quanta computer inc. and subsidiaries...nt$15,634,889 thousand and nt$87,234,963 thousand,...
TRANSCRIPT
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Stock Code:2382
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
With Independent Auditors’ Review ReportFor the Six Months Ended June 30, 2020 and 2019
Address: No.188 Wenhua 2nd Rd., Guishan Dist. Taoyuan City, Taiwan, R.O.C.
Telephone: (03)327-2345
The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of theChinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of theEnglish and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version shallprevail.
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Table of contents
Contents Page
1. Cover Page 1
2. Table of Contents 2
3. Independent Auditors’ Review Report 3
4. Consolidated Statements of Financial Position 4
5. Consolidated Statements of Comprehensive Income 5
6. Consolidated Statements of Changes in Equity 6
7. Consolidated Statements of Cash Flows 7
8. Notes to the Consolidated Financial Statements
(1)Overview 8
(2)Financial Statements Authorization Date and Authorization Process 8
(3)New Standards and Interpretations Adopted 8~9
(4)Significant Accounting Policies 9~14
(5)Major Sources of Accounting Assumptions, Judgments and EstimationUncertainties
15
(6)Explanation to Significant Accounts 15~49
(7)Related Party Transactions 49~51
(8)Pledged Assets 51
(9)Significant Commitments and Contingencies 52~53
(10)Losses Due to Major Disasters 54
(11)Subsequent Events 54
(12)Others 54
(13)Other disclosures
(a) Information on significant transactions 54~66
(b) Information on investees 67~69
(c) Information on investment in mainland China 70~72
(d)Major shareholders 72
(14)Segment Information 73
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Independent Auditors’ Review Report
To the Board of Directors of Quanta Computer Inc.:
Introduction
We have reviewed the accompanying consolidated statements of financial position of Quanta Computer Inc. andits subsidiaries as of June 30, 2020 and 2019, and the related consolidated statements of comprehensive incomefor the three months and six months ended June 30, 2020 and 2019, and changes in equity and cash flows for thesix months ended June 30, 2020 and 2019 and notes to the consolidated financial statements, including asummary of significant accounting policies. Management is responsible for the preparation and fair presentationof the consolidated financial statements in accordance with the Regulations Governing the Preparation ofFinancial Reports by Securities Issuers and International Accounting Standards (“IASs”) 34, “Interim FinancialReporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.
Scope of Review
Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordancewith Statement of Auditing Standards 65, “ Review of Financial Information Performed by the IndependentAuditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarilyof persons responsible for financial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted in accordance with the generallyaccepted auditing standards and consequently does not enable us to obtain assurance that we would becomeaware of all significant matters that might be identified in an audit. Accordingly, we do not express an auditopinion.
Basis for Qualified Conclusion
As stated in Note 4 (b), the consolidated financial statements included the financial statements of certain non-significant subsidiaries, which were not reviewed by independent auditors. These financial statements reflecttotal assets amounting to NT$63,585,770 thousand and NT$174,770,260 thousand, constituting 10.64% and26.82% of consolidated total assets as of June 30, 2020 and 2019, respectively, total liabilities amounting toNT$15,634,889 thousand and NT$87,234,963 thousand, constituting 3.38% and 16.84% of consolidated totalliabilities as of June 30, 2020 and 2019, respectively, and total comprehensive income (loss) amounting to
NT$723,224 thousand, NT$1,156,078 thousand, NT$440,227 thousand and NT$983,696 thousand, constituting
11.43%, 34.45%, 5.91% and 15.33% of consolidated total comprehensive income (loss) for the three monthsand six months ended June 30, 2020 and 2019, respectively.
Furthermore, as stated in Note 6 (g), the other equity accounted investments of Quanta Computer Inc. and itssubsidiaries in its investee companies of NT$427,576 thousand and NT$358,225 thousand as of June 30, 2020and 2019, respectively, and its equity in net earnings (loss) on these investee companies of NT$(17,094)
thousand, NT$(1,924) thousand, NT$(24,620) thousand and NT$(217) thousand for the three months and sixmonths ended June 30, 2020 and 2019, respectively, were recognized solely on the financial statements preparedby these investee companies, but not reviewed by independent auditors.
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Qualified Conclusion
Except for the adjustments, if any, as might have been determined to be necessary had the financial statementsof certain consolidated subsidiaries and equity accounted investee companies described in the Basis forQualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothinghas come to our attention that causes us to believe that the accompanying consolidated financial statements donot present fairly, in all material respects, the consolidated financial position of Quanta Computer Inc. and itssubsidiaries as of June 30, 2020 and 2019, and of its consolidated financial performance for the three monthsand six months ended June 30, 2020 and 2019, and its consolidated cash flows for the six months ended June30, 2020 and 2019, in accordance with the Regulations Governing the Preparation of Financial Reports bySecurities Issuers and IASs 34, “Interim Financial Reporting” endorsed and issued into effect by the FinancialSupervisory Commission of the Republic of China.
The engagement partners on the reviews resulting in this independent auditors’ review report are Wan-Wan Linand Liu-Fong Yang.
KPMG
Taipei, Taiwan (Republic of China)August 13, 2020
Notes to Readers
The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position,financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic ofChina and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financialstatements are those generally accepted and applied in the Republic of China.
The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of theChinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation ofthe English and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese versionshall prevail.
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JUNE 30, 2020, DECEMBER 31, 2019, AND JUNE 30, 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
June 30, 2020 December 31, 2019 June 30, 2019 ASSETS Amount % Amount % Amount %Current assets:
1100 Cash and cash equivalents (Notes (6)(a)) $ 130,239,367 22 192,605,577 31 223,926,579 34
1110 Current financial assets at fair value through profit or
loss (Notes (6)(b))
8,228,643 1 6,742,086 1 9,546,626 2
1120 Current financial assets at fair value through other
comprehensive income (Notes (6)(c))
5,028,342 1 5,381,084 1 5,055,108 1
1172 Accounts receivable, net (Notes (6)(d) and (7)) 211,501,233 36 201,146,463 33 171,454,970 26
1200 Other receivables, net (Notes (6)(e) and (7)) 3,362,411 1 3,167,221 1 3,618,902 1
1310 Inventories (Notes (6)(f)) 156,498,365 26 122,568,746 20 152,324,848 23
1476 Other current financial assets (Note (8)) 18,374,564 3 18,755,574 3 22,606,492 4
1479 Other current assets, others 2,492,089 - 2,378,404 - 2,570,408 -
535,725,014 90 552,745,155 90 591,103,933 91
Non-current assets:
1510 Non-current financial assets at fair value through
profit or loss (Notes (6)(b))
444,402 - 321,993 - 275,671 -
1517 Non-current financial assets at fair value through
other comprehensive income (Notes (6)(c))
1,777,989 - 1,879,363 - 1,268,709 -
1550 Investments accounted for using equity method
(Notes (6)(g))
427,576 - 340,472 - 358,225 -
1600 Property, plant and equipment (Notes (6)(h)) 47,697,013 8 47,497,209 8 48,346,881 7
1755 Right-of-use assets (Notes (6)(i)) 2,524,723 1 3,015,597 1 3,475,883 1
1760 Investment property, net (Notes (6)(j)) 68,688 - 69,011 - 69,334 -
1780 Intangible assets (Notes (6)(k)) 762,469 - 832,242 - 776,526 -
1840 Deferred tax assets 6,432,270 1 6,253,802 1 4,599,393 1
1975 Net defined benefit asset, non-current 34,360 - 33,701 - 32,343 -
1980 Other non-current financial assets (Note (8)) 218,532 - 255,489 - 264,970 -
1995 Other non-current assets, others 1,507,880 - 1,382,899 - 1,121,490 -
61,895,902 10 61,881,778 10 60,589,425 9
TOTAL ASSETS $ 597,620,916 100 614,626,933 100 651,693,358 100
June 30, 2020 December 31, 2019 June 30, 2019 LIABILITIES AND EQUITY Amount % Amount % Amount %Current liabilities:
2100 Short-term borrowings (Note (6)(l)) $ 127,798,173 22 182,336,322 30 235,921,549 36
2120 Current financial liabilities at fair value through
profit or loss (Notes (6)(b))
182 - 7,030 - - -
2130 Current contract liabilities 51,671,106 9 47,185,954 8 38,615,947 6
2170 Accounts payable 185,173,721 31 150,772,704 25 159,670,262 25
2219 Other payables (Note (7)) 42,825,805 7 28,936,078 5 41,019,399 6
2230 Current tax liabilities 7,103,820 1 8,098,084 1 4,976,760 1
2280 Current lease liabilities (Notes (6)(n)) 885,057 - 926,693 - 950,896 -
2305 Other current financial liabilities 5,880,380 1 6,214,702 1 5,736,784 1
2320 Long-term liabilities, current portion (Note (6)(m)) 14,145,600 2 14,419,200 2 - -
2365 Current refund liabilities 4,712,553 1 3,908,078 1 1,439,169 -
2250 Current provisions 1,282,331 - 336,029 - 169,392 -
2399 Other current liabilities, others 53,005 - 54,969 - 82,378 -
441,531,733 74 443,195,843 73 488,582,536 75
Non-Current liabilities:
2540 Long-term borrowings (Note (6)(m)) 18,495,100 3 26,229,300 4 25,751,600 4
2570 Deferred tax liabilities 694,742 - 721,858 - 761,124 -
2580 Non-current lease liabilities (Notes (6)(n)) 1,269,184 - 1,658,511 - 2,021,898 -
2640 Net defined benefit liability, non-current 791,439 - 791,636 - 796,896 -
2670 Other non-current liabilities, others 93,961 - 98,520 - 131,376 -
21,344,426 3 29,499,825 4 29,462,894 4
Total liabilities 462,876,159 77 472,695,668 77 518,045,430 79
Equity attributable to owners of parent
(Note (6)(q)):
3100 Share capital 38,626,274 7 38,626,274 6 38,626,274 6
3200 Capital surplus 14,104,397 2 14,090,564 2 14,095,898 2
3300 Retained earnings 85,005,405 14 90,494,982 15 81,644,382 13
3400 Other equity (8,277,586) (1) (7,236,915) (1) (6,748,178) (1)
3500 Treasury shares (333,094) - (333,094) - (333,094) -
Total equity attributable to owners of parent 129,125,396 22 135,641,811 22 127,285,282 20
36XX Non-controlling interests 5,619,361 1 6,289,454 1 6,362,646 1
Total equity 134,744,757 23 141,931,265 23 133,647,928 21
TOTAL LIABILITIES AND EQUITY $ 597,620,916 100 614,626,933 100 651,693,358 100
See accompanying notes to financial statements.
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
For the Three Months Ended June 30 For the Six Months Ended June 30,
2020 2019 2020 2019Amount % Amount % Amount % Amount %
4000 Operating revenue (Notes (6)(s) and (7)) $ 270,182,333 100 245,740,721 100 460,480,229 100 467,071,016 100
5000 Operating costs (Note (6)(f)) 253,394,957 94 234,028,014 95 434,462,303 94 445,469,164 95
Gross profit from operations 16,787,376 6 11,712,707 5 26,017,926 6 21,601,852 5
5910 Less: Unrealized profit from sales 4,177 - 3,665 - 4,177 - 3,665 -
5920 Add: Realized profit from sales 2,782 - 3,772 - 2,186 - 2,595 -
16,785,981 6 11,712,814 5 26,015,935 6 21,600,782 5
Operating expenses:
6100 Selling expenses 1,790,586 1 2,123,290 1 3,463,367 1 3,759,010 1
6200 General and administrative expenses 1,640,848 1 1,696,520 - 3,272,439 1 3,930,128 1
6300 Research and development expenses 3,852,773 1 4,150,569 2 7,303,151 1 7,322,249 2
7,284,207 3 7,970,379 3 14,038,957 3 15,011,387 4
Net operating income 9,501,774 3 3,742,435 2 11,976,978 3 6,589,395 1
Non-operating income and expenses:
7100 Interest income (Note (6)(u)) 1,182,038 - 1,827,867 1 2,340,192 - 3,613,457 1
7010 Other income (Notes (6)(u) and (7)) 7,653 - 227,914 - 7,653 - 227,914 -
7020 Other gains and losses, net (Notes (6)(u) and (7)) (1,914,161) (1) 964,087 - (991,741) - 1,713,879 -
7050 Financial costs (Note (6)(u)) (519,325) - (1,832,502) (1) (1,385,963) - (3,641,815) -
7060 Share of profit (loss) of associates and joint ventures accounted for usingequity method (Note (6)(g)) (17,094) - (1,924) - (24,620) - (217) -
(1,260,889) (1) 1,185,442 - (54,479) - 1,913,218 1
7900 Profit before tax 8,240,885 2 4,927,877 2 11,922,499 3 8,502,613 2
7950 Less: Tax expenses (Note (6)(p)) 2,328,688 1 857,455 - 3,304,342 1 1,191,412 -
Profit 5,912,197 1 4,070,422 2 8,618,157 2 7,311,201 2
Other comprehensive income (loss):
8310 Components of other comprehensive income that will not be reclassifiedto profit or loss
8316 Unrealized gains (losses) from investments in equity instrumentsmeasured at fair value through other comprehensive income 1,279,672 1 (806,392) - (430,289) - (1,151,707) -
8320 Share of other comprehensive income of associates and joint venturesaccounted for using equity method, components of othercomprehensive income that will not be reclassified to profit or loss(Note (6)(g)) 2,396 - (28) - (8,459) - 4,608 -
8349 Less: Income tax related to components of other comprehensive incomethat will not be reclassified to profit or loss - - - - - - - -
Total components of other comprehensive income that will not bereclassified to profit or loss 1,282,068 1 (806,420) - (438,748) - (1,147,099) -
8360 Components of other comprehensive income that will be reclassified toprofit or loss
8361 Exchange differences on translation (864,320) - 90,256 - (741,468) - 249,669 -
8370 Share of other comprehensive income of associates and joint venturesaccounted for using equity method, components of othercomprehensive income that will be reclassified to profit and loss(Note (6)(g)) (1,949) - 1,136 - 5,388 - 1,265 -
8399 Less: Income tax related to components of other comprehensive incomethat will be reclassified to profit or loss - - - - - - - -
Total components of other comprehensive income that will bereclassified to profit or loss (866,269) - 91,392 - (736,080) - 250,934 -
Other comprehensive income, net of income tax 415,799 1 (715,028) - (1,174,828) - (896,165) -
8500 Total comprehensive income $ 6,327,996 2 3,355,394 2 7,443,329 2 6,415,036 2
Profit attributable to:
8610 Profit, attributable to owners of parent $ 6,252,091 1 3,967,695 2 8,831,231 2 7,091,332 2
8620 Profit, attributable to non-controlling interests (339,894) - 102,727 - (213,074) - 219,869 -
$ 5,912,197 1 4,070,422 2 8,618,157 2 7,311,201 2
Comprehensive income attributable to:
8710 Comprehensive income, attributable to owners of parent $ 6,681,508 2 3,225,977 2 7,761,473 2 6,090,305 2
8720 Comprehensive income, attributable to non-controlling interests (353,512) - 129,417 - (318,144) - 324,731 -
$ 6,327,996 2 3,355,394 2 7,443,329 2 6,415,036 2
Earnings per share attributable to parent company (Note (6)(r))
9750 Basic earnings per share (NT dollars) $ 1.62 1.03 2.29 1.84
9850 Diluted earnings per share (NT dollars) $ 1.62 1.03 2.28 1.83
See accompanying notes to financial statements.
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
Equity Attributable to Owners of ParentOther Equity
Share Capital Retained Earnings
ExchangeDifferences onTranslation of
Unrealized Gains(Losses) from
Financial AssetsMeasured atFair Value Total Equity
OrdinaryShare
CapitalSurplus Legal Reserve
SpecialReserve
UnappropriatedRetainedEarnings
ForeignFinancial
Statements
Through OtherComprehensive
IncomeTreasury
Shares
Attributableto Owners of
Parent
Non-Controlling
InterestsTotal
EquityBalance as of January 1, 2019 $ 38,626,274 14,085,280 31,699,285 5,987,359 50,553,544 4,330,076 (10,052,038) (333,094) 134,896,686 6,330,410 141,227,096
Profit for the period - - - - 7,091,332 - - - 7,091,332 219,869 7,311,201
Other comprehensive income for the period - - - - - 202,783 (1,203,810) - (1,001,027) 104,862 (896,165)
Total comprehensive income for the period - - - - 7,091,332 202,783 (1,203,810) - 6,090,305 324,731 6,415,036
Appropriation and distribution of retained earnings:
Legal reserve appropriated - - 1,511,855 - (1,511,855) - - - - - -
Reversal of special reserve - - - (265,397) 265,397 - - - - - -
Cash dividends of ordinary share - - - - (13,712,327) - - - (13,712,327) - (13,712,327)
Other changes in capital surplus:
Changes in equity of subsidiaries accounted for using equity method - 36 - - - - - - 36 83 119
Adjustments of capital surplus for company’s cash dividends received bysubsidiaries - 10,582 - - - - - - 10,582 - 10,582
Changes in non-controlling interests - - - - - - - - - (292,578) (292,578)
Disposal of investments in equity instruments measured at fair value through othercomprehensive income - - - - 25,189 - (25,189) - - - -
Balance as of June 30, 2019 $ 38,626,274 14,095,898 33,211,140 5,721,962 42,711,280 4,532,859 (11,281,037) (333,094) 127,285,282 6,362,646 133,647,928
Balance as of January 1, 2020 $ 38,626,274 14,090,564 33,211,140 5,721,962 51,561,880 3,350,490 (10,587,405) (333,094) 135,641,811 6,289,454 141,931,265
Profit for the period - - - - 8,831,231 - - - 8,831,231 (213,074) 8,618,157
Other comprehensive income for the period - - - - - (632,492) (437,266) - (1,069,758) (105,070) (1,174,828)
Total comprehensive income for the period - - - - 8,831,231 (632,492) (437,266) - 7,761,473 (318,144) 7,443,329
Appropriation and distribution of retained earnings:
Legal reserve appropriated - - 1,596,712 - (1,596,712) - - - - - -
Special reserve appropriated - - - 1,514,953 (1,514,953) - - - - - -
Cash dividends of ordinary share - - - - (14,291,721) - - - (14,291,721) - (14,291,721)
Other changes in capital surplus:
Changes in equity of subsidiaries accounted for using equity method - 2,885 - - - - - - 2,885 (2,826) 59
Adjustments of capital surplus for company’s cash dividends received bysubsidiaries - 11,030 - - - - - - 11,030 - 11,030
Changes in ownership interests in subsidiaries - (82) - - - - - - (82) 82 -
Changes in non-controlling interests - - - - - - - - - (349,205) (349,205)
Disposal of investments in equity instruments measured at fair value through othercomprehensive income - - - - (29,087) - 29,087 - - - -
Balance as of June 30, 2020 $ 38,626,274 14,104,397 34,807,852 7,236,915 42,960,638 2,717,998 (10,995,584) (333,094) 129,125,396 5,619,361 134,744,757
See accompanying notes to financial statements.
〜6〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
For the Six Months Ended June 30,2020 2019
Cash flows from operating activities:
Profit before tax $ 11,922,499 8,502,613
Adjustments:
Adjustments to reconcile profit:
Depreciation expense 3,509,475 4,059,634
Amortization expense 603,515 560,722
Expected credit gain (144,797) (237,758)
Net gain on financial assets or liabilities at fair value through profit or loss (28,298) (19,873)
Interest expense 1,385,963 3,641,815
Interest income (2,340,192) (3,613,457)
Dividend income (7,653) (227,914)
Share of loss of associates and joint ventures accounted for using equity method 24,620 217
Loss on disposal of property, plant and equipment 503,837 493,812
Property, plant and equipment transferred to expenses 91 -
Gain on disposal of intangible assets - (54)
Gain on disposal of investments - (60,441)
Loss on disposal of investments accounted for using equity method 6,841 664
Impairment loss on non-financial assets - 2,092
Reversal of impairment loss on non-financial assets (73,171) -
Unrealized foreign exchange (gain) loss (78,900) 117,800
Other adjustments (11,617) (437)
Total adjustments to reconcile profit 3,349,714 4,716,822
Changes in operating assets and liabilities:
Changes in operating assets:
Financial assets at fair value through profit or loss, mandatorily measured at fair value 61,825 (48,189)
Accounts receivable (13,046,851) 34,260,599
Other receivables (616,272) 415,984
Inventories (36,245,231) (15,258,731)
Other current assets (130,162) 1,056,971
Other financial assets (148,492) (218,810)
Net defined benefit assets (659) (711)
Total changes in operating assets (50,125,842) 20,207,113
Changes in operating liabilities:
Contract liabilities 4,485,152 6,462,647
Accounts payable 40,865,639 (19,478,895)
Other payables 609,614 (4,312,196)
Increase in provisions 946,302 15,685
Other financial liabilities (343,527) 939,391
Other current liabilities 899,094 (1,013,259)
Net defined benefit liabilities (197) (194)
Other liabilities 1,991 1,069
Total changes in operating liabilities 47,464,068 (17,385,752)
Total changes in operating assets and liabilities (2,661,774) 2,821,361
Total adjustments 687,940 7,538,183
See accompanying notes to financial statements.
〜7〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
QUANTA COMPUTER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
For the Six Months Ended June 30,
2020 2019Cash inflow generated from operations 12,610,439 16,040,796
Interest received 2,891,177 4,437,956
Dividends received - 1,854
Interest paid (1,621,326) (4,731,803)
Income taxes paid (4,527,994) (2,277,215)
Net cash from operating activities 9,352,296 13,471,588
Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive income (7,470) (5,766)
Proceeds from disposal of financial assets at fair value through other comprehensive income 3,290 45,316
Proceeds from capital reduction of financial assets at fair value through other comprehensive
income 24,407 15,277
Acquisition of financial assets at fair value through profit or loss (1,796,706) (3,904,225)
Acquisition of investments accounted for using equity method (124,858) (92,243)
Proceeds from disposal of investments accounted for using equity method 1,982 -
Proceeds from capital reduction of investments accounted for using equity method - 5,168
Acquisition of property, plant and equipment (5,644,576) (3,756,782)
Proceeds from disposal of property, plant and equipment 554,781 387,052
Acquisition of intangible assets (93,554) (96,801)
Proceeds from disposal of intangible assets - 54
Increase in other financial assets (8,806) (12,224)
Decrease in other financial assets 215,426 8,345,510
Increase in other non-current assets (607,180) (169,229)
Decrease in other non-current assets 6,733 21,589
Net cash (used in) from investing activities (7,476,531) 782,696
Cash flows from financing activities:
Increase in short-term borrowings 11,591,305 56,040,800
Decrease in short-term borrowings (65,490,538) (65,862,707)
Proceeds from long-term borrowings 598,900 13,562,675
Repayments of long-term borrowings (8,248,500) (6,453,797)
Repayments of principal portion of lease liabilities (451,702) (468,851)
Increase in other financial liabilities 3,209 27,955
Decrease in other financial liabilities (3,853) -
Increase in other non-current liabilities 108 -
Decrease in other non-current liabilities - (506)
Change in non-controlling interests 61,425 14,617
Cash dividends returned 59 119
Net cash used in financing activities (61,939,587) (3,139,695)
Effect of exchange rate changes on cash and cash equivalents (2,302,388) 1,530,906
Net (decrease) increase in cash and cash equivalents (62,366,210) 12,645,495
Cash and cash equivalents at beginning of period 192,605,577 211,281,084
Cash and cash equivalents at end of period $ 130,239,367 223,926,579
See accompanying notes to financial statements.
〜7-1〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(1) Overview
Quanta Computer Inc. (the “Company”) was incorporated on May 9, 1988, as a company limited by sharesand registered under the Ministry of Economic Affairs, R.O.C.. The address of the Company’s registeredoffice is No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan, R.O.C.. The Company and itssubsidiaries (together referred to as the “Group”) engage primarily in the manufacturing, processing, andsales of laptop computers and telecommunication products.
(2) Financial Statements Authorization Date and Authorization Process
The consolidated financial statements for the six months ended June 30, 2020 and 2019 were authorizedfor issuance by the board of directors on August 13, 2020.
(3) New Standards and Interpretations Adopted:
(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the FinancialSupervisory Commission, R.O.C. (“FSC”) which have already been adopted.
The following new standards, interpretations and amendments have been endorsed by the FSC andare effective for annual periods beginning on or after January 1, 2020.
New, Revised or Amended Standards and InterpretationsEffective date
per IASBAmendments to IFRS 3 “Definition of a Business” January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform” January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020
Amendments to IFRS 16 “Covid-19-Related Rent Concessions” June 1, 2020
The Group assesses that the adoption of the abovementioned standards would not have any materialimpact on its consolidated financial statements.
(b) The impact of IFRS issued by IASB but not yet endorsed by the FSC
As of the date, the following IFRSs that have been issued by the International Accounting StandardsBoard (IASB), but have yet to be endorsed by the FSC:
New, Revised or Amended Standards and InterpretationsEffective date
per IASBAmendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Betweenan Investor and Its Associate or Joint Venture”
Effective date tobe determinedby IASB
IFRS 17 “Insurance Contracts” January 1, 2023
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” January 1, 2023
〜8〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
New, Revised or Amended Standards and InterpretationsEffective date
per IASBAmendments to IAS 16 “Property, Plant and Equipment-Proceeds beforeIntended Use”
January 1, 2022
Amendments to IAS 37 “Onerous Contracts-Cost of Fulfilling a Contract” January 1, 2022
Annual Improvements to IFRS Standards 2018-2020 January 1, 2022
Amendments to IFRS 17 “Insurance Contracts” January 1, 2023
The Group assessed that the above IFRSs may not be relevant to the Group.
(4) Significant Accounting Policies
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with the preparation andguidelines of IAS 34 “ Interim Financial Reporting” which are endorsed and issued into effect byFSC and do not include all of the information required by the Regulations and International FinancialReporting Standards, International Accounting Standards, IFRIC Interpretations and SICInterpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed bythe FSC) for full annual consolidated financial statements.
Except the following accounting policies mentioned below, the significant accounting policiesadopted in the consolidated financial statements are the same as those in the consolidated financialstatement for the year ended December 31, 2019. For the related information, please refer to Note(4) of the consolidated financial statements for the year ended December 31, 2019.
(b) Basis of consolidation
1.List of subsidiaries in the consolidated financial statements:
Shareholding
Name ofInvestor
Name ofSubsidiary
PrincipalActivity
June 30,2020
December 31,2019
June 30,2019 Note
The Company Quanta International Limited(QIL)
Holding company %100.00 %100.00 %100.00
〞 QCJ Corp. After-sales service and saleof computers andtelecommunication products
%100.00 %100.00 %100.00 Note 6
〞 Quanta ComputerTechnology InvestmentCorp. (QCTI)
Investment company %100.00 %100.00 %100.00 Note 6
〞 Quanta Venture Capital Co.,Ltd. (QVC)
Venture capital %100.00 %100.00 %100.00 Note 6
〞 Quanta Cloud TechnologyInc. (QCTTW)
Sale of computers andperipherals
%100.00 %99.99 %99.99 Note 6
〜9〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Shareholding
Name ofInvestor
Name ofSubsidiary
PrincipalActivity
June 30,2020
December 31,2019
June 30,2019 Note
The Company THINKTECH COMERCIODE INFORMATICA LTDA(ThinkTech)
Sale of computers andperipherals
%83.16 %83.16 %83.16 Note 6
〞 QMB Co., Ltd. (QMB) Manufacture and sale ofcomputers, peripherals andconsumer products
%100.00 %100.00 %- QMB was established onAugust 15, 2019. Note 6
〞 Quanta Cloud TechnologySingapore Pet. Ltd. (QCTS)
Sale and after-sales serviceof computer peripherals
%100.00 %- %- QCTS was establishedon January 1, 2020. Note 6
The Companyand QCTI
Quanta Storage Inc. (QSI) Manufacture and sale ofoptical storage equipment,and computer storagedevices and peripherals
%30.22 %30.22 %30.22 Note 1
〞 RoyalTek Company Ltd.(RTK)
Design, manufacture,processing, distribute, andsale of satellite guidednavigation systems andperipherals, navigatedmaps, and digital maps
%37.57 %37.57 %37.57 Note 1
〞 Quanta Microsystem Inc.(QMIT)
Electronic company %100.00 %100.00 %100.00 Note 6
QIL QCE Computer B.V. (QCE) Sale and after-sales serviceof computer peripherals
%100.00 %100.00 %100.00 Note 6
〞 Access InternationalCompany (AIC)
Holding company %100.00 %100.00 %100.00
〞 Quanta ASIA LTD. (QAL) Investment company andafter-sales service
%100.00 %100.00 %100.00
〞 Quanta Capital ManagementLtd. (QCML)
Investment company %100.00 %100.00 %100.00 Note 6
〞 QCT LLC (QCT-USA) Sale of computerperipherals
%100.00 %100.00 %100.00 Note 6
〞 QCT Inc. (QCTC) Investment company %100.00 %100.00 %100.00 Note 6
QCE THINKTECH COMERCIODE INFORMATICA LTDA(ThinkTech)
Sale of computers andperipherals
%16.84 %16.84 %16.84 Note 6
AIC Quanta ManufacturingIncorporation (QMI)
Assembly and processing ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〞 Quanta Service Incorporation(QSI-USA)
After-sales service ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〞 Quanta Computer USA, Inc.(QCA)
After-sales service ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〞 QCH, Inc., a Nevadacorporation (QCH)
Sale of computers andperipherals
%100.00 %100.00 %100.00
QMI Quanta ManufacturingNashville LLC (QMN)
Assembly and processing ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
QSI-USA Quanta Service NashvilleLLC (QSN)
After-sales service ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〜10〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Shareholding
Name ofInvestor
Name ofSubsidiary
PrincipalActivity
June 30,2020
December 31,2019
June 30,2019 Note
QCA Quanta Computer NashvilleLLC (QCN)
After-sales service ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
QCH QCH Nashville LLC(QCHN)
Sale of computers andperipherals
%100.00 %100.00 %100.00 Note 6
QAL Quanta Development LTD.(QDL)
Holding Company %100.00 %100.00 %100.00
〞 Quanta InternationalTechnology LTD. (QIT)
Sale of computers andperipherals, and investmentcompany
%100.00 %100.00 %100.00 Note 6
〞 Q_Bus International Limited(Q_Bus)
Holding company %100.00 %100.00 %100.00 Note 6
QCTC QCT Korea Inc. (QCTK) Sale of computers andperipherals
%100.00 %100.00 %100.00 Note 6
QIT QCG Computer GMBH Assembly and processing ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
QDL Quanta Development(HONG KONG) Limited(QDL(HK))
Sale of computers andperipherals, and investmentcompany
%100.00 %100.00 %100.00
QDL (HK) Tech-Front (Shanghai)Computer Co., Ltd. (TFC)
Manufacture and sale ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〞 Tech-Com (Shanghai)Computer Co., Ltd. (TCC)
Manufacture and sale ofcomputers and peripherals
%100.00 %100.00 %100.00
〞 Tech-Com (Chongqing)Computer Co., Ltd. (TCQ)
Manufacture and sale ofcomputers, mobilecommunication, storagedevice, peripherals andaccessories
%100.00 %100.00 %100.00 Note 6
〞 Tech-Trend (Shanghai)Computer Co., Ltd. (TTC)
Sale and after-sales serviceof computers andperipherals
%100.00 %100.00 %100.00 Note 6
〞 Tech-Lead (Shanghai)Computer Co., Ltd. (TLC)
After-sales service ofcomputers
%100.00 %100.00 %100.00 Note 6
〞 Tech-Giant (Shanghai)Computer Co., Ltd. (TGC)
Manufacture and sale ofcomputers and peripherals
%100.00 %100.00 %100.00 Note 6
〞 Tech-Wave (Shanghai)Logistics Co., Ltd. (TWW)
Storage service %100.00 %100.00 %100.00 Note 6
〞 Tech-Full Computer(Changshu) Co., Ltd. (TNC)
Manufacture and sale ofcomputers, mobilecommunication, storagedevice, peripherals andaccessories
%100.00 %100.00 %100.00
〞 Tech-Front (Chongqing)Computer Co., Ltd. (TFQ)
Processing, manufactureand sale of computers
%100.00 %100.00 %100.00 Note 5
〞 Tech-Wave (Chongqing)Logistics Co., Ltd. (TWQ)
Storage service %100.00 %100.00 %100.00 Note 6
〞 Kenseisha Shanghai P.M.P.Co., Ltd. (KSH)
Manufacture and sale ofprecision machinery,peripherals and metallicmolds
%100.00 %100.00 %100.00 Note 6
〜11〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Shareholding
Name ofInvestor
Name ofSubsidiary
PrincipalActivity
June 30,2020
December 31,2019
June 30,2019 Note
QDL (HK) CloudTech (Chongqing)Technology Co., Ltd.(YDCQ)
Sale of servers and switches %100.00 %100.00 %100.00 Note 6
〞 Fly Dragon International Ltd.(FDDT)
Investment company andtrading company
%100.00 %100.00 %100.00 Note 6
〞 Dragon Grand Group Ltd.(DGDT)
Investment company andtrading company
%100.00 %100.00 %100.00 Note 6
FDDT Kenseisha Changshu P.M.PCo., Ltd. (KCC)
Manufacture and sale ofmachine cases, molds andtools
%100.00 %100.00 %100.00 Note 6
DGDT Dragnotech Metallic IndustryCo., Ltd. (SJDT)
Manufacture and sale ofcomputers and componentsof peripherals
%100.00 %100.00 %100.00 Note 6
Q_Bus Exmore Services HoldingLimited (EXM)
Holding company %95.00 %95.00 %95.00 Note 6
〞 Tech Chain Ltd. (TCL) Holding company %100.00 %100.00 %100.00 Note 6
EXM Exmore Services Holding(HONG KONG) Limited(EXMHK)
Investment company %100.00 %100.00 %100.00 Note 6
EXMHK Gem-Tech (Shanghai)Precision Mold Co., Ltd.(GTM)
Manufacture and sale ofnon-metallic product molds
%100.00 %100.00 %100.00 Note 6
TCL Tech Chain (HONG KONG)Limited (TCLHK)
Investment company %100.00 %100.00 %100.00 Note 6
TCLHK Zhan Yun (Shanghai)Electronics Co., Ltd. (ZYES)
Manufacture and sale ofcomputers and componentsof peripherals
%100.00 %100.00 %100.00 Note 6
〞 Zhan Yun (Chongqing)Electronics Co., Ltd.(ZYEQ)
Manufacture and sale ofcomputers and componentsof peripherals
%- %- %100.00 The cancellation ofregistration wascompleted in October2019.
QSI Quanta Storage InternationalLtd. (QSI (CAYMAN))
Investment company %100.00 %100.00 %100.00
〞 Quanta Storage InvestmentInc.
Investment company %100.00 %100.00 %100.00 Note 6
〞 Techman Electronics(Thailand) Co., Ltd. (TMT)
Manufacture and sale ofcomputer storage devicesand components ofperipherals
%100.00 %100.00 %100.00 Note 6
〞 Techman Incorporation(TAI)
Factory automationplanning, installation andimplementation
%100.00 %100.00 %100.00 Note 3、Note 6
〞 TM SMT SDN. BHD.(JVM)
Sale of computer storagedevices and components ofperipherals
%51.00 %51.00 %51.00 Note 6
〞 Techman Robot Inc. (TRI) Manufacture and sale ofindustrial collaborativerobots
%91.66 %- %- Note 2、Note 4
〜12〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Shareholding
Name ofInvestor
Name ofSubsidiary
PrincipalActivity
June 30,2020
December 31,2019
June 30,2019 Note
QSI(CAYMAN)
Quanta Storage (BVI) Ltd.(QSL (BVI))
Investment company %100.00 %100.00 %100.00
〞 E-Foward Technology Ltd.(SAMOA) (E-Foward (SAMOA))
Manufacture and sale ofcomputer storage devicesand components ofperipherals
%100.00 %100.00 %100.00
QSL(BVI) Quanta Storage Holding(Hong Kong) Ltd. (QHH)
Investment company %100.00 %100.00 %100.00
〞 Techman Electronic (HongKong) Limited (QIH)
Investment company %100.00 %100.00 %100.00
〞 Techman Asia Ltd. (TMA) Sale and after-sales serviceof computer storage devicesand components ofperipherals
%100.00 %100.00 %100.00 Note 6
QHH Quanta Storage (Shanghai),Ltd. (QSS)
Manufacture and sale ofcomputer storage devicesand components ofperipherals
%100.00 %100.00 %100.00
QIH Techman Electronics(Changshu) Ltd.(Techman)
Manufacture and sale ofcomputer storage devicesand components ofperipherals
%100.00 %100.00 %100.00
E-Foward(SAMOA)
Quanta Storage Asia Ltd.(SAMOA) (QSA)
Sale and after-sales serviceof computer storage devicesand components ofperipherals
%100.00 %100.00 %100.00
Quanta StorageInvestment Inc.
Techman Robot Inc. (TRI) Manufacture and sale ofindustrial collaborativerobots
%- %100.00 %100.00 Note 2
TRI Techman Robot (HONGKONG) Ltd. (TRH)
Investment company %100.00 %100.00 %100.00 Note 6
TRH Techman Robot (Shanghai)Ltd. (TRS)
After-sales service and saleof industrial collaborativerobots and components ofperipherals
%100.00 %100.00 %100.00 Note 6
RTK Royaltek InternationalEnterprises Ltd. (RTKI)
Investment company %100.00 %100.00 %100.00
RTKI Royaltek Trading (Changshu)Co., Ltd.
Import and export businessand wholesale of electronicproducts
%100.00 %100.00 %100.00
QMIT Quanta Cloud TechnologyJapan Inc. (QCTJ)
Sale of computerperipherals
%100.00 %100.00 %100.00 Note 6
QCTTW Quanta Cloud TechnologyGermany GmbH (QCTG)
Sale of computerperipherals
%100.00 %100.00 %100.00 Note 6
〜13〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Note 1: Although the Company holds less than half of these companies’ voting right, theCompany has actual effect to lead these companies’ activities, considering the fact thatthese companies’ other equity shares are highly separated and considering theparticipation of other shareholders from previous shareholders’ meetings. In addition, noother sign suggests that any collectively decision-making agreement between othershareholders exist. Therefore, the Company considers these companies as subsidiaries.
Note 2: The subsidiary, Quanta Storage Investment Inc., reduced its capital on February 5, 2020,and all shares of Techman Robot Inc. owned by Quanta Storage Investment Inc. aretreated as capital refunds instead.
Note 3: The subsidiary, Techman Automation Incorporation, changed its company name onregistration certificate to Techman Incorporation with effect from February 21, 2020.
Note 4: The subsidiary, Techman Robot Inc., issued employee stock options and shares in thefirst quarter of 2020. All capital-added shares were subscribed by employees.
Note 5: The subsidiary, Tech-Front (Chongqing) Computer Co., Ltd., become a significantsubsidiary with effect from the fiscal year 2020. It was a non-significant subsidiary andits financial statements were not reviewed in the second quarter of 2019.
Note 6: Companies are non-significant and their financial statements have not been reviewed.
2. Subsidiaries excluded from the interim consolidated financial statements: None.
(c) Income Taxes
The income tax expenses have been prepared and disclosed in accordance with paragraph B12 ofInternational Financial Reporting Standards 34, Interim Reporting.
Income tax expenses for the period are best estimated by multiplying pre-tax income for the interimreporting period by the effective annual tax rate as forecasted by the management. This should berecognized fully as tax expense for the current period.
Temporary differences between the carrying amounts of assets and liabilities for financial reportingpurposes and their respective tax bases shall be measured based on the tax rates that have beenenacted or substantively enacted at the time of the asset or liability is recovered or settled, and berecognized directly in equity or other comprehensive income as tax expense.
(d) Employee Benefits
Pension cost for an interim period is calculated on a year-to-date basis by using the actuariallydetermined pension cost rate at the end of the prior financial year, adjusted for significant marketfluctuations since that time and for significant curtailments, settlements, or other significant one-offevents.
〜14〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(5) Major Sources of Accounting Assumptions, Judgments and Estimation Uncertainties
The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (inaccordance with IAS 34 “Interim Financial Reporting” and endorsed by the FSC) requires management tomake judgments, estimates and assumptions that affect the application of the accounting policies and thereported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.
In the preparation of the consolidated financial statements, the major sources of significant accountingjudgments and estimation uncertainty are consistent with Note (5) of the consolidated financial statementsfor the year ended December 31, 2019.
(6) Explanation to Significant Accounts
Except as described in the following paragraphs, there were no significant differences with those disclosedin the 2019 annual consolidated financial statements. Please refer to Note (6) of the consolidated financialstatements for the year ended December 31, 2019, for other related information.
(a) Cash and cash equivalents
June 30,2020
December 31,2019
June 30,2019
Cash on hand, demand deposits and checking accounts $ 89,597,449 79,384,407 91,668,888
Time deposits 40,263,835 112,319,496 130,910,920
Short-term notes and bills 378,083 901,674 1,346,771
Cash and cash equivalents in consolidated statements of cash flows
$ 130,239,367 192,605,577 223,926,579
The Group’s interest risk and sensitivity analysis of financial assets and liabilities were disclosed inNote (6)(v).
(b) Financial assets and liabilities at fair value through profit or loss
June 30,2020
December 31,2019
June 30,2019
Mandatorily measured at fair value through profit orloss:
Non-derivative financial assets
Beneficiary certificates $ 8,642,235 6,885,120 9,535,455
Convertible bonds - 150,200 -
Private equity 30,810 28,759 275,671
Derivative instruments not used for hedging
Forward foreign exchange contracts - - 11,171
Total $ 8,673,045 7,064,079 9,822,297
〜15〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
June 30,2020
December 31,2019
June 30,2019
Financial liabilities designated at fair value throughprofit or loss:
Held-for-trading financial liabilities:
Derivative instruments not used for hedging
Forward foreign exchange contracts $ 182 7,030 -
The Group held derivative financial instruments to hedge certain foreign exchange and interest riskthe Group is exposed to, arising from its operating, financing and investing activities. The followingderivative instruments that did not apply hedge accounting were classified as mandatorily measuredat fair value through profit or loss and held-for-trading financial liabilities:
June 30, 2020Amount
(in thousands) Currency Maturity periodForward foreign exchangecontracts
US dollars sold USD 18,000 USD against TWD 2020.07.06~2020.07.20
US dollars purchased USD 21,000 TWD against USD 2020.07.07~2020.08.26
December 31, 2019Amount
(in thousands) Currency Maturity periodForward foreign exchangecontracts
US dollars sold USD 23,000 USD against TWD 2020.01.07~2020.02.12
US dollars purchased USD 32,000 TWD against USD 2020.01.08~2020.03.18
June 30, 2019Amount
(in thousands) Currency Maturity periodForward foreign exchangecontracts
US dollars sold USD 20,000 USD against TWD 2019.07.16~2019.09.17
US dollars purchased USD 19,000 TWD against USD 2019.07.05~2019.07.25
The aforesaid financial assets were not pledged as collateral.
〜16〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(c) Financial assets at fair value through other comprehensive income
June 30,2020
December 31,2019
June 30,2019
Debt instruments at fair value through othercomprehensive income
Debt investments $ 62,425 64,305 67,923
Equity instruments at fair value through othercomprehensive income
Public quoted entity 5,179,074 5,528,483 5,285,534
Private equity 1,564,832 1,667,659 970,360
Subtotal 6,743,906 7,196,142 6,255,894
Total $ 6,806,331 7,260,447 6,323,817
1.Debt investments at fair value through other comprehensive income
The Group has assessed that the above securities were held within a business model whoseobjective was achieved by both collecting the contractual cash flows and by selling securities.Therefore, they have been classified as debt investments at fair value through other comprehensiveincome.
2.Equity investments at fair value through other comprehensive income
The Group designated the equity securities at fair value through other comprehensive incomebecause these equity securities represent those investments that the Group intends to hold forlong-term for strategic purposes.
For the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020and 2019, the Group has sold its financial assets designated at fair value through othercomprehensive income. The shares sold had a fair value of $3,290, $33,489, $3,290 and $45,316.The Group realized a (loss) gain of $(29,087), $13,362, $(29,087) and $25,189, which has beentransferred from other equity to retained earnings.
3.For credit risk (including the impairment of debt investments) and market risk, please refer to Note(6)(v).
4.The aforesaid financial assets were not pledged as collateral.
〜17〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(d) Accounts receivable
June 30,2020
December 31,2019
June 30,2019
Accounts receivable-measured as amortized cost $ 202,247,266 198,515,774 160,376,988
Accounts receivable-fair value through othercomprehensive income 10,100,892 3,685,883 12,959,459
Less: Allowance for impairment (846,925) (1,055,194) (1,881,477)
Net $ 211,501,233 201,146,463 171,454,970
The Group has assessed a portion of its accounts receivable that was held within a business modelwhose objective is achieved by both collecting contractual cash flows and selling financial assets.Therefore, such accounts receivable was measured at fair value through other comprehensiveincome.
The Group applies the simplified approach to provide for its expected credit losses, i.e. the use oflifetime expected loss provision for all receivables. To measure the expected credit losses, tradereceivables have been grouped based on shared credit risk characteristics and the days past due, aswell as incorporated forward looking information. The loss allowance provisions were determined asfollows:
June 30, 2020
Accountsreceivable
carrying amount
Weighted-average
expected creditloss rate
Allowancelifetime
expected creditloss
Current $ 207,244,347 0.18% 381,822
1 to 60 days past due 4,227,531 3.89% 164,585
61 to 120 days past due 387,294 8.81% 34,111
More than 121 days past due 488,986 54.48% 266,407
$ 212,348,158 846,925
December 31, 2019
Accountsreceivable
carrying amount
Weighted-average
expected creditloss rate
Allowancelifetime
expected creditloss
Current $ 194,626,897 0.18% 341,759
1 to 60 days past due 6,528,569 4.60% 300,605
61 to 120 days past due 579,097 12.30% 71,222
More than 121 days past due 467,094 73.13% 341,608
$ 202,201,657 1,055,194
〜18〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
June 30, 2019
Accountsreceivable
carrying amount
Weighted-average
expected creditloss rate
Allowancelifetime
expected creditloss
Current $ 165,953,066 0.17% 286,085
1 to 60 days past due 4,926,664 2.91% 143,527
61 to 120 days past due 1,009,093 22.28% 224,875
More than 121 days past due 1,447,624 84.76% 1,226,990
$ 173,336,447 1,881,477
The movements in the allowance for impairment for accounts receivable were as follows:
For the Six Months Ended June 30,2020 2019
Balance as of January 1 $ 1,055,194 2,118,233
Impairment losses reversed (145,122) (240,779)
Bad debts written off (61,364) (520)
Effect of movements in exchange rate (1,783) 4,543
Balance as of June 30 $ 846,925 1,881,477
The aforementioned financial assets of the Group were not pledged as collateral or long-termborrowings.
The Group signed the accounts receivable factoring agreements without recourse with differentfinancial institutions. According to the agreements, the Group transfers almost all risks and rewardsto debtors, thus is eligible for derecognizing the financial assets. The amounts receivable fromfinancial institutions were recognized as other receivables upon the derecognition of those tradereceivables. The relevant information of the unexpired accounts receivable at the reporting date wereas follows:
Unit: in thousands
June 30, 2020
PurchaserAmount
DerecognizedCreditUnused
CreditAdvanced
AmountRecognized in
OtherReceivables
Range ofInterest Rate
SignificantTransferring
TermsFinancialInstitutions
$ 34,266,292 US$ 340,000 US$ 1,125,000 1,031,450 0.87%~0.90% None
〜19〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
December 31, 2019
PurchaserAmount
DerecognizedCreditUnused
CreditAdvanced
AmountRecognized in
OtherReceivables
Range ofInterest Rate
SignificantTransferring
TermsFinancialInstitutions
$ 41,554,307 US$ 119,700 US$ 1,345,300 1,051,400 2.14%~2.34% None
June 30, 2019
PurchaserAmount
DerecognizedCreditUnused
CreditAdvanced
AmountRecognized in
OtherReceivables
Range ofInterest Rate
SignificantTransferring
TermsFinancialInstitutions
$ 33,702,251 US$ 416,300 US$ 1,056,700 839,160 2.89%~2.92% None
The Group signed the accounts receivable factoring agreements with different financial institutions.According to the agreements, the Group bears almost all risks and rewards, and thus is ineligible forderecognizing the financial assets. The book value of the accounts receivable factored but yetderecognized at the reporting date were as follows:
Unit:in thousandsJune 30, 2020
PurchaserAmount
transferred Credit Line
Credit Advanced(accounted under
short-termborrowings)
Range ofInterest Rate Collateral
FinancialInstitutions
$ 10,138,554 US$ 650,000 US$ 344,030 0.59%~0.70% None
December 31, 2019
PurchaserAmount
transferred Credit Line
Credit Advanced(accounted under
short-termborrowings)
Range ofInterest Rate Collateral
FinancialInstitutions
$ 19,511,747 US$ 650,000 US$ 649,526 2.01%~2.73% None
June 30, 2019
PurchaserAmount
transferred Credit Line
Credit Advanced(accounted under
short-termborrowings)
Range ofInterest Rate Collateral
FinancialInstitutions
$ 11,729,620 US$ 550,000 US$ 377,401 2.83% None
〜20〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(e) Other receivables
June 30,2020
December 31,2019
June 30,2019
Other receivables $ 3,368,244 3,172,729 3,625,963
Less: Allowance for impairment (5,833) (5,508) (7,061)
$ 3,362,411 3,167,221 3,618,902
As of June 30, 2020, December 31, 2019, and June 30, 2019, the aging analysis of other receivables,which were past due, were as follows:
June 30,2020
December 31,2019
June 30,2019
1 to 60 days past due $ 246,081 84,543 34,422
61 to 120 days past due 89,319 10,108 10,690
More than 121 days past due 16,819 12,614 5,417
Total $ 352,219 107,265 50,529
The movements in the allowance for impairment for other receivables for the six months ended June30, 2020 and 2019, were as follows:
For the Six Months Ended June 30,
2020 2019Balance as of January 1 $ 5,508 4,040
Impairment loss recognized 325 3,021
Balance as of June 30 $ 5,833 7,061
( f ) Inventories
June 30,2020
December 31,2019
June 30,2019
Finished goods $ 60,711,867 59,786,969 79,799,332
Work-in-process 11,413,317 8,178,971 5,038,128
Raw materials 78,327,143 47,061,780 61,447,597
Inventory in-transit 6,046,038 7,541,026 6,039,791
Total $ 156,498,365 122,568,746 152,324,848
〜21〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
For the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and2019, the details of cost of goods sold were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Cost of goods sold $ 251,616,369 234,627,705 429,275,655 443,449,003
Net amount of inventoryobsolescence and disposal ofscrapping
2,213,841 2,349,462 3,584,794 5,346,163
(Reversal) recognized losseson inventory valuation andobsolescence
(361,160) (2,887,878) 1,646,628 (3,389,339)
Idle capacity loss 252 20,529 93,383 226,818
Others (74,345) (81,804) (138,157) (163,481)
Total $ 253,394,957 234,028,014 434,462,303 445,469,164
The factor leading to the net realizable value of inventories is lower than the cost was vanished, sothat the reversal of write-down of inventories was recognized resulting from the increase in netrealizable value for the three months ended June 30, 2020 and 2019 and for the six months endedJune 30, 2019.
(g) Investments accounted for using equity method
The Group’ s financial information for investments accounted for using equity method that areindividually insignificant was as follows:
June 30,2020
December 31,2019
June 30,2019
Carrying amount of individually insignificant associates’equity
$ 427,576 340,472 358,225
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Attributable to the Group:
Loss from continuingoperation $ (17,094) (1,924) (24,620) (217)
Other comprehensiveincome (loss) 447 1,108 (3,071) 5,873
Total comprehensiveincome $ (16,647) (816) (27,691) 5,656
The aforesaid investments accounted for using equity method were not pledged as collateral.
Investments were accounted for by the equity method and the share of profit or loss and othercomprehensive income of those investments were calculated based on the financial statements thathave not been reviewed.
〜22〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(h) Property, plant and equipment
The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for thesix months ended June 30, 2020 and 2019, were as follows:
Land Buildings
Machinery andmiscellaneous
equipment
Equipment tobe inspected
andconstruction in
progress Total
Cost or deemed cost:
Balance as of January 1, 2020 $ 7,722,481 28,879,637 55,603,136 864,104 93,069,358
Additions 278,429 52,980 3,170,328 1,275,355 4,777,092
Disposal and obsolescence - (255,545) (5,097,265) - (5,352,810)
Effect of movements in exchangerate (7,459) (426,232) (847,668) (54,156) (1,335,515)
Balance as of June 30, 2020 $ 7,993,451 28,250,840 52,828,531 2,085,303 91,158,125
Balance as of January 1, 2019 $ 7,292,734 29,068,952 58,410,538 185,307 94,957,531
Additions 74,103 104,814 2,360,205 465,895 3,005,017
Disposal and obsolescence - (2,256) (2,985,044) - (2,987,300)
Effect of movements in exchangerate 352 208,579 650,723 (60,407) 799,247
Balance as of June 30, 2019 $ 7,367,189 29,380,089 58,436,422 590,795 95,774,495
Depreciation and impairment losses:
Balance as of January 1, 2020 $ 57,496 11,515,832 33,998,821 - 45,572,149
Depreciation for the period - 468,898 2,537,125 - 3,006,023
Disposal and obsolescence - (255,544) (4,038,648) - (4,294,192)
Impairment loss reversed - - (73,171) - (73,171)
Effect of movements in exchangerate - (187,149) (562,548) - (749,697)
Balance as of June 30, 2020 $ 57,496 11,542,037 31,861,579 - 43,461,112
Balance as of January 1, 2019 $ 57,496 10,854,439 34,611,021 - 45,522,956
Depreciation for the period - 451,762 3,063,313 - 3,515,075
Disposal and obsolescence - (2,185) (2,104,251) - (2,106,436)
Impairment loss recognized - - 2,092 - 2,092
Effect of movements in exchangerate - 83,005 410,922 - 493,927
Balance as of June 30, 2019 $ 57,496 11,387,021 35,983,097 - 47,427,614
〜23〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Land Buildings
Machinery andmiscellaneous
equipment
Equipment tobe inspected
andconstruction in
progress Total
Book values:
Balance as of January 1, 2020 $ 7,664,985 17,363,805 21,604,315 864,104 47,497,209
Balance as of June 30, 2020 $ 7,935,955 16,708,803 20,966,952 2,085,303 47,697,013
Balance as of January 1, 2019 $ 7,235,238 18,214,513 23,799,517 185,307 49,434,575
Balance as of June 30, 2019 $ 7,309,693 17,993,068 22,453,325 590,795 48,346,881
As of June 30, 2020, December 31, 2019, and June 30, 2019, the aforesaid property, plant andequipment were not pledged as collateral.
( i ) Right-of-use assets
The Group leases many assets including land, buildings, machinery and equipment andtransportation equipment. The movements in right-of-use assets were as follow:
Land BuildingsMachinery and
equipmentTransportation
equipment TotalCost:
Balance as of January 1, 2020 $ 556,795 3,446,974 100,218 468 4,104,455
Additions - 66,616 - - 66,616
Reductions - (106,115) - - (106,115)
Effect of movements in exchange
rate (11,616) (66,876) (1,901) - (80,393)
Balance as of June 30, 2020 $ 545,179 3,340,599 98,317 468 3,984,563
Balance as of January 1, 2019 $ 571,934 3,022,224 61,698 - 3,655,856
Additions - 330,976 - - 330,976
Effect of movements in exchangerate 5,258 28,910 581 - 34,749
Balance as of June 30, 2019 $ 577,192 3,382,110 62,279 - 4,021,581
Depreciation and impairment losses:
Balance as of January 1, 2020 $ 16,300 1,000,681 71,851 26 1,088,858
Depreciation for the period 8,134 480,150 14,767 78 503,129
Reductions - (106,115) - - (106,115)
Effect of movements in exchangerate (488) (23,911) (1,633) - (26,032)
Balance as of June 30, 2020 $ 23,946 1,350,805 84,985 104 1,459,840
〜24〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Land BuildingsMachinery and
equipmentTransportation
equipment Total Balance as of January 1, 2019 $ - - - - -
Depreciation for the period 8,432 507,135 28,669 - 544,236
Effect of movements in exchangerate 15 1,349 98 - 1,462
Balance as of June 30, 2019 $ 8,447 508,484 28,767 - 545,698
Book values:
Balance as of January 1, 2020 $ 540,495 2,446,293 28,367 442 3,015,597
Balance as of June 30, 2020 $ 521,233 1,989,794 13,332 364 2,524,723
Balance as of January 1, 2019 $ 571,934 3,022,224 61,698 - 3,655,856
Balance as of June 30, 2019 $ 568,745 2,873,626 33,512 - 3,475,883
( j ) Investment property
Investment property comprises factories that are leased to third parties under operating leases, aswell as properties that are owned by the Group. The rent income of the leases of investmentproperties is fixed.
Land and landimprovement Buildings Total
Book values:
Balance as of January 1, 2020 $ 52,664 16,347 69,011
Balance as of June 30, 2020 $ 52,664 16,024 68,688
Balance as of January 1, 2019 $ 52,664 16,993 69,657
Balance as of June 30, 2019 $ 52,664 16,670 69,334
There were no significant additions, disposals, or recognition and reversal of impairment losses ofinvestment property for the six months ended June 30, 2020 and 2019. Please refer to Note (12)(a)for depreciation amounts this period. Please refer to Note (6)(j) of the consolidated financialstatements for the year ended December 31, 2019, for other related information.
The fair value of the investment property was not significantly different from those disclosed in Note(6)(j) of the consolidated financial statements for the year ended December 31, 2019.
As of June 30, 2020, December 31, 2019, and June 30, 2019, the aforesaid investment propertieswere not pledged as collateral.
〜25〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(k) Intangible assets
GoodwillSoftware and
trademark TotalBook values:
Balance as of January 1, 2020 $ 407,292 424,950 832,242
Balance as of June 30, 2020 $ 407,292 355,177 762,469
Balance as of January 1, 2019 $ 407,292 441,721 849,013
Balance as of June 30, 2019 $ 407,292 369,234 776,526
There were no significant additions, disposals, or recognition and reversal of impairment losses ofintangible assets for the six months ended June 30, 2020 and 2019. Please refer to Note (12) (a) foramortization amounts this period. Please refer to Note (6)(k) of the consolidated financial statementsfor the year ended December 31, 2019, for other related information.
( l ) Short-term borrowings
June 30,2020
December 31,2019
June 30,2019
Credit loan $ 109,989,988 164,077,762 217,036,583
Purchase loan 17,808,185 18,258,560 18,884,966
Total $ 127,798,173 182,336,322 235,921,549
Range of interest rates 0.53%~3.93% 1.02%~4.00% 0.56%~4.35%
Please refer to Note (8) for details of the Group’s assets pledged as collateral for bank borrowings.
The Group’s interest risk and sensitivity analysis of financial assets and liabilities were disclosed inNote (6)(v).
The Group has agreements with different financial institutions to offset its financial assets andliabilities. The following table lists the netting information of these financial assets and liabilities asof June 30, 2020, December 31, 2019, and June 30, 2019:
June 30, 2020
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the statement offinancial position
Net financial assets/liabilities reported in the statement offinancial position
Bank deposits / Bank borrowings $ 607,941,220 607,941,220 -
〜26〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
December 31, 2019
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the statement offinancial position
Net financial assets/liabilities reportedin the statement offinancial position
Bank deposits / Bank borrowings $ 568,994,392 568,994,392 -
June 30, 2019
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the statement offinancial position
Net financial assets/liabilities reportedin the statement offinancial position
Bank deposits / Bank borrowings $ 555,247,071 555,247,071 -
(m) Long-term borrowings
Amount
Names of financial institutionNon-current
portionCurrentportion Total
Collateral orGuarantee
June 30, 2020
Syndicated agreement with Mizuho Bankand other 19 participating banks (ii) $ 11,493,300 - 11,493,300 None
Syndicated agreement with Credit AgricoleCorporate & Investment Bank and other 15participating banks (i) - 14,145,600 14,145,600 None
National development agreement withTaiShin International Bank (iii) 1,500,000 - 1,500,000 None
National development agreement withMega International Commercial Bank (iv) 1,139,800 - 1,139,800 None
National development agreement withTaipei Fubon Bank (v) 1,500,000 - 1,500,000 None
National development agreement withE.Sun Commercial Bank (vi) 1,862,000 - 1,862,000 None
National development agreement withCTBC Bank (vii) 1,000,000 - 1,000,000 None
Total $ 18,495,100 14,145,600 32,640,700
〜27〜
-
(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
Amount
Names of financial institutionNon-current
portionCurrentportion Total
Collateral orGuarantee
December 31, 2019
Syndicated agreement with Mizuho Bankand other 19 participating banks (ii) $ 19,826,400 - 19,826,400 None
Syndicated agreement with Credit AgricoleCorporate & Investment Bank and other 15participating banks (i) - 14,419,200 14,419,200 None
National development agreement withTaiShin International Bank (iii) 1,500,000 - 1,500,000 None
National development agreement withMega International Commercial Bank (iv) 1,100,000 - 1,100,000 None
National development agreement withTaipei Fubon Bank (v) 1,370,000 - 1,370,000 None
National development agreement withE.Sun Commercial Bank (vi) 1,496,000 - 1,496,000 None
National development agreement withCTBC Bank (vii) 936,900 - 936,900 None
Total $ 26,229,300 14,419,200 40,648,500
June 30, 2019
Syndicated agreement with Mizuho Bankand other 19 participating banks (ii) $ 9,013,200 - 9,013,200 None
Syndicated agreement with Credit AgricoleCorporate & Investment Bank and other 15participating banks (i) 14,918,400 - 14,918,400 None
National development agreement withTaiShin International Bank (iii) 750,000 - 750,000 None
National development agreement withMega International Commercial Bank (iv) 700,000 - 700,000 None
National development agreement withTaipei Fubon Bank (v) 370,000 - 370,000 None
Total $ 25,751,600 - 25,751,600
(i) Effective December 2015, the Company and its subsidiary, QIL, entered into syndicated creditagreement with Credit Agricole Corporate and Investment Bank and other 18 participatingfinancial institutions. Under which, the Company and QIL will share the term facility andrevolving facility amounted to USD480,000 thousand for a period of 3 years. The borrowingduration is agreed to extend for 2 years with Credit Agricole Corporate and Investment Bankand other 15 participating financial institutions. The loan bears floating interest rates.According to the agreements, the Company takes joint and several liabilities for QIL’ srepayments.
〜28〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(ii) Effective July 2018, the Company and its subsidiary, QIL, entered into syndicated creditagreement with Mizuho Bank and other 19 participating financial institutions. The agreementincluded two trenches, A and B. In trench A, the term facility and revolving facility availableto the Company and QIL amounted to USD560,000 thousand. In trench B, the term facilityand revolving facility available amounted to USD320,000 thousand and the agreementamounted to USD880,000 thousand with floating interest rates for a period of 3 years. Theborrowing duration is allowed to extend for 2 years, but the extension is limited to one timeonly. According to the agreements, the Company takes joint and several liabilities for QIL’srepayments.
(iii) Effective June 2019, the Company entered into credit agreement with TaiShin InternationalBank. The loan facility of agreement amounted to $1,500,000 with floating interest rates for aperiod of 7 years. The agreement started on June 4, 2019.
(iv) Effective June 2019, the Company entered into credit agreement with Mega InternationalCommercial Bank. The loan facility of agreement amounted to $1,300,000 with floatinginterest rates for a period of 7 years. The agreement started on June 19, 2019.
(v) Effective June 2019, the Company entered into credit agreement with Taipei Fubon Bank. Theloan facility of agreement amounted to $1,500,000 with floating interest rates for a period of 7years. The agreement started on June 4, 2019.
(vi) Effective June 2019, the Company entered into credit agreement with E.Sun CommercialBank. The loan facility of agreement amounted to $2,000,000 with floating interest rates for aperiod of 7 years. The agreement started on July 3, 2019.
(vii) Effective June 2019, the Company entered into credit agreement with CTBC Bank. The loanfacility of agreement amounted to $1,000,000 with floating interest rates for a period of 7years. The agreement started on July 4, 2019.
(viii) Under these agreements, the Group shall adhere to certain financial provisions such as currentratios, leverage ratios, interest coverage ratios and tangible net worth at the end dates of thesemi-annual and the annual accounting periods (June 30 and December 31). Otherwise, theborrowings will be considered due and payable immediately. As of June 30, 2020, the Groupwas in compliance with the above financial covenants.
(ix) The interest rates for all aforementioned credit facilities were 0.000%~1.327%,0.095%~2.958% and 0.095%~3.581% as of June 30, 2020, December 31, 2019, and June 30,2019, respectively.
(x) The Group’ s interest risk and sensitivity analysis of financial assets and liabilities weredisclosed in Note (6)(v).
〜29〜
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(n) Lease liabilities
The carrying amounts of the Group’s lease liabilities were as follows:
June 30,2020
December 31,2019
June 30,2019
Current $ 885,057 926,693 950,896
Non-current $ 1,269,184 1,658,511 2,021,898
For the maturity analysis, please refer to note (6)(v).
The amounts recognized in profit or loss were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,2020 2019 2020 2019
Interest expenses on leaseliabilities
$ 14,589 19,931 30,864 40,756
Variable lease paymentsnot included in themeasurement of leaseliabilities
$ 41,801 31,330 90,136 80,701
Expenses relating toshort-term leases
$ 29,100 44,955 75,850 131,475
The amounts recognized in the statement of cash flows for the Group were as follows:
For the Six Months Ended June 30,2020 2019
Total cash outflow for leases $ 652,167 721,783
1. Land and Building leases
As of June 30, 2020, the Group leases land and buildings for its office space, warehouse and staffdormitory. The leases typically run for a period of 1 to 10 years. Some leases include an option torenew the lease for an additional period of the same duration after the end of the contract term.
2. Other leases
The Group leases machinery and equipment, and transportation equipment with lease terms of 2years and 3 years, respectively. In some cases, the Group has no options to purchase the assets atthe end of the contract term; in other cases, it does not guarantee the residual value of the leasedassets at the end of the contract term.
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(o) Employee benefits
1.Defined benefit plans
In prior fiscal year, there was no material volatility of the market, reimbursement and settlement orother material one-time events. As a result, pension cost in the accompanying interim financialstatements is measured and disclosed as of December 31, 2019 and 2018.
The details of the Group’s expenses were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Operating costs $ 240 264 475 449
Selling expenses 68 114 137 302
General andadministrative expenses
2,768 3,369 5,526 6,885
Research anddevelopment expenses 1,043 1,244 2,118 2,362
$ 4,119 4,991 8,256 9,998
2.Defined contribution plans
The Group’s pension expenses under the pension plan cost to the Bureau of Labor Insurance wereas follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Operating costs $ 13,971 8,624 27,859 14,887
Selling expenses 7,137 6,651 14,222 13,205
General andadministrative expenses
20,211 19,786 40,500 39,739
Research anddevelopment expenses 67,710 62,215 135,066 123,449
Total $ 109,029 97,276 217,647 191,280
The Group allocates 6% of each employee’s monthly wages to the labor pension personal accountat the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act.Under this defined contribution plan, the Group allocates a fixed amount to the Bureau of theLabor Insurance without additional legal or constructive obligations.
3.The Group’s pension expenses of foreign subsidiaries allocated in accordance with local laws andregulations were $308,036, $676,390, $852,905 and $1,398,696 for the three months ended June30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019.
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(ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUDED IN CHINESE)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS AS OF JUNE 30, 2020 AND 2019
QUANTA COMPUTER INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020 AND 2019
(AMOUNTS EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
UNLESS OTHERWISE SPECIFIED)
(p) Income taxes
The details of the Group’s income tax expense were as follows:
For the Three Months Ended June 30, For the Six Months Ende