30th Oct 2013 12:19
| HON HAI PRECISION INDUSTRY CO., LTD. |
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| CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT ACCOUNTANTS JUNE 30, 2013 AND 2012 |
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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. The English translation does not include additional disclosures that are required for Chinese-language reports under Guidelines for Securities Issuers's Financial Reporting promulgated by the Securities and Futures Commission of the Republic of China. | ||
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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
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To The Board of Directors and Stockholders
Hon Hai Precision Industry Co., Ltd.
We have reviewed the accompanying consolidated balance sheets of Hon Hai Precision Industry Co., Ltd. and subsidiaries as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, and the related consolidated statements of comprehensive income and of cash flows for the three-month and six-month periods ended June 30, 2013 and 2012. 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 did not review the financial statements of certain consolidated subsidiaries accounted for under equity method, which statements reflect total assets of these subsidiaries amounting to $155,770,762,000, $147,874,948,000, $161,307,895,000 and $245,803,235,000, representing 7.98%, 7.21%, 8.39%, and 14.17% of the related consolidated total assets as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, respectively, and total revenues amounting to $40,975,344,000, $37,292,266,000, $77,867,553,000 and $74,442,939,000, constituting 4.58%, 4.18%, 4.57% and 3.93% of the total revenues for the three-month and six-month periods then ended, respectively. Those statements were reviewed by other auditors, whose reports thereon have been furnished to us and our conclusion expressed herein, is based solely on the review reports of the other auditors.
Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36, "Review of Financial Statements" in the Republic of China. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, 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.
As explained in Notes 4(3) and 6(9), we did not review the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under equity method, which statements reflect total assets (including investments accounted for under equity method) of $433,075,648,000 and $358,852,646,000, constituting 22.19% and 18.67% of the consolidated total assets, and total liabilities of $207,457,003,000 and $184,965,044,000, constituting 16.97% and 14.22% of the consolidated total liabilities as of June 30, 2013 and 2012, respectively, and total comprehensive income (including share of profit (loss) and other comprehensive income of associates and joint ventures accounted for under equity method) of $5,220,099,000, $4,532,782,000, $3,016,255,000 and $5,149,064,000, constituting 20.83%, 38.27%, 5.12% and 31.46% of the consolidated total comprehensive income for the three-month and six-month periods then ended, respectively. These amounts and the information disclosed in Note 13 were based solely on the unreviewed financial statements of these companies as of June 30, 2013 and 2012.
Based on our reviews and the review reports of the other auditors, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries, investments accounted for under equity method and the information disclosed in Note 13 been audited or reviewed by independent accountants and the omission of certain additional disclosures relating to the investee companies, as required by Article 15-1 of the Rules Governing the Preparation of Financial Statements by Securities Issuers, 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", IAS 34, "Interim Financial Reporting", and IFRS 1, "First-time Adoption of International Financial Reporting Standards", as endorsed by the Financial Supervisory Commission (FSC).
Pricewaterhouse Coopers, Taiwan
Republic of China
August 13, 2013
------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated 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 consolidated 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. |
June 30, 2013 | December 31, 2012 | June 30, 2012 | January 1, 2012 | ||||||||||||||||||||||||||||
Assets | Notes | AMOUNT | % | AMOUNT | % | AMOUNT | % | AMOUNT | % | ||||||||||||||||||||||
Current assets | |||||||||||||||||||||||||||||||
1100 | Cash and cash equivalents | 6(1) | $ | 602,490,947 | 31 | $ | 505,526,956 | 25 | $ | 637,339,044 | 33 | $ | 329,793,633 | 19 | |||||||||||||||||
1110 | Financial assets at fair value through profit or loss - current | 6(2) | 430,089 | - | 140,220 | - | 139,524 | - | 70,329 | - | |||||||||||||||||||||
1125 | Available-for-sale financial assets - current | 6(3) | 835,126 | - | 777,410 | - | 672,254 | - | 674,287 | - | |||||||||||||||||||||
1170 | Accounts receivable, net | 6(4) | 432,318,438 | 22 | 597,578,990 | 29 | 413,351,344 | 22 | 450,757,984 | 26 | |||||||||||||||||||||
1180 | Accounts receivable - related parties | 7 | 20,383,827 | 1 | 35,469,651 | 2 | 14,648,865 | 1 | 25,291,811 | 2 | |||||||||||||||||||||
1200 | Other receivables | 6(5) and 7 | 48,380,966 | 3 | 38,235,975 | 2 | 32,275,867 | 2 | 34,679,896 | 2 | |||||||||||||||||||||
130X | Inventory | 6(6) | 325,423,059 | 17 | 349,882,643 | 17 | 309,969,848 | 16 | 380,521,794 | 22 | |||||||||||||||||||||
1410 | Prepayments | 8,341,639 | - | 7,647,041 | - | 5,479,699 | - | 7,119,919 | - | ||||||||||||||||||||||
1470 | Other current assets | 6(7) and 8 | 2,338,763 | - | 947,222 | - | 58,416,794 | 3 | 46,741,750 | 3 | |||||||||||||||||||||
11XX | Total current assets | 1,440,942,854 | 74 | 1,536,206,108 | 75 | 1,472,293,239 | 77 | 1,275,651,403 | 74 | ||||||||||||||||||||||
Non-current assets | |||||||||||||||||||||||||||||||
1510 | Financial assets at fair value through profit or loss - noncurrent | 6(2) | 179,300 | - | 179,300 | - | - | - | - | - | |||||||||||||||||||||
1523 | Available-for-sale financial assets - noncurrent | 6(3) | 13,324,381 | 1 | 12,498,717 | 1 | 14,496,358 | 1 | 9,365,511 | - | |||||||||||||||||||||
1543 | Financial assets carried at cost - noncurrent | 6(8) | 9,411,632 | 1 | 8,591,982 | - | 4,028,922 | - | 4,018,056 | - | |||||||||||||||||||||
1550 | Investments accounted for under equity method | 6(9) | 43,542,238 | 2 | 41,958,943 | 2 | 37,577,278 | 2 | 37,792,058 | 2 | |||||||||||||||||||||
1600 | Property, plant and equipment | 6(10) | 399,687,780 | 20 | 405,155,076 | 20 | 357,201,243 | 19 | 368,166,092 | 21 | |||||||||||||||||||||
1760 | Investment property - net | 6(11) | 2,425,292 | - | 1,231,003 | - | 1,284,306 | - | 1,345,340 | - | |||||||||||||||||||||
1780 | Intangible assets | 6(12) | 3,871,822 | - | 3,954,469 | - | 551,166 | - | 695,266 | - | |||||||||||||||||||||
1840 | Deferred income tax assets | 6(35) | 13,036,059 | 1 | 10,951,902 | 1 | 9,949,962 | - | 10,560,705 | 1 | |||||||||||||||||||||
1900 | Other non-current assets | 6(13) and 8 | 24,944,061 | 1 | 29,510,605 | 1 | 25,135,062 | 1 | 27,340,133 | 2 | |||||||||||||||||||||
15XX | Total non-current assets | 510,422,565 | 26 | 514,031,997 | 25 | 450,224,297 | 23 | 459,283,161 | 26 | ||||||||||||||||||||||
1XXX | Total assets | $ | 1,951,365,419 | 100 | $ | 2,050,238,105 | 100 | $ | 1,922,517,536 | 100 | $ | 1,734,934,564 | 100 | ||||||||||||||||||
(Continued)
June 30, 2013 | December 31, 2012 | June 30, 2012 | January 1, 2012 | ||||||||||||||||||||||||||||
Liabilities and Equity | Notes | AMOUNT | % | AMOUNT | % | AMOUNT | % | AMOUNT | % | ||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||||||||||
2100 | Short-term loans | 6(14) | $ | 357,221,512 | 19 | $ | 297,572,165 | 15 | $ | 473,585,750 | 25 | $ | 260,522,749 | 15 | |||||||||||||||||
2110 | Short-term notes and bills payable | 6(15) | 5,593,757 | - | 7,991,597 | - | 5,494,490 | - | 7,989,312 | - | |||||||||||||||||||||
2120 | Financial liabilities at fair value through profit or loss - current | 6(2) | 84,139 | - | 82,055 | - | 4,573,592 | - | 251,834 | - | |||||||||||||||||||||
2170 | Accounts payable | 451,409,441 | 23 | 602,755,794 | 29 | 465,309,959 | 24 | 519,725,102 | 30 | ||||||||||||||||||||||
2180 | Accounts payable - related parties | 7 | 26,710,286 | 2 | 35,614,847 | 2 | 34,541,700 | 2 | 28,769,177 | 2 | |||||||||||||||||||||
2200 | Other payables | 6(16) | 138,197,537 | 7 | 196,267,554 | 10 | 138,101,510 | 7 | 123,145,854 | 7 | |||||||||||||||||||||
2230 | Current income tax liabilities | 6(35) | 18,099,660 | 1 | 19,177,206 | 1 | 11,644,808 | 1 | 19,939,503 | 1 | |||||||||||||||||||||
2250 | Provisions for liabilities - current | 6(23) | 2,030,576 | - | 3,464,280 | - | 3,536,429 | - | 7,302,884 | - | |||||||||||||||||||||
2300 | Other current liabilities | 6(17) | 103,396,777 | 5 | 89,442,390 | 4 | 22,542,518 | 1 | 25,879,538 | 2 | |||||||||||||||||||||
21XX | Total current liabilities | 1,102,743,685 | 57 | 1,252,367,888 | 61 | 1,159,330,756 | 60 | 993,525,953 | 57 | ||||||||||||||||||||||
Non-current liabilities | |||||||||||||||||||||||||||||||
2500 | Financial liabilities at fair value through profit or loss - noncurrent | 6(2) | - | - | - | - | 7,032 | - | 470,158 | - | |||||||||||||||||||||
2530 | Corporate bonds payable | 6(18) | 90,903,899 | 5 | 74,980,461 | 4 | 77,326,947 | 4 | 62,378,777 | 4 | |||||||||||||||||||||
2540 | Long-term loans | 6(19) | 14,385,724 | 1 | 30,707,957 | 2 | 53,504,834 | 3 | 53,600,100 | 3 | |||||||||||||||||||||
2570 | Deferred income tax liabilities | 6(35) | 4,210,831 | - | 4,148,965 | - | 3,409,729 | - | 3,927,601 | - | |||||||||||||||||||||
2600 | Other non-current liabilities | 6(22) | 10,061,572 | - | 7,119,084 | - | 7,542,391 | 1 | 6,256,685 | 1 | |||||||||||||||||||||
25XX | Total non-current liabilities | 119,562,026 | 6 | 116,956,467 | 6 | 141,790,933 | 8 | 126,633,321 | 8 | ||||||||||||||||||||||
2XXX | Total liabilities | 1,222,305,711 | 63 | 1,369,324,355 | 67 | 1,301,121,689 | 68 | 1,120,159,274 | 65 | ||||||||||||||||||||||
Equity | |||||||||||||||||||||||||||||||
Equity attributable to owners of parent | |||||||||||||||||||||||||||||||
Share capital | 6(24) | ||||||||||||||||||||||||||||||
3110 | Share capital - common stock | 118,358,665 | 6 | 118,358,665 | 6 | 106,890,967 | 6 | 106,890,967 | 6 | ||||||||||||||||||||||
3150 | Stock dividends to be distributed | 18,658,757 | 1 | - | - | 16,563,649 | 1 | - | - | ||||||||||||||||||||||
Capital surplus | 6(25) | ||||||||||||||||||||||||||||||
3200 | Captial surplus | 59,505,263 | 3 | 58,932,078 | 3 | 53,215,791 | 3 | 53,206,711 | 3 | ||||||||||||||||||||||
Retained earnings | 6(26) | ||||||||||||||||||||||||||||||
3310 | Legal reserve | 69,456,739 | 4 | 59,980,502 | 3 | 59,980,502 | 3 | 51,821,402 | 3 | ||||||||||||||||||||||
3350 | Undistributed earnings | 392,799,144 | 20 | 399,791,359 | 19 | 333,260,941 | 17 | 340,192,127 | 20 | ||||||||||||||||||||||
Other equity interest | 6(27) | ||||||||||||||||||||||||||||||
3400 | Other equity interest | 31,994,231 | 1 | 7,805,557 | - | 16,266,920 | - | 25,495,188 | 1 | ||||||||||||||||||||||
3500 | Treasury stocks | 6(24) | ( | 18,901 | ) | - | ( | 18,901 | ) | - | ( | 18,901 | ) | - | ( | 18,901 | ) | - | |||||||||||||
31XX | Equity attributable to owners of the parent | 690,753,898 | 35 | 644,849,260 | 31 | 586,159,869 | 30 | 577,587,494 | 33 | ||||||||||||||||||||||
36XX | Non-controlling interest | 6(28) | 38,305,810 | 2 | 36,064,490 | 2 | 35,235,978 | 2 | 37,187,796 | 2 | |||||||||||||||||||||
3XXX | Total equity | 729,059,708 | 37 | 680,913,750 | 33 | 621,395,847 | 32 | 614,775,290 | 35 | ||||||||||||||||||||||
(Continued)
June 30, 2013 | December 31, 2012 | June 30, 2012 | January 1, 2012 | ||||||||||||||||||||||||||||
Liabilities and Equity | Notes | AMOUNT | % | AMOUNT | % | AMOUNT | % | AMOUNT | % | ||||||||||||||||||||||
Commitments and Contingent Liabilities | 9 | ||||||||||||||||||||||||||||||
Subsequest Events | 11 | ||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 1,951,365,419 | 100 | $ | 2,050,238,105 | 100 | $ | 1,922,517,536 | 100 | $ | 1,734,934,564 | 100 | |||||||||||||||||||
For the three-month periods ended June 30 | For the six-month periods ended June 30 | ||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||
Items | Notes | AMOUNT | % | AMOUNT | % | AMOUNT | % | AMOUNT | % | ||||||||||||||||||||||
4000 | Sales revenue | 6(29) and 7 | $ | 895,617,497 | 100 | $ | 891,917,151 | 100 | $ | 1,704,629,448 | 100 | $ | 1,893,202,811 | 100 | |||||||||||||||||
5000 | Operating costs | 6(6)(32)(33) and 7 | ( | 843,684,571 | ) | ( | 94 | ) | ( | 837,980,104 | ) | ( | 94 | ) | ( | 1,606,783,435 | ) | ( | 94 | ) | ( | 1,790,857,910 | ) | ( | 95 | ) | |||||
5900 | Net operating margin | 51,932,926 | 6 | 53,937,047 | 6 | 97,846,013 | 6 | 102,344,901 | 5 | ||||||||||||||||||||||
Operating expenses | 6(32)(33) | ||||||||||||||||||||||||||||||
6100 | Selling expenses | ( | 5,655,751 | ) | ( | 1 | ) | ( | 5,765,762 | ) | ( | 1 | ) | ( | 10,640,350 | ) | ( | 1 | ) | ( | 11,508,945 | ) | - | ||||||||
6200 | General and administrative expenses | ( | 16,950,476 | ) | ( | 2 | ) | ( | 16,001,053 | ) | ( | 2 | ) | ( | 34,424,614 | ) | ( | 2 | ) | ( | 34,036,506 | ) | ( | 2 | ) | ||||||
6300 | Research and development expenses | ( | 10,723,867 | ) | ( | 1 | ) | ( | 10,772,816 | ) | ( | 1 | ) | ( | 20,271,226 | ) | ( | 1 | ) | ( | 19,938,878 | ) | ( | 1 | ) | ||||||
6000 | Total operating expenses | ( | 33,330,094 | ) | ( | 4 | ) | ( | 32,539,631 | ) | ( | 4 | ) | ( | 65,336,190 | ) | ( | 4 | ) | ( | 65,484,329 | ) | ( | 3 | ) | ||||||
6900 | Operating profit | 18,602,832 | 2 | 21,397,416 | 2 | 32,509,823 | 2 | 36,860,572 | 2 | ||||||||||||||||||||||
Non-operating income and expenses | |||||||||||||||||||||||||||||||
7010 | Other income | 6(30) | 4,185,192 | - | 6,475,854 | 1 | 7,125,786 | - | 9,351,688 | - | |||||||||||||||||||||
7020 | Other gains and losses | 6(31) | 4,285,658 | 1 | ( | 8,785,900 | ) | ( | 1 | ) | 10,974,131 | 1 | ( | 5,237,311 | ) | - | |||||||||||||||
7050 | Finance costs | 6(34) | ( | 2,021,279 | ) | - | ( | 3,297,539 | ) | - | ( | 3,916,336 | ) | - | ( | 5,122,622 | ) | - | |||||||||||||
7060 | Share of profit of associates and joint ventures accounted for under equity method | 6(9) | 491,414 | - | 807,729 | - | 1,447,586 | - | 1,127,817 | - | |||||||||||||||||||||
7000 | Total non-operating income and expenses | 6,940,985 | 1 | ( | 4,799,856 | ) | - | 15,631,167 | 1 | 119,572 | - | ||||||||||||||||||||
7900 | Profit before income tax | 25,543,817 | 3 | 16,597,560 | 2 | 48,140,990 | 3 | 36,980,144 | 2 | ||||||||||||||||||||||
7950 | Income tax expense | 6(35) | ( | 8,613,432 | ) | ( | 1 | ) | ( | 5,753,308 | ) | ( | 1 | ) | ( | 14,860,281 | ) | ( | 1 | ) | ( | 11,053,586 | ) | ( | 1 | ) | |||||
8200 | Profit for the year | $ | 16,930,385 | 2 | $ | 10,844,252 | 1 | $ | 33,280,709 | 2 | $ | 25,926,558 | 1 | ||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||
8310 | Financial statements translation differences of foreign operations | $ | 8,526,477 | 1 | $ | 1,496,256 | - | $ | 25,120,147 | 1 | ( | $ | 10,459,708 | ) | - | ||||||||||||||||
8325 | Unrealized gain (loss) on valuation of available-for-sale financial assets | ( | 885,076 | ) | - | ( | 494,920 | ) | - | ( | 398,364 | ) | - | 1,554,942 | - | ||||||||||||||||
8370 | Share of other comprehensive income of associates and joint ventures accounted for under equity method | 483,360 | - | ( | 1,811 | ) | - | 869,649 | - | ( | 656,513 | ) | - | ||||||||||||||||||
8300 | Other comprehensive income for the year | $ | 8,124,761 | 1 | $ | 999,525 | - | $ | 25,591,432 | 1 | ( | $ | 9,561,279 | ) | - | ||||||||||||||||
8500 | Total comprehensive income for the year | $ | 25,055,146 | 3 | $ | 11,843,777 | 1 | $ | 58,872,141 | 3 | $ | 16,365,279 | 1 | ||||||||||||||||||
Profit (loss) attributable to: | |||||||||||||||||||||||||||||||
8610 | Owners of the parent | $ | 16,977,649 | 2 | $ | 12,059,161 | 1 | $ | 33,330,162 | 2 | $ | 27,950,656 | 1 | ||||||||||||||||||
8620 | Non-controlling interest | ( | 47,264 | ) | - | ( | 1,214,909 | ) | - | ( | 49,453 | ) | - | ( | 2,024,098 | ) | - | ||||||||||||||
$ | 16,930,385 | 2 | $ | 10,844,252 | 1 | $ | 33,280,709 | 2 | $ | 25,926,558 | 1 | ||||||||||||||||||||
Comprehensive income attributable to: | |||||||||||||||||||||||||||||||
8710 | Owners of the parent | $ | 23,808,004 | 3 | $ | 13,531,671 | 1 | $ | 57,518,836 | 3 | $ | 18,722,388 | 1 | ||||||||||||||||||
8720 | Non-controlling interest | 1,247,142 | - | ( | 1,687,894 | ) | - | 1,353,305 | - | ( | 2,357,109 | ) | - | ||||||||||||||||||
$ | 25,055,146 | 3 | $ | 11,843,777 | 1 | $ | 58,872,141 | 3 | $ | 16,365,279 | 1 | ||||||||||||||||||||
Earnings per share | 6(36) | ||||||||||||||||||||||||||||||
9750 | Basic earnings per share | $ | 1.30 | $ | 0.93 | $ | 2.56 | $ | 2.15 | ||||||||||||||||||||||
9850 | Diluted earnings per share | $ | 1.27 | $ | 0.91 | $ | 2.49 | $ | 2.11 | ||||||||||||||||||||||
2012 | ||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2012 | $ 106,890,967 | $ - | $ 53,206,711 | $ 51,821,402 | $ 340,192,127 | $ 21,047,357 | $ 4,447,831 | ( | $ 18,901 | ) | $ 577,587,494 | $ 37,187,796 | $ 614,775,290 | |||||||||||||||||||||||||||||||
Appropriations of 2011 earnings (Note 1): | ||||||||||||||||||||||||||||||||||||||||||||
Legal reserve | - | - | - | 8,159,100 | ( | 8,159,100 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
Cash dividends | - | - | - | - | ( | 16,033,645 | ) | - | - | - | ( | 16,033,645 | ) | - | ( | 16,033,645 | ) | |||||||||||||||||||||||||||
Stock dividends | - | 10,689,097 | - | - | ( | 10,689,097 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
Employees' stock bonus | - | 5,874,552 | - | - | - | - | - | - | 5,874,552 | - | 5,874,552 | |||||||||||||||||||||||||||||||||
Consolidated net income for 2012 | - | - | - | - | 27,950,656 | - | - | - | 27,950,656 | ( | 2,024,098 | ) | 25,926,558 | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) for the six months ended June 30, 2012, net of income tax | - | - | - | - | - | ( | 10,805,405 | ) | 1,577,137 | - | ( | 9,228,268 | ) | ( | 333,011 | ) | ( | 9,561,279 | ) | |||||||||||||||||||||||||
Changes in equity of associates and joint ventures accounted for under equity method | - | - | 9,080 | - | - | - | - | - | 9,080 | - | 9,080 | |||||||||||||||||||||||||||||||||
Increase in non-controlling interests | - | - | - | - | - | - | - | - | - | 405,291 | 405,291 | |||||||||||||||||||||||||||||||||
Balance at June 30, 2012 | $ 106,890,967 | $ 16,563,649 | $ 53,215,791 | $ 59,980,502 | $ 333,260,941 | $ 10,241,952 | $ 6,024,968 | ( | $ 18,901 | ) | $ 586,159,869 | $ 35,235,978 | $ 621,395,847 | |||||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 | $ 118,358,665 | $ - | $ 58,932,078 | $ 59,980,502 | $ 399,791,359 | $ 1,370,511 | $ 6,435,046 | ( | $ 18,901 | ) | $ 644,849,260 | $ 36,064,490 | $ 680,913,750 | |||||||||||||||||||||||||||||||
Appropriations of 2012 earnings (Note 2): | ||||||||||||||||||||||||||||||||||||||||||||
Legal reserve | - | - | - | 9,476,237 | ( | 9,476,237 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
Cash dividends | - | - | - | - | ( | 17,753,800 | ) | - | - | - | ( | 17,753,800 | ) | - | ( | 17,753,800 | ) | |||||||||||||||||||||||||||
Stock dividends | - | 11,835,866 | - | - | ( | 11,835,866 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
Employees' stock bonus | - | 6,822,891 | - | - | - | - | - | - | 6,822,891 | - | 6,822,891 | |||||||||||||||||||||||||||||||||
Consolidated net income for 2013 | - | - | - | - | 33,330,162 | - | - | - | 33,330,162 | ( | 49,453 | ) | 33,280,709 | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) for the six months ended June 30, 2013, net of income tax | - | - | - | - | - | 24,575,985 | ( | 387,311 | ) | - | 24,188,674 | 1,402,758 | 25,591,432 | |||||||||||||||||||||||||||||||
Changes in equity of associates and joint ventures accounted for under equity method | - | - | 564,018 | - | - | - | - | - | 564,018 | - | 564,018 | |||||||||||||||||||||||||||||||||
Adjustments arising from changes in percentage of ownership in subsidiaries | - | - | 9,167 | - | ( | 1,256,474 | ) | - | - | - | ( | 1,247,307 | ) | - | ( | 1,247,307 | ) | |||||||||||||||||||||||||||
Increase in non-controlling interests | - | - | - | - | - | - | - | - | - | 888,015 | 888,015 | |||||||||||||||||||||||||||||||||
Balance at June 30, 2013 | $ 118,358,665 | $ 18,658,757 | $ 59,505,263 | $ 69,456,739 | $ 392,799,144 | $ 25,946,496 | $ 6,047,735 | ( | $ 18,901 | ) | $ 690,753,898 | $ 38,305,810 | $ 729,059,708 |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Consolidated profit before tax for the period | $ | 48,140,990 | $ | 36,980,144 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||
Income and expenses having no effect on cash flows | |||||||||
Depreciation | 36,841,771 | 32,908,758 | |||||||
Amortization | 423,404 | 194,480 | |||||||
Provision for doubtful accounts and sales discount | 227,523 | - | |||||||
Loss on impairment of non-financial assets | 35,376 | 1,780,642 | |||||||
Loss (gain) on disposal of property, plant and equipment, net | 194,316 | ( | 213,139 | ) | |||||
Loss on financial assets or liabilities at fair value through profit or loss, net | 183,588 | 4,018,802 | |||||||
Share of profit of associates and joint ventures accounted for under equity method | ( | 1,447,586 | ) | ( | 1,127,817 | ) | |||
Gain on disposal of investments | ( | 551,075 | ) | ( | 1,026,809 | ) | |||
Interest expense | 3,851,272 | 4,998,819 | |||||||
Interest income | ( | 3,755,113 | ) | ( | 6,590,196 | ) | |||
Dividend income | ( | 143,927 | ) | ( | 35,676 | ) | |||
Changes in assets/liabilities relating to operating activities | |||||||||
Net changes in assets relating to operating activities | |||||||||
Financial assets held for trading | ( | 209,047 | ) | ( | 194,605 | ) | |||
Notes receivable | 56,476 | 14,416 | |||||||
Accounts receivable | 164,976,553 | 37,392,224 | |||||||
Accounts receivable due from related parties | 15,085,824 | 10,642,946 | |||||||
Other receivables | ( | 10,075,705 | ) | 4,303,939 | |||||
Inventories | 24,459,584 | 64,635,330 | |||||||
Prepayments | ( | 694,598 | ) | 1,640,220 | |||||
Net changes in liabilities relating to operating activities | |||||||||
Accounts payable | ( | 151,346,353 | ) | ( | 54,415,143 | ) | |||
Accounts payable to related parties | ( | 8,904,561 | ) | 5,772,523 | |||||
Other payables | ( | 46,749,485 | ) | 2,072,652 | |||||
Provisions for liabilities - current | ( | 1,433,704 | ) | ( | 3,766,455 | ) | |||
Receipts in advance | ( | 753,515 | ) | ( | 1,492,901 | ) | |||
Other current liabilities | 711,411 | ( | 1,844,119 | ) | |||||
Accrued pension liabilities | ( | 66,477 | ) | 34,284 | |||||
Cash generated from operations | 69,056,942 | 136,683,319 | |||||||
Income tax paid | ( | 17,484,649 | ) | ( | 17,921,629 | ) | |||
Net cash provided by operating activities | 51,572,293 | 118,761,690 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Acquisition of property, plant and equipment | ( | 34,098,343 | ) | ( | 26,421,730 | ) | |||
Increase in other financial assets | ( | 870,232 | ) | ( | 12,562,205 | ) | |||
Acquisition of available-for-sale financial assets | ( | 132,000 | ) | ( | 7,552,438 | ) | |||
Increase in other non-current assets | ( | 189,503 | ) | ( | 746,361 | ) | |||
Acquisition of investments accounted for under equity method | ( | 1,078,665 | ) | ( | 585,000 | ) | |||
Acquisition of financial assets carried at cost | ( | 248,958 | ) | ( | 338,610 | ) | |||
Increase in land use right | ( | 60,939 | ) | ( | 11,639 | ) | |||
Proceeds from disposal of financial assets carried at cost | 39,942 | - | |||||||
Proceeds from disposal of available-for-sale financial assets | 147 | 4,757,151 | |||||||
Proceeds from disposal of investments accounted for under equity method | 2,428,216 | 1,799,326 | |||||||
Proceeds from disposal of property, plant and equipment | 879,116 | 2,783,652 | |||||||
Other investing activities | 242,032 | - | |||||||
Interest received | 3,844,902 | 6,095,148 | |||||||
Dividends received | 143,927 | 35,676 | |||||||
Net cash used in investing activities | ( | 29,100,358 | ) | ( | 32,747,030 | ) |
(Continued)
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Increase in short-term loans | $ | 46,706,574 | $ | 213,063,001 | |||||
Decrease in short-term notes and bills payable | ( | 2,397,840 | ) | ( | 2,494,822 | ) | |||
Proceeds from issuing bonds | 15,292,000 | 15,000,000 | |||||||
Proceeds from long-term debt | 3,110,151 | 4,583,900 | |||||||
Repayments of long-term debt | ( | 5,413,350 | ) | ( | 3,336,750 | ) | |||
Increase in other non-current liabilities | 2,766,933 | 1,251,420 | |||||||
Changes of non-controlling interests | 888,015 | 405,291 | |||||||
Interest paid | ( | 2,933,615 | ) | ( | 3,757,630 | ) | |||
Net cash provided by financing activities | 58,018,868 | 224,714,410 | |||||||
Net effect of changes in foreign currency exchange rates | 16,473,188 | ( | 3,183,659 | ) | |||||
Increase in cash and cash equivalents | 96,963,991 | 307,545,411 | |||||||
Cash and cash equivalents at beginning of period | 505,526,956 | 329,793,633 | |||||||
Cash and cash equivalents at end of period | $ | 602,490,947 | $ | 637,339,044 | |||||
Supplemental disclosures of cash flow information | |||||||||
Cash paid for the acquisition of property, plant and equipment | |||||||||
Increase in property, plant and equipment | $ | 11,158,805 | $ | 26,826,656 | |||||
Add:payable - beginning | 49,996,281 | 28,177,904 | |||||||
Less:payable - ending | ( | 26,827,183 | ) | ( | 28,246,181 | ) | |||
Effect of changes in foreign currency exchange rates | ( | 229,560 | ) | ( | 336,649 | ) | |||
Cash paid | $ | 34,098,343 | $ | 26,421,730 | |||||
Investing activities with no cash flow effect: | |||||||||
Unrealized (loss) gain on financial instruments | |||||||||
Adjustment for change in value of availabe-for-sale financial assets | ( | $ | 391,826 | ) | $ | 1,582,248 | |||
Valuation of long-term investments accounted for under the equity method | 4,515 | ( | 5,111 | ) | |||||
( | $ | 387,311 | ) | $ | 1,577,137 | ||||
Financing activities with no cash flow effect: | |||||||||
Cash dividends payable | $ | 17,753,800 | $ | 16,033,645 | |||||
Employees' stock bonus | $ | 6,822,891 | $ | 5,874,552 |
HON HAI PRECISION INDUSTRY CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013 AND 2012
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)
(UNAUDITED)
HISTORY AND ORGANIZATION
Hon Hai Precision Industry Co., Ltd. (the "Company") was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the "Group") are primarily engaged in the manufacture, processing and sales of connectors, cable, enclosures, wired/wireless communication products, optical products, power supply modules, and assemblies for use in the IT, communications, automotive equipment, precision molding, automobile, and consumer electronics industries.
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 13, 2013.
APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC")
Not applicable as it is the first-time adoption of IFRSs by the Group this year.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group
IFRS 9, 'Financial Instruments: Classification and measurement of financial assets'
A. The International Accounting Standards Board ("IASB") published IFRS 9, 'Financial Instruments', in November, 2009, which will take effect on January 1, 2015 with early application permitted. Although the FSC has endorsed IFRS 9, FSC does not permit early application of IFRS 9 when IFRSs are adopted in R.O.C. in 2013. Instead, enterprises should apply International Accounting Standard No. 39 ("IAS 39"), 'Financial Instruments: Recognition and Measurement' reissued in 2009.
B. IFRS 9 was issued as the first step to replace IAS 39. IFRS 9 outlines the new classification and measurement requirements for financial instruments, which might affect the accounting treatments for financial instruments of the Group.
C. The Group has not evaluated the overall effect of the IFRS 9 adoption. However, based on preliminary evaluation, it was noted that the IFRS 9 adoption might have an impact on those instruments classified as 'available-for-sale financial assets' held by the Group, as IFRS 9 specifies that the fair value changes in the equity instruments that meet certain criteria may be reported in other comprehensive income, and such amount that has been recognized in other comprehensive income should not be reclassified to profit or loss when such assets are derecognized. The Group recognized loss on equity instruments amounting to ($391,826) in other comprehensive income for the six-month period ended June 30, 2013.
(3) IFRSs issued by IASB but not yet endorsed by the FSC
The following are the assessment of new standards, interpretations and amendments issued by IASB that are effective but not yet endorsed by the FSC (application of the new standards, interpretations and amendments should follow the regulations of the FSC):
New Standards, Interpretations and Amendments |
Main Amendments |
Effective Date |
Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1) | The amendment provides first-time adopters of IFRSs with the same transition relief that existing IFRS preparer received in IFRS 7, 'Financial Instruments: Disclosures' and exempts first-time adopters from providing the additional comparative disclosures. | July 1, 2010 |
Improvements to IFRSs 2010 | Amendments to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 34 and IFRIC 13. | January 1, 2011 |
IFRS 9, 'Financial instruments: Classification and measurement of financial liabilities' | IFRS 9 requires gains and losses on financial liabilities designated at fair value through profit or loss to be split into the amount of change in the fair value that is attributable to changes in the credit risk of the liability, which shall be presented in other comprehensive income, and cannot be reclassified to profit or loss when derecognising the liabilities; and all other changes in fair value are recognized in profit or loss. The new guidance allows the recognition of the full amount of change in the fair value in the profit or loss only if there is reasonable evidence showing on initial recognition that the recognition of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch (inconsistency) in profit or loss. (That determination is made at initial recognition and is not reassessed subsequently.) | January 1, 2015 |
Disclosures - transfers of financial assets (amendment to IFRS 7)
| The amendment enhances qualitative and quantitative disclosures for all transferred financial assets that are not derecognized and for any continuing involvement in transferred assets, existing at the reporting date. | July 1, 2011 |
Severe hyperinflation and removal of fixed dates for first-time adopters (amendment to IFRS 1) | When an entity's date of transition to IFRSs is on, or after, the functional currency normalisation date, the entity may elect to measure all assets and liabilities held before the functional currency normalisation date at fair value on the date of transition to IFRSs. First-time adopters are allowed to apply the derecognition requirements in IAS 39, 'Financial instruments: Recognition and measurement', prospectively from the date of transition to IFRSs, and they are allowed not to retrospectively recognize related gains on the date of transition to IFRSs. | July 1, 2011 |
Deferred tax: recovery of underlying assets (amendment to IAS 12) | The amendment gives a rebuttable presumption that the carrying amount of investment properties measured at fair value is recovered entirely by sale, unless there exists any evidence that could rebut this presumption. The amendment also replaces SIC 21, 'Income taxes-recovery of revalued non-depreciable assets'. | January 1, 2012 |
IFRS 10, 'Consolidated financial statements' | The standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where it is difficult to assess. | January 1, 2013 |
IFRS 11, 'Joint arrangements' | Judgments applied when assessing the types of joint arrangements-joint operations and joint ventures, the entity should assess the contractual rights and obligations instead of the legal form only. The standard also prohibits the proportional consolidation for joint ventures. |
January 1, 2013 |
IFRS 12, 'Disclosure of interests in other entities' | The standard requires the disclosure of interests in other entities including subsidiaries, joint arrangements, associates and unconsolidated structured entities. | January 1, 2013 |
IAS 27, 'Separate financial statements' (as amended in 2011)
| The standard removes the requirements of consolidated financial statements from IAS 27 and those requirements are addressed in IFRS 10, 'Consolidated financial statements'. | January 1, 2013 |
IAS 28, 'Investments in associates and joint ventures' (as amended in 2011) | As consequential amendments resulting from the issuance of IFRS 11 , 'Joint arrangements', IAS 28 (revised) sets out the requirements for the application of the equity method when accounting for investments in joint ventures. | January 1, 2013 |
IFRS 13, 'Fair value measurement' | IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. | January 1, 2013 |
IAS 19 revised, 'Employee benefits' (as amended in 2011) | The revised standard eliminates corridor approach and requires actuarial gains and losses to be recognized immediately in other comprehensive income. Past service costs will be recognized immediately in the period incurred. Net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. The return of plan assets, excluding net interest expense, is recognized in other comprehensive income. | January 1, 2013 |
Presentation of items of other comprehensive income (amendment to IAS 1)
| The amendment requires profit or loss and other comprehensive income (OCI) to be presented separately in the statement of comprehensive income. Also, the amendment requires entities to separate items presented in OCI into two groups based on whether or not they may be recycled to profit or loss subsequently. | July 1, 2012 |
IFRIC 20, 'Stripping costs in the production phase of a surface mine' | Stripping costs that meet certain criteria should be recognized as the 'stripping activity asset'. To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the entity shall account for the costs of that stripping activity in accordance with IAS 2, 'Inventories'. | January 1, 2013 |
Disclosures-Offsetting financial assets and financial liabilities (amendment to IFRS 7)
| The amendment requires disclosures to include quantitative information that will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements. | January 1, 2013 |
Offsetting financial assets and financial liabilities (amendment to IAS 32) | The amendment clarifies criterion that an entity 'currently has a legally enforceable right to set off the recognized amounts' and gross settlement mechanisms with features are effectively equivalent to net settlement; they would therefore satisfy the IAS 32 criterion in these instances. | January 1, 2014 |
Mandatory effective date and transition disclosures (amendment to IFRS 7 and IFRS 9) | The mandatory effective date has been postponed to January 1, 2015. | January 1, 2015 |
Government loans (amendment to IFRS 1) | The amendment provides exemption to first-time adopters to apply the requirements in IFRS 9, 'Financial instruments', and IAS 20, 'Accounting for government grants and disclosure of government assistance', prospectively to government loans that exist at the date of transition to IFRS. | January 1, 2013 |
Improvements to IFRSs 2009-2011 | Amendments to IFRS 1 and IAS 1, IAS 16, IAS 32 and IAS 34. | January 1, 2013 |
Consolidated financial statements, joint arrangements and disclosure of interests in other Entities: Transition guidance (amendments to IFRS 10, IFRS 11 and IFRS 12) | The amendment clarifies that the date of initial application is the first day of the annual period in which IFRS 10, 11 and 12 is adopted. | January 1, 2013 |
Investment entities (amendments to IFRS 10, IFRS 12 and IAS 27) | The amendments define 'Investment Entities' and their characteristics. The parent company that meets the definition of investment entities should measure its subsidiaries using fair value through profit of loss instead of consolidating them. | January 1, 2014 |
IFRIC 21, 'Levies' | The interpretation addresses the accounting for levies imposed by governments in accordance with legislation (other than income tax). A liability to pay a levy shall be recognized in accordance with IAS 37, 'Provisions, contingent liabilities and contingent assets'. | January 1, 2014 |
Recoverable amount disclosures for non-financial assets (amendments to IAS 36) | The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or intangible assets with indefinite useful lives that were not impaired. | January 1, 2014 |
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) | The amendment states that the novation of a hedging instrument would not be considered an expiration or termination giving rise to the discontinuation of hedge accounting when the hedging instrument that is being novated complies with specified criteria. | January 1, 2014 |
The Group is currently assessing the potential impact of the new standards, interpretations and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unless otherwise stated, the principal accounting policies applied in the preparation of these consolidated financial statements as set out below have been consistently applied to all the periods presented.
(1) Compliance statement
A. These consolidated financial statements are the first second-quarter consolidated financial statements prepared by the Group in accordance with the "Rules Governing the Preparation of Financial Statements by Securities Issuers", IAS 34, 'Interim Financial Reporting', and IFRS 1, 'First-time Adoption of International Financial Reporting Standards', as endorsed by the FSC.
B. In the preparation of the balance sheet of January 1, 2012 (the Group's date of transition to IFRSs) ("the opening IFRSs balance sheet"), the Group has adjusted the amounts that were reported in the consolidated financial statements in accordance with previous R.O.C. GAAP. Please refer to Note 15 for the impact of transitioning from R.O.C. GAAP to the International Financial Reporting Standards, International Accounting Standards, and Interpretations/bulletins as endorsed by the FSC (collectively referred herein as the "IFRSs") on the Group's financial position, operating results and cash flows.
(2) Basis of preparation
A. Except for the following items, these 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) Available-for-sale financial assets measured at fair value.
(c) Liabilities on cash-settled share-based payment arrangements measured at fair value.
(d) Defined benefit liabilities recognized based on the net amount of pension fund assets plus unrecognized prior period's service cost and unrecognized actuarial losses, less unrecognized actuarial gains and present value of defined benefit obligation.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment 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:
(a) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. The existence and effect of potential voting rights that are currently exercisable or convertible have been considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
(b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
(d) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss.
B. Subsidiaries included in the consolidated financial statements:
(a) The financial statements of the entity as of and for the six-month periods ended June 30, 2013 and 2012 were not reviewed by independent auditors as the entity did not meet the difinition of significant subsidiary.
(b) The financial statements of certain consolidated subsidiaries for the six-month period ended June 30, 2012 were not reviewed by independent accountants, which reflect total assets of $424,874,438 and $350,380,414, constituting 21.77% and 18.23% of total consolidated assets, and total liabilities were $207,457,003 and $184,965,044, constituting 16.97% and 14.22% of the consolidated total liabilities as of June 30, 2013 and 2012, respectively, as well as the total comprehensive income of $4,692,149, $3,832,836, $2,567,539, and $5,087,176, constituting 18.73%, 32.36%, 4.36% and 31.09% of the consolidated total comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
(c) Changes in the consolidated subsidiaries：From July, 2011 to March, 2012, a subsidiary of the Company disposed 70% of Shenzhen Futaihong Bright Real Estate Co., which was excluded from consolidation effective in June, 2012, the date on which the Company lost control over the subsidiary.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.
(4) Compliance statement
A. The consolidated financial statements are presented in NTD, which is the Company's functional and the Group's presentation currency.
B. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within other gains and losses.
C. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
iii. All resulting exchange differences are recognized in other comprehensive income.
(b) When the foreign operation as an associate is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, when the Group still retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realized within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be paid off within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be paid off within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash equivalents
Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the above criteria and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
(8) Available-for-sale financial assets
A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in 'financial assets measured at cost'.
(9) Accounts receivable
Accounts receivable are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(10) Impairment of financial assets
A. The Group assesses at balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the individual financial asset or group of financial assets that can be reliably estimated.
B. The criteria that the Group uses to determine whether there is an impairment loss is as follows:
(a) Significant financial difficulty of the issuer or debtor;
(b) A breach of contract, such as a default or delinquency in interest or principal payments;
(c) The Group, for economic or legal reasons relating to the borrower's financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
(d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
(e) The disappearance of an active market for that financial asset because of financial difficulties;
(f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
(h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(a) Financial assets measured at cost
The amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset directly.
(b) Available-for-sale financial assets
The amount of the impairment loss is measured as the difference between the asset's acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from 'other comprehensive income' to 'profit or loss'. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset directly.
(11) Derecognition of financial assets
The Group derecognizes a financial asset when one of the following conditions is met:
A. The cash flows from the financial asset have been received.
B. The contractual rights to receive cash flows from the financial asset expire.
C. The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
D. The contractual rights to receive cash flows from the financial asset have been transferred; however, the Group has not retained control of the financial asset.
(12) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.
(13) Investments accounted for under the equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Group's investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.
B. The Group's share of its associates' post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.
C. When changes in an associate's equity that are not recognized in profit or loss or other comprehensive income of the associate and such changes not affecting the Group's ownership percentage of the associate, the Group recognizes change in ownership interests in the associate in 'capital surplus' in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group's ownership percentage of the associate but maintains significant influence on the associate, then 'capital surplus' and 'investments accounted for under the equity method' shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group's ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.
G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(14) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant in relation to the total, the cost of the item must be depreciated separately.
D. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors', from the date of the change. The estimated useful lives of property, plant and equipment are as follows:
Buildings 51 years
(Buildings auxiliary 6 ～ 11 years)
Machinery and equipment 3 ～ 9 years
Office equipment 4 ～ 6 years
Other equipment 1 ～ 6 years
(15) Investment property
An investment property is stated initially at its cost and measured subsequently using the cost model. Investment property is depreciated on a straight-line basis over its estimated useful life of 6 ~ 51 years.
(16) Intangible assets
A. Goodwill arises in a business combination accounted for by applying the acquisition method.
B. Patent is amortised on a straight-line basis over its estimated useful life of 1~20 years.
(17) Impairment of non-financial assets
A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognized.
B. Goodwill for impairment testing purpose is allocated to cash generating units. This allocation is identified based on operating segments. Goodwill is allocated to a cash generating unit or a group of cash generating units that expects to benefit from business combination that will produce goodwill.
(18) Borrowings
A. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
(19) Notes and accounts payable
Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. However, short-term accounts payable without bearing interest, are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(20) Financial liabilities at fair value through profit or loss
A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
(21) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.
(22) Offsetting financial instruments
Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
(23) Financial liabilities and equity instruments - Bonds payable
Ordinarycorporate bonds issued by the Group are initially recognized at fair value, net of transaction costs incurred. Ordinarycorporate bonds are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the 'finance costs' over the period of bond circulation using the effective interest method.
Convertible corporate bonds issued by the Group contain conversion options (that is, the bondholders have the right to convert the bonds into the Group's common shares but not by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Group classifies the bonds payable and derivative features embedded in convertible corporate bonds on initial recognition as a financial asset or a financial liability ('capital surplus-stock warrants') in accordance with the substance of the contractual arrangement. Convertible corporate bonds are accounted for as follows:
A. Conversion options, call options and put options embedded in convertible corporate bonds are recognized initially at net fair value as 'financial assets or financial liabilities at fair value through profit or loss'. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognized as 'gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss'.
B. Bonds payable of convertible corporate bonds is remaining value of total issue price less amounts of 'financial assets or financial liabilities at fair value through profit or loss' as stated above, and subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the 'finance costs' over the period of bond circulation using the effective interest method.
C. Any transaction costs directly attributable to the issuance of convertible corporate bonds are allocated to each liability components in proportion to the allocation of proceeds.
D. When bondholders exercise conversion options, the liability component of the bonds (including 'bonds payable' and 'financial assets or financial liabilities at fair value through profit or loss') shall be remeasured on the conversion date. The book value of common shares issued due to the conversion shall be based on the adjusted book value of the above-mentioned liability component.
(24) Derivative financial instruments
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss.
(25) Provisions for other liabilities
Provisions of warranties are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.
(26) Employee benefits
A. Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service.
B. Pensions
(a) Defined contribution plans
For defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.
(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
ii. Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise.
iii. Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period.
iv. Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.
C. Employees' bonus and directors' and supervisors' remuneration
Employees' bonus and directors' and supervisors' remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees' bonus and directors' and supervisors' remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders' meeting subsequently, the differences should be recognized based on the accounting for changes in estimates. The Group calculates the number of shares of employees' stock bonus based on the fair value per share at the previous day of the stockholders' meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.
(27) Employee share-based payment
A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B. For the cash-settled share-based payment arrangements, the employee services received and the liability incurred are measured at the fair value of the liability to pay for those services, and are recognized as compensation cost and liability over the vesting period. The fair value of the liability shall be remeasured at each balance sheet date until settled at the settlement date, with any changes in fair value recognized in profit or loss.
(28) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. Tax preference given for expenditures incurred on research and development is recorded using the income tax credits accounting.
G. The interim period income tax expense is recognized 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.
(29) Dividends
Dividends are recorded in the Company's financial statements in the period in which they are approved by the Company's shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.
(30) Revenue recognition
The Group manufactures and sells 3C products. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group's activities. Revenue arising from the sales of goods should be recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.
(31) Government grants
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes expenses for the related costs for which the grants are intended to compensate. Government grants related to property, plant and equipment are recognized as non-current liabilities and are amortised to profit or loss over the estimated useful lives of the related assets using the straight-line method.
(32) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY
The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group's accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The above information is addressed below:
(1) Critical judgements in applying the Group's accounting policies
A. Revenue recognition
The determination of whether the Group is acting as principal or agent in a transaction is based on an evaluation of Group's exposure to the significant risks and rewards associated with the sale of goods or the rendering of service in accordance with the business model and substance of the transaction. Where the Group acts as a principal, the amount received or receivable from customer is recognized as revenue on a gross basis. Where the Group acts as an agent, net revenue is recognized representing commissions earned. The following characteristics of a principal are used as indicators to determine whether the Group shall recognize revenue on a gross basis:
a. The Group has primary responsibilities for the goods or services it provides;
b. The Group bears inventory risk;
c. The Group bears credit risk of customers.
B. Financial assets-impairment of equity investments
The Group follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.
C. Financial assets carried at cost
For investments held by the Group which have no active quoted market price, sufficient information cannot be obtained, and their fair value cannot be measured reliably. Therefore, they were classified as "financial assets carried at cost".
(2) Critical accounting estimates and assumptions
The Group makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:
A. Evaluation of inventories
As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.
As of June 30, 2013, the carrying amount of inventories was $325,423,059.
DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents
A. The Group associates 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. The Group's maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.
B. The Group's time deposits pledged to others as collateral and over three months had transferred to "other current assets".
(2) Financial assets and liabilities at fair value through profit or loss
A. The Group recognized loss of $171,117, $6,028,026, $159,308 and $3,985,567 on the above financial assets and liabilities for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
B. The counterparties of the Group's debt instrument investments have good credit quality. The maximum exposure to credit risk at balance sheet date is the carrying amount of financial assets at fair value through profit or loss.
C. The non-hedging derivative instruments transaction and contract information are as follows:
(a) Forward foreign exchange contracts
The Group entered into long-term foreign exchange transactions to hedge the following risk of exchange rate:
A. Operating activities: Import of raw materials and export price.
B. Investing activities: Import of machinery and equipment price.
C. Financial activities: Long-term and short-term foreign currency denominated assets and liabilities (Finance).
(b) Equity subscription contract
On March 27, 2012, the Company's board of directors resolved to sign an equity subscription contract for the Company and its subsidiary, Foxconn (Far East) Limited, to acquire 50 million and 31,143 thousand shares of a listed company in Japan, Sharp Corporation, in the amount of JPY 27,500 million and JPY 17,128,650 thousand, respectively, for a total equity interest by the Group of 6.584%. This equity subscription contract meets the recognition criteria of a forward contract specified in IAS No. 39, "Financial Instruments : Recognition and Measurement". The Company and its subsidiary should evaluate gain or loss based on fair value for this arrangement and also recognize related financial assets/liabilities. However, the Company could not get the approval for equity settlement because it was unable to provide related documents before July 31, 2012 as required by the competent authorities. As such, this equity subscription contract no longer met the recognition criteria of a forward contract specified in IAS No. 39. Therefore, the Company and its subsidiary reversed the loss on valuation of financial liabilities and financial liabilities of $4,513,255 and reversed deferred income tax assets and income tax benefit of $501,753, on July 31, 2012 as these amounts had been recognized during the six-month period ended June 30, 2012. The net effect of such reversals was $4,011,502.
(c) The issuance of convertible bonds by the Company was recognized under financial liabilities designated at fair value through profit or loss on initial recognition due to their compound instrument feature. The Group recognized gain on valuation of convertible bonds amounting to $3,336, $19,144, $15,176 and $463,126 for the three-month and six-month periods ended June 30, 2013 and 2012, respectively. Please refer to Note 6(18)A for the terms of the 2010 1st unsecured euro convertible bonds.
D. The Group has no financial assets at fair value through profit or loss pledged to others.
(3) Available-for-sale financial assets
The Group recognized net loss of $867,023, $449,291, $391,826 and net gain of $1,582,248 in other comprehensive income due to fair value change for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
(4) Notes and accounts receivable
A. The Company factored its accounts receivable to certain financial institutions without recourse. Under the agreement, the Company is not required to bear uncollectible risk of the underlying accounts receivable, but is liable for the losses incurred on any business dispute, and did not provide any collateral. Accordingly, these accounts receivable meet the derecognition criteria for financial assets. The Company has derecognized the accounts receivable sold to financial institutions, net of the amount estimated for business disputes.
As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the balance of accounts receivable factored but unsettled were $6,000,000, $44,721,600, $45,862,800 and $44,382,349, respectively. The relevant information of accounts receivable factored but unsettled were as follows:
B. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the Group has signed promissory notes amounting to $1,500,000 (US$50 million), $4,065,600 (US$140 million), $4,631,400 (US$155 million) and $3,542,760 (US$117 million) as guarantee for those accounts receivable in commercial dispute, respectively.
C. For the three-month and six-month periods ended June 30, 2013 and 2012, the financing charges (expenses) incurred from accounts receivable factoring were $13,636, $77,581, $65,064 and $123,803 (shown as "finance costs"), respectively.
D. The maximum exposure to credit risk at June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 was the carrying amount of each class of accounts receivable.
E. The Group does not hold any collateral as security.
(5) Other receivables
The counterparties of the Group's other accounts receivable are good credit quality enterprises and government agencies. There is no significant compliance concerns and credit risk.
(6) Inventories
Expenses and losses incurred on inventories for the three-month and six-month periods ended June 30, 2013 and 2012 were as follows:
(7) Other current assets
(8) Financial assets carried at cost
A. According to the Group's intension, its investment in above Corporation stocks should be classified as 'available-for-sale financial assets'. However, as the above Corporation stocks are not traded in active market, and no sufficient industry information of companies similar to above Corporation or above Corporation's financial information can be obtained, the fair value of the investment in above Corporation stocks cannot be measured reliably. The Group classified those stocks as 'financial assets carried at cost'.
B. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, no financial assets measured at cost held by the Group were pledged to others.
(9) Investments accounted for under the equity method
The investment using the equity method, and some of the amounts were based on the financial statements of the investee companies for the same periods which were not audited or reviewed by accountants. The consolidated financial information for the aforementioned unaudited or unreviewed investee companies includes the related investments of $8,201,210 and $8,472,232, constituting 0.42% and 0.44% of the consolidated total assets as of June 30, 2013 and 2012, respectively and the share of profit of associates and joint ventures accounted for under equity method of $527,950, $699,946, $448,716, and $61,888, constituting 2.11%, 5.91%, 0.76%, and 0.38% of the consolidated comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
The financial information and quoted market price of the Group's principal associates are summarized below:
Note: The investee company, an emerging company in Taiwan, has not released 2013 semi-annual financial information before August 13, 2013. Thus, the net income for the first quarter of the investee company should be disclosed instead.
(10) Property, plant and equipment
(11) Investment property
A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:
B. The fair value of the investment property held by the Group as at June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 was $2,877,911, $1,421,325, $1,460,057 and $1,504,989, respectively, which was revalued by independent appraisers. Valuations were made using the market approach.
(12) Intangible assets
A. The above amount mainly represents goodwill arising from the Group acquisition of Scientific-Atlanta de Mexico S. de R.L. de C.V. in 2011.
B. The above amount mainly represents patents obtaining NEC panel patent in September, 2012.
C. The details of amortization are as follows:
(13) Other non-current assets
Long-term prepaid rent pertains mainly to the rental for land use rights in China which was paid in advance when the contract was signed. The Group recognized rental expenses of $114,834, $99,417, $212,378, and $194,480 for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
(14) Short-term loans
A. On June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, FOXCONN SLOVAKIA, SPOL S.R.O., a subsidiary of the Company, entered into a short-term loan contract with a financial institution, and the Company is a guarantor of the loan amounting to EUR 131 million, EUR 251 million, EUR 331 million, and EUR 536 million, respectively.
B. On June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, COMPETITION TEAM TECHNOLOGIES LIMITED, a subsidiary of the Company, entered into a short-term loan contract with a financial institution, and the Company is a guarantor of the loan amounting to RMB 1,500 million, RMB 1,500 million, RMB 0, and RMB 0, respectively.
C. On June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, FALCON PRECISION TRADING LIMITED, a subsidiary of the Company, entered into a short-term loan contract with a financial institution, and the Company is a guarantor of the loan amounting to RMB 1,500 million, RMB 0, RMB 0, and RMB 0, respectively.
(15) Short-term notes and bills payable
(16) Other payables
(17) Other current liabilities
(18) Bonds payable
A. 2010 1st unsecured euro convertible bonds
(a) On August 18, 2010, following the approval from the SFB, the Company issued the 1st unsecured euro zero coupon convertible bonds in the amount of US$1 billion. These convertible bonds cover a period of three years from October 12, 2010 to October 12, 2013.
(b) The conversion price shall be adjusted based on the terms of the convertible bonds. As of June 30, 2013, the convertible bonds have not been converted. The adjusted conversion price was $111.592 (in dollars) per share with a fixed exchange rate applicable on bonds of NTD$31.251=USD$1.
(c) Under the terms of the convertible bonds, all the repurchased, previously redeemed or converted bonds will be retired and not to be re-issued.
(d) Under the terms of the convertible bonds, the rights and obligations of the new shares converted from convertible bonds are the same as those of the issued and outstanding common stock.
(e) The effective interest rate of the bonds was 2.02%.
(f) Regarding the issuance of convertible bonds, the non-equity conversion options were separated from their host contracts and were recognized in 'financial liabilities at fair value through profit or loss' in net amount in accordance with IAS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.
(g) First unsecured corporate bonds issue in 2010 had been reclassified to "Current liabilities" in the fourth quarter of 2012.
B. First unsecured corporate bonds issue in 2005
On September 14, 2005, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $11,500,000. As of June 30, 2013, Bond Aa to Af, Bond Ba to Bf and Bond Ca to Cf had been redeemed in the amount of $9,000,000. The amount of the unredeemed bonds is $2,500,000. The terms of these domestic unsecured bonds are summarized as follows:
C. First debenture issue of 2009
(a) On January 12, 2009, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $6,820,000. The terms of these domestic unsecured bonds are summarized as follows:
(b) 2009 1st unsecured corporate bonds payable of $3,410,000 had been reclassified to "Current liabilities" in the fourth quarter of 2012.
D. First debenture issue of 2010
On December 17, 2010, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $6,000,000. The terms of these domestic unsecured bonds are summarized as follows:
E. First debenture issue of 2011
On January 7, 2011, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $6,000,000. The terms of these domestic unsecured bonds are summarized as follows:
F. Second debenture issue of 2011
On June 1, 2011, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $7,050,000. The terms of these domestic unsecured bonds are summarized as follows:
G. Third debenture issue of 2011
On July 6, 2011, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $4,950,000. The terms of these domestic unsecured bonds are summarized as follows:
H. First debenture issue of 2012
On December 28, 2011, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $9,000,000. The terms of these domestic unsecured bonds are summarized as follows:
I. Second debenture issue of 2012
On May 11, 2012, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $6,000,000. The terms of these domestic unsecured bonds are summarized as follows:
J. Third debenture issue of 2012
On July 27, 2012, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $8,000,000. The terms of these domestic unsecured bonds are summarized as follows:
K. Fourth debenture issue of 2012
On September 28, 2012, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $3,300,000. The terms of these domestic unsecured bonds are summarized as follows:
L. First debenture issue of 2013
On January 7, 2013, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $11,050,000. The terms of these domestic unsecured bonds are summarized as follows:
M. Foreign unsecured corporate bonds USD-denominated
On December 13, 2012, Competition Team Technologies Ltd., a subsidiary of the Company, issued foreign unsecured corporate bonds in the amount of US$650 million, and the Company is the guarantor of the bonds. The terms of these foreign unsecured corporate bonds are summarized as follows:
N. Foreign unsecured corporate bonds JPY-denominated
On March 21, 2013, Foxconn (Far East) Limited, a subsidiary of the Company, issued foreign unsecured corporate bonds in the amount of JPY 10 billion, and the Company is the guarantor of the bonds. The terms of these foreign unsecured corporate bonds are summarized as follows:
O. Foreign unsecured corporate bonds JPY-denominated
On March 21, 2013, Foxconn (Far East) Limited, a subsidiary of the Company, issued foreign unsecured corporate bonds in the amount of JPY 4 billion, and the Company is the guarantor of the bonds. The terms of these foreign unsecured corporate bonds are summarized as follows:
(19) Long-term loans
A. In 2008, Foxconn (Far East) Limited, a subsidiary of the Company, entered into a syndicated credit facility agreement with Mizuho Corporate Bank Ltd. as the lead bank and obtained a credit line in the amount of US$ 1,035 million, of which US$ 405 million had been repaid in advance. As of June 30, 2013, the credit line is US$ 517.5 million, and the Company is the guarantor of the loan.
B. Part of the syndicated loan with Mizuho Corporate Bank Ltd. as the lead bank, amounting to US$ 517.5 million, had been reclassified to 'current liabilities' in the first quarter of 2013.
C. The Company entered into a syndicated credit facility agreement with Mizuho Coporate Bank Ltd., etc. as the lead bank and obtained a credit line in the amount of JPY 51 billion on March 21, 2011.
D. Foxconn Slovakia, SPOL. S.R.O., a subsidiary of the Company, entered into a syndicated credit facility agreement with ING Bank N.V. as the lead bank and obtained a credit line in the amount of EUR 410 million, of which EUR 265 million had been repaid in advance. As of June 30, 2013, the credit line is EUR 145 million, and the Company is the guarantor of the loan.
E. The Company entered into a comprehensive credit contract with China Development Industrial Bank on August 3, 2011, and obtained a credit line in the amount of $2 billion.
F. The Company's subsidiary Syntrend Creative Park Co. Ltd., a subsidiary of the Company, entered into a comprehensive credit contract with First Commercial Bank on April 18, 2011, and obtained a credit line in the amount of $2.5 billion.
G. Honfujin Precision Electronics (Chengdu) Limited, a subsidiary of the Company, entered into a syndicated credit facility agreement with Mizuho Coporate Bank Ltd. and Sumitomo Mitsui Banking Corporation on June 11, 2012, and obtained a credit line in the amount of JPY 11 billion. The Company is the guarantor of the loan.
H. Honfujin Precision Electronics (Chengdu) Limited, a subsidiary of the Company, entered into a U.S. dollar regular loan commitment agreement with Citibank (China) Ltd., and obtained a credit line of US$50 million on September 21, 2012, and the Company is the guarantor of the loan.
I. The Company entered into a comprehensive credit facility agreement with ING Bank, N.V. etc. as the lead bank and obtained a credit line of JPY 417 million.
J. Throughout the term of Mizuho Corporate Bank Ltd., ING Bank, N.V., Citibank (China) Ltd., China Development Industrial Bank, etc. syndicated term loan agreement, the Group shall maintain the agreed financial ratios, to be tested semi-annually and annually on consolidated basis.
(20) Pensions
A. Defined benefit plans
(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 average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% 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) The amounts recognized in the balance sheet are determined as follows:
(c) The Group recognized pension expenses of $13,635, $14,179, $27,270 and $28,358 in the statement of comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.
(d) As of December 31, 2012 and January 1, 2012, cumulative actuarial losses/(gains) recognized in other comprehensive income were $193,854 and $0, respectively.
(e) The Bank of Taiwan was commissioned to manage the Fund of the Company's and domestic subsidiaries' defined benefit pension plan in accordance with the Fund's annual investment and utilisation plan and the "Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund" (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The constitution of fair value of plan assets as of June 30, 2013 and 2012 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund's minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.
(f) The principal actuarial assumptions used were as follows:
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.
(g) Historical information of experience adjustments was as follows:
(h) Expected contributions to the defined benefit pension plans of the Group within one year from June 30, 2013 is $49,135.
B. Defined contribution plans
(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 subsidiaries in mainland China have defined contribution pension plans and contribute an amount monthly based on 8%~9% of employees' monthly salaries and wages to an independent fund administered by a government agency. The plan is administered by the government of mainland China. Other than the monthly contributions, the Group do not have further pension liabilities.
(c) The pension costs under the defined contribution pension plans of the Group for the three-month and six-month periods ended June 30, 2013 and 2012 were $4,872,555, $3,547,167, $8,919,380 and $6,824,581, respectively.
(21) Share-based payment
As of June 30, 2013 and 2012, the share-based payment transactions of FIH Mobile Limited (formerly: Foxconn International Holdings Limited), a subsidiary of the Company (listed on the Stock Exchange of Hong Kong), are set forth below:
Note 1: Vested upon completion of certain years' service.
Note 2: Of the shares granted, 2,737,718 shares cannot be sold within 1 to 3 years from the grant date.
Note 3: Of the shares granted, 407,000 shares cannot be sold within 1 to 2 years from the grant date.
Note 4: Of the shares granted, 20,362,078 shares cannot be sold within 1 to 3 years from the grant date.
Note 5: Of the shares granted, 13,939,379 shares cannot be sold within 1 to 2 years from the grant date.
Note 6: Of the shares granted, 14,934,766 shares cannot be sold within 1 to 2 years from the grant date.
Note 7: Of the shares granted, 6,210,640 shares cannot be sold within 1 to 2 years from the grant date.
A. Employee stock options
For the stock options granted with the compensation cost accounted for using the fair value method, their fair value on the grant date is estimated using the Black-Scholes option-pricing model. The weighted-average parameters used in the estimation of the fair value are as follows:
(a) For the six-month periods ended June 30, 2013 and 2012, the weighted-average exercise price of employee stock options outstanding were US$0.53 and US$0.71 (in dollars) per share, respectively. For the three-month and six-month periods ended June 30, 2013 and 2012, expenses incurred on employee stock options transactions were $22,447 (US$752 thousand), $62,510 (US$2,110 thousand), $43,496 (US$1,466 thousand) and $118,584 (US$3,998 thousand), respectively.
(b) Details of the employee stock options are set forth below:
B. Other share-based payment plans
These share-based payments were granted to employees. For the three-month and six-month periods ended June 30, 2013 and 2012, expenses incurred on other share-based payments were $121,095 (US$4,070 thousand), $73,024 (US$2,465 thousand), $173,540 (US$5,849 thousand) and $146,264 (US$4,931 thousand), respectively.
(22) Other non-current liabilities
(23) Provisions for liabilities
Analysis of total provisions:
The Group gives warranties on 3C products sold. Provision for warranty is estimated based on historical warranty data of 3C products.
(24) Capital stock
A. On June 25, 2013, the Company's shareholders adopted a resolution to increase the authorized shares to 18 billion shares. As of June 30, 2013, the Company's authorized capital was $122,300,000, consisting of 12,230 million shares of ordinary stock, and the paid-in capital was $118,358,665 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.
B. On June 26, 2013 and June 18, 2012, the Company's shareholders adopted a resolution to distribute employees' stock bonus amounting to $6,822,891 and $5,874,552 for 2012 and 2011, respectively. The employee stock bonus of 109,254 thousand and 77,860 thousand shares were determined based on the closing price on June 25, 2013 and June 15, 2012, respectively, the previous day of the 2013 and 2012 shareholders' meeting after taking into account the effects of ex-rights and ex-dividends. In addition, the Company's shareholders adopted a resolution to issue stock dividends at par value amounting to $11,835,866 and $10,689,097, totaling 1,183,587 thousand and 1,068,910 thousand shares in 2013 and 2012, respectively. The capital increase was approved by the Financial Supervisory Commission, Securities and Futures Bureau on July 29, 2013 and July 5, 2012, respectively. The additional stock allocation ex-right date was scheduled on September 15, 2013 and Auguat 18, 2012 so the additional shares were accounted for as equity and shown as "stock dividend to be distributed".
C. Pursuant to the resolution adopted at the stockholders' meeting held on June 1, 1999, and after obtaining approval from the SFC, the Company issued 25 million units of global depository receipts (GDRs) in Europe, Asia and the USA, comprising 50 million shares of common stock (Deposited Shares). The issuance amounted to USD347,250 thousand, and the main terms and conditions of the GDRs are as follows:
(a) Voting
Holders of GDRs have no right to directly exercise voting rights or attend the Company's stockholders' meeting, except when a motion is on the election of directors or supervisors.
A holder or holders together holding at least 51% of the GDRs outstanding at the relevant record date of the stockholders' meeting can instruct the Depositary to vote in the same direction in respect of one or more resolutions to be proposed at the meeting.
(b) Sale and withdrawal of GDRs
Under the current R.O.C. law, shares represented by the GDRs may be withdrawn by holders of GDRs commencing three months after the initial issue of GDRs. A holder of a GDR may, provided that the Company has delivered to the custodian physical share certificates in respect of the Deposited Shares, request the Depositary to sell or cause to be sold on behalf of such holder the shares represented by such GDRs.
(c) Dividends
GDR holders are entitled to receive dividends to the same extent as the holders of common stock subject to the terms of the Deposit Agreement and applicable laws of the R.O.C.
(d) As of June 30, 2013, 145,748,000 units of GDRs were outstanding, which represents 291,495 thousand shares of common stock.
D. Treasury stocks
The Company's subsidiary, Hong Jingguo International Investment Co., Ltd., held ordinary shares issued by the Company in 1998. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the subsidiary owned 1,302,812, 1,302,812, 1,184,375 and 1,184,375 shares, respectively, of the Company's common stock at a cost of $18,901.
(25) Capital surplus
Pursuant to the R.O.C. Company Law, 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 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 capitalized 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.
(26) Retained earnings
A. In accordance with the Company's Articles of Incorporation, current year's earnings must be distributed in the following order:
(a) Covering accumulated deficit;
(b) Setting aside as legal reserve equal to 10% of current year's net income after tax and distribution pursuant to clause (A);
(c) Setting aside a special reserve in accordance with applicable legal and regulatory requirement;
(d) 8% as bonuses to employees; qualified employees include employees of affiliates per criteria set by Board of Directors; and
(e) the remainder shall be distributed pursuant to the proposal of the board of directors in accordance with the Company's dividend policy.
The Company's dividend policy requires the board of directors to consider the Company's budget for future capital expenditures and funding needs when proposing the distribution of earnings. The proposal should be resolved during the Stockholders' Meeting. Dividends may be distributed in the form of cash or shares, or a combination of both, provided, however, that share dividends distributed in respect of any fiscal year shall not exceed 90 percent of total dividends to stockholders.
B. 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 exceeds 25% of the Company's paid-in capital.
C. 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.
D. The appropriations of 2012 and 2011 earnings had been resolved at the stockholders' meeting on June 26, 2013 and June 18, 2012, respectively. Details are summarized below:
The information on distribution of earnings will be posted on the "Market Observation Post System" of the TSEC.
E. For the three-month and six-month periods ended June 30, 2013 and 2012, employees' bonus was accrued at $1,222,391, $907,892, $2,399,772 and $1,982,411, respectively, based on a certain percentage (8%) of net income, and are recognized as operating costs and expenses in current year. Employees' bonus and directors' and supervisors' remuneration for 2012 as resolved by the stockholders were in agreement with those amounts recognized in the 2012 financial statements.
Information about the appropriation of employees' bonus and directors' and supervisors' 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.
(27) Other equity items
(28) Non-controlling interests
(29) Operating revenue
(30) Other income
(31) Other gains and losses
(32) Expenses by nature
(33) Employee benefit expense
(34) Finance costs
(35) Income tax
A. Income tax expense
Components of income tax expense:
B. Relationship between tax expense and accounting profit
C. The Company's income tax returns through 2009 have been assessed and approved by the Tax Authority.
D. Unappropriated retained earnings:
E. The Company's stockholders deductible tax and expected deductible tax rate are as follows:
The estimated creditable tax rate for distribution of earnings of 2012 is calculated based on draft amendment of the Income Tax Law not yet passed.
(36) Earnings per share
The number of shares had retroactively been adjusted by the stock dividends as of June 30, 2013.
RELATED PARTY TRANSACTIONS
(1) Significant transactions and balances with related parties
A. Sales
Goods are sold based on the price lists in force and terms that would be available to third parties.
B. Purchases
Commodities purchased from related enterprises were based on normal commercial terms and conditions.
C. Accounts receivable
Accounts receivable from related parties primarily arise from sales transactions with credit terms of 30 to 90 days. The receivables are unsecured and interest-bearing.
D. Accounts payable
Accounts payable to related parties primarily arise from purchase transactions and procurement of raw materials by related parties on behalf of the Company with payment terms of 30 to 90 days. The payables are interest-bearing.
E. Property transactions:
Sale of property:
Period-end balances arising from sale of property:
Acquisition of property:
Period-end balance arising from acquisition:
F. Purchase of materials on behalf of related parties:
G. Prepayment
H. Loans to related parties
Receivables from related parties
Interest income
Loans to related enterprise are payable monthly within two years (shown as "other receivables"). Interest for the three-month and six-month periods ended June 30, 2013 was charged at the rate of 0.8%~1.625% and 0.80%, respectively.
(2) Key management compensation
PLEDGED ASSETS
As of June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, the book value of the Group's pledged assets are as follows:
SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS
(1) Contingencies
None.
(2) Commitments
A. Capital commitments
Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:
B. Operating lease commitments
The Company leases factory dormitory under non-cancellable operating lease agreements. The lease terms are between 5 and 10 years, and the majority of lease agreements are renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
C. The Group entered into an agreement with Qualcomm Incorporated regarding mobile phone use right. Under the agreement, the Group shall pay royalties based on sales volume of the related products.
D. The subsidiary, Syntrend Creative Park Co. Ltd., entered into a "Private Participation in Construction and Operation of Taipei Information Park and Parking Lots" contract with Taipei City Government, and the royalty shall be paid in accordance with the contract time schedule.
SIGNIFICANT DISASTER LOSS
None.
SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
Hongfujin Precision Electronics (Zhengzhou) and Futaihua Industrial (Shenzhen) Co., Ltd., the subsidiaries of the Company, disposed machinery to an international company at a selling price of $6,524,065. No gain (loss) was recognized on disposal.
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, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the consolidated balance sheet) less cash and cash equivalents. Net value is calculated as 'equity' as shown in the consolidated balance sheet less the total of intangible assets.
During 2013, the Group's strategy, which was unchanged from 2012, was to maintain the gearing ratio within 70%.
(2) Financial instruments
A. Fair value information of financial instruments
The financial assets with fair values equal to book values include cash and cash equivalents, financial assets measured at fair value through profit or loss, available-for-sale financial assets, notes and accounts receivable and other financial assets; the financial liabilities with fair values equal to book values include short-term bank loan, financial liabilities measured at fair value through profit or loss, notes and accounts payable and long-term liabilities due within one year.
B. Financial risk management policies
(a) Risk categories:
The Group employs a comprehensive risk management and control system to clearly identify, measure, and control the various kinds of financial risk it faces, including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk, liquidity risk.
(b) Management objectives:
i. Except for market risk, which is controlled by outside factors, the remainder of the foregoing types of risk can be controlled internally or removed from business processes. Therefore, the goal in managing each of these risks is to reduce them to zero.
ii. As for market risk, the goal is to optimize its overall position through strict suggestion, execution and audit processes, and proper consideration of a) long-term trends in the external economic/financial environment, b) internal operating conditions, and c) the actual effects of market fluctuations.
iii. The Group's overall risk management policy focuses on the unpredictable item of financial markets and seeks to reduce the Group's financial position and financial performance of the potential adverse effects.
iv. The Group uses derivative financial instruments. Please refer to Note 6(2) for details.
(c) Management system:
i. Risk management is carried out by the Group's financial department under policies approved by the Board. Through cooperation with the Group's operating units, the Group's financial department is responsible for identifying, evaluating and avoidance of financial risks.
ii. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as exchange rate risk, interest rate risk, credit risk, derivative and non-derivative financial instruments used, and the investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk
i. Foreign exchange risk
(i) Nature:
The Group is a multinational in the operation electronic generation industry. Most of the exchange rate risk come from:
a. Nonfunctional foreign currency receivable and payable accounts are established at different time so the difference in the functional currency rate results to exchange rate risk. As the amounts offset for assets and liabilities are insignificant, therefore loss is not significant. (Note: The Group has strongholds in many countries worldwide resulting to various currency exchange rate risk, but mainly in U.S. dollars and RMB.)
b. Except from the above commercial transactions on the income statement (operating activities), assets, liabilities and the net investment to foreign operation recognized in the balance sheet will occur the exchange rate risk.
(ii) Management:
a. For foreign exchange risk, the Group has set up a policy to require companies in the Group to manage exchange rate risk relative to its functional currency.
b. The Group's financial department manages the foreign exchange risk arising from various functional currency and reporting currency of the Group.
(iii) The source:
a. U.S. dollar and NT dollar:
Foreign exchange risk arises primarily from U.S. dollar-denominated cash, cash equivalents, accounts receivable and other receivables and other assets; and loans, accounts payable and other payables and other liabilities. Exchange loss or gain arise when they are translated into New Taiwan dollars.
b. U.S. dollars and RMB:
Foreign exchange risk arises primarily from U.S. dollar-denominated cash, cash equivalents, accounts receivable and other receivables and other assets; and loans, accounts payable and other payables and other liabilities. Exchange loss or gain arise when they are translated into RMB.
c. JPY and NT dollar:
Foreign exchange risk arises primarily from yen valued loans, accounts payable and other payables and other liabilities. Exchange loss or gain arise when they are translated into New Taiwan dollars.
(iv) Degree
The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:
ii. Equity securities
(i) Nature
The Group's major long-term investments in domestic and foreign publicly traded and unlisted equity instruments are accounted as available-for-sale financial assets and financial assets carried at cost. The price of those equity instruments will be influenced by the subject of future value of the investment's uncertainty.
(ii) Degree
If such equity instruments' price rise or fall by 1%, with all other factors held constant, the impact on gain or loss on available-for-sale equity instruments are $141,595 and $151,686 for the six-month periods ended June 30, 2013 and 2012, respectively.
iii. Futures
(i) Nature
The Group is exposed to price risk because of investments in futures market instruments, which have fair value in the active market.
(ii) Degree
The Group sets limits to control the transaction volume and the stop-loss amount of derivatives to reduce its futures market risk. As a result, there is no significant future market risk.
iv. Interest rate risk
The Group's interest rate risk arises from long-term loan. The Company's long-term corporate bonds have fixed interest rates so there is no interest rate volatility risk and fair value interest rate risk.Long-term borrowings issued at floating rates expose the Group to cash flow interest rate risk, but most of the risks are offset by cash and cash equivalents with floating rates.
(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.
ii. According to the Group's credit policy, each local entity in the Group is responsible for managing and analysing 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.
iii. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board of directors. The utilisation of credit limits is regularly monitored. Major credit risk arises from cash and cash equivalents, derivative financial instruments and other financial instruments' credit risk. The counterparties of the Group's accounts receivable are good credit quality enterprises and government agencies. There is no significant compliance concerns and credit risk.
iv. The ageing analysis of notes receivable and accounts receivable (including related parties) that were past due but not impaired is as follows:
v. Movements on the Group's provision for impairment of notes receivable and accounts receivable (including related parties) are as follows:
(i) As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, accounts receivable that had been impaired were $2,451,701, $2,224,178, $1,835,555 and $1,835,555, respectively.
(ii) Movement in allowance for bad debts was as follows:
vi. The credit quality of accounts receivable (including related parties) that were neither past due nor impaired is as follows based on the Group's Credit Quality Control Policy:
Group 1: Standard Poor's, Fitch, or Moody rating of A-level or no external agency rating, subject to the Group credit rating at A-level standard.
Group 2: Standard Poor's or Fitch rating of BBB. Moody rating of Baa-or no external agency rating, subject to the Group credit rating at Standard B or C.
Group 3: Standard Poor's or Fitch rating of BB + and below, or Moody rating of Ba1 and below.
Group 4: Have no external agency rating, subject to the Group credit rating standard non-A, B, C grade.
(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 at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group's debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements, for example, currency restrictions.
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.
Non-derivative financial liabilities:
Derivative financial liabilities:
(3) Fair value estimation
The table below analyses financial instruments measured at fair value, by valuation techniques. The different levels have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
These instruments held by the Group mainly are equity instrument, the fair value of these financial assets are mainly quoted from the Stock Exchange, OTC market or regulatory agency's market actual data, which are classified as "valuation from fair value through profit or loss financial assets and liabilities" or "available-for-sale financial assets".
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
These instruments held by the Group are mainly not as first class publicly quoted financial instruments such as derivative instruments or forward exchange. The fair value is mainly determined by valuation techniques or the use of counterparties' quote information. Use more observable market data, rely on the enterprises' specific estimates as little as possible. If the calculated fair value of a financial instrument parameters are required for all significant observable data, the financial instruments belong to the level 2 class. Its main classification is "financial assets and liabilities valued by fair value through profit or loss".
Level 3: Inputs for the asset or liability that are not based on observable market data.
The following table presents the Group's financial assets and liabilities that are measured at fair value at June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012.
SEGMENT INFORMATION
(1) General information
The Group has adopted eCMMS (E-enabled Components, Modules, Moves & Services) strategy, and provided a one-stop shop to its customers, which are primarily in the 3C industries, with a total solution for design, development, engineering, procurement, manufacturing, logistics and after-sales service. The Group segregates operating segments from both a customer service and product perspective.
In accordance with IFRS No. 8, "Operating Segments", the Group has determined the operating segments and reportable operating segments. Operating segments which have met certain quantitative threshold are disclosed individually or aggregately as reportable operating segments; other segments which have not met the quantitative threshold are included in the 'all other segments'. The Group has identified the electronic manufacturing integrated services department, which provides global 3C production-related one-stop services, as a reportable operating segment.
The chief operating decision maker assesses performance and allocates resources of the operating segments based on each operating segment's revenue and operating income after adjusting the internal costs and allocated expenses. Except for the recognition of internal costs which shall be in accordance with the Group's related internal calculation basis, the operating segments' accounting policies are the same as disclosed in Note 4.
(2) Segment information
The financial information of reportable segments provided to chief operating decision maker is as follows:
(3) Reconciliation information of segment income, assets, and liabilities
The reconciliations of a pre-tax income between reportable segments and continuing operations were as follows:
14. INITIALAPPLICATION OF IFRSs
(1) These consolidated financial statements are the first second-quarter consolidated financial statements prepared by the Group in accordance with the IFRSs. The Group has adjusted the amounts as appropriate that are reported in the previous R.O.C. GAAP consolidated financial statements to those amounts that should be presented under IFRSs in the preparation of the opening IFRS balance sheet. Information about exemptions elected by the Group, exceptions to the retrospective application of IFRSs in relation to initial application of IFRSs, and how it affects the Group's financial position, operating results and cash flows in transition from R.O.C. GAAP to the IFRSs is set out below:
A. Business combinations
The Company has elected not to apply the requirements in IFRS 3, "Business Combinations", retrospectively to business combinations that occurred prior to the date of transition to IFRSs ('the transition date'). This exemption also applies to the Company's previous acquisitions of investments in associates.
B. Share-based payment transactions
The Company has elected not to apply the requirements in IFRS 2, "Share-based Payment", retrospectively to equity instruments vested and liabilities that were settled arising from share-based payment transactions prior to the transition date.
C. Leases
The Company has elected to apply the transitional provisions in IFRS 4, "Determining Whether an Arrangement Contains a Lease". Therefore, the Company determines whether an arrangement existing at the transition date contains a lease based on the facts and circumstances on that date.
D. Employee benefits
The Company has elected to recognize all cumulative actuarial gains and losses relating to all employee benefit plans in 'retained earnings' at the transition date, and to disclose the information of present value of defined benefit obligation, fair value of plan assets, gain or loss on plan assets and experience adjustments under the requirements of paragraph 120A (P), IAS 19, "Employee Benefits", based on their prospective amounts for financial periods from the transition date.
E. Compound financial instruments
The Company has elected not to segregate between liability components and equity components of compound financial instruments whose liability components were no longer outstanding at the transition date.
F. Designation of previously recognized financial instruments
The Company reclassified part of financial assets carried at cost to available-for-sale financial assets on the transition date.
G. Decommissioning liabilities included in the cost of property, plant and equipment
The Company has elected to measure the decommissioning liabilities included in the cost of certain property, plant and equipment at the transition date in accordance with IAS 37, "Provisions, Contingent Liabilities and Contingent Assets".
H. Borrowing costs
The Company has elected to apply the transitional provisions in paragraphs 27 and 28 of IAS 23, "Borrowing Costs", amended in 2007 and apply IAS 23 from the transition date.
I. Transfers of assets from customers
The Company has elected to apply the transitional provisions in paragraph 22 of IFRIC 18, "Transfers of Assets from Customers", and apply IFRIC 18 from the transition date.
(2) Except hedge accounting to which exceptions to the retrospective application of IFRSs specified in IFRS 1 are not applied as they have no relation with the Group, other exceptions to the retrospective application are set out below:
A. Accounting estimates
Accounting estimates made under IFRSs on January 1, 2012 are consistent with those made under R.O.C. GAAP on that day.
B. Derecognition of financial assets and financial liabilities
The derecognition requirements in IAS 39, "Financial Instruments: Recognition and Measurement" shall be applied prospectively to transactions occurring on or after January 1, 2004.
C. Non-controlling interest
Requirements of IAS 27 (amended in 2008) that shall be applied prospectively are as follows:
(a) Requirements concerning total comprehensive income (loss) attributed to owners of the parent and non-controlling interest, even which results in a loss to non-controlling interest;
(b) Requirements that change in interest ownership of the parent in a subsidiary while control is retained is accounted for as an equity transaction with the parent; and
(c) Requirements concerning the parent's loss of control over a subsidiary.
(3) Requirement to reconcile from R.O.C. GAAP to IFRSs at the time of initial application of IFRS 1 requires that entity should make reconciliation for equity, comprehensive income and cash flows for the comparative periods. The Group's initial application of IFRSs has no significant effect on cash flows from operating activities, investing activities and financing activities. Reconciliation for equity and comprehensive income for the comparative periods as to transition from R.O.C. GAAP to IFRSs is shown below:
A. Reconciliation for equity on January 1, 2012:
B. Reconciliation for equity on December 31, 2012:
C. Reconciliation for equity on June 30, 2012:
D. Reconciliation for comprehensive income for the year ended December 31, 2012:
E. Reconciliation for comprehensive income for the six-month period ended June 30, 2012:
F. Reconciliation for comprehensive income for the three-month period ended June 30, 2012:
Description of the reconciliation of significant differences:
G. Major adjustments for the consolidated statement of cash flows for the six-month period ended June 30, 2012:
a) Under R.O.C. GAAP, payment of interest and receipt of interest and dividend are both included in cash flows from operating activities. However, under IFRSs, payment of interest and receipt of interest and dividend are classified as cash flows from financing activities and from investing activities, respectively, when they are the cost for acquisitions of financial resources or the return on investments.
b) The transition of R.O.C. GAAP to IFRSs has no effect on the Group's cash flows reported.
c) The reconciliation between R.O.C. GAAP and IFRSs has no net effect on the Group's cash flows reported.
H. The accounting policies and selection of exemptions applied in these interim consolidated financial statements may be different from those applied in the first year-end IFRSs consolidated financial statements due to the issuance of related regulations by regulatory authorities, changes in economic environment, or changes in the evaluation of the impact of application of accounting policies and exemptions by the Group.
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