Elitegroup Computer Systems Co., Ltd. and Subsidiaries

Transcription

Elitegroup Computer Systems Co., Ltd.
and Subsidiaries
Consolidated Financial Statements for the
Years Ended December 31, 2013 and 2012 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, 2013 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 20, 2014
-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, 2013, December 31, 2012 and January 1, 2012, and the related consolidated
statements of comprehensive income, changes in equity and cash flows for the years ended
December 31, 2013 and 2012. 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, 2013, December 31, 2012
and January 1, 2012. These subsidiaries’ total assets were 6% (NT$2,131,524 thousand), 5%
(NT$1,869,068 thousand) and 6% (NT$2,220,214 thousand) of the total consolidated assets as of
December 31, 2013, December 31, 2012 and January 1, 2012, respectively. The related revenues
were 11% (NT$6,704,573 thousand) and 10% (NT$6,590,699 thousand) of the total consolidated
revenues for 2013 and 2012, 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 Audit 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, 2013,
December 31, 2012 and January 1, 2012, and their consolidated financial performance and their
consolidated cash flows for the years ended December 31, 2013 and 2012, 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 financial statements of the parent company, Elitegroup Computer
Systems Co., Ltd., as of and for the years ended December 31, 2013 and 2012 on which we have
issued a modified unqualified report.
March 20, 2014
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
(In Thousands of New Taiwan Dollars)
December 31, 2013
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 30)
Other receivables (Notes 4, 10 and 31)
Inventories (Notes 4 and 11)
Prepayments
Other current assets
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, 12 and 30)
Investment properties (Notes 4 and 13)
Goodwill (Notes 4, 5 and 14)
Other intangible assets (Notes 4 and 15)
Deferred tax assets (Notes 4, 5 and 24)
Prepayments for equipment
Refundable deposits (Note 27)
Overdue receivables (Notes 10 and 32)
Prepaid pension cost (Notes 4 and 21)
Prepayments from lease - non-current (Note 16)
Other non-current assets
Total non-current assets
TOTAL
December 31, 2012
Amount
%
January 1, 2012
Amount
%
$ 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
-
$ 7,568,702
379,820
8
8,638,738
218
921,170
6,805,912
432,000
22,581
21
1
24
2
19
1
-
$ 9,043,571
1,354,214
8,327,932
47,710
1,088,422
6,258,563
323,999
21,323
23
4
21
3
16
1
-
26,617,279
77
24,769,149
68
26,465,734
68
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
-
243,387
57,243
8,177,154
411,006
841,172
39,752
884,892
173,306
21,058
118,074
93,218
713,233
8,353
1
22
1
2
3
1
2
-
284,056
57,307
9,147,887
413,019
859,894
44,848
884,200
30,814
35,305
125,431
62,669
760,967
1,558
1
24
1
2
2
2
-
8,133,757
23
11,781,848
32
12,707,955
32
$ 34,751,036
100
$ 36,550,997
100
$ 39,173,689
100
$ 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
$ 2,178,000
3,025
10,034,132
27,503
1,300,261
235,227
967,414
196,842
6
27
4
1
3
-
$ 3,035,570
344
9,444,427
23,067
1,380,083
126,287
918,445
272,474
8
24
4
2
1
15,729,741
45
14,942,404
41
15,200,697
39
28,542
4,085
20,711
580,340
1,312
2
-
2,032,800
51,629
3,064
20,011
1,173
6
-
1,514,000
54,889
3,537
32,998
37
4
-
634,990
2
2,108,677
6
1,605,461
4
16,364,731
47
17,051,081
47
16,806,158
43
7,335,801
6,461,790
21
18
11,831,937
7,011,975
32
19
11,831,937
9,520,346
30
24
293,857
539,714
3,633,768
4,467,339
1
2
10
13
257,386
242,336
381,786
881,508
1
1
2
214,560
281,956
437,026
933,542
1
1
1
3
(1)
1
-
(638,431)
99,386
(539,045)
(2)
1
(1)
(376,552)
134,216
(242,336)
(1)
(1)
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 17)
Financial liabilities at fair value through profit or loss - current (Notes 4 and 7)
Accounts payable (Note 18)
Accounts payable to related parties (Notes 18 and 30)
Other payables (Notes 19 and 30)
Current tax liabilities (Notes 4 and 24)
Provisions - current (Notes 4 and 20)
Other current liabilities (Note 19)
Total current liabilities
NON-CURRENT LIABILITIES
Long-term borrowings (Note 17)
Deferred tax liabilities (Notes 4 and 24)
Accrued pension liabilities (Notes 4, 5 and 21)
Guarantee deposits received (Note 27)
Unrealized gain on sale and leaseback (Note 12)
Other non-current liabilities (Note 19)
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 21, 22, 24 and 26)
Share capital
Common shares
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retain earnings
Other equity
Exchange differences on translating foreign operations
Unrealized gain on available-for-sale financial assets
Total other equity
(252,980)
165,041
(87,939)
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 20, 2014)
-4-
18,176,991
52
19,186,375
52
22,043,489
56
209,314
1
313,541
1
324,042
1
18,386,305
53
19,499,916
53
22,367,531
57
$ 34,751,036
100
$ 36,550,997
100
$ 39,173,689
100
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
For the Year Ended December 31
2013
2012
Amount
%
Amount
OPERATING REVENUE (Notes 4, 20 and 30)
Sales
Sales returns
Sales allowances
%
$ 64,630,013
269,029
919,081
102
2
$ 68,353,249
347,790
1,055,219
102
2
63,441,903
100
66,950,240
100
57,777,772
91
62,418,928
93
GROSS PROFIT
5,664,131
9
4,531,312
7
OPERATING EXPENSES (Notes 21, 23 and 30)
Marketing
General and administrative
Research and development
1,621,197
1,861,847
1,047,285
2
3
2
1,667,833
1,350,420
906,319
3
2
1
Total operating expenses
4,530,329
7
3,924,572
6
PROFIT FROM OPERATIONS
1,133,802
2
606,740
1
(1)
-
(56,672)
(48,561)
116,778
108,988
-
(375)
-
Total operating revenue
COST OF GOODS SOLD (Notes 11, 23 and 30)
NON-OPERATING INCOME AND EXPENSES
Other gains and losses (Note 23)
Finance costs (Note 23)
Interest income (Note 4)
Other income (Note 23)
Gain (loss) on disposal of property, plant and
equipment (Note 12)
2,930,056
5
Total non-operating income and expenses
2,895,913
4
120,158
-
4,029,715
6
726,898
1
520,731
1
359,819
-
3,508,984
5
367,079
1
475,607
1
(405,672)
(1)
65,655
-
(283,034)
(28,343)
89,285
187,949
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4 and 24)
NET PROFIT
OTHER COMPREHENSIVE INCOME (LOSS)
(Notes 22 and 24)
Exchange differences on translating foreign
operations
Unrealized gain (loss) on available-for-sale financial
assets
-5-
(34,830)
(Continued)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2013
2012
Amount
%
Amount
Actuarial gain arising from defined benefit plans
Income tax relating to components of other
comprehensive income
$
3,335
-
-
130,900
-
465,138
1
(306,267)
(1)
$
3,974,122
6
$
60,812
-
$
3,624,282
(115,298)
6
-
$
358,749
8,330
1
-
$
3,508,984
6
$
367,079
1
$
4,078,349
(104,227)
6
-
$
65,375
(4,563)
-
$
3,974,122
6
$
60,812
-
Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
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
EARNINGS PER SHARE (NEW TAIWAN
DOLLARS; Note 25)
Basic
Diluted
$
$
4,251
-
(80,375)
3.44
3.37
$
%
$
$
0.30
0.30
-6-
(Concluded)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Capital
Capital Surplus
$ 11,831,937
$ 9,520,346
Appropriation of the 2011 earnings
Legal reserve
Special reserve
Cash dividends distributed by the Company
-
-
Other changes in capital surplus
Distribution of cash dividends from capital surplus
-
Net profit for the year ended December 31, 2012
-
Other comprehensive income (loss) for the year ended
December 31, 2012, net of income tax
BALANCE AT JANUARY 1, 2012
Equity Attributable to Shareholders of the Parent (Notes 4, 21, 22, 24 and 26)
Other Equity
Exchange
Unrealized Gain
Differences on
(Loss) on
Retained Earnings
Translating
Available-forUnappropriated
Foreign
sale Financial
Legal Reserve
Special Reserve
Earnings
Operations
Assets
$
214,560
$
42,826
-
(39,620)
-
$
437,026
$
(42,826)
39,620
(414,118)
(376,552)
$
134,216
(2,508,371)
-
(2,508,371)
-
-
-
358,749
-
-
-
-
-
-
3,335
(261,879)
Total comprehensive income (loss) for the year ended
December 31, 2012
-
-
-
-
362,084
(261,879)
Decrease in non-controlling interests
-
-
-
-
-
11,831,937
7,011,975
257,386
242,336
381,786
-
-
36,471
-
297,378
-
(36,471)
(297,378)
(41,412)
-
-
-
-
(638,431)
358,749
8,330
367,079
(34,830)
(293,374)
(12,893)
(306,267)
(34,830)
65,375
(4,563)
60,812
-
-
(5,938)
(5,938)
99,386
19,186,375
(41,412)
-
(41,412)
-
-
-
(4,496,136)
-
(4,496,136)
-
-
-
-
(550,185)
-
(550,185)
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
$ 7,335,801
$ 6,461,790
539,714
$ 3,633,768
165,041
$ 18,176,991
293,857
$
-7-
19,499,916
-
-
$
313,541
-
Other changes in capital surplus
Distribution of cash dividends from capital surplus
BALANCE, DECEMBER 31, 2013
$ 22,367,531
(414,118)
-
(550,185)
324,042
-
-
(4,496,136)
$
(414,118)
-
Reduction of cash capital
$ 22,043,489
Total Equity
-
-
Appropriation of the 2012 earnings
Legal reserve
Special reserve
Cash dividends distributed by the Company
Total
-
-
BALANCE, DECEMBER 31, 2012
(2,508,371)
281,956
Non-controlling
Interests
(Note 22)
$
(252,980)
$
(115,298)
11,071
(104,227)
$
209,314
3,508,984
465,138
3,974,122
$ 18,386,305
CONSOLIDATED STATEMENTS OF CASH FLOWS
2013
2012
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
(Gain) loss on disposal of property, plant and equipment, net
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
Amortization of unrealized gain on sale and leaseback
Net (gain) loss on foreign currency exchange
Net changes in operating assets/liabilities
Financial assets held for trading
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Prepaid pension cost
Accounts payable
Other payables
Provisions
Other current liabilities
Accrued pension liabilities
Cash generated from operations
Interest received
Interest paid
Income tax paid
$ 4,029,715
914,204
73,392
49,803
$
726,898
1,010,340
79,613
97,728
(889)
28,343
(89,285)
(2,930,056)
10,624
5,855
296,764
(37,732)
(1,407)
83,120
(5,118)
48,561
(116,778)
375
4,141
26
45,008
(44,855)
(60,400)
(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
1,426,710
95,675
(29,923)
(435,150)
951,855
(8)
(346,800)
165,124
(502,494)
(118,007)
(1,258)
(27,214)
594,141
(80,508)
48,969
(75,632)
(473)
2,393,234
112,021
(47,874)
(126,709)
Net cash generated from operating activities
1,057,312
2,330,672
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Proceeds of the disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
(176,730)
6,575,791
(207,478)
1,021
(401,904)
107,960
14,247
(Continued)
-8-
CONSOLIDATED STATEMENTS OF CASH FLOWS
2013
2012
Payments for intangible assets
Payments for investment properties
Increase in other non-current assets
Increase in prepayments for equipment
$
Net cash generated from (used in) investing activities
(7,151)
(8,990)
(28,608)
6,147,855
$
(18,984)
(85)
(6,794)
(230,758)
(536,318)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings
Proceeds of long-term borrowings
Repayment of long-term borrowings
Increase (decrease) in guarantee deposits received
Increase in other current liabilities
Cash dividends paid to owners of the Company
Cash return through capital reduction
Decrease in non-controlling interests
(548,883)
2,885,120
(5,001,040)
700
140
(591,597)
(4,496,136)
-
(857,570)
579,200
(12,987)
1,136
(2,922,489)
(5,938)
Net cash used in financing activities
(7,751,696)
(3,218,648)
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
167,060
(379,469)
(50,575)
(1,474,869)
7,568,702
9,043,571
$ 7,189,233
$ 7,568,702
-9-
(Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(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 20, 2014.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. New, amended and revised standards and interpretations (the “New IFRSs”) in issue but not yet
effective
The Company and entities controlled by the Company (the “Group”) have not applied the following
International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) issued by the IASB. On January 28,
2014, the Financial Supervisory Commission (FSC) announced the framework for the adoption of
updated IFRSs version in the ROC. Under this framework, starting January 1, 2015, the previous
version of IFRSs endorsed by the FSC (the 2010 IFRSs version) currently applied by companies with
shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or
Emerging Stock Market will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs
version). However, as of the date that the consolidated financial statements were authorized for issue,
the FSC has not endorsed the following new, amended and revised standards and interpretations issued
by the IASB (the “New IFRSs”) included in the 2013 IFRSs version.
The New IFRSs Included in the
2013 IFRSs Version Not Yet Endorsed by the FSC
Improvements to IFRSs (2009) - amendment to IAS 39
Amendment to IAS 39 “Embedded Derivatives”
Improvements to IFRSs (2010)
Annual Improvements to IFRSs 2009-2011 Cycle
- 10 -
Effective Date
Announced by IASB (Note 1)
January 1, 2009 and January 1,
2010, as appropriate
Effective for annual periods
ending on or after June 30,
2009
July 1, 2010 and January 1,
2011, as appropriate
January 1, 2013
(Continued)
The New IFRSs Included in the
2013 IFRSs Version Not Yet Endorsed by the FSC
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters”
Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed
Dates for First-time Adopters”
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 27 (Revised 2011) “Separate Financial Statements”
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
July 1, 2010
July 1, 2011
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, 2013
January 1, 2014
January 1, 2013
(Concluded)
The New IFRSs Not Included in the 2013 IFRSs Version
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
IFRS 14 “Regulatory Deferral Accounts”
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”
Effective Date
July 1, 2014 (Note 2)
July 1, 2014
Note 3
Note 3
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 the respective effective dates.
- 11 -
Note 2: The amendment to IFRS 2 applies to share-based payment actions for which the grant date is
on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations for which
the acquisition date is on or after July 1, 2014; the amendment to IFRS 13 is effective
immediately; the remaining amendments are effective for annual periods beginning on or after
July 1, 2014.
Note 3: IASB tentatively decided that an entity should apply IFRS 9 for annual periods beginning on
or after January 1, 2018.
b. Significant impending changes in accounting policy resulted from New IFRSs in issue but not yet
effective
Except for the following, the initial application of the above New IFRSs has not had any material
impact on the Group’s accounting policies:
1) IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
With regards to 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. Specifically, financial assets that are held within a business model whose
objective is to collect the contractual cash flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are generally measured at amortized
cost at the end of subsequent accounting periods. All other financial assets are measured at their
fair values at the end of reporting period. However, the Group may make an irrevocable election
to present subsequent changes in the fair value of an equity investment (that is not held for trading)
in other comprehensive income, with only dividend income generally recognized in profit or loss.
Recognition and measurement of financial liabilities
As for financial liabilities, the main changes in the classification and measurement relate to the
subsequent measurement of financial liabilities designated as at fair value through profit or loss.
The amount of change in the fair value of such financial liability attributable to changes in the credit
risk of that liability is presented in other comprehensive income and the remaining amount of
change in the fair value of that liability is presented in profit or loss, unless the recognition of the
effects of changes in the liability's credit risk in other comprehensive income would create or
enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial
liability's credit risk are not subsequently reclassified to profit or loss. If the above accounting
treatment would create or enlarge an accounting mismatch in profit or loss, the Group presents all
gains or losses on that liability in profit or loss.
2) New and revised standards on consolidation, joint arrangement, and associates and disclosure
a) 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 if and 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.
- 12 -
b) IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in
subsidiaries, joint arrangements, associates and unconsolidated structured entities. In general,
the disclosure requirements in IFRS 12 are more extensive than in the current standards.
3) 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 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.
4) Amendment to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendment to IAS 1 requires items of other comprehensive income to be grouped into those
that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified
subsequently to profit or loss when specific conditions are met. Income taxes on related items of
other comprehensive income are grouped on the same basis. Under current IAS 1, there were no
such requirements.
5) Revision to IAS 19 “Employee Benefits”
Revision in 2011
Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair
value of plan assets when they occur, and hence eliminate the “corridor approach” permitted under
current IAS 19 and accelerate the recognition of past service costs. The revision requires all
actuarial gains and losses to be recognized immediately through other comprehensive income in
order for the net pension asset or liability to reflect the full value of the plan deficit or surplus.
Furthermore, the interest cost and expected return on plan assets used in current IAS 19 are replaced
with a “net interest” amount, which is calculated by applying the discount rate to the net defined
benefit liability or asset.
6) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”
In issuing IFRS 13 “Fair Value Measurement”, the IASB made 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. The
amendment clarifies that such disclosure of recoverable amounts is required only when an
impairment loss has been recognized or reversed during the period. Furthermore, the Group is
required to disclose the discount rate used in measurements of the recoverable amount based on fair
value less costs of disposal measured using a present value technique.
7) Annual Improvements to IFRSs:
2010-2012 Cycle
Several standards including IAS 24 “Related Parties Disclosures” and IFRS 8 “Operating
Segments” were amended in this annual improvement.
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. Consequently, the Group is required to
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 such compensation is not required.
- 13 -
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 the
segments’ assets are regularly provided to the chief operating decision-maker.
c. The impact of the application of New IFRSs and the Regulations Governing the Preparation of
Financial Reports by Securities Issuers (the “Regulations”) in issue but not yet effective on the Group’s
consolidated financial statements is as follows:
As of the date the consolidated financial statements were authorized for issue, the Group is continuingly
assessing the possible impact that the application of the above New IFRSs will have on the Group's
financial position and operating result, and will disclose the relevant impact when the assessment is
complete.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the
ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or
traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their
consolidated financial statements in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC and SIC (the “IFRSs”) endorsed by the
FSC.
The Group’s consolidated financial statements for the years ended December 31, 2013 is its first IFRS
consolidated financial statements. The date of transition to IFRSs was January 1, 2012. Refer to Note 36
for the impact of IFRS conversion on the Group’s consolidated financial statements.
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.
The opening consolidated balance sheets as of the date of transition to IFRSs were prepared in
accordance with IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The
applicable IFRSs have been applied retrospectively by the Group except for some aspects where IFRS 1
prohibits retrospective application or grants optional exemptions to this general principle. For the
exemptions that the Group elected, refer to Note 36.
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
- 14 -
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, even if an agreement to
refinance, or to reschedule payments, on a long-term basis is completed after the reporting period
and before the consolidated financial statements are authorized for issue; 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. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
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.
- 15 -
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.
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.
PC Chips Holding Ltd.
(UK)
Dragon Asia Trading Co.,
Ltd. (BVI)
ECS DE Mexico S.A. DE
C.V.
Dragon Asia Trading
Co., Ltd. (BVI)
Elitegroup Computer
Systems Holding
Co., Ltd. (BVI)
Elitegroup Computer
System (HK) Co.,
Ltd.
Unitop International Corp.
Unity Investments Limited
Super ECS Co., Ltd.
(Mauritius)
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.
Beijing Xun Ron
Technology Co., Ltd.
ECS Holding (America)
Co. (USA)
Super ECS USA, Inc.
Elitegroup Computer
Systems Inc. (USA)
December 31,
2013
% of Ownership
December 31,
2012
January 1,
2012
Note
-
100.00
100.00
(a)
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Investment holding
100.00
100.00
100.00
Trade of motherboards
100.00
100.00
100.00
Sale of motherboards, notebook
computers, computer
peripheral products and
related components
Investment holding
100.00
100.00
100.00
(b)
-
-
100.00
(c)
Investment holding
100.00
100.00
100.00
(d)
-
100.00
100.00
(e)
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Investment holding,
manufacture and sale of
printed circuit Boards (PCBs)
Investment holding
Manufacture and sale of
motherboards, computer
related components
Investment holding
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
68.45
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
related components
computers, computer
peripheral products, related
components and systems
assembled
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Principal Activities
related components
related components
computers, computer
related components
Investment holding
Sale, manufacture and
maintenance of
motherboards, computer
systems assembled
Investment holding
Investment holding
computers, systems
assembled, computer
related components
Investment holding
(f)
(Continued)
- 16 -
Name of Investor
Unitop International
Corp.
Name of Subsidiary
Principal Activities
December 31,
2013
% of Ownership
December 31,
2012
January 1,
2012
Elitegroup Electronic
(Suzhou) Corp.
Research, development and
maintenance of notebook
computers and related
products
100.00
100.00
100.00
Elitegroup Computer
(Suzhou Industrial Park)
Ltd.
manufacture of notebook
computers and related
components
Investment holding
100.00
100.00
100.00
100.00
100.00
100.00
manufacture of
motherboards, systems
assembled, notebook
computers and peripheral
products
Manufacture, research and
development of PCBs,
motherboards, systems,
assembled, notebook
products
Investment holding
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Investment holding
100.00
100.00
100.00
Trade of IC and electric
components
Wholesale, trade, maintenance
and technical consultation of
products
Sale of computer peripheral
products
Wholesale, maintenance and
technical consultation of
products and related
components
Sale of IC and electric
components
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Unity Investments
Limited
Elitegroup International
Holding (HK) Co.,
Ltd.
Unique Sino Limited
Million Up Finance
Ltd.
Golden Elite (Shenzhen)
Co., Ltd.
Venture Well Holdings
Ltd. (BVI)
Affirm International Ltd.
(BVI)
Advazone International
Ltd. (BVI)
Alpha Leader Ltd. (HK)
(Changshu) Co., Ltd.
Unique Sino Limited
ECS Trading (Shenzhen)
Co., Ltd.
Affirm International
Ltd. (BVI)
Advazone International
Ltd. (BVI)
Protac International
Computer, S.L.
Beijing Advazone
Electronic Co., Ltd.
Orbbit International Corp.
Note
(g)
(Concluded)
In 2013 and 2012, 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, 2013 and 2012.
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.
b) To improve the financial structure of Elitegroup Computer Systems EU B.V., the Company
increased its investments in the subsidiary by settling accounts receivable of $50,827 thousand
(US$1,735 thousand) in November 2013.
c) PC Chips Holding Ltd. (UK) remitted to the Company capital returns of $10,610 thousand
(GBP229 thousand) in July 2012 and $316 thousand (GBP7 thousand) in September 2012. PC
Chips Holding Ltd. (UK) was liquidated in December 2012.
d) The board of directors of Dragon Asia Trading Co., Ltd. (BVI) approved the reduction of capital
by $297,550 thousand (US$10,000 thousand), and remitted back this amount to the Company in
September 2013.
- 17 -
e) ECS DE Mexico S.A. DE C.V. (“ECS Mexico”) remitted the Company capital return of $5,270
thousand (US$179 thousand) in March 2011 and an earnings of $895 thousand (US$29
thousand) in December 2010. ECS DE Mexico S.A. DE C.V. (“ECS Mexico”) completed
liquidation in March 2013.
f) The board of directors of Shining Bright Technology Ltd. (Samoa) approved reduction a capital
and liquidation of this subsidiary on August 9, 2013. Capital was reduced by US$12,000
thousand and remitted to its investing company, Dragon Asia Trading Co., Ltd. (BVI) in
September 2013.
g) 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.
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, associates, joint ventures or branches operations 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.
- 18 -
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. When the
prices of raw materials are decreasing and the costs of finished goods are exceeding its net realizable
value, the replacement costs raw materials are the best estimate for its net realizable value. 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.
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.
- 19 -
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.
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.
- 20 -
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.
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.
- 21 -
Cash equivalent includes time deposits and repurchase agreements collateralized by bonds
with original maturities within three 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
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 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.
- 22 -
2) Equity instruments
Debt and equity instruments issued by a 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 a group entity are recognized at the proceeds received, net of direct
issue costs.
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 29.
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).
- 23 -
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.
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.
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.
- 24 -
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.
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.
- 25 -
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.
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.
- 26 -
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.
Underlying items are the other main information sources of assumptions acted for concerning future and
uncertainty estimated, and these assumptions as well as uncertainty exists significant risks making
significant adjustment to the carrying amount of assets and liabilities.
a. 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.
b. 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.
c. 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.
d. 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.
- 27 -
6. CASH AND CASH EQUIVALENTS
December 31,
2013
Petty cash and foreign cash on hand
Checking accounts and demand deposits
Cash equivalent
Time deposits with original maturities less than
three months
Repurchase agreements collateralized by bonds
$
1,534
1,145,258
December 31,
2012
$
1,822
957,520
January 1,
2012
$
2,619
614,943
5,812,441
230,000
6,539,360
70,000
8,361,009
65,000
$ 7,189,233
$ 7,568,702
$ 9,043,571
As of December 31, 2013, December 31, 2012 and January 1, 2012, the total of time deposits with original
maturities more than 3 months were $116,331 thousand, $631,891 thousand and $600,407 thousand,
respectively, and were classified as other receivables (see Note 10).
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
December 31,
2013
December 31,
2012
January 1,
2012
Financial assets at FVTPL - current
Financial assets held for trading
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts (a)
Non-derivative financial assets
Mutual funds
Domestic quoted shares over the counter
Financial products - Chinese Yuan
$
8
$
3,900,368
9,308
-
3,621
$
1,039
367,994
8,205
-
619,705
7,815
725,655
$ 1,354,214
$ 3,909,684
$
379,820
$
$
3,025
Financial liabilities at FVTPL - current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge
accounting)
Foreign exchange forward contracts (a)
121
$
344
a. At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:
Currency
Maturity Date
Contract Amount
(In Thousands)
December 31, 2013
Buy
USD/KRW
2014.01.29-2014.02.18
- 28 -
USD1,000/KRW1,061,950
(Continued)
Maturity Date
Contract Amount
(In Thousands)
USD/KRW
USD/NTD
USD/NTD
2013.01.10-2013.02.04
2013.01.23-2013.02.08
2013.01.25-2013.02.19
USD1,500/KRW1,634,150
USD45,000/NTD1,300,465
USD45,000/NTD1,306,515
USD/KRW
2012.01.18-2012.03.02
USD4,500/KRW5,171,850
(Concluded)
Currency
December 31, 2012
Buy
Buy
Sell
December 31, 2011
Buy
The Group entered into foreign exchange forward contracts during 2013 and 2012 to manage exposures
to exchange rate fluctuations 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,
2013
Domestic investments
Listed shares
Foreign investments
Mutual funds
$
6,434
December 31,
2012
$
4,641
January 1,
2012
$
4,124
307,095
238,746
279,932
$ 313,529
$ 243,387
$ 284,056
December 31,
2013
December 31,
2012
January 1,
2012
Domestic unlisted common shares
$ 51,419
$ 57,243
$ 57,307
Classified according to financial asset
measurement categories
Available-for-sale financial assets
$ 51,419
$ 57,243
$ 57,307
9. FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT
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.
- 29 -
An investee, Trigem Computer Inc., spun off a part of its operation in October 2012, resulting in the
establishment of S Com Inc.; thus, the Company acquired equity in S Com Inc. The Company assessed
the operation of S Com Inc. and recognized an impairment loss of $26 thousand in December 2012.
10. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
December 31,
2013
December 31,
2012
January 1,
2012
Notes receivable
Notes receivable - operating
$
9,788
$
8
$
Accounts receivable, net
Third parties - operating
Less: Allowance for impairment loss
Related parties - operating
$ 9,974,630
(78,608)
9,896,022
$ 9,896,022
$ 8,776,729
(137,988)
8,638,738
218
$$ 8,638,956
$ 8,394,005
(66,073)
8,327,932
47,710
$ 8,375,642
Other receivables
Time deposits with maturities more than 3
months
Supplier discounts receivables
Pledged time deposits (Note 31)
Others
$
116,331
163,232
4,253
156,085
(24,473)
$
631,981
764
99,268
216,133
(26,976)
$
600,407
313,981
51,790
143,112
(20,868)
$
415,428
$
921,170
$ 1,088,422
$
560,933
(514,966)
$
641,694
(523,620)
$
609,192
(483,761)
$
45,967
$
118,074
$
125,431
Overdue receivables
Overdue receivables
a. Accounts receivable
Before accepting a new customer, the Group takes both the evaluation results generated by the internal
system and the evaluation report provided by the external hedging institution into consideration to
measure that potential customer's credit quality and defines its credit limit. Customer credit limits and
rating are reviewed twice every year. For fair presentation of the accounts receivables account, the
Group reviews the aging and recovery of trade receivables every week.
For the accounts receivables balances that were past due at the end of the reporting period, the Group
did not recognize an allowance for impairment loss, because there was not a significant change in credit
quality and the amounts were still considered recoverable.
- 30 -
The aging of receivables that were past due but not impaired was as follows:
December 31,
2013
December 31,
2012
January 1,
2012
$ 100,674
$ 144,276
$ 268,890
Less than 30 days
The above aging schedule was based on the past due date.
Movement in the allowance for impairment loss recognized on trade receivables were as follow:
2013
2012
Balance at January 1
Add: Impairment losses recognized on receivables
Add: Amounts recovered from prior year’s write-off
Deduct: Impairment losses reversed
Deduct: Reclassification
Effect of exchange rate changes
$ 137,988
420
(53,901)
(8,427)
2,528
$
Balance at December 31
$
$ 137,988
78,608
66,073
76,069
(3,831)
(323)
b. Other receivables
Movements in the allowance for impairment loss recognized on other receivables were as follows:
2013
2012
Deduct: Impairment losses reversed
$ 26,976
(3,078)
575
$ 20,868
6,885
(777)
$ 24,473
$ 26,976
c. Overdue receivables
Overdue receivables were primarily accounts receivable of a subsidiary, Elitegroup Computer Systems
Inc., which has initiated litigation to get compensation for these receivables.
Movements in the allowance for impairment loss recognized on overdue receivables were as follows:
2013
2012
Add: Amounts recovered from prior year’s write-off
Add: Reclassification
Deduct: Amounts written off as uncollectible
$ 523,620
106,782
8,427
(129,186)
5,323
$ 483,761
14,774
30,751
3,831
(9,497)
$ 514,966
$ 523,620
- 31 -
11. INVENTORIES
Finished goods
Work in progress
Raw materials
December 31,
2013
December 31,
2012
January 1,
2012
$ 2,557,875
430,384
1,996,000
$ 3,636,117
358,409
2,811,386
$ 3,797,831
227,256
2,233,476
$ 4,984,259
$ 6,805,912
$ 6,258,563
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2013 and 2012
were $57,777,772 thousand and $62,418,928 thousand, respectively.
The cost of inventories recognized as cost of goods sold for the year ended December 31, 2013 and 2012
included reversal of inventory write-downs of $37,732 thousand and $44,855 thousand, respectively.
Previous write-downs were reversed as a result of obsolete inventory disposal.
12. PROPERTY, PLANT AND EQUIPMENT
Freehold Land
Buildings and
Improvements
Transportation
Equipment
Equipment
Other
Equipment
In Construction
Total
Cost
Balance at January 1, 2013
Additions
Disposals
Reclassification
Effect of foreign currency exchange
differences
$
Balance at December 31, 2013
$
1,336,205
(1,273,686 )
-
$
62,519
5,083,394
924
(2,059,104 )
(3,882 )
$
166,869
4,763,749
65,087
(25,555 )
119,950
$
276,394
41,724
2,936
(4,199 )
318
$
2,231
1,480,442
80,932
(314,186 )
6,949
$
68,716
$
3,188,201
$
5,199,625
$
43,010
$
1,322,853
Depreciation Expenses
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 )
$
1,192,878
$
2,806,519
$
29,654
$
1,097,517
23,309
26,851
(20,659 )
$ 12,728,823
176,730
(3,676,730 )
102,676
1,418
$
30,919
515,628
$
9,847,127
$
4,551,669
906,600
(612,742 )
(4,199 )
Accumulated depreciation and
impairment
Carrying amounts at January 1, 2013
Carrying amounts at December 31, 2013
-
45,124
56,722
112
127,114
1,489
1,367
46,725
53,312
238,515
$
$
1,336,205
62,519
$
$
3,843,200
1,995,323
$
$
2,624,044
2,393,106
$
$
15,386
13,356
$
$
335,010
225,336
$
$
23,309
30,919
Additions
Disposals
Reclassification
differences
$
1,336,205
-
$
5,210,981
6,197
(12,494 )
$
5,587,241
240,922
(889,401 )
27,725
$
45,946
5,626
(8,202 )
65
$
1,688,145
139,719
(302,265 )
7,817
$
70,589
9,440
(1,206 )
(53,497 )
$
1,336,205
$
5,083,394
$
4,763,749
$
41,724
$
1,480,442
$
23,309
$
1,066,144
214,971
(5,017 )
$
2,565,935
504,526
(800,889 )
(9,246 )
$
30,829
3,848
(7,298 )
51
$
1,128,312
279,504
(284,552 )
1,502
$
5,126,568
$
$
8,177,154
4,720,559
Cost
-
(121,290 )
(202,738 )
(1,711 )
(52,974 )
$ 13,939,107
401,904
(1,201,074 )
(30,384 )
(2,017 )
(380,730 )
$ 12,728,823
Accumulated depreciation and
impairment
Depreciation Expenses
Disposals
Reclassification
Impairment losses recognized in profit or
loss
Reversal of impairment losses
recognized in profit or loss
differences
-
$
$
1,336,205
1,336,205
-
(13,191 )
(35,904 )
-
58,199
-
(107,430 )
(13,191 )
(37,533 )
1,240,194
$
2,139,705
$
26,338
$
1,145,432
$
$
4,144,837
3,843,200
$
$
3,021,306
2,624,044
$
$
15,117
15,386
$
$
559,833
335,010
4,791,220
1,002,849
(1,092,739 )
(12,710 )
58,199
-
(1,092 )
$
- 32 -
$
(181,959 )
$
$
70,589
23,309
$
4,551,669
$
$
9,147,887
8,177,154
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 to 45 years
2 to 25 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, 2013 and 2012.
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 $1,407 thousand in
2013 was reported as a deduction from rental costs. As of December 31, 2013, the unamortized unrealized
gain on this sale and leaseback was $580,340 thousand.
After assessing, Golden Elite (Shenzhen) Co., Ltd. and Shining Bright Technology Ltd. (Samoa)
recognized impairment losses of $46,725 thousand (RMB 9,649 thousand) and reversal of impairment
losses of $13,191 thousand (US$445 thousand), respectively, for 2013. Elitegroup Electronic (Changshu)
Co., Ltd. recognized an impairment loss of $58,199 thousand (RMB 12,400 thousand) for 2012
13. INVESTMENT PROPERTIES
Land
Building and
Improvements
Total
Effect of foreign currency exchange differences
$ 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
(Continued)
Cost
Accumulated depreciation
Accumulated impairment
Balances at January 1 and December 31, 2013
$ 14,673
$ 301,867
- 33 -
Building and
Improvements
Total
$ 209,950
85
12,528
(3,499)
$ 526,490
85
12,528
(3,499)
$ 219,064
$ 535,604
Depreciation expense
Reclassification
$
$
$ 108,395
$ 108,395
$
1,530
$ 111,152
$ 109,139
$ 16,203
$ 413,019
$ 411,006
(Concluded)
Land
Cost
Additions
Reclassification
$ 316,540
$ 316,540
-
Accumulated depreciation
97,268
7,491
5,638
(2,002)
97,268
7,491
5,638
(2,002)
Accumulated impairment
Balances at January 1 and December 31, 2012
$ 14,673
$ 301,867
$ 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.
14. GOODWILL
2013
2012
Cost
$
994,630
11,301
1,005,931
$ 1,013,352
(18,722)
994,630
Accumulated impairment losses
Impairment losses recognized in profit or loss
(153,458)
(250,039)
(403,497)
Carrying amounts at December 31
$
- 34 -
602,434
(153,458)
(153,458)
$
841,172
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, 2013, the CGUs used a discount rate ranging from 10.31% to 11.82% 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 2013.
c. Estimate of operating expenses: The operating expenses were estimated on the basis of the actual ratio
of operating expenses to revenue for 2013.
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 carrying amount of goodwill was allocated to cash-generating units were as follow:
December 31,
2013
December 31,
2012
January 1,
2012
$ 212,106
390,328
-
$ 402,787
394,450
43,935
$ 419,634
394,450
45,810
$ 602,434
$ 841,172
$ 859,894
Motherboard and barebone systems business
Mobile products business
Channel products business
15. OTHER INTANGIBLE ASSETS
Trademarks
Computer
Software
Royalty
Total
Cost
Additions
Disposals
Effect of foreign currency
exchange differences
$
$
2,005
-
$
87
2,092
- 35 -
22,667
-
$
$
22,667
76,366
7,151
(23,241)
$ 101,038
7,151
(23,241)
1,542
$
61,818
1,629
$
86,577
(Continued)
Trademarks
Computer
Software
Royalty
Total
Accumulated amortization and
impairment
Amortization expense
Disposals
$
1,571
253
-
$
$
1,907
$
13,749
$
44,433
$
60,089
Carrying amounts at December 31,
2013
$
185
$
8,918
$
17,385
$
26,488
Additions
Disposals
$
2,063
-
$
22,958
(291)
$
66,711
18,984
(5,504)
$
91,732
18,984
(5,795)
$
2,005
$
Amortization expense
Disposals
$
1,323
287
-
$
$
1,571
$
9,289
$
50,426
$
61,286
$
740
$
18,089
$
26,019
$
44,848
$
434
$
13,378
$
25,940
$ 39,752
(Concluded)
83
9,289
4,460
-
$
-
50,426
15,890
(23,241)
$
1,358
61,286
20,603
(23,241)
1,441
Cost
(58)
22,667
(3,825)
(3,883)
$
76,366
$ 101,038
$
40,692
18,939
(5,504)
$
Accumulated amortization and
impairment
Carrying amounts at January 1,
2012
Carrying amounts at December 31,
2012
(39)
4,869
4,711
(291)
-
(3,701)
46,884
23,937
(5,795)
(3,740)
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
1 to 6 years
- 36 -
16. PREPAYMENTS FROM LEASE
December 31,
2013
December 31,
2012
January 1,
2012
$ 724,726
$ 713,233
$ 760,967
Non-current
Prepayments from lease include the factory land use rights of Elitegroup Computer (Suzhou Industrial
Park) Ltd. and Golden Elite (Shenzhen) Co., Ltd., and the durabilities were 47 to 50 years.
17. BORROWINGS
a. Short-term borrowings
Line of credit borrowings
December 31,
2013
December 31,
2012
January 1,
2012
$ 1,629,117
$ 2,178,000
$ 3,035,570
The range of interest rate on bank loans was revolving 1.0% to 2.5%, 0.86% to 1.90% and 0.98% to
3.47% per annum as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively.
b. Long-term borrowings
December 31,
2013
December 31,
2012
January 1,
2012
Unsecured borrowings
Loans from Bank
Less: Current portion
$
-
$ 2,032,800
-
$ 1,514,000
-
Long-term borrowings
$
-
$ 2,032,800
$ 1,514,000
1) the interest rates for borrowing repayments were 1.00% and 1.30% as of December 31, 2012 and
January 1, 2012, respectively (December 31, 2013: Zero).
2) On December 2010, the Company signed a syndicated loan agreement with a group of banks,
known as “syndicated bank facility.” The goal of the syndicated loan was to maintain
medium-term working capital for the Company. Under the agreement, a revolving credit line of
US$100,000 thousand was granted to the Company, and multiple drawdowns may be made on this
credit line for three years from March 23, 2011, the date of the first drawdown.
3) Under the syndicated bank loan agreement, the Company has the obligation to maintain the
appointed financial ratios of semiannual and annual reports during the duration period.
18. ACCOUNTS PAYABLE
December 31,
2013
December 31,
2012
January 1,
2012
$ 10,272,358
76,843
$ 10,034,132
27,503
$
9,444,427
23,067
$ 10,349,201
$ 10,061,635
$
9,467,494
Accounts payable
Third parties - operating
Related parties - operating
- 37 -
Accounts payable resulted principally from the purchase of components, including CPUs, IC chip-sets,
LCD panels, CD-ROM drives, hard disks, and memory modules.
19. OTHER LIABILITIES
December 31,
2013
December 31,
2012
January 1,
2012
Current
Other payables
Salaries and bonus
Service expenses
Import and export
Other
$ 1,025,492
68,999
71,854
732,211
$
561,109
77,565
54,275
607,312
$
646,932
71,069
73,886
588,196
$ 1,898,556
$ 1,300,261
$ 1,380,083
$
155,732
48,646
$
131,246
65,596
$
210,139
62,335
$
204,378
$
196,842
$
272,474
$
1,312
$
1,173
$
37
Other liabilities
Unearned revenue
Other
Non-current
Other liabilities
20. PROVISIONS
Short-term
Provisions
Depending on
Legal
Procedures
83,699
(39,026)
(5,647)
(39,026)
Warranties
Customer
Returns and
Rebates
$
382,180
82,922
-
$
501,535
254,387
-
$
Total
Additional provisions recognized
Usage
Reversing un-usage balances
Reclassification
$
$
-
$
465,102
$
755,922
$ 1,221,024
Additional provisions recognized
Reversing un-usage balances
$
83,699
-
$
349,578
32,602
-
$
485,168
16,367
-
$
918,445
48,969
-
$
83,699
$
382,180
$
501,535
$
967,414
- 38 -
967,414
337,309
(39,026)
(5,647)
(39,026)
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, including interests, which were worth NT$83,699 thousand when the complaint
was filed. 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 and the Company had to pay the amount or securities demanded plus
interest. 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,
promising to pay $78,052 thousand, and already paid $39,026 thousand in July, 2013. As of
December 31, 2013, the unpaid obligation amounting to $39,026 thousand had been reclassified under
other payables. By March 20, 2014, date of the accompanying auditors’ report, the remaining liability
had been fully paid.
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.
21. 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 year ended December 31, 2013 and 2012, the pension costs recognized by U.S.-based
subsidiaries were $683 thousand (US$23 thousand) and $933 thousand (US$32 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.
- 39 -
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.
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,
2013
December 31,
2012
January 1,
2012
1.875%
2.000%
3.000%
1.625%
1.875%
3.000%
1.750%
2.000%
3.000%
Discount rate
Expected return on plan assets
Expected rate of salary increase
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:
2013
2012
Current service cost
Interest cost
Actuarial gains and losses
$
An analysis by function
Marketing expenses
General and administrative expenses
Research and development expenses
1,198
2,754
(4,971)
-
$
1,501
3,243
(5,017)
(21,963)
$ (1,019)
$ (22,236)
$
(91)
(291)
(637)
$ (2,096)
(6,535)
(13,605)
$ (1,019)
$ (22,236)
Actuarial gains recognized in other comprehensive income for the years ended December 31, 2013 and
2012 was $2,961 thousand (net of income tax $1,290 thousand) and $3,335 thousand, respectively.
The cumulative amount of actuarial gains and losses recognized in other comprehensive income as of
December 31, 2013 and 2012 was $6,296 thousand and $3,335 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,
2013
December 31,
2012
January 1,
2012
Present value of funded defined benefit
obligation
Fair value of plan assets
$ (159,937)
263,033
$ (169,511)
262,729
$ (200,550)
263,219
$ 103,096
$
$
- 40 -
93,218
62,669
Movements in the present value of the defined benefit obligations were as follows:
2013
2012
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial gains
Losses/(gains) on curtailments
Benefits paid
$ 169,511
1,198
2,754
(5,865)
(7,661)
$ 200,550
1,501
3,243
(5,803)
(21,963)
(8,017)
Closing defined benefit obligation
$ 159,937
$ 169,511
Movements in the fair value of the plan assets were as follows:
2013
2012
Opening fair value of plan assets
Actuarial losses
Contributions from the employer
Benefits paid
$ 262,729
4,971
(1,614)
4,608
(7,661)
$ 263,219
5,017
(2,468)
4,978
(8,017)
Closing fair value of plan assets
$ 263,033
$ 262,729
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,
2013
Cash
Short-term transactions instruments
Government loan
Bonds
Fixed income investments
Equity instruments
Others
December 31,
2012
January 1,
2012
22.17
4.34
9.83
19.11
43.64
0.91
23.39
10.45
0.07
11.00
16.06
38.29
0.74
22.76
8.12
0.20
11.49
16.17
41.26
-
100.00
100.00
100.00
December 31,
2013
December 31,
2012
January 1,
2012
$ (159,937)
$ 263,033
$ 103,096
$
1,868
$ (1,614)
$ (169,511)
$ 262,729
$ 93,218
$
5,803
$ (2,468)
$ (200,550)
$ 263,219
$ 62,669
$
$
-
Present value of defined benefit obligation
Fair value of plan assets
Funded status
Experience adjustments on plan liabilities
Experience adjustments on plan assets
- 41 -
The Company expects to make a contribution of $4,666 thousand to the defined benefit plans within
one year from December 31, 2013.
Under a defined benefit plan, Elitegroup Computer Systems (Korea) Co., Ltd. (“ECS Korea”)
recognized pension costs of $1,017 (KRW81,187 thousand) and $1,274(KRW48,428 thousand) for the
years ended December 31, 2012 and 2013, respectively. The accrued pension costs of ECS Korea
were $4,085 thousand (KRW144,595), $3,064 thousand (KRW112,927 thousand) and $3,357 thousand
as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively.
22. EQUITY
a. Share capital
Ordinary shares
Numbers of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in
thousands)
Shares issued
December 31,
2013
December 31,
2012
January 1,
2012
1,750,000
$ 17,500,000
1,750,000
$ 17,500,000
1,750,000
$ 17,500,000
733,580
7,335,801
1,183,194
$ 11,831,937
1,183,194
$ 11,831,937
$
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.
b. Capital surplus
Share premium
Treasury share transaction
Employee share options
December 31,
2013
December 31,
2012
January 1,
2012
$ 6,245,127
216,663
-
$ 6,722,462
216,663
72,850
$ 9,230,833
216,663
72,850
$ 6,461,790
$ 7,011,975
$ 9,520,346
- 42 -
A reconciliation of the carrying amount at the beginning and at the end of 2013 and 2012, for each class
of capital surplus was as follows:
Share Premium
Treasury Share
Transaction
Employee
Share Options
Issue of cash dividends from capital surplus
Invalid employee share options
$ 6,722,462
(550,185)
72,850
$
216,663
-
$
72,850
(72,850)
$ 6,245,127
$
216,663
$
-
Issue of cash dividends from capital surplus
$ 9,230,833
(2,508,371)
$
216,663
-
$
72,850
-
$ 6,722,462
$
216,663
$
72,850
The capital surplus arising from shares issued in excess of par (including share premium from issuance
of common shares and treasury share transactions) and donations may be used to offset a deficit; in
addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or
transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a
year).
The capital surplus from long-term investments, employee share options and share warrants may not be
used for any purpose.
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, 2013 and 2012, the bonuses to employees were $371,363 thousand
and $3,086 thousand, respectively, and the remuneration to directors and supervisors was $37,136
thousand and $309 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
- 43 -
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. 100116 and Rule No. 0950000507 issued by the FSC, an amount equal to the net debit
balance of shareholders’ other equity items (including unrealized revaluation increment, unrealized gain
or loss on financial instruments, net loss recognized as pension costs, cumulative translation
adjustment) shall be transferred from unappropriated earnings to a special reserve. Any special
reserve appropriated may be reversed to the extent of the decrease in the net debit balance.
Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and
Answers for Special Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption
of IFRSs, a company should appropriate to a special reserve of an amount that was the same as these of
unrealized revaluation increment and cumulative translation differences (gains) transferred to retained
earnings as a result of the company’s use of exemptions under IFRS 1. The Company did not have an
increase in retained earnings that resulted from cumulative translation differences generated from the
company’s use of exemptions under IFRS 1; therefore, no special reserve was appropriated.
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 for 2012 and 2011 had been approved in the shareholders’ meetings on
June 20, 2013 and June 25, 2012, respectively. The appropriations and dividends per share were as
follows:
Dividends Per Share
(NT$)
For the Year Ended
December 31
2012
2011
Appropriation of Earnings
For the Year Ended
December 31
2012
2011
Legal reserve
Appropriate (reverse) special reserve
Cash dividends
$
36,471
297,378
41,412
$
42,826
(39,620)
414,118
$ 0.035
$ 0.35
The shareholders also approved the distribution of $550,185 thousand (NT$0.465 per share) and
$2,508,371 thousand (NT$2.12 per share) of capital surplus in cash in their meetings on June 20, 2013
and June 25, 2012, respectively.
Bonuses to employees and remuneration to directors and supervisors for 2012 and 2011 approved in the
shareholders’ meetings on June 20, 2013 and June 25, 2012, respectively, were as follows:
2012
2011
Cash
Share
Cash
Share
Dividends
Dividends
Dividends
Dividends
Bonus to employees
Remuneration of directors and
supervisors
$
3,086
309
- 44 -
$
-
$ 38,544
-
3,854
$
-
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 in 2013 and 2012 and the amounts
recognized in the financial statements for the years ended December 31, 2012 and 2011.
The appropriations of earnings for 2013 had been proposed by the Company’s board of directors on
March 20, 2014. The appropriations and dividends per share were as follows:
Appropriation
of Earnings
Legal reserve
Reverse special reserve
Cash dividends
$
362,428
(451,775)
2,200,740
Dividends Per
Share (NT$)
$
3
The appropriations of earnings, the bonus to employees, and the remuneration to directors and
supervisors for 2013 are subject to the resolution of the shareholders’ meeting to be held on June 23,
2014.
To increase the Shareholders’ equity and returns on investments, the board of directors approved in their
meeting on March 20, 2014 a capital reduction and a cash return to shareholders The amount of
capital-reduction was $1,797,271 thousand, representing the cancellation of 179,727 thousand common
shares; the capital reduction ratio was 24.5%, and the capital remaining after reduction was $5,538,530
thousand. This capital reduction will be presented to the shareholders’ meeting and to the SFB for
approval.
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.
e. Non-controlling interests
2013
2012
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
$ 313,541
$ 209,314
- 45 -
(115,298)
11,071
-
$ 324,042
8,330
(12,893)
(5,938)
$ 313,541
23. NET PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS)
The components of net income were as follow:
a. Other gains and losses
2013
2012
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 12)
Gain on reversal impairment property, plant and equipment
(Note 12)
Impairment loss on goodwill (Note 14)
Other
$
72,008
$ (13,399)
8,373
(5,855)
(10,624)
(46,725)
21,410
(26)
(4,141)
(58,199)
(250,039)
(50,172)
13,191
(15,508)
$ (283,034)
$ (56,672)
b. Finance costs
2013
2012
Interest on bank overdrafts and loans
$ 28,343
$ 48,561
c. Other income
2013
2012
Rental income
Others
$
42,899
145,050
$ 187,949
$
43,391
65,597
$ 108,988
d. Depreciation and amortization
2013
2012
Property, plant and equipment
Investment property
Prepayments
Other intangible assets
Prepayment from lease
- 46 -
$
906,600
7,604
29,758
20,603
18,044
4,987
$ 1,002,849
7,491
21,168
23,937
17,728
16,780
$
987,596
$ 1,089,953
(Continued)
2013
2012
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
$
646,235
260,365
7,604
$
753,002
249,847
7,491
$
914,204
$ 1,010,340
$
20,547
49,429
3,416
$
13,318
63,433
2,862
$
73,392
$
79,613
(Concluded)
e. Operating expenses directly related to investment properties
2013
2012
Direct operating expenses from investment properties that
generated rental income
Direct operating expenses from investment properties that did not
generate rental income
$ 10,534
$ 10,203
200
198
$ 10,734
$ 10,401
f. Employee benefit expense
2013
2012
Post-employment benefits (see Note 21)
Defined contribution plans
Defined benefit plans
$
Other employee benefits
Payroll
Labor and health insurance
Other employee costs
56,298
(2)
56,296
$
44,026
(20,962)
23,064
3,897,655
316,775
53,682
4,268,112
3,424,318
283,983
50,893
3,759,194
Total employee benefit expense
$ 4,324,408
$ 3,782,258
An analysis of employee benefit expense by function
Operating costs
Operating expenses
$ 1,997,590
2,326,818
$ 1,960,216
1,822,042
$ 4,324,408
$ 3,782,258
- 47 -
g. Gain or loss on foreign currency exchange
2013
2012
Foreign exchange gains
Foreign exchange losses
$ 1,216,465
(1,144,457)
$
400,505
(413,904)
Total foreign exchange (losses) gains
$
$
(13,399)
72,008
24. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense (income) were as follows:
2013
2012
Current tax
Current year
Land value increment tax
Effect of tax rate changes
Prior periods
Region income tax
$ 330,041
114,124
180,440
1,087
625,692
Deferred tax
Current year
Decrease in deferred income taxes assets
Prior periods
$ 188,813
(64)
51,995
(1,567)
239,177
(73,386)
(40,418)
8,843
(104,961)
Income tax expense recognized in profit or loss
$ 520,731
150,564
(56,926)
27,004
120,642
$ 359,819
A reconciliation of accounting profit and income tax expenses is as follows:
2013
2012
Profit before tax
$ 4,029,715
$
726,898
Income tax expense calculated at the statutory rate
Nondeductible expenses in determining taxable income
Tax-exempt income
Land value increment tax
Effect of tax rate changes
Effect of different tax rate of group entities operating in other
jurisdictions
Recognized deductible temporary differences
Unrecognized investment credits
Adjustments of prior years’ tax expense
Region income tax
Other
$
$
197,595
(190)
(772)
(64)
Income tax expense recognized in profit or loss
$
- 48 -
866,989
19,809
(500,155)
114,124
8,843
(183,616)
180,440
1,087
13,210
520,731
27,004
(56,325)
151,175
51,995
(1,567)
(9,032)
$
359,819
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
2013 unappropriated earnings are not reliably determinable.
b. Income tax recognized directly in other comprehensive income
2013
2012
Deferred tax
Inspect of current year
Effect of foreign operating function reports’ currency
exchanges differences
Gains or loss on defined benefit actuarial interests
Total income tax recognized directly in other comprehensive
income
$
79,085
1,290
$ (130,900)
-
$
80,375
$ (130,900)
c. Current income tax assets and liabilities
December 31,
2013
December 31,
2012
January 1, 2012
$ 427,344
$ 235,227
$ 126,287
Current income tax liabilities
Accrued income tax expense
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, 2013
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 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)
- 49 -
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
Allowance for doubtful accounts
$ (35,848)
-
$
(500)
(15,280)
(1 )
26,392
(1,314)
$
255
(956)
-
$ (51,629)
$
-
$
-
(1,290)
-
24,377
$
$
-
(1,290)
$
(9,456)
(1,314)
(245)
(17,526)
(1 )
-
$ (28,542)
(Concluded)
For the year ended December 31, 2012
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
Loss on investment in equity
Loss on doubtful accounts
Difference in durabilities of fixed assets
differences
Others
Tax losses
Investment credits
$
32,221
124,721
261,447
52,904
41,498
$
(4,638)
17,167
20,207
8,685
$
-
$
27,583
540,374
167,815
176,011
(2,316)
39,105
(35,942)
(127,065)
130,900
130,900
-
$ 884,200
$ (123,902)
$ 130,900
$
$ (42,016)
(1,914)
$
$
$
(897)
(298)
(2,555)
(1,719)
$
26,686
141,590
261,447
70,556
48,464
(792)
(6,261)
(45)
-
130,900
24,475
704,118
131,828
48,946
(6,306)
$ 884,892
Goodwill
Unrealized exchange gain or loss
Financial assets at fair value through profit
or loss
Defined benefit plan
(305)
(10,653)
(1 )
6,168
1,914
-
(195)
(4,627)
-
$ (54,889)
$
3,260
$
-
$
-
$ (35,848)
-
-
(500)
(15,280)
(1 )
-
$ (51,629)
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,
2013
Deductible temporary differences
Financial assets at costs
Difference in durabilities of fixed assets
- 50 -
December 31,
2012
$
11,600
70,434
205
$
40,251
70,434
200
$
82,239
$ 110,885
January 1,
2012
$
34,561
70,434
187
$ 105,182
(Continued)
December 31,
2013
December 31,
2012
January 1,
2012
Investment credits
Research and development and personnel
training
$
-
$ 198,877
$ 276,533
Loss carryforwards
$ 119,323
$ 133,370
$ 210,289
(Concluded)
f. Loss carryforwards unused as of December 31, 2013 comprised:
1) The Company
Unused Amount
Expiry Year
$ 1,047,840
2014-2020
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
$ 374,192
342,531
2014-2033
Unlimited duration
$ 716,723
g. The aggregate amount of temporary difference associated with investments for which deferred tax
liabilities have not been recognized.
As of December 31, 2013, December 31, 2012 and January 1, 2012, the aggregate amount of temporary
difference associated with investments for which deferred tax liabilities have not been recognized.
$1,601,593 thousand, $1,459,491 thousand and $1,498,900 thousand, respectively.
h. Integrated income tax
December 31,
2013
Unappropriated earnings generated before
January 1, 1998
Unappropriated earnings generated on and
after January 1, 1998
Imputation credits accounts
$
-
December 31,
2012
$
3,633,768
-
January 1,
2012
$
381,786
437,026
$ 3,633,768
$
381,786
$
437,026
$
$
76,217
$
63,212
137,272
The creditable ratio for distribution of earnings of 2013 and 2012 was 3.20% (expected ratio) and
14.25%, respectively.
- 51 -
Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation
credits allocated to ROC resident shareholders of the Company was calculated based on the creditable
ratio as of the date of dividend distribution. The actual imputation credits allocated to shareholders of
the Company was based on the balance of the Imputation Credit Accounts (ICA) as of the date of
dividend distribution. Therefore, the expected creditable ratio for the 2013 earnings may differ from
the actual creditable ratio to be used in allocating imputation credits to the shareholders.
According to legal interpretation No. 10204562810 announced by the Taxation Administration of the
Ministry of Finance, when calculating imputation credits in the year of first-time adoption of IFRSs, the
cumulative retained earnings include the net increase or net decrease in retained earnings arising from
first-time adoption of IFRSs.
i.
Income tax assessment
The tax returns through 2011, except 2010, have been assessed by the tax authorities. The Company
disagreed with the tax authorities’ assessment of its 2010 tax return and applied for an administrative
remedy. Nevertheless, to be conservative, the Company has provided for the income tax assessed by
the tax authorities.
25. EARNINGS PER SHARE
Unit: NT$ Per Share
2013
2012
Basic earnings per share
Diluted earnings per share
$
$
3.44
3.37
$
$
0.30
0.30
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
2013
2012
Profit for the period attributable to owners of the Company
Earnings used in the computation of basic and diluted earnings per
share
$ 3,624,282
$
358,749
$ 3,624,282
$
358,749
Weighted average number of ordinary shares outstanding (in thousand shares):
2013
2012
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
- 52 -
1,053,853
1,183,194
21,895
2,202
1,075,748
1,185,396
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, 2013 and 2012, they were anti-dilutive and
excluded from the computation of diluted earnings per share.
26. 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:
2013
Number of
Options
(In
Thousands)
Options expired
2012
Weightedaverage
Exercise
Price
(NT$)
131,185
(32,325)
Number of
Options
(In
Thousands)
$ 15.00
27.44
132,535
(1,350)
Weightedaverage
Exercise
Price
(NT$)
$ 15.47
13.83
98,860
21.15
131,185
15.00
Options exercisable, end of period
98,860
21.15
131,185
15.00
Weighted-average fair value of options
granted ($)
$
-
$
-
Information about outstanding options as of December 31, 2013, December 31, 2012 and January 1, 2012
was as follows:
December 31, 2013
The Weighted
Execution
Average
Price Range
Remaining
(NT$)
Contract
$
23.9
19.5
2.50
3.96
December 31, 2012
The Weighted
Execution
Average
Price Range
Remaining
(NT$)
Contract
$ 21.0
21.2
20.5
14.8
12.1
0.71
0.75
1.00
3.50
4.96
- 53 -
January 1, 2012
The Weighted
Execution
Average
Price Range
Remaining
(NT$)
Contract
$ 21.7
21.9
21.1
15.3
12.5
1.71
1.75
2.00
4.50
5.96
27. OPERATING LEASE AGREEMENT
a. The Group as lessee
Operating leases are related to leases of buildings and improvements with lease terms between 11 and
120 months.
As of December 31, 2013, December 31, 2012 and January 1, 2012, the Group’s refundable deposits
paid resulting from operating lease agreements were $209,593 thousand, $13,183 thousand and $17,529
thousand, respectively.
The Company sold and leased back headquarter building in Neihu in December 2013 (see Note 12),
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 that 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,
2013
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
$
December 31,
2012
January 1,
2012
246,340
820,461
1,045,224
$
49,653
14,445
-
$
129,511
20,269
-
$ 2,112,025
$
64,098
$
149,780
b. The Group as lessor
Operating leases relate to the investment property owned by the Group with 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, 2013, December 31, 2012 and January 1, 2012, the Group’s received guaranteed
deposits received resulting from operating lease agreements were $4,874 thousand, $4,819 thousand
and $4,869 thousand, respectively.
28. 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.
- 54 -
The gearing ratio at end of the reporting period was as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Debt
Less cash and cash equivalents (including cash
and cash equivalents in a disposal group held
for sale)
Net debt
Equity
$ 16,364,731
$ 17,051,081
$ 16,806,158
Total capital (a)
$ 27,561,803
$ 28,982,295
$ 30,130,118
33.29%
32.72%
25.76%
(7,189,233)
9,175,498
18,386,305
Net debt to equity ratio
(7,568,702)
9,482,379
19,499,916
(9,043,571)
7,762,587
22,367,531
a. 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, 2013, the Group’s capital management approach has not changed.
29. 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.
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).
- 55 -
December 31, 2013
Level 1
Financial assets at FVTPL
Foreign exchange forward
contracts
Mutual funds
Available-for-sale financial
assets
Domestic listed shares
Foreign mutual funds
Financial liabilities at FVTPL
contracts
Level 2
$
-
$
Level 3
8
9,308
3,900,368
Total
$
-
-
$
8
-
9,308
3,900,368
$ 3,909,676
$
8
$
-
$ 3,909,684
$
6,434
307,095
$
-
$
-
$
6,434
307,095
$
313,529
$
-
$
-
$
313,529
$
-
$
121
$
-
$
121
December 31, 2012
Level 1
contracts
Mutual funds
assets
contracts
$
Level 2
-
$
Level 3
3,621
8,205
367,994
$
Total
-
-
$
3,621
-
8,205
367,994
$ 376,199
$
3,621
$
-
$ 379,820
$
4,641
238,746
$
-
$
-
$
$ 243,387
$
-
$
-
$ 243,387
$
$
3,025
$
-
$
-
4,641
238,746
3,025
January 1, 2012
Level 1
contracts
Mutual funds
人民幣理財商品
$
Level 2
-
$
7,815
619,705
$
627,520
1,039
Level 3
$
725,655
$
726,694
$
Total
-
$
1,039
-
7,815
619,705
725,655
-
$ 1,354,214
(Continued)
- 56 -
Level 1
assets
contracts
Level 2
Level 3
Total
$
4,124
279,932
$
-
$
-
$
4,124
279,932
$
284,056
$
-
$
-
$
284,056
$
-
$
344
$
-
$
344
(Concluded)
There were no transfers between Level 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.
Where such prices were not available, valuation techniques were applied.
The estimates and assumptions used by the Group are consistent with those that market
participants would use in setting a price for the financial instruments;
b) The fair values of derivative instruments were calculated using quoted prices. Where such
prices were not available, a discounted cash flow analysis was performed using the applicable
yield curve for the duration of the instruments for non-optional derivatives, and option pricing
models for optional derivatives. The estimates and assumptions for valuation adopted by the
estimates and assumptions used by the Group are consistent with those that market participants
would use in setting a price for the financial instruments;
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.
- 57 -
b. Categories of financial instruments
December 31,
2013
December 31,
2012
$
$
January 1,
2012
Financial assets
Fair value through profit or loss (FVTPL)
Designated as at FVTPL - current
Loans and receivables (1)
Available-for-sale financial assets (2)
3,909,684
17,735,855
364,948
379,820
17,149,894
300,630
$
1,354,214
18,542,940
341,363
Financial liabilities
Fair value through profit or loss (FVTPL)
Designated as at FVTPL - current
Amortized cost (3)
121
13,897,585
3,025
15,592,707
344
15,430,145
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, 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, long-term loans (including
current portion), 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 nonderivative 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.
- 58 -
1) Market risk
The Group’s activities exposes it primarily 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.
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,
2013
December 31,
2012
January 1,
2012
Assets
USD
$
8
$
3,621
$
1,039
$
121
$
3,025
$
344
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. The amount below indicates a decrease in pretax profit and other
equity associated with the New Taiwan dollar’s strengthening 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 balances below would be
positive.
U.S. Dollars Impact
2013
2012
Profit or loss
$ 23,949
- 59 -
$ (78,625)
b) Interest rate risk
The Group was exposed to interest rate risk because entities in the Group borrowed funds at
fixed interest rates.
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.
Fair value interest rate risk
Financial assets
Cash flow interest rate risk
Financial assets
December 31,
2013
December 31,
2012
January 1,
2012
$ 6,163,024
1,629,117
$ 5,319,703
4,210,800
$ 8,775,406
4,549,570
781,970
-
2,873,433
-
733,849
-
The Group measured risks of financial assets and liabilities with changes in interest rates. The
sensitivity analyses 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, 2013 and 2012, had market interest rates been 10 basis points higher, the fair value of
financial assets with fixed interest rate would have decreased by $61,630 thousand and $53,197
thousand, respectively; the financial assets with floating interest rates would have generated
cash inflows of $7,820 thousand and $28,734 thousand, respectively.
On financial liabilities with interest rates changes that had been held by the Group as of
December 31, 2013 and 2012, had market interest rates been 10 basis points higher, the fair
values of financial liabilities with fixed interest rate would have decreased $16,291 thousand
and $42,108 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 $211,161
thousand and $31,160 thousand on December 31, 2013 and 2012, respectively.
- 60 -
2) Credit risk
Credit risk refers to the risk that a 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, 2013, December 31, 2012 and January 1, 2012, the Group’s five largest
customers accounted for 49% 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, 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
- 61 -
December 31, 2012
Less than
1 Year
2 to 3 Years
More than
3 Years
Total
Non-derivative
Short-term debts
Long-term debts
$ 2,178,000
-
$
2,032,800
$
-
$ 2,178,000
2,032,800
$ 2,178,000
$ 2,032,800
$
-
$ 4,210,800
Less than
1 Year
2 to 3 Years
January 1, 2012
More than
3 Years
Total
Non-derivative
Short-term debts
Long-term debts
$ 3,035,570
-
$
1,514,000
$
-
$ 3,035,570
1,514,000
$ 3,035,570
$ 1,514,000
$
-
$ 4,549,570
30. 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
Sale of Goods
For the Year Ended
December 31
2013
2012
Related Parties Types
Associates that have significant
influence over the investors
$
-
$
18,933
Purchase of Goods
For the Year Ended
December 31
2013
2012
$ 228,413
$ 204,492
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.
- 62 -
b. Other operating expenses
2013
2012
Related Party
Repair expenses
Associates that have significant influence over the investors
$
6,079
$
6,079
Service expenses
$
1,094
$
1,786
Research and development materials
$
95
$
11
Maintenance costs
$
11
$
-
c. Receivables (payables) from related parties
Related Party
December 31,
2013
Accounts receivable
Associates that have significant influence
over the investors
$
Accounts payable
over the investors
$ 76,843
-
December 31,
2012
$
January 1,
2012
218
$ 47,710
$ 27,503
$ 23,067
The Group did not provide any guarantee for the outstanding accounts payable from related parties, and
will pay up in cash. The Group did not receive any guarantee for the outstanding accounts receivable
from related parties. No impairment losses were recognized on the outstanding accounts receivable
from related parties in 2013 and 2012.
d. Accrued expenses payable (account for other payables)
Related Party
December 31,
2013
over the investors
$
238
December 31,
2012
$ 13,721
January 1,
2012
$
-
e. Compensation of key management personnel
2013
2012
Short-term employee benefits
Termination benefits
Post-employment benefits
$ 128,746
20,000
934
$
56,712
4,283
$ 149,680
$
60,995
The remuneration of directors and key executives was determined by the remuneration committee on
the basis of individual performance and market trends.
- 63 -
f. Other transactions of related parties
In 2013, the Company bought computer software and computer equipment from associates that have
significant influence over the investors for $5,721 thousand and $467 thousand. In 2012, the
Company bought computer software from associates that have significant influence over the investors
for $5,721 thousand.
31. ASSETS PLEDGED AS COLLATERAL
The following assets were provided to the tariff bureau and electric power company as securities:
December 31,
2013
Pledge deposits (classified as other receivable)
$
4,253
December 31,
2012
January 1,
2012
$ 99,268
$ 51,790
32. 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, 2013, December 31, 2012 and January 1, 2012 were as follow:
 As of December 31, 2013 and 2012, unused letters of credit amounted to $630 thousand.
33. 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, 2013
Foreign
Currencies
Exchange Rate
Carrying
Amount
557,276
109
243,959
725
29.81
41.09
0.1386
4.889
$ 16,612,394
4,464
33,813
3,546
541,208
7,849
12,839
29.81
3.843
0.2839
16,133,409
30,164
3,645
Financial assets
Monetary items
USD
EUR
HUF
RMB
$
Monetary items
USD
HKD
JPY
- 64 -
December 31, 2012
Foreign
Currencies
Exchange Rate
Carrying
Amount
449,338
163
150,067
10,304
29.04
38.49
0.1319
4.620
$ 13,048,766
6,270
20,034
47,604
503,487
2,865
21,995
29.04
3.747
0.3364
14,621,271
10,737
7,399
Financial assets
Monetary items
USD
EUR
HUF
RMB
$
Monetary items
USD
HKD
JPY
January 1, 2012
Foreign
Currencies
Exchange Rate
Carrying
Amount
443,759
290
48,839
2,786
30.28
39.18
0.1258
4.805
$ 13,437,009
11,369
6,144
13,387
502,092
3,536
19,645
30.28
3.897
0.3906
15,203,339
13,778
7,603
Financial assets
Monetary items
USD
EUR
HUF
RMB
$
Monetary items
USD
HKD
JPY
34. 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)
- 65 -
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital.
(Table 4)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital. (Table 5)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital. (Table 6)
9) Trading in derivative instruments.
(Notes 7 and 29)
The Company recognized net profit NT$5,663 thousand from trading in derivative instruments.
10) Intercompany relationships and significant intercompany transactions. (Table 10)
11) Information on investees. (Table 7)
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 8)
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 9):
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.
35. SEGMENT INFORMATION
a. Segment revenues and results
Following is an analysis of the Group’s operating revenue and results from continuing operations by
reportable segment.
- 66 -
For the Year Ended December 31, 2013
Computer
Motherboard
and System
Division
Mobile
Products
Division
Channel
Products
Division
Revenues from external
customers
Inter-segment revenues
$ 36,535,964
-
$ 16,199,232
-
$ 10,404,514
53,915
$
-
$
302,193
(53,915 )
$ 63,441,903
-
Segment revenues
$ 36,535,964
$ 16,199,232
$ 10,458,429
$
-
$
248,278
$ 63,441,903
Segment income
Income tax expense
$
$
$
$
2,341,024
$
-
1,229,955
821,142
(362,406)
Adjustments
and
Eliminations
Others
Consolidated net income
Total
$
4,029,715
520,731
$
3,508,984
For the Year Ended December 31, 2012
Computer
Motherboard
and System
Division
Mobile
Products
Division
Channel
Products
Division
Revenues from external
customers
Inter-segment revenues
$ 35,550,169
-
$ 13,651,765
-
$ 17,363,713
13,001
$
Segment revenues
$ 35,550,169
$ 13,651,765
$ 17,376,714
$
Segment income
Income tax expense
$
$
$
$
584,366
303,350
29,955
Adjustments
and
Eliminations
Others
-
(190,773)
Total
$
384,593
(13,001 )
$ 66,950,240
-
$
371,592
$ 66,950,240
$
-
$
726,898
359,819
$
367,079
The revenues reported above included inter-segment transactions and transactions with external
customers.
The segment profit or loss represented the result of segment operations, which included the allocation
of central administration costs and excluded income tax expense. This was the measure reported to the
chief operating decision maker for the purposes of resource allocation and assessment of segment
performance.
b. Segment total assets and liabilities
1) Segment assets
Computer motherboard and system
division
Mobile products division
Channel products division
Adjustments and eliminations
December 31,
2013
December 31,
2012
$
$
9,755,866
3,632,903
1,328,677
172,623
$ 14,890,069
8,597,413
3,501,186
3,344,540
1,737
$ 15,444,876
January 1,
2012
$ 10,157,245
2,244,439
2,283,497
(50,976)
$ 14,634,205
2) Segment liabilities
The measure of segment liabilities was not reported to the chief operating decision maker, thus
according to the Interpretation Letter 2010.151 issued by the Accounting Research and
Development Foundation, the measure of segment liabilities should be $0.
- 67 -
c. Revenue from major products and services:
The reportable segments of the Group and its subsidiaries were identified by different products; thus,
there is no need to disclose additional information.
d. Geographical information
Geographical information is as follows:
Revenue from
External Customers
For the Year Ended
December 31
2013
2012
Asia
America
Europe
Others
December 31,
2013
Non-current Assets
December 31,
January 1,
2012
2012
$ 56,889,527
6,435,101
117,275
-
$ 60,821,803
5,935,751
192,686
-
$
6,714,795
58,301
806
-
$ 10,360,594
142,174
340
-
$ 11,201,981
130,154
519
87,069
$ 63,441,903
$ 66,950,240
$
6,773,902
$ 10,503,108
$ 11,419,723
Non-current assets exclude those classified as financial instruments, deferred tax assets, and prepaid
pension cost.
e. Information about major customers:
The customer that accounted for at least 10% of the Group’s net sales was as follows:
Customer
Customer A
For the Years Ended December 31
2013
2012
% to
% to
NT$
Net Sales
NT$
Net Sales
$ 14,156,968
22
$ 13,197,653
20
36. FIRST-TIME ADOPTION OF IFRSs
a. Basis of the preparation for financial information under IFRSs
The Group’s consolidated financial statements for the year ended December 31, 2013 were the first
IFRS financial statements. The Group not only follows the significant accounting policies stated in
Note 4 but also applies the requirements under IFRS 1 “First-time Adoption of IFRS” as the basis for
the preparation.
- 68 -
b. Impact on the transition to IFRSs
After transition to IFRSs, the impact on the Group’s consolidated balance sheet and consolidated
statements of comprehensive income is stated as follows:
1) Reconciliation of consolidated balance sheet as of January 1, 2012:
Effect of
Transition to
IFRSs
NT$
ROC GAAP
Item
NT$
Current assets
Cash and cash equivalents
Financial assets at fair value through profit or
cost - current
Other receivables, net
Inventories, net
Prepayments
Deferred income tax assets - current
Restricted assets - current
Noncurrent assets
Available-for-sale financial assets noncurrent
Financial assets carried at cost - noncurrent
Intangible assets
Assets leased to others, net
Idle assets, net
Refundable deposits
Deferred charges
Overdue receivables, net
Deferred income tax assets - non-current
Others
Total noncurrent assets
Total
$
9,643,978
1,354,214
7,890,474
436,225
6,258,563
323,999
206,050
51,790
21,323
26,186,616
485,168
652,197
(206,050 )
(51,790 )
279,118
-
57,307
8,912,701
1,621,601
425,152
2,067
35,305
296,622
125,431
625,082
29,755
844
12,415,923
$
3,035,570
344
235,186
413,019
(716,859 )
(425,152 )
(2,067 )
30,814
(296,622 )
259,118
32,914
760,967
714
292,032
$
571,150
$
9,467,494
1,665,205
107,169
126,287
272,474
14,674,543
Equity attributable to shareholders of the
parent
Minority interests
Total shareholders’ equity
Total
(600,407 )
-
284,056
$ 38,602,539
Current liabilities
Short-term loans
Financial liabilities at fair value through
profit or loss - current
Accounts payable
Accrued expenses
Other payables
Income tax payable
Noncurrent liabilities
Long-term debt
Accrued pension cost
Guarantee deposits received
Deferred income tax liabilities - non-current
Others
Total noncurrent liabilities
Total liabilities
Equity attributable to shareholders of the parent
Capital stock
Capital surplus
Legal surplus
Special surplus
Cumulative translation adjustments
Unrealized gain/loss on financial instruments
$
(1,665,205 )
1,272,914
918,445
526,154
1,514,000
3,537
32,998
37
1,550,572
16,225,115
54,889
54,889
581,043
11,831,937
9,537,921
214,560
281,956
428,261
(376,552 )
134,216
(17,575 )
8,765
-
22,052,299
(8,810 )
325,125
22,377,424
(1,083 )
(9,893 )
$ 38,602,539
$
571,150
IFRSs
Item
NT$
Current assets
cost - current
Inventories, net
Prepayments
Noncurrent assets
Investment property
Intangible assets
Refundable deposits
Deferred income tax assets - noncurrent
Long-term prepaid rent
Total
$
Note
9,043,571
1,354,214
5) a)
8,375,642
1,088,422
6,258,563
323,999
21,323
26,465,734
5) b)
5) a)
5) c)
5) a)
284,056
57,307
9,147,887
413,019
904,742
30,814
35,305
125,431
884,200
62,669
760,967
1,558
12,707,955
5) d), f) and g)
5) d)
5) e), g)
5) d)
5) d)
5) f)
5) g)
5) c), h) and i)
5) i)
5) e)
5) g)
$ 39,173,689
Current liabilities
Short-term loans
Accounts payable
Other payables
Income tax payable
Provisions - current
Long-term debt
Others
Total liabilities
Capital stock
Capital surplus
Legal surplus
Special surplus
Foreign currency translation reserve
Unrealized gain/loss on available-for-sale
financial assets
parent
Noncontrolling interests
Total
$
3,035,570
344
9,467,494
1,380,083
126,287
918,445
272,474
15,200,697
1,514,000
3,537
32,998
54,889
37
1,605,461
16,806,158
11,831,937
9,520,346
214,560
281,956
437,026
(376,552 )
134,216
5) j) and l)
5) h) and l)
5) b) and j)
5) c) and i)
5) k)
5) h), i) and k)
22,043,489
324,042
22,367,531
6) h)
$ 39,173,689
2) Reconciliation of the consolidated balance sheet as of December 31, 2012:
Effect of
Transition to
IFRSs
Amount
ROC GAAP
Item
Current assets
cost - current
Notes receivable
Amount
$
8,200,683
379,820
$
(631,981 )
-
8
-
IFRSs
Item
Current assets
cost - current
Notes receivable
Amount
$
Note
7,568,702
379,820
5) a)
8
(Continued)
- 69 -
ROC GAAP
Item
Amount
Inventories, net
Prepayments
Deferred income tax assets - current
Noncurrent assets
Intangible assets
Assets leased to others, net
Idle assets, net
Refundable deposits
Deferred charges
Others
$
Total
$ 35,966,388
$
584,609
$
$
-
Current liabilities
Short-term loans
Accounts payable
Income tax payable
Accrued expenses
Other payables
Long-term debt
Deferred tax liabilities - non-current
Others
Total liabilities
Capital stock
Capital surplus
Legal surplus
Special surplus
Cumulative translation adjustments
Unrealized gain/loss on financial instruments
parent
Minority interests
Total
8,137,421
189,921
6,805,912
432,000
238,579
99,268
22,581
24,506,193
Effect of
Transition to
IFRSs
Amount
$
501,535
731,249
(238,579 )
(99,268 )
262,956
243,387
-
57,243
8,203,719
1,554,839
418,099
1,877
21,058
179,935
118,074
595,181
61,276
5,507
11,460,195
(26,565 )
411,006
(673,915 )
(418,099 )
(1,877 )
173,306
(179,935 )
289,711
31,942
713,233
2,846
321,653
IFRSs
Item
Amount
$
Total
$ 36,550,997
2,032,800
3,064
20,011
1,173
2,057,048
16,454,754
51,629
51,629
596,327
11,831,937
7,029,550
257,386
242,336
375,651
(639,100 )
99,386
(17,575 )
6,135
669
-
19,197,146
(10,771 )
314,488
19,511,634
(947 )
(11,718 )
Current liabilities
Short-term loans
Accounts payable
Income tax payable
Provisions - current
Other payables
Long-term debt
Others
Total liabilities
Capital stock
Capital surplus
Legal surplus
Special surplus
financial assets
parent
Noncontrolling interests
584,609
Total
2,178,000
3,025
10,061,635
235,227
1,628,206
94,771
196,842
14,397,706
$ 35,966,388
(1,628,206 )
967,414
1,205,490
544,698
$
Note
Inventories, net
Prepayments
Noncurrent assets
Investment property
Intangible assets
Refundable deposits
Deferred charges
Long-term prepaid rent
8,638,956
921,170
6,805,912
432,000
22,581
24,769,149
5) b)
5) a)
5) c)
5) a)
243,387
57,243
8,177,154
411,006
880,924
173,306
21,058
118,074
884,892
93,218
713,233
8,353
11,781,848
$
5) d), f) and g)
5) d)
5) e) and g)
5) d)
5) d)
5) f)
5) g)
5) c), h) and i)
5) i)
5) e)
2,178,000
3,025
10,061,635
235,227
967,414
1,300,261
196,842
14,942,404
5) j) and l)
5) b) and j)
5) h) and l)
2,032,800
3,064
20,011
51,629
1,173
2,108,677
17,051,081
11,831,937
7,011,975
257,386
242,336
381,786
(638,431 )
99,386
5) k)
5) h), i) and k)
5) h)
19,186,375
313,541
19,499,916
6) h)
$ 36,550,997
(Concluded)
3) Reconciliation of the consolidated statement of comprehensive income for the year ended
December 31, 2012:
ROC GAAP
Item
Sales
Sales returns and allowances
Net sales
Cost of goods sold
Gross profit
Operating expenses
Selling
Operating income
Nonoperating income and gains
Interest income
Valuation gain on financial assets, net
Dividend income
Amount
$ 68,353,249
1,403,009
66,950,240
62,418,958
4,531,282
1,666,758
1,348,435
901,813
3,917,006
614,276
Effect of
Transition to
IFRSs
Amount
$
(30 )
30
1,075
1,985
4,506
7,566
(7,536 )
116,778
45,099
1,454
-
IFRSs
Item
Sales
Sales returns and allowances
Net sales
Cost of goods sold
Gross profit
Operating expenses
Selling
Operating income
Nonoperating income and gains
Interest income
Valuation gain on financial assets, net
Dividend income
Amount
Note
$ 68,353,249
1,403,009
66,950,240
62,418,928
4,531,312
1,667,833
1,350,420
906,319
3,924,572
606,740
5) h)
5) d), h) and i)
116,778
45,099
1,454
(Continued)
- 70 -
ROC GAAP
Item
equipment
Rental income
Reversal of allowance for doubtful accounts
Miscellaneous income
Total nonoperating income and gains
Nonoperating expenses and losses
Interest expenses
Valuation loss on financial liabilities, net
Loss on disposal of property, plant and
equipment
Financial expenses
Impairment loss on financial assets carried at
cost - noncurrent and property, plant and
equipment
Exchange loss, net
Miscellaneous expenses
Total nonoperating expenses and losses
Income tax expenses
Amount
$
$
4,254
Effect of
Transition to
IFRSs
Amount
$
-
43,391
13,191
64,143
288,310
-
48,561
23,689
4,629
-
4,141
2,862
58,225
(2,862 )
-
13,399
12,992
168,498
734,088
361,143
372,945
2,516
(346 )
(7,190 )
(1,324 )
(5,866 )
$
IFRSs
Item
equipment
Rental income
Reversal of allowance for doubtful accounts
Miscellaneous income
Total nonoperating income and gains
Nonoperating expenses and losses
Financial costs
Valuation loss on financial liabilities, net
Loss on disposal of property, plant and
equipment
Impairment loss
Amount
$
43,391
13,191
64,143
288,310
48,561
23,689
4,629
4,141
58,225
Exchange loss, net
Miscellaneous expenses
Total nonoperating expenses and losses
Income tax expenses
Other comprehensive income/loss:
financial assets
Actuarial gain on projected benefit obligation
Income tax relating to components of other
comprehensive income
Total other comprehensive loss (after income
tax)
Total comprehensive income
Note
4,254
13,399
15,508
168,152
726,898
359,819
367,079
5) d) and l)
5) h) and i)
(405,672 )
(34,830 )
3,335
130,900
(306,267 )
$
60,812
(Concluded)
4) Exemptions from IFRS 1
IFRS 1 establishes the procedures for the Group’s first consolidated financial statements prepared in
accordance with IFRSs. According to IFRS 1, the Group is required to determine the accounting
policies under IFRSs and retrospectively apply those accounting policies in its opening balance
sheet at the date of transition to IFRSs, January 1, 2012; except for optional exemptions and
mandatory exceptions to such retrospective application provided under IFRS 1. The major
optional exemptions the Group adopted are summarized as follows:
Business combinations
The Group elected not to apply IFRS 3, “Business Combinations,” retrospectively to business
combinations that occurred before the date of transition. Therefore, in the opening balance sheet,
the amount of goodwill generated from past business combinations, remains the same compared
with the one under ROC GAAP as of December 31, 2011.
Share-based payment transactions
The Group elected to take the optional exemption from applying IFRS 2 “Share-based Payment”
retrospectively for the shared-based payment transactions granted and vested before the date of
transition.
Deemed cost
The Group did not to evaluate any property, plant and equipment nor intangible assets at fair value
on the IFRS transition date. Instead, the Group has measured to evaluate property, plant and
equipment, investment properties and intangible assets by the cost method under IFRSs
retrospectively.
- 71 -
Employee benefits
The Group and its subsidiaries elected to recognize all unrecognized cumulative actuarial gains or
losses related to the employee benefits plans in retained earnings on the transition date.
The effect of the above- mentioned optional exemptions elected by the Group was stated in the
following Note 5 - explanations of significant reconciling items in the transition to IFRSs.
5) Explanations of significant reconciling items in the transition to IFRSs
Material differences between the accounting policies under ROC GAAP and the accounting policies
adopted under IFRSs were as follows:
a) Time deposits with an initial maturity of three months or more
Under ROC GAAP, time deposits that can be readily sold without evading the principle are
classified as cash. Under IFRSs, time deposits with an initial maturity of three months or more
are not classified as cash and cash equivalents. These time deposits do not have a quoted
market price in an active market, and are expected to receive a fixed or discretionary amount.
Thus, they are classified as other receivables.
As of January 1, 2012 and December 31, 2012, the Group reclassified $600,407 thousand and
$631,981 thousand, respectively, from cash and cash equivalents to other receivables.
b) Allowance for sales returns and others
Under R.O.C. GAAP, provisions for estimated sales returns and others are recognized as a
reduction in revenue in the year the related revenue is recognized based on historical
experience. The corresponding allowance for sales returns and others is presented as a
reduction in accounts receivable. Under IFRSs, the allowance for sales returns and others is a
present obligation with uncertain timing and an amount that arises from past events and is
therefore reclassified as provisions, which is included in current liabilities.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from allowance for
sales returns and others to provisions were $501,535 thousand and $485,168 thousand,
respectively.
c) Deferred tax assets/liabilities
Under ROC GAAP, valuation allowance is provided to the extent, if any, that it is more likely
than not that deferred income tax assets will not be realized. Under IFRSs, deferred income
tax asset is only recognized to the extent that it is probable that there will be sufficient taxable
profits; thus, the valuation allowance account is no longer not needed.
In addition, under ROC GAAP, a deferred income tax asset and liability is classified as current
or noncurrent in accordance with the classification of related asset or liability for financial
reporting. However, if a deferred income tax asset or liability does not relate to an asset or
liability in the financial statements, it is classified as either current or noncurrent based on the
expected length of time before it is realized or settled. Under IFRSs, a deferred income tax
asset and liability is classified as noncurrent asset or liability.
As of December 31, 2012 and January 1, 2012, the Group reclassified $238,579 thousand and
$206,050 thousand, respectively, from current deferred income tax assets to noncurrent assets.
Under ROC GAAP, offsetting deferred tax assets - current and liabilities - current for the same
taxpayer is required. The same is true for non-current deferred tax assets and liabilities.
- 72 -
Under IFRSs, the enterprise should offset deferred tax assets and liabilities if, and only if;
i. An enterprise has the legal rights to offset the current tax assets and liabilities; and
ii. Deferred tax assets and liabilities pertain to the same taxpayer and the same tax authority.
As of December 31, 2012 and January 1, 2012, the Group increased of $46,766 thousand and
$49,294 thousand, respectively, in deferred income tax assets and liabilities.
d) Classification of leased assets and idle assets
Under ROC GAAP, assets leased to others and idle assets are classified as leased assets and idle
assets, respectively. Under IFRSs, properties held to earn rentals or for capital appreciation,
should be classified as investment properties. If the property is not an investment property, it
should be reclassified to property, plant and equipment. If the property is not an investment
property, it should be reclassified to property, plant and equipment.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from leased assets and
idle assets to investment properties were $411,006 thousand and $413,019 thousand,
respectively; the amounts reclassified from leased assets to property, plant and equipment were
$8,970 thousand and $14,200 thousand, respectively.
e) Land use rights
Under ROC GAAP, land use rights are classified as intangible assets. Under IFRSs, in
accordance with the requirements of IAS 17, “Lease”, land use rights as long-term prepaid rent.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from land use rights to
prepayment for lease were $713,233 thousand and $760,967 thousand, respectively.
f) Prepayment for equipment
Under ROC GAAP, prepayments for equipment are classified as property, plant and equipment.
Under IFRSs, they are classified as prepayments and presented under current and noncurrent
assets depending on the length of the realization period.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from prepayments for
equipment to other noncurrent assets - prepayments for equipment were $173,306 thousand and
$30,814 thousand, respectively.
g) Deferred charges
Under ROC GAAP, deferred charges are classified as other assets. Under IFRSs, these
charges are classified as property, plant and equipment, intangible assets, prepayments or
long-term prepayments depending on their nature, which are other non-current assets.
As of December 31, 2012 and January 1, 2012, the Group and its subsidiaries reclassified
deferred charges as follows: Reclassified $137,771 thousand and $251,800 thousand to
property, plant and equipment, respectively; reclassified $39,318 thousand and $44,108
thousand to intangible assets, respectively; and reclassified $2,846 thousand and $714 thousand
to long-term prepayments, respectively.
- 73 -
h) Employee benefits - short-term accumulating compensated absences
Short-term accumulating compensated absences are not specifically addressed under ROC
GAAP and usually recognized when employees go on leave. Under IFRSs, accumulating
compensated absences are recognized as salary expense as employees render services that
increase their entitlement to future compensated absences.
As of December 31, 2012 and January 1, 2012, the Group accrued accumulating compensated
absences amounting to $43,164 thousand and $40,986 thousand, respectively; deferred income
tax assets increased by $4,366 thousand and $3,774 thousand, respectively; unappropriated
earnings decreased by $38,519 thousand and $36,129 thousand, respectively; and no controlling
interests decreased by $947 thousand and $1,083 thousand, respectively.
For the year ended December 31, 2012, the Group increased salary expense and cumulative
translation adjustments by $2,883 thousand and $669 thousand, respectively; and decreased
income tax expense by $592 thousand.
i) Employee benefits - actuarial gains or losses on employee benefit plan
Under ROC GAAP, unrecognized net transition obligation on the first-time adoption of SFAS
No. 18 “Accounting for Pensions”, should be amortized by the expected average remaining
service lives of the employees who are still in service and are expected to receive pension
benefits using the straight-line method and recorded in net pension cost. Under IFRSs, the
Group is not subject to the transition requirements of IFRS 19. Thus, unrecognized net
transition obligation should be recognized immediately in retained earnings.
Under ROC GAAP, actuarial gains and losses are recognized using the corridor approach. The
portion of those actuarial gains and losses to be recognized is calculated as the excess divided
by the expected average remaining service lives of the employees who are still in service and
are expected to receive pension benefits. Under IFRS 19 “Employee Benefits”, actuarial gains
and losses should be recognized immediately in other comprehensive income and retained
earnings in statement of changes in equity and should not be reclassified subsequently to profit
or loss.
As of December 31, 2012 and January 1, 2012, in accordance with IAS 19 “Employee Benefits”
and IFRS 1 “First-time Adoption of International Financial Reporting Standards”, the Group
increased prepaid pension cost by $31,942 thousand and $32,914 thousand, respectively;
increased deferred income tax liabilities by $4,863 thousand and $5,595 thousand, respectively;
increased unappropriated earnings by $27,079 thousand and $27,319 thousand, respectively.
In addition, for the year ended December 31, 2012, the Group decreased pension benefits and
income tax expense by $4,307 thousand and $732 thousand, respectively; and recognized the
actuarial gain of $3,335 thousand on the defined benefit plan.
j) Provision
Under IFRSs, provisions should be recognized when the Group has a present obligation arising
from past events, and will probably cause economic resource outflows, and a reliable estimate
can be made of the amount of the obligation.
As of December 31, 2012 and January 1, 2012, the Group and its subsidiaries reclassified
accrued expenses of $465,879 thousand and $433,277 thousand, respectively, to provisions.
- 74 -
k) Changes in subsidiary’s ownership interest resulting from the issuance of shares by the
subsidiary
Under ROC GAAP, if an investee issues new shares and an investor does not subscribe for new
shares proportionately, the investor’s ownership percentage and also its interest in net assets of
the investment will be changed. The resulting difference is adjusted in capital surplus - from
long-term equity-method investments and equity-method investments. Under IFRSs, changes
in the investor’s ownership interests in associates that do not result in the investor losing control
over the associates are accounted for as proportionate acquisition or disposal of the associates’
shares; changes in the investor’s ownership interests in subsidiaries that do not result in the
investor losing control over the subsidiaries are accounted for as equity transactions.
In addition, according to “Q&A for Adoption of International Financial Reporting Standards by
Companies in the ROC,” issued by TWSE, capital surplus that is not covered by regulations of
IFRSs, or those with no violation of related regulation of Company Law and related
interpretations issued by the Minister Economic Affairs (MOEA) should be adjusted at the
transition date.
Check that requirements in the" Q&A for Adoption of International Financial Reporting
Standards by Companies in the ROC,” issued by TWSE regarding long-term equity investment
was not feasible in practice to apply retrospectively, reclassification adjustment was made
resulting in a decrease in capital surplus - investment accounted for by the equity method and an
increase by the same amount in retained earnings. As of December 31, 2012 and January 1,
2012, the Group’s capital surplus - investment accounted for by the equity method decreased by
$17,575 thousand each.
l) Reclassification
Several certain items of the consolidated report on December 31, 2012 have been reclassified
for being in accordance with the consolidated report on December 31, 2013.
6) Explanation of material adjustments to the statement of cash flows
Certificates of deposits that can be readily canceled and negotiable certificates of deposit that can be
readily sold without eroding the principal meet the definition of cash under ROC GAAP.
However, under IFRSs 7 “Statement of Cash Flows”, cash equivalents are held for the purpose of
meeting short-term cash commitments rather than for investment or other purposes. For an
investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash
and be subject to an insignificant risk of changes in value. An investment normally qualifies as a
cash equivalent only when it has a short maturity of, say, three months or less from the date of
acquisition. Certificates of deposits with carrying amounts of $631,981 thousand and $600,407
thousand as of January 1, 2012 and December 31, 2012, respectively, held by the Group were for
investment purposes and were thus no longer classified as cash under IFRSs.
Under ROC GAAP, interest paid and received and dividends received are classified as operating
activities while dividends paid are classified as financing activities. Additional disclosure is
required for interest expenses when reporting cash flow using the indirect method. However,
under IFRS 7 “Statement of Cash Flows”, cash flows from interest and dividends received and paid
should each be disclosed separately. Each shall be classified in a consistent manner from period to
period as operating, investing or financing activities. Thus, interests amounting to $112,021
thousand received by the Group and the interests amounting to $47,874 thousand paid by the Group
for the year ended December 31, 2012 were presented separately at the date of transition to IFRSs.
Except for the above differences, there are no other significant differences between ROC GAAP
and IFRSs regarding the consolidated statement of cash flows.
- 75 -
TABLE 1
FINANCING PROVIDED TO OTHERS
FOR THE YEAR ENDED DECEMBER 31, 2013
(Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Guarantee Party
No.
0
1
Endorsement/
Guarantee
Provider
Name
Elitegroup Computer Alpha Leader Ltd.
Systems Co., Ltd.
(HK)
Elitegroup Computer Beijing Advazone
Systems Co., Ltd.
Electronic., Ltd.
Golden Elite
(Shenzhen) Co.,
Ltd.
Nature of
Relationship
Limits on
Endorsement/
Guarantee
Maximum
Amount Provided
Balance for the
to Each
Period
Guaranteed
Party
(Notes 1 and 2)
Ratio of
Accumulated
Amount of
Endorsement/
Endorsement/
Guarantee
Amount Actually
Guarantee
Ending Balance
Collateralized to
Drawn
Collateralized by
Net Equity per
Properties
Latest Financial
Statements
Subsidiary of
Venture Well
Subsidiary of
Venture Well
$ 9,088,495
(Note 1)
9,088,495
(Note 1)
$ 1,105,500
$
651,349
3,042,089
1,834,846
Elitegroup Computer Parent Company
Systems Co., Ltd.
9,088,495
(Note 1)
7,500
7,453
-
3.58
1,004,944
-
10.09
7,453
-
0.04
$
103,301
$
Maximum
Endorsement/
Guarantee
Amount
Allowable
Guarantee
Provided by
Parent Company
Guarantee
Provided by A
Subsidiary
Guarantee
Provided to
Subsidiaries in
Mainland China
$ 9,088,495
(Note 2)
9,088,495
(Note 2)
Y
N
N
Y
N
Y
9,088,495
(Note 2)
N
Y
N
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.。
- 76 -
TABLE 2
MARKETABLE SECURITIES HELD
DECEMBER 31, 2013
December 31, 2013
Holding Company Name
Elitegroup Computer Systems (HK) Co.,
Ltd.
Type and Name of Marketable
Securities
Relationship with the
Holding Company
Common stock
Genuine C&C Inc.
No
pAsia Inc.
No
Lu- Chu Development Corporation
No
Ennoconn Corporation.
No
Trigem Computer Inc.
No
S Com Inc.
No
Preferred stock
Einux, Inc.
No
pAsia Inc.
No
Beneficiary certificate
Mega Diamond Money Market
No
FSITC Taiwan Money Market
No
Jih Sun Money Market
No
Yuanta De-Bao Money Market
Fund
UPAMC James Bond Money
Market
No
NPRS-IMPERIAL FUND
No
No
Financial Statement Account
Financial assets at fair value
through profit or loss - current
Financial assets carried at cost non-current
- non-current
- 77 -
Carrying
Amount
Shares
689,510
$
Percentage of
Ownership
9,308
0.87
1,040,000
-
4,410,000
Fair Value/Net
Assets Value
(Note 1)
$
Maximum
Shares
Holding/Units
During the
Period
9,308
689,510
17.33
-
1,040,000
44,100
2.24
-
7,000,000
949,074
7,313
1.57
-
949,074
66
6
-
-
66
303
-
-
-
303
500,000
-
4.68
-
500,000
65,000
-
1.14
-
65,000
8,173,875
100,011
-
100,011
18,285,583
66,966,229
1,000,094
-
1,000,094
66,966,229
55,343,406
800,077
-
800,077
55,343,406
85,137,540
1,000,094
-
1,000,094
85,137,540
61,232,113
1,000,092
-
1,000,092
61,232,113
199,400
US$ 4,295,076
-
US$ 4,295,076
199,400
Note
December 31, 2013
Holding Company Name
Type and Name of Marketable
Securities
Elitegroup Computer Systems Holding Co., Beneficiary certificate
Ltd. (BVI)
NPRS-IMPERIAL FUND
Elitegroup Computer Systems Inc. (USA).
Super ECS Co., Ltd. (Mauritius)
Beijing Advazone Electronic Co., Ltd.
Relationship with the
Holding Company
Shares
Carrying
Amount
Percentage of
Ownership
Fair Value/Net
Assets Value
(Note 1)
Maximum
Shares
Holding/Units
During the
Period
No
- non-current
228,860
US$ 4,929,644
-
US$ 4,929,644
228,860
Stock
MiTAC Holdings Corporation
No
- non-current
223,124
US$ 215,850
0.03
US$ 215,850
223,124
NPRS-IMPERIAL FUND
No
- non-current
50,000
US$ 1,077,000
-
US$ 1,077,000
50,000
No
RMB
-
RMB
Stock
Beijing Beareyes Info Systems Co.,
Ltd.
-
-
-
Note
-
Note 1: The fair value was calculated according to close price on December 31, 2013 or net assets value of individual fund. If there was no fair value, it displayed the net value of shares calculated by the percent of holding shares. Financial
assets carried at cost only could obtain its verifiable value when exceeding its reasonable value, therefore, it would not display its fair value.
Note 2: Marketable securities above did not exist the following conditions:
Providing for guarantee, collateralizing for borrowing and other restrictions.
(Concluded)
- 78 -
TABLE 3
MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
(Amount in Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Company Name
Elitegroup Computer
Systems Co., Ltd.
Type and Name of
Financial Statement
Marketable
Account
Securities
FSITC Taiwan
Money Market
Jih Sun Money
Market
Yuanta De- Bao
Money Market
Fund
UPAMC James
Bond Money
Market
Note:
Financial assets at fair
value through profit
or loss - current
or loss - current
or loss - current
or loss - current
Counterparty
Beginning Balance
Nature of
Relationship Shares/Units
Amount
-
-
-
-
-
-
-
$
Acquisition
Shares/Units
Amount
Disposal
Carrying
Amount
Amount
Shares/Units
-
66,966,229
$ 1,000,000
-
-
-
55,343,406
800,000
-
-
-
-
-
85,137,540
1,000,000
-
-
-
-
61,232,113
1,000,000
-
The book amount was original acquisition cost.
- 79 -
$
-
$
Ending Balance
Gain (Loss) on
Disposal
-
$
Shares
Amount
-
66,966,229
$ 1,000,000
-
-
55,343,406
800,000
-
-
-
85,137,540
1,000,000
-
-
-
61,232,113
1,000,000
TABLE 4
DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
Seller
Elitegroup Computer
Systems Co., Ltd.
Property
Land and building
Event Date
2013.12.10
Original
Acquisition
Date
Carrying
Amount
(Note 2)
Transaction
Amount
(Note 1)
Collection
Gain (Loss) on
Disposal
2000.05.192007.07.01
$ 3,055,072
$ 6,572,038
Collected in full
$ 2,935,219
Counterparty
Mercuries Life
Insurance
Relationship
Third party
Purpose of
Disposal
To increase the
Company’s
equity and
return on
investment
Price Reference
Other Terms
Note 3
Note 4
Note 1: The Company signed a contract with a third party and sold the real estates for $6,572,038 thousand (net of business tax and brokerage fees) and 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 (see Note 12).
Note 2: It contained the fixed equipment of the real estates amounted to $9,996 thousand.
Note 3: The reference basis were appraisal reports from CCIS Real Estate Appraisers Firm, Honda Appraisers Joint Firm and Panasia Real Estate Appraisers Firm.
Note 4: The rental period of sold and leaseback is 10 years.
- 80 -
TABLE 5
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
Elitegroup Computer Systems
Co., Ltd.
Amount
$
Payment Terms
5,497,905
11
OA 60 days
Sale
558,268
1
Sale
108,359
-
Elitegroup Computer Systems Inc. Subsidiary of ECS
(USA)
Holding (America)
Co. (USA)
Super ECS USA Inc.
Subsidiary of ECS
Holding (America)
Co. (USA)
Elitegroup Computer Systems EU Subsidiary
B.V.
Golden Elite (Shenzhen) Co., Ltd. Subsidiary of Million
Up Finance Ltd.
Elitegroup Computer (Suzhou
Subsidiary of Unitop
Industrial Park) Ltd.
International Corp.
Chunghwa Picture Tubes, Ltd.
Invested company
accounted in equity
method by Tatung
Sale
Golden Elite (Shenzhen) Co., Ltd. Elitegroup Computer Systems
Ultimate parent
Co., Ltd.
company
ECS Trading (Shenzhen) Co., Ltd. Subsidiary of Unique
Sino Limited
Subsidiary of Unitop
Sino Limited
Sale
13,570,860
Sale
Ultimate parent
Co., Ltd.
company
Golden Elite (Shenzhen) Co., Ltd. Subsidiary of Million
Up Finance Ltd.
% to Total
Abnormal Transaction (Note)
Unit Price
$
Payment Terms
-
-
OA 90 days
-
OA 45 days
Notes/Accounts Receivable
(Payable)
Ending Balance
% to Total
$
183,974
2
-
278,288
3
-
-
15,198
-
Purchase
(13,570,860)
(29)
OA 75 days
-
-
(2,392,423)
(36)
Purchase
(11,832,075)
(25)
OA 60 days
-
-
(2,684,522)
(40)
Purchase
(172,484)
Net 30 days from
the end of the
month
-
-
(75,705)
(1)
95
OA 75 days
-
-
US$ 5,417,043
-
OA 90 days
-
-
US$
Sale
US$ 5,120,274
-
OA 90 days
-
Sale
11,832,075
100
OA 60 days
-
2,392,423
82
438,804
-
-
US$ 1,441,355
1
-
-
2,684,522
100
Purchase
US$ (5,120,274)
(1)
OA 90 days
-
-
US$ (1,441,355)
(1)
Elitegroup Computer Systems Inc. Elitegroup Computer Systems
(USA)
Co., Ltd.
Ultimate parent
company
Purchase
(5,497,905)
(100)
OA 60 days
-
-
(183,974)
(100)
Elitegroup Computer Systems EU Elitegroup Computer Systems
B.V.
Co., Ltd.
Ultimate parent
company
Purchase
(108,359)
(100)
OA 45 days
-
-
(15,198)
(100)
ECS Trading (Shenzhen) Co., Ltd. Golden Elite (Shenzhen) Co., Ltd. Subsidiary of Million
Up Finance Ltd.
Purchase
US$ (5,417,043)
(100)
OA 90 days
-
-
(438,804)
(100)
Super ECS USA Inc.
Purchase
(558,268)
(100)
OA 90 days
-
-
(278,288)
(100)
Note:
Co., Ltd.
Ultimate parent
company
It has been wrote off when compiling consolidated financial statements.
- 81 -
US$
Note
TABLE 6
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2013
Company Name
Co., Ltd.
Related Party
Relationship
Turnover Rate
183,974
22.41
278,288
Accounts receivable
Accounts receivable
Elitegroup Computer Systems Inc.
(USA)
Super Ecs USA Inc.
Subsidiary of ECS Holding (America) Accounts receivable
Co. (USA)
Subsidiary of ECS Holding (America) Accounts receivable
Co. (USA)
Golden Elite (Shenzhen) Co.,
Ltd.
Ultimate Parent Company
Ultimate Parent Company
Note:
Overdue
Ending Balance
(Note)
It was wrote off when compiling consolidated financial statements.
- 82 -
$
Amount
$
Actions Taken
Amounts Received in
Subsequent Period
(Note)
$
183,974
Allowance for
Impairment Loss
-
-
$
-
3.34
-
-
203,643
-
2,392,423
7.71
-
-
2,392,423
-
2,684,522
5.32
-
-
2,480,448
-
TABLE 7
INFORMATION ON INVESTEES
Original Investment Amount (Note 1)
Investor Company
Co., Ltd.
Holding Co., Ltd. (BVI)
Investee Company
Location
Main Businesses and Products
Elitegroup Computer Systems Gmbh Schwannstr. 6, 40476
Ltd.
Dusseldorf, Germany
peripheral products and related
components
Elitegroup Computer Systems (HK) Flat D, 12/F, Roxy
Co., Ltd.
Industrial Centre, 58-66 peripheral products and related
Tai Lin Pai Road, Kwai
components
Chung, N.T. Hong
Kong
Elitegroup Computer Systems (Japan) 2F SAKURA Bldg, 4-6-1, Sale of motherboards, computer
Co., Ltd.
Oi Shinagawa-Ku,
Tokyo 140-0014, Japan
components
Palm Grove House, P.O. Investment holding
Holding Co., Ltd. (BVI)
Box 438, Road Town,
Tortola, B.V.I.
ECS Holding (America) Co. (USA) 1209 Orange Street,
Investment holding
Wilmington City,
Delaware State, New
Castle
Elitegroup Computer Systems (Korea) 3F, 138, Wouhyo-ro,
Trade of motherboards
Co., Ltd.
Yongsan-gu, Seoul,
Korea
Elitegroup Computer Systems EU
Kerkenbos 1309A,
B.V.
6546BG Nijmegen The
Netherlands
components
Dragon Asia Trading Co., Ltd. (BVI) Palm Grove House, P.O. Investment holding
Box 438, Road Town,
Tortola, B.V.I.
Unitop International Corp.
Offshore Incorporations Investment holding
Limited P.O. Box 957,
Offshore Incorporations
Centre, Road Town,
Tortola, British Virgin
Islands
Offshore Chambers, P.O. Investment holding
Box 217, Apia, Samoa
ECS Trading Co., Ltd. (Samoa)
Venture Well Holdings Ltd. (BVI)
Level 2, Lotemau Centre, Sale of motherboards, computer
Vaea Street, Apia,
Samoa
components
Centre, Road Town,
Islands
December 31, 2013 December 31, 2012
$
-
$
As of December 31, 2013
Carrying Amount
Shares
%
(Note 1)
-
$
-
Net Income (Loss)
of the Investee
(Note 2)
Share of Profits
(Loss)
(Note 1)
$
$
49,587
-
(1,862)
62,413
62,413
16,560,000
100.00
254,939
3,540
3,540 Note 3
19,078
19,078
1,136
100.00
20,095
1,264
1,264 Note 3
1,025,541
1,025,541
27,225,805
100.00
687,207
1,325,119
1,325,119
3,362
100.00
1,298,455
66,780
66,780
469,000
100.00
50,827
-
1,300,000
7,015,064
7,312,614
429,091
62,052
(256,881)
Note
(1,862) Notes 3 and 7
(251,977) Note 3
96,230
87,985 Note 3
(1,580)
22,105
22,105 Notes 3 and 4
100.00
7,140
(1,233)
(1,233) Note 3
212,125,969
100.00
5,686,903
(68,455)
(64,629) Note 3
429,091
2,700
100.00
1,929,174
136,635
135,617 Note 3
62,052
1,905,000
100.00
68,425
12,490
12,490 Note 3
30,108
1,010,000)
1,010,000
100.00
751
25,231) (US$
751 Notes 3 and 5
25,231)
654,460
654,460
(US$ 21,954,373) (US$ 21,954,373)
21,954,373
(US$
30,108
1,010,000) (US$
(US$
68.45
98,921
3,318,386) (US$
454,122
(365,444)
(US$ 15,233,870) (US$ -12,275,592) (US$
(250,147) Note 3
-8,402,643)
(Continued)
- 83 -
Original Investment Amount (Note 1)
Investor Company
ECS Holding (America) Co.
(USA)
Investee Company
Elitegroup Computer Systems Inc.
(USA)
Super ECS USA, Inc.
Dragon Asia Trading Co., Ltd.
(BVI)
Super ECS Co., Ltd. (Mauritius)
Million Up Finance Ltd.
Elitegroup International Holding
(HK) Co., Ltd.
Shining Bright Technology Ltd.
(Samoa)
Unique Sino Limited
Venture Well Holdings Ltd. (BVI) Alpha Leader Ltd. (HK)
Advazone International Ltd. (BVI)
Affirm International Ltd. (BVI)
Affirm International Ltd. (BVI)
Orbbit International Corp.
Protac International Computer, S.L.
Location
December 31, 2013 December 31, 2012
6851 Mowry Avenue
Newark, CA 94560,
U.S.A.
Sale of motherboards, ,notebook
$
1,144,847
$
1,144,847
computers, computer peripheral (US$ 38,404,813) (US$ 38,404,813)
products, related components
and systems assembled
6600 Sands Point Dr. #
14,905
14,905
288 Houston, TX77074, peripheral products and related (US$
500,000) (US$
500,000)
U.S.A.
components
2nd Floor, Felix House,
24 Dr. Joseph Riviere
Street, Port Louis,
Republic of Mauritius
Portcullis TrustNet
Chambers
4th Floor Ellen Skelton
Building, P.O. Box
3444, Road Town,
Islands
Flat D, 12/F., Roxy
Industrial Centre, 58-66
Tai Lin Pai Road, N.T.,
Hong Kong
Level 2, Lotemau Centre,
Vaea Street, Apia,
Samoa
100.00
100.00
Investment holding
721,402
721,402
(US$ 24,200,000) (US$ 24,200,000)
24,200,000
100.00
1,026,875
1,384,595
(US$ 34,447,334) (US$ 46,447,334)
34,447,334
Investment holding, manufacture
and sale of printed circuit
boards (PCBs)
56,341
1,890,000) (US$
596,200
596,200
(US$ 20,000,000) (US$ 20,000,000)
155,600,000
100.00
552,976
552,976
(US$ 18,550,000) (US$ 18,550,000)
18,550,000
100.00
130,568
4,380,000
(US$
130,568
4,380,000)
4,380,000
(US$
65,582
2,200,001) (US$
65,582
2,200,001)
6,351,401
(US$
-
-
(US$
35,134
1,178,592) (US$
6,615
222,190) (US$
6,615 Note 3
222,190)
(US$
95,876
3,216,249) (US$
(19,955)
-670,308) (US$
5,114,212
(US$ 171,560,293) (US$
204,259
6,861,245) (US$
143,962 Note 3
4,835,822)
(US$
293,077
9,831,498) (US$
35,069
1,177,998) (US$
35,069 Note 3
1,177,998)
(US$
6,496
217,914) (US$
6,289
211,261) (US$
6,289 Notes 3 and 6
211,261)
(US$
68,400
2,294,547) (US$
12,490
419,538) (US$
12,490 Note 3
419,538)
445,803
(US$ 14,954,808) (US$
(167,151)
-5,614,753) (US$
(167,151) Note 3
-5,614,753)
(US$
211,458
7,093,534) (US$
(204,368)
-6,864,898) (US$
(204,368) Note 3
-6,864,898)
(US$
218
7,315) (US$
(58)
-1,941) (US$
(58) Note 3
-1,941)
100.00
100.00
100.00
100.00
Note
89,871 Note 3
3,018,847)
(US$
-
Share of Profits
(Loss)
(Note 1)
89,871
$
3,018,847) (US$
100.00
1,890,000
Net Income (Loss)
of the Investee
(Note 2)
$
1,252,486
$
(US$ 42,015,623) (US$
100.00
56,341
1,890,000)
(US$
L' Hospitalet de Hobregat, Sale of computer peripheral
Barrselona, Esquadres,
products
12-14
It was calculated by the average rate from January to December 2013.
2,500,000
99,150,000
8F., No.239, Sec. 2,
Sale of IC and electric
Tiding Blvd., Neihu
components
Dist., Taipei City
11493, Taiwan (R.O.C.)
Note 2:
100.00
11,000,000
Flat D, 12/F., Roxy
Trading of IC and electric
Industrial Centre, 58-66 components
Tai Lin Pai Road, N.T.,
Hong Kong
Centre, Road Town,
Islands
Centre, Road Town,
Islands
It was calculated by the closing rate on December 31, 2013.
47,552
327,910
327,910
computers, computer peripheral (US$ 11,000,000) (US$ 11,000,000)
products and related
components
Investment holding
3,522,052
3,522,052
(US$ 118,150,000) (US$ 118,150,000)
Offshore Chambers, P.O. Investment holding
Box 217, Apia, Samoa
Note 1:
As of December 31, 2013
Carrying Amount
Shares
%
(Note 1)
15,951
535,101)
-
(160)
(US$
-
(19,955) Notes 3 and 5
-670,308)
(160) Note 3
-5,367)
- Notes 3 and 6
(Continued)
- 84 -
Note 3:
Besides from Elitegroup Computer Systems Gmbh Ltd. and Protac International Computer, S.L, the investment income was calculated based on the current audited financial statements of investees.
Note 4:
It was accounted as other receivables from related parties because it continually recognized investment losses and resulted in credit balance of investment.
Note 5:
It shuts down at present.
Note 6:
It is in liquidation at present.
Note 7:
Its liquidation has been finished in October 2013.
(Concluded)
- 85 -
TABLE 8
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
Investee Company
Paid-in Capital
(Note 2)
Method of Investment
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.
Manufacture and maintenance of
electric equipment and instrument,
computer peripheral products and
cases
Beijing Advazone Electronic
Co., Ltd.
Wholesale, maintenance and technical
consultation of computers and
(US$
components
479,941 Indirect investment by Advazone
16,100,000)
International Ltd. (BVI) of
Venture Well Holdings Ltd.
(BVI) of Elitegroup Computer
Systems Holding Co., Ltd. (BVI)
ECS Trading (Shenzhen) Co.,
Ltd.
Wholesale, trade, maintenance and
technical consultation of computers (US$
and peripheral products
59,620 Indirect investment by Unique Sino
2,000,000)
Limited of Unity Investments
Limited
Golden Elite (Shenzhen) Co.,
Ltd.
Manufacture, research and
development of PCBs,
(US$
motherboards, systems, assembled,
notebook computers, tablets and
peripheral products
manufacture of notebook
computers, tablets and related
components
(Changshu) Co., Ltd.
manufacture of motherboards,
systems assembled, notebook
computers and peripheral products
Remittance of Funds
Outward
31,301 Indirect investment by Elitegroup
$
1,050,000)
Computer System (HK) Co., Ltd. (US$
23,691
794,718)
1,600,000)
Computer System (HK) Co., Ltd. (US$
51,857
1,739,577)
-
(US$
332,803
11,164,138)
-
(US$
59,620
2,000,000)
-
(US$
3,519,315
118,058,217)
-
(US$
29,810 Indirect investment byUnitop
1,000,000)
International Corp.
29,810
1,000,000)
-
(US$
775,060 Indirect investment byUnitop
26,000,000)
International Corp.
775,060
26,000,000)
-
(US$
715,440
24,000,000)
-
(US$
(US$
2,951,190 Indirect investment by Million Up
99,000,000)
Finance Ltd. of Dragon Asia
Trading Co., Ltd. (BVI)
24,000,000)
International Holding (HK) Co., (US$
Ltd. of Dragon Asia Trading Co.,
Ltd. (BVI)
$
Accumulated
Outward
Remittance for
Net Income (Loss) of
Investment from
the Investee
Taiwan as of
(Note 3)
December 31, 2013
(Note 2)
Inward
$
(US$
Elitegroup Electronic (Suzhou) Research, development and
Corp.
maintenance of notebook computers (US$
and related products
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2013
(Note 2)
-
$
-
$
(US$
23,691 $
794,718) (RMB
925
190,950)
100.00
51,857
1,739,577) (RMB
3,499
722,567)
100.00
(US$
332,803
(158,588)
11,164,138) (RMB -32,748,377)
68.45
-
(US$
-
$6,938,858 (US$232,769,475) (Note 2)
$10,906,195
It was calculated by the rate of January 1, 2013.
Note 3:
It was calculated by the average rate from January to December 2013.
Note 4:
Amount was calculated based on the net value of the audited financial statements on December 31, 2013, and the upper limit on investment was calculated as follow:
- 86 -
207,057
42,757,336)
29,810
1,000,000) (RMB
3,164
653,322)
100.00
(US$
775,060
26,000,000) (RMB
133,501
27,567,957)
100.00
(US$
715,440
24,000,000) (RMB
35,425
7,315,342)
100.00
(US$
-
$5,507,596 (US$184,756,650) (Note 2)
Note 2:
3,519,315
118,058,217) (RMB
100.00
(US$
-
Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA
The investment income (loss) was calculated based on the current audited financial statements of investees.
12,490
2,579,121)
-
Investment Amounts Authorized by Investment
Commission, MOEA
Note 1:
59,620
2,000,000) (RMB
100.00
(US$
-
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2013
% Ownership of
Direct or Indirect
Investment
$18,176,991 x 60% = $10,906,195.
Investment
Gain (Loss)
(Notes 1 and 3)
Accumulated
Carrying Amount as
Repatriation of
of December 31,
Investment Income
2013
as of December 31,
(Note 2)
2013
$
(US$
925 $
31,061) (US$
15,398
516,543)
$
-
3,499
117,538) (US$
84,660
2,839,979)
-
(US$
(158,588)
-5,327,105) (US$
210,946
7,076,345)
-
(US$
12,490
419,538) (US$
68,398
2,294,472)
-
(US$
207,057
6,955,213) (US$
4,528,797
151,922,068)
-
(US$
3,164
106,274) (US$
58,970
1,978,184)
-
(US$
133,501
4,484,400) (US$
1,871,271
62,773,275)
-
(US$
35,425
1,189,966) (US$
289,653
9,716,641)
-
(US$
TABLE 9
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 Details
Transaction Type
Amount
Golden Elite (Shenzhen) Co., Ltd.
Purchases
$
Purchases
Sales
US$
ECS Trading (Shenzhen) Co., Ltd.
Purchases
US$ (5,417,043)
Sales
US$
Purchases
US$ (5,120,274)
%
Price
Payment Term
Comparison with
Normal Transaction
Notes/Accounts Receivable
(Payable)
Ending Balance
%
$
(2,392,423)
(36)
(2,684,522)
(40)
(13,570,860)
(29)
No significance
OA 75 days
No significance
(11,832,075)
(25)
No significance
OA 60 days
No significance
No significance
OA 90 days
No significance
US$
438,804
No significance
OA 90 days
No significance
US$
(438,804)
-
No significance
OA 90 days
No significance
US$
(1)
No significance
OA 90 days
No significance
US$ (1,441,355)
5,417,043
5,120,274
(100)
Note: It was wrote off when compiling consolidated financial statements.
- 87 -
1,441,355
Unrealized (Gain)
Loss
-
Note
-
Note
-
Note
-
Note
1
-
Note
(1)
-
Note
(100)
$
Note
TABLE 10
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
Transaction Details
No.
Investee Company
Counterparty
Relationship
0
Elitegroup Computer Systems Inc. (USA)
Elitegroup Computer Systems Inc. (USA)
Super ECS USA Inc.
Super ECS USA Inc.
Elitegroup Computer Systems EU B.V.
Elitegroup Computer Systems EU B.V.
Elitegroup Computer (Suzhou Industrial Park) Ltd.
1
1
1
1
1
1
1
1
1
1
Sales revenue
Accounts receivable from related parties
Sales revenue
Sales revenue
Purchases
Accounts payable to related parties
Purchases
Accounts payable to related parties
1
3
3
3
3
Sales revenue
Sales revenue
Amount
$
Payment Terms
% to
Total Sales or
Assets
5,497,905
183,974
558,268
278,288
108,359
15,198
13,570,860
2,392,423
11,832,075
2,684,522
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
No significance
9
1
1
1
21
7
19
8
161,265
13,081
152,431
42,967
No significance
No significance
No significance
No significance
-
Note 1: The information about the transactions between the Company and the Subsidiaries should be marked in the note column as follows:
1. the Company: 0.
2. the subsidiaries was marked from 1 in order of numeric characters by the companies.
Note 2: Investment types as follows:
1. the Company to the Subsidiaries.
2. the Subsidiaries to the Company.
3. 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.
- 88 -
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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