when an entity sells or contributes assets that constitute a business
(as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction
is recognized in full. Also, when an entity loses control of a subsidiary that contains a business but
retains significant influence or joint control, the gain or loss resulting from the transaction is
recognized in full.
On the other hand, when an entity sells or contributes assets that do not constitute a business to an
associate or joint venture, the gain or loss resulting from the transaction is recognized only to the
extent of the unrelated investors’ interest in the associate or joint venture, i.e., the entity’s share of
the gain or loss is eliminated. Also, when an entity loses control of a subsidiary that does not
contain a business but retains significant influence or joint control in an associate or a joint venture,
the gain or loss resulting from the transaction is recognized only to the extent of the unrelated
investors’ interest in the associate or joint venture, i.e., the entity’s share of the gain or loss is
eliminated.
Except for the above impact, as of the date the consolidated financial statements were authorized for
issue, the Group was continuing to assess the possible impact that the application of other standards and
interpretations will have on the Group’s financial position and financial performance, and will disclose
this impact when the assessment is completed.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed by the
FSC.
b. Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for
financial instruments that are measured at fair values. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
- 17 -
c. Classification of current and non-current assets and liabilities
Current assets include:
1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within twelve months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period.
Current liabilities include:
1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least
twelve months after the reporting period.
Assets and liabilities that are not classified as current are classified as non-current.
d. Basis of consolidation
1) Principles for preparing consolidated financial statements
The consolidated financial statements incorporate the financial statements of the Company and the
entities controlled by the Company (i.e. its subsidiaries).
Income and expenses of subsidiaries acquired or disposed of during the period are included in the
consolidated statement of profit or loss and other comprehensive income from the effective date of
acquisition up to the effective date of disposal, as appropriate.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by the Company.
All intra-group transactions, balances, income and expenses are eliminated in full upon
consolidation.
The Company’s equity and its subsidiaries’ non-controlling interests are presented separately.
Attribution of total comprehensive income to non-controlling interests
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s ownership interests in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the consideration paid or received is
recognized directly in equity and attributed to the owners of the Company.
- 18 -
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is
calculated as the difference between (i) the aggregate of the fair value of the consideration received
and any investment retained in the former subsidiary at its fair value at the date when control is lost
and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the
former subsidiary at their carrying amounts at the date when control is lost. The Group accounts
for all amounts recognized in other comprehensive income in relation to that subsidiary on the same
basis as would be required if the Group had directly disposed of the related assets or liabilities.
2) Subsidiaries included in the consolidated financial statements
Name of Investor
Elitegroup Computer
Systems Co., Ltd.
Dragon Asia Trading
Co., Ltd. (BVI)
Elitegroup Computer
Systems Holding
Co., Ltd. (BVI)
Elitegroup Computer
System (HK) Co.,
Ltd.
Name of Subsidiary
Elitegroup Computer
Systems GmbH Ltd.
Elitegroup Computer
Systems (HK) Co., Ltd.
Elitegroup Computer
Systems (Japan) Co.,
Ltd.
Elitegroup Computer
Systems Holding Co.,
Ltd. (BVI)
ECS Holding (America)
Co. (USA)
Elitegroup Computer
Systems (Korea) Co.,
Ltd.
Elitegroup Computer
Systems EU B.V.
Dragon Asia Trading Co.,
Ltd. (BVI)
Unitop International Corp.
Unity Investments Limited
Super ECS Co., Ltd.
(Mauritius)
-
100.00
100.00
100.00
100.00
Investment holding
100.00
100.00
Investment holding
100.00
100.00
Sale motherboards, maintenance and intermediary of
products
100.00
100.00
Sale of motherboards, notebook computers, computer
peripheral products and related components
Investment holding
100.00
100.00
c)
100.00
100.00
d)
Investment holding
Investment holding
Sale of motherboards, notebook computers, systems
assembled, computer peripheral products and related
components
Investment holding
100.00
100.00
100.00
100.00
100.00
100.00
e)
100.00
100.00
f)
Investment holding, manufacture and sale of printed
circuit Boards (PCBs)
Investment holding
Manufacture and sale of motherboards, computer
100.00
100.00
g)
100.00
-
100.00
100.00
h)
68.45
68.45
Manufacture and maintenance of electric equipment
and instrument, computer peripheral products and
cases
Manufacture and maintenance of electric equipment
and instrument, computer peripheral products and
cases
Sale of motherboards, computer peripheral products
and related components
peripheral products, related components and systems
assembled
Research, development and maintenance of notebook
computers and related products
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Elitegroup Computer
(Suzhou Industrial Park)
Ltd.
Unique Sino Limited
Research, development and manufacture of notebook
computers and related components
100.00
100.00
Investment holding
100.00
100.00
Elitegroup Electronic
(Changshu) Co., Ltd.
Research, development and manufacture of
motherboards, systems assembled, notebook
computers and peripheral products
Manufacture, research and development of PCBs,
motherboards, systems, assembled, notebook
computers and peripheral products
Investment holding
-
100.00
100.00
100.00
100.00
100.00
Investment holding
100.00
100.00
Trade of IC and electric components
100.00
100.00
Elitegroup International
Holding (HK) Co., Ltd.
Shining Bright Technology
Ltd. (Samoa)
Million Up Finance Ltd.
ECS Trading Co., Ltd.
(Samoa)
Venture Well Holdings Ltd.
(BVI)
Xun Rui Electron
(Shenzhen) Co., Ltd.
Super ECS USA, Inc.
Elitegroup Computer
Systems Inc. (USA)
Unitop International
Corp.
Unity Investments
Limited
Elitegroup International
Holding (HK) Co.,
Ltd.
Million Up Finance
Ltd.
Venture Well Holdings
Ltd. (BVI)
Elitegroup Electronic
(Suzhou) Corp.
Golden Elite Technology
(Shenzhen) Co., Ltd.
Affirm International Ltd.
(BVI)
Advazone International Ltd.
(BVI)
Alpha Leader Ltd. (HK)
Note
-
Beijing Xun Ron
Technology Co., Ltd.
ECS Holding (America)
Co. (USA)
Principal Activities
% of Ownership
December 31
2014
2013
Investment holding
a)
b)
i)
(Continued)
- 19 -
Name of Investor
% of Ownership
December 31
2014
2013
Name of Subsidiary
Principal Activities
Wholesale, trade, maintenance and technical
consultation of computers and peripheral products
Sale of computer peripheral products
100.00
100.00
Affirm International Ltd.
(BVI)
Advazone International
Ltd. (BVI)
ECS Trading (Shenzhen)
Co., Ltd.
Protac International
Computer, S.L.
Beijing Advazone
Electronic Co., Ltd.
100.00
100.00
100.00
100.00
Orbbit International Corp.
Wholesale, maintenance and technical consultation of
computers and peripheral products and related
components
Sale of IC and electric components
100.00
100.00
Unique Sino Limited
Note
(Concluded)
In 2014 and 2013, the subsidiaries listed above were included in the consolidation. Although the
financial statements of some subsidiaries whose operations ceased or undergoing liquidation were
not audited by independent accountants, the conditions would have had no material effect on the
Group’s consolidated financial statements for the years ended December 31, 2014 and 2013.
Other investment information is as follows:
a) The board of directors of Elitegroup Computer Systems GmbH (“ECS GmbH”) approved the
liquidation of the subsidiary because of its operating loss, and the liquidation process was
completed in October 2013. The Company recognized a loss of $10,624 thousand on the
disposal of this investment.
b) The board of directors of Elitegroup Computer Systems Holding Co., Ltd. (BVI) approved the
reduction of capital by $60,460 thousand (US$2,000 thousand) on April 25, 2014, and remitted
back this amount to the Company on this date also.
c) To improve the financial structure of Elitegroup Computer Systems EU B.V., the Company
increased its investment in the subsidiary by settling accounts receivable of $50,827 thousand
(US$1,735 thousand) in November 2013.
d) The board of directors of Dragon Asia Trading Co., Ltd. (BVI) (“Dragon Asia”) approved the
reduction of its capital by $297,550 thousand (US$10,000 thousand), and remitted this amount
to the Company in September 2013. On August 7, 2014, the board of directors of Dragon Asia
approved another capital reduction by $283,385 thousand (US$9,500 thousand), and remitted
this amount to the Company in September 2014.
e) Super ECS Co., Ltd. (Mauritius) underwent liquidation and remitted share proceeds of
US$2,643 thousand to its investor, Dragon Asia Trading Co., Ltd. (BVI), on April 25, 2014, and
later completed the liquidation process in February 2015.
f) The board of directors of Elitegroup International Holding (HK) Co., Ltd. approved a
liquidation plan on August 7, 2014, and remitted the remaining share proceeds of US$9,761
thousand to its investor, Dragon Asia Trading Co., Ltd. (BVI), on August 25, 2014.
g) On August 9, 2013, the board of directors of Shining Bright Technology Ltd. (Samoa) approved
a capital reduction and liquidation of this subsidiary. In September 2013, an amount of
US$12,000 thousand from the capital reduction was remitted to Shining Bright’s investor,
Dragon Asia Trading Co., Ltd. (BVI) (“Dragon Asia”). Later, the remaining share proceeds of
US$218 thousand were remitted to Dragon Asia, and the liquidation was completed in March
2014.
h) ECS Trading Co., Ltd remitted share proceeds of US$3,323 thousand to its investor, Elitegroup
Computer Systems Holding Co., Ltd. (BVI), in March 2014, and completed the liquidation
process in April 2014.
- 20 -
i) The board of directors of Elitegroup Electronic (Changshu) Co., Ltd. approved the liquidation of
this company on September 19, 2012 because of its operating loss, and remitted share proceeds
of US$9,638 thousand to its investor, Elitegroup International Holding (HK) Co., Ltd., which
recognized a gain of $49,243 thousand (US$1,622 thousand) on disposal of this investment in
March 2014. Elitegroup Electronic (Changshu) completed its liquidation process in April
2014.
e. Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other
than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or
translation are recognized in profit or loss in the period in which they arise.
Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was determined. Exchange differences arising on
the retranslation of non-monetary items are included in profit or loss for the period except for exchange
differences arising from the retranslation of non-monetary items in respect of which gains and losses are
recognized directly in other comprehensive income, in which case, the exchange differences are also
recognized directly in other comprehensive income.
Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations (including of the subsidiaries in other countries or currencies used different with the
Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each
reporting period. Income and expense items are translated at the average exchange rates for the
period. Exchange differences arising are recognized in other comprehensive income (attributed to the
owners of the Company and non-controlling interests as appropriate).
On the disposal of a foreign operation and resulting in losing control or significant impacts over the
foreign operation, all of the exchange differences accumulated in equity in respect of that operation
attributable to the owners of the Company are reclassified to profit or loss.
In relation to a partial disposal of a subsidiary that does not result in the Company losing control over
the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to
non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial
disposals, the proportionate share of the accumulated exchange differences recognized in other
comprehensive income is reclassified to profit or loss.
f. Inventories
Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the
lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be
appropriate to group similar or related items. Net realizable value is the estimated selling price of
inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are
recorded at weighted-average cost on the balance sheet date.
g. Property, plant and equipment
Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and
subsequent accumulated impairment loss.
- 21 -
Depreciation is recognized using the straight-line method. Each significant part is depreciated
separately. The estimated useful lives, residual values and depreciation method are reviewed at the
end of each year, with the effect of any changes in estimate accounted for on a prospective basis.
Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in profit or loss.
h. Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation (including
property under construction for such purposes). Investment properties also include land held for a
currently undetermined future use.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at cost less accumulated depreciation and accumulated
impairment loss. Depreciation is recognized using the straight-line method.
Any gain or loss arising on derecognition of the property is calculated as the difference between the net
disposal proceeds and the carrying amount of the asset and is included in profit or loss in the period in
which the property is derecognized.
i.
Goodwill
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating
units (or groups of cash-generating units) that is expected to benefit from the synergies of the
combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired, by comparing its carrying amount,
including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to
a cash-generating unit was acquired in a business combination during the current annual period, that
unit shall be tested for impairment before the end of the current annual period. If the recoverable
amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is
recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in
subsequent periods.
If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within
that unit, the goodwill associated with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal, and is measured on the basis of the relative
values of the operation disposed of and the portion of the cash-generating unit retained.
j.
Intangible assets
1) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are initially measured at cost
and subsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and
amortization method are reviewed at the end of each year, with the effect of any changes in estimate
accounted for on a prospective basis. The residual value of an intangible asset with a finite useful
life shall be assumed to be zero unless the Group expects to dispose of the intangible asset before
the end of its economic life. Any change in estimate accounted for on a prospective basis.
- 22 -
2) Derecognition of intangible assets
Gains or losses arising from derecognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or
loss when the asset is derecognized.
k. Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and
intangible assets, excluding goodwill, to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss. When it is not possible to estimate
the recoverable amount of an individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual
cash-generating units on a reasonable and consistent basis of allocation. Or corporate assets are
allocated to the smallest group of cash-generating units on a reasonable and consistent allocation basis.
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its recoverable amount.
When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating
unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying
amount that would have been determined had no impairment loss been recognized for the asset or
cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.
l.
Financial instruments
Financial assets and financial liabilities are recognized when a group entity becomes a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately in profit or loss.
1) Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade
date basis.
a) Measurement category
Financial assets are classified into the following categories: Financial assets at fair value
through profit or loss, available-for-sale financial assets, and loans and receivables.
i. Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset
is held for trading.
- 23 -
Financial assets at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognized in profit or loss. The net gain or loss
recognized in profit or loss does not incorporate any dividend or interest earned on the
financial asset.
ii. Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated as
available-for-sale or are not classified as loans and receivables, held-to-maturity investments
or financial assets at fair value through profit or loss.
Available-for-sale financial assets are measured at fair value. Changes in the carrying
amount of available-for-sale monetary financial assets relating to changes in foreign
currency exchange rates, interest income calculated using the effective interest method and
dividends on available-for-sale equity investments are recognized in profit or loss. Other
changes in the carrying amount of available-for-sale financial assets are recognized in other
comprehensive income and will be reclassified to profit or loss when the investment is
disposed of or is determined to be impaired.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the
Group’s right to receive the dividends is established.
Available-for-sale equity investments that do not have a quoted market price in an active
market and whose fair value cannot be reliably measured and derivatives that are linked to
and must be settled by delivery of such unquoted equity investments are measured at cost
less any identified impairment loss at the end of each reporting period and are presented in a
separate line item as financial assets carried at cost. If, in a subsequent period, the fair
value of the financial assets can be reliably measured, the financial assets are remeasured at
fair value. The difference between carrying amount and fair value is recognized in profit
or loss or other comprehensive income on financial assets. Any impairment losses are
recognized in profit and loss.
iii. Loans and receivables
Loans and receivables (including accounts receivables, cash and cash equivalent, other
receivables and overdue receivables) are measured at amortized cost using the effective
interest method, less any impairment, except for short-term receivables when the effect of
discounting is immaterial.
Cash equivalent includes time deposits and repurchase agreements collateralized by bonds
with original maturities within 3 months from the date of acquisition, highly liquid, readily
convertible to a known amount of cash and be subject to an insignificant risk of changes in
value. These cash equivalents are held for the purpose of meeting short-term cash
commitments.
b) Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators
of impairment at the end of each reporting period. Financial assets are considered to be
impaired when there is objective evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
For financial assets carried at amortized cost, such as trade receivables and other receivables,
assets are assessed for impairment on a collective basis even if they were assessed not to be
impaired individually. Objective evidence of impairment for a portfolio of receivables could
- 24 -
include the Group’s past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period of 60 days, as well as
observable changes in national or local economic conditions that correlate with default on
receivables, and other situation.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is
the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment loss is reversed through
profit or loss to the extent that the carrying amount of the investment at the date the impairment
is reversed does not exceed what the amortized cost would have been had the impairment not
been recognized.
For available-for-sale equity investments, a significant or prolonged decline in the fair value of
the security below its cost is considered to be objective evidence of impairment.
When an available-for-sale financial asset is considered to be impaired, cumulative losses
previously recognized in other comprehensive income are reclassified to profit or loss in the
period.
For financial assets that are carried at cost, the amount of the impairment loss is measured as the
difference between the asset’s carrying amount and the present value of the estimated future
cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables and other receivables, where the carrying
amount is reduced through the use of an allowance account. When a trade receivable and other
receivables are considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognized in profit or
loss except for uncollectible trade receivables and other receivables that are written off against
the allowance account.
c) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or
loss that had been recognized in other comprehensive income is recognized in profit or loss.
2) Equity instruments
Debt and equity instruments issued by the Group entity are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments issued by the Group entity are recognized at the proceeds received, net of direct
issue costs.
- 25 -
Repurchase of the Group’s own equity instruments is recognized in and deducted directly from
equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of
the Group’s own equity instruments.
3) Financial liabilities
a) Subsequent measurement
Except the following situation, all the financial liabilities are measured at amortized cost using
the effective interest method.
Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized
in profit or loss does not incorporate any interest or dividend paid on the financial liability.
Fair value is determined in the manner described in Note 30.
b) Derecognition of financial liabilities
The difference between the carrying amount of the financial liability derecognized and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognized in profit or loss.
4) Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to foreign
exchange rate risks, including foreign exchange forward contracts.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. When the fair value of derivative financial
instruments is positive, the derivative is recognized as a financial asset; when the fair value of
derivative financial instruments is negative, the derivative is recognized as a financial liability.
m. Provisions
Provisions, including those arising from the contractual obligation specified in the service concession
arrangement to maintain or restore the infrastructure before it is handed over to the grantor, are
measured at the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When
a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will
be received and the amount of the receivable can be measured reliably.
1) Warranties
Provisions for the expected cost of warranty obligations are recognized at the date of sale of the
relevant products, at the best estimate of the expenditure required to settle the Group’s obligation by
the management of the Group.
- 26 -
2) Sales returns and allowances
The prevision for sales returns and allowances is an estimate, based on previous experience and
relevant factors, of the possible amounts needed to settle sales returns and allowances and is treated
as a reduction of sales revenues in the period sales are made.
n. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced
for estimated customer returns, rebates and other similar allowances. Sales returns are recognized at
the time of sale provided the seller can reliably estimate future returns and recognizes a liability for
returns based on previous experience and other relevant factors.
1) Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have passed,
at which time all the following conditions are satisfied:
a) The Group has transferred to the buyer the significant risks and rewards of ownership of the
goods;
b) The Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
c) The amount of revenue can be measured reliably;
d) It is probable that the economic benefits associated with the transaction will flow to the Group;
and
e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Group does not recognize sales revenue on materials delivered to subcontractors because this
delivery does not involve a transfer of risks and rewards of materials ownership.
Specifically, sales of goods are recognized when goods are delivered and title has been passed.
2) Dividend and interest income
Dividend income from investments is recognized when the shareholder’s right to receive payment
has been established provided that it is probable that the economic benefits will flow to the Group
and the amount of income can be measured reliably.
Interest income from a financial asset is recognized when it is probable that the economic benefits
will flow to the Group and the amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
o. Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
1) The Group as lessor
Rental income from operating leases is recognized on a straight-line basis over the term of the
relevant lease.
- 27 -
2) The Group as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
p. Retirement benefit costs
Payments to defined contribution retirement benefit plans are recognized as an expense when
employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the
Projected Unit Credit Method. All actuarial gains and losses on the defined benefit obligation are
recognized immediately in other comprehensive income. Past service cost is recognized immediately
to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over
the average period until the benefits become vested.
The retirement benefit obligation recognized in the consolidated balance sheets represents the present
value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by
the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized
past service cost, plus the present value of available refunds and reductions in future contributions to the
plan.
Curtailment or settlement gains or losses on the defined benefit plan are recognized when the
curtailment or settlement occurs.
q. Employee share options
Equity-settled share-based payments to employees are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the employee share options is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of employee share options that will
eventually vest, with a corresponding increase in capital surplus - employee share options. The fair
value determined at the grant date of the employee share options is recognized as an expense in full at
the grate date when the share options granted vest immediately.
At the end of each reporting period, the Group revises its estimate of the number of employee share
options expected to vest. The impact of the revision of the original estimates is recognized in profit or
loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to
the capital surplus - employee share options.
r. Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1) Current tax
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided
for as income tax in the year the shareholders approve to retain the earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax
provision.
- 28 -
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally recognized for all deductible temporary
differences, unused loss carry forward and unused tax credits for purchases of machinery,
equipment and technology, research and development expenditures, and personnel training
expenditures to the extent that it is probable that taxable profits will be available against which
those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are
not recognized if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments
in subsidiaries, except where the Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred
tax assets arising from deductible temporary differences associated with such investments and
interests are only recognized to the extent that it is probable that there will be sufficient taxable
profits against which to utilize the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also
reviewed at the end of each reporting period and recognized to the to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period. The measurement
of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.
3) Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the
tax effect is included in the accounting for the business combination.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group's accounting policies, management is required to make judgments, estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors
that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
- 29 -
1) Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation requires
management to estimate the future cash flows expected to arise from the cash-generating unit and a
suitable discount rate in order to calculate present value. Where the actual future cash flows are less
than expected, a material impairment loss may arise.
2) Income taxes
The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable
temporary differences will be available. If the actual future profits generated are less than expected, a
material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the
period in which the reversal takes place.
3) Estimated impairment of accounts receivable
When there is objective evidence of impairment loss, the Group takes into consideration the estimation
of future cash flows. The impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. If the actual future
cash flows are less than expected, a material impairment loss may arise.
4) Recognition and measurement of defined benefit plans
Accrued pension liabilities and the resulting pension expense under defined benefit pension plans are
calculated using the projected unit credit method. Actuarial assumptions comprise the discount rate,
rate of employee turnover, and long-term average future salary increase. Changes in economic
circumstances and market conditions will affect these assumptions and may have a material impact on
the amount of the expense and the liability.
6. CASH AND CASH EQUIVALENTS
December 31
2014
Petty cash and foreign cash on hand
Checking accounts and demand deposits
Cash equivalents
Time deposits with original maturities less than three months
Repurchase agreements collateralized by bonds
$
1,321
463,735
2013
$
1,534
1,145,258
5,048,912
85,200
5,812,441
230,000
$ 5,599,168
$ 7,189,233
As of December 31, 2014 and 2013, the total of time deposits with original maturities of more than three
months were $700,403 thousand and $116,331 thousand, respectively, and were classified as other
receivables (see Note 10).
- 30 -
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
December 31
2014
2013
Financial assets at FVTPL - current
Financial assets held for trading
Derivative financial assets (not under hedge accounting)
Foreign exchange forward contracts*
Non-derivative financial assets
Mutual funds
Domestic quoted shares over the counter
$
-
$
8
332,778
7,688
3,900,368
9,308
$
340,466
$ 3,909,684
$
87
Financial liabilities at FVTPL - current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge accounting)
Foreign exchange forward contracts*
*
$
121
At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:
Currency
Contract Amount
(In Thousands)
Maturity Date
December 31, 2014
Buy
USD/KRW
2015.01.28-2015.02.13
USD600/KRW663,573
USD/KRW
2014.01.29-2014.02.18
USD1,000/KRW1,061,950
December 31, 2013
Buy
The Company entered into foreign exchange forward contracts during 2014 and 2013 to manage
exchange rate exposure of foreign currency denominated assets and liabilities. However, those
contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for using
hedge accounting.
8. AVAILABLE-FOR-SALE FINANCIAL ASSETS - NON-CURRENT
December 31
Foreign investments
Mutual funds
Domestic investments
Listed shares
- 31 -
2014
2013
$ 362,226
$ 307,095
5,221
6,434
$ 367,447
$ 313,529
One of the Company’s investee, Ennoconn Corporation, listed its stock on the Taiwan Stock Exchange
Market on March 28, 2014. Thus, this investment was reclassified from financial assets measured at cost non-current to available-for-sale financial assets - non-current and measured at fair value. The Company
sold off all its shares in Ennoconn in 2014 (see Note 24).
9. FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT
December 31
2014
2013
Domestic unlisted common shares
$ 44,106
$ 51,419
Classified according to financial asset measurement categories
Available-for-sale financial assets
$ 44,106
$ 51,419
Management believed that the above unlisted equity investments held by the Group, whose fair value
cannot be reliably measured due to the range of reasonable fair value estimates was so significant; therefore
they were measured at cost less impairment at the end of reporting period.
The Group assessed the operation and net asset of the investment of an investee, Lu- Chu Development
Corporation, which reduced its capital on June 24, 2013 to make up for losses and recognized an
impairment loss of $4,900 thousand.
The Group assessed the operation of an investee, Beijing Beareyes Info Systems Co., Ltd., and recognized
an impairment loss of $955 thousand in April 2013.
10. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
December 31
2014
2013
Notes receivable
Notes receivable - operating
$
535
$
9,788
Accounts receivable, net
Third parties - operating
Less: Allowance for impairment loss
$ 6,917,294
(18,696)
6,898,598
147
Related parties - operating
$ 6,898,745
$ 9,974,630
(78,608)
9,896,022
$$ 9,896,022
Other receivables
Time deposits with maturities more than 3 months
Supplier discounts receivables
Pledged time deposits (Note 32)
Others
$
700,403
366,711
4,304
136,411
(21,582)
$ 1,186,247
- 32 -
$
116,331
163,232
4,253
156,085
(24,473)
$
415,428
(Continued)
December 31
2014
2013
Overdue receivables
Overdue receivables
$
627,285
(579,810)
$
560,933
(514,966)
$
47,475
$
45,967
(Concluded)
a. Accounts receivable
Before accepting a new customer, the Group takes both the client evaluation results generated by the
internal system and the evaluation report provided by the external hedging institution into consideration
to measure the potential customer's credit quality and define its credit limit. Customer credit limits
and ratings are reviewed twice a year. For fair presentation of the accounts receivable, the Group
reviews the aging and recovery of accounts receivable every week.
For the accounts receivable that were past due at the end of the reporting period, the Group did not
recognize an allowance for impairment loss because there was no significant change in the credit
quality of these receivables and the amounts were considered recoverable.
The aging of receivables that were past due but not impaired was as follows:
December 31
2014
Less than 30 days
$
70,988
2013
$ 100,674
The above aging schedule was based on the past due date.
Movement in the allowance for impairment loss recognized on accounts receivable were as follow:
Individually
Assessed for
Impairment
Balance at January 1, 2013
Add: Amounts recovered from prior year
write-off
Deduct: Impairment losses reversed
Deduct: Reclassification
Effect of exchange rate changes
Balance at December 31, 2013
Deduct: Elimination
Deduct: Reclassification
$
$
-
Collectively
Assessed for
Impairment
Total
$ 137,988
$ 137,988
-
- 33 -
-
420
(53,901)
(8,427)
2,528
78,608
(20,796)
(16,411)
(22,650)
(55)
$
18,696
420
(53,901)
(8,427)
2,528
78,608
(20,796)
(16,411)
(22,650)
(55)
$
18,696
b. Other receivables
Movements in the allowance for impairment loss recognized on other receivables were as follows:
Individually
Assessed for
Impairment
Collectively
Assessed for
Impairment
Total
$ 26,976
(3,078)
575
24,473
(3,907)
1,016
$
-
$ 26,976
(3,078)
575
24,473
(3,907)
1,016
$ 21,582
$
-
$ 21,582
c. Overdue receivables
Movements in the allowance for impairment loss recognized on overdue receivables were as follows:
Individually
Assessed for
Impairment
Add: Impairment losses reversed
Add: Reclassification
Deduct: Amounts written off as
uncollectible
Add: Impairment losses reversed
Add: Reclassification
Deduct: Amounts written off as
uncollectible
$ 523,620
106,782
8,427
$ 579,810
Collectively
Assessed for
Impairment
$
-
Total
$ 523,620
106,782
8,427
(129,186)
5,323
514,966
60,281
26,557
-
(129,186)
5,323
514,966
60,281
26,557
(43,614)
21,620
-
(43,614)
21,620
$
-
$ 579,810
11. INVENTORIES
December 31
Finished goods
Work in progress
Raw materials
2014
2013
$ 2,590,010
682,447
2,996,843
$ 2,557,875
430,384
1,996,000
$ 6,269,300
$ 4,984,259
The cost of inventories recognized as cost of goods sold were $50,321,751 thousand for 2014 and
$57,777,772 thousand for 2013.
- 34 -
The cost of inventories recognized as cost of goods sold included a loss of $106,034 thousand resulted from
a decline of net realizable value of inventory in 2014 and a reversal of inventory write-downs of $37,732
thousand in 2013. Previous write-downs were reversed as a result of disposal of obsolete inventory.
12. OTHER FINANCIAL ASSETS - CURRENT
December 31
2014
Specific-purpose savings
2013
$ 3,746,419
$
-
Other financial assets - current refers to specific purpose savings, which may only be used on payments
related to sales from specific bid of project. As of March 23, 2015, the total savings were $311,760
thousand.
13. PROPERTY, PLANT AND EQUIPMENT
Freehold Land
Buildings and
Improvements
Equipment
Transportation
Equipment
Other
Equipment
Construction in
Progress
Total
Cost
Additions
Disposals
Reclassification
Effect of foreign currency exchange
differences
$
$
62,519
(62,519 )
$
-
3,188,201
8,194
(4,502 )
$
185,611
5,199,625
230,230
(122,396 )
784
$
303,415
43,010
97
(2,225 )
-
$
2,358
1,322,853
178,812
(140,882 )
-
$
65,540
30,919
6,688
(18,365 )
(17,275 )
$
9,847,127
424,021
(283,868 )
(83,512 )
369
557,293
$ 10,461,061
$
3,377,504
$
5,611,658
$
43,240
$
1,426,323
$
2,336
$
1,192,878
144,174
(10,119 )
$
2,806,519
444,046
(108,155 )
-
$
29,654
4,204
(2,056 )
-
$
1,097,517
180,616
(139,220 )
-
$
(18,365 )
-
Accumulated depreciation and
impairment
Disposals
Reclassification
Impairment losses recognized in profit or
loss
differences
$
5,126,568
773,040
(267,796 )
(10,119 )
-
110,599
-
8,686
18,365
137,650
75,644
181,795
1,793
54,627
-
313,859
$
1,402,577
$
3,434,804
$
33,595
$
1,202,226
$
-
$
6,073,202
$
1,974,927
$
2,176,854
$
9,645
$
224,097
$
2,336
$
4,387,859
$
5,083,394
924
(2,059,104 )
(3,882 )
$
4,763,749
65,087
(25,555 )
119,950
$
41,724
2,936
(4,199 )
318
$
1,480,442
80,932
(314,186 )
6,949
$
23,309
26,851
(20,659 )
$
3,188,201
$
5,199,625
$
43,010
$
1,322,853
$
30,919
$
9,847,127
Disposals
Reclassification
Impairment losses recognized in profit or
loss
differences
$
1,240,194
187,875
(287,714 )
(4,199 )
$
2,139,705
517,772
(23,201 )
5
$
26,338
4,561
(2,724 )
-
$
1,145,432
196,392
(299,103 )
(5 )
$
-
$
4,551,669
906,600
(612,742 )
(4,199 )
$
1,192,878
$
2,806,519
$
29,654
$
1,097,517
$
-
$
5,126,568
$
1,995,323
$
2,393,106
$
13,356
$
225,336
$
30,919
$
4,720,559
Carrying amounts at December 31, 2014
$
-
Cost
Additions
Disposals
Reclassification
differences
$
$
1,336,205
(1,273,686 )
62,519
166,869
276,394
2,231
68,716
$ 12,728,823
176,730
(3,676,730 )
102,676
1,418
515,628
Accumulated depreciation and
impairment
-
45,124
56,722
$
62,519
112
127,114
- 35 -
1,489
1,367
-
53,312
46,725
-
238,515
The above items of property, plant and equipment were depreciated on a straight-line basis over the
estimated useful life of the asset:
Buildings
Buildings
Improvements
Equipment
Transportation
Other equipment
20 years
2 to 20 years
3 to 15 years
4 to 5 years
3 to 10 years
There were no capitalization of interests for the years ended December 31, 2014 and 2013.
In their June 20, 2013 meeting, the Company’s shareholders authorized the board of directors to sell the
land and building located in the Neihu headquarters; thus, on December 10, 2013, the Company signed a
contract with a third party and sold these items for $6,572,038 thousand (net of business tax and brokerage
fees) and then leased them back under an operating lease. The rental period is 10 years from December
23, 2013 to December 22, 2023. A selling price portion, which was the fair value in excess of carrying
value, amounted to $2,935,219 thousand and was recognized as gain on disposal of property, plant and
equipment; the part which was the selling price in excess of fair value amounted to $581,747 thousand and
was deferred and amortized periodically over the lease term. The amortized amount of $58,175 thousand
in 2014 was reported as a deduction from rental costs. As of December 31, 2014, the unamortized
unrealized gain on this sale and leaseback was $522,165 thousand.
After assessing, Golden Elite Technology (Shenzhen) Co., Ltd recognized impairment losses of $137,650
thousand (RMB27,919 thousand) and $46,725 thousand (RMB9,649 thousand), for the years ended
December 31, 2014 and 2013, respectively.
14. INVESTMENT PROPERTIES
Land
Buildings and
Improvements
Total
Additions
Disposals
Reclassification
Effect of foreign currency exchange differences
$ 316,540
(1,930)
62,519
-
$ 224,120
3,154
(2,096)
13,572
4,908
$ 540,660
3,154
(4,026)
76,091
4,908
$ 377,129
$ 243,658
$ 620,787
Depreciation expense
Disposals
Reclassification
$ 118,846
7,698
(841)
10,119
3,243
$ 118,846
7,698
(841)
10,119
3,243
$ 139,065
$ 139,065
(Continued)
Cost
Accumulated depreciation
- 36 -
Land
Buildings and
Improvements
Total
Accumulated impairment
Balances at January 1, 2014
Reversal
$
14,673
-
$
1,530
(1,530)
$
14,673
$
$ 362,456
$ 104,593
$ 467,049
$ 316,540
-
$ 219,064
5,056
$ 535,604
5,056
$ 316,540
$ 224,120
$ 540,660
Depreciation expense
$ 108,395
7,604
2,847
$ 108,395
7,604
2,847
$ 118,846
$ 118,846
$
1,530
$ 103,744
$ 16,203
$ 405,611
(Concluded)
-
$
16,203
(1,530)
$
14,673
Cost
Accumulated depreciation
Accumulated impairment
Balances at January 1 and December 31, 2013
$ 14,673
$ 301,867
The investment properties held by the Group is mainly consisted of buildings and improvements and were
depreciated using the straight-line method over their estimated useful lives of 10 to 45 years and 10 to 20
years, respectively.
The investment properties held by the Group are located at Tamsui and Guandu, and the fair value of them
were not reliably determined because the market for comparable properties is inactive and alternative
reliable measurements of fair value are not available.
15. GOODWILL
For the Year Ended December 31
2014
2013
Cost
Balance at January 1
Balance at December 31
$ 1,005,931
12,838
1,018,769
- 37 -
$
994,630
11,301
1,005,931
(Continued)
2014
2013
Accumulated impairment losses
Impairment losses recognized in profit or loss
$
(403,497)
(403,497)
$
(153,458)
(250,039)
(403,497)
Carrying amounts at December 31
$
615,272
$
602,434
(Concluded)
Goodwill is the business combination or business acquisition premium generated from the business
combination or business acquisition of the mobile products, motherboard and barebone systems, and
channel products businesses.
Cash-generating units (CGUs) to which goodwill has been allocated, such as the motherboards and
barebone systems businesses, mobile products businesses and channel product businesses, are tested for
impairment annually.
The calculation of the recoverable amount of the above CGUs was based on their value in use. In this
calculation, the Group used cash flow projections for a budget period that are based on the key asset’s
remaining durable year, which is determined as seven years. The cash flows beyond that five-year period
have been extrapolated using a steady 2% to 3% per annum growth rate. In making impairment tests on
December 31, 2014, the CGUs used a discount rate ranging from 10.02% to 11.42% per annum.
Key assumptions and the methods used to calculate the major data of the CGUs were as follows:
a. Estimate of the growth rate: The estimation of sales was based on the expected future global growth
rate of motherboards, desktop computers and notebook computers.
b. Estimate of the ratio of gross profit of goods sold, before deduction of depreciation and amortization, to
revenue: The estimate was based on the actual ratio for 2014.
c. Estimate of operating expenses: The operating expenses were estimated on the basis of the actual ratio
of operating expenses to revenue for 2014.
For the year ended December 31, 2013, the Group recognized impairment losses of $205,000 thousand and
$45,039 thousand in relation to goodwill related to the business department of the motherboard and
barebone systems and the channel products business, respectively.
The CGU each used the above key assumptions to calculate their recoverable amounts, which were higher
than their carrying values as of December 31, 2014; thus there was no indication of impairment.
The carrying amount of goodwill was allocated to cash-generating units were as follow:
2014
2013
Motherboard and barebone systems business
Mobile products business
Channel products business
- 38 -
$ 220,822
394,450
-
$ 212,106
390,328
-
$ 615,272
$ 602,434
16. OTHER INTANGIBLE ASSETS
Trademarks
Computer
Software
Royalty
Total
Cost
Additions
Disposals
Effect of foreign currency
exchange differences
$
2,092
-
$
$
2,190
$
22,667
$
68,987
$
93,844
Amortization expense
Disposals
$
1,907
51
-
$
13,749
4,459
-
$
44,433
11,296
(10,069)
$
60,089
15,806
(10,069)
$
2,056
$
18,208
$
47,246
$
67,510
Carrying amounts at December 31,
2014
$
134
$
4,459
$
21,741
$
26,334
Additions
Disposals
$
2,005
-
$
22,667
-
$
76,366
7,151
(23,241)
$
2,092
$
22,667
$
61,818
$
86,577
Amortization expense
Disposals
$
1,571
253
-
$
9,289
4,460
-
$
50,426
15,890
(23,241)
$
61,286
20,603
(23,241)
$
1,907
$
13,749
$
44,433
$
60,089
Carrying amounts at December 31,
2013
$
185
$
8,918
$
17,385
$
26,488
98
22,667
-
$
-
61,818
15,534
(10,069)
$
1,704
86,577
15,534
(10,069)
1,802
Accumulated amortization and
impairment
98
-
1,586
1,684
Cost
87
-
$ 101,038
7,151
(23,241)
1,542
1,629
Accumulated amortization and
impairment
83
- 39 -
-
1,358
1,441
The above items of other intangible assets were depreciated on a straight-line basis at the following rates
per annum:
Trademarks
Royalty
Computer software
6 to 10 years
10 years
2 to 6 years
17. PREPAYMENTS FROM LEASE
2014
2013
Non-current
$ 748,896
$ 724,726
Prepayments from lease include the factory land use rights of Elitegroup Computer (Suzhou Industrial
Park) Ltd. and Golden Elite Technology (Shenzhen) Co., Ltd., and the durabilities were 47 to 50 years.
18. SHORT-TERM BORROWINGS
December 31
Line of credit borrowings
2014
2013
$ 3,778,754
$ 1,629,117
The range of interest rate on bank loans was revolving 0.66%-2.75% and 1.0% to 2.5% per annum as of
December 31, 2014 and 2013, respectively.
19. ACCOUNTS PAYABLE
December 31
2014
2013
Accounts payable
Third parties - operating
Related parties - operating
$
8,171,899
79,344
$ 10,272,358
76,843
$
8,251,243
$ 10,349,201
Accounts payable resulted mainly from the purchase of components, including CPUs, IC chip-sets, LCD
panels, CD-ROM drives, hard disks, and memory modules.
- 40 -
20. OTHER LIABILITIES
December 31
2014
2013
$ 1,040,273
86,332
63,644
40,953
527,857
$ 1,025,492
71,854
62,808
68,999
669,403
$ 1,759,059
$ 1,898,556
$
351,165
45,062
36,021
$
155,732
8,977
39,669
$
432,248
$
204,378
$
470
$
1,312
Current
Other payables
Salaries and bonus
Import and export
Royalty
Service expenses
Other
Other liabilities
Unearned revenue
Temporary credits
Other
Non-current
Other liabilities
21. PROVISIONS
Short-term
Provisions
Depending on
Legal
Procedures
Warranties
Customer
Returns and
Rebates
Total
Reversing un-usage balances
$
-
$
465,102
(5,679)
$
755,922
(218,990)
$
-
$
459,423
$
536,932
$
996,355
Additional provisions recognized
Usage
Reversing un-usage balances
Reclassification
$
$
382,180
82,922
-
$
501,535
254,387
-
$
967,414
337,309
(39,026)
(5,647)
(39,026)
$
$
465,102
$
755,922
$ 1,221,024
83,699
(39,026)
(5,647)
(39,026)
-
- 41 -
$ 1,221,024
(224,669)
a. Several former employees of the Company requested the Company to buy back certain warrants
allegedly held by them. The Company denied their request. On December 10, 2007, the former
employees made a legal complaint to the Taiwan Shihlin District Court against the Company for the
securities and rights. However, after reviewing the minutes of past Company meetings, the board of
directors found that there was no agreement made in 2005 to issue warrants. Nevertheless, the court
declared that the Company lost the lawsuit on November 18, 2009, and should buy back the securities
demanded plus interest, which were worth $83,699 thousand. The Company then filed an appeal with
the Taiwan High Court, but the Court declared that the Company lost the lawsuit on May 28, 2013.
Hence the Company reconciled with the plaintiffs on June 27, 2013, promising to pay $78,052
thousand, and the amount was paid separately in July 2013 and January 2014.
b. The provision for warranty claims was the present value of management’s best estimate of the future
outflow of economic benefits that will be required under the Group’s obligations for warranties under
the local sale of goods legislation. The estimate had been made on the basis of historical warranty
trends and may vary as a result of the use of new materials or altered manufacturing processes as well
as other events affecting product quality.
c. The provision for customer returns and rebates was based on historical experience, management’s
judgments and other known reasons estimated product returns and rebates may occur in the year. The
provision was recognized as a reduction of operating income in the period the related goods are sold.
22. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed
defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
Under the pension plan act governing U.S.-based subsidiaries, the subsidiaries match 100% of the
participating employees’ contributions, and the pension plan under that act is defined contribution.
For the years ended December 31, 2014 and 2013, the pension costs recognized by U.S.-based
subsidiaries were $572 thousand (US$19 thousand) and $683 thousand (US$23 thousand), respectively.
Under the social insurance system of the People’s Republic of China, China-based subsidiaries are
required to contribute an amount equal to a specified percentage of local employees’ salaries to fund
pension benefits. Employees’ pensions are managed by their respective local governments, and the
Group’s only obligation is to make pension contributions monthly.
The pension acts of other consolidated subsidiaries were in accordance with their respective local
regulations.
b. Defined benefit plans
The Company adopted the defined benefit plan under the Labor Standards Law, under which pension
benefits are calculated on the basis of the length of service and average monthly salaries of the six
months before retirement. The Company contributes amounts equal to 2% of total monthly salaries
and wages to a pension fund administered by the pension fund monitoring committee. Pension
contributions are deposited in the Bank of Taiwan in the committee’s name.
The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The
investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the
mandated management. However, in accordance with Regulations for Revenues, Expenditures,
Safeguard and Utilization of the Labor Retirement Fund the return generated by employees' pension
contribution should not be below the interest rate for a 2-year time deposit with local banks.
- 42 -
The actuarial valuations of plan assets and the present value of the defined benefit obligation were
carried out by qualifying actuaries. The principal assumptions used for the purposes of the actuarial
valuations were as follows:
December 31
Discount rate
Expected return on plan assets
Expected rate of salary increase
2014
2013
2.000%
2.000%
3.000%
1.875%
2.000%
3.000%
The assessment of the overall expected rate of return was based on historical return trends and analysts’
predictions of the market for the asset over the life of the related obligation, by reference to the
aforementioned use of the plan assets and the impact of the related minimum return.
Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:
2014
2013
Current service cost
Interest cost
$
An analysis by function
Marketing expenses
General and administrative expenses
Research and development expenses
732
2,999
(5,307)
$
1,198
2,754
(4,971)
$ (1,576)
$ (1,019)
$
$
(125)
(432)
(1,019)
$ (1,576)
(91)
(291)
(637)
$ (1,019)
Recognized in other comprehensive income were on actuarial of $6,295 thousand (net of income tax
benefit $1,289 thousand) for 2014 and an actuarial gain of $2,961 thousand (net of income tax $1,290
thousand) for 2013. The cumulative amounts of actuarial gains recognized in other comprehensive
income as of December 31, 2014 and 2013 was $1 thousand and $6,296 thousand, respectively.
The amount included in the consolidated balance sheet arising from the Company’s obligation in
respect of its defined benefit plans was as follows:
December 31
2014
2013
Present value of funded defined benefit obligation
Fair value of plan assets
$ (170,408)
271,987
$ (159,937)
263,033
Prepaid pension cost
$ 101,579
$ 103,096
- 43 -
Movements in the present value of the defined benefit obligations were as follows:
2014
2013
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial losses (gains)
Benefits paid
$ 159,937
732
2,999
8,540
(1,800)
$ 169,511
1,198
2,754
(5,865)
(7,661)
Closing defined benefit obligation
$ 170,408
$ 159,937
Movements in the fair value of the plan assets were as follows:
2014
2013
Opening fair value of plan assets
Actuarial losses
Contributions from the employer
Benefits paid
$ 263,033
5,307
956
4,491
(1,800)
$ 262,729
4,971
(1,614)
4,608
(7,661)
Closing fair value of plan assets
$ 271,987
$ 263,033
The actual returns on plan assets were $6,263 thousand in 2014 and $3,357 thousand in 2013.
The major categories of plan assets at the end of the reporting period for each category were disclosed
based on the information announced by Bureau of Labor Funds, Ministry of Labor:
December 31
Cash
Short-term transactions instruments
Bonds
Fixed income investments
Equity instruments
Others
2014
2013
19.12
1.98
11.92
14.46
49.69
2.83
22.17
4.34
9.83
19.11
43.64
0.91
100.00
100.00
The Company elected to disclose the following historical information of experience adjustments from
the adoption of Taiwan-IFRSs:
Present value of defined benefit
obligation
Fair value of plan assets
Surplus
December 31,
2014
December 31,
2013
December 31,
2012
$ (170,408)
$ 271,987
$ 101,579
$ (159,937)
$ 263,033
$ 103,096
$ (169,511)
$ 262,729
$ 93,218
- 44 -
January 1,
2012
$ (200,550)
$ 263,219
$ 62,669
(Continued)
December 31,
2014
Experience adjustments on plan
liabilities
Experience adjustments on plan
assets
$
$
December 31,
2013
(6,335)
956
December 31,
2012
$
1,868
$
5,803
$
(1,614)
$
(2,468)
January 1,
2012
$
-
$
(Concluded)
The Company expects to make a contribution of $4,600 thousand and $4,666 thousand to the defined
benefit plans within one year from December 31, 2014 and 2013, respectively.
Under a defined benefit plan, Elitegroup Computer Systems (Korea) Co., Ltd. (“ECS Korea”)
recognized pension costs of $956 (KRW33,201 thousand) and $1,017 (KRW37,389 thousand) for the
years ended December 31, 2014 and 2013, respectively. The accrued pension liabilities of ECS Korea
was $4,085 thousand (KRW144,595) as of December 31, 2013 (there were no accrued pension
liabilities in 2014)
23. EQUITY
a. Share capital
Ordinary shares
December 31
Numbers of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in thousands)
Shares issued
2014
2013
1,750,000
$ 17,500,000
557,123
$ 5,571,230
1,750,000
$ 17,500,000
733,580
$ 7,335,801
Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to
dividends.
To increase the Shareholders’ equity and returns on investments, the shareholders approved in their
meeting on June 20, 2013 a capital reduction and cash return to shareholders. The amount of
capital-reduction was $4,496,136 thousand, representing the cancellation of 449,614 thousand common
shares; the capital reduction ratio was 38%, and the capital remaining after the reduction was
$7,335,801 thousand. The Securities and Futures Bureau (SFB) under the Financial Supervisory
Commission approved this capital reduction on September 3, 2013. On September 17, 2013, the board
of directors approved September 18, 2013 as the record date of the capital reduction and completed the
amendment of the Company’s registered stock on October 7, 2013.
At the Company’s annual shareholder’ meeting on June 23, 2014 and a capital reduction plan was
passed (this plan was approved by the Securities and Future Bureau on July 15, 2014), which included a
cash distribution of $1,797,271 thousand and cancellation of 179,727 thousand shares (the cancellation
ratio was 24.5%); as a result, the Company’s capital decreased to $5,538,530 thousand. At the board
meeting held on August 7, 2014, the record date for capital reduction was set for August 8, 2014, and
the Company completed the registration of this capital change on August 26, 2014. Cash distribution
was completed on October 20, 2014. In addition, because of the exercise of employee stock options,
the Company’s capital has increased by 3,270 thousand common shares in 2014, and the Company had
to reduce the above cancellation ratio to 24.4%. As of December 31, 2014, the Company’s actual
issued capital was $5,571,230 thousand consisting of 557,123 thousand shares.
- 45 -
b. Capital surplus
December 31
Share premium
Treasury share transaction
Employee share options - expired
2014
2013
$ 6,196,267
216,663
72,850
$ 6,172,277
216,663
72,850
$ 6,485,780
$ 6,461,790
The capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, this
capital surplus may be distributed as cash dividends or may be transferred once a year within a certain
percentage of the Company’s capital surplus to share capital.
c. Retained earnings and dividend policy
The Company’s Articles of Incorporation provide that when allocating the net profits for each fiscal
year, the Company should first pay taxes, offset its deficit in previous years and then set aside the
following items accordingly:
1) Legal reserve at 10% of the profits, until this reserve equals the Company’s paid-in capital.
2) Special reserve based on relevant laws or regulations or as instructed by the authorities in charge.
3) Remuneration to directors and supervisors and bonus to employees of the Company at 1% and 10%,
respectively, of the remainder.
4) Allocation of any balance base on proposals of the board of directors and on resolution approved in
shareholders’ meeting.
The Company’s Articles of Incorporation provide that profit distribution should be at least 50% of net
income of current year and the ratio of cash dividend should not be less than 20% of each profit
distribution. The dividend policy takes into account the results of the Company’s operation,
investment plan, change in industry environment, shareholders’ benefits and long-term financial plan.
For the years ended December 31, 2014 and 2013, the bonuses to employees were $133,569 thousand
and $371,363 thousand, respectively, and the remuneration to directors and supervisors was $13,357
thousand and $37,136 thousand, respectively. The bonus to employees and remuneration to directors
and supervisors represented 10% and 1%, respectively, of net income (net of the bonus and
remuneration) after the deduction of legal reserve and special reserve. Material differences between
these estimates and the amounts proposed by the Board of Directors in the following year are adjusted
for in the year of the proposal. If the actual amounts subsequently resolved by the shareholders differ
from the proposed amounts, the differences are recorded in the year of shareholders’ resolution as a
change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number
of shares is determined by dividing the amount of the share bonus by the share closing price (after
considering the effect of cash and stock dividends) of the shares of the day immediately preceding the
shareholders’ meeting.
Under Rule No. 1010012865 issued by the FSC and the directive titled “Questions and Answers for
Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or
reverse to a special reserve. Any special reserve appropriated may be reversed to the extent that the
net debit balance reverses and thereafter distributed.
- 46 -
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s
paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the
legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to
capital or distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Company.
The appropriations of earnings, bonus to employees and remuneration to directors and supervisors for
2013 and 2012 approved in the shareholders’ meetings on June 23, 2014 and June 20, 2013,
respectively, were as follows:
Dividends Per Share
(NT$)
For the Year Ended
December 31
2013
2012
Appropriation of Earnings
For the Year Ended
December 31
2013
2012
Legal reserve
Appropriate (reverse) special reserve
Cash dividends
$
362,428
(451,75)
2,200,740
$
36,471
297,378
41,412
$ 3.000
$ 0.035
2013
2012
Cash
Share
Cash
Share
Dividends
Dividends
Dividends
Dividends
Bonus to employees
Remuneration of directors and
supervisors
$ 371,363
37,136
$
-
$
-
3,086
$
-
309
-
The appropriations of earnings, the bonus to employees and the remuneration of directors and
supervisors for 2012 were proposed according to the Company’s financial statements for the years
ended December 31, 2012, which were prepared in accordance with the Guidelines Governing the
Preparation of Financial Reports by Securities Issuers and the Generally Accepted Accounting Standard
in the Republic of China (“ROC GAAP”), and by reference to the balance sheet for the year ended
December 31, 2012, which was prepared in accordance with the Guidelines Governing the Preparation
of Financial Reports by Securities Issuers (revised) and International Financial Reporting Standards.
There was no difference between the amounts of the bonus to employees and the remuneration to
directors and supervisors approved in the shareholders’ meetings on June 23, 2014 and June 20, 2013
and the amounts recognized in the financial statements for the years ended December 31, 2013 and
2012, respectively.
The Company’s shareholders also resolved to issue cash dividends from capital surplus of $550,185
thousand ($0.465 per share) in the shareholders’ meeting held on June 20, 2013.
The appropriations of earnings for 2014 had been proposed by the Company’s board of directors on
March 23, 2015. The appropriations and dividends per share were as follows:
Appropriation
of Earnings
Legal reserve
Reverse special reserve
Cash dividends
$
- 47 -
138,639
(87,939)
2,786,515
Dividends Per
Share (NT$)
$
5
The appropriations of earnings, the bonus to employees, and the remuneration to directors and
supervisors for 2014 are subject to the resolution of the shareholders’ meeting to be held on June 16,
2015.
Information on the bonus to employees, directors and supervisors proposed by the Company’s board of
directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.
d. Non-controlling interests
2014
2013
Attributable to non-controlling interests:
Share of profit (loss) for the year
Exchange difference arising on translation of foreign entities
Change in non-controlling interests
$ 209,314
$ 133,428
$ 313,541
(84,262)
(115,298)
11,071
-
8,376
$ 209,314
24. NET PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS)
The components of net income were as follow:
a. Other gains and losses
2014
2013
Net gain on disposal of available-for-sale financial assets
(Note 8)
Net foreign exchange gains/(losses)
Net gain/(loss) arising on financial assets designated as at
FVTPL
Impairment loss on financial assets at cost
Gain/(loss) on disposal of investment
Impairment loss on property, plant and equipment (Note 13)
Gain on reversal of impairment of investment properties
Gain on disposal of investment properties
Impairment loss on goodwill (Note 15)
Other
$ 178,964
36,450
9,358
49,243
(137,650)
1,530
130
(11,917)
$ 126,108
$
72,008
8,373
(5,855)
(10,624)
(46,725)
(250,039)
(50,172)
$ (283,034)
b. Finance costs
2014
2013
Interest on bank overdrafts and loans
$ 17,383
- 48 -
$ 28,343
c. Other income
2014
2013
Rental income
Dividend income
Others
$
62,915
5,090
138,897
$ 206,902
$
42,899
145,050
$ 187,949
d. Depreciation and amortization
2014
2013
Property, plant and equipment
Investment property
Prepayments
Other intangible assets
Prepayment from lease
Other non-current assets
An analysis of deprecation by function
Operating costs
Operating expenses
Non-operating expenses
An analysis of amortization by function
Operating costs
Operating expenses
Non-operating expenses
$ 773,040
7,698
36,548
15,806
18,393
6,986
$ 906,600
7,604
29,758
20,603
18,044
4,987
$ 858,471
$ 987,596
$ 639,327
133,713
7,698
$ 646,235
260,365
7,604
$ 780,738
$ 914,204
$
33,613
44,120
-
$
20,547
49,429
3,416
$
77,733
$
73,392
e. Operating expenses directly related to investment properties
2014
2013
Direct operating expenses from investment properties that
generated rental income
Direct operating expenses from investment properties that did not
generate rental income
$
$
- 49 -
8,397
$ 10,534
35
200
8,432
$ 10,734
f. Employee benefit expense
2014
2013
Post-employment benefits (see Note 22)
Defined contribution plans
Defined benefit plans
$
Other employee benefits
Payroll
Labor and health insurance
Other employee costs
43,462
(620)
42,842
$
56,298
(2)
56,296
3,912,708
329,618
34,481
4,276,807
3,897,655
316,775
53,682
4,268,112
Total employee benefit expense
$ 4,319,649
$ 4,324,408
An analysis of employee benefit expense by function
Operating costs
Operating expenses
$ 2,219,018
2,100,631
$ 1,997,590
2,326,818
$ 4,319,649
$ 4,324,408
25. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense (income) were as follows:
2014
2013
Current tax
Current year
Income tax expense of unappropriated earnings
Land value increment tax
In respect of prior years
Region income tax
Deferred tax
Current year
Decrease in deferred income taxes assets
In respect of prior years
$ 381,863
151,585
23
(5,955)
293
527,809
238,836
(27,135)
(4,728)
206,973
Income tax expense recognized in profit or loss
$ 734,782
$ 330,041
114,124
180,440
1,087
625,692
(73,386)
(40,418)
8,843
(104,961)
$ 520,731
A reconciliation of accounting profit and income tax expenses is as follows:
2014
2013
Profit before tax
$ 2,036,910
- 50 -
$ 4,029,715
(Continued)
2014
2013
Income tax expense calculated at the statutory rate
Nondeductible expenses in determining taxable income
Tax-exempt income
Offset between profits and losses
Income tax expense of unappropriated earnings
Land value increment tax
Adjustment of deferred tax from the prior years
Recognized taxable (deductible) temporary differences
Adjustments of prior years’ tax expense
Region income tax
Other
$
463,324
34,197
(33,256)
(17,790)
151,585
23
(6,060)
147,856
(4,724)
293
(666)
$
866,989
19,809
(500,155)
114,124
8,843
(183,616)
180,440
1,087
13,210
Income tax expense recognized in profit or loss
$
734,782
$
520,731
(Concluded)
The applicable tax rate used above is the corporate tax rate of 17% payable by the Group in ROC, while
the applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities
operating in other jurisdictions are based on the tax laws in those jurisdictions.
As the status of 2014 appropriations of earnings is uncertain, the potential income tax consequences of
2014 unappropriated earnings are not reliably determinable.
b. Income tax recognized directly in other comprehensive income
2014
2013
Deferred tax
Inspect of current year
Effect of foreign operating function reports’ currency
exchanges differences
Gains or losses on defined benefit actuarial interests
Total income tax recognized directly in other comprehensive
income
$
86,720
(1,289)
$
79,085
1,290
$
85,431
$
80,375
c. Current income tax assets and liabilities
December 31
Current income tax liabilities
Accrued income tax expense
- 51 -
2014
2013
$ 427,226
$ 427,344
d. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2014
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Exchange
Differences
Closing
Balance
Deferred tax assets
Temporary differences
Unrealized loss on inventory
Provisions
Gain on disposal of properties, plant and
equipment
Loss on investment in equity
Loss on doubtful accounts
Difference in durabilities of fixed assets
differences
Others
$
17,819
199,080
$
8,330
(33,150)
$
-
78,026
222,234
82,607
48,408
(7,821)
(161,680)
(3,275)
662
51,815
11,474
711,463
180,348
2,112
(194,822)
(10,712)
(51,815)
(51,815)
-
$ 891,811
$ (205,534)
$ (51,815)
$
$
$
Tax losses
$
-
655
320
$
26,804
166,250
4,962
2,834
70,205
60,554
84,294
51,904
1,122
9,893
135
14,708
474,719
169,771
$
10,028
$ 644,490
$
-
Deferred tax liabilities
Goodwill
Unrealized exchange gain or loss
differences
Financial assets at fair value through profit
or loss
Defined benefit plan
Allowance for doubtful accounts
(9,456)
(1,314)
-
(653)
-
(245)
(17,526)
(1 )
245
(1,031)
-
$ (28,542)
$
(1,439)
-
$
(9,456)
(1,967)
(34,905)
-
(34,905)
1,289
-
-
(17,268)
(1 )
-
$ (63,597)
$ (33,616)
$
For the year ended December 31, 2013
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Exchange
Differences
Closing
Balance
Deferred tax assets
Unrealized loss on inventory
Provisions for sales returns and allowances
Gain on disposal of property, plant and
equipment
Loss on investment in equity
Loss on doubtful accounts
Difference in durabilities of property, plant
and equipment
differences
Others
Tax losses
Investment credits
$
26,686
141,590
$
(9,845)
57,376
$
-
$
978
114
$
17,819
199,080
261,447
70,556
78,026
(39,213)
10,167
-
1,884
78,026
222,234
82,607
48,464
(2,838)
-
2,782
48,408
130,900
24,475
704,118
131,828
48,946
(12,602)
81,071
48,459
(48,946)
(399)
5,359
61
-
51,815
11,474
711,463
180,348
-
$ 884,892
$
80,584
(79,085)
(79,085)
$ (79,085)
$
5,420
$ 891,811
(Continued)
- 52 -
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Exchange
Differences
Closing
Balance
Deferred tax liabilities
Goodwill
Unrealized exchange gain or loss
Financial assets at fair value through profit
or loss
Defined benefit plan
$ (35,848)
-
$
(500)
(15,280)
(1 )
$ (51,629)
26,392
(1,314)
$
255
(956)
$
24,377
-
$
(1,290)
$
-
$
-
(1,290)
$
(9,456)
(1,314)
(245)
(17,526)
(1 )
-
$ (28,542)
(Concluded)
e. Deductible temporary differences, unused loss carryforwards and unused investment credits for which
no deferred tax assets have been recognized in the consolidated balance sheets
December 31
2014
Deductible temporary differences
Financial assets at costs
$
Loss carryforwards
64,865
70,434
2013
$
68,235
70,434
$ 135,299
$ 138,669
$ 990,990
$ 679,454
f. Loss carryforwards unused as of December 31, 2014 comprised of:
1) The Company
Unused Amount
Expiry Year
$ 985,160
2015-2020
2) Elitegroup Computer Systems Inc. (USA), Elitegroup Computer Systems (HK) Co., Ltd., Elitegroup
Computer Systems (Korea) Co., Ltd., Elitegroup Computer Systems (Japan) Co., Ltd., Xun Rui
Electron (Shenzhen) Co., Ltd., ECS Trading (Shenzhen) Co., Ltd., Beijing Advazone Electronic
Co., Ltd. and Orbbit International Corp.
Unused Amount
$
Expiry Year
593,750
436,555
2015-2034
Unlimited duration
$ 1,030,305
g. The aggregate amount of temporary difference associated with investments for which deferred tax
liabilities have not been recognized.
As of December 31, 2014 and 2013, the aggregate amount of temporary difference associated with
investments for which deferred tax liabilities have not been recognized was $643,515 thousand and
$1,449,186 thousand, respectively.
- 53 -
h. Integrated income tax
December 31
2014
Unappropriated earnings
Unappropriated earnings generated before January 1, 1998
Unappropriated earnings generated on and after January 1,
1998
Imputation credits accounts
2013
$
-
-
2,902,470
3,633,768
$ 2,902,470
$ 3,633,768
$
$
221,253
2014
(Expected)
Creditable ratio for distribution of earnings
i.
$
137,279
2013
(Actual)
6.41%
6.89%
Income tax assessments
The tax returns through 2012 have been assessed by the tax authorities.
26. EARNINGS PER SHARE
Unit: NT$ Per Share
2014
2013
Basic earnings per share
Diluted earnings per share
$
$
2.09
2.05
$
$
3.44
3.37
The earnings and weighted average number of ordinary shares outstanding in the computation of earnings
per share were as follows:
Net Profit for the Year
2014
2013
Profit for the period attributable to owners of the Company
Earnings used in the computation of basic and diluted earnings per
share
- 54 -
$ 1,386,390
$ 3,624,282
$ 1,386,390
$ 3,624,282
Weighted average number of ordinary shares outstanding (in thousand shares):
2014
2013
Weighted average number of ordinary shares in computation of basic
earnings per share
Effect of potentially dilutive ordinary shares:
Employee share option
Weighted average number of ordinary shares used in the
computation of diluted earnings per share
662,902
1,053,853
13,726
21,895
676,628
1,075,748
If the Company offered to settle bonuses paid to employees in cash or shares, the Company assumed the
entire amount of the bonus would be settled in shares and the resulting potential shares were included in the
weighted average number of shares outstanding used in the computation of diluted earnings per share, if the
effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted
earnings per share until the shareholders resolve the number of shares to be distributed to employees at their
meeting in the following year.
Since the exercise price of the options or warrants issued by the Company exceeded the average market
price of the shares during the years ended December 31, 2014 and 2013, they were anti-dilutive and
excluded from the computation of diluted earnings per share.
27. SHARE-BASED PAYMENT ARRANGEMENTS
Employee Share Option Plan of the Company
Qualified employees of the Company and its subsidiaries were granted 40,000 options in September to
December 2003, 40,000 options in July 2006, and 70,000 options in December 2007. Each option entitles
the holder to subscribe for one thousand common shares of the Company. The options granted are valid
for 10 years and exercisable at certain percentages after the second anniversary from the grant date. The
options were granted at an exercise price equal to the closing price of the Company’s common shares listed
on the Taiwan Stock Exchange on the grant date. For any subsequent changes in the Company’s capital
surplus, the exercise price is adjusted accordingly.
Information on employee share options was as follows:
2014
Number of
Options
(In
Thousands)
2013
Weightedaverage
Exercise
Price
(NT$)
Number of
Options
(In
Thousands)
Options exercised
Options expired
98,860
(3,270)
(9,750)
85,840
24.45
98,860
21.15
Options exercisable, end of period
85,840
24.45
98,860
21.15
Weighted-average fair value of options
granted ($)
$
- 55 -
-
$ 21.15
17.34
21.52
131,185
(32,325)
Weightedaverage
Exercise
Price
(NT$)
$
-
$ 15.00
27.44
Information about outstanding options as of December 31, 2014 and 2013 was as follows:
December 31, 2014
The Weighted
Execution Price
Average Remaining
Range (NT$)
Contract
$ 27.5
22.5
1.50
2.96
December 31, 2013
The Weighted
Execution Price
Average Remaining
Range (NT$)
Contract
$ 23.9
19.5
2.50
3.96
28. OPERATING LEASE AGREEMENT
a. The Group as lessee
Operating leases are related to leasing leases of buildings and improvements with lease terms between
11 and 120 months.
As of December 31, 2014 and 2013, the Group’s refundable deposits paid resulting from operating lease
agreements were $209,033 thousand and $209,593 thousand, respectively.
The Company sold and leased back headquarter building in Neihu in December 2013 (see Note 13),
negotiating to pay rent by prepaying checks annually. The rental term is 10 years and if the monthly
rent of the first three years accords with those floating rates of two-year time deposits of Chunghwa
Post increases by certain rates, the rent of next month will consequentially increase. The monthly rent
of the forth to seventh year and the eighth to tenth year are adjusted to increase by certain multiplicator
respectively. At the 3 months before the expiration, if the Company intends to continue renting, it has
right of first refusal with the same renting terms, and should negotiate related terms of contract
extension. If both of them do not complete the negotiation at one month before the expiration, the
Company is regarded as abandoning the right of first refusal, and the rental relation terminated
automatically upon the completion of the contract.
The future minimum lease payments of non-cancellable operating lease commitments were as follows:
December 31
2014
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
$
230,679
827,693
838,812
$ 1,897,184
2013
$
246,340
820,461
1,045,224
$ 2,112,025
b. The Group as lessor
Operating leases relate to the investment real estate owned by the Group and the real estate subleased
by the Company, which have lease terms between 2 to 5 years. All operating lease contracts contain
market review clauses in the event that the lessee exercises its option to renew. The lessee does not
have a bargain purchase option to acquire the property at the expiry of the lease period.
As of December 31, 2014 and 2013, the Group’s received guaranteed deposits received resulting from
operating lease agreements were $10,137 thousand and $4,874 thousand, respectively.
- 56 -
The future minimum lease payments on noncancelable operating leases were as follows:
2014
Not later than 1 year
Later than 1 year and not later than 5 years
$
December 31
2013
51,198
135,619
$
14,754
17,413
$ 186,817
$
32,167
29. CAPITAL MANAGEMENT
Gearing Ratio
The policy of board of directors is to maintain sound capital structure and seek to maintain investor,
creditor and market confidence between investors, creditors and market, in order to support the
development of future operations.
The gearing ratio at end of the reporting period was as follows:
December 31
2014
2013
Debt
Less cash and cash equivalents (including cash and cash equivalents
in a disposal group held for sale)
Net debt
Equity
$ 16,254,982
$ 16,364,731
Total capital*
$ 26,873,823
$ 27,561,803
39.65%
33.29%
Net debt to equity ratio
*
(5,599,168)
10,655,814
16,218,009
(7,189,233)
9,175,498
18,386,305
Total capital is total Equity which includes capital, reserves, retained earnings, other equity and
non-controlling interests of the Group plus net debt.
As of December 31, 2014, the Group’s capital management approach has not changed.
30. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value
Except as detailed in the following table, management believes the carrying amounts of financial
assets and financial liabilities recognized in the consolidated financial statements approximate their
fair values.
- 57 -
2) Fair value measurements recognized in the consolidated balance sheets
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
December 31, 2014
Level 1
Financial assets at FVTPL
Mutual funds
Available-for-sale financial
assets
Domestic listed shares
Foreign mutual funds
Financial liabilities at
FVTPL
Foreign exchange
forward contracts
$
Level 2
Level 3
Total
7,688
332,778
$
-
$
-
$
$ 340,466
$
-
$
-
$ 340,466
$
5,221
362,226
$
-
$
-
$
$ 367,447
$
-
$
-
$ 367,447
$
$
87
$
-
$
-
7,688
332,778
5,221
362,226
87
December 31, 2013
Level 1
Financial assets at FVTPL
Foreign exchange
forward contracts
Mutual funds
$
Level 2
-
$
9,308
3,900,368
$ 3,909,676
- 58 -
Level 3
8
$
$
8
$
Total
-
$
8
-
9,308
3,900,368
-
$ 3,909,684
(Continued)
Level 1
Available-for-sale financial
assets
Domestic listed shares
Foreign mutual funds
Financial liabilities at
FVTPL
Foreign exchange
forward contracts
Level 2
Level 3
Total
$
6,434
307,095
$
-
$
-
$
6,434
307,095
$
313,529
$
-
$
-
$
313,529
$
-
$
121
$
-
$
121
(Concluded)
There were no transfers between Levels 1 and 2 in the current and prior periods.
3) Valuation techniques and assumptions applied for the purpose of measuring fair value
The fair values of financial assets and financial liabilities were determined as follows:
a) The fair values of financial assets and financial liabilities with standard terms and conditions
and traded in active liquid markets are determined with reference to quoted market prices.
b) The fair values of derivative instruments were calculated using quoted prices. Where such
prices were not available, foreign currency forward contracts are measured using quoted
forward exchange rates and yield curves derived from quoted interest rates matching maturities
of the contracts;
c) The fair values of other financial assets and financial liabilities (excluding those described
above) were determined in accordance with generally accepted pricing models based on
discounted cash flow analysis.
The significant assumptions applied in determining the fair values of financial assets and liabilities
were as follows:
Unlisted shares
The consolidated financial statements included holdings in unlisted shares with fair value under
significant volatility; the management believes that the fair value cannot be reliably measured;
therefore they were measured at cost less accumulated impairment at the end of reporting period.
b. Categories of financial instruments
December 31
2014
2013
Financial assets
Fair value through profit or loss (FVTPL)
Designated as at FVTPL - current
Loans and receivables (1)
Available-for-sale financial assets (2)
$
- 59 -
340,466
17,650,882
411,553
$
3,909,684
17,735,855
364,948
(Continued)
December 31
2014
2013
Financial liabilities
Fair value through profit or loss (FVTPL)
Designated as at FVTPL - current
Amortized cost (3)
$
87
13,812,834
$
121
13,897,585
(Concluded)
1) The balances included loans and receivables measured at amortized cost, which comprise cash and
cash equivalents, notes receivables, accounts receivables (including related parties), other
receivables, other financial assets - current and refundable deposits.
2) The balances included the carrying amount of available-for-sale financial assets and financial assets
measured at cost.
3) The balances included financial liabilities measured at amortized cost, which comprise short-term
loans, accounts payables (including related parties), other payables, and guaranteed deposits
received.
c. Financial risk management objectives and policies
The Group’s major financial instruments include equity investments, trade receivables, trade payables,
and payables. The Group’s Corporate Treasury function provides, coordinates access to domestic and
international financial markets, and monitors and manages each business unit’s financial risks relating
to the operations of the Group through internal risk reports, which provide an analysis of exposures by
degree and magnitude of risks. These risks include market risk (including currency risk, interest rate
risk and other price risk), credit risk and liquidity risk.
The Group seeks to minimize the effects of these risks by using derivative financial instruments to
hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved
by the board of directors, which provided written principles on foreign exchange risk, interest rate risk,
credit risk, the use of financial derivatives and non- derivative financial instruments, and the investment
of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors
continually. The Group does not enter into financial contracts or trade financial instruments, including
derivative financial instruments, for speculative purposes.
The Corporate Treasury function is reviewed by the Group’s board of directors in accordance with the
internal control system and related rules. The Group should implement the overall financial
management objective as well as observe the levels of delegated authority and ensure that those with
delegated authority carry out their duties.
1) Market risk
The Group’s activities are primarily exposed to the financial risks of changes in foreign currency
exchange rates (see (a) below), interest rates (see (b) below) and other price factors (see (c) below).
The Group uses a variety of derivative financial instruments to manage its exposure to foreign
currency risk and interest rate risk, as follows:
a) Foreign currency risk
The Group is exposed to foreign currency risk because it owns assets and liabilities
denominated in foreign currencies. Exchange rate exposures are managed within approved
policy parameters by using financial instruments such as foreign exchange spot transactions,
forward exchange contracts, etc.
- 60 -
The Group requires all its member entities to use forward exchange contracts to eliminate
currency exposure.
The carrying amounts of the Group’s derivatives exposing to foreign currency risk at the end of
the reporting period are as follows:
December 31
2014
2013
Assets
USD
$
-
$
8
$
87
$
121
Liabilities
USD
Sensitivity analysis
The Group measured the risks of financial assets and liabilities with significant influence, and
did not take the net position of outstanding foreign exchange forward contracts into
consideration.
The Group was mainly exposed to the U.S. dollar.
The following table shows the Group’s sensitivity to a 5% increase and decrease in New Taiwan
dollars (the functional currency) against the U.S. dollar. The 5% sensitivity rate is used in
reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in foreign exchange rates. The
sensitivity analysis included only outstanding foreign currency-denominated monetary items,
for which their translation at the end of the reporting period is adjusted for a 5% change in
foreign currency rates. A positive number below indicates an increase in pretax profit and
other equity associated with the New Taiwan dollars, strengthening by 5% against the relevant
currency. For a 5% weakening of the New Taiwan dollar against the relevant currency, there
would be an equal and opposite impact on pretax profit and other equity, and the balance below
would be negative.
U.S. Dollars Impact
2014
2013
Profit or loss
$ 48,845
$ (23,949)
b) Interest rate risk
The Group was exposed to interest rate risk because entities in the Group borrowed funds at
fixed interest rates.
- 61 -
The carrying amounts of the Group’s financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows.
December 31
Fair value interest rate risk
Financial assets
Cash flow interest rate risk
Financial assets
2014
2013
$ 5,837,248
3,778,754
$ 6,163,024
1,629,117
4,130,618
-
781,970
-
The Group measured risks of financial assets and liabilities with changes in interest rates. The
sensitivity analysis below was determined on the basis of the Group’s exposure to interest rates
at the end of the reporting period. A 10 basis points increase or decrease was used when
reporting interest rate risk internally to key management personnel and represented
management’s assessment of the reasonably possible change in interest rates. For the financial
assets and financial liabilities with fixed interest rate held by the Group, their fair value will
change as the market interest rates change. For the financial assets and financial liabilities
with floating interest rate held by the Group, their effective interest rates will vary as the market
interest rates change, resulting in future cash flow fluctuations.
On financial assets with interest rates changes that had been held by the Group as of December
31, 2014 and 2013, had market interest rates been 10 basis points higher, the fair value of
financial assets with fixed interest rate would have decreased by $58,372 thousand and $61,630
thousand, respectively; the financial assets with floating interest rates would have generated
cash inflows of $41,306 thousand and $7,820 thousand, respectively.
On financial liabilities with interest rates changes that had been held by the Group as of
December 31, 2014 and 2013, had market interest rates been 10 basis points higher, the fair
values of financial liabilities with fixed interest rate would have decreased $37,788 thousand
and $16,291 thousand, respectively. Had market interest rates been 10 basis points lower, the
impact would have been negative but at the same amounts.
c) Other price risk
The Group was exposed to equity price risks through its investments in listed companies and
mutual funds.
The Group measured risks of financial assets with equity price changes.
Sensitivity analyses were used to measure equity price risks at the end of the reporting period.
Had the positions of domestic and foreign equity investments been 5% lower, the fair values of
held-for-trading and available-for-sale financial assets would have decreased by $35,396
thousand and $211,161 thousand on December 31, 2014 and 2013, respectively.
- 62 -
2) Credit risk
Credit risk refers to the risk that the counterparty will default on its contractual obligations,
resulting in financial loss to the Group. As of the end of the reporting period, the Group’s
maximum exposure to credit risk which could cause a financial loss to the Group due to failure of
counterparties to discharge an obligation and financial guarantees provided by the Group could
consist of:
a) The carrying amounts of the financial assets stated in the balance sheets; and
b) The amounts of contingent liabilities in relation to financial guarantee issued by the Group.
The evaluation results generated by the internal system and the evaluation report provided by the
external hedging institution are both taken into consideration before granting the appropriate credit
line to counterparties. The counterparties’ transaction type, financial position and collaterals are
also taken into consideration. All credit lines have expiration dates and are subject to
reexamination before the granting of any extensions.
As of December 31, 2014 and 2013, the Group’s five largest customers accounted for 36% to 61%
of accounts receivable, and the concentration of credit risk is relatively insignificant for the
remaining accounts receivable. After considering specific factors and conducting risk evaluation,
the credit risks of the Group’s five largest customers would not have had any material impact on the
Group.
3) Liquidity risk
The Group manages liquidity risk by maintaining and monitoring a level of cash and cash
equivalents deemed adequate to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows. Since the Group has sufficient equity and working capital, which
ensure the compliance with loan covenants, the Group has no liquidity risk.
The following tables show the Group’s remaining contractual maturity for its financial liabilities
with agreed-upon repayment periods.
December 31, 2014
Less than
1 Year
2 to 3 Years
More than
3 Years
Total
Non-derivative
financial liabilities
Short-term debts
Long-term debts
$ 3,778,754
-
$
-
$
-
$ 3,778,754
-
$ 3,778,754
$
-
$
-
$ 3,778,754
December 31, 2013
Less than
1 Year
2 to 3 Years
More than
3 Years
Total
Non-derivative
financial liabilities
Short-term debts
Long-term debts
$ 1,629,117
-
$
-
$
-
$ 1,629,117
-
$ 1,629,117
$
-
$
-
$ 1,629,117
- 63 -
31. TRANSACTIONS WITH RELATED PARTIES
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and are not disclosed in this note. Details of
transactions between the Group and other related parties are disclosed below.
a. Sales of goods
Line Items
Sales
Related Parties Types
Associates that have significant influence
over the investors
2014
2013
$
404
$
-
The terms and conditions of sales transactions with related parties were not significantly different from
those for unrelated third parties, but for other transactions with the related parties, the terms and
conditions were based on mutual agreement.
b. Purchases of goods
2014
2013
Parties Types
Associates that have significant influence over the investors
$ 1,001,922
$
228,413
c. Receivables from related parties
Line Items
Accounts
receivable
Other accounts
receivable
over the investors
over the investors
2014
2013
$
147
$
-
$
69
$
-
The outstanding accounts receivable from related parties are unsecured.
impairment loss was recognized on receivables from related parties.
For 2014 and 2013, no
d. Payables to related parties (excluding loans from related parties)
Line Items
Accounts payable
Other accounts
payable
Payable on
equipment
over the investors
over the investors
over the investors
2014
2013
$ 79,344
$ 76,843
$
186
$
238
$
3,580
$
-
The outstanding payables from related parties are unsecured and will be settled in cash.
- 64 -
e. Prepayments
December 31
2014
$ 12,000
2013
$
-
f. Property, plant and equipment acquired
Price
2014
2013
$ 17,230
$
467
g. Other assets acquired
Associates that have significant
influence over the investors
Line Items
Other intangible assets
Price
2014
2013
$
830
$
5,721
h. Other operating expenses
Associates that have significant
influence over the investors
Line Items
Repair expenses
Service expense
Research and development
materials
Maintenance costs
Miscellaneous purchase
Price
2014
2013
$ 10,998
965
13
149
$ 12,125
i.
$
6,079
1,094
95
11
-
$
7,279
Compensation of key management personnel
2014
2013
Short-term employee benefits
Termination benefits
Post-employment benefits
$
92,054
782
$ 128,746
20,000
934
$
92,836
$ 149,680
The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.
- 65 -
32. ASSETS PLEDGED AS COLLATERAL
The following assets were provided as guarantees for the tariff of imported raw materials or securities
requested by the electric power company:
December 31
2014
Pledge deposits (classified as other receivable)
$
4,304
2013
$
4,253
33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of
December 31, 2014 and 2013 were as follow:
 As of December 31, 2014 and 2013, unused letters of credit amounted to $0 and $630 thousand,
respectively.
34. EXCHANGE RATE FOR FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES
The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31, 2014
Foreign
Currencies
Exchange Rate
Carrying
Amount
485,838
184
728
31.65
38.47
5.172
$ 15,376,759
7,097
3,763
516,704
6,356
9,389
31.65
4.08
0.2646
16,353,668
25,931
2,484
Financial assets
Monetary items
USD
EUR
RMB
$
Monetary items
USD
HKD
JPY
December 31, 2013
Foreign
Currencies
Exchange Rate
Carrying
Amount
Financial assets
Monetary items
USD
EUR
HUF
RMB
$
- 66 -
557,276
109
243,959
725
29.81
41.09
0.1386
4.889
$ 16,612,394
4,464
33,813
3,546
(Continued)
Foreign
Currencies
Exchange Rate
Carrying
Amount
Monetary items
USD
HKD
JPY
$
541,208
7,849
12,839
29.81
3.843
0.2839
$ 16,133,409
30,164
3,645
(Concluded)
35. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees:
1) Financing provided to others.
(None)
2) Endorsements/guarantees provided. (Table 1)
3) Marketable securities held. (Table 2)
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the
paid-in capital. (Table 3)
5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in
capital. (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital.
(None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital. (Table 4)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital. (Table 5)
9) Trading in derivative instruments.
(Notes 7 and 30)
The Company recognized net profit $94 thousand from trading in derivative instruments.
10) Intercompany relationships and significant intercompany transactions. (Table 9)
11) Information on investees. (Table 6)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business
activities, paid-in capital, method of investment, inward and outward remittance of funds,
ownership percentage, net income of investees, investment income or loss, carrying amount of the
investment at the end of the period, repatriations of investment income, and limit on the amount of
investment in the mainland China area. (Table 7)
- 67 -
2) Any of the following significant transactions with investee companies in mainland China, either
directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or
losses (Table 8):
a) The amount and percentage of purchases and the balance and percentage of the related payables
at the end of the period.
b) The amount and percentage of sales and the balance and percentage of the related receivables at
the end of the period.
c) The amount of property transactions and the amount of the resultant gains or losses.
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the
end of the period and the purposes.
e) The highest balance, the end of period balance, the interest rate range, and total current period
interest with respect to financing of funds.
f) Other transactions that have a material effect on the profit or loss for the period or on the
financial position, such as the rendering or receiving of services.
36. SEGMENT INFORMATION
The Group had a segment restructuring on January 1, 2014. The information reported to the chief
operating decision maker for the purpose of resource allocation and assessment of segment performance
focuses on the types of goods or services delivered or provided. The Group has only one reportable
segment and mainly produces and sells computer equipment; thus, based on IFRS 8 “Operating Segments,”
there is no need to disclose segment information and to restate the 2013 segment information.
a. Revenue from major products and services:
The Group mainly produces and sells computer equipment; thus, there is no need to disclose additional
information.
b. Geographical information
The Group’s information on its revenue from external customers and non-current assets by location of
assets is shown below:
Revenue from
External Customers
2014
2013
Asia
America
Europe
Non-current Assets
December 31
2014
2013
$ 52,043,805
3,810,684
40,818
$ 56,889,527
6,435,101
117,275
$
6,526,121
59,983
663
$
6,714,795
58,301
806
$ 55,895,307
$ 63,441,903
$
6,586,767
$
6,773,902
Non-current assets exclude financial instruments, deferred tax assets, and prepaid pension cost.
- 68 -
c. Information about major customers:
Included in revenues arising from direct sales of computer products and related components of
$55,895,307 thousand in 2014 and $63,441,903 thousand in 2013, were revenues of $15,926,125
thousand and $14,156,968 thousand, respectively, which arose from sales to the Group’s largest
customer. No other single customer contributed 10% or more to the Group’s revenue for both 2014
and 2013.
- 69 -
TABLE 1
FINANCING PROVIDED TO OTHERS
FOR THE YEAR ENDED DECEMBER 31, 2014
Guarantee Party
No.
0
Endorsement/
Guarantee Provider
Elitegroup Computer
Systems Co., Ltd.
Name
Beijing Advazone
Electronic., Ltd.
1
Golden Elite (Shenzhen)
Co., Ltd.
Elitegroup Computer
Systems Co., Ltd.
Nature of
Relationship
Limits on
Endorsement/
Guarantee
Maximum
Amount Provided
Balance for the
to Each
Period
Guaranteed
Party
(Notes 1 and 2)
Subsidiary of
Venture Well
Subsidiary of
Venture Well
$ 8,042,291
(Note 1)
8,042,291
(Note 1)
Parent Company
8,042,291
(Note 1)
$
665,770
Ending Balance
$
63,300
Ratio of
Accumulated
Amount of
Endorsement/
Endorsement/
Amount
Guarantee
Guarantee
Actually Drawn
Collateralized to
Collateralized by
Net Equity per
Properties
Latest Financial
Statements
$
34,370
$
-
0.39
1,613,067
208,890
208,890
-
1.30
7,913
7,913
7,913
-
0.05
Note 1:
The total amount of the guarantee provided by Elitegroup Computer Systems Co., Ltd. to any individual entity shall not exceed fifty percent of Elitegroup Computer Systems Co., Ltd.’s net worth.
Note 2:
The total accumulated amount of guarantee shall not exceed fifty percent of Elitegroup Computer Systems Co., Ltd.’s net worth.
- 70 -
Maximum
Endorsement/
Guarantee
Amount
Allowable
Guarantee
Guarantee
Guarantee Provided to
Provided by
Provided by a Subsidiaries
Parent
Subsidiary in Mainland
Company
China
$ 8,042,291
(Note 2)
8,042,291
(Note 2)
Y
N
N
Y
N
Y
8,042,291
(Note 2)
N
Y
N
TABLE 2
MARKETABLE SECURITIES HELD
DECEMBER 31, 2014
Holding Company Name
Type and Name of
Marketable Securities
Relationship
with the
Holding
Company
December 31, 2014
Financial Statement Account
Common stock
Genuine C&C Inc.
No
pAsia Inc.
Lu-Chu Development Corporation
Trigem Computer Inc.
S Com Inc.
No
No
No
No
Financial assets at fair value through profit or
loss - current
Financial assets carried at cost - non-current
Preferred stock
Einux, Inc.
pAsia Inc.
No
No
Beneficiary certificate
Mega Diamond Money Market
No
Jih Sun Money Market
No
loss - current
loss - current
Beneficiary certificate
NPRS-IMPERIAL FUND
No
Elitegroup Computer Systems Holding Co., Ltd. (BVI) Beneficiary certificate
NPRS-IMPERIAL FUND
Elitegroup Computer Systems (HK) Co., Ltd.
Elitegroup Computer Systems Inc. (USA).
Beijing Advazone Electronic Co., Ltd.
Stock
MiTAC Holdings Corporation
Stock
Beijing Beareyes Info Systems Co.,
Ltd.
Percentage Fair Value/
of
Net Asset Value
Ownership
(Note 1)
Carrying
Amount
Shares
689,510
7,688
0.87
7,688
689,510
1,040,000
4,410,000
66
303
44,100
6
-
17.33
2.24
-
-
1,040,000
4,410,000
66
303
500,000
65,000
-
4.68
1.14
-
500,000
65,000
6,218,714
76,529
-
76,529
164,307,750
17,623,929
256,249
-
256,249
55,393,406
Available-for-sale financial assets - non-current
199,400
US$ 4,771,642
-
US$ 4,771,642
199,400
No
278,860
US$ 6,673,120
-
US$ 6,673,120
278,860
No
223,124
US$ 164,956
0.03
US$ 164,956
223,124
No
RMB
-
RMB
-
$
-
$
Maximum
Shares/Units
Held During
the Year
-
-
Note 1: The fair value was calculated at the closing price on December 31, 2014 or at the net asset value of individual fund. If there was no fair value, the column showed the net value of shares calculated by the percent of holding shares.
when exceeding its reasonable value, the financial asset carried at cost could have its verifiable value; thus, the column would not show its fair value.
Note 2: The above marketable securities had not been used as guarantees or collaterals for borrowing and were not subject to other restrictions.
- 71 -
Note
Only
TABLE 3
MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
Company Name
Elitegroup Computer
Systems Co., Ltd.
Type and Name of
Marketable Securities
FSITC Taiwan Money
Market
Jih Sun Money Market
Yuanta De-Bao Money
Market Fund
UPAMC James Bond
Money Market
Mega Diamond Money
Market
Note:
Financial
Statement Account
Financial assets at fair value
through profit or loss - current
Beginning Balance
Counterparty
Nature of
Relationship
-
-
66,966,229
-
-
-
Shares/Units
Amount
$
Acquisition
Shares/Units
1,000,000
-
55,343,406
800,000
-
85,137,540
-
Amount
Shares/Units
-
66,966,229
17,623,929
256,200
55,343,406
802,624
1,000,000
-
-
85,137,540
61,232,113
1,000,000
-
-
8,173,875
100,000
164,912,878
2,020,000
The book amount was the original acquisition cost.
- 72 -
$
Disposal
Carrying
Amount
Amount
$
1,000,380
$
1,000,000
Ending Balance
Gain (Loss) on
Disposal
$
Shares
Amount
380
-
$
-
800,000
2,624
17,623,929
256,200
1,000,834
1,000,000
834
-
-
61,232,113
1,001,852
1,000,000
1,852
-
-
166,868,039
2,048,984
2,043,500
5,484
6,218,714
76,500
TABLE 4
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
Buyer
Related Party
Transaction Details
Relationship
Purchase/Sale
Payment Terms
Unit Price
Payment Terms
-
OA 90 days
-
1
3
3
OA 60 days
OA 75 days
OA 60 days
(11,887,762)
(8,320,456)
(25)
(18)
Purchase
(793,241)
(2)
Purchase
(185,264)
0
11,887,762
1,108,179
36,477,252)
(1,324,042)
Sale
Elitegroup Computer (Suzhou Industrial
Park) Ltd.
Ultimate parent company
Subsidiary of Unitop International Corp.
Sale
Sale
Purchase
Park) Ltd.
Subsidiary of Unitop International Corp.
Purchase
Golden Elite (Shenzhen) Co., Ltd.
Subsidiary of Million Up Finance Ltd.
Sale
Sale
Purchase
Purchase
Elitegroup Computer Systems Inc. (USA)
Purchase
Super ECS USA Inc.
Beijing Advazone Electronic., Ltd.
Park) Ltd.
% to Total
-
Elitegroup Computer Systems Inc. (USA) Subsidiary of ECS Holding (America) Co.
(USA)
Super ECS USA Inc.
Subsidiary of ECS Holding (America) Co.
(USA)
Beijing Advazone Electronic., Ltd.
Subsidiary of Advazone International Corp.
Elitegroup Computer (Suzhou Industrial Subsidiary of Unitop International Corp.
Park) Ltd.
Elitegroup Computer (Suzhou Industrial Subsidiary of Unitop International Corp.
Park) Ltd.
Chunghwa Picture Tubes, Ltd.
Invested company accounted in equity method
by Tatung
CPTF
Invested company accounted in equity method
by Tatung
Amount
Abnormal Transaction
$
2,800,441
6
OA 60 days
Sale
799,814
2
Sale
Sale
Sale
273,179
1,324,042
1,637,475
Purchase
Purchase
220,494
4
Note
-
169,219
3
Note
-
-
93,575
-
2
-
Note
Note
Note
OA 75 days
OA 60 days
-
-
(1,634,917)
(658,736)
(37)
(15)
Note
Note
Net 30 days from the
end of the month
Net 30 days from the
end of the month
-
-
(79,344)
(2)
-
-
-
-
-
-
81
3
OA 75 days
OA 90 days
-
-
1,634,917
-
25
-
Note
Note
(4)
OA 75 days
-
-
-
-
Note
(2,005,031)
(US$ -65,998,395)
(8)
OA 120 days
-
-
(1,896,653)
(US$ -59,925,832)
8,320,456
2,005,031
(US$ 65,998,395)
(1,637,475)
(1,108,179)
(US$ -36,477,252)
84
16
OA 60 days
OA 120 days
-
-
(13)
(9)
OA 60 days
OA 90 days
-
-
658,736
1,896,653
59,925,832)
-
(2,800,441)
(100)
OA 60 days
-
-
(220,494)
(100)
Note
Purchase
(799,814)
(100)
OA 90 days
-
-
(169,219)
(100)
Note
Purchase
(273,179)
(31)
OA 60 days
-
-
(93,575)
(53)
Note
(US$
Note: The above transactions and ending balances of accounts receivable (payable) were not included in the consolidated financial statements.
- 73 -
$
Notes/Accounts
Receivable (Payable)
Note
Ending Balance % to Total
$
(US$
(31)
Note
20
59
Note
Note
-
Note
Note
TABLE 5
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2014
Overdue
Company Name
Related Party
Super Ecs USA Inc.
Elitegroup Computer (Suzhou Industrial Elitegroup Computer Systems Co., Ltd.
Park) Ltd.
Relationship
Ending Balance
Subsidiary of ECS Holding (America) Accounts receivable $
Co. (USA)
Subsidiary of ECS Holding (America) Accounts receivable
Co. (USA)
Turnover
Rate
-
3.57
-
-
148,281
-
1,634,917
5.90
-
-
1,634,917
-
658,736
1,896,653
4.98
2.11
-
-
658,736
63,247
-
13.85
169,219
Accounts receivable
Ultimate Parent Company
Accounts receivable
Subsidiary of Million Up Finance Ltd. Accounts receivable
Note: The subsequent period is between January 1 and February 28, 2015.
- 74 -
Actions Taken
Allowance for
Impairment
Loss
-
220,494
Ultimate Parent Company
Amount
Amount
Received in
Subsequent
Period (Note)
$
$
220,494
$
-
TABLE 6
INFORMATION ON INVESTEES
Investment Amount (Note 1)
Investor Company
Elitegroup Computer Systems Co.,
Ltd.
Elitegroup Computer Systems
Holding Co., Ltd. (BVI)
Investee Company
Location
(HK) Co., Ltd.
(Japan) Co., Ltd.
ECS Holding (America) Co.
(USA)
(Korea) Co., Ltd.
Elitegroup Computer Systems EU
B.V.
Dragon Asia Trading Co., Ltd.
(BVI)
Unitop International Corp.
Hong Kong
ECS Trading Co., Ltd. (Samoa)
Samoa
Sale of motherboards, computer peripheral
products and related components
Japan
British Virgin Islands Investment holding
U.S.A
Super ECS Co., Ltd. (Mauritius)
Million Up Finance Ltd.
$
62,413
Investment holding
Sale motherboards, maintenance and
intermediary of products
The Netherlands
U.S.A.
Sale of motherboards, notebook computers,
computer peripheral products, related
components and systems assembled
Republic of
Mauritius
Sale of motherboards, notebook computers,
computer peripheral products and related
components
Elitegroup International Holding
(HK) Co., Ltd.
Shining Bright Technology Ltd.
(Samoa)
Hong Kong
Investment holding
Samoa
Investment holding, manufacture and sale of
printed circuit boards (PCBs)
Unique Sino Limited
Samoa
Investment holding
Hong Kong
Trading of IC and electric components
Advazone International Ltd. (BVI) British Virgin Islands Investment holding
Affirm International Ltd. (BVI)
19,078
1,136
100.00
19,536
965,081
1,025,541
25,225,805
100.00
517,941
1,325,119
1,325,119
3,362
100.00
1,434,291
66,780
66,780
469,000
100.00
50,827
50,827
1,300,000
100.00
2,717
6,731,679
7,015,064
202,625,969
100.00
5,846,511
173,906
187,027 Note 3
429,091
62,052
429,091
62,052
2,700
1,905,000
100.00
100.00
2,140,282
73,241
93,400
799
94,763 Note 3
799 Note 3
1,215,512
1,215,512
(US$ 38,404,813) (US$ 38,404,813)
-
15,825
500,000)
2,500,000
100.00
348,150
-) (US$ 11,000,000)
-
3,739,448
3,739,448
(US$ 118,150,000) (US$ 118,150,000)
765,930
(US$
-) (US$ 24,200,000)
1,090,258
(US$
-) (US$ 34,447,334)
99,150,000
100.00
-
100.00
-
-
15,825
500,000) (US$
(US$
59,819
1,890,000) (US$
1,890,000
633,000
633,000
(US$ 20,000,000) (US$ 20,000,000)
587,108
587,108
(US$ 18,550,000) (US$ 18,550,000)
138,627
138,627
(US$ 4,380,000) (US$ 4,380,000)
155,600,000
100.00
18,550,000
100.00
4,380,000
100.00
875
(182,841)
54,847
1,073
(4,669)
(632) Note 3
875 Note 3
(177,836) Note 3
54,847 Note 3
1,073 Notes 3 and 4
(4,669) Note 3
1,370,564
(US$ 43,303,757) (US$
40,061
1,318,670) (US$
40,061 Note 3
1,318,670)
(US$
52,948
1,672,926) (US$
15,018
494,334) (US$
15,018 Note 3
494,334)
(US$
-) (US$
114
3,782) (US$
114 Notes 3 and 6
3,782)
5,577,354
(US$ 176,219,705) (US$
(US$
-) (US$
(US$
-) (US$
180,542
5,942,783) (US$
48,277
1,599,098) (US$
3
91) (US$
156,940 Note 3
5,165,888)
48,277 Notes 3 and 7
1,599,098)
3 Notes 3 and 8
91)
73,215
2,313,276) (US$
799
26,299) (US$
799 Note 3
26,299)
404,441
(US$ 12,778,540) (US$
14,085
(US$
445,011) (US$
165
(US$
5,217) (US$
(65,164)
-2,144,957) (US$
(199,830)
-6,577,669) (US$
(64)
-2,098) (US$
(65,164) Note 3
-2,144,957)
(199,830) Note 3
-6,577,669)
(64) Note 3
-2,098)
100.00
59,819
1,890,000)
$
153
5,051) (US$
(267,076)
-8,791,169) (US$
(US$
100.00
(632)
-) (US$
289,483
9,146,383) (US$
68.45
47,552
(US$
(538)
(US$
21,954,373
$
Note
19,078
-
284,715
Share of
Profits (Loss)
(Note 2)
100.00
31,967
-) (US$ 1,010,000)
694,856
694,856
(US$ 21,954,373) (US$ 21,954,373)
$
Net Income (Loss)
of the Investee
(Note 2)
16,560,000
(US$
(US$
Venture Well Holdings Ltd. (BVI)
$
As of December 31, 2014
Carrying Amount
Shares
%
(Note 1)
62,413
Samoa
Investment holding
Venture Well Holdings Ltd. (BVI) British Virgin Islands Investment holding
Super ECS USA, Inc.
December 31, 2014 December 31, 2013
Korea
ECS Holding (America) Co. (USA) Elitegroup Computer Systems Inc. U.S.A.
(USA)
Dragon Asia Trading Co., Ltd.
(BVI)
Main Businesses and Products
100.00
(US$
153 Notes 3 and 5
5,051)
(182,813) Note 3
-6,017,555)
(Continued)
- 75 -
Investment Amount (Note 1)
Investor Company
Investee Company
Location
Orbbit International Corp.
Taiwan
Sale of IC and electric components
Affirm International Ltd. (BVI)
Protac International Computer,
S.L.
Spain
Sale of computer peripheral products
As of December 31, 2014
Carrying Amount
Shares
%
(Note 1)
December 31, 2014 December 31, 2013
$
(US$
69,630
$
2,200,001) (US$
69,630
2,200,001)
(US$
-) (US$
-)
$
Note 1:
The calculation of the amount was based on the closing rate on December 31, 2014.
Note 2:
The amount was calculated using the average exchange rate from January 2014 to December 2014.
Note 3:
The financial statements used as basis for calculating investment income had all been audited, except those of Protac International Computer, S.L.
Note 4:
The carrying amount was accounted for as other receivables from related parties because the investment losses recognized referred to credit balances on the carrying values of investments.
Note 5:
The investee company’s liquidation was completed in April 2014.
Note 6:
The investee company’s liquidation was completed in February 2015.
Note 7:
The investee company has underwent liquidation currently.
Note 8:
The investee company’s liquidation has been finished in March 2014.
6,351,401
100.00
-
100.00
Net Income (Loss)
of the Investee
(Note 2)
Share of
Profits (Loss)
(Note 2)
$
(US$
16,106
$
508,890) (US$
155
$
5,103) (US$
(US$
-) (US$
-) (US$
Note
155 Note 3
5,103)
- Notes 3 and 7
-)
(Concluded)
- 76 -
TABLE 7
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
Investee Company
Xun Rui Electron (Shenzhen) Co., Ltd.
Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
Beijing Xun Ron Technology Co., Ltd.
Paid-in Capital
(Note 2)
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2014
(Note 2)
Method of Investment
Remittance of Funds
Outward
Inward
$
(US$
33,233 Indirect investment by Elitegroup Computer
1,050,000)
System (HK) Co., Ltd.
$
(US$
25,153
794,718)
Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
50,640 Indirect investment by Elitegroup Computer
1,600,000)
System (HK) Co., Ltd.
(US$
55,058
1,739,577)
-
(US$
Wholesale, maintenance and technical
consultation of computers and
peripheral products and related
components
509,565 Indirect investment by Advazone International
353,345
(US$ 16,100,000)
Ltd. (BVI) of Venture Well Holdings Ltd. (US$ 11,164,138)
(BVI) of Elitegroup Computer Systems
-
-
ECS Trading (Shenzhen) Co., Ltd.
Wholesale, trade, maintenance and
technical consultation of computers and (US$
peripheral products
63,300
2,000,000)
-
-
3,736,543
(US$ 118,058,217)
-
31,650
1,000,000)
-
822,900
(US$ 26,000,000)
-
759,600
(US$ 24,000,000)
-
Elitegroup Electronic (Suzhou) Corp.
Park) Ltd.
63,300 Indirect investment by Unique Sino Limited of
2,000,000)
(US$
Manufacture, research and development
3,133,350 Indirect investment by Million Up Finance
of PCBs, motherboards, systems,
(US$ 99,000,000)
Ltd. of Dragon Asia Trading Co., Ltd.
assembled, notebook computers, tablets
(BVI)
and peripheral products
Research, development and maintenance
of notebook computers and related
products
Research, development and manufacture
of notebook computers, tablets and
related components
Elitegroup Electronic (Changshu) Co., Ltd. Research, development and manufacture
of motherboards, systems assembled,
notebook computers and peripheral
products
(US$
31,650 Indirect investment by Unitop International
1,000,000)
Corp.
822,900 Indirect investment by Unitop International
(US$ 26,000,000)
Corp.
(US$
- Indirect investment by Elitegroup
-)
International Holding (HK) Co., Ltd. of
Dragon Asia Trading Co., Ltd. (BVI)
(US$
$
Accumulated
Outward
%
Remittance for Net Income (Loss) Ownership
Investment from
of the Investee
of Direct or
Taiwan as of
(Note 3)
Indirect
December 31, 2014
Investment
(Note 2)
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2014
Investment Amounts Authorized by
Investment Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA (Note 4)
$5,546,873 (US$175,256,650) (Note 2)
$7,065,350 (US$223,233,794) (Note 2)
$9,650,749
-
$
-
$
(US$
25,153 $
794,718) (RMB
1,205
244,465)
100.00
55,058
1,739,577) (RMB
(1,179)
-239,051)
100.00
(US$
353,345
(199,131)
(US$ 11,164,138) (RMB -40,388,321)
68.45
-
799
162,047)
100.00
3,736,543
183,502
(US$ 118,058,217) (RMB 37,218,493)
100.00
(US$
-
-
3,494
708,603)
100.00
822,900
89,937
2,600,000) (RMB 18,241,269)
100.00
(US$
283,385
458,925
9,500,000 ) (US$ 14,500,000) (RMB
(Note 5)
(943)
-189,512)
17,554
554,629)
(1,179)
-38,796) (US$
88,324
2,790,655)
-
(US$
(199,131)
(US$ -6,554,660) (US$
13,607
429,918)
-
799
26,299) (US$
73,213
2,313,201)
-
183,502
4,983,477
6,040,226) (US$ 157,455,818)
-
(US$
(US$
(Note 5)
Accumulated
Repatriation of
Investment
Income as of
December 31, 2014
1,205 $
39,674) (US$
(US$
31,650
1,000,000) (RMB
Carrying Amount
as of December 31,
2014
(Note 2)
$
(US$
(US$
(US$
-
(US$
63,300
2,000,000) (RMB
Investment
Gain (Loss)
(Notes 1 and 3)
(US$
3,494
115,000) (US$
$
-
66,049
2,086,843)
-
89,937
2,073,950
2,960,393) (US$ 65,527,644)
-
(943)
-31,070) (US$
-)
-
Note 1:
The calculation of investment income (loss) was based on the investees’ audited financial statements.
Note 2:
The calculation was based on the exchange rate of January 1, 2014.
Note 3:
The calculation was based on the average exchange rate from January to December 2014.
Note 4:
The calculation was based on the net value of Elitegroup Computer Systems Co., Ltd.’s audited financial statements on December 31, 2014, and the upper limit on investment was calculated as follow:
Note 5:
The board of Elitegroup Electronic (Changshu) in September 19, 2012, and remitted to its investor, Elitegroup International Holding (HK) Co., Ltd., a capital return of US$9,638,046 in March 2014. This subsidiary’s liquidation was completed in April 2014. The board of directors approved the liquidation of Elitegroup
International Holding (HK) Co., Ltd. in August 2014, and remitted to its investor, Dragon Asia Trading Co., Ltd., a capital return of US$9,761,123. And the board of directors of Dragon Asia Trading Co., Ltd. approved the reduction of its capital by $283,385 thousand (US$9,500 thousand), and remitted in September 2014.
- 77 -
$16,084,581 x 60% = $9,650,749.
TABLE 8
SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND
UNREALIZED GAINS OR LOSSES
Purchase/Sale
Investee Company
Transaction Type
Amount
Sales
Purchase
Elitegroup Computer (Suzhou Industrial Sales
Park) Ltd.
Purchase
Sales
Sales
Purchase
Elitegroup Computer (Suzhou Industrial Sales
Park) Ltd.
Purchase
$
%
Notes/Accounts
Receivable (Payable)
Transaction Details
Comparison of
Price with Market
Payment Term
Comparison with
Market Transaction
Unrealized
(Gain) Loss
Ending Balance
%
$
(1,634,917)
(37)
1,324,042
(11,887,762)
3
(25)
No significant difference
OA 75 days
OA 75 days
1,637,475
(8,320,456)
3
(18)
OA 60 days
OA 60 days
(658,736)
(15)
1
OA 60 days
93,575
3
OA 90 days
-
(8)
OA 120 days
(1,896,653)
(US$ -59,925,832)
16
OA 120 days
(9)
OA 90 days
1,896,653
(US$ 59,925,832)
-
273,179
1,108,179
(US$ 36,477,252)
(2,005,031)
(US$ -65,998,395)
2,005,031
(US$ 65,998,395)
(1,108,179)
(US$ -36,477,252)
Note: The above transactions were not included in the consolidated financial statements.
- 78 -
$
Note
-
Note
Note
-
Note
Note
2
1,492
Note
-
-
Note
(31)
-
Note
59
-
Note
-
-
Note
TABLE 9
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
Transaction Details
No.
Investee Company
Counterparty
Relationship
Financial Statement Account
0
Super ECS USA Inc.
Super ECS USA Inc.
Elitegroup Computer (Suzhou Industrial Park) Ltd.
a
a
a
a
a
a
a
a
a
a
a
a
Sales revenue
Accounts receivable from related parties
Sales revenue
Purchases
Accounts payable to related parties
Sales revenue
Purchases
Accounts payable to related parties
Sales revenue
Sales revenue
1
c
c
c
Sales revenue
Sales revenue
Amount
$
Payment Terms
% to
Total Sales or
Assets
2,800,441
220,494
799,814
169,219
11,887,762
1,634,917
1,324,042
8,320,456
658,736
1,637,475
273,179
93,575
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
5
1
1
1
21
5
2
15
2
3
-
152,431
42,967
152,431
No significance
No significance
No significance
2
4
6
Note 1: The information about the transactions between the Company and the subsidiaries should be marked in the note column as follows:
a. The Company: 0.
b. The subsidiaries was marked from 1 in order of numeric characters by the companies.
Note 2: Investment types as follows:
a. The Company to the subsidiaries.
b. The subsidiaries to the Company.
c. Between the subsidiaries.
Note 3: The ratio of transaction amounts accounted for total sales revenue or assets is calculated as follows: (1) asset or liability:
The ratio was calculated based on the midterm accumulated amounts accounted for total consolidated sales revenue.
Note 4: The above transactions were not included in the consolidated financial statements.
- 79 -
The ratio was calculated based on the ending balance accounted for total consolidated assets; (2) income or loss:

Elitegroup Computer Systems Co., Ltd. and Subsidiaries

Transcription

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