Hiwin Technologies Corporation and Subsidiaries
Consolidated Financial Statements for the Six Months Ended June 30, 2014 and 2013 and Independent Accountants’ Review Report
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
June 30, 2014 December 31, 2013 June 30, 2013
(Reviewed) (Audited) (Reviewed)
ASSETS Amount % Amount % Amount %
CURRENT ASSETS
Cash (Note 6) $ 2,246,912 8 $ 1,185,673 4 $ 1,235,275 5
Financial assets at fair value through profit or loss - current (Note 7) 77 - - - 756 -
Notes receivable from unrelated parties, net (Notes 10 and 27) 157,163 1 141,709 1 155,389 -
Notes receivable from related parties, net (Note 26) 5,644 - 69,275 - 17,795 -
Trade receivables from unrelated parties, net (Note 10) 4,825,493 16 4,656,896 17 3,805,394 15
Trade receivables from related parties, net (Note 26) 26,991 - - - 20,336 -
Inventories (Note 11) 4,454,622 15 3,960,986 15 4,221,881 17
Other current assets (Notes 6, 26 and 27) 601,426 2 370,849 1 176,381 1
Total current assets 12,318,328 42 10,385,388 38 9,633,207 38
NON-CURRENT ASSETS
Available-for-sale financial assets - non-current (Note 8) 17 - 16 - 15,060 -
Held-to-maturity financial assets - non-current 3,258 - 3,369 - 3,369 -
Financial assets measured at cost - non-current (Note 9) 360,954 1 360,954 1 339,954 1
Investments accounted for using equity method (Note 12) 103,527 - 99,181 - 88,018 -
Property, plant and equipment (Notes 13, 15 and 27) 13,825,449 47 13,902,937 50 12,653,412 50
Deferred tax assets (Note 4) 125,121 - 136,389 1 174,171 1
Prepayments for machinery and equipment 2,486,295 8 2,337,571 8 2,231,733 9
Refundable deposits 226,148 1 222,087 1 18,760 -
Other non-current assets (Notes 6, 10, 15 and 27) 174,385 1 163,096 1 98,039 1
Total non-current assets 17,305,154 58 17,225,600 62 15,622,516 62
TOTAL $ 29,623,482 100 $ 27,610,988 100 $ 25,255,723 100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 14 and 27) $ 5,560,430 19 $ 5,120,653 19 $ 4,519,794 18
Financial liabilities at fair value through profit or loss - current
(Note 7) 26 - 2,792 - 717 -
Notes payable 7,509 - 20,518 - 12,449 -
Trade payables to unrelated parties 1,901,422 6 1,868,197 7 1,595,435 6
Trade payables to related parties (Note 26) 127,825 - 90,075 - 107,433 -
Other payables (Note 16) 1,153,114 4 1,029,653 4 869,957 4
Dividends payable 685,316 2 - - 665,355 3
Current tax liabilities (Note 4) 347,540 1 315,136 1 200,178 1
Current portion of long-term borrowings (Notes 14, 15 and 27) 1,132,847 4 1,252,797 4 1,029,697 4
Other current liabilities 159,524 1 118,764 - 107,313 -
Total current liabilities 11,075,553 37 9,818,585 35 9,108,328 36
NON-CURRENT LIABILITIES
Long-term borrowings (Notes 14 and 27) 5,708,903 19 5,210,736 19 5,110,926 20
Deferred tax liabilities (Note 4) 151,486 1 151,754 1 153,456 -
Finance lease payables - non-current (Note 15) 409,294 1 420,165 1 430,887 2
Accrued pension liabilities (Note 4) 213,863 1 213,850 1 214,216 1
Guarantee deposits received 300 - 300 - 300 -
Total non-current liabilities 6,483,846 22 5,996,805 22 5,909,785 23
Total liabilities 17,559,399 59 15,815,390 57 15,018,113 59
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION
Common stock 2,538,208 9 2,538,208 9 2,464,280 10
Stock dividend to be distributed 76,146 - - - 73,928 -
Capital surplus- additional paid-in capital 308,630 1 308,630 1 308,630 1
Retained earnings
Legal reserve 1,355,627 5 1,153,469 4 1,153,469 5
Special reserve - - 163,449 1 163,449 1
Unappropriated earnings 7,128,300 24 7,065,846 26 5,678,209 22
Other equity 2,830 - 2,154 - (33,950) -
Total equity attributable to owners of the Corporation 11,409,741 39 11,231,756 41 9,808,015 39
NON-CONTROLLING INTERESTS 654,342 2 563,842 2 429,595 2
Total equity 12,064,083 41 11,795,598 43 10,237,610 41
TOTAL $ 29,623,482 100 $ 27,610,988 100 $ 25,255,723 100
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche review report dated August 11, 2014)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
For the Three Months Ended June 30 For the Six Months Ended June 30
2014 2013 2014 2013
Amount % Amount % Amount % Amount %
SALES (Note 26) $ 3,538,429 100 $ 2,803,323 100 $ 6,550,399 100 5,176,878 100
COST OF GOODS SOLD
(Notes 11, 17, 19 and
26) 2,149,884 61 1,742,166 62 3,962,978 61 3,286,218 64
GROSS PROFIT 1,388,545 39 1,061,157 38 2,587,421 39 1,890,660 36
OPERATING EXPENSES
(Notes 17, 19 and 26)
Selling and marketing
expenses 298,472 8 226,663 8 526,497 8 405,350 8
General and
administrative
expenses 272,199 8 95,612 3 498,437 7 476,675 9
Research and
development expenses 207,267 6 152,282 6 369,077 6 256,880 5
Total operating
expenses 777,938 22 474,557 17 1,394,011 21 1,138,905 22
PROFIT FROM
OPERATIONS 610,607 17 586,600 21 1,193,410 18 751,755 14
NON-OPERATING
INCOME AND
EXPENSES
Finance costs (Note 19) (44,251) (1) (37,420) (2) (85,753) (1) (74,340) (2)
Other income (Notes 12
and 26) 18,094 - 26,726 1 34,267 - 32,267 1
Net foreign exchange
gain (loss) (78,531) (2) 49,143 2 10,534 - 142,702 3
Other expenses (1,950) - (1,316) - (7,826) - (4,384) -
Total non-operating
income and
expenses (106,638) (3) 37,133 1 (48,778) (1) 96,245 2
PROFIT BEFORE
INCOME TAX 503,969 14 623,733 22 1,144,632 17 848,000 16
INCOME TAX EXPENSE
(Notes 4 and 20) 213,778 6 215,385 8 355,947 5 263,245 5
NET PROFIT FOR THE
PERIOD 290,191 8 408,348 14 788,685 12 584,755 11
(Continued)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
For the Three Months Ended June 30 For the Six Months Ended June 30
2014 2013 2014 2013
Amount % Amount % Amount % Amount %
OTHER
COMPREHENSIVE
INCOME
Exchange differences on
translating foreign
operations $ (36,045) (1) $ 15,412 1 $ 1,254 - $ 8,736 1
Unrealized gain (loss)
on available-for-sale
financial assets (1) - 7,993 - 1 - 7,254 -
Income tax benefit
(expense) relating to
the components of
other comprehensive
income 6,128 - - - (579) - - -
Other
comprehensive
income (loss) for
the period (29,918) (1) 23,405 1 676 - 15,990 1
TOTAL
COMPREHENSIVE
INCOME FOR THE
PERIOD $ 260,273 7 $ 431,753 15 $ 789,361 12 $ 600,745 12
NET PROFIT
ATTRIBUTABLE TO:
Owners of the
Corporation $ 328,387 9 $ 435,247 16 $ 862,625 13 $ 634,260 12
Non-controlling interests (38,196) (1) (26,899) (1) (73,940) (1) (49,505) (1)
$ 290,191 8 $ 408,348 15 $ 788,685 12 $ 584,755 11
TOTAL
COMPREHENSIVE
INCOME
ATTRIBUTABLE TO:
Owners of the
Corporation $ 298,469 8 $ 458,652 16 $ 863,301 13 $ 650,250 13
Non-controlling interests (38,196) (1) (26,899) (1) (73,940) (1) (49,505) (1)
$ 260,273 7 $ 431,753 15 $ 789,361 12 $ 600,745 12
EARNINGS PER SHARE
(Note 21)
Basic $ 1.29 $ 1.71 $ 3.40 $ 2.50
Diluted $ 1.29 $ 1.71 $ 3.39 $ 2.49
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche review report dated August 11, 2014) (Concluded)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
(Reviewed, Not Audited)
Equity Attributable to Owners of the Corporation (Note 18)
Other Equity
Exchange Unrealized
Retained Earnings Differences on Gain (Loss) on
Stock Unappropriated Translating Available-for- Non-controlling
Common Stock
Dividend to be
Distributed Capital Surplus Legal Reserve Special Reserve
Earnings
(Note 20)
Foreign
Operations
Sale Financial
Assets Total
Interests
(Note 22) Total Equity
BALANCE AT JANUARY 1, 2013 $ 2,464,280 $ - $ 308,630 $ 953,150 $ 132,863 $ 6,014,137 $ (45,404) $ (4,536) $ 9,823,120 $ 479,100 $ 10,302,220
Appropriation of 2012 earnings
Legal reserve - - - 200,319 - (200,319) - - - - -
Special reserve - - - - 30,586 (30,586) - - - - -
Cash dividends - NT$2.7 per share - - - - - (665,355) - - (665,355) - (665,355)
Share dividends - NT$0.3 per share - 73,928 - - - (73,928) - - - - -
- 73,928 - 200,319 30,586 (970,188) - - (665,355) - (665,355)
Net profit for the six months ended June 30, 2013 - - - - - 634,260 - - 634,260 (49,505) 584,755
Other comprehensive income (loss) for the six months ended
June 30, 2013, net of income tax - - - - - - 8,736 7,254 15,990 - 15,990
Total comprehensive income (loss) for the six months ended
June 30, 2013 - - - - - 634,260 8,736 7,254 650,250 (49,505) 600,745
BALANCE AT JUNE 30, 2013 $ 2,464,280 $ 73,928 $ 308,630 $ 1,153,469 $ 163,449 $ 5,678,209 $ (36,668) $ 2,718 $ 9,808,015 $ 429,595 $ 10,237,610
BALANCE AT JANUARY 1, 2014 $ 2,538,208 $ - $ 308,630 $ 1,153,469 $ 163,449 $ 7,065,846 $ 2,151 $ 3 $ 11,231,756 $ 563,842 $ 11,795,598
Appropriation of 2013 earnings
Legal reserve - - - 202,158 - (202,158) - - - - -
Reversal of special reserve - - - - (163,449) 163,449 - - - - -
Cash dividends - NT$2.7 per share - - - - - (685,316) - - (685,316) - (685,316)
Share dividends - NT$0.3 per share - 76,146 - - - (76,146) - - - - -
- 76,146 - 202,158 (163,449) (800,171) - - (685,316) - (685,316)
Changes in non-controlling interests - - - - - - - - - 164,440 164,440
Net profit for the six months ended June 30, 2014 - - - - - 862,625 - - 862,625 (73,940) 788,685
Other comprehensive income (loss) for the six months ended
June 30, 2014, net of income tax - - - - - - 675 1 676 - 676
Total comprehensive income (loss) for the six months ended
June 30, 2014 - - - - - 862,625 675 1 863,301 (73,940) 789,361
BALANCE AT JUNE 30, 2014 $ 2,538,208 $ 76,146 $ 308,630 $ 1,355,627 $ - $ 7,128,300 $ 2,826 $ 4 $ 11,409,741 $ 654,342 $ 12,064,083
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche review report dated August 11, 2014)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
For the Six Months Ended
June 30
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $ 1,144,632 $ 848,000
Adjustments for :
Depreciation expenses 543,219 520,665
Impairment loss recognized on receivables 8,815 82,272
Finance costs 85,753 74,340
Unrealized foreign currency exchange loss (gain), net 13,132 (35,098)
Impairment loss recognized on non-financial assets 460 12,052
Amortization expenses 7,364 8,705
Gain on disposal of investments - (3,575)
Share of profit of associates accounted for using equity method (4,298) (2,638)
Loss on disposal of property, plant and equipment 1,507 2,458
Net loss (gain) on fair value change of financial assets and liabilities
at fair value through profit or loss
(51) 1,583
Others 111 -
Changes in operating assets and liabilities
Financial instruments held for trading (2,792) (3,233)
Notes receivable 48,863 12,829
Trade receivables (215,165) 527,054
Inventories (459,764) (450,988)
Other current assets 111,512 (31,230)
Notes payable (13,009) 9,364
Trade payables 67,702 (33,337)
Accrued pension liabilities 13 118
Other payables (4,746) (76,192)
Other current liabilities 40,283 36,342
Cash generated from operations 1,373,541 1,499,491
Interest paid (86,443) (65,070)
Income taxes paid (313,520) (508,072)
Net cash generated from operating activities 973,578 926,349
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment (190,105) (533,711)
Increase in prepayments for machinery and equipment (329,788) (241,645)
Decrease (increase) in other financial assets (341,590) 46,904
Proceeds from sale of available-for-sale financial assets - 20,672
Increase in other non-current assets (24,249) (12,231)
Purchase of held-to-maturity financial assets - (3,369)
Increase in refundable deposits (3,328) (2,422)
Proceeds from disposal of property, plant and equipment 1,523 302
Net cash used in investing activities (887,537) (725,500)
(Continued)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
For the Six Months Ended
June 30
2014 2013
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term borrowings $ (702,052) $ (457,210)
Proceeds from short-term borrowings 437,108 186,439
Repayments of finance lease payable (10,556) (9,925)
Changes in non-controlling interests 168,127 -
Proceeds from long-term borrowings 1,085,740 -
Net cash generated from (used in) financing activities 978,367 (280,696)
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES
(3,169) (1,967)
NET INCREASE (DECREASE) IN CASH 1,061,239 (81,814)
CASH AT THE BEGINNING OF THE PERIOD 1,185,673 1,317,089
CASH AT THE END OF THE PERIOD $ 2,246,912 $ 1,235,275
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche review report dated August 11, 2014) (Concluded)
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HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
(Reviewed, Not Audited)
1. GENERAL INFORMATION
Hiwin Technologies Corporation (the “Corporation”) was incorporated on October 11, 1989. It
manufactures and sells ballscrews, linear guideways, industrial robots, aerospace automation equipment
parts, CNC (computer numerical control) milling machines and medical equipment.
The Corporation was approved by the Securities and Futures Commission (renamed “Securities and Futures
Bureau (SFB)”) to become a public Corporation on April 16, 1997. The shares of the Corporation have
been listed on the Taiwan Stock Exchange (“TSE”) since June 26, 2009.
The consolidated financial statements are presented in the Corporation’s functional currency, New Taiwan
dollars.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the board of directors on August 11, 2014.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. The 2013 version of the International Financial Reporting Standards (IFRS), International Accounting
Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) in issue but not yet
effective
Rule No. 1030010325 issued by the Financial Supervisory Commission (FSC) on April 3, 2014,
stipulated that the Group should apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the
“IFRSs”) endorsed by the FSC starting January 1, 2015.
New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Effective Date
Announced by IASB (Note)
Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1,
2010, as appropriate
Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods
ending on or after June 30,
2009
Improvements to IFRSs (2010) July 1, 2010 and January 1,
2011, as appropriate
Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7
Disclosures for First-Time Adopters”
July 1, 2010
Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed
Dates for First-Time Adopters”
July 1, 2011
(Continued)
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New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Effective Date
Announced by IASB (Note)
Amendment to IFRS 1 “Government Loans” January 1, 2013
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
Financial Liabilities”
January 1, 2013
Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011
IFRS 10 “Consolidated Financial Statements” January 1, 2013
IFRS 11 “Joint Arrangements” January 1, 2013
IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013
Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated
Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance”
January 1, 2013
Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment
Entities”
January 1, 2014
IFRS 13 “Fair Value Measurement” January 1, 2013
Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012
Amendment to IAS 12 “Deferred tax: Recovery of Underlying
Assets”
January 1, 2012
IAS 19 “Employee Benefits” January 1, 2013
IAS 27 “Separate Financial Statements” January 1, 2013
IAS 28 “Investments in Associates and Joint Ventures” January 1, 2013
Amendment to IAS 32 “Offsetting Financial Assets and Financial
Liabilities”
January 1, 2014
IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013
(Concluded)
Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after the respective effective dates.
Except for the following, the initial application of the above 2013 IFRSs version has not had any
material impact on the Group’s accounting policies:
1) IFRS 10 “Consolidated Financial Statements”
IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12
“Consolidation - Special Purpose Entities”. The Group considers whether it has control over other
entities for consolidation. The Group has control over an investee 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.
2) 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.
The fair value measurements under IFRS 13 will be applied prospectively from January 1, 2015.
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3) 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
items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified
subsequently to profit or loss. Income taxes on related items of other comprehensive income are
grouped on the same basis. Under current IAS 1, there were no such requirements.
The Group will apply the above amendments in presenting the consolidated statement of
comprehensive income, starting from the year 2015. Items not expected to be reclassified to profit
or loss are the actuarial gain (loss) arising from defined benefit plans and share of the actuarial gains
(loss) arising from defined benefit plans of associates accounted for using the equity method.
Items expected to be reclassified to profit or loss are the exchange differences on translating foreign
operations, and unrealized gains (loss) on available-for-sale financial assets.
As of the date the consolidated financial statements were approved, the Group was continuingly to
assess other possible impacts that the application of the 2013 IFRSs version will have on the Group's
financial position and financial performance, and will disclose these other impacts when the assessment
is completed.
b. New IFRSs in issue but not yet endorsed by FSC
The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the
FSC. As of the date the consolidated financial statements were approved, the FSC had not announced
their effective dates.
New IFRSs
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2)
Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014
IFRS 9 “Financial Instruments” January 1, 2018
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
January 1, 2018
Amendment to IFRS 11 “ Accounting for Acquisitions of Interests in
Joint Operations”
January 1, 2016
IFRS 14 “Regulatory Deferral Accounts” January 1, 2016
IFRS 15 “Revenue from Contracts with Customers” January 1, 2017
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
January 1, 2016
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” January 1, 2016
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
July 1, 2014
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”
January 1, 2014
Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
January 1, 2014
IFRIC 21 “Levies” January 1, 2014
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or
after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition
date 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.
- 12 -
The initial application of the above New IFRSs has not had any material impact on the Group’s
accounting policies, except for the following:
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. Under IFRS 9, the requirement for the classification of financial assets is stated
below.
For the Group’s debt instruments that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, their classification and measurement are
as follows:
a) For debt instruments, if they are held within a business model whose objective is to collect the
contractual cash flows, the financial assets are measured at amortized cost and are assessed for
impairment continuously with impairment loss recognized in profit or loss, if any. Interest
revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets, the financial assets are
measured at fair value through other comprehensive income (FVTOCI) and are assessed for
impairment. Interest revenue is recognized in profit or loss by using the effective interest
method, and other gain or loss shall be recognized in other comprehensive income, except for
impairment gains or losses and foreign exchange gains and losses.
Except for above, all other financial assets are measured at fair value through profit or loss.
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. No subsequent impairment assessment
is required.
The impairment of financial assets
IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit
Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost,
financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from
IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and
financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required
for a financial asset if its credit risk has not increased significantly since initial recognition. A loss
allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has
increased significantly since initial recognition. However, a loss allowance for full lifetime expected
credit losses is required for trade receivables that do not constitute a financing transaction.
For purchased or originated credit-impaired financial assets, the Group takes into account the
expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate.
Subsequently, any changes in expected losses are recognized as a loss allowance with a
corresponding gain or loss recognized in profit or loss.
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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) Annual Improvements to IFRSs: 2010-2012 Cycle
Several standards including IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments”
were amended in this annual improvement.
IFRS 3 was amended to clarify that contingent consideration should be measured at fair value,
irrespective of whether the contingent consideration is a financial instrument within the scope of
IAS 39 or IFRS 9. Changes in fair value should be recognized in profit or loss.
The amended IFRS 8 requires an entity to disclose the judgments made by management in applying
the aggregation criteria to operating segments, including a description of the operating segments
aggregated and the economic indicators assessed in determining whether the operating segments
have ‘similar economic characteristics’. The amendment also clarifies that a reconciliation of the
total of the reportable segments’ assets to the entity’s assets should only be provided if the
segments’ assets are regularly provided to the chief operating decision-maker.
IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure
short-term receivables and payables with no stated interest rate at their invoice amounts without
discounting, if the effect of not discounting is immaterial.
IAS 24 was amended to clarify that a management entity providing key management personnel
services to the Group is a related party of the Group. 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.
3) Annual Improvements to IFRSs: 2011-2013 Cycle
Several standards including IFRS 13 were amended in this annual improvement.
The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial
assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that
are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those
contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.
4) Amendments to IAS 16 “Clarification of Acceptable Methods of Depreciation and Amortization”
The entity should use appropriate depreciation and amortization method to reflect the pattern in
which the future economic benefits of the property, plant and equipment and intangible asset are
expected to be consumed by the entity.
- 14 -
The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is
based on revenue that is generated by an activity that includes the use of an asset is not appropriate.
The amended standard does not provide any exception from this requirement.
An entity should apply the aforementioned amendments prospectively for annual periods beginning
on or after the effective date.
5) IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers,
and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of
revenue-related interpretations.
When applying IFRS 15, an entity shall recognize revenue by applying the following steps:
Identify the contract with the customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contracts; and
Recognize revenue when the entity satisfies a performance obligation.
When IFRS 15 is effective, an entity may elect to apply this Standard either retrospectively to each
prior reporting period presented or retrospectively with the cumulative effect of initially applying
this Standard recognized at the date of initial application.
As of the date the consolidated financial statements were approved, the Group is continuingly to
assessing the possible impact that the application of other standards and interpretations will have on the
Group's financial position and financial performance, and will disclose the relevant impact when the
assessment is completed.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial
Reporting” as endorsed by the FSC. Disclosure information included in the consolidated financial
statements is less than those required in a complete set of annual financial statements.
b. Basis of consolidation
Subsidiaries included in consolidated financial statements
% of Ownership
Investor Investee Main Business
June 30,
2014
December
31, 2013
June 30,
2013
The Corporation Hiwin Corporation, U.S.A.
(“Hiwin USA”)
Manufacture and sale of aerospace
parts, ballscrews, linear guideways and industrial robots
100 100 100
Hiwin Corporation, Japan
(“Hiwin Japan”)
Manufacture and sale of aerospace
parts, ballscrews, linear guideways and industrial robots
100 100 100
Hiwin GmbH
Manufacture and sale of aerospace
parts, ballscrews, linear guideways and industrial robots
100 100 100
(Continued)
- 15 -
% of Ownership
Investor Investee Main Business
June 30,
2014
December
31, 2013
June 30,
2013
The Corporation Hulk Energy Technology Co.,
Ltd. (“Hulk”)
Research, development, design,
manufacture and sale of solar cell, electronic components, electric
power supply, electric transmission
and power distribution machinery products
48 49 48
Hiwin Singapore Pte. Ltd.
(“Hiwin Singapore”)
Manufacture and sale of aerospace
parts, ballscrews, linear guideways and industrial robots
100 100 -
Hiwin Corporation
(“Hiwin Korea”)
Manufacture and sale of aerospace
parts, ballscrews, linear guideways and industrial robots
100 100 -
Hiwin Technologies (China)
Corporation (“Hiwin China”)
Manufacture and sale of ballscrews,
linear guideways and industrial robots
100 - -
Hiwin GmbH HIWIN S.R.L. Sale of aerospace parts, ballscrews,
linear guideways and industrial robots
100 100 100
(Concluded)
Except the financial statements of Hiwin GmbH for the six months ended June 30, 2014 were reviewed
by the independent accountant, the remaining subsidiaries are non-significant subsidiaries, its financial
statements have not been reviewed.
c. Other significant accounting policies
The same accounting policies of these consolidated financial statements have been followed as were
applied in the preparation of the Group’s consolidated financial statements for the year ended December
31, 2013, except for those described below.
1) Retirement benefit costs
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially
determined pension cost rate at the end of the prior financial year, adjusted for significant market
fluctuations since that time and for significant curtailments, settlements, or other significant
one-time events.
2) Income taxes
Income tax expense is the sum of the tax currently payable and deferred tax. Interim period
income taxes are assessed on an annual basis and calculated by applying to an interim period's
pre-tax income the tax rate that would be applicable to expected total annual earnings.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
The same critical accounting judgments and key sources of estimation uncertainty of consolidated financial
statements have been followed in these consolidated financial statements as were applied in the preparation
of the consolidated financial statements for the year ended December 31, 2013.
- 16 -
6. CASH
June 30, December 31, June 30,
2014 2013 2013
Cash on hand $ 1,572 $ 1,793 $ 1,308
Cash in bank 2,640,093 1,237,819 1,290,221
2,641,665 1,239,612 1,291,529
Less: Pledged time deposits
Current (classified as other current assets) (366,580) (26,908) (11,888)
Non-current (classified as other non-current
assets)
(28,173) (27,031) (44,366)
$ 2,246,912 $ 1,185,673 $ 1,235,275
Deposit interest rate per annum (%)
Cash in bank 0.00-2.00 0.00-1.80 0.00-1.85
Pledged time deposits 0.17-3.35 0.53-1.36 0.53-1.36
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
The financial assets and liabilities at fair value through profit or loss were derivative financial instruments
of foreign exchange forward contracts. At the end of the reporting period, outstanding foreign exchange
forward contracts not under hedge accounting were as follows:
Currency Maturity Date Notional Amount
June 30, 2014
Sell EUR/NTD 2014.8.14-2014.9.26 EUR690/NTD28,092
Sell USD/NTD 2014.8.15 USD500/NTD14,980
Sell GBP/NTD 2014.8.15-2014.9.19 GBP120/NTD6,100
Sell JPY/NTD 2014.7.11-2014.9.16 JPY35,000/NTD10,287
December 31, 2013
Sell EUR/NTD 2014.1.17-2014.4.13 EUR2,970/NTD122,126
Sell USD/NTD 2014.1.16-2014.3.3 USD8,400/NTD250,152
Sell GBP/NTD 2014.1.20-2014.3.20 GBP208/NTD10,221
June 30, 2013
Sell EUR/NTD 2013.7.1-2013.9.18 EUR4,220/NTD165,327
Sell USD/NTD 2013.7.1-2013.9.25 USD9,600/NTD287,092
Sell JPY/NTD 2013.7.10-2013.11.15 JPY89,000/NTD27,450
Sell GBP/NTD 2013.7.18-2013.9.9 GBP240/NTD11,093
The Group entered into foreign exchange forward contracts to manage exposures due to exchange rate
fluctuations of foreign currency denominated assets and liabilities.
- 17 -
8. AVAILABLE-FOR-SALE FINANCIAL ASSETS
June 30, December 31, June 30,
2014 2013 2013
Domestic quoted stocks
Gallant Precision Machining Co., Ltd. (“Gallant”) $ 17 $ 16 $ 15,060
9. FINANCIAL ASSETS MEASURED AT COST
June 30, December 31, June 30,
2014 2013 2013
Domestic unlisted common shares
Sunengine Corporation Ltd. (Sunengine) $ 81,346 $ 81,346 $ 76,246
Hiwin Mikrosystem Corp. (Hiwin
Mikrosystem)
37,922 37,922 22,022
Taichung International Country Club 2,100 2,100 2,100
King Kong Iron Work Ltd. - - -
121,368 121,368 100,368
Overseas unlisted common shares
Kaland Holdings Corp. (Kaland) 236,266 236,266 236,266
Hiwin (Schweiz) GmbH 3,320 3,320 3,320
$ 360,954 $ 360,954 $ 339,954
The Investment Commission of Ministry of Economic Affairs (MOEA) approved the Corporation’s
investment in Suzhou YIFU Finance Leasing Co., Ltd. (YIFU Finance). The investment in the amount of
US$8,168 thousand was made through investing Kaland and Cheer Tone Group Limited in British Virgin
Islands (BVI). YIFU Finance mainly engages in finance leasing services.
Management believed that the fair value of the above unlisted equity investments held by the Group cannot
be reliably measured due to the very wide range of reasonable fair value estimates; therefore they were
measured at cost less impairment at the end of reporting period.
10. NOTES RECEIVABLE AND TRADE RECEIVABLES
June 30, December 31, June 30,
2014 2013 2013
Notes receivable from unrelated parties
Notes receivable $ 158,129 $ 143,059 $ 156,732
Less: Allowance for impairment loss (966) (1,350) (1,343)
$ 157,163 $ 141,709 $ 155,389
Trade receivables from unrelated parties
Trade receivables $ 4,876,340 $ 4,701,585 $ 4,064,427
Less: Allowance for impairment loss (50,847) (44,689) (259,033)
$ 4,825,493 $ 4,656,896 $ 3,805,394
- 18 -
The average credit period on sales of goods was 90 to 150 days. In determining the recoverability of a trade
receivable, the Group considered any change in the credit quality of the trade receivable since the date
credit was initially granted to the end of the reporting period. The Group recognized an allowance for
impairment loss of 100% against all receivables over 180 days because historical experience had been that
receivables that are past due beyond 180 days were not recoverable. Allowance for impairment loss was
recognized against trade receivables between 31 days and 180 days based on estimated irrecoverable
amounts determined by reference to past default experience of the counterparties and an analysis of their
current financial position.
Movements in the allowance for impairment loss recognized on notes receivable and trade receivables were
as follows (other receivables were classified as other non-current assets):
For the Six Months Ended June 30
2014 2013
Notes
Receivable
Trade
Receivables
Other
Receivables
Notes
Receivable
Trade
Receivables
Balance at January 1 $ 1,350 $ 44,689 $ 101,579 $ 1,470 $ 176,357
Add: Impairment losses
recognized (reversed)
on receivables
(384)
6,487
2,712
(127)
82,399
Less: Amounts written
off as uncollectible
- - (384) - - -
-
Effect of exchange rate
changes
-
55
-
-
277
Balance at June 30 $ 966 $ 50,847 $ 104,291 $ 1,343 $ 259,033
The aging of trade receivables that were impaired was as follows:
June 30, December 31, June 30,
2014 2013 2013
31- 60 days $ 39,766 $ 105,412 $ 502,022
61-120 days 334,219 141,989 556,265
121-180 days 4,340 4,741 105,091
More than 180 days 6,869 9,403 28,321
$ 385,194 $ 261,545 $ 1,191,699
The above aging of trade receivables before deducting the allowance for impairment loss was based on the
past due date.
11. INVENTORIES
June 30, December 31, June 30,
2014 2013 2013
Merchandise $ 1,672 $ 604 $ 448
Finished goods 2,162,235 1,772,837 1,842,047
Work in process 1,184,413 1,124,389 1,068,882
Raw materials and supplies 923,766 905,096 1,162,917
Inventory in transit 182,536 158,060 147,587
$ 4,454,622 $ 3,960,986 $ 4,221,881
- 19 -
The cost of inventories recognized as cost of goods sold for the three months ended June 30, 2014 and 2013
and for the six months ended June 30, 2014 and 2013 included inventory write-downs (reversal of
inventory write-downs) of $(3,282) thousand, $2,907 thousand, $460 thousand and $12,052 thousand,
respectively. Previous write-downs were reversed as a result of disposal of the write-downs inventories.
12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
June 30, December 31, June 30,
Investments in associates 2014 2013 2013
Unlisted companies
Mega Fabs Motion Systems Ltd. (Mega Fabs) $ 65,133 $ 63,099 $ 56,822
HIWIN S.R.O. 38,394 36,082 31,196
$ 103,527 $ 99,181 $ 88,018
As at the end of the reporting period, the proportions of ownership and voting rights in associates held by
the Group were as follows:
June 30, December 31, June 30,
Name of Associate 2014 2013 2013
Mega Fabs 40% 40% 40%
HIWIN S.R.O. 32% 32% 32%
Investments accounted for using equity method and the share of profit or loss for the six months ended June
30, 2014 and 2013 were calculated based on the financial statements that have not been reviewed.
Management believes there is no material impact on the equity method accounting or the calculation of the
share of profit or loss, from the financial statements that have not been reviewed.
13. PROPERTY, PLANT AND EQUIPMENT
For the Six Months Ended June 30, 2014
Beginning
Balance Additions Disposals Reclassified
Amount Translation
Adjustments
Ending
Balance
Cost
Land $ 2,476,839 $ 25,807 $ - $ 658,527 $ (379 ) $ 3,160,794
Buildings and improvements 5,676,072 15,563 - 28,500 (1,602 ) 5,718,533
Machinery and equipment 7,714,402 115,036 (175,078 ) 123,116 69 7,777,545
Transportation equipment 104,841 12,795 (5,421 ) 504 (112 ) 112,607
Leased assets 530,529 - - - 3 530,532
Leasehold improvements 51,866 2,567 (100 ) 356 673 55,362
Miscellaneous equipment 910,278 58,967 (25,815 ) 57,444 294 1,001,168
Construction in progress 38,206 88,050 - (28,856 ) (851 ) 96,549
Prepayments for land and
buildings 658,527 - - (658,527 ) -
-
18,161,560 $ 318,785 $ (206,414 ) $ 181,064 $ (1,905 ) 18,453,090
(Continued)
- 20 -
For the Six Months Ended June 30, 2014
Beginning
Balance Additions Disposals Reclassified
Amount Translation
Adjustments
Ending
Balance
Accumulated depreciation
and impairment
Buildings and improvements $ 669,742 $ 65,119 $ - $ - $ (656 ) $ 734,205
Machinery and equipment 3,192,932 431,719 (173,514 ) (1,208 ) 153 3,450,082
Transportation equipment 49,539 9,578 (5,090 ) - (1 ) 54,026
Leased assets 1,263 - - - 2 1,265
Leasehold improvements 15,918 2,622 (100 ) - 289 18,729
Miscellaneous equipment 329,229 63,489 (24,680 ) 1,208 88 369,334
4,258,623 $ 572,527 $ (203,384 ) $ - $ (125 ) 4,627,641
$ 13,902,937 $ 13,825,449
(Concluded)
For the Six Months Ended June 30, 2013
Beginning
Balance Additions Disposals Reclassified
Amount Translation
Adjustments
Ending
Balance
Cost
Land $ 1,438,143 $ 20,8177 $ - $ 157,056 $ 317 $ 1,615,693
Buildings and improvements 4,964,806 96,752 (3,553 ) 521,231 3,626 5,582,862
Machinery and equipment 7,391,695 110,794 (125,604 ) 322,496 851 7,700,232
Transportation equipment 87,982 9,390 (1,930 ) 2,165 86 97,693
Leased assets 530,497 - - - 41 530,538
Leasehold improvements 33,555 9,200 - 758 (761 ) 42,752
Miscellaneous equipment 716,670 46,263 (10,601 ) 83,076 1,305 836,713
Construction in progress 420,551 171,161 - (549,516 ) 125 42,321
Prepayments for land and
buildings 295,917 - - (157,064 ) 85
138,938
15,879,816 $ 463,737 $ (141,688 ) $ 380,202 $ 5,675 16,587,742
Accumulated depreciation
and impairment
Buildings and improvements 543,670 $ 60,735 $ (3,553 ) $ - $ 1,151 602,003
Machinery and equipment 2,690,073 420,611 (123,232 ) - (511 ) 2,986,941
Transportation equipment 37,352 8,168 (1,930 ) - (210 ) 43,380
Leased assets 1,230 - - - (845 ) 385
Leasehold improvements 14,700 1,532 - - 98 16,330
Miscellaneous equipment 240,163 54,708 (10,213 ) - 633 285,291
3,527,188 $ 545,754 $ (138,928 ) $ - $ 316 3,934,330
$ 12,352,628 $ 12,653,412
The above items of property, plant and equipment, except leased land which is not depreciated, were
depreciated on a straight-line basis over the estimated useful life of the asset:
Buildings and improvements
Main buildings 25-55 years
Electrical power equipment 35 years
Engineering system 8-55 years
Machinery and equipment
Machinery equipment 3-20 years
Inspection equipment 3-10 years
Transportation equipment 2-10 years
Miscellaneous equipment 2-15 years
Leasehold improvements 2-15 years
- 21 -
Refer to Note 27 for the carrying amount of property, plant and equipment pledged by the Group to secure
borrowings granted to the Group.
14. BORROWINGS
a. Short-term borrowings
June 30, December 31, June 30,
2014 2013 2013
Secured borrowings
Loans for export sales $ 1,000,000 $ 1,051,102 $ 1,071,252
Usance letters of credit 97,045 117,300 121,896
Working capital loans 38,224 27,866 4,648
Loans secured by notes receivable 27,161 26,385 14,335
1,162,430 1,222,653 1,212,131
Unsecured borrowings
Line of credit borrowings 4,398,000 3,898,000 3,307,663
$ 5,560,430 $ 5,120,653 $ 4,519,794
Rate of interest per annum (%)
Loans for export sales 0.73-1.24 0.75-1.31 0.81-1.32
Usance letters of credit 0.83-1.59 0.78-1.48 0.75-1.27
Working capital loans 1.25-1.79 1.80-1.81 1.88-3.00
Loans secured by notes receivable 1.48-1.50 1.50 1.48-1.50
Line of credit borrowings 1.06-1.20 1.06-1.15 1.06-1.65
b. Long-term borrowings
June 30, December 31, June 30,
2014 2013 2013
Secured borrowings
Secured loans $ 5,640,156 $ 5,279,254 $ 4,821,819
Syndicated loans 680,000 763,000 1,098,000
Unsecured borrowings
Unsecured loans 500,000 400,000 200,000
6,820,156 6,442,254 6,119,819
Less: Current portion (1,111,253) (1,231,518) (1,008,893)
Long-term borrowings $ 5,708,903 $ 5,210,736 $ 5,110,926
Rate of interest per annum (%)
Secured loans 1.37-6.24 0.90-6.24 0.90-6.24
Syndicated loans 1.58 1.58 1.58
Unsecured loans 1.28 1.28 1.30
- 22 -
To meet the requirements of long-term financial plans, working capital needs, and capital project
expenditures, the Corporation entered into a $4.3 billion syndicated loan agreement with 13 banks, led
by Taiwan Bank, in October 2006. The loan period was from 3 to 10 years, depending on the loan
type, starting from the first loan drawdown. As of June 30, 2014, December 31, 2013 and June 30,
2013, the Corporation had borrowed $0.68 billion, $0.763 billion and $1.098 billion, respectively.
Under the loan agreement, the Corporation commits: (a) current ratio no lower than 100%, debt ratio
no higher than 150%, interest coverage ratio at least 150% and tangible net equity ratio at certain level,
based on the Corporation’s annual unconsolidated financial statements; and (b) not dispose of important
assets and rights, buy back treasury stocks, decrease issued capital, merge with other companies, split
off or reduce the collaterals unless there is written approval from a majority of the syndicated banks.
According to the terms of the loan agreement, in case the Corporation fails to meet the above
requirements regarding financial ratios, the Corporation should seek improvement within 6 months
based on semiannual unconsolidated financial statements. If the situation did not improve after the
evaluation, the Corporation should pay extra interest of 0.25% for the unpaid principal retroactive from
the start date of default to the date the deficiency has been resolved. Also, the banks have the rights to
call the loan from the Corporation.
15. FINANCE LEASE PAYABLES
June 30, December 31, June 30,
2014 2013 2013
Land; the term of lease is from September 2003
to September 2027; rentals are paid monthly,
imputed discount rate: 2.71%, 2.91% and
3.054%
$ 430,888 $ 441,444 $ 451,691
Less: Current portion (21,594) (21,279) (20,804)
Noncurrent portion $ 409,294 $ 420,165 $ 430,887
In September 2003, January 2006 and September 2007, the Corporation signed land lease contract with
Industrial Development Bureau (IDB), Ministry of Economic Affairs. The parcels of land, measuring
50,683, 18,004 and 5,602 square meters, are located in Yunlin Technology Industrial Park.
Rentals were calculated by annual rental rate based on land market price. The market price was $9,408,
$10,517 and $11,409 per square meter on the contract date. The annual rental rates are subject to
adjustment twice a year on January 1 and July 1 according to long-term loan interest rate promulgated by
the Executive Yuan. The adjustment also takes consumer price index into account annually. The annual
rental rate was 4.2% since December 2012.
The aforementioned land lease contract concluded and signed by the Corporation and IDB provides that the
first two years’ rental would be free, and 60% of the rental for third and fourth years, and 80% for fifth and
sixth years will be payable. Moreover, according to the regulations of land leasing in Yunlin Technology
Industrial Park, the lease period should be at least for 6 years and should not be longer than 20 years. The
Corporation has an option to buy the land from IDB during the period of the lease. Price to be paid will be
based on the market price at the contract date and on the Industry Development Fund of this area.
However, the rentals paid and the deposits provided would be deductible. The Corporation provided time
deposits as collaterals in the amount of $11,576 thousand, recorded as other non-current assets, which
should be returned by IDB without interest at the end of the land lease contract.
- 23 -
The finance lease obligations as of June 30, 2014 are summarized as follows:
Year Amount
The second half year of 2014 $ 16,935
2015 33,869
2016 33,869
2017 33,869
2018 33,869
$ 152,411
The aggregate rentals (include the bargain purchase price) and present value of finance lease obligations
discounted at 2.71%, 2.91% and 3.054% for future years are summarized as follows:
Year Future Value Present Value
2019-2023 $ 342,582 $ 285,616
2024-2027 21,180 17,833
$ 363,762 $ 303,449
16. OTHER PAYABLES
June 30, December 31, June 30,
2014 2013 2013
Payable for salaries and bonus $ 414,336 $ 440,600 $ 319,824
Payable for bonus to employees 239,326 169,033 211,912
Payable for remuneration to directors and
supervisors
35,278 83,965 25,385
Payable for annual leave 74,548 65,889 64,316
Payable for purchase of land, building and
equipment
156,335 27,655 36,280
Others 233,291 242,511 212,240
$ 1,153,114 $ 1,029,653 $ 869,957
17. RETIREMENT BENEFIT PLANS
Employee benefit expenses in respect of the Corporation’s defined benefit retirement plans were calculated
using the actuarially determined pension cost discount rate as of December 31, 2013 and 2012, and
recognized in the following line items in their respective periods:
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Operating cost $ 1,713 $ 1,513 $ 3,426 $ 3,028
Selling and marketing expenses 42 50 87 105
General and administrative expenses 136 142 268 289
Research and development expenses 94 106 193 216
$ 1,985 $ 1,811 $ 3,974 $ 3,638
- 24 -
18. EQUITY
a. Common stock
June 30, December 31, June 30,
2014 2013 2013
Numbers of shares authorized (in thousands) 300,000 300,000 300,000
Shares authorized $ 3,000,000 $ 3,000,000 $ 3,000,000
Number of shares issued and fully paid (in
thousands)
253,821 253,821 246,428
Shares issued $ 2,538,208 $ 2,538,208 $ 2,464,280
Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to
dividends.
b. Capital surplus
The capital surplus arising from shares issued in excess of par (including share premium from issuance
of common shares) may be used to offset a deficit; in addition, when the Corporation has no deficit,
such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a
certain percentage of the Corporation’s capital surplus and once a year).
c. Retained earnings and dividend policy
The Corporation’s Articles of Incorporation provide that the annual net income, less any deficit and
taxes, should be appropriated as follows:
1) 10% as legal reserve;
2) For special reserve;
3) At most 6% as dividends;
4) Of the remainder, at most 5% as remuneration to directors and supervisors and at most 10% as
bonus to employees; however, it should not be lower than 1%.
The Corporation needs to evaluate its cash position and take capital expenditure and working capital
requirements into account in determining the type of dividend (cash or stock). Cash dividends will be
paid when working capital requirements are fulfilled; otherwise, stock dividends will be distributed.
For the six months ended June 30, 2014 and 2013, the bonus to employees was $69,293 thousand and
$49,469 thousand, respectively, and the remuneration to directors and supervisors was $34,647
thousand and $24,734 thousand, respectively. The bonus to employees and remuneration to directors
and supervisors represented 10% and 5%, respectively, of net income (net of the bonus and
remuneration) after 6% dividends. Material differences between such estimated amounts and the
amounts proposed by the board of directors in the following year are adjusted for in the current year.
If the actual amounts subsequently resolved by the shareholders differ from the proposed amounts, the
differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If
a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing
the amount of the share bonus by the closing price (after considering the effect of cash and stock
dividends) of the shares of the day immediately preceding the shareholders’ meeting.
The Corporation appropriates or reverses a special reserve in accordance with Rule No. 1010012865
and Rule No. 1010047490 issued by the FSC on April 6, 2012 and the directive entitled “Questions and
Answers on Special Reserves Appropriated Following the Adoption of IFRSs”. Distributions can be
made out of any subsequent reversal of the debit to other equity items.
- 25 -
Legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has
exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or
distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Corporation.
The appropriations of 2013 and 2012 earnings, have been approved by the shareholders in its meetings
held in June 2013 and 2014, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings Dividends Per Share (NT$)
For Year 2013 For Year 2012 For Year 2013 For Year 2012
Legal reserve $ 202,158 $ 200,319
Appropriation (reverse of)
special reserve (163,449)
30,586
Cash dividends 685,316 665,355 $ 2.7 $ 2.7
Share dividends 76,146 73,928 0.3 0.3
The issue of stock dividends of 2012 was approved by FSC, and the ex-right and ex-dividend date was
determined at August 12, 2014, both, by the board of directors.
Bonuses to employees and remuneration to directors and supervisors for 2013 and 2012 approved in the
shareholders’ meetings were as follows:
For the Year Ended December 31
2013 2012
Bonus to employees $ 166,713 $ 162,443
Remuneration of directors and supervisors 83,357 81,222
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 consolidated financial statements for the years ended December 31, 2013 and 2012,
respectively.
Information on the bonus to employees, directors and supervisors approved by the Corporation’s
shareholders’ meetings is available on the Market Observation Post System website of the Taiwan
Stock Exchange.
d. Special reserves
The Corporation had a decrease in retained earnings that resulted from all IFRSs adjustments; therefore,
no special reserve was appropriated.
- 26 -
19. NET PROFIT FROM CONTINUING OPERATIONS
a. Information about capitalized interest
For the Three Months Ended
June 30
For the Six Months Ended
June 30 2014 2013 2014 2013
Capitalized interest $ 3,273 $ 3,613 $ 6,656 $ 8,818
Capitalization rates 1.590%-1.622% 1.56%-1.584% 1.584%-1.622% 1.559%-1.584%
b. Employee benefits expense, depreciation and amortization expenses
Operating
Costs
Operating
Expenses Total
For the Three Months Ended June 30, 2014
Short-term employee benefits $ 535,682 $ 296,679 $ 832,361
Post-employment benefits
Defined contribution plans 17,924 4,958 22,882
Defined benefit plans 1,713 272 1,985
Other employee benefits 45,180 10,287 55,467
Depreciation expenses 232,901 40,415 273,316
Amortization expenses 1,417 2,609 4,026
For the Three Months Ended June 30, 2013
Short-term employee benefits 505,905 199,316 705,221
Post-employment benefits
Defined contribution plans 14,103 3,877 17,980
Defined benefit plans 1,514 297 1,811
Other employee benefits 88,625 23,575 112,200
Depreciation expenses 227,843 37,383 265,226
Amortization expenses 1,981 2,488 4,469
For the Six Months Ended June 30, 2014
Short-term employee benefits 1,042,365 589,267 1,631,632
Post-employment benefits
Defined contribution plans 34,787 9,487 44,274
Defined benefit plans 3,426 548 3,974
Other employee benefits 103,375 25,240 128,615
Depreciation expenses 463,561 79,658 543,219
Amortization expenses 2,080 5,284 7,364
For the Six Months Ended June 30, 2013
Short-term employee benefits 965,833 392,831 1,358,664
Post-employment benefits
Defined contribution plans 30,357 7,612 37,969
Defined benefit plans 3,028 610 3,638
Other employee benefits 136,907 48,455 185,362
Depreciation expenses 449,617 71,048 520,665
Amortization expenses 4,065 4,640 8,705
- 27 -
20. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Current tax
In respect of the current year $ 89,745 $ 111,981 $ 226,127 $ 156,288
Income tax expense of
unappropriated earnings 119,990 103,301 119,990 103,301
In respect of prior periods (1,955) (4,125) (1,955) (4,125)
Deferred tax
In respect of the current year 5,998 4,228 11,785 7,781
Income tax expense recognized
in profit or loss
$ 213,778 $ 215,385 $ 355,947 $ 263,245
b. Income tax recognized in other comprehensive income
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Deferred tax In respect of the current
period: Translation of foreign
operations $ (6,128) $ - $ 579 $ -
c. Integrated income tax
June 30,
2014
December 31,
2013
June 30,
2013
Unappropriated earnings
Generated before January 1, 1998 $ - $ - $ -
Generated on and after January 1, 1998 7,128,300 7,065,846 5,678,209
$ 7,128,300 $ 7,065,846 $ 5,678,209
Imputation credits account $ 1,439,405 $ 1,108,959 $ 1,164,399
The creditable ratio for distribution of earnings of 2013 and 2012 was 19.92% (expected ratio) and
19.36%, respectively.
- 28 -
Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation
credit allocated to ROC resident shareholders of the Corporation was calculated based on the creditable
ratio as of the date of dividend distribution. The actual imputation credit allocated to shareholders of the
Corporation 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.
d. Income tax assessments
The tax returns of the Corporation through 2010 have been assessed by the tax authorities. The
Corporation disagreed with the tax authorities’ assessment of its 2010 tax return and applied for a
re-examination. Nevertheless, to be conservative, the Corporation paid the income tax assessed by the
tax authorities.
The tax returns of Hulk through 2012 have been assessed by the tax authorities.
21. EARNINGS PER SHARE
Net profit
attributable to Number of Earnings Per
Owners of the Shares Shares
Corporation (In Thousands) (NT$)
For the Three Months Ended June 30, 2014
Basic earnings per share
Profit for the period attributable to owners of
the Corporation $ 328,387 253,821 $ 1.29
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 677
Diluted earnings per share
Profit for the period attributable to owners of
the Corporation plus effect of potentially
dilutive common stock $ 328,387 254,498 $ 1.29
Pro forma earnings per share that adjusted
retrospectively to reflect the effects of changes
in the number of shares resulted from bonus
issue (August 12, 2014)
Basic earnings per share
Profit for the period attributable to owners
of the Corporation $ 328,387 261,435 $ 1.26
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 677
Diluted earnings per share
Profit for the period attributable to owners
of the Corporation plus effect of
potentially dilutive common stock $ 328,387 262,112 $ 2.25
- 29 -
Net profit
attributable to Number of Earnings Per
Owners of the Shares Shares
Corporation (In Thousands) (NT$)
For the Three Months Ended June 30, 2013
Basic earnings per share
Profit for the period attributable to owners of
the Corporation $ 435,247 253,821 $ 1.71
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 1,149
Diluted earnings per share
Profit for the period attributable to owners of
the Corporation plus effect of potentially
dilutive common stock $ 435,247 254,970 $ 1.71
Pro forma earnings per share that adjusted
retrospectively to reflect the effects of changes
in the number of shares resulted from bonus
issue (August 12, 2014)
Basic earnings per share
Profit for the period attributable to owners
of the Corporation $ 435,247 261,435 $ 1.66
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 1,149
Diluted earnings per share
Profit for the period attributable to owners
of the Corporation plus effect of
potentially dilutive common stock $ 435,247 262,584 $ 1.66
For the Six Months Ended June 30, 2014
Basic earnings per share
Profit for the period attributable to owners of
the Corporation $ 862,625 253,821 $ 3.40
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 689
Diluted earnings per share
Profit for the period attributable to owners of
the Corporation plus effect of potentially
dilutive common stock $ 862,625 254,510 $ 3.39
Pro forma earnings per share that adjusted
retrospectively to reflect the effects of changes
in the number of shares resulted from bonus
issue (August 12, 2014)
Basic earnings per share
Profit for the period attributable to owners
of the Corporation $ 862,625 261,435 $ 3.30
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 689
Diluted earnings per share
Profit for the period attributable to owners
of the Corporation plus effect of
potentially dilutive common stock $ 862,625 262,124 $ 3.29
- 30 -
Net profit
attributable to Number of Earnings Per
Owners of the Shares Shares
Corporation (In Thousands) (NT$)
For the Six Months Ended June 30, 2013
Basic earnings per share
Profit for the period attributable to owners of
the Corporation $ 634,260 253,821 $ 2.50
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 1,159
Diluted earnings per share
Profit for the period attributable to owners of
the Corporation plus effect of potentially
dilutive common stock $ 634,260 254,980 $ 2.49
Pro forma earnings per share that adjusted
retrospectively to reflect the effects of changes
in the number of shares resulted from bonus
issue (August 12, 2014)
Basic earnings per share
Profit for the period attributable to owners
of the Corporation $ 634,260 261,435 $ 2.43
Effect of potentially dilutive ordinary shares:
Bonus issue to employees - 1,159
Diluted earnings per share
Profit for the period attributable to owners
of the Corporation plus effect of
potentially dilutive common stock $ 634,260 262,594 $ 2.42
If the Group can settle bonuses paid to employees in cash or shares, the Group assumes the entire amount of
the bonus would be settled in shares and the resulting potential shares are 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 is 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.
22. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS
On March 28, 2014, the Corporation subscribes for additional new shares of Hulk at a percentage different
from its existing ownership percentage, reducing its continuing interest from 49 % to 48%.
The above transactions were accounted for as equity transactions, since the Group did not cease to have
control over Hulk.
- 31 -
23. OPERATING LEASE ARRANGEMENTS
The Group’s future lease payments on factory building, inventory warehouse and employee dormitory
based on operating lease agreements are as follows:
Year Amount
2014 $ 76,328
2015 85,862
2016 73,706
2017 19,293
2018 5,337
$ 260,526
24. CAPITAL MANAGEMENT
To support the need to expand and enhance the plant and equipment, the Group has to maintain large
amount of capital. Therefore, the capital management of the Group focuses on ensuring that it has the
necessary financial resources and operation plans to support operating funds, capital expenditure, research
and development, repayment of debt and dividend payment in the future 12 months.
25. FINANCIAL INSTRUMENTS
The fair value information on financial instruments, financial instruments categories, and objectives and
policies of financial risk management of consolidated financial statements of the Group have been followed
in the same manner without significant change in these consolidated financial statements as were applied in
the preparation of the consolidated financial statements for the year ended December 31, 2013.
26. TRANSACTIONS WITH RELATED PARTIES
Balances and transactions between the Corporation and its subsidiaries, which are related parties of the
Corporation, 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. Operating transactions
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
1) Sales of goods
Associates $ 37,969 $ 27,359 $ 75,258 $ 63,731
Others 11,539 16,717 38,854 30,747
$ 49,508 $ 44,076 $ 114,112 $ 94,478
Due to the specific differences of the products, the selling prices for related parties and those for
third parties are not comparable. The selling price is primarily quoted at cost plus a reasonable
margin according to the market price.
- 32 -
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
2) Purchases of goods
Others $ 131,923 $ 70,949 $ 231,867 $ 185,135
Associates 31 - 31 -
$ 131,954 $ 70,949 $ 231,898 $ 185,135
The products purchased from related parties and those from third parties are not the same, therefore,
their prices are not comparable.
3) Other operating transactions
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Non-operating income -
rental income
(classified as other
income)
Others $ 2,549 $ 2,793 $ 5,268 $ 5,586
The Group leased a portion of its manufacturing facility and office to the abovementioned related
parties. The rental is negotiated based on the quoted rate in the neighborhood leased properties.
The rental is collected monthly.
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Manufacturing and
operating expenses
Others $ 1,813 $ 7 $ 3,984 $ 131
Operating expenses -
donations
Others $ 5,600 $ - $ 8,100 $ 3,000
June 30,
2014
December 31,
2013
June 30,
2013
4) Notes receivable
Others $ 5,644 $ 69,275 $ 17,795
5) Trade receivables
Associates $ 20,939 $ - $ 12,555
Others 6,052 - 7,781
$ 26,991 $ - $ 20,336
- 33 -
June 30,
2014
December 31,
2013
June 30,
2013
6) Other receivables (classified as other
current assets)
Others $ 2,754 $ 425 $ 3,248
7) Trade payables
Others $ 127,825 $ 90,075 $ 107,433
b. Compensation of key management personnel
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2014 2013 2014 2013
Short-term employee benefits $ 59,487 $ 81,248 $ 138,747 $ 141,988
Post-employment benefits 217 228 417 450
$ 59,704 $ 81,476 $ 139,164 $ 142,438
The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.
27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets had been pledged or mortgaged as collateral for capital lease of land, application for
land acquisition of Dapumei Intelligent Industrial Park, short-term and long-term bank loans, research
project plan, lawsuit and guarantee of customs duties:
June 30,
2014
December 31,
2013
June 30,
2013
Property, plant and equipment $ 14,117,667 $ 11,115,954 $ 11,010,366
Pledge deposits 394,753 53,939 56,254
Notes receivable 27,161 26,385 14,335
$ 14,539,581 $ 11,196,278 $ 11,080,955
28. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
a. As of June 30, 2014, December 31, 2013 and June 30, 2013, unused letters of credit for purchases of
raw materials and machinery and equipment amounted to $72,697 thousand, $81,653 thousand and
$48,926 thousand, respectively.
b. As of June 30, 2014, December 31, 2013 and June 30, 2013, the Group had a commitment to buy
property, plant and equipment for $565,620 thousand, $385,248 thousand and $995,808 thousand,
respectively.
- 34 -
c. The Corporation’s dealer Tianjin Ace Piliar Co., Ltd. (Ace Piliar) stops repaying maturing payables
intentionally amounted to USD 6,984 thousand. The Corporation filed a civil lawsuit against Ace
Piliar at Secondary Intermediate People’s Court of Tianjin on November 7, 2013 to secure the safty of
assets, then requested for the loss of overdue payments on January 7, 2014. As a result, total request
amounted to USD 9,130 thousand. Due to the adjustment of request amount, the lawsuit had
transferred to the Supreme People’s Court of Tianjin. The Corporation executed the second property
preservation on June 18, 2014. Ace Piliar appealed to a counterclaim against the Corporation on April
21, 2014. As of August 11, 2014, the court has not start a court trial.
29. EXCHANGE RATES OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES
The significant financial assets and liabilities denominated in foreign currencies were as follows:
June 30, 2014 June 30, 2013
Foreign
Currencies
Exchange
Rate
Carrying
Amount
Foreign
Currencies
Exchange
Rate
Carrying
Amount
Financial assets
Monetary items
USD $ 74,506 29.865 $ 2,225,134 $ 99,223 30.00 $ 2,976,684
EUR 15,929 40.78 649,586 11,194 39.15 438,250
JPY 1,009,307 0.2946 297,342 910,412 0.3036 276,401
CNY 226,282 4.811 1,088,643 11 4.888 54
Non-monetary items
USD 8,168 29.865 243,937 8,168 30.00 245,040
ILS 3,712 8.7032 32,304 2,945 8.2428 24,272
Financial liabilities
Monetary items
USD 3,136 29.865 93,668 1,977 30.00 59,313
EUR 961 40.78 39,192 786 39.15 30,759
JPY 754,600 0.2946 222,305 308,783 0.3036 93,747
December 31, 2013
Foreign
Currencies
Exchange
Rate
Carrying
Amount
Financial assets
Monetary items
USD $ 103,847 29.805 $ 3,095,167
EUR 14,192 41.09 583,151
JPY 957,922 0.2839 271,954
CNY 9,859 4.919 48,498
Non-monetary items
USD 8,168 29.805 243,447
ILS 3,519 8.601 30,270
Financial liabilities
Monetary items
USD 1,841 29.805 54,865
EUR 1,210 41.09 49,717
JPY 474,503 0.2839 134,711
- 35 -
30. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees:
1) Financing provided to others. (Table1)
2) Endorsements/guarantees provided. (Table 2)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled
entities). (Table 3)
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the
paid-in capital. (None)
5)Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital.
(None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital.
(None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital. (Table 4)
8)Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital.
(Table 5)
9) Trading in derivative instruments. (Note 7)
10) Intercompany relationships and significant intercompany transactions. (Table 6)
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: (None)
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.
- 36 -
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.
31. SEGMENT INFORMATION
Information reported to the chief operating decision maker for the purpose of resource allocation and
assessment of segment performance focuses on the types of goods or services delivered or provided. The
Group’s reportable segments are Linear guideways, Ballscrews and others.
Segment revenues and results
The following was an analysis of the Group’s revenue and results from continuing operations by reportable
segment.
Six Months Ended June 30
Segment Revenue Segment Profit
2014 2013 2014 2013
Linear guideways $ 3,945,154 $ 2,769,379 $ 617,420 $ 416,148
Ballscrews 1,808,946 1,618,456 166,239 148,662
Others 796,299 789,043 409,751 186,945
Total from continuing operations $ 6,550,399 $ 5,176,878 1,193,410 751,755
Finance costs (85,753) (74,340)
Other income 34,267 32,267
Net foreign exchange gain 10,534 142,702
Other expenses (7,826) (4,384)
Profit before income tax $ 1,144,632 $ 848,000
Segment revenue reported above represents revenue generated from external customers. There were no
intersegment sales for the six months ended June 30, 2014 and 2013.
Segment profit represented the profit before tax earned by each segment without finance costs, other
income, net foreign exchange gain, other expenses and income tax expense. This was the measure
reported to the chief operating decision maker for the purpose of resource allocation and assessment of
segment performance.
- 37 -
TABLE 1
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
FINANCING PROVIDED TO OTHERS
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars)
No. Lender Borrower Financial Statement
Account
Related
Parties
Highest Balance
for the Period
(Note 4)
Ending Balance
(Note 4)
Actual
Borrowing
Amount
(Note 5)
Interest
Rate
Nature of
Financing
(Note 2)
Business
Transaction
Amounts
(Note 5)
Reasons
for
Short-term
Financing
Allowance
for
Impairment
loss
Collateral Financing
Limit for
Each
Borrower
(Note 1)
Aggregate
Financing
Limits
(Note 3)
Item Value
0 The Corporation Hiwin Japan Other receivables from
related parties
Yes $ 200,000 $ 100,000 $ 73,775 2.02% 1 Sales $153,587
Purchases 567
- $ - - $ - $ 3,422,922
(Note 3)
$ 3,422,922
0 The Corporation Hulk Other receivables from
related parties
Yes 300,000 150,000 - 2.02% 2 - Operating
capital
- Promissory
note and
equipment
150,000 1,140,974 3,422,922
Note 1: The total amount for lending to a company for funding shall not exceed 10% of the net assets of the Corporation in the latest financial report. In addition, the total amount lending to any one borrower shall not be more than the borrower’s paid-in capital. The
above restriction does not apply to the offshore subsidiaries whose voting shares are 100% owned, directly or indirectly.
Note 2: Nature of the loan funds:
1. Business relationship.
2. Necessary for short-term financing.
Note 3: For the financing provided by each subsidiary, the maximum amount should not exceed 30% of the Corporation’s net assets as shown in its latest financial statements.
Note 4: The ending balance amount has been approved by the board of directors.
Note 5: Significant intercompany accounts and transactions have been eliminated; please see Table 6.
- 38 -
TABLE 2
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
ENDORSEMENTS/GUARANTEES PROVIDED
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
No. Endorser/Guarantor
Endorsee/Guaranteed Party
Limits on
Endorsement/
Guarantee
Given on
Behalf of
Each Party
(Note 2)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
Outstanding
Endorsement/
Guarantee at
the End of the
Period
Actual
Borrowing
Amount
Amount
Endorsed/
Guaranteed by
Collaterals
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity In
Latest
Financial
Statements
(%)
Aggregate
Endorsement/
Guarantee
Limit
(Note 3)
Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries
Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent
Endorsement/
Guarantee
Given On
behalf of
Companies in
Mainland
China
Name Relationship
0 The Corporation Hiwin USA 2
(Note 1)
$ 1,179,659 $ 213,654
(USD 7,154)
$ 213,654
(USD 7,154)
$ 65,056 $ - 2% $ 3,993,409 Y - -
Note 1: Investees in which the Corporation directly hold more than 50% of the voting shares.
Note 2: The maximum is 10% of the net assets of the Corporation as shown in the latest financial statements.
Note 3: The maximum amount of the total guarantee is 35% of the Corporation’s net assets as shown in its latest financial statements.
Note 4: The amounts denominated in foreign currency were translated into New Taiwan dollars at prevailing exchange rate on June 30, 2014.
- 39 -
TABLE 3
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
JUNE 30, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Holding Company Name Type and Name of Marketable
Securities
Relationship with the
Holding Company Financial Statement Account
June 30, 2014
Note Shares Carrying Amount
Percentage of
Ownership
Fair Value
(Note 1)
The Corporation Capital stock
Gallant - Available-for-sale financial assets - non-current 1,267 $ 17 - $ 17
Capital stock
Kaland - Financial assets measured at cost - non-current 389 236,266 19 271,242
Sunengine - Financial assets measured at cost - non-current 8,134,565 81,346 11 81,026
Hiwin Mikrosystem - Financial assets measured at cost - non-current 7,195,092 37,922 10 135,979
Taichung International Country Club - Financial assets measured at cost - non-current 1 2,100 - -
King Kong Iron Work Ltd. - Financial assets measured at cost - non-current 76,300 - - -
Hiwin GmbH Share capital
Hiwin (Schweiz) GmbH - Financial assets measured at cost - non-current - EUR 72 19 EUR 72
Note 1: For companies with stocks that have no quoted market prices, the estimated fair value of the securities held is based on the investees’ net asset values as of June 30, 2014.
Note 2: Information about the investment in subsidiary and associates; please see Table 7.
- 40 -
TABLE 4
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars)
Company Name Related Party Relationship
Transaction Details Abnormal Transaction Notes/Accounts Receivable
(Payable) Note
Purchase/Sale Amount
(Note) % to Total Payment Terms Unit Price Payment Terms
Ending Balance
(Note) % to Total
The Corporation (Note) Hiwin GmbH Subsidiary Sale $ 446,701 8 O/A 120 days $ - - $ 312,618 6
Hiwin Japan Subsidiary Sale 153,587 3 O/A 150-180 days - - 201,125 4
Hiwin GmbH Hiwin Mikrosystem Other related party Purchase 153,469 19 O/A 90 days - - (80,246) (18)
Note: Significant intercompany accounts and transactions have been eliminated.
- 41 -
TABLE 5
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
JUNE 30, 2014
(In Thousands of New Taiwan Dollars)
Company Name Related Party Relationship Ending Balance (Note) Turnover Rate
Overdue Amounts Received
in Subsequent
Period
Allowance for
Impairment Loss Amount Actions Taken
The Corporation Hiwin GmbH Subsidiary Trade receivable from related parties $ 312,618 3.14 $ - - $ 79,072 $ -
Hiwin Japan Subsidiary Trade receivable from related parties 201,125 1.60 - - 23,778 -
Hiwin Japan Subsidiary Other receivables from related parties 73,909 - - - - -
Note: Significant intercompany accounts and transactions have been eliminated.
- 42 -
TABLE 6
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars)
No. Investee Company Counterparty Relationship (Note 1)
Transaction Details
Financial Statement Account Amount (Note 2) Payment Terms % to
Total Sales or Assets
0 The Corporation Hiwin Japan 1 Sales $ 153,587 O/A 150-180 days 2
1 Trade receivables 201,125 O/A 150-180 days 1
Hiwin GmbH 1 Sales 446,701 O/A 120 days 7
1 Trade receivables 312,618 O/A 120 days 1
Hiwin USA 1 Sales 66,481 O/A 120-180 days 1
Note 1: Relationship of counterparty; (1) parent company to subsidiary; (2) subsidiary to parent company.
Note 2: Significant intercompany accounts and transactions have been eliminated.
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TABLE 7
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTEES
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Investor Company Investee Company Location Main Businesses and Products
Original Investment Amount As of June 30, 2014 Net Income
(Loss) of the
Investee
Share of
Profit (Loss) Note
June 30, 2014 December 31,
2013 Shares %
Carrying
Amount
The Corporation Hiwin GmbH Germany Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
$ 207,687 $ 207,687 - 100% $ 911,642 $ 129,672 $ 129,672 Subsidiary
Hiwin USA United States of America Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
353,844 353,844 2,148,000 100% 325,566 31,168 31,168 Subsidiary
Hiwin Japan Japan Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
156,183
(Note 1)
156,183
(Note 1)
- 100% (32,244) (58,071) (58,071) Subsidiary
Mega Fabs Israel Research, manufacture and sale of
drivers and controllers
42,444 42,444 - 40% 65,133 4,186 1,675 -
Hulk Taiwan Research, development, design,
manufacture and sale of solar
cell, electronic components,
electric power supply, electric
transmission and power
distribution machinery products
861,151 729,279 86,115,115 48% 618,655 (143,268) (69,328) Subsidiary
Hiwin Singapore Singapore Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
117,550 117,550 5,000,000 100% 101,649 (7,926) (7,926) Subsidiary
Hiwin Korea Korea Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
140,665 140,665 1,000,000 100% 124,027 (13,893) (13,893) Subsidiary
Hiwin GmbH Hiwin S.R.O. Czech Republic Sale of aerospace parts,
ballscrews, linear guideways,
and industrial robots
104
(CZK 70)
104
(CZK 70)
- 32% 38,394
(EUR 941)
- (Note 2) -
Hiwin S.R.L. Italy Sale of aerospace parts,
ballscrews, linear guideways,
and industrial robots
25,249
(EUR 619)
4,549
(EUR 119)
- 100% (5,234)
(EUR 128)
- (Note 2) Indirectly owned
subsidiary
Note 1: Deducted by the amount of reduction of capital to offset deficit.
Note 2: Not applicable.
Note 3: Significant intercompany accounts and transactions have been eliminated except Mega Fabs and Hiwin S.R.O..
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TABLE 8
HIWIN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
FOR THE SIX MONTHS ENDED JUNE 30, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Investee Company Main Businesses and Products Paid-in
Capital
Method of
Investment
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2014
Remittance of Funds Accumulated
Outward
Remittance for
Investment from
Taiwan as of
June 30, 2014
Net Income
(Loss) of the
Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)
Carrying
Amount as of
June 30, 2014
Accumulated
Repatriation
of Investment
Income as of
June 30, 2014
Outward Inward
YIFU Finance Finance lease $ 746,625
(USD 25,000)
(Note 1) $ 236,266
(USD 8,168)
$ - $ - $ 236,266
(USD 8,168)
$ 22,121 19% (Note 3) $ 236,266 $ -
Hiwin China Manufacture and sale of aerospace
parts, ballscrews, linear
guideways and industrial robots
226,264
(CNY 46,700)
(Note 2) - 226,264
(CNY 46,700)
- 226,264
(CNY 46,700)
(4,441) 100% $ (4,441)
(Note 4)
220,316 -
Accumulated Outward Remittance for
Investment in Mainland China as of June
30, 2014
Investment Amounts Authorized by
Investment Commission, MOEA
Upper Limit on the Amount of
Investment Stipulated by Investment
Commission, MOEA
$ 462,530
(USD 8,168 and CNY 46,700)
$ 1,727,018
(USD 9,500 and CNY 300,000)
(Note 5)
Note 1: The investment was made through a corporation established in a third country, which, in turn, invested in companies located in Mainland China.
Note 2: The investment in Mainland China was made directly.
Note 3: The investment in Kaland is carried at cost; thus, no investment gain or loss is recognized.
Note 4: The share of profit or loss were calculated base on the financial statements that have not been reviewed.
Note 5: According to “Regulation for Screening of Application to Engage in Technical Cooperation in Mainland China” issued by the Investment Commission of Ministry of Economic Affairs, the investment in Mainland China has no maximum
limitation since the Corporation had acquired the IDB approval of the Corporation’s establishment of an operating headquarter in Taiwan.