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POLYTRONICS TECHNOLOGY CORP. AND
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
REVIEW REPORT OF INDEPENDENT
ACCOUNTANTS
JUNE 30, 2015 AND 2014
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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying
financial statements have been translated into English from the original Chinese version prepared and used in
the Republic of China. In the event of any discrepancy between the English version and the original
Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’
report and financial statements shall prevail.
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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
PWCR15000034
To Polytronics Technology Corp.
We have reviewed the accompanying consolidated balance sheets of Polytronics Technology Corp. and
its subsidiaries as of June 30, 2015 and 2014, and the related consolidated statements of
comprehensive income for the three-month and six-month periods then ended, as well as the
consolidated statements of changes in equity and of cash flows for the six-month periods then ended.
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express a conclusion on these consolidated financial statements based on our
reviews.
We conducted our reviews in accordance with the Statement of Auditing Standards No. 36
“Engagements to Review Financial Statements” in the Republic of China. A review consists primarily
of inquiries of company personnel and analytical procedures applied to financial data. It is
substantially less in scope than an audit conducted in accordance with generally accepted auditing
standards in the Republic of China, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the
consolidated financial statements referred to above for them to be in conformity with the “Rules
Governing the Preparation of Financial Statements by Securities Issuers” and International Accounting
Standard 34 “Interim Financial Reporting ” as endorsed by the Financial Supervisory Commission.
PricewaterhouseCoopers, Taiwan
August 11, 2015 ------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of New Taiwan dollars) (The consolidated balance sheets as of June 30, 2015 and 2014 are reviewed, not audited)
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June 30, 2015 December 31, 2014 June 30, 2014 Assets Notes AMOUNT % AMOUNT % AMOUNT %
Current assets
Cash and cash equivalents 6(1) $ 1,021,559 38 $ 797,260 33 $ 912,716 35
Financial assets at fair value through
profit or loss - current
6(2)
- - - - 243 -
Notes receivable, net 98,081 4 111,945 4 93,731 4
Accounts receivable, net 6(4) 357,335 14 310,642 13 376,140 14
Accounts receivable - related parties 6(4) and 7 28,592 1 20,466 1 17,911 1
Other receivables 5,446 - 2,667 - 2,236 -
Inventories, net 6(5) 295,325 11 290,757 12 328,304 12
Prepayments 23,848 1 24,467 1 18,643 1
Other current assets 8 7,867 - 3,286 - 4,890 -
Current Assets 1,838,053 69 1,561,490 64 1,754,814 67
Non-current assets
Non-current financial assets at cost,
net
6(3)
3,000 - - - - -
Property, plant and equipment, net 6(6) 733,882 28 780,428 32 782,706 30
Investment property, net 6(7) 59,601 2 39,607 2 40,008 2
Intangible assets 4,877 - 5,232 - 5,464 -
Deferred income tax assets 10,617 - 9,850 1 10,348 -
Other non-current assets 8 27,197 1 30,978 1 26,859 1
Non-current assets 839,174 31 866,095 36 865,385 33
Total assets $ 2,677,227 100 $ 2,427,585 100 $ 2,620,199 100
(Continued)
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of New Taiwan dollars) (The consolidated balance sheets as of June 30, 2015 and 2014 are reviewed, not audited)
The accompanying notes are an integral part of these financial statements.
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June 30, 2015 December 31, 2014 June 30, 2014 Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
Short-term borrowings 6(8) $ 7,715 - $ 23,738 1 $ 68,689 2
Financial liabilities at fair value
through profit or loss - current
6(2)
422 - 1,925 - - -
Notes payable 19,378 1 28,492 1 911 -
Accounts payable 6(9) 120,236 5 91,342 4 129,302 5
Other payables 6(10) 549,736 21 207,887 9 566,859 22
Current income tax liabilities 114,088 4 96,324 4 97,510 4
Other current liabilities 4,697 - 2,821 - 3,751 -
Current Liabilities 816,272 31 452,529 19 867,022 33
Non-current liabilities
Other non-current liabilities 30,839 1 29,307 1 29,613 1
Non-current liabilities 30,839 1 29,307 1 29,613 1
Total Liabilities 847,111 32 481,836 20 896,635 34
Equity attributable to owners of
parent
Share capital 6(12)
Share capital - common stock 800,018 30 800,018 33 800,018 30
Capital surplus 6(13)
Capital surplus 235,900 9 235,900 10 235,900 10
Retained earnings 6(14)
Legal reserve 326,834 12 286,766 12 286,766 11
Special reserve 11,982 - 11,982 - 11,982 -
Unappropriated retained earnings 6(22) 438,678 16 582,041 24 387,373 15
Other equity interest 6(15) 16,704 1 29,042 1 1,525 -
Equity attributable to owners
of the parent
1,830,116 68 1,945,749 80 1,723,564 66
Total equity 1,830,116 68 1,945,749 80 1,723,564 66
Significant contingent liabilities and
unrecognised contract commitments
9
Total liabilities and equity $ 2,677,227 100 $ 2,427,585 100 $ 2,620,199 100
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands of New Taiwan dollars, except earnings per share amount) (UNAUDITED)
The accompanying notes are an integral part of these financial statements.
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For the three-month periods ended June 30 For the six-month periods ended June 30 2015 2014 2015 2014
Items Notes AMOUNT % AMOUNT % AMOUNT % AMOUNT %
Operating revenue 6(16) $ 444,819 100 $ 456,713 100 $ 826,753 100 $ 821,810 100
Operating costs 6(5)(20)
(21) ( 198,061 ) ( 44 ) ( 219,899 ) ( 48 ) ( 375,112 ) ( 45 ) ( 405,929 ) ( 49 )
Net operating margin 246,758 56 236,814 52 451,641 55 415,881 51
Operating expenses 6(20)(21)
Selling expenses ( 21,444 ) ( 5 ) ( 21,028 ) ( 4 ) ( 40,962 ) ( 5 ) ( 42,401 ) ( 5 )
General & administrative expenses ( 36,232 ) ( 8 ) ( 35,472 ) ( 8 ) ( 71,125 ) ( 9 ) ( 67,607 ) ( 8 )
Research and development expenses ( 29,599 ) ( 7 ) ( 30,306 ) ( 7 ) ( 61,361 ) ( 7 ) ( 60,525 ) ( 8 )
Total operating expenses ( 87,275 ) ( 20 ) ( 86,806 ) ( 19 ) ( 173,448 ) ( 21 ) ( 170,533 ) ( 21 )
Operating profit 159,483 36 150,008 33 278,193 34 245,348 30
Non-operating income and expenses
Other income 6(17) 9,542 2 8,947 2 18,023 2 15,043 2
Other gains and losses 6(18) ( 5,847 ) ( 1 ) ( 9,278 ) ( 2 ) ( 9,465 ) ( 1 ) ( 6,120 ) ( 1 )
Finance costs 6(19) ( 36 ) - ( 429 ) - ( 140 ) - ( 824 ) -
Total non-operating income and
expenses
3,659 1 ( 760 ) - 8,418 1 8,099 1
Profit before tax 163,142 37 149,248 33 286,611 35 253,447 31
Income tax expense 6(22) ( 29,870 ) ( 7 ) ( 29,207 ) ( 7 ) ( 53,898 ) ( 7 ) ( 47,467 ) ( 6 )
Profit for the period $ 133,272 30 $ 120,041 26 $ 232,713 28 $ 205,980 25
Other comprehensive (loss) income
Components of other comprehensive
income that will be reclassified to
profit or loss
Cumulative translation differences of
foreign operations
6(15)
( $ 7,171 ) ( 2 ) ( $ 8,458 ) ( 2 ) ( $ 12,338 ) ( 1 ) ( $ 9,661 ) ( 1 )
Other comprehensive loss for the
period
( $ 7,171 ) ( 2 ) ( $ 8,458 ) ( 2 ) ( $ 12,338 ) ( 1 ) ( $ 9,661 ) ( 1 )
Total comprehensive income for the
period, net of tax
$ 126,101 28 $ 111,583 24 $ 220,375 27 $ 196,319 24
Profit attributable to:
Owners of the parent $ 133,272 30 $ 120,041 26 $ 232,713 28 $ 205,980 25
Comprehensive income attributable to:
Owners of the parent $ 126,101 28 $ 111,583 24 $ 220,375 27 $ 196,319 24
Basic earnings per share 6(23) $ 1.67 $ 1.50 $ 2.91 $ 2.57
Diluted earnings per share 6(23) $ 1.65 $ 1.49 $ 2.87 $ 2.55
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
(Expressed in thousands of New Taiwan dollars) (UNAUDITED)
Equity attributable to owners of the parent
Capital Reserves Retained Earnings
Notes
Share capital
- common stock
Capital surplus
Treasury
stock transactions
Employee stock options
Legal reserve
Special reserve
Unappropriated
retained earnings
Cumulative
translation differences of
foreign operations
Total equity
The accompanying notes are an integral part of these financial statements.
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For the six-month period ended June 30, 2014
Balance at January 1, 2014 $ 800,018 $ 203,343 $ 14,924 $ 17,633 $ 249,038 $ 11,982 $ 547,129 $ 11,186 $ 1,855,253
Distribution of 2013 earnings
Legal reserve - - - - 37,728 - ( 37,728 ) - -
Cash dividends - - - - - - ( 328,008 ) - ( 328,008 )
Profit for the period - - - - - - 205,980 - 205,980
Other comprehensive loss for the period 6(15) - - - - - - - ( 9,661 ) ( 9,661 )
Balance at June 30, 2014 $ 800,018 $ 203,343 $ 14,924 $ 17,633 $ 286,766 $ 11,982 $ 387,373 $ 1,525 $ 1,723,564
For the six-month period ended June 30, 2015
Balance at January 1, 2015 $ 800,018 $ 203,343 $ 14,924 $ 17,633 $ 286,766 $ 11,982 $ 582,041 $ 29,042 $ 1,945,749
Distribution of 2014 earnings
Legal reserve - - - - 40,068 - ( 40,068 ) - -
Cash dividends - - - - - - ( 336,008 ) - ( 336,008 )
Profit for the period - - - - - - 232,713 - 232,713
Other comprehensive loss for the period 6(15) - - - - - - - ( 12,338 ) ( 12,338 )
Balance at June 30, 2015 $ 800,018 $ 203,343 $ 14,924 $ 17,633 $ 326,834 $ 11,982 $ 438,678 $ 16,704 $ 1,830,116
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of New Taiwan dollars) (UNAUDITED)
For the six-month periods ended June 30, Notes 2015 2014
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CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the period $ 286,611 $ 253,447
Adjustments to reconcile profit before tax to net cash
provided by operating activities
Income and expenses having no effect on cash flows
Net loss (gain) on financial assets at fair value through
profit or loss
6(2)
422 ( 243 )
Provision for doubtful accounts 6(4) 388 2,752
Depreciation (including investment property) 6(18)(20) 41,297 41,950
Amortization 6(20) 906 897
Interest expense 6(19) 140 824
Interest income 6(17) ( 5,012 ) ( 4,749 )
Loss on disposal of property, plant and equipment 6(18) ( 86 ) 247
Property, plant and equipment reclassified to expenses - 171
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets/liabilities at fair value through profit or
loss - current
( 1,925 ) ( 754 )
Notes receivable, net 11,207 ( 28,101 )
Accounts receivable, net ( 49,775 ) ( 82,635 )
Accounts receivable, net - related parties ( 8,126 ) 1,816
Other receivables ( 2,779 ) ( 311 )
Inventories ( 4,568 ) ( 39,579 )
Prepayments 619 227
Other current assets ( 4,581 ) ( 1,578 )
Net changes in liabilities relating to operating activities
Notes payable ( 9,114 ) ( 1,339 )
Accounts payable 28,894 23,132
Other payables 10,177 41,353
Other current liabilities 1,876 1,038
Other non-current liabilities ( 348 ) ( 379 )
Cash generated from operations 296,223 208,186
Interest paid ( 140 ) ( 824 )
Interest received 5,012 4,749
Income tax paid ( 36,901 ) ( 48,963 )
Net cash provided by operating activities 264,194 163,148
(Continued)
POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of New Taiwan dollars) (UNAUDITED)
For the six-month periods ended June 30, Notes 2015 2014
The accompanying notes are an integral part of these financial statements.
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at cost ( $ 3,000 ) $ -
Decrease (increase) in other non-current assets 3,455 ( 1,953 )
Acquisition of property, plant and equipment 6(25) ( 23,866 ) ( 15,822 )
Proceeds from disposal of property, plant and equipment 205 -
Acquisition of intangible assets ( 588 ) ( 656 )
Increase in deposits - out - ( 657 )
Net cash used in investing activities ( 23,794 ) ( 19,088 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings ( 15,584 ) ( 9,056 )
Increase in deposits - in 1,880 800
Net cash used in financing activities ( 13,704 ) ( 8,256 )
Effect of exchange rate ( 2,397 ) ( 1,243 )
Increase in cash and cash equivalents 224,299 134,561
Cash and cash equivalents at beginning of period 797,260 778,155
Cash and cash equivalents at end of period 6(1) $ 1,021,559 $ 912,716
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POLYTRONICS TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ENDED JUNE 30, 2015 AND 2014
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)
(Unaudited)
1. HISTORY AND ORGANIZATION
Polytronics Technology Corporation (the “Company”) was incorporated on December 18, 1997 and
started to operate from August 1, 1999. The Company and its subsidiaries (collectively referred herein
as the “Group”) are primarily engaged in research, development, manufacturing and sale of Polymeric
Positive Temperature Coefficent and its production related semi-finished goods, modules, heat
conductive substrate, thermal module, heat dispersing materials, and LED lightings and modules.
2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These consolidated financial statements were authorized for issuance by the Board of Directors on
August 11, 2015.
3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting
Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)
According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3,
2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei
Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9,
‘Financial instruments’) as endorsed by the FSC and Regulations Governing the Preparation of
Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the
“2013 version of IFRS”) in preparing the consolidated financial statements. The impact of adopting
the 2013 version of IFRS is listed below:
A. IAS 1, ‘Presentation of financial statements’
The amendment requires entities to separate items presented in OCI classified by nature into two
groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently
when specific conditions are met. If the items are presented before tax then the tax related to
each of the two groups of OCI items (those that might be reclassified and those that will not be
reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the
statement of comprehensive income.
B. IFRS 13, ‘Fair value measurement’
The standard defines fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date.
The standard sets out a framework for measuring fair value from market participants’
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perspective, and requires disclosures about fair value measurements. For non-financial assets
only, fair value is determined based on the highest and best use of the asset. Based on the
Group’s assessment, the adoption of the standard has no significant impact on its consolidated
financial statements, and the Group will disclose additional information about fair value
measurements accordingly.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by
the Group
None.
(3) IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet included in the 2013
version of IFRS as endorsed by the FSC:
New Standards, Interpretations and Amendments
Effective date by
International
Accounting
Standards Board
IFRS 9, ‘Financial instruments' January 1, 2018
Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)
January 1, 2016
Investment entities:applying the consolidation exception (amendments
to IFRS 10, IFRS 12 and IAS 28)
January 1, 2016
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)
January 1, 2016
IFRS 14, 'Regulatory deferral accounts' January 1, 2016
IFRS 15, ‘Revenue from contracts with customers' January 1, 2018
Disclosure initiative (amendments to IAS 1) January 1, 2016
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
January 1, 2016
Defined benefit plans: employee contributions
(amendments to IAS 19R)
July 1, 2014
Equity method in separate financial statements (amendments to IAS 27) January 1, 2016
Recoverable amount disclosures for non-financial assets
(amendments to IAS 36)
January 1, 2014
Novation of derivatives and continuation of hedge accounting
(amendments to IAS 39)
January 1, 2014
IFRIC 21, ‘Levies’ January 1, 2014
Improvements to IFRSs 2010-2012 July 1, 2014
Improvements to IFRSs 2011-2013 July 1, 2014
Improvements to IFRSs 2012-2014 January 1, 2016
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The Group is assessing the potential impact of the new standards, interpretations and amendments
above. The impact will be disclosed when the assessment it complete.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except for the following, the accounting policies applied in the consolidated financial statements are
consistent with those applied in the consolidated financial statements for the year ended December 31,
2014. These policies have been consistently applied to all the periods presented, unless otherwise
stated.
(1) Compliance statement
A. These consolidated financial statements are prepared by the Group in accordance with the “Rules
Governing the Preparation of Financial Statements by Securities Issuers” and IAS 34, “Interim
Financial Reporting” as endorsed by the FSC.
B. Please refer to the Group’s consolidated financial statements for the year ended December 31,
2014.
(2) Basis of preparation
A.Except for the following items, the consolidated financial statements have been prepared under
the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value
through profit or loss.
(b) Defined benefit liabilities recognised based on the net amount of pension fund assets less
present value of defined benefit obligation.
B.The preparation of financial statements in conformity with International Financial Reporting
Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as
endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A.Basis for preparation of consolidated financial statements:
The same basis of consolidation have been followed in these consolidated financial statement as
were applied in the preparation of the Group’s consolidated financial statements for the year
ended December 31, 2014.
(Blank below)
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B. Subsidiaries included in the consolidated financial statements:
Name of Investor Name of Subsidiaries Main Business Activities
June 30,
2015
December 31,
2014
June 30,
2014 Note
Polytronics Technology
Corporation
Polytronics (B.V.I)
Corporation
Investments and general
business operations
100 100 100
Polytronics Technology
Corporation
Polycarbide Material Co.,
Ltd.
Manufacturing of electrical
components and wholesale and
retail of chemical raw materials
100 100 100
Polytronics (B.V.I)
Corporation
P-Circuit corporation Investments and general
business operations
100 100 100
P-Circuit Corporation Polystar Electronics Co.,
Ltd.
Production and sale of varistor
and potentiometer
100 100 100
Polystar Electronics Co.,
Ltd.
Hanpu (Kunshan) Trading
Co., Ltd.
Wholesale, import and export
business
100 100 100
Ownership (%)
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C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.
(4) Employee benefits
Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost
rate derived from the actuarial valuation at the end of the prior financial year, adjusted for
significant market fluctuations since that time and for significant curtailments, settlements, or other
significant one-off events. And, the related information is disclosed accordingly.
(5) Income tax
The interim period income tax expense is recognised based on the estimated average annual
effective income tax rate expected for the full financial year applied to the pretax income of the
interim period, and the related information is disclosed accordingly.
5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF
ASSUMPTION UNCERTAINTY
There is no significant variation, please refer to the Group’s consolidated financial statements for the
year ended December 31, 2014.
6. DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents
A. The Group transacts with a variety of financial institutions all with high credit quality to disperse
credit risk, so it expects that the probability of counterparty default is remote.
B. Details of cash and cash equivalents pledged as collaterals (recorded as ‘other current assets’ and
‘other non-current assets’) are provided in Note 8.
June 30, 2015 December 31, 2014 June 30, 2014
Cash on hand and
revolving funds
$ 581 519$ 601$
Checking accounts and
demand deposits 95,386 82,863 63,344
Time deposits 643,592 564,078 431,131
Cash equivalent
-short-term notes 282,000 149,800 417,640
Total $ 1,021,559 797,260$ 912,716$
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(2) Financial assets/liabilities at fair value through profit or loss
1. The Group recognized net gain of $941, $1,595, $2,341 and $186 on financial assets (liabilities)
held for trading for the three-month periods ended June 30, 2015 and 2014, and six-month
periods ended June 30, 2015 and 2014, respectively.
2. The non-hedging derivative instruments transaction and contract information are as follows:
Note: Expressed in thousands of US dollars.
Items June 30, 2015 December 31, 2014 June 30, 2014
Current items:
Financial assets
(liabilities) held for
trading
Derivative instrument-
forward foreign
exchange contracts
-$ -$ -$
Financial assets
(liabilities) held for
trading valuation
adjustment 422)( 1,925)( 243
Total 422)($ 1,925)($ 243$
Derivative Contract amount Contract Contract amount Contract
instruments (Notional principal) Period (Notional principal) Period
Forward foreign
exchange contracts
500$ 2015/4/30~2015/7/1 500$ 2014/10/31~2015/1/5
Forward foreign
exchange contracts
1,000 2015/5/7~2015/7/1 1,000 2014/11/19~2015/1/5
Forward foreign
exchange contracts
500 2015/5/25~2015/7/29 1,000 2014/12/08~2015/2/5
Forward foreign
exchange contracts
500 2015/5/25~2015/8/3
Forward foreign
exchange contracts
1,000 2015/6/17~2015/8/3
Derivative Contract amount Contract
instruments (Notional principal) Period
Forward foreign
exchange contracts
500$ 2014/6/11~2014/7/15
Forward foreign
exchange contracts
500 2014/6/11~2014/8/1
Forward foreign
exchange contracts
1,000 2014/6/18~2014/8/1
June 30, 2015 December 31, 2014
June 30, 2014
~14~
The Group entered into forward foreign exchange contracts to sell US dollars to hedge exchange
rate risk of export proceeds. However, these forward foreign exchange contracts are not
accounted for under hedge accounting.
(3) Financial assets measured at cost
A.Based on the Group’s intention, its investment in GreenMark Inc. stocks should be classified as
‘available-for-sale financial assets’. However, as GreenMark Inc. stocks are not traded in
active market, and no sufficient industry information of companies similar to GreenMark Inc. or
GreenMark Inc.’s financial information cannot be obtained, the fair value of the investment in
GreenMark Inc. stocks cannot be measured reliably. The Group classified those stocks as
“financial assets measured at cost”.
B.As of June 30, 2015, no financial assets measured at cost held by the Group were pledged to
others.
(4) Accounts receivable
A.The credit quality of accounts receivable that were neither past due nor impaired was in the
following categories based on the Group’s Credit Quality Control Policy:
Group 1: Listed companies or customers who are considered to have good credit conditions.
Group 2:Non-listed companies or customers whose credit conditions are considered to be inferior
than Group 1 customers.
Items June 30, 2015
Non-current items:
Non-listed stocks 3,000$
June 30, 2015 December 31, 2014 June 30, 2014
Accounts receivable 360,089$ 313,116$ 378,819$
Accounts receivable
-related parties 28,592 20,466 17,911
Less: allowance for
bad debts 2,754)( 2,474)( 2,679)(
385,927$ 331,108$ 394,051$
June 30, 2015 December 31, 2014 June 30, 2014
Group 1 192,876$ 167,404$ 191,604$
Group 2 75,078 109,294 100,320
267,954$ 276,698$ 291,924$
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B.The ageing analysis of accounts receivable that were past due but not impaired is as follows:
C. Movement analysis of financial assets that were impaired is as follows:
(a) As of June 30, 2015, December 31, 2014 and June 30, 2014, the Group’s accounts receivable
that were impaired amounted to $2,754, $2,474 and $2,679, respectively.
(b) Movement on the Group provision for impairment of accounts receivable are as follows:
D. The Group does not hold any collateral as security.
(5) Inventories
June 30, 2015 December 31, 2014 June 30, 2014
Up to 30 days 57,786$ 40,414$ 55,378$
31 to 90 days 50,305 13,996 46,120
91 to 180 days 9,882 - 629
Over 181 days - - -
117,973$ 54,410$ 102,127$
Individual
provision Group provision Total
At January 1 262$ 2,212$ 2,474$
Provision of impairment 9 379 388
Write-offs during the period - 52)( 52)(
Effects of foreign exchange - 56)( 56)(
At June 30 271$ 2,483$ 2,754$
2015
Individual
provision Group provision Total
At January 1 25$ 6,079$ 6,104$
Provision of impairment 696 2,056 2,752
Write-offs during the period - 6,039)( 6,039)(
Effects of foreign exchange - 138)( 138)(
At June 30 721$ 1,958$ 2,679$
2014
June 30, 2015 December 31, 2014 June 30, 2014
Raw materials 106,330$ 116,646$ 104,574$
Work-in-process 59,960 58,997 82,458
Finished goods 129,035 115,114 141,272
Total 295,325$ 290,757$ 328,304$
~16~
The cost of inventories recognized as expense for the period:
2015 2014
Cost of goods sold 197,777$ 209,017$
Loss on decline in market value 285 10,889
Gain on physical inventory 1)( 7)(
198,061$ 219,899$
For the three-month periods ended June 30
2015 2014
Cost of goods sold 377,905$ 394,936$
(Gain) loss on decline in market value 2,792)( 11,000
Gain on physical inventory 1)( 7)(
375,112$ 405,929$
For the six-month periods ended June 30
~17~
(6) Property, plant and equipment
Buildings Machinery
Office
equipment
Transportation
equipment
Computer and
communication
equipment
Leasehold
improvements
Construction in
progress Others Total
At January 1, 2015
Cost 711,998$ 494,293$ 5,028$ 9,804$ 8,096$ 32,133$ 2,980$ 79,844$ 1,344,176$
Accumulated depreciation
and impairment 143,097)( 324,573)( 2,507)( 7,500)( 6,512)( 30,864)( - 48,695)( 563,748)(
568,901$ 169,720$ 2,521$ 2,304$ 1,584$ 1,269$ 2,980$ 31,149$ 780,428$
For the six-month period
ended June 30, 2015
Opening net book amount 568,901$ 169,720$ 2,521$ 2,304$ 1,584$ 1,269$ 2,980$ 31,149$ 780,428$
Additions - 9,972 780 - 233 - 5,981 1,644 18,610
Disposals - 119)( - - - - - - 119)(
Reclassifications 20,550)( 1,246 - - - - - - 19,304)(
Depreciation charge 14,490)( 18,832)( 338)( 476)( 378)( 321)( - 5,906)( 40,741)(
Net exchange differences 2,295)( 2,249)( 63)( 28)( - - 21)( 336)( 4,992)(
Closing net book amount 531,566$ 159,738$ 2,900$ 1,800$ 1,439$ 948$ 8,940$ 26,551$ 733,882$
At June 30, 2015
Cost 686,802$ 497,332$ 5,706$ 9,676$ 8,256$ 32,133$ 8,940$ 78,227$ 1,327,072$
Accumulated depreciation
and impairment 155,236)( 337,594)( 2,806)( 7,876)( 6,817)( 31,185)( - 51,676)( 593,190)(
531,566$ 159,738$ 2,900$ 1,800$ 1,439$ 948$ 8,940$ 26,551$ 733,882$
~18~
1. For the six-month periods ended June 30, 2015 and 2014, there was no capitalization of borrowing interests attributable to the property, plant and
equipment.
2. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.
Buildings Machinery
Office
equipment
Transportation
equipment
Computer and
communication
equipment
Leasehold
improvements
Construction in
progress Others Total
At January 1, 2014
Cost 703,328$ 462,422$ 2,878$ 10,379$ 7,804$ 31,433$ 1,114$ 71,840$ 1,291,198$
Accumulated depreciation
and impairment 111,367)( 287,965)( 1,930)( 8,753)( 5,687)( 27,595)( - 39,855)( 483,152)(
591,961$ 174,457$ 948$ 1,626$ 2,117$ 3,838$ 1,114$ 31,985$ 808,046$
For the six-month period
ended June 30, 2014
Opening net book amount 591,961$ 174,457$ 948$ 1,626$ 2,117$ 3,838$ 1,114$ 31,985$ 808,046$
Additions - 10,333 1,670 519 249 700 5,442 2,279 21,192
Disposals - 245)( 2)( - - - - - 247)(
Reclassifications - - - - - - 171)( 880 709
Depreciation charge 14,542)( 18,591)( 204)( 470)( 513)( 2,660)( - 4,568)( 41,548)(
Net exchange differences 2,151)( 2,007)( 40)( 37)( - - 857)( 354)( 5,446)(
Closing net book amount 575,268$ 163,947$ 2,372$ 1,638$ 1,853$ 1,878$ 5,528$ 30,222$ 782,706$
At June 30, 2014
Cost 699,702$ 466,134$ 4,464$ 10,789$ 7,985$ 32,133$ 5,528$ 72,906$ 1,299,641$
Accumulated depreciation
and impairment 124,434)( 302,187)( 2,092)( 9,151)( 6,132)( 30,255)( - 42,684)( 516,935)(
575,268$ 163,947$ 2,372$ 1,638$ 1,853$ 1,878$ 5,528$ 30,222$ 782,706$
~19~
(7) Investment property
Buildings
At January 1, 2015
Cost 40,945$
Accumulated depreciation 1,338)(
39,607$
For the six-month period ended June 30, 2015
Opening net book amount 39,607$
Reclassifications 20,550
Depreciation charge 556)(
Closing net book amount 59,601$
At June 30, 2015
Cost 62,029$
Accumulated depreciation 2,428)(
59,601$
Buildings
At January 1, 2014
Cost 40,945$
Accumulated depreciation 535)(
40,410$
For the six-month period ended June 30, 2014
Opening net book amount 40,410$
Depreciation charge 402)(
Closing net book amount 40,008$
At June 30, 2014
Cost 40,945$
Accumulated depreciation 937)(
40,008$
~20~
A. Rental income from investment property and direct operating expenses arising from investment
property are shown below:
B. The fair value of investment property held by the Company as of June 30, 2015, December 31,
2014 and June 30, 2014 were $118,364, $78,128 and $78,128, respectively. The fair value is
estimated using the valuation method frequently used by market participants. The valuation is
based on evidence of similar trading prices.
C. Amount of borrowing costs capitalized as part of investment property was zero.
D. The investment property was not pledged to others as collaterals.
2015 2014
Rental income from investment property 5,091$ 3,251$
Direct operating expenses arising from the
investment property that generated rental
income during the period 603$ 395$
Direct operating expenses arising from the
investment property that did not generate
rental income during the period -$ -$
For the three-month periods ended June 30
2015 2014
Rental income from investment property 10,211$ 6,355$
Direct operating expenses arising from the
investment property that generated rental
income during the period 855$ 596$
Direct operating expenses arising from the
investment property that did not generate
rental income during the period -$ -$
For the six-month periods ended June 30
~21~
(8) Short-term borrowings
(9) Accounts payable
(10) Other payables
(11) Pensions
A.(a)The Company and its domestic subsidiaries have a defined benefit pension plan in
accordance with the Labor Standards Law, covering all regular employees’ service years
prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years
thereafter of employees who chose to continue to be subject to the pension mechanism under
the Law. Under the defined benefit pension plan, two units are accrued for each year of
service for the first 15 years and one unit for each additional year thereafter, subject to a
maximum of 45 units. Pension benefits are based on the number of units accrued and the
Type of borrowings June 30, 2015 Interest rate range Collateral
Bank borrowings
Unsecured borrowings 7,715$ 0.90% None
Type of borrowings December 31, 2014 Interest rate range Collateral
Bank borrowings
Unsecured borrowings 23,738$ 0.92% None
Type of borrowings June 30, 2014 Interest rate range Collateral
Bank borrowings
Unsecured borrowings 68,689$ 0.93%~1.55% None
June 30, 2015 December 31, 2014 June 30, 2014
Accounts payable 109,886$ 80,811$ 116,242$
Estimated accounts payable 10,350 10,531 13,060
120,236$ 91,342$ 129,302$
June 30, 2015 December 31, 2014 June 30, 2014
Wages and salaries payable 58,732$ 80,224$ 60,846$
Employee bonus and
directors' remuneration
payable
85,509 54,092 78,742
Payables on machinery and
equipment
4,282 8,618 6,718
Dividends payable 336,008 - 328,008
Other payables, others 65,205 64,953 92,545
549,736$ 207,887$ 566,859$
~22~
average monthly salaries and wages of the last 6 months prior to retirement. The Company
contributes monthly an amount equal to 2.5% of the employees’ monthly salaries and wages
to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the
independent retirement fund committee.
(b)For the aforementioned pension plan, the Group recognised pension costs of $485, $479,
$968 and $957 for the three-month periods ended June 30, 2015 and 2014, and six-month
periods ended June 30, 2015 and 2014, respectively.
(c)Expected contributions to the defined benefit pension plans of the Group for the year ended
December 31, 2016 amounts to $2,601.
B.(a)Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined
contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),
covering all regular employees with R.O.C. nationality. Under the New Plan, the Company
and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’
monthly salaries and wages to the employees’ individual pension accounts at the Bureau of
Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of
employment.
(b)The Company’s Mainland China subsidiaries, Polystar Electronics Co., Ltd. and Hanpu
(Kunshan) Trading Co., Ltd., have a defined contribution plan. Monthly contributions to an
independent fund administered by the government in accordance with the pension
regulations in the People’s Republic of China (PRC) are based on certain percentage of
employees' monthly salaries and wages. Other than the monthly contributions, the Group
has no further obligations.
(c)The pension costs under defined contribution pension plans of the Group for the three-month
periods ended June 30, 2015 and 2014, and six-month periods ended June 30, 2015 and
2014, were $3,423, $2,986, $6,878 and $6,077, respectively.
(12) Share capital
As of June 30, 2015, the Company’s authorized capital was $900,000, consisting of 90,000
thousand shares of ordinary stock (including 5,000 thousand shares reserved for employee stock
options), and the paid-in capital was $800,018 with a par value of $10 (in dollars) per share. All
proceeds from shares issued have been collected.
Movements in the number of the Company’s ordinary shares outstanding are as follows (in
thousands of shares):
(13) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par
value on issuance of common stocks and donations can be used to cover accumulated deficit or to
2015 2014
At January 1 / At June 30 80,002 80,002
~23~
issue new stocks or cash to shareholders in proportion to their share ownership, provided that the
Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires
that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the
paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless
the legal reserve is insufficient.
(14) Retained earnings
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be
used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining
amount shall be set aside as legal reserve and also set aside as special reserve under Securities
and Exchange Act Article 41. The remainder, if any, shall be proposed by the Board of
Directors and approved by the shareholders in the following order:
(a) Remuneration to directors is 2% of the distributable earnings;
(b) Bonus to employees is not less than 8% of the distributable earnings;
(c) All or part of the remainder is to be distributed as bonus to shareholders.
B.Dividend policy: As the Company is in a rapidly changing industry and in the growing stage,
and considering the Company’s long-term financial plans, shareholders’ long-term profit and
stabilizing performance target, cash dividend distribution may not be lower than 10% of the
total dividend distribution.
C.Except for covering accumulated deficit or issuing new stocks or cash to shareholders in
proportion to their share ownership, the legal reserve shall not be used for any other purpose.
The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their
share ownership is permitted, provided that the balance of the reserve is limited to the portion
in exceeds 25% of the Company’s paid-in capital.
D.(a)In accordance with the regulations, the Company shall set aside special reserve from the
debit balance on other equity items at the balance sheet date before distributing earnings.
When debit balance on other equity items is reversed subsequently, the reversed amount
could be included in the distributable earnings.
(b) The amounts previously set aside by the Company as special reserve on initial application of
IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6,
2012, shall be reversed proportionately when the relevant assets are used, disposed of or
reclassified subsequently.
~24~
E.The appropriation of 2014 and 2013 had been resolved at the stockholders’ meeting on June 23,
2015 and June 20, 2014, respectively. Details are summarized below:
The appropriation of 2014 earnings was the same as that approved by the Board of Directors on
March 20, 2015. The deficit compensation of 2013 was the same as that approved by the Board
of Directors on March 20, 2014.
F.For information relating to employees’ remuneration (bonuses) and directors’ remuneration,
please refer to Note 6(21).
(15) Other equity items
(16) Operating revenue
(17) Other income
Dividends per share Dividends per share
Amount (in NT dollars) Amount (in NT dollars)
Legal reserve 40,068$ -$ 37,728$ -$
Cash dividends 336,008 4.2 328,008 4.1
Total 376,076$ 4.2$ 365,736$ 4.1$
2014 2013
2015 2014
At January 1 29,042$ 11,186$
Currency translation differences 12,338)( 9,661)(
At June 30 16,704$ 1,525$
2015 2014
Sales revenue $ 444,819 $ 456,713
For the three-month periods ended June 30
2015 2014
Sales revenue $ 826,753 $ 821,810
For the six-month periods ended June 30
2015 2014
Rental revenue $ 5,091 $ 3,251
Interest income 2,639 3,613
Other income, others 1,812 2,083
Total $ 9,542 $ 8,947
For the three-month periods ended June 30
~25~
(18) Other gains and losses
(19) Finance costs
2015 2014
Rental revenue $ 10,211 $ 6,355
Interest income 5,012 4,749
Other income, others 2,800 3,939
Total $ 18,023 $ 15,043
For the six-month periods ended June 30
2015 2014
Net gains on financial assets at
fair value through profit or loss 941$ 1,595$
Net currency exchange losses 6,558)( 10,409)(
Depreciation charge -investment
property 304)( 201)(
Gains (losses) on disposal of
property, plant and equipment 86 247)(
Other expenses 12)( 16)(
Total 5,847)($ 9,278)($
For the three-month periods ended June 30
2015 2014
Net gains on financial assets at
fair value through profit or loss 2,341$ 186$
Net currency exchange losses 11,307)( 5,669)(
Depreciation charge -investment
property 556)( 402)(
Gains (losses) on disposal of
property, plant and equipment 86 247)(
Other expenses 29)( 12
Total 9,465)($ 6,120)($
For the six-month periods ended June 30
2015 2014
Interest expense:
Bank borrowings 36$ 429$
For the three-month periods ended June 30
2015 2014
Interest expense:
Bank borrowings 140$ 824$
For the six-month periods ended June 30
~26~
(20) Expenses by nature
(21) Employee benefit expenses
2015 2014
Employee benefit expenses 83,990$ 83,851$
Depreciation charges on property,
plant and equipment 18,742 20,037
Amortisation charges on intangible
assets 473 441
Total 103,205$ 104,329$
For the three-month periods ended June 30
2015 2014
Employee benefit expenses 166,429$ 164,719$
Depreciation charges on property,
plant and equipment 40,741 41,548
Amortisation charges on intangible
assets 906 897
Total 208,076$ 207,164$
For the six-month periods ended June 30
2015 2014
Wages and salaries 69,887$ 69,482$
Labor and health insurance fees 3,035 3,090
Pension costs 3,908 3,465
Other personnel expenses 7,160 7,814
83,990$ 83,851$
For the three-month periods ended June 30
2015 2014
Wages and salaries 136,566$ 134,494$
Labor and health insurance fees 6,749 6,675
Pension costs 7,846 7,034
Other personnel expenses 15,268 16,516
166,429$ 164,719$
For the six-month periods ended June 30
~27~
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first
be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining
amount shall be set aside as legal reserve and also set aside as special reserve under Securities
and Exchange Act Article 41. The remainder, if any, shall be proposed by the Board of
Directors and approved by the shareholders in the following order:
(a) Remuneration to directors is 2% of the distributable earnings;
(b) Bonus to employees is not less than 8% of the distributable earnings;
(c) All or part of the remainder is to be distributed as bonus to shareholders.
However, in accordance with the Company Act amended on May 20, 2015, a company shall
distribute employee remuneration, based on the current year's profit condition, in a fixed
amount or a proportion of profits. If a company has accumulated deficit, earnings should be
channeled to cover losses.
The Company will propose an amendment to the clause relating to employee remuneration in
the Articles of Incorporation in accordance with the latest amendment of the Company Act at
the shareholders’ meeting before June 30, 2016.
B. For the three-month periods ended June 30, 2015 and 2014, and six-month periods ended June
30, 2015 and 2014, employees’ remuneration (bonus) was accrued at $15,593, $14,045,
$27,228 and $24,100, respectively; directors’ remuneration was accrued at $2,399, $2,161,
$4,189 and $3,708, respectively. The aforementioned amounts were recognized in salary
expenses. The expenses recognised for the year of 2015 were accrued based on the earnings of
current year; the expenses recognised for the year of 2014 were accrued based on the net
income of 2014 and the percentage specified in the Articles of Incorporation of the Company
(13% and 2% for employees and directors, respectively), taking into account other factors such
as legal reserve.
Employees’ bonus and directors’ remuneration of 2014 as resolved by the stockholders were in
agreement with those amounts recognised in the 2014 financial statements.
Information about the appropriation of employees’ bonus and directors’ remuneration by the
Company as proposed by the Board of Directors and resolved by the stockholders will be
posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
~28~
(22) Income tax
A. Income tax expense
(a) Components of income tax expense:
(b) The income tax (charge)/credit relating to components of other comprehensive income:
None.
B. The Company’s income tax returns through 2012 have been assessed and approved by the Tax
Authority.
C. Unappropriated retained earnings:
D. As of June 30, 2015, December 31, 2014 and June 30, 2014, the balance of the imputation tax
credit account was $94,925, $62,498 and $98,261, respectively. The creditable tax rate was
2015 2014
Current tax:
Current tax on profits for the
period 29,903$ 32,225$
Adjustments in respect of
prior years - -
Total current tax 29,903 32,225
Deferred tax:
Origination and reversal of
temporary differences 33)( 3,018)(
Total deferred tax 33)( 3,018)(
Income tax expense 29,870$ 29,207$
For the three-month periods ended June 30
2015 2014
Current tax:
Current tax on profits for the
period 54,665$ 50,329$
Adjustments in respect of
prior years - -
Total current tax 54,665 50,329
Deferred tax:
Origination and reversal of
temporary differences 767)( 2,862)(
Total deferred tax 767)( 2,862)(
Income tax expense 53,898$ 47,467$
For the six-month periods ended June 30
June 30, 2015 December 31, 2014 June 30, 2014
Earnings generated
in and after 1998 438,678$ 582,041$ 387,373$
~29~
17.96% for 2013 and the estimated creditable tax rate is 16.24% for 2014.
(23) Earnings per share
Weighted average number of
ordinary shares outstanding Earnings per share
Amount after tax (share in thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent 133,272$ 80,002 1.67$
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus - 948
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares 133,272$ 80,950 1.65$
For the three-month period ended June 30, 2015
Weighted average number of
ordinary shares outstanding Earnings per share
Amount after tax (share in thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent 120,041$ 80,002 1.50$
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus - 816
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares 120,041$ 80,818 1.49$
For the three-month period ended June 30, 2014
~30~
Weighted average number of
ordinary shares outstanding Earnings per share
Amount after tax (share in thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent 232,713$ 80,002 2.91$
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus - 971
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares 232,713$ 80,973 2.87$
For the six-month period ended June 30, 2015
Weighted average number of
ordinary shares outstanding Earnings per share
Amount after tax (share in thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent 205,980$ 80,002 2.57$
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus - 851
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares 205,980$ 80,853 2.55$
For the six-month period ended June 30, 2014
~31~
(24) Operating leases
The Group leases land and plants under non-cancellable operating lease agreements. These leases
have expiring terms between 2 and 20 years and have renewable right at the end of the lease
period. Rent will be increased in accordance with lease agreements depending on market rents.
Rents of $3,495, $3,470, $7,017 and $6,936 were recognised for these leases for the three-month
periods ended June 30, 2015 and 2014, and six-month periods ended June 30, 2015 and 2014,
respectively. The future aggregate minimum lease payments under non-cancellable operating
leases are as follows:
(25) Supplemental cash flow information
A.Investing activities with partial cash payments
B.Financial activities with no cash flow effects
7. RELATED PARTY TRANSACTIONS
(1) Significant related party transactions
A.Operating revenue
June 30, 2015 December 31, 2014 June 30, 2014
Not later than one year 10,493$ 10,493$ -$
Later than one year but
not later than five years 37,729 40,060 18,292
Later than five years 43,295 46,210 85,388
91,517$ 96,763$ 103,680$
2015 2014
Acquisitions of property, plant,
and equipment 18,610$ 21,192$
Net change of payable on
machinery and equipment 5,256 5,370)(
Cash paid during the period 23,866$ 15,822$
For the six-month periods ended June 30
June 30, 2015 June 30, 2014
Cash dividends declared 336,008$ 328,008$
Less: other payables 336,008)( 328,008)(
-$ -$
2015 2014
Sales of goods:
-Other associates 43,332$ 44,963$
For the three-month periods ended June 30
~32~
Goods are sold based on the price lists in force and terms that would be available to third parties.
B.Accounts receivable
The receivables from related parties arise mainly from sale transactions. The receivables are
due 45~60 days after the date of sales. The receivables are unsecured in nature and bear no
interest. There are no provisions held against receivables from related parties.
(2) Key management compensation
8. PLEDGED ASSETS
The Group’s assets pledged as collateral are as follow:
2015 2014
Sales of goods:
-Other associates 83,517$ 84,519$
For the six-month periods ended June 30
June 30, 2015 December 31, 2014 June 30, 2014
Accounts receivable
-Other associates 28,592$ 20,466$ 17,911$
2015 2014
Short-term employee benefits 7,514$ 7,118$
Post-employment benefits - -
Total 7,514$ 7,118$
For the three-month periods ended June 30
2015 2014
Short-term employee benefits 23,384$ 19,323$
Post-employment benefits - -
Total 23,384$ 19,323$
For the six-month periods ended June 30
Pledged asset June 30, 2015 December 31, 2014 June 30, 2014 Purpose
Time deposit (recorded under
‘other current assets’)
3,236$ 3,209$ 3,209$ Guarantee for duty paid
after customs release
Time deposit (recorded under
‘other non-current assets’)
6,704 6,704 6,704 Guarantee for land
leasing in science park
Buildings 121,152 122,974 124,796 Guarantee for long- and
short-term committed
borrowings facility
Book value
~33~
9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT
COMMITMENTS
(1) Contingencies
On March 5, 2015, the Company received a notice of complaint from Taiwan Hsinchu District
Court. It indicated that because the Company’s employee had an accident after being off duty, the
Company’s employee and the Company were jointly sued for compensation for the injury by the
plaintiff. The Company has appointed a legal counsel to handle this case. According to the initial
assessment, this case would not have any significant impact on the Company’s financial condition.
(2) Commitments
A.Capital expenditure contracted for at the balance sheet date but not yet incurred is as follow:
B.Operating lease agreement
Please refer to Note 6(24).
10. SIGNIFICANT DISASTER LOSS
None.
11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
None.
12. OTHERS
(1) Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The
Group may adjust the amount of dividends paid to shareholders, return capital or issue new shares
to achieve the optimal capital structure.
(2) Financial instruments
A. Fair value information of financial instruments
The carrying amounts of financial instruments (including cash and cash equivalents, notes
receivable, accounts receivable, other receivables, other current assets, short-term borrowings,
notes payable, accounts payable, other payables, and guarantee deposits received (shown as
non-current liabilities)) are approximate to their fair value.
B.Financial risk management policies
(a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and price risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial position and financial
June 30, 2015 December 31, 2014 June 30, 2014
Property, plant and
equipment25,439$ 10,423$ 11,696$
~34~
performance. The Group uses derivative financial instruments to hedge certain risk
exposures (see Note 6(2)).
(b)Risk management is carried out by a central treasury department (Group treasury) under
policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges
financial risks in close co-operation with the Group’s operating units. The Board provides
written principles for overall risk management, as well as written policies covering specific
areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of
derivative financial instruments and non-derivative financial instruments, and investment of
excess liquidity.
C.Significant financial risks and degrees of financial risks
(a) Market risk
Foreign exchange risk
i. The Group operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the USD and RMB. Foreign
exchange risk arises from future commercial transactions, recognised assets and liabilities
and net investments in foreign operations.
ii. Management has set up a policy to require that group companies manage their foreign
exchange risk against their functional currency. The group companies are required to
hedge their entire foreign exchange risk exposure with the Group treasury. To manage
their foreign exchange risk arising from future commercial transactions and recognized
assets and liabilities, entities in the Group use forward foreign exchange contracts,
transacted with Group treasury. Foreign exchange risk arises when future commercial
transactions or recognized assets or liabilities are denominated in a currency that is not
the entity’s functional currency.
iii. The Group uses derivative financial instruments such as forward exchange transaction to
hedge assets and liabilities denominated in foreign currencies or transactions that are
considered highly probable to occur in order to decrease fair value risk of cash flow
arising from exchange rate fluctuations. The Group monitors changes in exchange rate
and sets stop loss point to decrease exchange rate risk.
~35~
D.The Group’s businesses involve some non-functional currency operations (the Company’s
functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB).
The information on assets and liabilities denominated in foreign currencies whose values would
be materially affected by the exchange rate fluctuations is as follows:
Foreign currency
amount
(In thousands) Exchange rate
Book value
(NTD)
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD USD 17,799 30.86 549,272$
JPY:NTD JPY 2,623 0.2524 662
USD:RMB USD 1,645 6.201 10,203
RMB:NTD RMB 83,004 4.973 412,780
Non-monetary items
USD:NTD USD 16,440 30.86 507,346$
Financial liabilities
Monetary items
USD:NTD USD 8,104 30.86 250,083$
RMB:NTD RMB 11,338 4.973 56,386
Non-monetary items: None.
June 30, 2015
~36~
Foreign currency
amount
(In thousands) Exchange rate
Book value
(NTD)
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD USD 16,600 31.65 525,379$
JPY:NTD JPY 6,357 0.2646 1,682
USD:RMB USD 1,683 6.204 10,438
RMB:NTD RMB 62,770 5.092 319,626
Non-monetary items
USD:NTD USD 16,345 31.65 517,328$
Financial liabilities
Monetary items
USD:NTD USD 4,002 31.65 126,652$
RMB:NTD RMB 7,143 5.092 36,371
Non-monetary items: None.
December 31, 2014
Foreign currency
amount
(In thousands) Exchange rate
Book value
(NTD)
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD USD 20,663 29.865 617,103$
JPY:NTD JPY 4,325 0.2946 1,274
USD:RMB USD 2,353 6.205 14,602
RMB:NTD RMB 63,484 4.811 305,424
Non-monetary items
USD:NTD USD 15,553 29.865 464,483$
Financial liabilities
Monetary items USD:NTD USD 11,351 29.865 338,993$ RMB:NTD RMB 9,339 4.811 44,931
Non-monetary items: None.
June 30, 2014
~37~
E. Please refer to the following table for the details of unrealised exchange gain (loss) arising from
significant foreign exchange variation on the monetary items held by the Group.
Foreign currency
(Foreign currency: functional
currency)
amount
(In thousands) Exchange rate
Book value
(NTD)
Financial assets
Monetary items
USD:NTD -$ 30.86 2,694$
JPY:NTD - 0.2524 60
USD:RMB 164 6.201 795
RMB:NTD - 4.973 3,411)(
Financial liabilities
Monetary items
USD:NTD -$ 30.86 236$
JPY:NTD - 0.2524 55)(
USD:RMB 97)( 6.201 490)(
For the three-month period ended June 30, 2015
Unrealised exchange gain (loss)
Foreign currency
(Foreign currency: functional
currency)
amount
(In thousands) Exchange rate
Book value
(NTD)
Financial assets
Monetary items
USD:NTD -$ 29.865 6,952)($
JPY:NTD - 0.2946 26
USD:RMB 239)( 6.205 878)(
RMB:NTD - 4.811 986
Financial liabilities
Monetary items
USD:NTD -$ 29.865 47)($
USD:RMB 493 6.205 2,397
For the three-month period ended June 30, 2014
Unrealised exchange gain (loss)
~38~
Foreign currency
(Foreign currency: functional
currency)
amount
(In thousands) Exchange rate
Book value
(NTD)
Financial assets
Monetary items
USD:NTD -$ 30.86 2,407$
JPY:NTD - 0.2524 126
USD:RMB 57 6.201 256
RMB:NTD - 4.973 1,491)(
Financial liabilities
Monetary items
USD:NTD -$ 30.86 201$
USD:RMB 13)( 6.201 65)(
For the six-month period ended June 30, 2015
Unrealised exchange gain (loss)
Foreign currency
(Foreign currency: functional
currency)
amount
(In thousands) Exchange rate
Book value
(NTD)
Financial assets
Monetary items
USD:NTD -$ 29.865 2,891)($
JPY:NTD - 0.2946 54
USD:RMB 116)( 6.205 585)(
RMB:NTD - 4.811 407
Financial liabilities
Monetary items
USD:NTD -$ 29.865 590)($
USD:RMB 166 6.205 797
For the six-month period ended June 30, 2014
Unrealised exchange gain (loss)
~39~
F. Analysis of foreign currency market risk arising from significant foreign exchange variation:
Degree of
variation
Effect on
profit or loss
Effect on other
comprehensive
income
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD 1% 5,493$ -$
JPY:NTD 1% 7 -
USD:RMB 1% 102 -
RMB:NTD 1% 4,128 -
Non-monetary items
USD:NTD 1% -$ 5,073$
Financial liabilities
Monetary items
USD:NTD 1% 2,501)($ -$
RMB:NTD 1% 564)( -
Non-monetary items: None.
Six-month period ended June 30, 2015
Sensitivity analysis
~40~
Price risk
The Group is exposed to equity securities price risk because of investments held by the Group
and classified on the consolidated balance sheet at fair value through profit or loss. To
manage its price risk arising from investments in equity securities, the Group diversifies its
portfolio. Diversification of the portfolio is done in accordance with the limits set by the
Group.
(b) Credit risk
i.Credit risk refers to the risk of financial loss to the Group arising from default by the
clients or counterparties of financial instruments on the contract obligations. According
to the Group’s credit policy, each local entity in the Group is responsible for managing and
analyzing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Internal risk control assesses the credit quality of the
customers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits
set by the Board of Directors. The utilization of credit limits is regularly monitored.
Credit risk arises from cash and cash equivalents, derivative financial instruments and
deposits with banks and financial institutions, as well as credit exposures to customers,
including outstanding receivables and committed transactions.
Degree of
variation
Effect on
profit or loss
Effect on other
comprehensive
income
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD:NTD 1% 6,171$ -$
JPY:NTD 1% 13 -
USD:RMB 1% 146 -
RMB:NTD 1% 3,054 -
Non-monetary items
USD:NTD 1% -$ 4,645$
Financial liabilities
Monetary items
USD:NTD 1% 3,390)($ -$
RMB:NTD 1% 449)( -
Non-monetary items: None.
Six-month period ended June 30, 2014
Sensitivity analysis
~41~
ii.No credit limits were exceeded during the reporting periods, and management does not
expect any significant losses from non-performance by these counterparties.
iii.The credit quality information of financial assets that are neither past due nor impaired is
provided in the statement in Note 6(3).
iv.The credit quality information of financial assets that were past due but not impaired is
provided in the statement in Note 6(3).
(c) Liquidity risk
i.Cash flow forecasting is performed in the operating entities of the Group and aggregated
by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes
into consideration the Group’s debt financing plans, and compliance with internal balance
sheet ratio targets.
ii.The table below analyses the Group’s non-derivative financial liabilities and net-settled or
gross-settled derivative financial liabilities into relevant maturity groupings based on the
remaining period at the balance sheet date to the contractual maturity date for
non-derivative financial liabilities and to the expected maturity date for derivative
financial liabilities. The amounts disclosed in the table are the contractual undiscounted
cash flows.
~42~
June 30, 2015
Less than 3
months
Between 3
months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Short-term borrowings -$ 7,715$ -$ -$ -$
Notes payable 19,378 - - - -
Accounts payable - 120,236 - - -
Other payable - 549,736 - - -
December 31, 2014
Less than 3
months
Between 3
months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Short-term borrowings -$ 23,738$ -$ -$ -$
Notes payable 28,492 - - - -
Accounts payable - 91,342 - - -
Other payable - 207,887 - - -
June 30, 2014
Less than 3
months
Between 3
months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Short-term borrowings 68,689$ -$ -$ -$ -$
Notes payable 911 - - - -
Accounts payable - 129,302 - - -
Other payable - 566,859 - - -
Non-derivative financial liabilities:
Non-derivative financial liabilities:
Non-derivative financial liabilities:
Derivative financial liabilities:
June 30, 2015
Less than
3 months
Between 3
months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Forward exchange contracts $ 422 $ - $ - $ - $ -
~43~
(3) Fair value information
A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at
fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment
property measured at cost are provided in Note 6(7).
B. The different levels that the inputs to valuation techniques are used to measure fair value of
financial and non-financial instruments have been defined as follows:
Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date. A market is regarded as active where a
market in which transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3:Unobservable inputs for the asset or liability.
Derivative financial liabilities:
December 31, 2014
Less than
3 months
Between 3
months
and 1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Forward exchange contracts $ 1,925 $ - $ - $ - $ -
Derivative financial liabilities:
June 30, 2014:None.
~44~
C. The related information of financial and non-financial instruments measured at fair value by
level on the basis of the nature, characteristics and risks of the assets and liabilities at June 30,
2015, December 31, 2014 and June 30, 2014 is as follows:
Level 1 Level 2 Level 3 Total
June 30, 2015
Assets:None.
Liabilities
Recurring fair value
measurements
Financial liabilities at fair
value through profit or
loss-forward exchange
contracts -$ 422$ -$ 422$
Level 1 Level 2 Level 3 Total
December 31, 2014
Assets:None.
Liabilities
Recurring fair value
measurements
Financial liabilities at fair
value through profit or
loss-forward exchange
contracts -$ 1,925$ -$ 1,925$
June 30, 2014 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value
measurements
Financial assets at fair
value through profit or
loss-forward exchange
contracts -$ 243$ -$ 243$
Liabilities: None.
~45~
D. The methods and assumptions the Group used to measure fair value are as follows:
(a)The instruments the Group used market quoted prices as their fair values (that is, Level 1)
are listed below by characteristics:
(b)Except for financial instruments with active markets, the fair value of other financial
instruments is measured by using valuation techniques or by reference to counterparty
quotes. The fair value of financial instruments measured by using valuation techniques can
be referred to current fair value of instruments with similar terms and characteristics in
substance, discounted cash flow method or other valuation methods, including calculated by
applying model using market information available at the consolidated balance sheet date
(i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted
from Reuters).
(c)The valuation of derivative financial instruments is based on valuation model widely
accepted by market participants, such as present value techniques and option pricing models.
Forward exchange contracts are usually valued based on the current forward exchange rate.
(d)Under “Regulations Governing the Preparation of Financial Reports by Securities Issuers”,
the Group makes self-assessment using the income approach to calculate the fair value of
investment property. Related assumption and information of inputs are as follows:
i.Cash flow: Cash flow shall be valuated on the basis of existing lease contracts, rent at local
market rates, or current market rents for similar comparable properties in the same location
and condition, and overvalued and undervalued comparable properties shall be excluded. If
there is a period-end value, the discounted present period-end value may be added.
ii.Analysis period: When there is no specified period for the income, the analysis period in
principle shall not be longer than 10 years; when there is a specified period for the income,
the income shall be estimated for the remainder of the specified period.
iii.Discount rate: The discount rate shall be determined using the risk premium approach only,
with the calculation based on a certain interest rate, plus the estimate for the individual
characteristics of the investment property. The language "based on a certain interest rate"
means the interest rate may not be lower than the floating interest rate on a 2-year time
deposit of a small amount, as posted by the Chunghwa Post Co. Ltd., plus 0.75 percentage
points.
(e)The output of valuation model is an estimated value and the valuation technique may not be
able to capture all relevant factors of the Group’s financial and non-financial instruments.
Listed
shares
Closed-end
fund
Open-end
fund
Government
bond
Corporate
bond
Convertible
(exchangeable
bond)
Market quoted price
Closing
price
Closing
price
Net asset
value
Transaction
price
Weighted
average
quoted price Closing price
~46~
Therefore, the estimated value derived using valuation model is adjusted accordingly with
additional inputs, for example, model risk or liquidity risk and etc. In accordance with the
Group’s management policies and relevant control procedures relating to the valuation
models used for fair value measurement, management believes adjustment to valuation is
necessary in order to reasonably represent the fair value of financial and non-financial
instruments at the consolidated balance sheet. The inputs and pricing information used
during valuation are carefully assessed and adjusted based on current market conditions.
(f)The Group takes into account adjustments for credit risks to measure the fair value of
financial and non-financial instruments to reflect credit risk of the counterparty and the
Group’s credit quality.
E.For the six-month periods ended June 30, 2015 and 2014, there was no transfer between Level 1
and Level 2.
~47~
13. SUPPLEMENTARY DISCLOSURES
(1) Significant transactions information
A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates
and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or
20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of
paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:
None.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes
6(2) and 12.
J. Significant inter-company transactions during the reporting periods: Please refer to table 5.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland
China):Please refer to table 6.
(3) Information on investments in Mainland China
A.Basic information: Please refer to table 7.
B.Significant transactions, either directly or indirectly through a third area, with investee companies
in the Mainland Area: Please refer to table 8.
~48~
14. SEGMENT INFORMATION
(1) General information
The Group mainly operates in a single industry. The chief operating decision-maker reviews the
Group’s reporting to assess performance and allocate resources. The Group mainly has a single
reportable segment.
(2) Segment information
The Group’s operating decision-maker evaluates the performance of operating segments based on
the consolidated financial statements. The accounting policies of the operating segments are in
accordance with the significant accounting policies summarized in Note 4.
(3) Information about segment profit or loss, assets and liabilities
(4) Reconciliation for segment income (loss), assets and liabilities:
None.
Six-month period ended
June 30, 2015
Six-month period ended
June 30, 2014
Revenue from external customers 826,753$ 821,810$
Inter-segment revenue -$ -$
Segment income 286,611$ 253,447$
Segment assets 2,677,227$ 2,620,199$
Item Value
0 Polytronics
Technology
Corp.
Polytronics
(B.V.I)
Corporation
Other
receivables -
related party
Y $ 126,600 $ 123,440 $ - 3.5% Reason for
short-term
financings
$ - Operational need $ - $ - $ - $ 366,023 $ 732,046
1 Polytronics
(B.V.I)
Corporation
Polystar
Electronics
Co., Ltd.
Inter-company
transactions
Y 126,600 123,440 13,887 3.9% Reason for
short-term
financings
- Operational need - - - 366,023 366,023
2 Polystar
Electronics
Co., Ltd.
Hanpu
(Kunshan)
Trading Co.,
Ltd.
Other
receivables
Y 25,460 24,865 9,946 5.1% Reason for
short-term
financings
- Operational need - - - 366,023 366,023
Note: Follow the group policy “Procedure for provision of loans”.
Table 1 Expressed in thousands of NTD
Amount of
transactions
with the
borrower
Maximum
outstanding
balance during
the six-month
period ended
June 30, 2015
Balance at June
30, 2015
Actual amount
drawn down
Interest
rate
Nature of
loan
Collateral
(Except as otherwise indicated)
Allowance
for
doubtful
accounts
Limit on loans
granted to
a single party
(Note)
Ceiling on
total loans
granted
(Note) Footnote
Polytronics Technology Corp. and Subsidiaries
Loans to others
For the six-month period ended June 30, 2015
Reason
for short-term
financingNo. Creditor Borrower
General
ledger
account
Is a
related
party
Table 1
Company
name
Relationship
with the
endorser/
guarantor
0 Polytronics
Technology
Corp.
Polytronics
(B.V.I)
Corporation
100%
owned
subsidiary
$ 457,529 $ 206,000 $ 164,000 $ 7,715 $ - 8.96 $ 915,058 Y N N
Note: Follow the Group policy “Procedure for Provision of endorsements and guarantees to others”.
Outstanding
endorsement/
guarantee
amount at
June 30, 2015Number
Endorser/
guarantor
Limit on
endorsements/
guarantees
provided for a
single party
Maximum
outstanding
endorsement/
guarantee
amount as of
June 30, 2015
Party being
endorsed/guaranteedProvision of
endorsements/
guarantees to
the party in
Mainland
China (Note) Footnote
Actual amount
drawn down
Amount of
endorsements/
guarantees
secured with
collateral
Ratio of
accumulated
endorsement/
guarantee
amount to net
asset value of
the endorser/
guarantor
company
Ceiling on
total amount of
endorsements/
guarantees
provided (Note)
Provision of
endorsements/
guarantees by
parent
company to
subsidiary
(Note)
Provision of
endorsements/
guarantees by
subsidiary to parent
company (Note)
Expressed in thousands of NTD
(Except as otherwise indicated)
Table 2
Polytronics Technology Corp. and Subsidiaries
Provision of endorsements and guarantees to others
For the six-month period ended June 30, 2015
Table 2
Table 3
Number of shares Book value Ownership (%) Fair value
Polytronics Technology Corp. GreenMark Inc. common
stock
None Non-current financial assets
at cost, net
300,000 $ 3,000 10 $ -
FootnoteSecurities held by Marketable securities
Relationship with the
securities issuer
General
ledger account
As of June 30, 2015
Polytronics Technology Corp. and Subsidiaries
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)
June 30, 2015
Expressed in thousands of NTD
(Except as otherwise indicated)
Table 3
Table 4
Purchases
(sales) Amount
Percentage of
total purchases
(sales) Credit term Unit price Credit term Balance
Percentage of
total notes/accounts
receivable (payable)
Polytronics Technology
Corp.
Polytronics (B.V.I)
Corporation
Subsidiary Sales 121,518)($ 18% Net 60 days Note Note 77,334$ 22%
Polytronics (B.V.I)
Corporation
Polytronics Technology
Corp.
Ultimate parent
company
Purchases 121,518 94% Net 60 days Note Note 77,334)( 65%
Note: With the general payment term.
FootnotePurchaser/seller Counterparty
Relationship with the
counterparty
Transaction
Differences in transaction terms
compared to third party
transactions
Notes/accounts receivable (payable)
Polytronics Technology Corp. and Subsidiaries
Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more
For the six-month period ended June 30, 2015
Expressed in thousands of NTD
(Except as otherwise indicated)
Table 4
Table 5
General ledger account Amount Transaction terms
Percentage of consolidated total operating
revenues or total assets (Note 3)
0 Polytronics Technology Corp. Polytronics (B.V.I) Corporation 1 Processing charges 38,332$ Net 45 days 5%
0 " " 1 Purchases 8,220 " 1%
0 " " 1 Accounts payable 40,805 " 2%
0 " " 1 Sales 121,518 Net 60 days 15%
0 " " 1 Accounts receivable 77,334 " 3%
0 " " 1 Endorsements and guarantees 164,000 Note 6 6%
0 " Polystar Electronics Co., Ltd. 1 Other receivables 193 " 0%
0 " Polycarbide Material Co., Ltd. 1 Rent revenue 11 Net 60 days 0%
1 Polytronics (B.V.I) Corporation P-Circuit Corp. 3 Other receivables 732 Note 5 0%
1 " Polystar Electronics Co., Ltd. 3 Inter-company transactions 13,887 Note 4 1%
1 " " 3 Other receivables 137 Note 7 0%
1 " " 3 Interest revenue 520 Note 4 0%
1 " " 3 Processing charges 38,332 Net 45 days 5%
1 " " 3 Purchases 7,492 " 1%
1 " " 3 Accounts payable 40,506 " 2%
1 " " 3 Sales 73,591 Net 60 days 9%
1 " " 3 Accounts receivable 59,710 " 2%
1 " Hanpu (Kunshan) Trading Co., Ltd. 3 Purchases 727 Net 45 days 0%
1 " " 3 Accounts payable 299 " 0%
1 " " 3 Sales 47,927 Net 60 days 6%
1 " " 3 Accounts receivable 17,623 " 1%
2 Polystar Electronics Co., Ltd. Hanpu (Kunshan) Trading Co., Ltd. 3 Purchases 32,332 Spot 4%
2 " " 3 Accounts payable 11,621 T/T in advance 0%
2 " " 3 Other receivables 9,946 Note 4 0%
2 " " 3 Sales 40 Spot 0%
2 " " 3 Interest revenue 254 Note 4 0%
2 " " 3 Notes receivable 10,002 " 0%
Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:
(1)Parent company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between
subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction;
for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
(1)Parent company to subsidiary.
(2)Subsidiary to parent company.
(3)Subsidiary to subsidiary.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on
accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.
Note 4: Loan to subsidiary and count interst revenue.
Note 5: Pay temporary debits for subsidiary.
Note 6: Follow the policy “Procedure for Provision of endorsements and guarentees to others”.
Note 7: Interesst payable of parent loan to subsidiary.
Number
(Note 1) Company name Counterparty
Relationship
(Note 2)
Transaction
Polytronics Technology Corp. and Subsidiaries
Significant inter-company transactions during the reporting periods
For the six-month period ended June 30, 2015
Expressed in thousands of NTD
(Except as otherwise indicated)
Table 5
Table 6
Balance
as at June 30, 2015
Balance
as at December 31,
2014 Number of shares Ownership (%) Book value
Polytronics
Technolgy
Corp.
Polytronics (B.V.I)
Corporation
British
Virgin
Islands
Investment and
general business
operations
$ 211,431 $ 211,431 2,644 100 $ 506,896 $ 22,162 $ 22,162 Subsidiary
Polytronics
Technolgy
Corp.
Polycarbide
Material Co., Ltd.
Taiwan Manufacturing of
electrical
components and
wholesale and
retail of chemical
raw materials
6,000 6,000 200 100 7,088 ( 90) ( 90) Subsidiary
Polytronics
(B.V.I)
Corporation
P-Circuit Corp. America Investment and
general business
operations
219,106 224,715 2 100 486,106 21,881 21,881 Subsidiary
Initial investment amount Shares held as at June 30, 2015
Net profit (loss)
of the investee for the six-
month period ended June
30, 2015
Investment income(loss)
recognised by the Company
for the six-month period
ended June 30, 2015
Polytronics Technology Corp. and Subsidiaries
Information on investees
For the six-month period ended June 30, 2015
Expressed in thousands of NTD
(Except as otherwise indicated)
Footnote Investor Investee Location
Main business
activities
Table 6
Table 7
Remitted to
Mainland China
Remitted back
to Taiwan
Polystar
Electronics Co.,
Ltd.
Production and
sale of varistor
and
potentiometer
219,106$ Through investing
in an existing
company in the
third area, which
then invested in
the investee in
Mainland China.
199,356$ -$ -$ 199,356$ 21,881$ 100 21,881$ 486,805$ -$
Hanpu
(Kunshan)
Trading Co., Ltd.
Wholesale,
import and
export business
5,008 Other ways to
invest in
Mainland China.
- - - - 1,048 100 1,048 23,684 -
Accumulated
amount of
remittance from
Taiwan to
Mainland China
as of January 1,
2015 (Note 1)
Polytronics Technology Corp. and Subsidiary
Information on investments in Mainland China
For the six-month period ended June 30, 2015
Expressed in thousands of NTD
(Except as otherwise indicated)
Accumulated
amount
of investment
income
remitted back to
Taiwan as of
June 30, 2015 Footnote
Amount remitted from Taiwan to
Mainland China/
Amount remitted back
to Taiwan for the Six-month
period ended June 30, 2015
Accumulated
amount
of remittance
from Taiwan to
Mainland China
as of June 30,
2015
Net income of
investee as of
June 30, 2015
Ownership
held by
the
Company
(direct or
indirect)
Investment income
(loss) recognised
by the Company
for the Six-month
period ended June
30, 2015 (Note 2)
Book value of
investments in
Mainland China
as of June 30,
2015
Investee in
Mainland China
Main business
activities Paid-in capital
Investment
method
Table 7, Page 1
Company name
Accumulated
amount of
remittance
from Taiwan to
Mainland
China
as of June 30,
2015
Investment
amount approved
by the Investment
Commission of
the Ministry of
Economic Affairs
(MOEA)
Ceiling on
investments in
Mainland China
imposed by the
Investment
Commission of
MOEA
Polytronics
Technology
Corp.
$ 199,356 $ 219,106 $ 1,098,069
Note 2:The financial statements that are reviewed by R.O.C. parent company’s CPA.
Note 4: Mainland China’s investees information are translated using the exchange rates of USD:NTD = 1:31.168 for recognised investment income (loss) and remaining using the exchange rates of USD:NTD = 1:30.86.
Note 1: During 2001~2002, the Company remitted US$360,000 for investment in Polytronics (B.V.I) Corporation in British Virgin Islands. In 1991, Polytronics (B.V.I) Corporation took this ammount along with its own
US$640,000, totalling US$1,000,000 to invest in P-Circuit Corp. in U.S. P-Circuit Corp. then used this US$1,000,000 to invest in Polystar Electronics Co., Ltd. in Mainland China. During 2003~2010, the Company
remitted US$1,500,000, US$150,000, US$1,000,000, US$1,000,000 and US$2,100,000, respectively, to Polytronics (B.V.I) Corporation for investment. The cumulative investment amount was US$6,470,000. Then
Polytronics (B.V.I) Corporation’s remitted US$1,500,000, US$510,000, US$1,000,000, US$990,000 and US$2,100,000, respectively to P-Circuit Corp. for investment. P-Circuit Corp. then remitted this amount to Polystar
Electronics Co., Ltd.in Mainland China. The cumulative investment amount in Polystar Electonics Co., Ltd. through P-Circuit Corp. was US$6,460,000.
Note 3: Under ‘Regulations Governing the Permission of Investment or Technical Cooperation in Mainland Area’, amendment to Jing-Shen-Zi No. 09704604680 of Ministry of Economic Affairs, effective August 2008, ceiling
of accumulated investment in Mainland China may not exceed 60% of the net assets and the ceiling is effective from August 1.
Table 7, Page 2
Table 8
Amount %
Balance at June
30, 2015 %
Maximum balance during
the Six-month period
ended June 30, 2015
Balance at June
30, 2015 Interest rate
Interest during the
Six-month period
ended June 30, 2015
Balance at
June 30, 2015 %
Polystar
Electronics
Co., Ltd.
$ 73,591 10.84% $ 59,710 16.74% $ 126,600 $ 123,440 3.90% $ 520 $ 38,332 66.07%
Polystar
Electronics
Co., Ltd.
( 7,492) 4.64% ( 40,506) 29.02%
Hanpu
(Kunshan)
Trading Co.,
Ltd.
47,927 7.06% 17,623 4.94%
Hanpu
(Kunshan)
Trading Co.,
Ltd.
727)( 0.45% 299)( 0.21%
Others-processing charges
Expressed in thousands of NTD
(Except as otherwise indicated)
Polytronics Technology Corp. and Subsidiary
Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas
For the six-month period ended June 30, 2015
Investee in
Mainland
China
Sale (purchase)
Accounts receivable
(payable) Financing
Table 8