Yageo Corporation and Subsidiaries
Consolidated Financial Statements for the
Years Ended December 31, 2014 and 2013 and
Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
Yageo Corporation
We have audited the accompanying consolidated balance sheets of Yageo Corporation (the
“Company”) and subsidiaries (collectively referred to as the “Group”) as of December 31, 2014
and 2013, and the related consolidated statements of comprehensive income, changes in equity and
cash flows for the years then ended. These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. However, we did not audit the financial statements of a
consolidated subsidiary, Yageo Europe Holding B.V. (“Yageo Europe”), as of and for the years
ended December 31, 2014 and 2013. The total assets of this consolidated subsidiary were 12.20%
(NT$6,283,413 thousand) and 10.86% (NT$6,376,436 thousand) of the consolidated total assets as
of December 31, 2014 and 2013, respectively, and the total revenues of this consolidated subsidiary
were 13.22% (NT$3,573,426 thousand) and 13.32% (NT$3,295,599 thousand) of the consolidated
total revenues in 2014 and 2013, respectively. As disclosed in Note 12, we also did not audit the
financial statements of some investees accounted for using the equity method. The total
investments in these investees accounted for using equity method were 2.07% (NT$1,065,260
thousand) and 2.56% (NT$1,506,106 thousand) of the consolidated total assets as of December 31,
2014 and 2013, respectively, and the total share of the profit of associates was 1.59% (NT$77,049
thousand) and 8.18% (NT$175,538 thousand) of the consolidated profit before income tax in 2014
and 2013, respectively. The financial statements of the consolidated subsidiary and investees
accounted for using equity method were audited by other auditors, whose reports have been
furnished to us, and our opinion, insofar as it relates to the investees’ amounts included herein, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with the Regulations Governing the Auditing and
Attestation 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 and the reports of the other auditors 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 Yageo Corporation and its subsidiaries as of December 31, 2014 and 2013, and their
consolidated financial performance and their consolidated cash flows for the years ended December
31, 2014 and 2013, 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.
-1-
We have also audited the financial statements of the parent company, Yageo Corporation, as of and
for the years ended December 31, 2014 and 2013 on which we have issued a modified unqualified
report.
March 13, 2015
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated
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 applied in the Republic of China.
For the convenience of readers, the 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
auditors’ report and consolidated financial statements shall prevail.
-2-
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars)
2014
Amount
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss (Notes 4 and 7)
Debt investments with no active market - current (Notes 4 and 9)
Notes receivable (Notes 4 and 10)
Trade receivables (Notes 4 and 10)
Trade receivable from related parties (Notes 4 and 28)
Other receivables
Other receivables from related parties (Note 28)
Inventories (Notes 4 and 11)
Prepayment (Note 15)
Other current assets
Total current assets
$
%
2013
Amount
%
6,412,680
54,609
5,856,514
552,131
7,704,072
3,342
213,189
115,001
5,505,965
341,043
200,906
13
11
1
15
11
1
-
$ 14,349,810
13,898
7,416,093
593,357
5,993,872
3,530
282,171
86,080
4,671,715
381,420
104,398
24
13
1
10
1
8
1
-
26,959,452
52
33,896,344
58
CURRENT LIABILITIES
Short-term borrowings (Note 16)
Short-term bills payable (Note 16)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7
and 17)
Notes payable
Trade payables
Trade payables to related parties (Note 28)
Other payables to related parties (Note 28)
Other payables (Note 18)
Income tax payable (Note 4)
Current portion of bonds payable (Notes 4 and 17)
Other current liabilities
Total current liabilities
NONCURRENT ASSETS
Available-for-sale financial assets - noncurrent (Notes 4 and 8)
Debt investments with no active market - noncurrent (Notes 4 and 9)
Investments accounted for using the equity method (Notes 4 and 12)
Property, plant and equipment (Notes 4, 13, 28 and 29)
Computer software (Note 4)
Goodwill (Notes 4 and 14)
Deferred tax assets (Notes 4 and 22)
Refundable deposits
Long-term prepayments for lease (Note 15)
Other noncurrent assets
Total noncurrent assets
2,650,276
50,000
2,909,348
14,926,535
56,930
2,446,087
1,060,703
79,382
89,578
269,319
5
6
29
5
2
1
2,573,052
50,000
2,775,861
15,146,803
46,236
2,590,650
1,195,591
70,767
89,358
283,163
4
5
26
4
2
1
24,538,158
48
24,821,481
42
NONCURRENT LIABILITIES
Long-term borrowings (Notes 16 and 29)
Deferred tax liabilities (Notes 4 and 22)
Accrued pension liabilities (Notes 4 and 19)
Guarantee deposits received
Total noncurrent liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital
Common shares
Capital surplus
Issuance of common shares
Conversion of bonds
From treasury share transactions
From share of changes in capital surplus of associates
From employee share options
Total capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Exchange differences on translation of foreign operations
Unrealized loss on available-for-sale financial assets
Total other equity
Treasury shares
Total equity attributable to owners of the Company
NONCONTROLLING INTERESTS
Total equity
TOTAL
$ 51,497,610
100
$ 58,717,825
2014
Amount
LIABILITIES AND EQUITY
100
TOTAL
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 13, 2015)
-3-
$
2013
Amount
%
8,764,499
499,877
17
1
15,150
11,769
4,279,691
446,857
896
2,987,361
1,106,518
660,566
5,586,493
699,929
10
1
8
1
6
2
1
910,436
3,458
4,088,189
338,765
2,292,228
571,235
6,716,474
270,503
2
7
1
4
1
11
-
18,773,184
36
21,477,710
37
6,400,000
269,931
281,041
34,020
12
1
1
-
7,400,000
227,419
251,678
35,811
13
-
6,984,992
14
7,914,908
13
25,758,176
50
29,392,618
50
6,678,919
13
15,437,159
26
1,142,129
755,574
26,275
98,884
2,022,862
2
2
4
1,000,765
29,138
121,617
20,498
172,260
1,344,278
2
2
1,406,122
437,595
14,083,468
15,927,185
3
1
27
31
1,261,160
1,181,865
9,889,602
12,332,627
2
2
17
21
1,175,751
(191,024)
984,727
-
2
2
-
$
%
509,298
(243,493)
265,805
(172,215)
1
1
-
25,613,693
50
29,207,654
50
125,741
-
117,553
-
25,739,434
50
29,325,207
50
$ 51,497,610
100
$ 58,717,825
100
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2014
Amount
OPERATING REVENUE (Notes 4 and 28)
Net sales
%
2013
Amount
%
$ 27,026,984
100
$ 24,735,047
100
19,979,522
74
18,936,054
76
GROSS PROFIT
7,047,462
26
5,798,993
24
OPERATING EXPENSES (Notes 4, 21 and 28)
Selling and marketing
General and administrative
Research and development
1,485,346
1,182,107
352,957
6
4
1
1,437,742
1,077,376
366,037
6
4
2
Total operating expenses
3,020,410
11
2,881,155
12
PROFIT FROM OPERATIONS
4,027,052
15
2,917,838
12
OPERATING COSTS (Notes 4, 11, 21 and 28)
Cost of goods sold
NONOPERATING INCOME AND EXPENSES
Financial costs (Notes 4 and 21)
Share of profit of associates (Note 4)
Interest income (Note 4)
Rental income (Notes 4 and 28)
Gain on financial instruments at fair value through
profit or loss (Note 4)
Loss on financial instruments at fair value through
profit or loss (Note 4)
Impairment loss on financial assets (Notes 4 and 21)
Impairment loss on property, plant and equipment
(Notes 4, 13 and 21)
Other gains and losses (Note 21)
Total nonoperating income and expenses
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4 and 22)
NET PROFIT FOR THE YEAR
-4-
(203,590)
181,985
556,377
21,745
(1)
1
2
-
(261,241)
225,029
354,552
21,780
(1)
1
1
-
256,943
1
295,624
1
(170,637)
-
(1)
-
(228,344)
(64,549)
(1)
-
160,809
1
(1,244,949)
131,320
(5)
1
803,632
3
(770,778)
(3)
4,830,684
18
2,147,060
9
938,121
4
676,116
3
3,892,563
14
1,470,944
6
(Continued)
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2014
Amount
OTHER COMPREHENSIVE INCOME (LOSS)
Exchange differences on translating foreign
operations (Notes 4 and 20)
Unrealized gain on available-for-sale financial assets
(Notes 4 and 20)
Actuarial loss arising from defined benefit plans
(Notes 4 and 19)
Share of the other comprehensive income of
associates (Notes 4 and 20)
Income tax relating to the components of other
comprehensive income (Notes 4 and 22)
$
NET PROFIT ATTRIBUTABLE TO:
Owner of the Company
Noncontrolling interests
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owner of the Company
Noncontrolling interests
%
$
%
705,556
3
53,359
-
(7,755)
-
(4,521)
-
98,264
-
98,060
-
(135,184)
-
(103,545)
-
714,240
3
$
4,606,803
17
$
3,863,046
29,517
$
Other comprehensive income for the year, net
of income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
2013
Amount
1,161,979
5
291,308
1
1,443,281
6
$
2,914,225
12
14
-
$
1,449,623
21,321
6
-
3,892,563
14
$
1,470,944
6
$
4,575,287
31,516
17
-
$
2,889,214
25,011
12
-
$
4,606,803
17
$
2,914,225
12
EARNINGS PER SHARE (NEW TAIWAN
DOLLARS; Note 23)
Basic
Diluted
$2.30
$2.30
$0.75
$0.68
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 13, 2015)
-5-
(Concluded)
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars)
Equity Attributable to Owners of the Company
Share Capital
(Note 20)
BALANCE, JANUARY 1, 2013
$ 22,053,084
Capital reduction
Capital Surplus
(Notes 4, 20
and 24)
$
(6,615,925)
1,309,425
Legal Reserve
(Note 20)
$
1,155,285
Retained Earnings
Unappropriated
Earnings
Special Reserve
(Notes 4, 19
(Note 20)
and 20)
$
516,125
-
-
-
$
Other Equity
Exchange
Unrealized
Differences on
Gain (Loss) on
Translating
Available-forForeign
sale Financial
Operations
Assets
(Notes 4 and 20)
(Notes 4 and 20)
Total
$
(641,038)
$
(536,686)
Treasury Stock
(Note 20)
$
-
Noncontrolling
Interests
(Notes 4 and 20)
Total
$ 33,071,727
$
9,215,532
$ 10,886,942
-
-
-
-
-
-
-
-
-
-
-
-
(6,615,925)
92,542
Total Equity
-
$ 33,164,269
(6,615,925)
Appropriation of the 2012 earnings
Legal reserve
Special reserve
-
-
105,875
-
665,740
Changes in capital surplus from investments in associates
-
20,498
-
-
-
-
-
-
-
20,498
-
20,498
Recognition of compensation cost of employee share options
-
14,355
-
-
-
-
-
-
-
14,355
-
14,355
Net profit for the year ended December 31, 2013
-
-
-
-
1,449,623
1,449,623
-
-
-
1,449,623
21,321
1,470,944
Other comprehensive income (loss) for the year ended December 31, 2013,
net of income tax
-
-
-
-
1,150,336
293,193
-
1,439,591
3,690
1,443,281
Buyback of treasury shares
-
-
-
-
-
-
-
-
15,437,159
1,344,278
1,261,160
1,181,865
9,889,602
12,332,627
509,298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 2013
Capital reduction
(15,395,087)
(105,875)
(665,740)
(3,938)
(3,938)
(172,215)
(243,493)
(172,215)
(172,215)
-
29,207,654
117,553
(15,395,087)
-
(15,395,087)
-
-
-
Appropriation of the 2013 earnings
Legal reserve
Special reserve
Cash dividends distributed by the Company
-
-
144,962
-
Changes in capital surplus from investments in associates
-
5,777
-
-
-
-
-
-
-
5,777
-
5,777
Recognition of compensation cost of employee share options
-
10,312
-
-
-
-
-
-
-
10,312
-
10,312
293,825
102,839
-
-
-
-
-
-
-
396,664
-
396,664
6,917,972
726,437
-
-
-
-
-
-
-
7,644,409
-
7,644,409
Net profit for the year ended December 31, 2014, net of income tax
-
-
-
-
3,863,046
3,863,046
-
-
-
3,863,046
29,517
3,892,563
Other comprehensive income (loss) for the year ended December 31, 2014
-
-
-
-
666,453
52,469
-
712,241
1,999
714,240
Buyback of treasury shares
-
-
-
-
-
-
(607,444)
-
-
-
-
779,659
-
-
$ 25,613,693
Recognition of employee share options granted by the Company
Convertible bonds converted to common shares
Cancellation of treasury shares
BALANCE, DECEMBER 31, 2014
(574,950)
$
6,678,919
(166,781)
$
2,022,862
$
1,406,122
$
437,595
(144,962)
744,270
(223,879)
(6,681)
(37,928)
$ 14,083,468
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 13, 2015)
-6-
(223,879)
(6,681)
(37,928)
$ 15,927,185
$
1,175,751
$
(191,024)
$
(23,328)
29,325,207
Cash dividends distributed by subsidiaries
(744,270)
-
-
(172,215)
(223,879)
-
(607,444)
-
$
(23,328)
(223,879)
(607,444)
-
-
125,741
$ 25,739,434
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars)
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Impairment loss on trade receivables
Depreciation expenses
Amortization expenses
Amortization of prepayments for lease
Compensation cost of employee share options
Amortization of prepayments
Net gain on fair value change of financial assets and liabilities held
for trading
Financial costs
Interest income
Dividend income
Exchange loss on bonds payable, net
Share of profit of associates
Gain on disposal of property, plant and equipment, net
Impairment loss on available-for-sale financial assets
Write-down of inventories
Impairment loss on property, plant and equipment
Net loss on unrealized foreign currency exchange
Changes in operating assets and liabilities:
Financial assets held for trading
Notes receivable
Trade receivables
Trade receivables from related parties
Other receivables
Other receivables from related parties
Inventories
Prepayments
Other current assets
Notes payable
Trade payables
Trade payables to related parties
Other payables
Other payables to related parties
Other current liabilities
Accrued pension liabilities
Cash generated from operations
Interest received
Dividend received
Interest paid
Income tax paid
Net cash generated from operating activities
-7-
$
4,830,684
18,461
1,907,722
49,634
2,616
10,312
255,627
2013
$
2,147,060
390
2,034,591
44,055
2,570
14,355
235,201
(86,306)
203,590
(556,377)
(54,641)
17,939
(181,985)
(3,848)
29,959
8,101
(67,280)
261,241
(354,552)
(79,018)
177,803
(225,029)
(1,050)
64,549
150,485
1,244,949
12,091
52,219
41,226
(1,698,112)
188
(22,127)
(28,921)
(864,209)
(91,214)
(96,508)
8,311
157,527
108,092
485,498
896
390,063
30,692
4,925,109
647,486
54,641
(185,154)
(373,016)
8,920
(146,781)
(238,737)
(3,505)
(9,832)
(72,446)
(213,173)
(134,513)
(22,216)
(2,746)
359,703
114,342
441,622
(13,023)
101,198
1,529
5,832,753
208,742
79,018
(34,750)
(372,174)
5,069,066
5,713,589
(Continued)
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars)
2014
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available-for-sale financial assets
Proceeds of the capital reduction of available-for-sale financial assets
Proceeds on sale (purchase) of debt investments with no active market
Acquisition of associates
Dividends received from associates
Proceeds of the capital reduction of associates
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease in other financial assets
Payments for intangible assets
Increase in other noncurrent assets
Increase in refundable deposits
$
Net cash generated from (used in) investing activities
7,999
1,559,579
(6,587)
47,939
115,107
(1,404,406)
5,029
(49,408)
(32,547)
(8,615)
234,090
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of short-term borrowings
Proceeds (repayments) of short-term bills payable
Proceeds of long-term bank loans
Repayments of long-term bank loans
Dividends paid to the owners of the Company
Cash reduction
Proceeds from employee share options
Payments for buyback of treasury shares
Dividends paid to noncontrolling interests
Proceeds of guarantee deposits received
Refund of guarantee deposits received
Net cash generated from (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH HELD IN FOREIGN CURRENCIES
2013
$
(17,288)
10,008
(1,931,320)
20,990
25,926
(2,145,067)
6,566
582,730
(4,990)
(98,690)
(50,658)
(3,601,793)
3,178,006
(200,000)
6,400,000
(7,400,000)
(223,879)
(15,395,087)
396,664
(607,444)
(23,328)
(1,791)
4,649,445
635,000
7,400,000
(6,615,925)
(172,215)
6,964
-
(13,876,859)
5,903,269
636,573
394,854
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
(7,937,130)
8,409,919
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
14,349,810
5,939,891
6,412,680
$ 14,349,810
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 13, 2015)
-8-
(Concluded)
YAGEO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars Unless Stated Otherwise)
1. GENERAL INFORMATION
Yageo Corporation (the “Company”) was incorporated in 1987 in the Republic of China (ROC). The
Company’s shares are traded on the Taiwan Stock Exchange. The Company manufactures and sells
passive components.
The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan
dollar.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Company’s board of directors on March 13,
2015.
3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND
INTERPRETATIONS
a. The amendments to the Regulations Governing the Preparation of Financial Reports by Securities
Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC)
endorsed by the FSC not yet effective
Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC on April 3, 2014, stipulated that the
Company and entities controlled by the Company (the “Group”) should apply the 2013 version of IFRS,
IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers starting January 1,
2015.
New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Improvements to IFRSs (2009) - amendment to IAS 39
Amendment to IAS 39 “Embedded Derivatives”
Improvements to IFRSs (2010)
Annual Improvements to IFRSs 2009-2011 Cycle
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”
Effective Date
Announced by IASB (Note)
January 1, 2009 and January 1, 2010,
as appropriate
Effective for annual periods ended
on or after June 30, 2009
July 1, 2010 and January 1, 2011, as
appropriate
January 1, 2013
July 1, 2010
July 1, 2011
January 1, 2013
(Continued)
-9-
New, Amended and Revised
Standards and Interpretations (the “New IFRSs”)
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets
and Financial Liabilities”
Amendment to IFRS 7 “Disclosure - Transfer of Financial
Assets”
IFRS 10 “Consolidated Financial Statements”
IFRS 11 “Joint Arrangements”
IFRS 12 “Disclosure of Interests in Other Entities”
Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated
Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance”
Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment
Entities”
IFRS 13 “Fair Value Measurement”
Amendment to IAS 1 “Presentation of Other Comprehensive
Income”
Amendment to IAS 12 “Deferred Tax: Recovery of
Underlying Assets”
IAS 19 (Revised 2011) “Employee Benefits”
IAS 28 (Revised 2011) “Investments in Associates and Joint
Ventures”
Amendment to IAS 32 “Offsetting Financial Assets and
Financial Liabilities”
IFRIC 20 “Stripping Costs in Production Phase of a Surface
Mine”
Effective Date
Announced by IASB (Note)
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
(Concluded)
Note:
Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or
after the respective effective dates.
Except for the following, whenever applied, the initial application of the above 2013 IFRSs version and
the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities
Issuers would not have any material impact on the Group’s accounting policies:
1) IFRS 10 “Consolidated Financial Statements”
IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12
“Consolidation - Special Purpose Entities”. The Group considers whether it has control over other
entities for consolidation. The Group has control over an investee 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.
- 10 -
3) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendments 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 retrospectively apply the above amendments starting from 2015. Items not
expected to be reclassified to profit or loss are remeasurements of the defined benefit plans and the
share of remeasurement of the 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, unrealized gains (loss) on available-for-sale financial assets and share
of the other comprehensive income (except the share of the remeasurements of the defined benefit
plans) of associates accounted for using the equity method. However, the application of the above
amendments will not result in any impact on the net profit for the year, other comprehensive income
for the year (net of income tax), and total comprehensive income for the year.
4) Revision to IAS 19 “Employee Benefits”
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 eliminates the “corridor approach” permitted under
current IAS 19 and accelerate the recognition of past service costs. The revision requires all
remeasurements of the defined benefit plans 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. In addition, the revised IAS 19 introduces certain changes in the
presentation of the defined benefit cost, and also includes more extensive disclosures.
In addition, revised IAS 19 changes the definition of short-term employee benefits. The revised
definition is “employee benefits (other than termination benefits) that are expected to be settled
wholly before twelve months after the end of the annual reporting period in which the employees
render the related service”. The Group’s unused annual leave, which can be carried forward
within 24 months after the end of the annual period in which the employee renders service and
which is currently classified as short-term employee benefits, will be classified as other long-term
employee benefits under revised IAS 19. Related defined benefit obligation of such other
long-term benefit is calculated using the Projected Unit Credit Method. However, this change
does not affect unused annual leave to be presented as a current liability in the consolidated balance
sheet.
On initial application of the revised IAS 19 in 2015, the changes in cumulative employee benefit
costs as of December 31, 2013 resulting from the retrospective application are adjusted to net
defined benefit liabilities, deferred tax assets and retained earnings. In addition, in preparing the
consolidated financial statements for the year ended December 31, 2015, the Group would elect not
to present 2014 comparative information about the sensitivity of the defined benefit obligation.
- 11 -
The anticipated impact on initial application of the revised IAS 19 is detailed as follows:
Impact on Assets, Liabilities and Equity
Adjustments
Arising from
Initial
Application
Carrying
Amount
Adjusted
Carrying
Amount
December 31, 2014
Accrued pension costs
Deferred tax assets
Retained earnings
$
281,041
$ 1,060,703
$ 14,083,468
$
$
$
28,621
8,336
(20,285)
$
309,662
$ 1,069,039
$ 14,063,183
b. New IFRSs in issue but not yet endorsed by the FSC
The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the
FSC. As of the date the consolidated financial statements were authorized for issue, the FSC has not
announced their effective dates.
Effective Date
Announced by IASB (Note 1)
New IFRSs
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
Annual Improvements to IFRSs 2012-2014 Cycle
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date
of IFRS 9 and Transition Disclosures”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of
Assets between an Investor and its Associate or Joint
Venture”
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment
Entities: Applying the Consolidation Exception”
Amendment to IFRS 11 “Accounting for Acquisitions of
Interests in Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 1 “Disclosure Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer
Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 36 “Impairment of Assets: Recoverable
Amount Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and
Continuation of Hedge Accounting”
IFRIC 21 “Levies”
July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 4)
January 1, 2018
January 1, 2018
January 1, 2016 (Note 3)
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
- 12 -
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.
Note 3: Prospectively applicable to transactions occurring in annual periods beginning on or after
January 1, 2016.
Note 4: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that
occur in annual periods beginning on or after January 1, 2016; the remaining amendments are
effective for annual periods beginning on or after January 1, 2016.
The initial application of the above New IFRSs, whenever applied, would not have any material impact
on the Group’s accounting policies, except for the following:
1) IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
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 the collecting of contractual cash flows and the selling of 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. When the debt
instruments are derecognized or reclassified, the cumulative gain or loss previously recognized
in other comprehensive income is reclassified from equity to profit or loss.
Except for 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, and the cumulative gain or loss previously recognized in other
comprehensive income cannot be reclassified from equity to profit or loss.
The impairment of financial assets
IFRS 9 requires 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
- 13 -
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 and is not low. 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.
2) 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.
3) IFRIC 21 “Levies”
IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government.
It addresses the accounting for a liability whose timing and amount is certain and the accounting for
a provision whose timing or amount is not certain. The Group accrues related liability when the
transaction or activity that triggers the payment of the levy occurs. Therefore, if the obligating
event occurs over a period of time (such as generation of revenue over a period of time), the liability
is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum
threshold (such as a minimum amount of revenue or sales generated), the liability is recognized
when that minimum threshold is reached.
4) Annual Improvements to IFRSs:
2010-2012 Cycle
Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and
IFRS 8 “Operating Segments” were amended in this annual improvement.
The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and
adds definitions for “performance condition” and “service condition”. The amendment clarifies
that a performance target can be based on the operations (i.e. a non-market condition) of the Group
or another entity in the same group or the market price of the equity instruments of the Group or
another entity in the same group (i.e. a market condition); that a performance target can relate either
to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period
for achieving a performance condition must not extend beyond the end of the related service period.
In addition, a share market index target is not a performance condition because it not only reflects
the performance of the Group, but also of other entities outside the Group.
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.
- 14 -
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.
5) Amendments to IAS 16 and IAS 38 “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.
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.
The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an
amortization method that is based on revenue that is generated by an activity that includes the use
of an intangible asset is not appropriate. This presumption can be overcome only in the following
limited circumstances:
a) In which the intangible asset is expressed as a measure of revenue (for example, the contract
that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue
threshold); or
b) When it can be demonstrated that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated.
An entity should apply the aforementioned amendments prospectively for annual periods beginning
on or after the effective date.
6) 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 from January 1, 2017.
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.
7) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture”
The amendments stipulated that, when an entity sells or contributes assets that constitute a business
(as defined in IFRS 3) to an associate, the gain or loss resulting from the transaction is recognized in
full. Also, when an entity loses control of a subsidiary that contains a business but retains
significant influence, the gain or loss resulting from the transaction is recognized in full.
- 15 -
Conversely, when an entity sells or contributes assets that do not constitute a business to an
associate, the gain or loss resulting from the transaction is recognized only to the extent of the
unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated.
Also, when an entity loses control of a subsidiary that does not contain a business but retains
significant influence in an associate, the gain or loss resulting from the transaction is recognized
only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the
gain or loss is eliminated.
8) Annual Improvements to IFRSs:
2012-2014 Cycle
Several standards including IFRS 5 “Non-current assets held for sale and discontinued operations”,
IFRS 7, IAS 19 and IAS 34 were amended in this annual improvement.
IAS 19 was amended to clarify that the depth of the market for high quality corporate bonds used to
estimate discount rate for post-employment benefits should be assessed by the market of the
corporate bonds denominated in the same currency as the benefits to be paid, i.e. assessed at
currency level (instead of country or regional level).
9) Amendment to IAS 1 “Disclosure Initiative”
The amendment clarifies that the consolidated financial statements should be prepared for the
purpose of disclosing material information. To improve the understandability of its consolidated
financial statements, the Group should disaggregate the disclosure of material items into their
different natures or functions, and disaggregate material information from immaterial information.
The amendment further clarifies that the Group should consider the understandability and
comparability of its consolidated financial statements to determine a systematic order in presenting
its footnotes.
Except for the above impact, as of the date the consolidated financial statements were authorized for
issue, the Group is continuously 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 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.
c. Classification of current and noncurrent 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
- 16 -
3) Cash and cash equivalents.
Current liabilities include:
1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least
twelve months after the reporting period.
Assets and liabilities that are not classified as current are classified as noncurrent.
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, including special purpose entities).
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.
Attribution of total comprehensive income to noncontrolling interests
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the
noncontrolling interests even if this results in the noncontrolling interests having a deficit balance.
2) Entities included in the consolidated financial statements
Investor
Yageo Corporation
Yageo Holding
(Bermuda) Ltd.
Yageo (Hong Kong) Limited
Investee
Main Business
Yageo Holding (Bermuda) Ltd.
Ko-Shin Investment Ltd.
Ferroxcube Holding (Samoa) Ltd.
Yageo Corporation (South Asia)
Ferroxcube Taiwan, Ltd.
Investment
Investment
Investment
Electronic component marketing
Ferrite core manufacture and marketing
Yageo Europe B.V.
Yageo America
Yageo South Asia (M) Sdn. Bhd.
Holding company
Electronic component marketing
Electronic component marketing
Yageo (Hong Kong) Limited
Yageo USA (H.K.) Limited
Ko-E Holding (Cayman)
Vitrohm Holding GmbH
Rextron International
Yageo Korea
Yageo Japan
Hsu Tai International (H.K.)
Yageo Electronics (China) Co., Ltd.
Investment
Passive Component marketing
Holding company
Investment
Investment
Resistor marketing
Resistor marketing
Investment
Passive Component manufacture and
marketing
Passive Component manufacture and
marketing
Passive Component marketing
Passive Component manufacture and
marketing
Passive Component manufacture and
marketing
Investment
Electronic components marketing
Yageo Electronics (Dongguan) Co.,
Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Yageo Components (SuZhou) Co., Ltd.
Ferroxcube Holding (Samoa) Ltd.
Compostar Technology (Dongguan)
Co., Ltd.
Ferroxcube Electronics (H.K.) Limited
Ko-E Corp. Technology
% of Ownership
December 31
2014
2013
100.0
100.0
100.0
100.0
(Note 1)
100.0
100.0
100.0
(Note 2)
100.0
100.0
77.2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
77.2
100.0
100.0
100.0
100.0
100.0
100.0
(Continued)
- 17 -
Investor
Ko-E Holding (Cayman)
Ko-E (H.K.) Limited
Yageo Europe B.V.
Ferroxcube International Holding
B.V.
Investee
Main Business
Ko-E (H.K.) Limited
Ko-E Corp.
Ko-E Technology (Shenzhen) Co., Ltd.
Ferroxcube International Holding B.V.
Ferroxcube Electronics (Dongguan)
Co., Ltd.
Electronic components marketing
Electronic components marketing
Electronic components marketing
Holding company
Ferrite core manufacture and marketing
% of Ownership
December 31
2014
2013
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
(Concluded)
Note 1: Ferroxcube Taiwan, Ltd. had been liquidated and dissolved in the third quarter of 2014.
Note 2: Yageo South Asia (M) Sdn. Bhd. was established in the fourth quarter of 2014.
All subsidiaries are included in the consolidated financial statements as of 2014 and 2013.
e. Business combinations
Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs
are generally recognized in profit or loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
noncontrolling interests in the acquire, and the fair value of the acquirer’s previously held equity
interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired
and the liabilities assumed.
f. 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 except for:
 Exchange differences on monetary items receivable from or payable to a foreign operation for
which settlement is neither planned nor likely to occur (therefore forming part of the net investment
in the foreign operation), which are recognized initially in other comprehensive income and
reclassified from equity to profit or loss on disposal of the net investments.
Nonmonetary 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 nonmonetary items are included in profit or loss for the period except for exchange
differences arising from the retranslation of nonmonetary 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.
Nonmonetary 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 or associates 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 noncontrolling interests as appropriate).
- 18 -
On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a
disposal involving loss of significant influence over an associate that includes a 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
noncontrolling 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.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the
acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and
translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences
arising are recognized in other comprehensive income.
g. 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. Net realizable value
is the estimated selling price of inventories less all estimated costs of completion and costs necessary to
make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.
h. Investment in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary
nor an interest in a joint venture.
The results and assets and liabilities of associates are incorporated in these consolidated financial
statements using the equity method of accounting. Under the equity method, an investment in an
associate is initially recognized at cost and adjusted thereafter to recognize the Group’s share of the
profit or loss and other comprehensive income of the associate. The Group also recognizes the
changes in the Group’s share of equity of associates attributable to the Group.
When the Group subscribes for additional new shares of the associate at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment differs from the amount
of the Group’s proportionate interest in the associate. The Group records such a difference as an
adjustment to investments with the corresponding amount charged or credited to capital surplus. If the
Group’s ownership interest is reduced due to the additional subscription of the new shares of associate,
the proportionate amount of the gains or losses previously recognized in other comprehensive income in
relation to that associate is reclassified to profit or loss on the same basis as would be required if the
investee had directly disposed of the related assets or liabilities. When the adjustment should be
debited to capital surplus, but the capital surplus recognized from investments accounted for by the
equity method is insufficient, the shortage is debited to retained earnings.
When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which
includes any carrying amount of the investment accounted for by the equity method and long-term
interests that, in substance, form part of the Group’s net investment in the associate), the Group
discontinues recognizing its share of further losses. Additional losses and liabilities are recognized
only to the extent that the Group has incurred legal obligations, or constructive obligations, or made
payments on behalf of that associate.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable
assets and liabilities of an associate recognized at the date of acquisition is recognized as goodwill,
which is included within the carrying amount of the investment and is not amortized. Any excess of
- 19 -
the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of
acquisition, after reassessment, is recognized immediately in profit or loss.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single
asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized
forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognized to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date on which it ceases to have
significant influence. Any retained investment is measured at fair value at that date and the fair value
is regarded as its fair value on initial recognition as a financial asset. The difference between the
previous carrying amount of the associate attributable to the retained interest and its fair value is
included in the determination of the gain or loss on disposal of the associate. The Group accounts for
all amounts previously recognized in other comprehensive income in relation to that associate on the
same basis as would be required if that associate had directly disposed of the related assets or liabilities.
When a group entity transacts with its associate, profits and losses resulting from the transactions with
the associate are recognized in the Group’ consolidated financial statements only to the extent of
interests in the associate that are not related to the Group.
i.
Property, plant and equipment
Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and
subsequent accumulated impairment loss.
Properties in the course of construction for production, supply or administrative purposes are carried at
cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs
eligible for capitalization. Such properties are depreciated and classified to the appropriate categories
of property, plant and equipment when completed and ready for intended use.
Freehold land is not depreciated.
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 reporting period, 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.
j.
Goodwill
Goodwill arising from the acquisition of a business is carried at cost as established at the date of
acquisition of the business less accumulated impairment loss.
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
- 20 -
to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is
recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in
subsequent periods.
If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within
that unit, the goodwill associated with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal, and is measured on the basis of the relative
values of the operation disposed of and the portion of the cash-generating unit retained.
k. 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 reporting period, 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. The effect of any changes in estimate is
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.
l.
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 Group 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.
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.
m. 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
- 21 -
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately in profit or loss.
1) Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade
date basis.
a) Measurement category
Financial assets are classified into the following categories: Financial assets at fair value
through profit or loss, available-for-sale financial assets, and loans and receivables.
i. Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset
is held for trading.
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 incorporates any dividend or interest earned on the financial
asset.
ii. Available-for-sale financial assets
Available-for-sale financial assets are nonderivatives 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 trade receivables, cash and cash equivalent, and debt
investments with no active market) are measured at amortized cost using the effective
- 22 -
interest method, less any impairment, except for short-term receivables when the effect of
discounting is immaterial.
Cash equivalent includes time deposits and short-term bills 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, 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.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is
the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment loss is reversed through
profit or loss to the extent that the carrying amount of the investment at the date the impairment
is reversed does not exceed what the amortized cost would have been had the impairment not
been recognized.
For available-for-sale equity investments, a significant or prolonged decline in the fair value of
the security below its cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include significant
financial difficulty of the issuer or counterparty, breach of contract, such as a default or
delinquency in interest or principal payments, it becoming probable that the borrower will enter
bankruptcy or financial re-organization, or the disappearance of an active market for that
financial asset because of financial difficulties.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or
losses previously recognized in other comprehensive income are reclassified to profit or loss in
the period.
In respect of available-for-sale equity securities, impairment loss previously recognized in profit
or loss are not reversed through profit or loss. Any increase in fair value subsequent to an
impairment loss is recognized in other comprehensive income. In respect of available-for-sale
debt securities, the impairment loss is subsequently reversed through profit or loss if an increase
in the fair value of the investment can be objectively related to an event occurring after the
recognition of the impairment loss.
- 23 -
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is 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 that
are written off against the allowance account.
c) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or
loss that had been recognized in other comprehensive income is recognized in profit or loss.
2) Equity instruments
Debt and equity instruments issued by 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 Company’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 Company’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
Financial liabilities are classified as at fair value through profit or loss when the financial
liability is held for trading.
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 27.
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.
- 24 -
4) Convertible bonds
The conversion options component of the convertible bonds issued by the Group that will be settled
other than by the exchange of a fixed amount of cash or other financial asset for a fixed number of
the Company’s own equity instruments is classified as derivative financial liabilities.
On initial recognition, the derivative financial liabilities component of the convertible bonds is
recognized at fair value, and the initial carrying amount of the component of non-derivative
financial liabilities is determined by deducting the amount of derivative financial liabilities from the
fair value of the hybrid instrument as a whole. In subsequent periods, the non-derivative financial
liabilities component of the convertible bonds is measured at amortized cost using the effective
interest method. The derivative financial liabilities component is measured at fair value and the
changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible notes are allocated to the derivative
financial liabilities component and the non-derivative financial liabilities component in proportion
to their relative fair values. Transaction costs relating to the derivative financial liabilities
component are recognized immediately in profit or loss. Transaction costs relating to the
non-derivative financial liabilities component are included in the carrying amount of the liability
component.
5) Derivative financial instruments
The Group uses a variety of derivative financial instruments to manage its exposure to foreign
exchange rate risks, including forward exchange 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.
Derivatives embedded in nonderivative host contracts are treated as separate derivatives when they
meet the definition of a derivative, their risks and characteristics are not closely related to those of
the host contracts and the contracts are not measured at fair value through profit or loss.
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.
1) Sale of goods
Revenue from the sale of goods is recognized when 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;
- 25 -
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.
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. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets
are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which
they are incurred.
q. 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.
- 26 -
The retirement benefit obligation recognized in the consolidated balance sheets represents the present
value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and
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.
r. Employee share options
Employee share options granted to employee
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.
s. 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 carryforwards 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.
- 27 -
Deferred tax liabilities are recognized for taxable temporary differences associated with investments
in subsidiaries and associates, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also
reviewed at the end of each reporting period and recognized to the to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period. The measurement
of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.
3) Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the
tax effect is included in the accounting for the business combination.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group’s accounting policies, management is required to make judgments, estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors
that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
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
As of December 31, 2014 and 2013, the carrying amount of the deferred tax assets in relation to unused
tax losses was $128,150 thousand and $100,083 thousand, respectively. As of December 31, 2014 and
2013, no deferred tax asset has been recognized on the tax loss of $947,087 thousand and $4,954,546
thousand, respectively, due to the unpredictability of future profit streams. The realizability of the
- 28 -
deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences
will be available in the future. In cases where 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 such reversal takes place.
c. Estimated impairment of trade receivables
When there is objective evidence of impairment loss, the Group takes into consideration the estimation
of future cash flows. The amount of 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.
Where the actual future cash flows are less than expected, a material impairment loss may arise.
d. Fair value of derivatives and other financial instruments
As described in Note 27, The Group’s management uses its judgment in selecting an appropriate
valuation technique for financial instruments that do not have quoted market price in an active market.
Valuation techniques commonly used by market practitioners are applied. For derivative financial
instruments, assumptions were based on quoted market rates adjusted for specific features of the
instruments. Note 27 provides detail information about the key assumptions used in the determination
of the fair value of financial instruments. The Group’s management believes that the chosen valuation
techniques and assumptions used are appropriate in determining the fair value of financial instruments.
e. Useful lives of property, plant and equipment
As described in Note 4 i, the Group reviews the estimated useful lives of property, plant and equipment
at each balance sheet date. During the current year, management determined that there the useful lives
of property, plant and equipment should not be changed.
f. Impairment of property, plant and equipment
The impairment of equipment in relation to the production of passive components was based on the
recoverable amount of those assets, which is the higher of fair value less costs to sell or value-in-use of
those assets. Any changes in the market price or future cash flows will affect the recoverable amount
of those assets and may lead to recognition of additional or reversal of impairment losses.
g. Write-down of inventory
Net realizable value of inventory is the estimated selling price in the common course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. The estimation
of net realizable value was based on current market conditions and the historical experience of selling
products of a similar nature. Changes in market conditions may have a material impact on the
estimation of net realizable value.
h. Impairment of investment in the associate
The Group immediately recognizes impairment loss on its net investment in the associate when there is
any indication that the investment may be impaired and the carrying amount may not be recoverable.
The Group takes into consideration the market conditions and industry development to evaluate the
appropriateness of assumptions.
i.
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
- 29 -
circumstances and market conditions will affect these assumptions and may have a material impact on
the amount of the expense and the liability.
6. CASH AND CASH EQUIVALENTS
December 31
2014
Cash on hand
Demand deposits
Cash equivalents (with original maturities less than 3 months)
Time deposits
Commercial papers
$
2013
1,760
3,600,119
$
$
2,233
11,465,886
2,810,801
-
2,763,917
117,774
6,412,680
$ 14,349,810
The market rate intervals of cash in bank at the end of the reporting period were as follows:
December 31
Demand deposits
Commercial papers
2014
2013
0.01%-5.60%
-
0.01%-4.26%
0.63%-0.65%
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
December 31
2014
2013
Financial assets at FVTPL - current
Financial assets held for trading
Derivative financial assets (not under hedge accounting)
Foreign exchange forward contracts (a)
$
54,609
$
13,898
$
15,150
-
$
21,159
889,277
$
15,150
$ 910,436
Financial liabilities at FVTPL - current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge accounting)
Foreign exchange forward contracts (a)
Convertible options (Note 17)
- 30 -
At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:
Notional Amount
(In Thousands)
Currency
Maturity
USD/RMB
EUR/NTD
EUR/USD
EUR/JPY
USD/NTD
EUR/USD
2015.01.05-2015.12.28
2015.01.20-2015.01.26
2015.01.20
2015.01.29
2015.01.05-2015.02.05
2015.01.20
USD39,559/RMB249,437
EUR2,500/NTD97,316
EUR2,000/USD2,490
EUR3,000/JPY440,580
USD132,370/NTD4,145,461
EUR6,000/USD7,468
USD/NTD
USD/JPY
EUR/USD
EUR/JPY
USD/RMB
USD/NTD
USD/RMB
EUR/USD
2014.01.03
2014.01.06-2014.01.29
2014.01.17-2014.02.19
2014.01.29-2014.02.26
2014.01.28-2014.04.02
2014.01.06
2014.01.22-2014.05.23
2014.01.14
USD15,000/NTD440,517
USD2,120/JPY216,071
EUR4,300/USD5,884
EUR3,800/JPY538,682
USD28,000/RMB170,502
USD15,000/NTD438,813
USD37,700/RMB230,392
EUR6,000/USD8,240
December 31, 2014
Sell
Sell
Sell
Sell
Buy
Buy
December 31, 2013
Sell
Sell
Sell
Sell
Sell
Buy
Buy
Buy
The Group entered into derivative contracts during 2014 and 2013 to manage exposures due to exchange
rate fluctuations of foreign currency denominated assets and liabilities.
8. AVAILABLE-FOR-SALE FINANCIAL ASSETS
December 31
2014
2013
Noncurrent
Domestic investments
Listed shares and emerging market shares
TA-I Technology Co., Ltd.
Unlisted shares
Luminous Town Electric Co., Ltd.
Xmholder Technology Co., Ltd.
Parawin Venture Capital Corp.
Hsin Bung International Co., Ltd.
Jihsun Securities Investment Trust Co., Ltd.
SEMR China Technology Co., Ltd.
HK Wahyi Electronic Co., Ltd.
Linko International Golf & Country Club
$
Foreign investments
Overseas Listed shares
SHS KOA Corp.
- 31 -
717,658
$
607,327
86,115
49,184
38,925
33,622
12,000
11,401
1,767
482
951,154
86,115
47,631
46,924
33,622
12,000
10,774
1,670
482
846,545
1,699,122
1,726,507
$ 2,650,276
$ 2,573,052
9. DEBT INVESTMENTS WITH NO ACTIVE MARKET
December 31
2014
2013
$ 5,856,514
$ 7,416,093
$
$
Current
Time deposits with original maturity more than 3 months (a)
Noncurrent
Subordinated bonds (b)
50,000
50,000
a. The market interest rates of the time deposits with original maturity more than 3 months were
3.00%-6.00% and 2.50%-6.50% per annum respectively as of December 31, 2014 and 2013.
b. In November 2006, the Group purchased subordinated bonds issued at par with an aggregate value of
$50,000 thousand. The subordinated bonds were issued by Ta Chong Bank with no maturity due date.
Among the bond terms is that Ta Chong Bank can exercise its redemption right at the bond principal
amount, with interest payable from November 2016. The interest payable is calculated at 5.5% per
annum for 10 years after the bond issuance. If, after 10 years from the date of issuance, Ta Chong
Bank does not redeem the bonds, the coupon interest rate will rise to 6.5% per annum. If Ta Chong
Bank does not make profits within a year as stated in its financial report and cannot issue common
dividends, Ta Chong Bank may be exempted from paying interest payments, as stated in the bond
agreement. As a result, any interest payments not received by the Group were not accounted for by
the Group.
10. NOTES RECEIVABLE AND TRADE RECEIVABLES
December 31
2014
2013
Notes receivable
Notes receivable - operating
$
552,131
$
593,357
Trade receivables
Trade receivables
Less: Allowance for impairment loss
$ 7,770,995
(66,923)
$ 7,704,072
$ 6,047,579
(53,707)
$$ 5,993,872
Trade Receivables
The average credit period on sales of goods was 30-90 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 365 days because historical experience had been that
receivables that are past due beyond 365 days were not recoverable. Allowance for impairment loss were
recognized against trade receivables between 61 days and 365 days based on estimated irrecoverable
amounts determined by reference to past default experience of the counterparties and an analysis of their
current financial position.
- 32 -
For the trade 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. The Group did not hold any collateral or other credit
enhancements for these balances.
The aging of receivables that were past due but not impaired was as follows:
December 31
2014
Less than 60 days
61 to 90 days
2013
$ 1,190,364
-
$
454,774
1
$ 1,190,364
$
454,775
The above aging schedule was based on the past due date.
The movements of the allowance for doubtful trade receivables were as follows:
Collectively
Assessed for
Impairment
Balance at January 1, 2013
Add: Impairment losses recognized on receivables
Less: Amounts written off during the period as uncollectible
Foreign exchange translation gains and losses
$ 51,774
390
(926)
2,469
Balance at December 31, 2013
$ 53,707
Balance at January 1, 2014
Add: Impairment losses recognized on receivables
Less: Amounts written off during the period as uncollectible
Foreign exchange translation gains and losses
$ 53,707
18,461
(571)
(4,674)
Balance at December 31, 2014
$ 66,923
11. INVENTORIES
December 31
Finished goods
Work in process
Raw materials
Supplies
Inventory in transit
2014
2013
$ 3,361,109
672,084
1,283,801
116,023
72,948
$ 2,798,435
527,023
1,204,812
100,475
40,970
$ 5,505,965
$ 4,671,715
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013
was $19,979,522 thousand and $18,936,054 thousand, respectively.
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013
included inventory write-downs of $29,959 thousand and $150,485 thousand, respectively.
- 33 -
12. INVESTMENTS ACCOUNTED FOR USING THE QUITY METHOD
Investments in Associates
December 31
2014
Listed companies
Chilisin Electronics Corp.
Global Testing Corporation Limited (GTCL)
Ralec Electronic Corp.
Teapo Electronics Corporation
Unlisted companies
Strong Components Co., Ltd.
Belkin International Enterprises Ltd. (Samoa)
Guo Chuang Electronics (Dongguan) Co., Ltd.
$
2013
884,062
776,275
607,735
460,078
$
817,347
702,118
567,637
505,556
87,295
52,098
41,805
93,375
49,862
39,966
$ 2,909,348
$ 2,775,861
As the end of the reporting period, the proportion of ownership and voting rights in associates held by the
Group were as follows:
December 31
Name of Associate
Chilisin Electronics Corp.
GTCL
Ralec Electronic Corp.
Teapo Electronic Corp.
Strong Componets Co., Ltd.
Belkin International Enterprises Ltd. (Samoa)
Guo Chuang Electronics (Dongguan) Co., Ltd.
2014
2013
21.2%
28.3%
16.7%
21.0%
31.4%
46.0%
35.0%
21.2%
27.8%
16.5%
21.0%
31.4%
46.0%
35.0%
Fair values of investments in associates for which there are published price quotation are summarized as
follows, based on the closing price of those investments at the balance sheet date:
December 31
2014
Chilisin Electronics Corp.
GTCL
Ralec Electronic Corp.
Teapo Electronics Corporation
$
920,365
420,765
543,949
247,772
$ 2,132,851
2013
$
875,047
381,607
523,270
373,862
$ 2,153,786
The investment in Ralec Electronic Corp. was accounted for by the equity method since the Group had
significant influence over it.
- 34 -
The summarized financial information in respect of the Group’s associates is set out below:
December 31
Total assets
Total liabilities
2014
2013
$ 17,321,317
$ 5,757,939
$ 15,601,426
$ 4,509,316
For the Year Ended December 31
2014
2013
Revenue
Profit for the year
Other comprehensive income
$ 5,931,017
$ 893,135
$ 281,917
$ 5,798,666
$ 1,148,782
$ 358,421
The investments accounted for by the equity method and the share of profit or loss and other comprehensive
income of those investments for the years ended December 31, 2014 and 2013 was based on the associates’
financial statements audited by the auditors for the same years.
The financial statements of some investment in associates - Chilisin Electronics Corp., Strong Components
Co., Ltd., Belkin International Enterprises Ltd. (Samoa), and Guo Chuang Electronics (Dongguan) Co., Ltd.
as of and for the year ended December 31, 2014, and Chilisin Electronics Corp., Teapo corporation, Strong
Components Co., Ltd., Belkin International Enterprises Ltd. (Samoa), and Guo Chuang Electronics
(Dongguan) Co., Ltd. as of and for the year ended December 31, 2013 had been audited by other auditors.
The Company pledged 1,301 thousand shares of Chilisin Electronics to the National Tax Administration of
the Northern Taiwan Province under the Ministry of Finance as collaterals for the petition case on its 2011
income tax return in the third quarter of 2014.
13. PROPERTY, PLANT AND EQUIPMENT
Buildings
Machinery
Equipment
$ 10,782,417
31,069
(1,056)
$ 24,881,307
143,920
(198,725)
Freehold Land
Other
Equipment
Construction in
Progress and
Prepayments
for Equipment
Total
Cost
Balance at January 1, 2013
Additions
Disposals
Effect of foreign currency
exchange differences
Reclassifications
$
Balance at December 31, 2013
724,940
-
$
2,106,292
79,552
(19,151)
$
64,437
57,082
400,443
1,859,467
-
42,376
-
682,853
300,445
385,832
756,569
(75,502)
(1,218,255)
$
767,316
$ 11,795,728
$ 25,968,903
$
2,288,212
$
966,153
Balance at January 1, 2013
Disposals
Impairment losses recognized
in profit or loss
Depreciation expense
Effect of foreign currency
exchange differences
$
203,808
-
$
$ 17,627,049
(196,153)
$
1,575,856
(16,205)
$
-
Balance at December 31, 2013
$
239,239
Carrying amounts at
December 31, 2013
$
528,077
$ 38,895,399
2,114,008
(218,932)
1,099,996
(104,159)
$ 41,786,312
Accumulated depreciation
and impairment
3,616,067
(1,058)
$ 23,022,780
(213,416)
35,431
-
318,342
381,132
891,155
1,462,150
21
191,309
-
1,244,949
2,034,591
-
109,584
414,573
26,448
-
550,605
$
4,424,067
$ 20,198,774
$
1,777,429
$
-
$ 26,639,509
$
7,371,661
$
$
510,783
$
966,153
5,770,129
$ 15,146,803
(Continued)
- 35 -
Buildings
Machinery
Equipment
$ 11,795,728
15,517
(1,201)
$ 25,968,903
54,824
(193,638)
Freehold Land
Other
Equipment
Construction in
Progress and
Prepayments
for Equipment
Total
Cost
Balance at January 1, 2014
Additions
Disposals
Effect of foreign currency
exchange differences
Reclassifications
$
767,316
-
Balance at December 31, 2014
$
Balance at January 1, 2014
Disposals
Depreciation expense
Effect of foreign currency
exchange differences
$
Balance at December 31, 2014
$
236,833
Carrying amounts at
December 31, 2014
$
521,793
(8,690)
-
$
2,288,212
49,505
(76,979)
$
(5,847)
67,636
966,153
1,483,793
-
112,853
674,322
260,837
809,666
758,626
$ 12,597,219
$ 26,900,592
$
2,322,527
$
821,246
239,239
-
$
$ 20,198,774
(195,042)
1,268,735
$
1,777,429
(74,394)
194,077
$
-
$ 41,786,312
1,603,639
(271,818)
4,248
(1,632,948)
363,401
(81,324)
$ 43,400,210
Accumulated depreciation
and impairment
(2,406)
4,424,067
(1,201)
444,910
13,508
188,134
$
4,881,284
$ 21,460,601
$
1,894,957
$
7,715,935
$
$
427,570
5,439,991
(2,155)
$ 26,639,509
(270,637)
1,907,722
-
197,081
$
-
$ 28,473,675
$
821,246
$ 14,926,535
(Concluded)
For the year ended December 31, 2013, due to the improvement of manufacturing process and the shorter
life cycle of passive products, the estimated future cash flows expected to arise from the related plants and
machinery equipment was decreased. The Group carried out a review of the recoverable amount of that
related plants and machinery equipment and determined that the carrying amount exceeded the recoverable
amount. The review led to the recognition of an impairment loss of $1,244,949 thousand for the year
ended December 31, 2013, which was recognized in non-operating profit or loss in the consolidated
statements of comprehensive income.
The above items of property, plant and equipment were depreciated on a straight-line basis over the
following economic lives:
Building
Main buildings
Engineering system
Others
Machinery equipment
Other equipment
50-56 years
40-56 years
1-21 years
1-21 years
1-21 years
Please refer to Note 29 for the carrying amount of property, plant and equipment pledged by the Group to
secure its borrowings.
14. GOODWILL
For the Year Ended December 31
2014
2013
Cost
Balance at January 1
Effect of foreign currency exchange differences
$ 2,590,650
(144,563)
$ 2,434,104
156,546
Balance at December 31
$ 2,446,087
$ 2,590,650
- 36 -
The recoverable amount of the cash-generating unit was determined based on a value in use calculation.
The Group’s management estimated the recoverable amounts of core assets at their expected useful lives
and thus based the cash flow forecast with the following discount rates as of December 31, 2014 and 2013:
6.39% and 5.50%, respectively. The operating revenue forecast was based on the expected future growth
rate of the passive product industry along with the projected advancement of the Group’s own business.
The Group’s management believed that any reasonable changes in the principal assumptions would not
result in the carrying values exceeding the recoverable amounts. As of December 31, 2014 and 2013,
there was no indication of impairment loss based on the principal assumptions.
15. REPAYMENTS FOR LEASE OBLIGATIONS
December 31
2014
Current asset (included in prepayment)
Noncurrent asset
$
2013
2,712
89,578
$
$ 92,290
2,626
89,358
$ 91,984
As of December 31, 2014 and 2013, lease prepayments included rights to use the land in Mainland China
with carrying amounts of $92,290 thousand and $91,984 thousand, respectively.
16. BORROWINGS
a. Short-term borrowings
December 31
2014
2013
Secured borrowings
Bank loans
$
792,950
$
838,600
Unsecured borrowings
Line of credit borrowings
7,971,549
4,747,893
$ 8,764,499
$ 5,586,493
The effective interest rates for bank loans had ranges of 0.98% - 1.3615% and 1.08% - 2.1695% per
annum as of December 31, 2014 and 2013, respectively.
The secured borrowings were Yageo Holding (Bermuda) Ltd.’s bank loans, which were guaranteed by
the Company (Table 2).
b. Short-term bills payable
December 31
2014
Commercial paper
Less: Unamortized discount on bills payable
- 37 -
2013
$
500,000
123
$
700,000
71
$
499,877
$
699,929
Outstanding short-term bills payable were as follows:
December 31, 2014
Nominal
Amount
Discount
Amount
Carrying
Value
Interest Rate
Collateral
1.198%
1.198%
-
Carrying
Value of
Collateral
Commercial paper
International Bills
China Bills
$ 200,000
300,000
$
33
90
$ 199,967
299,910
$
-
$ 500,000
$
123
$ 499,877
$
-
Carrying
Value
Interest Rate
Collateral
Carrying
Value of
Collateral
1.168%
1.168%
1.168%
-
December 31, 2013
Nominal
Amount
Discount
Amount
Commercial paper
Mega Bills
International Bills
China Bills
$ 200,000
200,000
300,000
$
22
20
29
$ 199,978
199,980
299,971
$ 700,000
$
71
$ 699,929
$
-
$
-
c. Long-term borrowings
December 31
2014
2013
$ 6,400,000
$ 7,400,000
Secured borrowings
Bank loans
The effective interest rate of long-term bank loans was 1.6025% and 1.5581% per annum as of
December 31, 2014 and 2013, respectively.
1) The Company signed a $6,500,000 thousand syndicated loan agreement with Hua Nan Commercial
Bank and nine other financial institutions on September 21, 2010. The terms of the loans were
summarized as follows:
Credit Lines
Credit Period
$ 6,500,000
Five years after the
date of contract
Interest Rate
Repayment Agreement
Fixed rate (0.60%) based
on a specific average
rate of notes transacted
in Taiwan
Eight quarterly installments
from the third month of
the third year after the
contract signing date
Under the loan agreement, the Company should collateralize the freehold land, the office buildings
and machinery equipment of the factory located in the administrative office in Xindian in New
Taipei City and in the Nan-Zi Branch and a capacitor-line factory in a village in Dashe in
Kaohsiung City. The Company will have to maintain the its interim and annual current ratios, debt
ratios and interest coverage ratios at percentages specified in the agreement. The Company
terminated the syndicated loan agreement on October 15, 2013 beforehand.
- 38 -
2) The Company signed a $7,400,000 thousand syndicated loan agreement with Mega International
Commercial Bank and nine other financial institutions on September 18, 2013. The terms of the
loans are summarized as follows:
Credit Lines
Credit Period
$ 7,400,000
Five years after the
date of contract
Interest Rate
Repayment Agreement
Fixed rate (0.65%) based
on a specific average
rate of notes transacted
in Taiwan
Eight quarterly installments
from the third month of
the third year after the
contract signing date
Under the loan agreement, the Company should collateralize the freehold land, the office buildings
and machinery equipment of the factory located in the administrative office in Xindian in New
Taipei City and in the Nan-Zi Branch and in the Da-fa industrial estate and a capacitor-line factory
in a village in Dashe in Kaohsiung City. The Company will have to maintain the its interim and
annual current ratios, debt ratios and interest coverage ratios at percentages specified in the
agreement.
17. BONDS PAYABLE
December 31
2014
Overseas convertible bonds
Less: Current portion
2013
$
-
$ 6,716,474
(6,716,474)
$
-
$
-
On June 11, 2007, the Company issued seven-year unsecured zero-coupon overseas convertible bonds with
an aggregate face value of US$230,000 thousand. The convertible bonds have a par value of US$100
thousand or integer multiples of US$100 thousand and were subscribed mainly by the affiliates of the
Company’s strategic investor, Kohlberg Kravis Roberts & Co. The convertible bonds contained two
components: The host liability instrument and the conversion option derivative instrument. The
effective interest rate of the host liability on initial recognition was 3.39% per annum, and the conversion
option derivative instruments were measured at fair value through profit or loss. The convertible bonds
with a par value of US$2,300 thousand were converted to 6,846 thousand common shares at the price of
$11.09. Moreover, as of March 25, 2014, the convertible bonds with a per value of US$227,700 thousand
were converted to 691,798 thousand common shares at the price of $10.865. The convertible bonds were
all converted to common shares in the first quarter of 2014.
Movements of the host liability instrument and the conversion option derivative instrument in 2014 and
2013 were as follows:
2013
The Host Liability Instrument
US$ (In
Thousands)
NT$
Derivative Instrument with
Conversion Option
US$ (In
Thousands)
NT$
Balance at January 1, 2013
Rate adjusted
Interest expense
Fair value changes gain (loss)
$
216,792
7,464
-
$ 6,316,443
177,803
222,228
-
$
(32,174)
2,482
$
(937,422)
(26,191)
74,336
Balance at December 31, 2013
$
224,256
$ 6,716,474
$
(29,692)
$
(889,277)
- 39 -
2014
The Host Liability Instrument
US$ (In
Thousands)
NT$
Derivative Instrument with
Conversion Option
US$ (In
Thousands)
NT$
Balance at January 1, 2014
Rate adjusted
Interest expense
Fair value changes gain (loss)
Convertible bonds converted to
common shares
$
$
Balance at December 31, 2014
$
224,256
269
-
$ 6,716,474
17,939
8,086
-
(224,525)
-
(6,742,499)
$
-
(29,692)
(342)
$
30,034
$
-
(889,277)
(2,376)
(10,257)
901,910
$
-
18. OTHER LIABILITIES
December 31
2014
2013
Current
Other payables
Salaries for bonus
Payable for purchase of equipment
Payable for accrual rebates and compensations
Payable for bonus to employees and remuneration to directors and
supervisors
Payable for annual leave
Others
$ 1,015,810
436,470
343,195
$
803,391
237,237
217,103
208,604
31,954
951,328
122,936
32,738
878,823
$ 2,987,361
$ 2,292,228
19. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Company and Ko-E Corp. of the Group 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.
The subsidiaries-Yageo Dongguan, Yageo China, Ferroxcube Dongguan, Yageo Components (SuZhou)
Co., Ltd., Yageo Trade (SuZhou) Co., Ltd., Yageo USA (H.K.) Limited, Yageo Europe, Ferroxcube
(except for employees under defined benefit plan as described below), Vitrohm Portuguesa, Yageo
Japan, Yageo America, Yageo Corporation (South Asia), Yageo South Asia (M) Sdn. Bhd., Ko-E H.K.,
and Ko-E Technology (Shenzhen) have defined contribution plans and make contributions based on a
fixed rate of salaries and wages according to the local laws. The subsidiaries-Yageo Holding
(Bermuda), Kuo Shin Investment, Ferroxcube Holding (Samoa), Hsu Tai (H.K.), Ko-E Holding
(Cayman), Yageo Hong Kong, Ferroxcube Taiwan, Ferroxcube Electronics (H.K.) and Rextron
International do not have pension plans because there is no employee.
- 40 -
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 contribute amounts equal to 2% of total monthly salaries and
wages to a pension fund administered by the pension fund monitoring committee. Pension
contributions are deposited in the Bank of Taiwan in the committee’s name.
The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The
investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the
mandated management. However, in accordance with Regulations for Revenues, Expenditures,
Safeguard and Utilization of the Labor Retirement Fund the return generated by employees’ pension
contribution should not be below the interest rate for a 2-year time deposit with local banks.
Some employees of Ferroxcube and all the employees of Vitrohm Holding GmbH and Yageo Korea
have defined benefit plans. As of December 31, 2104 and 2013, the pension liabilities amounted to
$149,791 thousand and $125,703 thousand, respectively, included in accrued pension liabilities.
The actuarial valuations of plan assets and the present value of the defined benefit obligation were
carried out by qualifying actuaries. The principal assumptions used for the purposes of the actuarial
valuations were as follows:
December 31
Discount rates
Expected rates of salary increase
Expected return on plan assets
2014
2013
2.125%
1.750%
1.750%
2.000%
1.750%
2.000%
The assessment of the overall expected rate of return was based on historical return trends and analysts’
predictions of the market for the asset over the life of the related obligation, by reference to the
aforementioned use of the plan assets and the impact of the related minimum return.
Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:
For the Year Ended December 31
2014
2013
Current service cost
Interest cost
Expected return on plan assets
An analysis by function
Operating cost
Marketing expenses
Administration expenses
Research and development expenses
$
4,219
6,192
(3,766)
$
4,435
5,029
(3,527)
$
6,645
$
5,937
$
$
$
$
5,061
381
763
440
$
$
$
$
4,546
331
676
384
Actuarial losses recognized in other comprehensive income for the years ended December 31, 2014 and
2013 were $6,437 thousand and $3,752 thousand, respectively. The cumulative amounts of actuarial
losses recognized in other comprehensive income as of December 31, 2014 and 2013 were $22,335
thousand and $15,898 thousand, respectively.
- 41 -
The amounts included in the consolidated balance sheet on the Company’s obligation of its defined
benefit plans were as follows:
December 31
2014
2013
Present value of funded defined benefit obligation
Fair value of plan assets
$ 315,479
(184,229)
$ 315,395
(189,420)
Net liability arising from defined benefit obligation
$ 131,250
$ 125,975
Movements in the present value of the defined benefit obligations were as follows:
For the Year Ended December 31
2014
2013
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial losses
Benefits paid
$ 315,395
4,219
6,192
8,430
(18,757)
$ 315,562
4,435
5,029
3,416
(13,047)
Closing defined benefit obligation
$ 315,479
$ 315,395
Movements in the fair value of the plan assets were as follows:
For the Year Ended December 31
2014
2013
Opening fair value of plan assets
Expected return on plan assets
Actuarial gains (losses)
Contributions from the employer
Benefits paid
$ 189,420
3,766
675
9,125
(18,757)
$ 189,201
3,527
(1,105)
9,416
(11,619)
Closing fair value of plan assets
$ 184,229
$ 189,420
For the years ended December 31, 2014 and 2013, the actual returns on plan assets were $4,441
thousand and $2,422 thousand, respectively.
The major categories of plan assets at the end of the reporting period for each category were disclosed
based on the information announced by Labor Pension Fund Supervisory Committee:
December 31
Cash
Short-term bills
Government bond, bank debentures, corporate bonds and
securities
Stocks and beneficiary securities investment
Domestic discretionary management
Fixed income and equity security
Others
- 42 -
2014
2013
18.82%
2.50%
22.86%
4.10%
11.53%
10.78%
18.46%
33.90%
4.01%
9.37%
8.41%
20.95%
33.52%
0.79%
100.00%
100.00%
The Company chose to disclose the history of experience adjustments as the amounts determined for
each accounting period prospectively from the date of transition to IFRSs (January 1, 2012):
Present value of defined benefit
obligation
Fair value of plan assets
Deficit
Experience adjustments on plan
liabilities
Experience adjustments on plan
assets
December 31,
2014
December 31,
2013
December 31,
2012
January 1,
2012
$ 315,479
$ 184,229
$ 131,250
$ 315,395
$ 189,420
$ 125,975
$ 315,562
$ 189,201
$ 126,361
$ 305,213
$ 189,576
$ 115,637
$
8,430
$
2,594
$
$
-
$
675
$
(1,097)
$
-
591
$ (14,590)
The Company expects to make a contribution of $9,125 thousand and $9,416 thousand, respectively to
the defined benefit plans during the annual period beginning after 2014 and 2013.
20. EQUITY
a. Share capital
1) Common shares
December 31
Numbers of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in thousands)
Shares issued
2014
2013
4,000,000
$ 40,000,000
667,892
$ 6,678,919
4,000,000
$ 40,000,000
1,543,715
$ 15,437,159
Fully paid common shares, which have a par value of NT$10, carry one vote per share and carry a
right to dividends.
The movements of the common shares were due to the conversion of convertible bonds (Note 17),
exercise of employee share options (Note 24), cancellation of treasury shares and capital reduction.
2) Global depositary shares
The Company’s global depositary receipts (GDRs) as of December 31, 2014 were as follows:
GDRs
(In Thousand
Units)
Initial offering
Converted from overseas convertible bonds
Net decrease due to capital increase or capital reduction
Reissued within authorized units
GDRs transferred to common shares
Outstanding GDRs issued
- 43 -
Equivalent
Common Stock
(In Thousand
Shares)
5,000
34,981
73,502
66,819
(169,831)
25,000
174,903
367,514
334,095
(849,155)
10,471
52,357
The owners of GDRs have the same rights as holders of common shares, except that the GDR
owners should exercise, through a depositary trust company, the following beneficial interests
subject to the terms of the depositary agreements and the relevant ROC laws and regulations:
a) Exercise voting rights;
b) Convert the GDRs into common shares; and
c) Receive dividends and exercise preemptive rights or other rights and interests.
3) Capital reduction
For purpose of enhancing the return on equity, profitability per share and proper use of the capital,
the capital reduction through a cash return to shareholders, which was proposed by the Company’s
board on May 3, 2013, was approved at the shareholders’ meeting on June 18, 2013. Total capital
reduction amounted to $6,615,925 thousand, which represented the cancellation of 661,593
thousand shares (30% of common shares). This capital reduction became effective upon the
approval by the Securities and Futures Bureau under the Financial Supervisory Commission (FSC)
on August 2, 2013. The Company’s board approved August 6, 2013 as the effective date of cash
return date. The Company had registered this capital reduction with the Department of Commerce
under the Ministry of Economic Affairs (MOEA).
In addition, for purpose of enhancing the return on equity, profitability per share and proper use of
the capital, the capital reduction through a cash return to shareholders, which was proposed by the
Company’s board on June 11, 2014, was approved at the shareholders’ meeting on July 29, 2014.
Total capital reduction amounted to $15,395,087 thousand, which represented the cancellation of
1,539,509 thousand shares (70% of common shares). This capital reduction became effective
upon the approval by the Securities and Futures Bureau under the FSC on September 1, 2014 as
well as the Company’s board approved the day as the effective date of cash return date. The
Company had registered this capital reduction with MOEA.
b. Capital surplus
December 31
2014
2013
$ 1,058,441
755,574
-
$ 1,000,765
29,138
121,617
83,688
-
26,275
98,884
20,498
172,260
$ 2,022,862
$ 1,344,278
May be used to offset a deficit, distributed as cash dividends
or transferred to share capital (1)
Arising from issuance of common shares
Arising from conversion of bonds
Arising from treasury share transactions
May be used to offset a deficit only
Transferring from employee share options to issuance of
common shares due to exercise
May not be used for any purpose
Arising from share of changes in capital surplus of associates or
subsidiaries (2)
Arising from employee share options
- 44 -
1) Such capital surplus 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 may be transferred to share capital
(limited to a certain percentage of the Company’s capital surplus and once a year).
2) Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulted
from equity transactions other than actual disposal or acquisition, or from changes in capital surplus
of subsidiaries accounted for by using equity method.
c. Retained earnings and dividend policy
Under the Company’s Articles of Incorporation, when the Company has earnings for the year, the
Company should first make taxation payments, offset any past years’ deficits and then make
appropriations for its legal reserve at 10% of annual net income (unless the legal reserve equals the
Company’s paid-in capital). In addition, a special reserve should be appropriated or reversed as
needed in accordance with the laws and regulations, then remuneration to directors and supervisors at
3% or less and employees’ bonus at least 2% of the remainder earnings should be appropriated. At
least 10% of the remainimg earnings may be appropriated as dividends, as proposed by the Company’s
board and as approved at the shareholders’ meeting.
The Company’s dividend policy takes into account the Company’s current and future competitiveness
in the domestic and foreign markets, the investment environment and cash requirements. The policy
authorizes the Company’s board to propose an earnings distribution in the form of shares or in cash
appropriately in accordance with the laws and regulations, with the board’s proposal subject to approval
at the shareholders’ meeting.
For the year ended December 31, 2014, the bonus to employees and the remuneration to directors
supervisors were estimated at $104,302 thousand each. For the year ended December 31, 2013, the
bonus to employees and the remuneration to directors and supervisors were estimated at $61,468
thousand each. These estimates were based on the Company’s Articles of Incorporation and past
experience. Material differences between such estimated amounts and the amounts proposed by the
board of directors on or before the consolidated financial statements are authorized for issue are
adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed
amounts after the consolidated financial statements are authorized for issue, the differences are recorded
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 fair value of the
shares. The fair value of the shares refer to the closing price (after considering the effect of cash and
share dividends) of the shares on the day immediately preceding the shareholders’ meeting.
Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled
“Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the
Company should appropriate or reverse to a special reserve. Any special reserve appropriated may be
reversed to the extent that the net debit balance reverses and thereafter distributed.
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.
- 45 -
The appropriations of earnings, bonuses to employees and remuneration to directors and supervisors for
2013 and 2012 approved in the shareholders’ meetings on June 11, 2014 and June 18, 2013,
respectively, were as follows:
Dividends Per Share
(NT$)
For the Year Ended
December 31
2013
2012
Appropriation of Earnings
For the Year Ended
December 31
2013
2012
Legal reserve
Special reserve
Cash dividends
$ 144,962
(744,270)
223,879
$ 105,875
665,740
-
$
0.1
$
-
For the Year Ended December 31
2013
2012
Cash
Share
Cash
Share
Dividends
Dividends
Dividends
Dividends
Bonus to employees
Remuneration of directors and
supervisors
$ 61,468
$
61,468
-
$
-
5,742
$
5,742
-
The appropriations of earnings for 2012 were proposed according to the Company’s financial
statements for the year ended December 31, 2012, which were prepared in accordance with the
Regulations 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
Regulations Governing the Preparation of Financial Reports by Securities Issuers (revised) and
International Financial Reporting Standards.
There was no difference between the amounts of the bonus to employees and the remuneration to
directors and supervisors approved in the shareholders’ meetings on June 11, 2014 and June 18, 2013
and the amounts recognized in the financial statements for the years ended December 31, 2013 and
2012, respectively.
Information on the bonus to employees, directors and supervisors proposed by the Company’s board of
directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.
d. Others equity items
1) Exchange differences on translating the financial statements of the foreign operations
For the Year Ended December 31
2014
2013
Balance at January 1
Exchange differences arising on translating the financial
statements of foreign operations
Income tax related to gains arising on translating the
financial statements of foreign operations
Share of exchange difference of associates accounted for
using the equity method
$
Balance at December 31
$ 1,175,751
- 46 -
509,298
$
703,557
(641,038)
1,158,289
(136,502)
(104,314)
99,398
96,361
$
509,298
2) Unrealized gain (loss) on available-for-sale financial assets
For the Year Ended December 31
2014
2013
Balance at January 1
Unrealized gain arising on revaluation of available-for-sale
financial assets
Share of unrealized gain (loss) on revaluation of
available-for-sale financial assets of associates accounted
for using the equity method
$ (243,493)
Balance at December 31
$ (191,024)
$ (536,686)
53,359
291,308
(890)
1,885
$ (243,493)
e. Noncontrolling interests
For the Year Ended December 31
2014
2013
Balance at January 1
Attributable to noncontrolling interests:
Share of profit for the year
Exchange difference arising on translation of foreign entities
Subsidiary’s cash dividends
$ 117,553
Balance at December 31
$ 125,741
29,517
1,999
(23,328)
$
92,542
21,321
3,690
-
$ 117,553
f. Treasury shares
Shares
Canceled
(In Thousands
of Shares)
Purpose of Buyback
Number of shares on January 1, 2013
Increase during the year
Number of shares on December 31, 2013
Increase during the year
Decrease during the year
16,719
16,719
40,776
(57,495)
Number of shares on December 31, 2014
-
To maintain the Company’s credibility and shareholders’ rights and interests, the Company’s board
resolved to buy back up to 47,000 thousand common shares with the buyback price between NT$6.60
to NT$15.30 from November 11, 2013 to January 10, 2014 on the Taiwan Stock Exchange on
November 8, 2013. As of January 10, 2014, the last day of the buyback period, the Company had
bought back 18,001 thousand shares amounting to $186,825 thousand. The Company had canceled
the buyback shares and registered the change with MOEA.
In addition, to maintain the Company’s credibility and shareholders’ rights and interests, the
Company’s board resolved to buy back up to 80,000 thousand common shares with the buyback price
between NT$9.35 to NT$21.30 from March 14, 2014 to May 13, 2014 on the Taiwan Stock Exchange
on March 13, 2014. As of May 13, 2014, the last day of the buyback period, the Company had bought
back 39,494 thousand shares amounting to $592,834 thousand. The Company had canceled the
buyback shares and registered the change with MOEA.
- 47 -
Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise
shareholders’ rights on these shares, such as rights to dividends and to vote.
21. NET PROFIT FOR THE YEAR
a. Other gains and losses
For the Year Ended December 31
2014
2013
Gain on disposal of property, plant and equipment
Net foreign exchange gains
Dividend income
Other gains
Other losses
$
3,848
190,024
54,641
162,116
(249,820)
$ 160,809
$
1,050
221,288
79,018
66,379
(236,415)
$ 131,320
b. Finance costs
For the Year Ended December 31
2014
2013
Interest on bank loans
Interest on convertible bonds
Interest on short-term bills
Other financial costs
Total interest expense for financial liabilities measured at
amortized cost
Less: Amounts included in the cost of qualifying assets
$ 193,798
8,086
1,421
285
203,590
$ 203,590
$
40,126
222,228
1,356
331
264,041
(2,800)
$ 261,241
Information about capitalized interest was as follows:
For the Year Ended December 31
2014
2013
Capitalized interest
Capitalization rate
$
-
$ 2,800
2.84%-3.04%
c. Impairment losses on financial assets
For the Year Ended December 31
2014
2013
Available-for-sale equity investments
$
- 48 -
-
$ 64,549
d. Depreciation and amortization
For the Year Ended December 31
2014
2013
Property, plant and equipment
Prepayments
Intangible assets (included in operating expenses)
An analysis of depreciation by function
Operating costs
Operating expenses
An analysis of amortization by function
Operating costs
Operating expenses
$ 1,907,722
258,243
49,634
$ 2,034,591
237,771
44,055
$ 2,215,599
$ 2,316,417
$ 1,752,342
155,380
$ 1,864,548
170,043
$ 1,907,722
$ 2,034,591
$
244,544
63,333
$
228,608
53,218
$
307,877
$
281,826
e. Employee benefit expense
For the Year Ended December 31
2014
2013
Post-employment benefits (Note 19)
Defined contribution plans
Defined benefit plans
$
Other employee benefits
173,940
39,734
213,674
6,652,675
$
178,030
5,937
183,967
5,922,095
Total employee benefit expense
$ 6,866,349
$ 6,106,062
An analysis of employee benefit expense by function
Operating costs
Operating expenses
$ 5,223,908
1,642,441
$ 4,693,416
1,412,646
$ 6,866,349
$ 6,106,062
f. Gain or loss on foreign currency exchange
For the Year Ended December 31
2014
2013
Foreign exchange gains
Foreign exchange losses
- 49 -
$ 5,757,453
(5,567,429)
$ 2,607,258
(2,385,970)
$
$
190,024
221,288
g. Impairment losses on nonfinancial assets
For the Year Ended December 31
2014
2013
Property, plant and equipment
$
-
$ 1,244,949
22. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
For the Year Ended December 31
2014
2013
Current tax
Current period
Income tax on unappropriated earnings
Adjustments for prior periods
$ 717,941
182,505
4,058
904,504
Deferred tax
Current period
Adjustments to deferred tax attributable to changes in tax rates
Adjustments for prior periods
Income tax expense recognized in profit or loss
$ 432,724
28,713
177,101
638,538
(37,171)
(48,742)
119,530
33,617
$ 938,121
(66,969)
104,547
37,578
$ 676,116
A reconciliation of accounting profit and income tax expenses were as follows:
For the Year Ended December 31
2014
2013
Profit before tax
$ 4,830,684
$ 2,147,060
Income tax expense calculated at the statutory rate
Add (deduct) tax effect
Gain on equity-method investment
Others
Income tax on unappropriated earnings
Effect of tax rate changes
Adjustments for prior years’ tax
$ 1,123,584
$
Income tax expense recognized in profit or loss
$
(409,680)
(33,134)
182,505
(48,742)
123,588
938,121
585,811
(304,758)
84,702
28,713
281,648
$
676,116
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 15% and 25%, respectively. Tax rates used by
other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.
As the status of the 2015 appropriation of the 2014 earnings is uncertain, the potential income tax
consequences of 2014 unappropriated earnings are not reliably determinable.
- 50 -
b. Income tax recognized in other comprehensive income
For the Year Ended December 31
2014
2013
Deferred tax
Current year
Translation of foreign operations
Actuarial losses on defined benefit plan
$ 136,502
(1,318)
$ 104,314
(769)
$ 135,184
$ 103,545
c. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2014
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensiv
e Income
Exchange
Differences
Closing
Balance
Deferred tax assets
Temporary differences
Impairment loss on goodwill
Investment loss on
subsidiaries
Impairment loss on property,
plant and equipment
Difference in estimated useful
lives of depreciation of
property, plant and
equipment
Inventory write-downs
Accrued expenses
Defined benefit obligation
Others
$
307,224
$
(47,265)
$
-
$
-
$
259,959
289,548
(130,000)
-
-
159,548
194,993
(3,492)
-
-
191,501
76,397
48,519
76,193
16,925
54,150
1,063,949
100,083
31,559
1,784
2,159
11,855
12,362
19,076
(133,521)
38,490
(31,559)
1,318
1,318
-
$ 1,195,591
$ (126,590)
$
1,318
$
$
$
$
-
$
Investment credits
Loss carryforwards
2,571
(576)
(1,188)
807
(10,423)
-
80,752
50,678
88,048
30,029
72,038
932,553
128,150
-
(9,616)
$ 1,060,703
Deferred tax liabilities
Temporary differences
Exchange differences of
overseas convertible bonds
Exchange difference on
foreign operations
Others
98,249
(98,249)
104,314
24,856
$
227,419
5,276
$
(92,973)
- 51 -
136,502
$
136,502
-
$
(1,017)
$
(1,017)
240,816
29,115
$
269,931
For the year ended December 31, 2013
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensiv
e Income
Exchange
Differences
Closing
Balance
Deferred tax assets
Temporary differences
Impairment loss on goodwill
Investment loss on
subsidiaries
Impairment loss on property,
plant and equipment
Difference in estimated useful
lives of depreciation of
property, plant and
equipment
Inventory write-downs
Accrued expenses
Defined benefit obligation
Others
$
Investment credits
Loss carryforwards
354,489
$
(47,265)
$
-
$
-
$
307,224
359,963
(70,415)
-
-
289,548
32,804
162,189
-
-
194,993
103,108
31,990
41,464
16,759
41,853
982,430
154,219
86,676
(31,993)
16,529
34,729
(603)
11,474
74,645
(64,067)
(55,117)
769
769
-
5,282
823
6,105
9,931
-
76,397
48,519
76,193
16,925
54,150
1,063,949
100,083
31,559
$ 1,195,591
$ 1,223,325
$
(44,539)
$
769
$
16,036
$
$
(30,227)
$
-
$
-
Deferred tax liabilities
Temporary differences
Exchange differences of
overseas convertible bonds
Exchange differences on
foreign operations
Others
128,476
1,590
$
130,066
23,266
$
(6,961)
104,314
$
104,314
$
$
98,249
104,314
24,856
-
$
227,419
d. Deductible temporary differences, unused loss carryforwards and unused investment credits for which
no deferred tax assets have been recognized in the consolidated balance sheets
December 31
2014
Loss carryforwards
Expire in 2013
Expire in 2014
Expire in 2017
Expire in 2018
Expire in 2019
Expire in 2020
Expire in 2021
Expire in 2022
Deductible temporary differences
Others
$
42,528
28,063
220,073
11,839
-
$
$
302,503
$ 4,302,488
$ 1,178,911
- 52 -
2013
$
77,506
19,471
41,160
2,241
225,795
11,839
2,394
3,922,082
414,206
Unused loss carryforward not recognized as deferred tax assets of Ferroxcube (Spain), Ferroxcube
Germany and Ferroxcube Hong Kong were $203,743 thousand, $410,118 thousand and $30,723
thousand as of December 31, 2014, respectively.
Unused loss carryforward not recognized as deferred tax assets of Ferroxcube (Spain) and Ferroxcube
Germany were $213,557 thousand and $438,501 thousand as of December 31, 2013, respectively.
e. Information about unused investment credits, unused loss carry-forward and tax-exemption
Loss carryforwards as of December 31, 2014 comprised of:
The Company
Ko-Shin Investment Ltd.
Ko-E Corp.
Vitrohm Holding GmbH
Ferroxcube Electronics (Dongguan) Co., Ltd.
Unused
Amount
Expiry Year
$ 206,121
220,073
11,839
32
70,448
42,528
28,063
2017
2019
2020
2022
2019
2017
2018
$ 579,104
The unused amount of loss carryforwards of Ferroxcube (Spain) was $440,216 thousand. Their expiry
were in the 15th year from the year of loss incurrence.
The unused amount of loss carryforwards without expiry date of Ferroxcube Germany and Ferroxcube
Hong Kong were $410,118 thousand and $30,723 thousand, respectively.
f. Integrated income tax
December 31
2014
Unappropriated earnings
Generated on and after January 1, 1998
Imputation credits accounts
$ 14,083,468
$
487,632
2013
$
$
9,889,602
353,585
For the Year Ended December 31
2014 (Expected) 2013 (Actual)
Creditable ratio for distribution of earning
7.76%
4.50%
g. Income tax assessments
The Company’s income tax returns through 2012 had been assessed by the tax authorities. The
Company filed administrative appeals on the results of the tax return examinations in 2009, 2011 and
2012. The case on the 2009 and 2012 tax return was awaiting reexamination as of December 31,
2014. The Ministry of Finance (MOF) revoked the result of the examination on the 2011 tax return
and remanded the case to the tax authorities for the reexamination of this return as of December 31,
2014. Under the conservative principle, the Company adjusted relevant accounts in accordance with
the verbal discussions with the tax authorities as well as the results of the authorities’ tax return
examination.
- 53 -
23. EARNINGS PER SHARE
Unit: NT$ Per Share
For the Year Ended December 31
2014
2013
Basic earnings per share
Diluted earnings per share
$ 2.30
$ 2.30
$ 0.75
$ 0.68
The earnings and weighted average number of common shares outstanding in the computation of earnings
per share were as follows:
Net Profit for the Period
For the Year Ended December 31
2014
2013
Earnings used in the computation of basic earnings per share
Effect of potentially dilutive common shares:
Effect of convertible bonds (net of tax)
$ 3,863,046
$ 1,449,623
-
351,886
Earnings used in the computation of diluted earnings per share
$ 3,863,046
$ 1,801,509
Weighted average number of common shares outstanding (in thousand shares):
For the Year Ended December 31
2014
2013
Weighted average number of common shares in computation of basic
earnings per share
Effect of dilutive potential common shares:
Convertible bonds
Employee share option
Bonus issue to employees
Weighted average number of common shares used in the
computation of diluted earnings per share
1,678,941
1,935,524
440
3,523
691,797
5,954
1,682,904
2,633,275
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 issued by the Company exceeded the average market price of the
shares during the year ended December 31, 2013, they were anti-dilutive and excluded from the
computation of diluted earnings per share.
24. SHARE-BASED PAYMENT ARRANGEMENTS
a. On November 30, 2007, the Company’s board approved the issue of 100,000 thousand units of share
options, which had been approved by the Securities and Futures Bureau under the FSC. The Company
issued the entire 100,000 thousand units on December 20, 2007. Each option represents one share of
- 54 -
the Company’s common share, and the exercise price per share is $10.25. The vesting period of these
options is 10 years. Qualified employees may exercise up to 10%, 20%, 40% and 70% of the vested
options after two years, three years, four years and five years, respectively, from the grant date. All
options vested may be exercised after six years from the grant date. If the number of the Company’s
common shares changes, the exercise price will be revised, as required under the Plan terms.
As of December 31, 2014, 32,983 thousand units of employee share options were exercised and
converted to 32,983 thousand common shares of the Company.
Information on employee share options was as follows:
2014
2013
Number of
Options
(In
Thousands)
Weightedaverage
Exercise
Price
(NT$)
Number of
Options
(In
Thousands)
Weightedaverage
Exercise
Price
(NT$)
60,480
(29,383)
(21,688)
$14.60
13.50
30.00
86,400
(25,920)
$10.25
4.35
Balance at December 31
9,409
44.60
60,480
14.60
Options exercisable, end of period
9,409
Balance at January 1
Options exercised
Options adjusted
60,480
Information about outstanding options as of December 31, 2014 and 2013 was as follows:
For the Year Ended December 31
2014
2013
Range of exercise price (NT$)
Weighted-average remaining contractual life (years)
$44.60
0.30
$14.64
1.30
Options granted in 2007 were priced using the Black-Scholes pricing model and the inputs to the model
were as follows:
November 2008
Risk-free interest rate
Expected life (years)
Expected price volatility
Expected dividend yield
2.48%
2.05 years
48.60%
4.87%
Compensation cost recognized was $14,355 thousand for the year ended December 31, 2013.
b. Qualified employees of the Company and its subsidiaries were granted 40,000 thousand units of share
options in May 2014. Each option represents one share of the Company’s common share. The
vesting period of these options is 10 years. Qualified employees may exercise at certain percentages
of the options after two years, from the grant date. The options were granted at an exercise price equal
to the closing price of the Company’s common shares listed on the on the grant date. For any
subsequent changes in the Company’s capital surplus, the exercise price is adjusted accordingly.
- 55 -
Information on employee share options was as follows:
2014
Number of
Options
(In
Thousands)
Weightedaverage
Exercise
Price
(NT$)
Balance at January 1
Options issued
Options adjusted
40,000
-
$17.70
22.30
Balance at December 31
40,000
40.00
Options exercisable, end of period
-
Information about outstanding options as of December 31, 2014 was as follows:
For the Year
Ended
December 31,
2014
Range of exercise price (NT$)
Weighted-average remaining contractual life (years)
$40.00
9.33
Options granted in May 2014 were priced using the binomial option pricing model and the inputs to the
model were as follows:
May 2014
Grant-date share price
Exercise price
Expected volatility
Expected life (years)
Expected dividend yield
Risk-free interest rate
$17.70
$17.70
37.50%
10 years
1.52%
Expected volatility was based on the historical share price volatility over the past 10 years. To allow
for the effects of early exercise, the Company assumed that employees would exercise their options
after the vesting date when the share price was 1.3 times the exercise price.
Compensation cost recognized was $10,312 thousand for the year ended December 31, 2014.
25. OPERATING LEASE ARRANGEMENTS
a. The Group as lessee
The Group’s assets for operation are all belonged to the Group.
significant noncancellable operating leases.
- 56 -
Therefore, the Group has no
b. The Group as lessor
Operating leases relate to the property owned by the Group with lease terms between 1 to 5 years. The
lessees do not have a bargain purchase option to acquire the property at the expiry of the lease periods.
The future minimum lease payments of noncancellable operating lease were as follows:
December 31
Up to 1 year
Over 1 year and not later than 5 years
2014
2013
$ 20,379
9,630
$ 10,069
535
$ 30,009
$ 10,604
26. CAPITAL MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as going
concerns while maximizing the return to shareholders through the optimization of the debt and equity
balance. The Group’s overall strategy in accordance with the Company operations and cash flow to assess
the situation and to be properly adjusted to adapt to changes in the market in a timely manner.
The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and
equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and
other equity).
Key management personnel of the Group review the capital structure on an annual basis. As part of this
review, the key management personnel consider the cost of capital and the risks associated with each class
of capital. Based on recommendations of the key management personnel, in order to balance the overall
capital structure, the Group may reduce the Group’s capital or adjust the amount of dividends paid to
shareholders and the number of shares repurchased.
27. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value
The Group’s management consider that 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
- 57 -
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
December 31, 2014
Level 1
Financial assets at FVTPL
Derivative financial assets
Available-for-sale financial
assets
Securities listed in ROC
Equity securities
Securities listed in other
countries
Equity securities
Unlisted securities - ROC
Equity securities
Unlisted securities - other
countries
Equity securities
Financial liabilities at FVTPL
Derivative financial liabilities
Level 2
Level 3
Total
$
-
$
54,609
$
-
$
54,609
$
717,658
$
-
$
-
$
717,658
1,699,122
-
-
1,699,122
-
-
171,144
171,144
-
-
62,352
62,352
$ 2,650,276
$ 2,416,780
$
-
$
233,496
$
$
15,150
$
-
-
$
15,150
December 31, 2013
Level 1
Financial assets at FVTPL
Derivative financial assets
Available-for-sale financial
assets
Securities listed in ROC
Equity securities
Securities listed in other
countries
Equity securities
Unlisted securities - ROC
Equity securities
Unlisted securities - other
countries
Equity securities
Financial liabilities at FVTPL
Derivative financial liabilities
Level 2
Level 3
Total
$
-
$
13,898
$
-
$
13,898
$
607,327
$
-
$
-
$
607,327
1,726,507
-
-
1,726,507
-
-
179,143
179,143
-
-
60,075
60,075
$ 2,573,052
$ 2,333,834
$
-
$
239,218
$
$
910,436
$
-
-
There were no transfers between Levels 1 and 2 in the current and prior periods.
- 58 -
$
910,436
3) Reconciliation of Level 3 fair value measurements of financial instruments
For the year ended December 31, 2013
Available-forsale Financial
Assets
Equity
Instruments
Financial assets
Balance at January 1, 2013
Total gains or losses
In profit or loss
Effect of foreign currency exchange differences
$ 309,977
Balance at December 31, 2013
$ 239,218
(64,549)
(6,210)
The total gains or losses for the year ended December 31, 2013 included a loss of $64,549 thousand
relating to assets measured at fair value on level 3 fair value measurement and held at the end of
reporting date.
4) Valuation techniques and assumptions applied for the purpose of measuring fair value
The fair values of financial assets and financial liabilities were determined as follows:
a) The fair values of financial assets and financial liabilities with standard terms and conditions
and traded in active liquid markets are determined with reference to quoted market prices;
b) The fair values of derivative instruments were calculated using quoted prices. Where such
prices were not available, 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. Foreign currency forward contracts are measured using
quoted forward exchange rates and yield curves derived from quoted interest rates matching
maturities of the contracts;
c) The fair values of other financial assets and financial liabilities (excluding those described
above) were determined in accordance with generally accepted pricing models based on
discounted cash flow analysis.
The Group uses the Monte Carlo method and the Least Square Monte Carlo approach, which
make use of some key variables such as the exchange rate between the USD and the NTD and
stock price pattern, etc. into account to assess the fair value of the liability component of
convertible bonds.
- 59 -
b. Categories of financial instruments
December 31
2014
2013
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading
Loans and receivables (1)
Available-for-sale financial assets (2)
$
54,609
20,986,311
2,650,276
$
13,898
28,845,680
2,573,052
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading
Measured at amortized cost (3)
15,150
23,424,970
910,436
27,161,347
1) The balances included loans and receivables measured at amortized cost, which comprise cash and
cash equivalents, debt investments with no active market, notes receivable, trade and other
receivables (including related parties) and refundable deposits.
2) The balances included the carrying amount of held-for-trading financial assets measured at cost.
3) The balances included financial liabilities measured at amortized cost, which comprise short-term
loans, short-term bills payable, notes payable, trade and other payables (including related parties),
bonds payable, long-term loans and guarantee deposits received.
c. Financial risk management objectives and policies
The Group’s major financial instruments included equity investments, trade receivables, trade payables,
bonds payable and borrowings. The Group’s Corporate Treasury function provides services to the
business, coordinates access to domestic and international financial markets, monitors and manages the
financial risks relating to the operations of the Group through internal risk reports which analyze
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 sought to minimize the effects of these risks by using derivative financial instruments to
hedge risk exposures. The use of financial derivatives was 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 was reviewed by the internal
auditors on a continuous basis. The Group did not enter into or trade financial instruments, including
derivative financial instruments, for speculative purposes.
The Group’s impartment financial activities are reviewed by the board of directors in accordance with
related standard and internal controls. In executing financial plan, the Group have to obey the related
financial operating procedures regarding financial risk management and segregation of duties.
1) Market risk
The Group’s activities exposed it primarily to the financial risks of changes in foreign currency
exchange rates (see (a) below) and interest rates (see (b) below). The Group entered into a forward
foreign exchange contract to manage its exposure to foreign currency risk.
- 60 -
There had been no change to the Group’s exposure to market risks or the manner in which these
risks were managed and measured.
a) Foreign currency risk
The Group had foreign currency sales and purchases, which exposed the Group to foreign
currency risk. Exchange rate exposures were managed within approved policy parameters
utilizing forward foreign exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and
monetary liabilities (including those eliminated on consolidation) and of the derivatives
exposing to foreign currency risk at the end of the reporting period are set out in Note 31.
Sensitivity analysis
The Group assessed the foreign currency risk of its significant assets and liabilities as well as
taking unexpired exchange forward contracts into consideration.
The Group was mainly exposed to the Currency USD, Currency EUR and Currency JPY.
The following table details the Group’s sensitivity to a 1% increase and decrease in New
Taiwan dollars (the functional currency) against the relevant foreign currencies. 1% is the
sensitivity rate used when 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 and foreign currency forward contracts designated as cash flow
hedges, and adjusts their translation at the end of the reporting period for a 1% change in foreign
currency rates. A negative number below indicates an increase (a decrease) in pre-tax profit
associated with New Taiwan dollars strengthen 1% against the relevant currency. For a 1%
weakening of New Taiwan dollars against the relevant currency, there would be an equal and
opposite impact on pre-tax profit and the balances below would be positive.
Currency USD Impact
For the Year Ended
December 31
2014
2013
Profit or loss
$
20,667
$
Currency EUR Impact
For the Year Ended
December 31
2014
2013
(9,314)
$
(1,433)
$
(4,370)
Currency JPY Impact
For the Year Ended
December 31
2014
2013
$
(1,937)
$
906
The analysis of profit or loss of the table was mainly attributable to the exposure to outstanding
currency USD, currency EUR and currency JPY which were not hedged, at the end of the
reporting period.
The Group’s sensitivity to foreign currency exchange has not changed significantly from the
prior year.
b) Interest rate risk
The Group was exposed to interest rate risk because entities in the Group borrowed funds at
both fixed and floating interest rates. The risk is managed by the Group by maintaining an
appropriate mix of fixed and floating rate policy.
- 61 -
The carrying amount of the Group’s financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows.
December 31
2014
Fair value interest rate risk
Financial assets
Financial liabilities
Cash flow interest rate risk
Financial assets
$
2013
8,717,315
15,664,376
$ 10,347,784
13,686,422
3,600,119
11,465,886
The Group’s fixed-term time deposits, bank borrowings and short-term bills are exposed to fair
value interest rate risk; however, this expected risk is insignificant.
Sensitivity analysis
The sensitivity analyses below were determined based on the Group’s exposure to interest rates
for both derivatives and nonderivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A 1%
increase or decrease was used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the reasonably possible change in interest
rates.
If interest rates had been 1% higher and all other variables were held constant, the Group’s
variable-rate financial assets for the years ended December 31, 2014 and 2013 would result in
cash inflows by $36,001 thousand and $114,659 thousand, respectively.
The Group’s sensitivity to interest rates decreased during the current period mainly due to a
decreased in variable-rate assets.
c) Other price risk
The Group was exposed to equity price risk through its investments in listed equity securities.
Sensitivity analysis
The sensitivity analyses below were determined based on the exposure to equity price risks at
the end of the reporting period.
If equity prices had been 1% lower, the pre-tax other comprehensive income for the years ended
December 31, 2014 and 2013 would decrease by $24,168 thousand and $23,338 thousand,
respectively, as a result of the changes in fair value of available-for-sale shares.
The Group’s sensitivity to available-for-sale investments has not changed significantly from the
prior year.
- 62 -
2) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure
to credit risk which will cause a financial loss to the Group due to failure of counterparties to
discharge an obligation and financial guarantees provided by the Group could arise from:
a) The carrying amount of the respective recognized financial assets as stated in the balance sheets;
and
b) The amount of contingent liabilities in relation to financial guarantee issued by the Group.
The Group adopted a policy of only dealing with creditworthy counterparties and obtaining
sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group only transacts with entities that are rated the equivalent of investment grade
and above. This information is supplied by independent rating agencies where available and, if not
available, the Group uses other publicly available financial information and its own trading records
to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst
approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed
and approved by the risk management committee annually.
In order to minimize credit risk, management of the Group has delegated a team responsible for
determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up
action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of
each individual trade debt at the end of the reporting period to ensure that adequate allowances are
made for irrecoverable amounts. In this regard, management believes the Group’s credit risk was
significantly reduced.
The credit risk on liquid funds and derivatives was limited because the counterparties are banks
with high credit ratings assigned by international credit-rating agencies.
Ongoing credit evaluation is performed on the financial condition of trade receivables.
The Group did transactions with a large number of unrelated customers and, thus, no concentration
of credit risk was observed.
3) Liquidity risk
The Group manages liquidity risk by monitoring and maintaining a level of cash and cash
equivalents deemed adequate to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings
and ensures compliance with loan covenants.
The Group relies on bank borrowings as a significant source of liquidity. As of December 31,
2014 and 2013, the Group had available unutilized short-term bank loan facilities of $2,514,490
thousand and $4,405,500 thousand, respectively.
- 63 -
a) Liquidity and interest risk rate tables for nonderivative financial liabilities
The table below summarizes the maturity profile of the Group’s financial liabilities based on
undiscounted contractual payments but did not include the financial liabilities with carrying
amounts that approximated contractual cash flows:
Carry
Value
Contractual
Cash Flows
8,764,499
499,877
6,400,000
$
Within
1 Year
More than
1 Year
December 31, 2014
Short-term borrowings
Short-term bills payable
Long-term borrowings
$
8,777,880
500,000
6,413,206
$
8,777,880
500,000
-
$
6,413,206
$ 15,664,376
$ 15,691,086
$
9,277,880
$
6,413,206
$
$
$
5,599,794
700,000
6,819,615
$
7,403,475
-
$ 13,119,409
$
7,403,475
December 31, 2013
Short-term borrowings
Short-term bills payable
Long-term borrowings
Bonds payable
5,586,493
699,929
7,400,000
6,716,474
$ 20,402,896
5,599,794
700,000
7,403,475
6,819,615
$ 20,522,884
b) Liquidity and interest risk rate tables for derivative financial liabilities
The following table detailed the Group’s liquidity analysis for its derivative financial
instruments. The table was based on the undiscounted contractual net cash inflows and
outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows
and outflows on those derivatives that require gross settlement. When the amount payable or
receivable is not fixed, the amount disclosed has been determined by reference to the projected
interest rates as illustrated by the yield curves at the end of the reporting period.
December 31, 2014
On Demand or
Less than
3 Months
3 Months to
6 Months
Over 6
Months to
12 Months
Gross settled
Foreign exchange forward contracts
Inflows
Outflows
$ 5,006,473
4,956,877
$
$
$
- 64 -
49,596
189,947
190,308
(361)
$
801,775
778,966
$
22,809
December 31, 2013
On Demand or
Less than
3 Months
3 Months to
6 Months
Over 6
Months to
12 Months
Gross settled
Foreign exchange forward contracts
Inflows
Outflows
$ 2,919,797
2,924,691
$
$
$
(4,894)
581,397
586,057
(4,660)
$
-
$
-
28. 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. Besides as disclosed
elsewhere in the other notes, details of transactions between the Group and other related parties are
disclosed below.
a. Sales of goods
Line Items
Sales
Related Party Categories
Associates
For the Year Ended December 31
2014
2013
$
4,136
$
3,887
b. Purchases of goods
For the Year Ended December 31
2014
2013
Related Party Categories
Associates
$ 1,106,090
$ 1,048,505
c. Receivables from related parties (excluding loans to related parties)
December 31
Line Items
Trade receivables
Other receivables
Related Party Categories
Associates
Associates
2014
$
$
2013
3,342
115,001
$
$
3,530
86,080
The outstanding trade receivables from related parties are unsecured. For the years ended December
31, 2014 and 2013, no impairment loss was recognized for trade receivables from related parties.
d. Payables to related parties (excluding loans from related parties)
December 31
Line Items
Trade payables
Other payables
Related Party Categories
Associates
Associates
2014
$
$
The outstanding trade payables from related parties are unsecured.
- 65 -
446,857
896
2013
$
$
338,765
-
The payment terms for the trade receivables from (trade payables to) related parties were based on the
terms of the related contracts. Other related-party transactions were conducted under normal terms.
e. Property, plant and equipment disposal
Price
For the Year Ended
December 31
2014
2013
Related Party
Associates
$
-
$
Gain (Loss) on Disposal
For the Year Ended
December 31
2014
2013
2,188
$
-
$
1,088
f. Other transactions with related parties
Line Items
Operating expenses - other
Rental income
Related Party Categories
Other related parties
Associates
For the Year Ended December 31
2014
2013
$
$
14,849
$
$
30,000
10,866
All the terms and conditions of above rental contracts conformed to normal business practice.
g. Compensation of key management personnel
For the Year Ended December 31
2014
2013
Short-term employee benefits
$
157,376
$
124,987
The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.
29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
In addition to those mentioned in Note 12, the following assets were provided as collateral for bank loans:
December 31
Property, plant and equipment, net
2014
2013
$ 4,015,014
$ 4,417,858
30. SIGNIFICANT CONTINGENCIES LIABILITIES AND UNRECOGNIZED COMMITMENTS
In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of
December 31, 2014 and 2013, were as follows:
a. Significant commitments
Unrecognized commitments were as follows:
December 31
Acquisition of property, plant and equipment
- 66 -
2014
2013
$ 445,183
$ 169,296
b. Contingencies
Contingent liabilities
1) Please refer to Table 2 about the endorsements/guarantees and between the Company and
subsidiaries.
2) The Securities and Future Investors Protection Center (SFIPC) alleged that Far Eastern Air
Transport Ltd. (FEATL) had been involved in exaggerating the turnover and accounts receivable.
The SFIPC charged that FEATL window-dressed its financial reports and thus harmed its investors’
welfare. Under these investors’ authorization, the SFIPC sued 33 defendants, including the
FEATL and its management, directors and supervisors, certified public accountant, its accounting
firm, etc., (excluding the Company) and filed a civil action lawsuit to demand compensation for
damages with the district court of Taipei on June 23, 2009.
In January 2010, the SFIPC included in its lawsuit the Company and two other companies because
they were FEATL’s directors and supervisors from 2005 to 2007. Since the joint defendants
increased to 36, SFIPC appealed for a compensation amounted of $296,989 thousand. But because
this case was still under court review as of December 31, 2014, the Company could not determine
the outcome of this case. Nevertheless, since the Company has business liability insurance, the
Company believes that if the court’s ruling is not favorable to the Company, the compensatory
damages would not significantly affect its finance and business status.
3) FEATL claimed that it suffered great losses because before its restructuring, the Company’s
management had allegedly allowed the unlawful seizure of its assets. The restructured FEATL
accused the Company of violating an appointment contract, in which the Company was designated
as an FEATL director, whose responsibilities included the safeguarding of FEATL’s assets. Thus,
FEATL filed a case with the Taipei District Court to demand from the Company a compensation of
$100,000 thousand. On December 30, 2014, the Taipei District Court declared that the defendant
should have been FEATL’s board (comprising the members before FEATL’s restructuring), and not
the Company itself. With its adjudication that the wrong defendant was named by FEATL, the
TDC dismissed this case. FEATL appealed the TDC’s decision to the Taiwan High Court. The
Company believed that the lawsuit would not significantly affect its financial and business
condition.
31. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES
The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31, 2014
Foreign
Currencies
Exchange Rate
Carrying
Amount
Financial assets
Monetary items
USD
USD
USD
USD
$
370,216
221,243
144,700
15,731
- 67 -
31.7180 (USD:NTD)
6.2040 (USD:RMB)
7.7550 (USD:HKD)
0.8229 (USD:EUR)
$ 11,742,511
7,017,374
4,589,587
498,950
(Continued)
Foreign
Currencies
USD
EUR
EUR
EUR
JPY
JPY
JPY
RMB
RMB
RMB
RMB
HKD
HKD
HKD
PLN
$
1,145
11,388
6,318
376
257,314
1,900,719
138,345
4,387
91,135
75,492
15,640
13,829
13,703
13,074
13,737
Carrying
Amount
Exchange Rate
1,087.7300 (USD:KRW)
38.5437 (EUR:NTD)
1.2152 (EUR:USD)
7.5391 (EUR:RMB)
0.2653 (JPY:NTD)
0.0069 (JPY:EUR)
0.0519 (JPY:RMB)
5.1125 (RMB:NTD)
0.1612 (RMB:USD)
0.1326 (RMB:EUR)
1.2500 (RMB:HKD)
4.0900 (HKD:NTD)
0.1289 (HKD:USD)
0.1061 (HKD:EUR)
0.2337 (PLN:EUR)
$
36,367
438,936
243,519
14,492
68,265
505,499
36,708
22,429
465,968
385,832
79,960
56,561
56,024
53,466
123,738
$ 26,436,186
Nonmonetary items
JPY
JPY
JPY
JPY
1,425,793
2,523,546
1,460,200
994,989
0.2653 (JPY:NTD)
0.0084 (JPY:USD)
0.0069 (JPY:EUR)
0.0649 (JPY:HKD)
$
378,263
669,497
387,391
263,971
$
1,699,122
$
7,850,046
7,863,990
9,913,445
323,995
126,770
311,202
115,626
286,786
129,938
79,926
33,910
69,413
Financial liabilities
Monetary items
USD
USD
USD
USD
EUR
EUR
EUR
JPY
JPY
RMB
HKD
PLN
247,495
247,935
312,550
10,215
3,289
8,074
3,000
1,080,987
489,706
15,632
8,291
7,706
31.7180 (USD:NTD)
6.2040 (USD:RMB)
7.7550 (USD:HKD)
0.8229 (USD:EUR)
38.5437 (EUR:NTD)
1.2152 (EUR:USD)
145.2772 (EUR:JPY)
0.2653 (JPY:NTD)
0.0519 (JPY:RMB)
0.1612 (RMB:USD)
0.8000 (HKD:RMB)
0.2337 (PLN:EUR)
$ 27,105,047
(Concluded)
- 68 -
December 31, 2013
Foreign
Currencies
Exchange Rate
Carrying
Amount
29.9500 (USD:NTD)
6.0529 (USD:RMB)
7.7535 (USD:HKD)
0.7267 (USD:EUR)
1,055.3000 (USD:KRW)
41.2112 (EUR:NTD)
1.3760 (EUR:USD)
0.2851 (JPY:NTD)
0.0095 (JPY:USD)
0.0069 (JPY:EUR)
0.0576 (JPY:RMB)
4.9480 (RMB:NTD)
0.1652 (RMB:USD)
1.2810 (RMB:HKD)
3.8628 (HKD:NTD)
0.0937 (HKD:EUR)
0.7807 (HKD:RMB)
0.2411 (PLN:EUR)
$ 13,296,243
8,367,331
5,167,072
348,836
42,258
522,311
262,021
117,548
74,332
153,179
15,539
18,565
170,400
59
78,639
562,244
16,309
56,238
Financial assets
Monetary items
USD
USD
USD
USD
USD
EUR
EUR
JPY
JPY
JPY
JPY
RMB
RMB
RMB
HKD
HKD
HKD
PLN
$
443,948
279,379
172,522
11,648
1,410
12,674
6,358
412,306
261,250
538,684
54,521
3,752
34,440
12
20,358
145,603
4,222
5,660
$ 29,269,124
Nonmonetary items
JPY
JPY
JPY
JPY
1,348,320
2,386,110
1,380,677
940,687
0.2851 (JPY:NTD)
0.0095 (JPY:USD)
0.0069 (JPY:EUR)
0.0738 (JPY:HKD)
$
384,406
680,280
393,631
268,190
$
1,726,507
Financial liabilities
Monetary items
USD
USD
USD
USD
EUR
EUR
EUR
JPY
JPY
RMB
HKD
HKD
PLN
388,352
315,043
158,101
16,313
327
4,300
3,800
1,076,235
506,455
46,041
230,974
8,419
8,527
29.9500 (USD:NTD)
6.0529 (USD:RMB)
7.7535 (USD:HKD)
0.7267 (USD:EUR)
41.2112 (EUR:NTD)
1.3760 (EUR:USD)
144.5626 (EUR:JPY)
0.2851 (JPY:NTD)
0.0576 (JPY:RMB)
0.1652 (RMB:USD)
0.0937 (HKD:EUR)
0.7807 (HKD:RMB)
0.2411 (PLN:EUR)
$ 11,631,142
9,435,459
4,735,160
488,545
13,476
177,208
156,616
306,835
144,342
227,799
891,904
32,522
84,724
$ 28,325,732
- 69 -
32. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees:
1) Financing provided to others.
(Table 1)
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) Information on investees. (Table 6)
10) Trading in derivative instruments.
(Notes 7 and 27)
11) Intercompany relationships and significant transactions. (Table 8)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business
activities, paid-in capital, method of investment, inward and outward remittance of funds,
ownership percentage, net income of investees, investment income or loss, carrying amount of the
investment at the end of the period, repatriations of investment income, and limit on the amount of
investment in the mainland China area. (Table 7)
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:
a) The amount and percentage of purchases and the balance and percentage of the related payables
at the end of the period. (Table 4)
b) The amount and percentage of sales and the balance and percentage of the related receivables at
the end of the period. (Table 4)
c) The amount of property transactions and the amount of the resultant gains or losses.
(Eliminated from the consolidated financial statements)
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the
end of the period and the purposes. (Table 2)
- 70 -
e) The highest balance, the end of period balance, the interest rate range, and total current period
interest with respect to financing of funds. (Table 1)
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. (None)
33. SEGMENT INFORMATION
a. Basic information
Information reported to the chief operating decision maker for resource allocation and the assessment of
segment performance is solely based on the financial information of each plant owned by the Group.
Each plant has similar economic features as well as manufacturing procedures. In addition, products
are sold by the Group in a centralized way. Thus, the Group is reported as a single segment. The
Group’s revenues and operating results in 2014 and 2013 are shown in the consolidated statements of
comprehensive income for 2014 and 2013.
b. Revenue from major products
The following is an analysis of the Group’s revenue from its major products.
For the Year Ended December 31
2014
2013
Resistors
Capacitors
Ferrite
Others
$ 11,245,082
10,669,609
2,010,980
3,101,313
$ 11,149,520
9,779,395
1,933,809
1,872,323
$ 27,026,984
$ 24,735,047
c. Geographical information
The Group’s revenue from external customers by location of operations and information about its
noncurrent assets by location of assets are detailed below.
Revenue from
External Customers
Year Ended December 31
2014
2014
Domestic
Europe
Asia
Others
$
5,228,675
3,874,821
17,923,488
-
$ 27,026,984
$
4,313,815
3,615,430
16,805,802
-
$ 24,735,047
Noncurrent Assets
December 31
2014
2013
$
5,439,059
3,291,653
9,039,376
18,361
$ 17,788,449
$
5,501,812
3,758,262
8,895,062
1,074
$ 18,156,210
Noncurrent assets exclude financial instruments and deferred tax assets.
d. Information about major customers
No single customer contributed 10% or more to the Group’s revenue for both 2014 and 2013.
- 71 -
TABLE 1
YAGEO CORPORATION AND SUBSIDIARIES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2014
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
No.
Lender
Borrower
Financial Statement
Account
Related
Parties
Highest Balance
for the Year
Ending Balance
Actual Borrowing
Interest Rate
Amount (Note 5)
Nature of
Financing
(Note 3)
0
Yageo Corporation
Yageo Electronics
(China) Co., Ltd.
Receivables from related
parties.
Yes
US$
50,000
US$
-
US$
-
-
b
1
Yageo Holding
(Bermuda) Ltd.
Hsu Tai International
(H.K.)
Hsu Tai International
(H.K.)
Yageo (Hong Kong)
Limited
Yageo Japan
Receivables from related
parties.
Receivables from related
parties.
Receivables from related
parties.
Receivables from related
parties.
Receivables from related
parties.
Receivables from related
parties.
Receivables from related
parties.
Loans to subsidiaries
considered as a
component of investment
Loans to subsidiaries
considered as a
component of investment
Yes
US$
8,151
US$
8,151
US$
8,010
-
Yes
HK$
14,926
HK$
14,926
HK$
14,926
Yes
US$
78,700
US$
63,700
US$
Yes
JPY
7,406
JPY
7,406
Yes
US$
9,742
US$
Yes
US$
7,668
Yes
EUR
Yes
Yageo America
Yageo Europe Holding
B.V.
Yageo Europe Holding
B.V.
Yageo Europe Holding
B.V.
Ferroxcube International
Holding B.V.
Business
Transaction
Amount
$
Reasons for
Short-term
Financing
-
For revolving fund
b
-
-
b
18,700
-
JPY
7,406
9,742
US$
US$
7,668
1,539
EUR
EUR
174,956
Yes
EUR
Allowance for
Impairment Loss
$
Collateral
Item
-
None
For revolving fund
-
-
For revolving fund
b
-
-
b
9,742
-
US$
7,416
1,539
EUR
EUR
174,956
20,688
EUR
Financing Limit
Aggregate
for Each Borrower Financing Limits
(Note 1)
(Note 2)
Value
$
-
US$
10,245,477
US$ 10,245,477
None
-
US$
925,691
US$
925,691
-
None
-
US$
925,691
US$
925,691
For revolving fund
-
None
-
US$
925,691
US$
925,691
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
b
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
-
b
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
1,539
-
b
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
EUR
173,956
-
b
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
20,688
EUR
13,300
-
b
-
For revolving fund
-
None
-
US$
925,691
US$
925,691
165,418
RMB
165,418
2
Ferroxcube Holding
(Samoa) Ltd.
Ferroxcube Electronics Receivables from related
(Dongguan) Co., Ltd.
parties.
Yes
US$
4,300
US$
4,300
US$
4,300
-
b
-
For revolving fund
-
None
-
RMB
3
Yageo (Hong Kong)
Limited
Yageo Electronics
(China) Co., Ltd.
Receivables from related
parties.
Yes
US$
80,000
US$
80,000
US$
20,000
-
b
-
For revolving fund
-
None
-
HK$
4
Yageo Trade (Suzhou)
Co., Ltd.
Yageo Electronics
(China) Co., Ltd.
Receivables from related
parties.
Yes
RMB
25,000
RMB
-
RMB
-
-
b
-
For revolving fund
-
None
-
RMB
141,950
RMB
141,950
5
Vitrohm Holding GmbH Yageo Holding
(Bermuda) Ltd.
Receivables from related
parties.
Yes
EUR
6,043
EUR
6,043
EUR
6,043
0.5
b
-
For revolving fund
-
None
-
EUR
9,592
EUR
9,592
4,403,133
HK$ 4,403,133
Note 1:
For the Company to the business relationship, financing limited for each borrowing company is limited to the amounting of business operation (base on the previous year’s actual sales and purchase amount when the loan contract awarded). The financing limited to the counterparty which has the short-term loan necessary is
limited to 40% of its net worth presented in the latest financial statements audited or reviewed by auditors. According to the financing procedure for Company’s overseas investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd., Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited,
Yageo Trade (Suzhou) Co., Ltd. and Vitrohm Holding GmbH are limited to 100% of each net worth presented in the latest financial statements audited or reviewed by auditors.
Note 2:
For the Company, the financing amount to each counterparty is limited to 40% of its net worth presented in the latest financial statements audited or reviewed by auditors. According to the financing procedures for Company’s overseas investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd.,
Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited, Yageo Trade (Suzhou) Co., Ltd. and Vitrohm Holding GmbH are limited to 100% of each net worth presented in the latest financial statements audited or reviewed by auditors.
Note 3:
Reasons for financing are as follows:
a.
b.
Business relationship.
For financing.
Note 4:
The currency rate on December 31, 2014, stated one New Taiwan dollar to HKD, USD, JPY, EUR and RMB are 1:4.09, 1:31.718, 1:0.2653, 1:38.5437 and 1:5.1125, respectively; stated one U.S. dollar to HKD, JPY, EUR, and RMB are 1:0.1289, 1:0.0084, 1:1.2152 and 1:0.1612, respectively.
Note 5:
All intercompany financing loans have been eliminated from consolidation.
- 72 -
TABLE 2
YAGEO CORPORATION AND SUBSIDIARIES
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2014
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Endorsee/Guarantee
No.
0
1
Endorser/Guarantor
Yageo Corporation
Yageo Holding (Bermuda)
Ltd. (Note 3)
Name
Relationship
Limits on
Maximum
Endorsement/
Amount
Guarantee Given
Endorsed/
on Behalf of Each
Guaranteed
Party (Note 1)
During the Year
Yageo Holding (Bermuda) Ltd.
Subsidiary
$ 25,613,693
The shared borrowing facilities of
Yageo Electronics (China) Co.,
Ltd., Yageo Electronics
(Dongguan) Co., Ltd. and
Ferroxcube Electronics
(Dongguan) Co., Ltd.
Yageo USA (H.K.) Limited
Subsidiary
25,613,693
Subsidiary
25,613,693
Yageo USA (H.K.) Limited
Subsidiary
Outstanding
Endorsement/ Actual Borrowing
Guarantee at the
Amount
End of the Year
$ 6,868,533
(US$ 216,550)
317,180
(US$ 10,000)
$ 6,868,533
(US$ 216,550)
317,180
(US$ 10,000)
$
792,950
(US$ 25,000)
33,114
(US$ 1,044)
Amount
Endorsed/
Guaranteed by
Collaterals
$
Ratio of
Accumulated
Endorsement/
Endorsement/
Endorsement/
Aggregate
Endorsement/
Guarantee Given
Guarantee Given
Guarantee to Net Endorsement/
Guarantee Given
by Parent on
on Behalf of
Equity In Latest Guarantee Limit
by Subsidiaries on
Behalf of
Companies in
Financial
(Note 2)
Behalf of Parent
Subsidiaries
Mainland China
Statements
(%)
-
26.82
$ 38,420,540
Yes
No
No
-
1.24
38,420,540
Yes
No
Yes
63,436
2,000)
-
0.25
38,420,540
Yes
No
No
(US$
63,436
2,000)
-
(US$
63,436
2,000)
-
0.22
44,041,594
Yes
No
No
(US$
63,436
2,000)
-
(US$
29,361,063
According to the endorsements/guarantees procedure for the Company’s overseas investees, endorsements/guarantees made by Yageo Holding
Note 1:
For the Company, endorsements or guarantees to each counterparty is limited to 100% of its net worth presented in the latest financial statements.
(Bermuda) Ltd. for each party is limited to 100% of its net worth presented in the latest financial statements.
Note 2:
Maximum endorsements/guarantees allowed for the Company is 150% of its net worth presented in the latest financial statements.
Holding (Bermuda) Ltd. is limited to 150% of its net worth presented in the latest financial statements.
Note 3:
The endorsements/guarantees limit to each counterparty and endorsements/guarantees limit of Yageo Holding (Bermuda) Ltd. are US$925,691 thousand and US$1,388,536 thousand, respectively.
Note 4:
The endorsements/guarantees was based on the currency rate on December 31, 2014, stated one New Taiwan dollar to USD is 1:31.718.
According to the endorsements/guarantees procedure for the Company’s overseas investees, maximum endorsements/guarantees that can be made by Yageo
- 73 -
TABLE 3
YAGEO CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
December 31, 2014
Holding Company Name
Yageo Corporation
Ko-Shin Investment Ltd.
Type and Name of Marketable
Securities
Relationship with the
Holding Company
Stock
TA-I Technology Co., Ltd.
-
SHS KOA Corp.
-
Luminous Town Electric Co., Ltd.
-
Linko International Golf &
Country Club
-
Financial Statement Account
Shares or Units
(All Common
Shares Unless
Stated Otherwise)
(In Thousands)
Available-for-sale financial assets noncurrent
Available-for-sale financial assets noncurrent
Available-for-sale financial assets noncurrent
Available-for-sale financial assets noncurrent
24,807
Available-for-sale financial assets noncurrent
Parawin Venture Capital Corp.
Member of the board of Available-for-sale financial assets directors
noncurrent
Hsin Bung International Co., Ltd.
Available-for-sale financial assets noncurrent
Jihsun Securities Investment Trust
Available-for-sale financial assets Co., Ltd.
noncurrent
Stock
TA-I Technology Co., Ltd.
Bond
Ta Chong subordinated debt
-
Carrying Amount
$
Percentage of
Ownership (%)
442,807
9.5
1,250
378,263
10,553
Fair Value
(Note)
$
Note
442,807
-
3.1
378,263
-
86,115
15.8
86,115
-
-
482
0.1
482
-
15,398
274,851
5.9
274,851
-
7,199
38,925
10.0
38,925
-
2,761
33,622
16.6
33,622
-
1,560
12,000
4.0
12,000
-
-
50,000
-
50,000
-
-
Debt investments with no active market noncurrent
Yageo Holding (Bermuda) Stock
Ltd.
SHS KOA Corp.
-
Available-for-sale financial assets noncurrent
1,926
US$
18,380
4.8
US$
18,380
-
Hsu Tai International
(H.K.)
Stock
SHS KOA Corp.
-
Available-for-sale financial assets noncurrent
872
HK$
64,565
2.2
HK$
64,565
-
Rextron International
Stock
SHS KOA Corp.
-
Available-for-sale financial assets noncurrent
286
US$
2,728
0.7
US$
2,728
-
(Continued)
- 74 -
December 31, 2014
Holding Company Name
Ko-E (H.K.) Limited
Type and Name of Marketable
Securities
Share certificates
HK Wahyi Electronic Limited
SEMR China Technology Co.,
Ltd.
Ko-E Corp. (Shenzhen)
Yageo Europe Holding
B.V.
Note:
Relationship with the
Holding Company
-
Financial Statement Account
Shares or Units
(All Common
Shares Unless
Stated Otherwise)
(In Thousands)
Carrying Amount
Percentage of
Ownership (%)
Fair Value
(Note)
Note
Available-for-sale financial assets noncurrent
Available-for-sale financial assets noncurrent
-
HK$
432
17.0
HK$
432
-
-
HK$
2,789
17.0
HK$
2,789
-
Share certificates
Xmholder Technology Co., Ltd.
-
Available-for-sale financial assets noncurrent
-
RMB
9,624
17.0
RMB
9,624
-
Stock
SHS KOA Corp.
-
Available-for-sale financial assets noncurrent
1,280
EUR
10,051
3.2
EUR
10,051
-
The listed common shares are valued by their closing prices as of December 31, 2014. The debt investments with no active market is valued by the evaluated information of issuing housing.
their cost of aquasition less accumulated impairment.
The unlisted common shares are presented by
(Concluded)
- 75 -
TABLE 4
YAGEO CORPORATION AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise, All Amounts in Thousands)
Transaction Details (Note)
Buyer
Related Party
Relationship
Yageo Electronics (Dongguan) Co., Ltd.
Subsidiary
Yageo Electronics (China) Co., Ltd.
.
Yageo Europe B.V
Ko-E (H.K.) Limited
Yageo Corporation (South Asia)
Yageo USA (H.K.) Limited
Yageo Components (Suzhou) Co., Ltd.
Subsidiary
Yageo USA (H.K.) Limited
Purchase/
Sale
Amount
$
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Sale
Purchase
Sale
Purchase
Sale
Sale
Sale
Sale
Purchase
Yageo Trade (Suzhou) Co., Ltd.
Ko-E (H.K.) Limited
Associate
Associate
Sale
Sale
HK$
HK$
Yageo Trade (Suzhou) Co., Ltd.
Ko-E Technology (Shenzhen) Co., Ltd.
Associate
Yageo Electronics (China) Co., Ltd.
Ko-E (H.K.) Limited
Yageo Europe B.V.
Yageo Holding (Bermuda) Ltd.
Associate
Associate
Associate
% to
Total
Abnormal Transaction
Payment Terms
(3,312,501)
128,756
(1,882,743)
395,458
(822,837)
(633,869)
(846,505)
(578,639)
129,692
(26)
1
(15)
4
(6)
(5)
(7)
(5)
1
Offset account T/T 90 days
Offset account T/T 90 days
T/T 90 days
T/T 90 days
T/T 45 days
T/T 60 days
T/T 90 days
Offset account T/T 90 day
T/T 90 days
(817,991)
(483,547)
(25)
(15)
Sale
RMB (438,678)
Sale
Sale
Sale
RMB (160,247)
RMB (55,662)
RMB (37,852)
Ko-E Technology (Shenzhen) Co., Ltd. Guo Chuang Electronics (Dongguan) Co., Ltd. Associate
Associate
Chilisin Su Zhou Ltd.
Purchase
Purchase
RMB
RMB
Associate
Purchase
HK$
Yageo Corporation
Ko-E (H.K.) Limited
Note:
Chilisin International Ltd.
Unit Price
-
-
$
T/T 90 days
T/T 90 days
-
-
HK$
HK$
(63)
T/T 65 days
-
-
(8)
(3)
(2)
T/T 65 days
T/T 90 days
T/T 90 days
-
47,126
40,236
7
6
T/T 75 days
T/T 75 days
121,598
11
T/T 75 days
All intercompany transactions have been eliminated from consolidation.
- 76 -
$
Payment Terms
Notes/Accounts (Payable) or
Receivable (Note)
% to
Ending Balance
Total
Remark
24
13
(32)
3
4
4
60
(1)
-
591,382
319,198
49
26
-
RMB
184,018
71
-
-
RMB
RMB
RMB
95,637
10,285
21,482
19
2
4
-
-
-
RMB
RMB
(19,855)
(17,636)
(8)
(7)
-
-
-
HK$
(39,338)
(7)
-
(884,371)
754,829
(1,178,529)
175,327
208,301
235,130
3,430,245
(43,723)
TABLE 5
YAGEO CORPORATION AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise, All Amounts in Thousands))
Company Name
Related Party
Relationship
Ending Balance
(Note 7)
Overdue
Turnover Rate
Amount
Action Taken
-
-
(Note 3)
(Note 2)
(Note 3)
(Note 3)
-
-
(Note 3)
-
-
Amounts Received
in Subsequent
Period (Note 7)
Yageo Corporation
Yageo USA (H.K.) Limited
Ko-E (H.K.) Limited
Yageo Corporation (South Asia)
Yageo Europe B.V.
Yageo Electronics (China) Co., Ltd.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
$
3,430,245
208,301
235,130
175,327
779,358
(Note 6)
3.91
3.18
5.98
6.65
3.67
Yageo Holding (Bermuda) Ltd.
Hsu Tai International (H.K.)
Yageo (Hong Kong) Limited
Yageo America
Yageo Europe Holding B.V.
Subsidiary
Subsidiary
Associate
Associate
Ferroxcube International Holding B.V.
Associate
Guo Chuang Electronics (Dongguan) Co.,
Ltd.
Associate
US$
9,934
US$ 22,686
US$
9,742
US$ 220,676
(Note 1)
US$ 16,162
(Note 1)
US$
3,463
Yageo Electronics (China) Co., Ltd.
Ko-E (H.K.) Limited
Yageo Holding (Bermuda) Ltd.
Yageo Corporation
Associate
Associate
Ultimate parent company
RMB 95,637
RMB 21,482
RMB 230,519
2.09
2.25
9.53
-
-
RMB 39,658
RMB 6,363
RMB 230,519
-
Yageo Trade (Suzhou) Co., Ltd.
Ko-E Technology (Shenzhen) Co., Ltd.
Associate
RMB 184,018
2.36
-
-
RMB 101,037
-
Yageo USA (H.K.) Limited
Yageo Trade (Suzhou) Co., Ltd.
Ko-E (H.K.) Limited
Associate
Associate
HK$ 591,382
HK$ 320,088
(Note 6)
1.71
1.86
-
-
HK$ 218,673
HK$ 60,361
-
Ferroxcube Electronics (H.K.) Limited
Ferroxcube International Holding B.V.
Associate
HK$ 163,816
(Note 5)
-
-
-
-
Ferroxcube Holding (Samoa) Ltd.
Feroxcube Electronics (Dongguan) Co.,
Ltd.
Associate
US$
4,300
(Note 3)
-
-
-
-
Yageo (Hong Kong) Limited
Yageo Electronics (China) Co., Ltd.
Subsidiary
US$
20,000
(Note 3)
-
-
20,000
-
Vitrohm Holding GmbH
Yageo Holding (Bermuda) Ltd.
Parent company
EUR
6,074
(Note 2)
-
-
-
-
Yageo Electronics (Dongguan) Yageo
Corporation
Yageo Corporation
Untimate parent company
RMB 172,982
7.34
-
-
RMB 172,982
-
$
(Note 4)
$
2,764,636
168,924
180,676
167,322
526,509
Allowance for
Impairment Loss
$
-
18,700
-
-
US$
4,010
-
US$
501
US$
US$
(Continued)
- 77 -
Note 1: Loans to subsidiaries considered a component of investment.
Note 2: Considered financing and other receivables.
Note 3: Considered financing.
Note 4: Considered other receivables.
Note 5: Considered receivables of selling Ferroxcube Electronics (Dongguan) Co., Ltd. to Ferroxcube International Holding B.V.
Note 6: Including other receivables.
Note 7: All intercompany transactions have been eliminated from consolidation.
(Concluded)
- 78 -
TABLE 6
YAGEO CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTEES
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise, All Amounts in Thousands))
Investor Company
Yageo Corporation
Investee Company
Location
Main Businesses and Products
Original Investment Amount
December 31, 2014 December 31, 2013
Yageo Holding (Bermuda) Ltd.
Ko-Shin Investment Ltd.
Ferroxcube Holding (Samoa)
Ltd.
Yageo Corporation (South Asia)
Ferroxcube Taiwan, Ltd.
Bermuda
Taipei
West Samoa
Investment
Investment
Investment
US$
334,747
2,236,059
US$
25,433
US$
Singapore
Hsinchu
SGD
780
-
SGD
Yageo Europe Holding B.V.
Yageo America
Yageo South Asia (M) Sdn. Bhd.
Chilisin Electronics Corp.
Netherlands
America
Malaysia
Hsinchu
US$
US$
147,757
2,347
446,902
US$
US$
GTCL
Ralec Electronic Corp.
Singapore
Kaohsiung
Teapo Electronics Corporation
New Taipei City
Strong Components Co., Ltd.
Kaohsiung
Electronic component marketing
Ferrite core manufacture and
marketing
Holding company
Electronic component marketing
Electronic component marketing
Capacitor manufacture and
marketing
Holding company
Resistor manufacture and
marketing
Capacitor manufacture and
marketing
Electronic component
manufacture and marketing.
Chilisin Electronics Corp.
Hsinchu
GTCL
Ralec Electronic Corp.
Singapore
Kaohsiung
Teapo Electronics Corporation
New Taipei City
Yageo (Hong Kong) Limited
Yageo USA (H.K.) Limited
Ko-E Holding (Cayman)
Vitrohm Holding GmbH
Rextron International
Belkin International
Yageo Korea
Yageo Japan
Hsu Tai International (H.K.)
GCD
Hong Kong
Hong Kong
Cayman Islands
Germany
British Virgin Islands
Samoa
Korea
Japan
Hong Kong
British Virgin Islands
Ferroxcube Holding (Samoa) Ferroxcube Electronics (H.K.)
Ltd.
Limited
Ko-E Holding (Cayman)
Ko-E Corp.
Ko-E (H.K.) Limited
Yageo Europe Holding B.V.
Ferroxcube International Holding Netherlands
B.V.
Ko-Shin Investment Ltd.
Yageo Holding (Bermuda)
Ltd.
374,747
2,236,059
US$
25,433
As of December 31, 2014
Shares
%
90,000
151,700
1,000
100.0
100.0
100.0
780
16,175
-
100.0
-
147,757
2,347
471,535
1
22,169
100.0
100.0
100.0
17.5
400,313
376,858
400,313
376,858
164,648
7,457
23.1
12.7
1,126,544
1,195,547
16,101
79,384
79,384
107,119
Carrying Amount
(Note 3)
$
29,262,855
1,411,225
845,701
Net Income (Loss)
of the Investee
$
$
1,753,333
62,382
-
Remarks
Subsidiary
Subsidiary
Subsidiary
24,095
(176)
24,095
(176)
Subsidiary
(Note 1)
396,155
3,935
(547)
363,848
423,103
3,935
(547)
63,529
Subsidiary
Subsidiary
Subsidiary
Associate
626,443
487,843
98,230
340,812
22,518
43,243
Associate
Associate
17.0
381,857
122,761
23,265
Associate
6,530
31.4
87,295
(27,993)
(8,795)
Associate
112,301
4,663
3.7
187,537
363,848
13,364
Associate
125,963
69,494
125,963
62,907
36,779
2,326
5.2
4.0
139,935
119,892
98,230
340,812
5,030
13,244
Associate
Associate
113,403
129,692
3,801
4.0
78,221
122,761
6,431
Associate
Investment
Passive Component marketing
Holding company
Investment
Investment
Investment
Resistor marketing
Resistor marketing
Investment
Investment
HK$ 1,937,050
HK$
8,000
US$
4,500
EUR
15,849
US$
3,643
US$
1,104
US$
236
US$
339
US$
2,400
US$
3,551
HK$ 1,937,050
HK$
8,000
US$
4,500
EUR
15,849
US$
3,643
US$
1,104
US$
236
US$
339
US$
2,400
US$
3,551
1,030,499
4,500
1,104
1
3,439
100.0
100.0
77.2
100.0
100.0
46.0
100.0
100.0
100.0
27.2
US$
US$
US$
US$
US$
US$
US$
US$
US$
567,564
59,534
13,436
11,656
2,986
1,643
1,309
44
(655)
-
29,247
25,311
3,294
1,274
51
(12)
(149)
(15)
85
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Subsidiary
Subsidiary
Subsidiary
Associate
Hong Kong
Investment
HK$
161,184
HK$
161,184
165,777
100.0
US$
23,263
New Taipei City
Hong Kong
Electronic components marketing
Electronic components marketing
US$
US$
1,393
4,662
US$
US$
1,393
4,662
4,500
-
100.0
100.0
US$
US$
1,623
15,204
US$
US$
10
4,263
Holding company
EUR
3,663
EUR
3,663
39
100.0
EUR
34,858
EUR
8,582
Capacitor manufacture and
marketing
Holding company
Resistor manufacture and
marketing
Capacitor manufacture and
marketing
Note 1:
Ferroxcube Taiwan, Ltd. had been liquidated and dissolved in the third quarter of 2014.
Note 2:
Information on investment in Mainland China please refer to Table 7.
Note 3:
All the above investment account and share of profit or loss relevant to subsidiaries have been eliminated from consolidation.
- 79 -
159,630
-
1,753,333
62,382
-
Share of Profits
(Loss) (Note 3)
(2,522,854)
(303,724)
(534)
696,525
US$
US$
US$
US$
US$
US$
US$
US$
US$
29,247
25,213
4,266
1,274
51
(25)
(149)
(15)
85
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
Subsidiary
US$
US$
10
4,263
Subsidiary
Subsidiary
EUR
8,582
Subsidiary
TABLE 7
YAGEO CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Remittance of Funds
Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2014
(Note 3)
Main Businesses and Products
Paid-in Capital
(Note 3)
Yageo Electronics (Dongguan) Co.,
Ltd.
Manufacture and marketing of passive
components
US$
43,250
($
1,371,804)
Indirect: Through a company
registered in a third region
US$
36,510
($
1,158,024)
-
Yageo Electronics (China) Co., Ltd.
Manufacture and marketing of passive
components
US$
221,977
($
7,040,666)
Indirect: Through a company
registered in a third region
US$
184,977
($
5,867,100)
Yageo Components (Suzhou) Co., Ltd. Manufacture and marketing of passive
components
US$
($
5,000
158,590)
Indirect: Through a company
registered in a third region
US$
($
Yageo Trade (SuZhou) Co., Ltd.
Marketing of passive components
US$
($
5,000
158,590)
Indirect: Through a company
registered in a third region
Compostar Technology (Dongguan)
Co., Ltd.
Manufacture and marketing of passive
components
US$
($
1,502
47,640)
Compostar Technology (SuZhou) Co., Manufacture and marketing of passive
Ltd.
components
US$
($
Guo Chuang Electronics (Dongguan)
Co., Ltd.
Manufacture and marketing of passive
components
Feroxcube Electronics (Dongguan)
Co., Ltd.
Manufacture and marketing of ferrite
core
Investee Company
Method of Investment
Outflow
(Note 3)
Accumulated
Outflow of
% Ownership
Investment from Net Income (Loss) of of Direct or
Taiwan as of
the Investee (Note 4)
Indirect
December 31, 2014
Investment
(Notes 3)
Inflow
(Note 3)
Carrying Value as
of
December 31, 2014
(Notes 3 and 5)
Accumulated
Inward Remittance
of Earnings as of
December 31, 2014
(Note 3)
-
US$
36,510
($
1,158,024)
HK$
($
57,510
225,244)
100.0
HK$
($
52,323
204,928)
HK$ 1,119,513
($
4,578,808)
-
-
US$
184,977
($
5,867,100)
HK$
($
163,415
640,031)
100.0
HK$
($
148,150
580,244)
HK$ 3,000,689
($
12,272,818)
5,000
158,590)
-
-
US$
($
5,000
158,590)
HK$
($
7,701
30,162)
100.0
HK$
($
7,574
29,664)
HK$
($
84,853
347,049)
-
US$
($
5,000
158,590)
-
-
US$
($
5,000
158,590)
HK$
($
18,475
72,359)
100.0
HK$
($
18,475
72,359)
HK$
($
168,685
689,922)
-
Indirect: Through a company
registered in a third region
US$
($
1,164
36,920)
-
-
US$
($
1,164
36,920)
HK$
($
381
1,492)
100.0
HK$
($
381
1,492)
HK$
($
20,248
82,814)
-
5,036
159,732)
Indirect: Through a company
registered in a third region
US$
($
5,150
163,348)
-
-
US$
($
5,150
163,348)
US$
($
1,709
54,206)
Indirect: Through a company
registered in a third region
US$
($
789
25,026)
-
-
US$
($
789
25,026)
HK$
($
371
1,453)
35.0
HK$
($
130
509)
HK$
($
10,225
41,820)
-
US$
($
21,133
670,296)
Indirect: Through a company
registered in a third region
US$
($
21,133
670,296)
-
-
US$
($
21,133
670,296)
EUR
($
160
6,457)
100.0
EUR
($
160
6,457)
EUR
($
14,788
569,984)
-
Ko-E Technology (Shenzhen) Co., Ltd. Manufacture and marketing of
electronic components
US$
($
3,500
111,013)
Indirect: Through a company
registered in a third region
US$
($
3,150
99,912)
-
-
US$
($
3,150
99,912)
HK$
($
14,232
55,741)
77.2
HK$
($
10,989
43,040)
HK$
($
54,901
224,545)
-
Guo Ray Electronics Co., Ltd.
US$
($
1,000
31,718)
Indirect: Through a company
registered in a third region
US$
($
460
14,590)
-
-
US$
($
460
14,590)
US$
($
(38)
(1,154))
46.0
US$
($
US$
($
152
4,821)
-
Chen-Xin Electronic (Chiao-Tao) Co., Production of passive components
Ltd.
US$
($
1,000
4,090)
Indirect: Through a company
registered in a third region
US$
($
59
1,871)
-
-
HK$
($
59
1,871)
-
46.0
-
-
-
Chen Xin (Dongguan)
US$
($
1,000
31,718)
Indirect: Through a company
registered in a third region
US$
($
460
14,590)
-
-
US$
($
460
14,590)
-
46.0
-
-
-
Manufacture and marketing of passive
components
Production of passive components
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2014
(Note 3)
Investment Amounts Authorized by Investment
Commission, MOEA (Note 3)
Upper Limit on the Amount of Investment Stipulated by
Investment Stipulated by Investment Commission,
MOEA
$8,368,857 (US$263,852)
$10,462,880 (US$329,872) (Note 1)
$15,443,660 (Note 2)
$
Investment Gain
(Loss)
(Notes 4 and 5)
Note 1:
The transfer of earnings to capital amount approved by MOEA of Yageo Electronics (Dongguan) Co., Ltd. and Yageo Electronics (China) Co., Ltd. are US$6,740 thousand and US$37,000 thousand, respectively.
Note 2:
Based on “Audit procedure of mainland china investment” on August 29, 2008, there is 60% cap on the amount of the Group’s investment. ($25,739,434 × 60% = $15,443,660)
Note 3:
The currency rate on December 31, 2014, stated one New Taiwan dollar to HKD, USD and EUR are 1:4.09, 1:31.718 and 1:38.5437, respectively.
Note 4:
The currency rate in 2014, stated one New Taiwan dollar to HKD, USD and EUR are 1:3.9166 and 1:30.371 and 1:40.3579, respectively.
Note 5:
All the above investment account and share of profit or loss relevant to subsidiaries have been eliminated from consolidation.
- 80 -
-
100.0
-
(18)
(547))
-
$
US$
($
-
7,751
245,846)
-
TABLE 8
YAGEO CORPORATION AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Transaction Details(Note 2)
No.
Company Name
Related Party
Flow of Transactions
(Note 1)
Financial Statement Account
0
Yageo Corporation
Yageo Components (SuZhou) Co., Ltd.
Yageo Components (SuZhou) Co., Ltd.
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E Corp
Yageo America
Yageo Corporation (South Asia)
Yageo Corporation (South Asia)
Yageo Japan
Yageo Japan
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Vitrohm Portuguesa
Vitrohm Portuguesa
Yageo Europe B.V.
Yageo Europe B.V.
Yageo Holding (Bermuda) Ltd.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
a.
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Rental income
Logistics service income
Receivables from related parties
Rental income
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Management service income
Receivables from related parties
Sales
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Receivables from related parties
1
Yageo Holding (Bermuda) Ltd.
Ferroxcube International Holding B.V.
Yageo Europe Holding B.V.
Yageo America
Yageo (Hong Kong) Limited
Yageo (Hong Kong) Limited
Ko-E Holding (Cayman)
Hsu Tai International (H.K.)
Yageo Japan
c.
c.
c.
a.
a.
a.
a.
a.
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Receivables from related parties
Receivables from related parties
Loans receivable from related parties
Loans receivable from related parties
Amount
$
Payment Terms
% to
Total Sales or
Assets
47,879
16,535
578,639
3,430,245
633,869
1,672
16,781
208,301
248
138
846,505
235,130
353
18
1,882,743
754,829
24,528
24,528
3,312,501
48,185
24,767
9,618
2,923
822,837
175,327
101
T/T 90 days
T/T 90 days
Offset account T/T 90 days
Offset account T/T 90 days
T/T 60 days
T/T 60 days
T/T 60 days
T/T 60 days
T/T 30 days
Offset account T/T 120 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
By contract
By contract
Offset account T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 45 days
T/T 45 days
Advances
2
7
2
3
7
1
12
3
-
512,631
6,999,409
309,002
593,127
126,444
94,557
315,108
1,965
Financing
Financing
Financing
Financing
Advances
Dividends receivable
Financing
Financing
1
14
1
1
1
(Continued)
- 81 -
Transaction Details(Note 2)
No.
Company Name
Related Party
Flow of Transactions
(Note 1)
Financial Statement Account
2
Yageo (Hong Kong) Limited
Yageo Electronics (China) Co., Ltd.
Yageo Holding (Bermuda) Ltd.
a.
b.
Loans receivable from related parties
Temporary payment
3
Yageo Electronics (China) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Yageo Europe Holding B.V.
Yageo Europe Holding B.V.
Yageo Corporation
Yageo Corporation
Yageo Holding (Bermuda) Ltd.
Yageo Holding (Bermuda) Ltd.
Yageo Components (SuZhou) Co., Ltd.
Yogo Electronics (Dongguan) Co., Ltd.
c.
c.
c.
c.
c.
c.
b.
b.
b.
b.
c.
c.
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
Receivables from related parties
Receivables from related parties
4
Yageo USA (H.K.) Limited
Yageo Trade (SuZhou) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ferroxcube H.K. Ltd.
c.
c.
c.
c.
c.
c.
5
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Corporation
Yageo Corporation
6
Ferroxcube Holding (Samoa) Ltd.
7
Amount
$
634,360
79,918
Payment Terms
% to
Total Sales or
Assets
Financing
Temporary payment
1
-
1,305
6,763
789,906
488,945
274,374
52,580
395,458
1,178,529
186,584
109,828
247
27,689
T/T 90 days
Advances
T/T 65 days
T/T 65 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
By agreements
3
1
1
1
2
-
Sales
Receivables from related parties
Service income
Sales
Receivables from related parties
Receivables from related parties
3,203,743
2,418,754
102,124
1,893,859
1,309,161
22
T/T 60 days
T/T 60 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
12
5
7
3
-
b.
b.
Sales
Receivables from related parties
128,756
884,371
T/T 90 days
T/T 90 days
2
Ferroxcube Electronics (Dongguan) Co.,
Ltd.
c.
Loans receivables from related parties
136,387
Financing
-
Yageo Trade (SuZhou) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Ko-E Technology (Shenzhen) Co., Ltd.
Ko-E Technology (Shenzhen) Co., Ltd.
Yageo Components (SuZhou) Co., Ltd.
Yageo Components (SuZhou) Co., Ltd.
c.
c.
c.
c.
c.
c.
Sales
Receivables from related parties
Sales
Receivables from related parties
Sales
Receivables from related parties
6,671
479
2,162,376
940,791
13,160
10,047
T/T 90 days
T/T 90 days
T/T 65 days
T/T 65 days
T/T 90 days
T/T 90 days
8
2
-
8
Yageo Components (SuZhou) Co., Ltd.
Yageo Europe B.V.
Yageo Europe B.V.
Yageo Corporation
Yageo Corporation
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
Yageo Trade (SuZhou) Co., Ltd.
Yageo Trade (SuZhou) Co., Ltd.
c.
c.
b.
b.
c.
c.
c.
c.
Sales
Receivables from related parties
Sales
Receivables from related parties
Receivables from related parties
Sales
Sales
Receivables from related parties
30,662
5,547
129,692
43,723
2,378
2,272
689
166
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
T/T 30 days
T/T 30 days
T/T 90 days
T/T 90 days
-
9
Yageo Korea
Yageo Corporation
Yageo Corporation
b.
b.
Commission income
Receivables from related parties
32,660
32,896
T/T 30 days
T/T 30 days
(Continued)
- 82 -
Transaction Details(Note 2)
No.
Company Name
Related Party
Flow of Transactions
(Note)
Financial Statement Account
10
Yageo Japan
Yageo Holding (Bermuda) Ltd.
Yageo Holding (Bermuda) Ltd.
b.
b.
Commission income
Receivables from related parties
11
Vitrohm Holding GmbH
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
Yageo Corporation
Yageo Corporation
Yageo Holding (Bermuda) Ltd.
Yageo Electronics (Dongguan) Co., Ltd.
c.
c.
b.
b.
b.
c.
Sales
Receivables from related parties
Sales
Receivables from related parties
Loans receivables from related parties
Receivables from related parties
12
Ko-E Holding (Cayman)
Ko-E (H.K.) Limited
a.
Receivables from related parties
13
Ko-E (H.K.) Limited
Ko-E Technology (Shenzhen) Co., Ltd.
c.
14
Ferroxcube Electronics (H.K.) Limited
Ferroxcube International Holding B.V.
15
Yageo America
Yageo Corporation
Amount
$
Payment Terms
% to
Total Sales or
Assets
32,029
2,132
T/T 30 days
T/T 30 days
-
947
713
998
71
232,932
97
T/T 90 days
T/T 90 days
T/T 90 days
T/T 90 days
Financing
T/T 90 days
-
49,624
Advances
Receivables from related parties
1,735
Advances
-
c.
Receivables from related parties
670,132
b.
Commission income
75,160
Receivables from sale of
long-term investment
1
T/T 90 days
-
Note 1: The flow of related-party transactions is as follows:
a. From the parent company to its subsidiary.
b. From a subsidiary to its parent company.
c. Between subsidiaries.
Note 2: The intercompany transactions have been eliminated from consolidation.
(Concluded)
- 83 -
TABLE 9
YAGEO CORPORATION AND SUBSIDIARIES
THE GROUP’S ORGANIZATION CHART
DECEMBER 31, 2014 AND 2013
2014
Yageo Corporation
100%
100%
100%
100%
Yageo America
Corporation
Kuo-Shin
Investment
Limited
Yageo
Corporation
(South Asia)
Pte. Ltd.
Yageo Holding
(Bermuda) Ltd.
100%
Yageo South Asia
(M) Sdn. Bhd.
100%
Ferroxcube
Holding (Samoa)
Ltd.
100%
100%
Yageo USA
(H.K.) Limited
100%
100%
Yageo Japan
Yageo Korea
Yageo (Hong
Kong) Limited
77%
100%
100%
Vitrohm Holding
GmbH
Ko-E Holding
(Cayman)
100%
Hsu Tai
International
(H.K.)
100%
Compostar
Technology
(Dongguan)
Co., Ltd.
100%
Yageo Trade
(SuZhou) Co.,
Ltd.
100%
Yageo
Electronics
(Dongguan)
Co., Ltd.
100%
Yageo
Electronics
(China) Co.,
Ltd.
100%
100%
Yageo
Components
(SuZhou) Co.,
Ltd.
Rextron
International
Ferroxcube
Electronics (H.K.)
Limited
Yageo
Europe B.V.
100%
Ferroxcube
International
Holding B.V.
100%
Ferroxcube
Electronics
(Dongguan) Co.,
Ltd.
Vitrohm
Portuguesa
100%
100%
100%
Ko-E Corp.
100%
Ko-E (H.K.)
Limited
100%
Ko-E
Technology
(Shenzhen) Co.,
Ltd.
(Continued)
- 84 -
2013
Yageo Corporation
100%
Yageo America
Corporation
100%
100%
Kuo-Shin
Investment
Limited
Yageo Holding
(Bermuda) Ltd.
100%
Yageo
Corporation
(South Asia)
Pte. Ltd.
100%
Ferroxcube
Taiwan, Ltd.
100%
Ferroxcube
Holding (Samoa)
Ltd.
100%
100%
Yageo USA
(H.K.) Limited
100%
Yageo Japan
100%
Yageo Korea
Yageo (Hong
Kong) Limited
77%
100%
100%
Vitrohm Holding
GmbH
Ko-E Holding
(Cayman)
100%
Hsu Tai
International
(H.K.)
100%
Vitrohm
Portuguesa
100%
Compostar
Technology
(Dongguan)
Co., Ltd.
100%
Yageo Trade
(SuZhou) Co.,
Ltd.
100%
Yageo
Electronics
(Dongguan)
Co., Ltd.
100%
Yageo
Electronics
(China) Co.,
Ltd.
100%
Yageo
Components
(SuZhou) Co.,
Ltd.
100%
Ko-E Corp.
100%
Rextron
International
Ferroxcube
Electronics
(H.K.) Limited
100%
Yageo
Europe B.V.
100%
Ferroxcube
International
Holding B.V.
100%
Ferroxcube
Electronics
(Dongguan)
Co., Ltd.
100%
Ko-E (H.K.)
Limited
100%
Ko-E
Technology
(Shenzhen)
Co., Ltd.
(Concluded)
- 85 -