Shih Wei Navigation Co., Ltd. and Subsidiaries

Transcription

Shih Wei Navigation Co., Ltd. and
Subsidiaries
Consolidated Financial Statements for the
Six Months Ended June 30, 2013 and 2012 and
Independent Accountants’ Review Report
SHIH WEI NAVIGATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
June 30, 2013
Amount
%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)
Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Held-to-maturity financial assets - current (Notes 4 and 8)
Trade receivables (Notes 4 and 24)
Inventories (Note 4)
Non-current assets classified as held for sale (Notes 4 and 11)
Other financial assets - current (Notes 10, 13 and 25)
Other current assets (Notes 21 and 24)
$ 1,056,244
103,884
40,582
287,011
2,984
426,757
4
1
2
1,917,462
January 1, 2012
Amount
%
3
1
1
1
$ 1,323,677
133,762
37,705
247,529
16,103
510,557
218,272
5
1
2
1
7
1,713,808
6
2,487,605
28,413
26,060,691
10,076
752,826
408,168
60,885
89
3
1
-
28,388
25,905,422
13,575
324,478
921,455
50,370
90
1
3
-
27,321,059
93
27,243,688
$ 29,238,521
100
$ 28,957,496
NON-CURRENT ASSETS
Financial assets measured at cost - non-current (Notes 4 and 9)
Property and equipment (Notes 4, 12, 13 and 25)
Deferred tax assets (Notes 4 and 18)
Prepayments for equipment (Note 25)
Other financial assets - non-current (Notes 10, 13 and 25)
Other non-current assets (Note 11)
Total non-current assets
$
June 30, 2012
Amount
%
965,332
156,929
29,360
258,086
16,103
30,733
257,265
Total current assets
TOTAL
December 31, 2012
Amount
%
$
969,108
89,650
15,138
20,022
163,659
848,813
1,635,520
223,398
4
1
3
7
1
9
3,965,308
16
28,410
23,585,840
10,388
1,145,294
786,495
49,533
84
4
3
-
28,421
17,688,286
13,149
2,058,910
556,856
45,767
73
9
2
-
94
25,605,960
91
20,391,389
84
100
$ 28,093,565
100
$ 24,356,697
100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 10, 13 and 25)
Short-term bills payable (Note 13)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7
and 14)
Notes and trade payable
Dividend payable
Other payables
Current tax liabilities (Notes 4 and 18)
Current portion of convertible bonds payable (Notes 4, 7, 14 and 21)
Current portion of long-term borrowings (Notes 10, 13, 21 and 25)
Other current liabilities (Notes 11 and 21)
$
295,555
-
1
-
557,745
-
2
-
1
1
8
-
30,440
168,561
393,802
37,959
429,738
2,166,922
71,739
1
2
1
2
7
-
159,020
131,185
146,468
132,145
1,579,131
379,922
1
1
1
6
2
3,972,163
13
3,891,487
14
3,085,616
13
16,808,741
88,510
17,045
360
61
1
-
16,501,547
91,663
18,103
268
59
-
26,730
420,118
12,870,942
141,350
19,015
297
2
53
-
Total non-current liabilities
17,796,420
62
16,611,581
59
13,478,452
55
Total liabilities
71
21,391,136
74
20,503,068
73
16,564,068
68
4,033,500
14
3,663,500
13
3,663,500
13
3,663,500
15
1,042,374
371,904
701
48,853
1,463,832
4
1
5
689,413
371,904
42,864
7,123
1,111,304
3
1
4
689,413
371,904
42,864
7,123
1,111,304
3
1
4
689,413
371,904
42,864
7,123
1,111,304
3
2
5
1,421,961
1,068,865
1,102,163
3,592,989
(738,619)
5
3
4
12
(2)
1,356,253
667,497
1,823,639
3,847,389
(1,055,833)
5
2
6
13
(4)
1,356,253
667,497
1,576,405
3,600,155
(784,462)
5
2
6
13
(3)
1,265,404
1,017,521
1,389,679
3,672,604
(654,779)
5
4
6
15
(3)
8,351,702
29
7,566,360
26
7,590,497
27
7,792,629
32
$ 29,238,521
100
$ 28,957,496
100
$ 28,093,565
100
$ 24,356,697
100
Total current liabilities
NON-CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - non-current (Notes 4,
7 and 14)
Convertible bonds payable (Notes 4, 7 and 14)
Long-term borrowings (Notes 10, 13 and 25)
Deferred tax liabilities (Notes 4 and 18)
Accrued pension liabilities (Notes 4 and 15)
Other non-current liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION
Share capital
Ordinary shares
Capital surplus
Arising from issuance of common shares
Arising from conversion of bonds
Arising from treasury shares transactions
Arising from equity component of convertible bonds
Others
Total capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total earnings
Exchange differences on the translating foreign operations
Total equity
TOTAL
498,714
200,000
2
1
468
150,709
403,350
201,464
20,291
2,405,126
92,041
367,715
-
1
-
1
1
2
7
-
127,775
147,020
549,525
161,195
125,118
424,901
1,864,919
123,319
3,594,716
12
58
-
17,689,532
88,510
18,090
288
16,914,656
58
20,886,819
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche review report dated August 9, 2013)
-3-
$
$
$
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
For the Three Months Ended June 30
2013
2012
Amount
%
Amount
OPERATING REVENUE
(Notes 4 and 24)
Rental revenue
Service revenue
Cargo revenue
$ 1,560,102
148,496
511,699
70
7
23
$ 1,595,325
59,844
267,160
83
3
14
1,002,695
100
2,220,297
100
1,922,329
100
(848,679)
(85)
(2,019,105)
(91)
(1,612,224)
(84)
8
154,016
15
201,192
9
310,105
16
(44,698 )
(4 )
(45,667)
(4 )
(102,432)
(4 )
(104,190)
(5 )
48,890
4
108,349
11
98,760
5
205,915
11
1,664
25,778
2
5,147
97,883
10
3,306
52,910
2
10,127
123,931
1
6
-
-
50,398
5
-
-
182,901
10
5,347
1
-
-
6,223
-
95
-
14,907
1
-
-
55,164
2
97,286
5
30,102
(2,939)
3
-
(7,094)
(1 )
82,665
(10,648)
4
-
47,520
(8,830)
2
-
-
-
(132,033)
(13)
-
-
-
-
-
-
(39,500)
(4 )
-
-
-
-
(58,081 )
(5 )
(53,951)
(5 )
(117,427)
(5 )
(106,099)
(6 )
16,778
2
(79,150)
(8 )
72,193
3
346,931
18
PROFIT BEFORE INCOME
TAX
65,668
6
29,199
3
170,953
8
552,846
29
INCOME TAX EXPENSE (Notes
4 and 18)
(5,363)
(1 )
(16,179)
(2 )
(22,003)
(1 )
(75,770)
(4 )
NET PROFIT FOR THE
PERIOD
60,305
5
13,020
1
148,950
7
477,076
GROSS PROFIT
OPERATING EXPENSES
(Notes 15, 16, 17 and 24)
PROFIT FROM OPERATIONS
NON-OPERATING INCOME
AND EXPENSES
Interest income
Other income (Note 24)
Net gain on disposal of
property and equipment
(Notes 4 and 11)
Net gain on sale of investments
(Notes 4 and 7)
Net foreign exchange gains
(Note 4)
Net gain arising on financial
assets and liabilities at
FVTPL (Notes 4 and 7)
Other losses (Notes 4 and 14)
Net foreign exchange losses
(Note 4)
Net loss arising on financial
assets and liabilities at
FVTPL (Notes 4 and 7)
Interest expense (Notes 4, 13
and 14)
Total non-operating
income and expenses
68
5
27
1,122,039
100
(1,028,451 )
(92)
93,588
$
%
80
5
15
OPERATING COSTS (Notes 15,
17 and 24)
758,959
58,593
304,487
%
806,285
44,944
151,466
Total operating revenue
$
For the Six Months Ended June 30
2013
2012
Amount
%
Amount
-4-
25
(Continued)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
For the Three Months Ended June 30
2013
2012
Amount
%
Amount
OTHER COMPREHENSIVE
INCOME
Exchange differences on
translating foreign operations
Income tax relating to the
components of other
comprehensive income
(Notes 4 and 18)
$
Other comprehensive
income (loss) for the
period, net of income
tax
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD
$
NET PROFIT ATTRIBUTABLE
TO:
Owner of the Corporation
Non-controlling interests
$
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE
TO:
Owner of the Corporation
Non-controlling interests
$
EARNINGS PER SHARE
(Note 19)
Basic
Diluted
61,112
6
1,202
%
124,993
13
-
(10,760)
(1 )
62,314
6
114,233
12
122,619
11
127,253
13
60,305
-
5
-
13,020
-
1
-
60,305
5
13,020
1
122,619
-
11
-
127,253
-
13
-
122,619
11
127,253
13
$0.15
$0.15
$
For the Six Months Ended June 30
2013
2012
Amount
%
Amount
$
$
$
$0.04
$0.03
$
319,125
(1,911)
$
$
$
14
$
(127,060)
%
(7 )
-
(2,623)
317,214
14
(129,683)
(7 )
466,164
21
347,393
18
148,950
-
7
-
477,076
-
25
-
148,950
7
477,076
25
466,164
-
21
-
347,393
-
18
-
466,164
21
347,393
18
$0.38
$0.38
$
$
$
-
$1.30
$1.25
(Concluded)
-5-
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Retained Earnings (Note 16)
Unappropriated
Legal Reserve
Special Reserve
Earnings
Share Capital
(Note 16)
Capital Surplus
(Notes 4, 14 and 16)
$ 3,663,500
$ 1,111,304
$ 1,265,404
APPROPRIATION OF 2011 EARNINGS
Legal reserve
Special reserve
Cash dividends distributed by the Corporation
-
-
90,849
-
Net profit for the six months ended June 30, 2012
-
-
-
Other comprehensive loss for the six months ended June 30, 2012,
net of income tax
-
-
Total comprehensive income for the six months ended June 30,
2012
-
BALANCE AT JANUARY 1, 2012
$ 1,017,521
$
(654,779)
Total Equity
$ 7,792,629
(90,849)
350,024
(549,525)
-
(549,525)
-
477,076
-
477,076
-
-
-
(129,683)
(129,683)
-
-
-
477,076
(129,683)
347,393
$ 3,663,500
$ 1,111,304
$ 1,356,253
667,497
$ 1,576,405
(784,462)
$ 7,590,497
3,663,500
1,111,304
1,356,253
667,497
1,823,639
(1,055,833)
7,566,360
APPROPRIATION OF 2012 EARNINGS
Legal reserve
Special reserve
Cash dividends distributed by the Corporation
-
-
65,708
-
401,368
-
Net profit for the six months ended June 30, 2013
-
-
-
Other comprehensive income for the six months ended June 30,
2013, net of income tax
-
-
Total comprehensive income for the six months ended June 30,
2013
370,000
BALANCE AT JUNE 30, 2012
BALANCE AT JANUARY 1, 2013
Issuance of ordinary shares for cash
Others
BALANCE AT JUNE 30, 2013
$ 4,033,500
(350,024)
-
$ 1,389,679
Exchange
Differences on
Translating Foreign
Operations (Note 4)
$
$
(65,708)
(401,368)
(403,350)
-
(403,350)
-
148,950
-
148,950
-
-
-
317,214
317,214
-
-
-
148,950
317,214
466,164
352,961
-
-
-
-
722,961
-
-
-
-
$ 1,421,961
$ 1,068,865
$ 1,102,163
(433)
$ 1,463,832
-6-
$
(738,619)
(433)
$ 8,351,702
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30
2013
2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation expenses
Amortization expenses
Compensation cost of employee share options
Interest expense
Interest income
Gain on disposal of property and equipment
Net gain on fair value change of financial assets and liabilities at fair
value through profit or loss
Net gain on sale of investments
Net gain on foreign currency exchange
Loss on repurchase of bond payable
Changes in operating assets and liabilities
(Increase) decrease in financial assets held for trading
Increase in trade receivables
Increase in inventories
Increase in other current assets
Decrease in other financial assets
Decrease in financial liabilities held for trading
(Decrease) increase in notes and trade payables
Increase in other payables
(Decrease) increase in other current liabilities
Decrease in accrued pension liabilities
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of held-to-maturity financial assets
Payments for property and equipment
Increase in prepayments for equipment
Proceeds from disposal of property and equipment
Increase in advance real estate receipts
(Increase) decrease in refundable deposits
-7-
$
170,953
$
552,846
721,086
904
1,461
117,427
(3,306)
-
574,589
904
106,099
(10,127)
(182,901)
(71,141)
(6,223)
(70,477)
5,112
(57,271)
(95)
(99,545)
-
131,959
(9,726)
(20,504)
(171,491)
552,452
(111)
(23,220)
41,836
17,766
(1,045)
1,383,712
3,432
(114,847)
(38,083)
(41,706)
(17,623)
(85,363)
(42,459)
864,534
(1,090)
17,065
11,643
(243)
(912)
1,588,345
10,704
(96,006)
(132,345)
1,234,214
1,370,698
(49,469)
(412,986)
4,750
14,831
(119,659)
(5,651,212)
263,966
573,405
(4,700)
(Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30
2013
2012
Net cash outflow on acquisition of subsidiaries
Increase in deferred charges
$
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares
Repayments of bond payables
Increase (decrease) in short-term borrowings
Proceeds from short-term bills payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
(Decrease) increase in guarantee deposits received
Net cash generated from (used in) financing activities
(240,000)
-
$
(31,498)
(697,705)
(4,954,867)
721,500
(463,274)
200,000
199,359
921,513
(2,045,799)
61
(179,948)
6,567,363
(2,442,110)
(24)
(466,640)
3,945,281
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH HELD IN FOREIGN CURRENCIES
21,043
NET INCREASE IN CASH AND CASH EQUIVALENTS
90,912
354,569
965,332
969,108
$ 1,056,244
$ 1,323,677
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(6,543)
-8-
(Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. GENERAL INFORMATION
Shih Wei Navigation Co., Ltd. (the “Corporation”) was incorporated in the Republic of China (“ROC”) in
March 1985. The Corporation mainly provides cargo shipping services, shipping agency, and sells and
leases ships.
The Corporation’s shares began to be traded on the Taiwan GreTai Securities Market in July 2001 and then
became listed on the Taiwan Stock Exchange in August 2003.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the board of directors and authorized for issue on
August 9, 2013.
3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND
INTERPRETATIONS
a. New and revised standards, amendments and interpretations in issue but not yet effective
The Group have not applied the following International Financial Reporting Standards (IFRS),
International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)
issued by the IASB. As of the date that the consolidated financial statements were authorized for
issue, the Financial Supervisory Commission (the “FSC”) has not announced the effective dates for the
following new and revised standards, amendments and interpretations.
New, Amended or Revised Standards and Interpretations
Effective Date
Announced by IASB
(Note)
Endorsed by the FSC
Amendments to IFRSs
Improvements to IFRSs (2009) - amendment
to IAS 39
IFRS 9 (2009)
Amendment to IAS 39
Financial Instruments
Embedded Derivatives
-9-
January 1, 2009 and
January 1, 2010, as
appropriate
January 1, 2015
Effective for annual
periods ending on or
after June 30, 2009
(Continued)
New, Amended or Revised Standards and Interpretations
Effective Date
Announced by IASB
(Note)
Not yet endorsed by the FSC
Amendments to IFRSs
Improvements to IFRSs (2010) - amendment
to IAS 39
Amendments to IFRSs
Annual Improvements to IFRSs 2009-2011
cycle
Amendments to IFRS 1
Limited Exemption from Comparative IFRS
7 Disclosures for First-time Adopters
Severe Hyperinflation and Removal of Fixed
Dates for First-time Adopters
Government Loans
Disclosure - Offsetting Financial Assets and
Financial Liabilities
Amendments to IFRS 9 and Mandatory Effective Date of IFRS 9 and
IFRS 7
Transition Disclosures
Disclosure - Transfer of Financial Assets
IFRS 9 (2010)
IFRS 10
Consolidated Financial Statements
IFRS 11
Joint Arrangements
IFRS 12
Disclosure of Interests in Other Entities
Amendments to IFRS 10,
Consolidated Financial Statements, Joint
IFRS 11 and IFRS 12
Arrangements and Disclosure of Interests
in Other Entities: Transition Guidance
Amendments to IFRS 10 and Investment Entities
IFRS 12 and IAS 27
IFRS 13
Fair Value Measurement
Amendments to IAS 1
Presentation of Other Comprehensive
Income
Amendments to IAS 12
Deferred tax: Recovery of Underlying
Assets
IAS 19 (Revised 2011)
Employee Benefits
Separate Financial Statements
Investments in Associates and Joint Ventures
Amendments to IAS 32
Offsetting Financial Assets and Financial
Liabilities
Amendment to IAS 36
Impairment of Assets: Recoverable
Amount Disclosures for Non-financial
Assets
Amendment to IAS 39
Novation of Derivatives and Continuation of
Hedge Accounting
IFRIC 20
Stripping Costs in Production Phase of a
Surface Mine
IFRIC 21
Levies
Note:
July 1, 2010 and
January 1, 2011, as
appropriate
January 1, 2013
July 1, 2010
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2015
July 1, 2011
January 1, 2015
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2014
January 1, 2014
January 1, 2013
January 1, 2014
(Concluded)
Unless stated otherwise, the above new and revised standards, amendments and interpretations
are effective for annual periods beginning on or after the respective effective dates.
- 10 -
b. Significant impending changes in accounting policy resulted from new and revised standards,
amendments and interpretations in issue but not yet effective
Except for the following, the initial application of the above new and revised standards, amendments
and interpretations have not had any material impact on the Group’s accounting policies:
1) IFRS 9 “Financial Instruments”
With regards to financial assets, all recognized financial assets that are within the scope of IAS 39
“Financial Instruments: Recognition and Measurement” to be subsequently measured at amortized
cost or fair value. Specifically, financial assets that are held within a business model whose
objective is to collect the contractual cash flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are generally measured at amortized
cost at the end of subsequent accounting periods. All other financial assets are measured at their
fair values at the balance sheet date.
2) IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value,
establishes a framework for measuring fair value, and requires disclosures about fair value
measurements. The disclosure requirements in IFRS 13 are more extensive than those required in
the current standards. For example, quantitative and qualitative disclosures based on the
three-level fair value hierarchy currently required for financial instruments only will be extended by
IFRS 13 to cover all assets and liabilities within its scope.
3) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendments to IAS 1 require items of other comprehensive income to be grouped into those
that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified
subsequently to profit or loss when specific conditions are met. Income taxes on related items of
other comprehensive income are grouped on the same basis. Previously, there were no such
requirements.
4) Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”
In issuing IFRS 13 “Fair Value Measurement”, the IASB made some consequential amendments to
the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to
disclose in every reporting period the recoverable amount of an asset or each cash-generating unit.
The amendment clarifies that the disclosure of such recoverable amount is required during the
period when an impairment loss has been recognized or reversed. Furthermore, the Group is
required to disclose the discount rate used in current and previous measurements of the recoverable
amount based on fair value less costs of disposal measured using a present value technique.
c. Material impact on consolidated financial statements resulted from new and revised standards,
amendments and interpretations in issue but not yet effective
The Group is in the process of estimating the impact of the initial application of the standards,
amendments and interpretations on its financial position and results of operations. Disclosures will be
provided until a detailed review of the impact has been completed.
- 11 -
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY
On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the
ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or
traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their
consolidated financial statements in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers and the International Financial Reporting Standards, International
Accounting Standards, and the Interpretations approved by the FSC. The date of transition to IFRSs was
January 1, 2012.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers, IFRS 1 “First-time Adoption of International
Financial Reporting Standards” and IAS 34 “Interim Financial Reporting” as endorsed by the FSC.
Disclosure information included in interim financial reports is less than disclosures required in a full set of
annual financial reports.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for certain
properties and financial instruments that are measured at revalued amounts or fair values, as explained in
the accounting policies below. Historical cost is generally based on the fair value of the consideration
given in exchange for assets.
The opening consolidated balance sheets as of the date of transition to IFRSs was prepared in accordance
with IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The applicable IFRSs
have been applied retrospectively by the Group except for some aspects where other IFRSs prohibit
retrospective application and specified areas where IFRS 1 grants limited exemptions from the requirements
of other IFRSs. The significant accounting policies are set out as below.
Classification of Current and Non-current Assets and Liabilities
Current assets include cash and cash equivalents and those assets held primarily for trading purposes or to
be realized within twelve months after the reporting period, unless the asset is to be used for an exchange or
to settle a liability, or otherwise remains restricted, at more than twelve months after the reporting period.
Property, plant and equipment, intangible assets, other than assets classified as current are classified as
non-current. Current liabilities are obligations incurred for trading purposes or to be settled within twelve
months after the reporting period and liabilities that do not have an unconditional right to defer settlement
for at least twelve months after the reporting period, even if an agreement to refinance, or to reschedule
payments on a long-term basis is completed after the reporting period and before the financial statements
are authorized for issue. Liabilities that are not classified as current are classified as non-current. 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.
Basis of Consolidation
a. Principles for preparing consolidated financial statements
The consolidated financial statements incorporate the financial statements of the Corporation and the
entities controlled by the Corporation. Control is achieved when the Corporation has the power to
govern the financial and operating policies of an entity so as to obtain benefits from its activities.
- 12 -
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.
b. Subsidiary included in consolidated financial statements:
The consolidated entities as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012
were as follows:
Investor
The Corporation
Dong Lien Maritime
S.A. Panama
January 1,
2012
Investee
Main Business
Dong Lien Maritime
S.A. Panama
Fortunate Maritime S.A.
Panama
Gueishan Island Marine
Biology
Development Co., Ltd.
Brave Pescadores S.A.
Cargo shipping services
and shipping agency
〃
100
100
100
100
-
100
100
100
100
a)
Resort hotels service
100
100
-
-
and shipping agency
〃
100
100
100
100
-
100
100
100
100
-
〃
〃
100
100
100
100
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
〃
100
100
100
100
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
〃
100
100
100
100
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
Blossom Pescadores
S.A. (Panama)
Jackson Steamship S.A.
Royal Pescadores S.A.
(Panama)
Grand Pescadores S.A.
(Panama)
Shining Pescadores S.A.
(Panama)
Grand Ocean Navigation
(Panama) S.A.
Excellent Pescadores
S.A. (Panama)
Bright Pescadores S.A.
Panama
Honor Pescadores S.A.
Panama
Sunny Pescadores S.A.
(Panama)
Grand Overseas S.A.
Panama
Leader Pescadores S.A.
Panama
Brilliant Pescadores S.A.
Superior Pescadores
S.A. Panama
Glaring Pescadores S.A.
Panama
Well Pescadores S.A.
Panama
Pharos Pescadores S.A.
Panama
Beacon Pescadores S.A.
Panama
Valor Pescadores S.A.
Panama
Poseidon Pescadores
S.A. Panama
Trump Pescadores S.A.
Panama
Huge Pescadores S.A.
Panama
Fair Pescadores S.A.
Panama
Vigor Pescadores S.A.
Panama
Patriot Pescadores S.A.
Panama
Gallant Pescadores S.A.
Wise Pescadores S.A.
Panama
Forever Pescadores S.A.
Panama
Fourseas Pescadores
S.A. Panama
June 30, 2013
% of Ownership
December 31,
2012
June 30, 2012
Remark
a) and b)
(Continued)
- 13 -
Investor
June 30, 2013
% of Ownership
December 31,
2012
June 30, 2012
January 1,
2012
Investee
Main Business
Remark
Eternity Pescadores S.A.
Panama
Federal Pescadores S.A.
Panama
Unicorn Brilliant S.A.
Panama
Elegant Pescadores S.A.
(Panama)
Moon Bright Shipping
Corporation
Penghu Pescadores S.A.
Panama
Modest Pescadores S.A.
Panama
Genius Pescadores S.A.
(Panama)
Skyhigh Pescadores S.A.
Panama
Dancewood Pescadores
S.A. Panama
Danceflora Pescadores
S.A. Panama
Stamina Pescadores S.A.
Panama
Spinnaker Pescadores
S.A. Panama
Endurance Pescadores
S.A. Panama
Summit Pescadores S.A.
Panama
Indigo Pescadores S.A.
Panama
Audrey Pescadores S.A.
Panama
Wonderful Pescadores
S.A. Panama
and shipping agency
〃
100
100
100
100
-
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
100
-
〃
100
100
100
-
c)
〃
100
100
-
-
d)
〃
100
-
-
-
e)
〃
100
-
-
-
e)
〃
100
-
-
-
e)
〃
100
-
-
-
f)
(Concluded)
Remark:
a) It is an immaterial subsidiary, its financial statements have not been reviewed.
b) The Corporation acquired 100% of the stock of Gueishan Island Marine Biology Development Co.,
Ltd. in December 2012. Thus, it was included in the consolidated financial statement as of and for
the six months ended June 30, 2013, as of December 31, 2012 and for the year ended 2012.
c) Spinnaker Pescadores S.A. Panama was incorporated in April 2012 by Dong Lien Maritime S.A.
Panama. Thus, it was included in the consolidated financial statement as of and for the six months
ended June 30, 2013 and 2012, as of December 31, 2012 and for the year ended 2012.
d) Endurance Pescadores S.A. Panama was incorporated in November 2012 by Dong Lien Maritime
S.A. Panama. Thus, it was included in the consolidated financial statement as of and for the six
months ended June 30, 2013, as of December 31, 2012 and for the year ended 2012.
e) Summit Pescadores S.A. Panama, Indigo Pescadores S.A. Panama and Audrey Pescadores S.A.
Panama was incorporated in March 2013 by Dong Lien Maritime S.A. Panama. Thus, it was
included in the consolidated financial statement as of and for the six months ended June 30, 2013.
f) Wonderful Pescadores S.A. Panama was incorporated in April 2013 by Dong Lien Maritime S.A.
Panama. Thus, it was included in the consolidated financial statement as of and for the six months
ended June 30, 2013.
- 14 -
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date
(i.e., the day when the Group obtains control) fair values of the assets transferred by the Group, liabilities
incurred by the Group to the former owners of the acquire and the equity interests issued by the Group in
exchange for control of the acquire. Acquisition-related costs are generally recognized in profit or loss as
incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their
fair value at the acquisition date.
If, after re-assessment, the net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration transferred, the excess are recognized immediately
in profit or loss as a bargain purchase gain.
Foreign Currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the
dates of the transactions. Functional currency is the currency of the primary economic environment in
which the entity operates. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items measured at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences on monetary items arising from settlement or translation are recognized in profit or
loss in the period in which they arise.
Exchange differences arising on the retranslation of non-monetary assets or liabilities measured at fair value
are included in profit or loss for the period at the rates prevailing at the end of reporting period.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each
reporting period. Income and expense items are translated at the average exchange rates for the period.
Exchange differences arising are recognized in other comprehensive income and accumulated in equity.
Inventories
Inventory is vessel fuel, which is stated at the lower of cost or net realizable value. Inventory write-downs
are made by item.
Property and Equipment
Property and equipment are tangible items that are held for supply of services, or for administrative
purposes, and are expected to be used during more than one period. Property and equipment are stated at
cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss 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.
- 15 -
Properties in the course of construction for supply or administrative purposes are carried at cost, less any
recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs
capitalized in accordance with IAS 23 “Borrowing Costs”. Such properties are classified to the
appropriate categories of property and equipment when completed and ready for intended use.
Depreciation of these assets, on the same basis as other property assets, commences when the assets are
ready for their intended use.
Freehold land is not depreciated.
Depreciation is recognized so as to write off the cost of assets less their residual values over their estimated
useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or
retirement of an item of property and equipment is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognized in profit or loss.
Impairment of Assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets, to
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the
individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.
When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount
that would have been determined had no impairment loss been recognized for the asset or cash-generating
unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
Non-current Assets Classified as Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the non-current asset is available for immediate sale in its present condition.
To meet the criteria for the sale being highly probable, the appropriate level of management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one
year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their previous carrying amount
and fair value less costs to sell. Recognition of depreciation of those assets would cease.
- 16 -
Financial assets and financial liabilities are recognized when a group entity becomes a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately in profit or loss.
a. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of
assets within the time frame established by regulation or convention in the marketplace.
1) Measurement category
Financial assets are classified into the following specified categories: Financial assets at fair value
through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and
receivables. The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition. The categories of financial assets held by the Group
are as follow:
a) Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset is
held for trading, including publicly traded stocks in an active market; open-end mutual funds;
forward exchange contracts and currency option contracts. Since the financial asset has been
acquired principally for the purpose of selling it in the near term; or it is a derivative, it is
classified as held for trading.
Financial assets at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized
in profit or loss incorporates any dividend earned on the financial asset and is included in the
other gains and losses line item. Fair value is determined in the manner described in Note 23.
Investments in equity instruments under financial assets at fair value through profit or loss that
do not have a quoted market price in an active market and whose fair value cannot be reliably
measured are subsequently measured at cost less any identified impairment loss at the end of
each reporting period and are recognized in a separate line item as financial assets carried at
cost.
b) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Group has the positive intent and ability to hold to
maturity other than those that the entity upon initial recognition designates as at fair value
through profit or loss, or designates as available for sale, or meet the definition of loans and
receivables.
Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost
using the effective interest method less any impairment.
- 17 -
The effective interest method is a method of calculating the amortized cost of a debt instrument
and of allocating interest income over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash receipts (including all fees that form an integral part
of the effective interest rate and transaction costs) through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the net carrying amount on initial
recognition.
c) Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Receivables (including trade receivables, cash and cash
equivalents, and other financial assets) are measured at amortized cost using the effective
interest method, less any impairment. Interest income is recognized by applying the effective
interest rate, except for short-term receivables when the effect of discounting is immaterial.
2) Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of
impairment at the end of each reporting period. Financial assets are considered to be impaired
when there is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been
affected.
For certain categories of financial assets, assets are assessed for impairment on a collective basis
even if they were assessed not to be impaired individually. Objective evidence of impairment for a
portfolio of receivables could include the Group’s past experience of collecting payments, an
increase in the number of delayed payments in the portfolio past the average credit period, as well
as observable changes in national or local economic conditions that correlate with default on
receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the
difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the financial asset’s original effective interest rate.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is reversed through profit or
loss to the extent that the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not been recognized.
For financial assets that are carried at cost, the amount of the impairment loss is measured as the
difference between the asset’s carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such impairment
loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is considered uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against the allowance account. Changes in the carrying amount of the allowance
account are recognized in profit or loss.
- 18 -
3) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognized in other comprehensive income and accumulated in equity is recognized in
profit or loss.
b. Equity instruments
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by a group entity are recognized at the
proceeds received, net of direct issue costs. No gain or loss is recognized in profit or loss on the issue
of the Group’s own equity instruments.
c. Financial liabilities
1) Subsequent measurement
A financial liability is classified as held for trading if it is a derivative.
Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognized in profit or loss. Fair value is determined in the
manner described in Note 23.
All other financial liabilities are measured at amortized cost basis using the effective interest
method (see above for the definition of effective interest method).
2) Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or expired. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is recognized in profit or loss.
d. Convertible bonds
The component parts of compound instruments (convertible bonds) issued by the Group are classified
separately as financial liabilities and equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument. The conversion
option that will be settled by the exchange of a fixed amount of cash or other financial asset for a fixed
number of the Group's own equity instruments is classified as an equity instrument.
On initial recognition, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recorded as a liability on an
amortized cost basis using the effective interest method until extinguished upon conversion or at the
instrument's maturity date.
- 19 -
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and
included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the
conversion option classified as equity will remain in equity until the conversion option is exercised, in
which case, the balance recognized in equity will be transferred to capital surplus - share premium.
When the conversion option remains unexercised at the maturity date of the convertible note, the
balance recognized in equity will be transferred to capital surplus - others. No gain or loss is
recognized in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to the
equity component are recognized directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component and are amortized over the
lives of the convertible notes using the effective interest method.
e. Derivative financial instruments
The Group enters into a variety of derivative financial instruments which including foreign exchange
forward contracts and currency option contracts. Derivatives are initially recognized at fair value at
the date the derivative contracts are entered into and are subsequently remeasured to their fair value at
the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately.
When the fair value of derivative financial instruments is positive, the derivative is recognized as a
financial asset; when the fair value of derivative financial instruments is negative, the derivative is
recognized as a financial liability.
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they
meet the definition of a derivative, their risks and characteristics are not closely related to those of the
host contracts and the contracts are not measured at fair value through profit or loss.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable.
a. Rendering of services
Revenue is recognized when the service are provided. The revenues from vessel leases are recognized
over the contract periods. Cargo revenues are recognized when the cargos are transported to the port
of discharge.
b. Dividend and interest income
Dividend income from investments is recognized when the shareholder’s right to receive payment has
been established provided that it is probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably.
Interest income from a financial asset is recognized when it is probable that the economic benefits will
flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a
time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
are added to the cost of those assets, until such time as the assets are substantially ready for their intended
use or sale.
- 20 -
All other borrowing costs are recognized in profit or loss in the period in which they are incurred other than
stated above.
Retirement Benefit Costs
Payments to defined contribution retirement benefit plans are recognized as an expense when employees
have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected
Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period.
Actuarial gains and losses on the defined benefit obligation are recognized immediately in other
comprehensive income.
The retirement benefit obligation recognized in the consolidated balance sheets represents the present value
of the defined benefit obligation as reduced by the fair value of plan assets.
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 other significant one-time events.
Employee Share Options
Employee share options to employees are measured at the fair value of the equity instruments at the grant
date.
The fair value determined at the grant date of the employee share options is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of employee share options that will eventually
vest, with a corresponding increase in capital surplus - employee share options. The fair value determined
at the grant date of the employee share options is recognized as an expense in full at the grate date when the
share options granted vest immediately.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
a. Current tax
Interim period income taxes are assessed on an annual basis. Interim period income tax expense is
calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to
expected total annual earnings.
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for
as income tax in the year the shareholders approve to retain the earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
b. Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally recognized for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized.
- 21 -
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and interests are only
recognized to the extent that it is probable that there will be sufficient taxable profits against which to
utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the
end of each reporting period and recognized to the to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets
and liabilities.
c. Current and deferred tax for the period
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income, the current and deferred tax are also recognized in other
comprehensive income.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group's accounting policies, which are described in Note 4, management is
required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical accounting judgments and key assumptions concerning the future and other
key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a. Impairment of assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. In the
process of evaluating the potential impairment of tangible assets, the Group is required to make
subjective judgments and assumptions of the scope and way that the assets are used or expected to be
used and to evaluate whether changes in shipping market and economic environment would have
material adverse impact on the tangible assets. Any changes in judgments and assumptions could
affect the evaluation of impairment.
For the six months ended June 30, 2013 and 2012, the Group didn’t recognize any impairment loss.
- 22 -
b. Useful lives of property and equipment
The Group reviews the estimated useful lives of property and equipment at each balance sheet date.
The Group is required to make subjective judgments and assumptions to determine the economic useful
life and residual value of property and equipment. Any changes in judgments and assumptions could
affect the estimation of useful lives and residual value of property and equipment.
6. CASH AND CASH EQUIVALENTS
June 30, 2013
Cash on hand
Checking accounts and demand
deposits
Cash equivalent
Time deposits with original
maturities less than three
months
$
226
December 31,
2012
$
303
June 30, 2012
$
289
January 1,
2012
$
142
455,397
789,289
622,152
464,748
600,621
175,740
701,236
504,218
965,332
$ 1,323,677
$ 1,056,244
$
$
969,108
Cash equivalents include time deposits that have a maturity of three months or less from the date of
acquisition, are readily convertible to a known amount of cash, and are subject to an insignificant risk of
change in value; these were held for the purpose of meeting short-term cash commitments.
The market rate intervals of cash in bank at the end of the reporting period were as follows:
Bank balance
maturities less than three months
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
0.17%
0.17%
0.17%
0.17%
0.20%-0.80%
0.23%-1.50%
0.46%-0.80%
0.25%-0.97%
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
Financial assets held for trading
Derivative financial assets (not
under hedge accounting)
Foreign exchange forward
contracts (a)
Non-derivative financial assets
Mutual funds
Domestic quoted shares
$
80,090
$
1,392
$
-
18,953
4,841
150,662
4,875
129,317
4,445
$ 103,884
$ 156,929
$ 133,762
- 23 -
$
1,062
83,376
5,212
$
89,650
(Continued)
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
Financial liabilities held for trading
Derivative financial liabilities (not
under hedge accounting)
Currency option contracts (b)
Foreign exchange forward
contracts (a)
Convertible options (Note 14)
Current
Non-current
$
468
$
-
1,460
$
70
$
1,171
28,980
109,030
18,675
157,849
26,730
$
468
$
30,440
$ 127,775
$ 185,750
$
468
-
$
30,440
-
$ 127,775
-
$ 159,020
26,730
$
468
$
30,440
$ 127,775
$ 185,750
(Concluded)
a. At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge
accounting were as follows:
Notional Amount
(In Thousands)
Currency
Maturity Date
JPY/USD
JPY/USD
JPY/USD
JPY/USD
JPY/USD
2013.07.02
2013.07.02
2013.12.30
2013.12.30
2013.12.30
JPY422,500/USD4,866
JPY335,670/USD3,866
JPY516,300/USD6,000
JPY512,880/USD6,000
JPY42,740/USD500
JPY/USD
JPY/USD
JPY/USD
2013.12.30
2013.12.30
2013.12.30
JPY516,300/USD6,000
JPY512,880/USD6,000
JPY42,740/USD500
JPY/USD
JPY/USD
JPY/USD
JPY/USD
JPY/USD
2012.10.31
2012.10.31
2013.12.30
2013.12.30
2013.12.30
JPY2,003,320/USD23,200
JPY500,888/USD5,800
JPY516,300/USD6,000
JPY512,880/USD6,000
JPY42,740/USD500
JPY/USD
JPY/USD
JPY/USD
JPY/USD
JPY/USD
JPY/USD
2012.02.02
2012.10.31
2012.10.31
2013.12.30
2013.12.30
2013.12.30
JPY150,000/USD1,899
JPY2,003,320/USD23,200
JPY500,888/USD5,800
JPY516,300/USD6,000
JPY512,880/USD6,000
JPY42,740/USD500
June 30, 2013
Buy
Buy
Buy
Buy
Buy
December 31, 2012
Buy
Buy
Buy
June 30, 2012
Buy
Buy
Buy
Buy
Buy
January 1, 2012
Sell
Buy
Buy
Buy
Buy
Buy
- 24 -
The Group entered into foreign exchange forward contracts during the six months ended June 30, 2013
and 2012 for trading purpose.
b. At the end of the reporting period, outstanding foreign currency option contracts not under hedge
accounting were as follows:
Contract
Amount
(In Thousands)
Exercise Price
Maturity Date
June 30, 2013
Sell USD put option
Sell USD call option
USD 1,000
USD 1,000
USD 2,500
USD 2,500
JPY96.5/USD1
JPY100/USD1
JPY104/USD1
JPY104/USD1
2013.07.04
2013.07.16
2013.07.25
2013.07.29
USD 1,000
USD 1,000
USD 1,000
USD 1,000
JPY 300,000
USD 1,000
USD 2,000
USD 1,500
JPY 63,000
JPY 81,000
USD 1,000
JPY81/USD1
USD1.28/EUR1
JPY80.8/USD1
JPY86.25/USD1
JPY83/USD1
USD1.025/AUD1
JPY83.15/USD1
JPY83.15/USD1
JPY80.5/USD1
JPY81/USD1
JPY81/USD1
2013.01.07
2013.01.07
2013.01.09
2013.01.16
2013.01.21
2013.01.22
2013.01.24
2013.01.24
2013.02.06
2013.02.18
2013.02.18
USD 1,000
JPY77.80/USD1
2012.07.11
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
NTD30.6/USD1
NTD30/USD1
JPY79.5/USD1
NTD30.7/USD1
USD1.28/EUR1
NTD29.95/USD1
NTD29.95/USD1
NTD29.95/USD1
NTD30.7/USD1
JPY77.2/USD1
2012.01.13
2012.01.13
2012.01.17
2012.01.19
2012.01.19
2012.01.30
2012.01.30
2012.01.30
2012.01.30
2012.01.30
December 31, 2012
Sell USD put option
Sell USD put option
Sell JPY call option
Sell USD put option
Sell USD put option
Sell USD put option
June 30, 2012
Sell USD put option
January 1, 2012
Sell USD put option
Sell USD put option
Sell USD put option
Sell USD put option
Sell USD put option
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
2,000
1,500
The Group entered into foreign currency option contracts during the six months ended June 30, 2013
and 2012 for trading purposes.
Net gains on financial assets held for trading for the six months ended June 30, 2013 and 2012 were
$75,022 thousand and $5,273 thousand, respectively. Net gains on financial liabilities held for trading
for the six months ended June 30, 2013 and 2012 were $13,866 thousand and $41,256 thousand,
respectively.
- 25 -
Net gains on financial assets held for trading for the three months ended June 30, 2013 and 2012 were
$25,508 thousand and $1,544 thousand, respectively. Net gains and losses on financial liabilities held
for trading for the three months ended June 30, 2013 and 2012 were $9,941 thousand and $41,218
thousand, respectively.
8. HELD-TO-MATURITY FINANCIAL ASSETS
June 30, 2013
Bond investments - Deutsche Bank
Aktiengesellschaft
$
December 31,
2012
-
$
June 30, 2012
-
$
January 1,
2012
-
$ 15,138
The Group bought three-year corporate bonds issued by Deutsche Bank Aktiengesellschaft, with face
values of US$500 thousand in June 2009 and a coupon interest rate of 3%. Interest is calculated annually.
The principal is fully repayable on the maturity date.
9. FINANCIAL ASSETS MEASURED AT COST
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
$ 10,888
$ 10,888
$ 10,888
$ 10,888
16,721
16,721
16,721
16,721
804
779
801
812
$ 28,413
$ 28,388
$ 28,410
$ 28,421
Domestic unlisted common shares
Lustrous Technology Ltd.
Overseas unlisted common shares
K/S Darned I (investment cost:
US$519 thousand)
Lando Co, Ltd. (investment cost:
￥3,000 thousand)
Management believed that the above unlisted equity investments held by the Group, whose fair value
cannot be reliably measured due to the range of reasonable fair value estimates was so significant;
therefore, the Group determined that the fair value of the investments are not reliably measurable.
10. OTHER FINANCIAL ASSETS
June 30, 2013
Time deposit with original maturity
less than 3 months (a) and (b)
Demand deposits (a) and (b)
maturity more than 3 months (a)
and (b)
Current
Non-current
$
348,011
60,157
December 31,
2012
$
2,984
590,098
60,111
June 30, 2012
$
448,231
60,065
January 1,
2012
$
983,530
60,019
301,979
788,756
1,148,827
$
411,152
$
952,188
$ 1,297,052
$ 2,192,376
$
2,984
408,168
$
30,733
921,455
$
510,557
786,495
$ 1,635,520
556,856
$
411,152
$
952,188
$ 1,297,052
$ 2,192,376
- 26 -
a. Refer to Note 25 for information relating to other financial assets pledged as security.
b. The market interest rates of other financial assets were 0.10%-1.24%, 0.17%-1.50%, 0.17%-1.10% and
0.17%-0.90%, per annum respectively, as of June 30, 2013, December 31, 2012, June 30, 2012 and
January 1, 2012.
11. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
June 30, 2013
Land and building in the Chang-an
section in Taipei City
$
-
December 31,
2012
$
16,103
June 30, 2012
$
16,103
January 1,
2012
$ 848,813
The Group entered into a joint construction contract with Wang Tai Construction Co., Ltd. (“Wang Tai”) on
February 12, 2009. Under the contract, the Corporation provided land in the Chang-an section in Taipei
City and Wang Tai provided the construction fund. After the completion of the construction, the
Corporation and Wang Tai will own 61 percent and 39 percent of the entire land and building, respectively.
Based on the joint construction contract, the land, the buildings and the buildings under construction, the
financing fund, the proceeds of the sales of land and buildings, and the related interest income should be
entrusted to Mega International Commercial Bank Co., Ltd. In January 2012, the real estate title to the
project was transferred, and the Corporation acquired the buildings ownership under the contract. The fair
value of transferred-in assets, buildings, amounted to $320,304 thousand and the cost of transferred-out
assets, land, amounted to $347,669 thousand. The loss of $27,365 thousand was recognized from the
exchange of assets.
In 2009, the Corporation entered into presale contracts with third parties and related parties for the third and
higher floors of the buildings. The related land rights of the above joint construction project amounted to
$1,567,550 thousand, including related-party transactions amounting to $135,800 thousand with Lan
Jun-De, Lin Hui-Ling and Chen Huo-Tsai. Proceeds of the presales of the residential buildings (and
related land rights) were split between the Corporation and Wang Tai at a ratio of 55.65% to 44.35%, and
those from the presales of the parking spaces (and related land rights) were split at a ratio of 52.44% to
47.56%. As of January 1, 2012, the Corporation had collected $255,057 thousand of the proceeds of the
project, including those from related-party transactions amounting to $26,315 thousand, which was
classified as other current liabilities. In addition, the Corporation sold the first and second floors of the
buildings from this project to related parties, Liang Yu Investment Co. and Chi Huan Investment Co., for
$227,371 thousand. As of June 30, 2012, the real estate title to this project had been transferred to the
counter-parties and the Corporation collected total proceeds of $1,092,428 thousand. The gain of
$210,266 thousand on property disposal, including those from related-party transactions amounting to
$69,296 thousand, is the total proceeds of the projects of $1,092,428 thousand net of (a) the carrying
amounts of $805,345 thousand of the building and (b) marketing expenses and other expenses of $76,817
thousand. As of December 31, 2012, the Corporation had collected total proceeds of the project.
As of June 30, 2013, the project remained parking spaces amounted to $16,103 thousand unsold. Since
the remaining parking spaces haven’t been sold over a year from the classified date and haven’t gotten any
firm purchase commitment in the coming year, the remaining amount was classified as other non-current
assets.
- 27 -
12. PROPERTY AND EQUIPMENT
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
January 1,
2012
Cost of each class
Freehold land
Buildings
Vessel equipment
Other equipment
Leasehold improvement
657,903
30,906
31,218,400
5,542
31,912,751
657,903
30,906
30,215,244
6,555
30,910,608
79,937
30,906
27,977,245
6,245
5,572
28,099,905
$
79,937
30,906
21,590,598
6,601
5,675
21,713,717
Accumulated depreciation
of each class
Buildings
Vessel equipment
Other equipment
9,896
5,839,372
2,792
5,852,060
9,353
4,992,295
3,538
5,005,186
8,810
4,496,886
2,913
5,456
4,514,065
8,267
4,009,382
2,924
4,858
4,025,431
$ 26,060,691
$ 25,905,422
$ 23,585,840
$ 17,688,286
Freehold Land
Vessel
Equipment
Buildings
Other
Equipment
Leasehold
Improvement
Total
Cost
Balance at January 1, 2012
Additions
Effect of foreign currency
exchange differences
Transfer from prepayments for
equipment
Disposals
$
79,937
-
$
30,906
-
$ 21,590,598
119,578
Balance at June 30, 2012
$
79,937
$
30,906
$ 27,977,245
$
6,245
$
5,572
$ 28,099,905
Additions
Transfer from prepayments for
equipment
Disposals
$
657,903
-
$
30,906
-
$ 30,215,244
49,322
$
6,555
147
$
-
$ 30,910,608
49,469
-
-
983,875
-
983,875
-
-
9,627
(39,668)
-
9,627
(40,828)
$
657,903
$
30,906
Depreciation expense
Disposals
$
-
$
8,267
543
$
-
$
8,810
$
4,496,886
$
2,913
$
5,456
$
4,514,065
Depreciation expense
Disposals
$
-
$
9,353
543
$
4,992,295
720,129
$
3,538
414
$
-
$
5,005,186
721,086
$
-
-
(226,836)
-
-
6,531,466
(37,561)
$
6,601
81
$
-
5,675
-
$ 21,713,717
119,659
-
(437)
(226,836)
(103)
(1,160)
$ 31,218,400
$
5,542
$
-
$
$
2,924
426
$
4,858
701
6,531,466
(38,101)
$ 31,912,751
Accumulated depreciation
-
-
-
(47,854)
(37,561)
$
9,896
4,009,382
572,919
(437)
166,616
(39,668)
$
- 28 -
5,839,372
(103)
(1,160)
$
2,792
$
(47,854)
(38,101)
$
-
4,025,431
574,589
166,616
(40,828)
$
5,852,060
Information on capitalized interest was as follows:
For the Three Months Ended
June 30
2013
2012
Capitalized interest
Capitalization rate
$
130
1.01%-1.25%
$ 1,819
0.92%-1.30%
June 30
2013
2012
$
130
1.01%-1.25%
$ 3,989
0.92%-1.92%
No impairment assessment was performed in the six months ended June 30, 2013 and 2012 as there was no
indication of impairment.
The above items of property and equipment were depreciated on a straight-line basis at the following rates
per annum:
Buildings
Vessel equipment
Vessel
Equipment
Vessel overhaul
Other equipment
50 years
20-25 years
3-10 years
2 years
3-10 years
Base on lease periods
Refer to Note 25 for the carrying amount of property and equipment pledged by the Group to secure
borrowings to the Group.
13. BORROWINGS
a. Short-term borrowings
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
Secured borrowings (Note 25)
Secured bank loans 1)
$
-
$
-
$
69,396
69,396
$ 387,814
70,313
458,127
Unsecured borrowings
Credit bank loans 3)
Secured borrowings interest rate
Unsecured borrowings interest rate
200,000
200,000
98,714
498,714
200,000
95,555
295,555
200,000
98,319
298,319
99,618
99,618
$ 498,714
$ 295,555
$ 367,715
$ 557,745
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
1.30%-1.38%
1.21%-1.30%
1.55%
1.22%-1.30%
0.87%-1.42%
1.50%
1) Secured bank loans are collateralized by U.S. certificate of deposit. The loans were due in January
2012. The principal amount was ￥993,000 thousand.
- 29 -
2) Secured bank loans are collateralized by U.S. certificate of deposit. As of June 30, 2012 and
January 1, 2012, the loans were due in August and February 2012, respectively. The principal
amount was US$2,322 thousand.
3) As of June 30, 2013, December 31, 2012 and June 30, 2012, the loans will be due in December
2013, January 2013 and July 2012, respectively.
4) The loans will be due in January 2014.
5) As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the loans will be due
in November 2013, May 2013, November 2012 and May 2012, respectively. The principal
amount was US$3,290 thousand.
b. Short-term bills payable
June 30, 2013
Commercial paper
$ 200,000
December 31,
2012
$
-
June 30, 2012
$
-
January 1,
2012
$
-
The commercial paper issued by Mega International Commercial Bank had a weighted average rate of
1% per annum and was due in July 2013. As the commercial paper was reaching its maturity and the
discount was immaterial, it was valued at par value.
c. Long-term borrowings
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
$ 15,277,877
308,875
$ 15,851,575
317,117
$ 14,836,641
342,275
$ 10,104,109
362,997
240,000
232,320
-
-
215,833
220,220
238,210
423,006
200,000
160,000
200,000
160,000
200,000
-
200,000
-
152,749
128,100
126,000
187,198
136,198
-
152,687
-
167,421
-
100,000
500,000
500,000
Secured borrowings (Note 25)
Eight-year secured bank loans
1)
Ten-year secured bank loans 2)
Three-year secured bank loans
3)
Seven-year secured bank loans
4)
5)
Four-year secured bank loans 6)
7)
Five-year secured bank loans 8)
Four-year secured bank loans 9)
10)
- 30 -
(Continued)
12)
13)
Syndicated bank loans 14)
Four-year and seven-month
secured bank loans 15)
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
75,450
-
233,435
January 1,
2012
$
475,124
61,338
80,408
99,335
115,000
-
95,832
-
168,922
-
1,076,250
17,046,222
17,980,868
16,771,505
211,166
13,135,073
600,000
600,000
-
-
400,000
350,000
400,000
-
400,000
-
-
300,000
200,000
300,000
-
-
-
192,308
80,000
186,154
80,000
80,000
80,000
45,337
-
59,432
250,000
73,422
250,000
85,000
250,000
-
-
600,000
600,000
-
-
191,539
-
Unsecured borrowings
Eighteen-month credit bank
loans 16)
Three-year credit bank loans
17)
(Five-year credit bank loans 18)
19)
Two-year credit bank loans 20)
loans 21)
23)
loans 25)
loans 26)
27)
Less: Current portion
Secured borrowing rates
Unsecured borrowing rates
2,167,645
(2,405,126)
1,875,586
(2,166,922)
1,594,961
(1,864,919)
$ 16,501,547
300,000
1,315,000
(1,579,131)
$ 16,808,741
$ 17,689,532
$ 12,870,942
(Concluded)
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
0.84%-2.81%
1.08%-2.30%
0.80%-2.81%
1.04%-1.687%
0.90%-2.06%
1.04%-1.50%
0.86%-2.01%
0.95%-1.50%
1) Secured bank loans were collateralized by the Group's vessel. As of June 30, 2013, December 31,
2012, June 30 2012 and January 1, 2012, the principal amount was US$493,136 thousand and
￥1,586,302 thousand, US$526,730 thousand and ￥1,650,942 thousand, US$278,635 thousand
and ￥17,352,114 thousand and US$228,618 thousand and ￥8,149,857 thousand, respectively,
and is repayable in 32 quarterly installments between July 2012 and November 2020.
- 31 -
2012, June 30, 2012 and January 1, 2012, the principal amount was US$10,296 thousand,
US$10,920 thousand, US$11,455 thousand and US$11,990 thousand, respectively and is repayable
in 40 quarterly installments until December 2018.
3) Secured bank loans were collateralized by U.S. certificate of deposit. The principal amount was
US$8,000 thousand and one-time repayment will be made upon maturity of the principal in
November 2015.
4) Secured bank loans were collateralized by vessel. As of June 30, 2013, December 31, 2012, June
30, 2012 and January 1, 2012, the principal amount was US$7,194 thousand, US$7,583 thousand,
US$7,972 thousand and US$13,972 thousand, respectively, and is repayable in 28 quarterly
installments between May 2012 and June 2018.
5) Secured bank loans were collateralized by New Taiwan dollar demand deposits. The credit period
is due in October 2014, and one-time repayment will be made upon maturity of the principal.
6) Secured bank loans were collateralized by the Group's freehold land.
made upon maturity of the principal in September 2013.
One-time repayment will be
7) Secured bank loans were collateralized by the Group's vessel and is repayable in 36 quarterly
installments until July 2015.
2012, June 30, 2012 and January 1, 2012, the principal amount was US$4,270 thousand, US$4,690
thousand, US$5,110 thousand and US$5,530 thousand, respectively, and is repayable in 20
quarterly installments until February 2015.
9) Secured bank loans were collateralized by the Group's vessel. The principal amount was
US$4,200 thousand and is repayable in 16 quarterly installments until June 2017.
10) Secured bank loans were collateralized by U.S. certificate of deposit. The credit period is due in
August 2014 and one-time repayment will be made upon maturity of the principal. Early
repayments were made in March 2013 and April 2013 and the credit lines had been reused in June
2013.
11) Secured bank loans were collateralized by the Group's vessel. As of June 30, 2013, June 30, 2012
and January 1, 2012, the principal amount was US$1,250 thousand and ￥125,000 thousand,
US$1,581 thousand and ￥496,000 thousand, and US$10,663 thousand and ￥390,000 thousand,
respectively. The principal is repayable in 32 quarterly installments from the date on which the
final drawdown is made.
12) Secured bank loans were collateralized by the Group's freehold land and building and is repayable
in 36 quarterly installments until December 2014.
13) Secured bank loans were collateralized by U.S. certificate of deposit. As of June 30, 2013,
December 31, 2012 and June 30, 2012, the principal amount was US$3,300 thousand, US$3,300
thousand, and ￥ 450,000 thousand, respectively, with monthly interest payment. One-time
repayment was originally due in November 2014, and early repayment was made in June 2013.
14) Syndicated bank loans were collateralized by U.S. certificate of deposit. The Corporation had
made early repayment in June 2012.
15) Secured bank loans were collateralized by the Group's vessel. $120,000 thousand of the principal
was repayable in the last installment. The remaining principal was repayable in 19 quarterly
installments until August 2015. Early repayment was made in February 2012.
- 32 -
16) Originally due in June 2014, maturity of the loans was extended to November 2014, and one-time
repayment will be made upon maturity of the principal.
17) One-time repayment will be made upon maturity of the principal in March 2015.
18) One-time repayment will be made upon maturity of the principal in January 2018.
19) The principal is repayable in monthly installments after 12 months from the drawdown date until
August 2015.
20) The credit lines may be used on a revolving basis within 120 days each period until January 2015.
If the Corporation reports two consecutive quarters of pre-tax loss, drawdown will be terminated
and the borrowings will have to be repaid immediately.
21) The principal amount was US$6,410 thousand and one-time repayment will be made upon maturity
of the principal in January 2014.
22) One-time repayment will be made upon maturity of the principal in August 2013.
23) Credit bank loans are repayable in 36 monthly installments until December 2014.
24) Originally due in February 2013, maturity of the loans was extended to February 2014, and early
repayment was made in April 2013.
25) The credit lines may be used on a revolving basis. Loan borrowed on June 30, 2012 was originally
due in December 2013 and early repayment was made in December 2012. Loan borrowed on
January 1, 2012 was originally due in June 2013 and early repayment was made in June 2012.
26) The principal amount was US$6,410 thousand. One-time repayment was originally due in July
2013, and early repayment was made in July 2012.
27) The credit period was December 2014. Early repayment was made in March 2012.
14. CONVERTIBLE BONDS PAYABLE
On January 14, 2010, the Corporation made a third issue of five-year unsecured convertible bonds, with a
face value of $450,000 thousand and a coupon rate of 0%. The effective interest rate was 2.27%. On the
third anniversary of issuance, the bondholders may require the Corporation to buy back their bonds at
103.03% of face value. The bondholders may request the Corporation to convert the bonds into the
Corporation’s common stock starting from one month after the issuance date to 10 days before the due date.
The conversion price at the issuance of the bonds was set at $46.2 which is required to be adjusted in
accordance with the bond agreement. The Corporation should redeem the remaining bonds at face value
upon maturity. During the period from one month after the issuance date to 40 days before the due date, if
the closing price of the Corporation’s common stock at the Taiwan Stock Exchange reaches 130% of the
conversion price for a period of 30 consecutive trading days, or the total amount of outstanding bonds is
less than 10% of the total issued amount, the Corporation may redeem the remaining bonds at a price
calculated using a predetermined formula.
- 33 -
Because part of bondholders requested the Corporation to repurchase the unsecured convertible bonds at
face value of $438,100 thousand, the Corporation paid $451,374 thousand for the bonds in accordance with
the bond agreement. Due to the early repayment, unamortized bond discount of $19,370 thousand and
financial liabilities at fair value through profit or loss - liability component of convertible bonds of $27,557
were derecognized and the Corporation recognized $5,087 thousand other losses. The equity component
of exercised redemption rights of convertible bonds amounted to $41,730 thousand (originally included in
capital surplus - equity component of convertible bonds) was reclassified to capital surplus-others.
The Corporation redeemed outstanding bonds of $11,900 thousand on April 19, 2013. And the related
unamortized bond discount of $458 thousand was derecognized. Differences between disbursement
allocated to liability component and book value were recognized as other losses of $25 thousand.
Differences of $701 thousand between disbursement allocated to equity component and its carring amount
$1,134 thousand (originally included in capital surplus - equity component of convertible bonds) were
reclassified to capital surplus-treasury shares transactions.
As of June 30, 2013, unsecured convertible bonds mentioned above were fully repurchased or redeemed.
Bondholders did not exercise convertible rights.
Related amount of the convertible bonds recognized is shown as follows:
Face value of convertible bonds
Liability component
Equity component
Transaction costs
Carrying amount of convertible
bonds payable
Repurchased bonds
Redeemed bonds
Amortized bond discount
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
$ 450,000
(1,800)
(42,864)
405,336
(3,500)
$ 450,000
(1,800)
(42,864)
405,336
(3,500)
$ 450,000
(1,800)
(42,864)
405,336
(3,500)
$ 450,000
(1,800)
(42,864)
405,336
(3,500)
401,836
(391,210)
(10,626)
-
Less: Current portion of
convertible bonds payable
$
-
$
401,836
27,902
429,738
401,836
23,065
424,901
(429,738)
(424,901)
-
$
-
401,836
18,282
420,118
$ 420,118
15. RETIREMENT BENEFIT PLANS
The Group’s retirement benefit plans include defined contribution and defined benefit plans. For defined
benefit plans, employee benefit expenses were calculated using the actuarially determined pension cost
discount rate as of December 31, 2012 and January 1, 2012, and recognized in their respective periods.
Refer to Note 15 to the consolidated financial statements as of March 31, 2013 for information on the
Group’s retirement benefit plans.
- 34 -
Employee benefit expenses were included in the following line items:
June 30
2013
2012
Defined contribution plans
Operating costs
Operating expenses
Defined benefit plans
Operating costs
Operating expenses
June 30
2013
2012
$
$
227
896
$
$
222
781
$
$
479
1,655
$
$
455
1,477
$
$
56
$
$
72
$
$
113
$
$
143
16. EQUITY
a. Share capital
Numbers of shares authorized
(in thousands)
Shares authorized
Number of shares issued and
fully paid (in thousands)
Shares issued
Share premium
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
500,000
$ 5,000,000
500,000
$ 5,000,000
500,000
$ 5,000,000
500,000
$ 5,000,000
403,350
366,350
366,350
366,350
$ 4,033,500
1,414,278
$ 3,663,500
1,061,317
$ 3,663,500
1,061,317
$ 3,663,500
1,061,317
$ 5,447,778
$ 4,724,817
$ 4,724,817
$ 4,724,817
Ordinary shares issued each has par value of NT$10.
dividends.
Each share receives one right to vote and to
For the Corporation to invest in its subsidiaries, the Company’s board of directors resolved on
November 1, 2012 to have a capital increase by cash which was approved by the Securities and Futures
Bureau on December 18, 2012. The board resolved to issue 37,000 thousand ordinary shares at
NT$19.5 per share, with a NT$10 par value and the record date of March 8, 2013.
b. Capital surplus
Reconciliation of capital surplus for the six months ended June 30, 2013:
Arising from
Issuance of
Common
Shares
Share-based payment
agreement
Issuance of ordinary
shares for cash
Repurchase of convertible
bonds (Note 14)
Redemption of
convertible bonds
(Note 14)
$
689,413
$ 1,042,374
Arising from
Conversion of
Bonds
$
371,904
Arising from
Treasury
Shares
Transactions
$
-
Arising from
Equity
Component
of
Convertible
Bonds
$
42,864
Arising from
Employee
Share
Options
$
-
Arising from
Expired
Employee
Share
Options
$
Total
7,123
$ 1,111,304
-
-
-
-
1,461
-
1,461
352,961
-
-
-
(1,461 )
-
351,500
-
-
-
(41,730 )
-
41,730
-
-
-
701
(1,134 )
-
-
$
371,904
$
- 35 -
701
$
-
$
-
$
48,853
(433 )
$ 1,463,832
The Corporation reserved 10% for subscription by the Corporation’s employees for the
above-mentioned capital increase according to the Company Law. The compensation cost of
employee stock options amounted to NT$1,461 thousand was recognized on the grant-date using the
fair value method, with a corresponding adjustment to capital surplus - employee share options. As
employees participated in share issuance for cash, the portion of participation amounting to NT$1,461
thousand was reclassified to the capital surplus - issuance of common shares.
The capital surplus arising from shares issued in excess of par (including share premium from issuance
of common shares, conversion of bonds and treasury share transactions) may be used to offset a deficit;
in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends
or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once
a year).
The capital surplus from employee share options and convertible bonds may not be used for any
purpose.
c. Retained earnings and dividend policy
According to the Corporation’s Articles of Incorporation, the legal reserve should be set aside at 10% of
annual income less any deficit. Under Company Law, after a special reserve is appropriated or
reversed, the remainder of income adding prior accumulated unappropriated retained earnings should be
distributed at not less than 2% of employees’ bonus and at not higher than 5% of remuneration to
directors and supervisors. And the above distributions should be approved by the board of directors at
stockholders meeting.
The Corporation’s dividend policy is based on the prudence principle, under which the Corporation
considers the long-term financing structure and operation. Thus, when earnings and funds become
sufficient for operating and expanding, then cash dividends or stock dividends will be distributed. The
most recent dividend policy provides for the distribution of stock dividends at up to 50% of earnings
and cash dividends of at least 50%.
For the six months ended June 30, 2013 and 2012, earnings appropriations included the following: the
bonus to employees was estimated at $4,250 thousand and $6,000 thousand, respectively, and the
remunerations to directors and supervisors were estimated at $2,250 thousand and $4,000 thousand,
respectively, which represented 2.04%, 2.11%, 1.08% and 1.40%, respectively, of appropriations of
earnings. Material differences between these estimates and the amounts proposed by the Board of
Directors in the following year are adjusted for also in the following year. If the actual amounts
subsequently resolved by the stockholders differ from the proposed amounts, the differences are
recorded in the year of stockholders’ resolution as a change in accounting estimate. If a share bonus is
resolved to be distributed to employees, the number of shares is determined by dividing the amount of
the share bonus by the closing price (after considering the effect of cash and stock dividends) of the
shares of the day immediately preceding the stockholders’ meeting.
Under Rule No. 100116 and Rule No. 0950000507 issued by the FSC, certain amounts shall be
transferred from exchange differences on translating foreign operations to a special reserve before any
appropriation of earnings generated before January 1, 2012 shall be made. Any special reserve
appropriated may be reversed to the extent of the decrease in the net debit balance of unappropriated
earnings.
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Corporation’s
paid-in capital. Legal reserve may be used to offset deficit. If the Corporation has no deficit and the
legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to
capital or distributed in cash.
- 36 -
Except for non-ROC resident stockholders, all stockholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Corporation.
The appropriations of earnings for 2012 and 2011 had been approved in the stockholders’ meetings on
June 19, 2013 and June 28, 2012, respectively. The appropriations and dividends per share were as
follows:
Appropriation of Earnings
For Year 2012 For Year 2011
Legal reserve
(Reversal) appropriation of
special reserve
Cash dividends
$
65,708
$
401,368
403,350
$ 870,426
90,849
Dividends Per Share (NT$)
For Year 2012 For Year 2011
$
(350,024)
549,525
$ 290,350
-
$
1.00
$
1.00
1.50
$
1.50
The bonus to employees and the remuneration to directors and supervisors for 2012 and 2011 approved
in the stockholders’ meetings on June 19, 2013 and June 28, 2012, respectively, were as follows:
Bonus to employees
Remuneration of directors and
supervisors
For the Year Ended 2012
Cash
Stock
Dividends
Dividends
For the Year Ended 2011
Cash
Stock
Dividends
Dividends
$ 12,000
-
$ 16,000
-
8,000
8,000
$
$
-
The appropriations of earnings for 2012 were proposed according to the Corporation’s financial
statements for the years ended December 31, 2012, which were prepared in accordance with the
Guidelines Governing the Preparation of Financial Reports by Securities Issuers and auditing standards
generally accepted in the Republic of China, and by reference to the balance sheet for the year ended
December 31, 2012, which was prepared in accordance with the Guidelines Governing the Preparation
of Financial Reports by Securities Issuers (revised) and International Financial Reporting Standards.
There were no differences between the approved amounts of the bonus to employees and the
remuneration to directors and supervisors in the stockholders’ meeting and the accrual amounts
reflected in the financial statements for the years ended December 31, 2012 and 2011.
The Corporation’s board of directors also resolved the ex-dividend date of September 7, 2013.
Information on the bonus to employees, directors and supervisors proposed by the Company’s board of
directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.
- 37 -
17. NET PROFIT
a. Depreciation and amortization
June 30
2013
2012
An analysis of deprecation by
function
Operating costs
Operating expenses
An analysis of amortization by
function
Operating costs expenses
June 30
2013
2012
$ 365,257
471
$ 305,154
836
$ 720,128
958
$ 572,919
1,670
$ 365,728
$ 305,990
$ 721,086
$ 574,589
$
$
$
$
452
452
904
904
b. Employee benefits expense
June 30
2013
2012
Short-term benefits
Payroll
Insurance
June 30
2013
2012
$ 236,921
2,553
239,474
$ 203,705
2,372
206,077
$ 463,381
5,042
468,423
$ 391,546
4,540
396,086
1,123
56
1,179
1,003
72
1,075
2,134
113
2,247
1,932
143
2,075
35,959
29,765
1,461
73,243
60,628
Total employee benefits
expense
$ 276,612
$ 236,917
$ 545,374
$ 458,789
An analysis of employee
benefits expense by function
Operating costs
Operating expenses
$ 252,593
24,019
$ 213,367
23,550
$ 498,476
46,898
$ 409,303
49,486
$ 276,612
$ 236,917
$ 545,374
$ 458,789
Post-employment benefits (see
Note 15)
Defined contribution plans
Defined benefit plans
Share-based payments (see
Note 16)
Equity-settled share-based
payments
Other employee benefits
- 38 -
18. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
June 30
2013
2012
Current tax
In respect of the current
period
Income tax expense of
unappropriated earnings
In respect of prior periods
$
Deferred tax
In respect of the current
period
Income tax expense recognized
in profit or loss
$
12,494
$
June 30
2013
2012
62,386
$
20,386
$
63,505
28
12,522
61,814
(1)
124,199
28
20,414
61,814
(1)
125,318
(7,159)
(108,020)
1,589
(49,548)
5,363
$
16,179
$
22,003
$
75,770
A reconciliation of accounting profit and income tax expenses is as follows:
June 30
2013
2012
Profit before tax from continuing operations
Income tax expense calculated at the statutory rate (17%)
Tax effect of adjusting items:
Permanent differences
Additional income tax on unappropriated earnings
Current income tax expense
Adjustments for prior years’ tax
$ 170,953
29,062
$ 552,846
93,984
$
(7,087)
21,975
28
$ (80,027)
61,814
75,771
(1)
Income tax expense recognized in profit or loss
$
22,003
$
75,770
b. Income tax recognized in other comprehensive income
June 30
2013
2012
June 30
2013
2012
Deferred tax
Recognized in other
comprehensive income:
Translation of foreign
operations
$
1,202
- 39 -
$ (10,760)
$ (1,911)
$ (2,623)
c. Integrated income tax
Imputation credits accounts
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
$ 404,720
$ 366,733
$ 394,063
$ 195,659
The creditable ratio for distribution of earnings of 2011 was 21.43%.
Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation
credits allocated to ROC resident shareholders of the Company was calculated based on the creditable
ratio as of the date of dividend distribution.
The creditable ratio for distribution of earnings of 2012 was 22.19% (expected ratio).
The expected ratio was calculated on the basis of the proposed revision of the Income Tax Law. As of
the date of approval of the consolidated financial statements, the proposed revision of the Income Tax
Law has not yet to be examined and passed by the Legislative Yuan. In addition, the actual imputation
credits allocated to shareholders of the Company was based on the balance of the ICA as of the date of
dividend distribution. Therefore, the expected creditable ratio for the 2012 earnings may differ from
the actual creditable ratio to be used in allocating imputation credits to the shareholders.
d. Income tax assessments
Income tax returns through 2011 and undistributed earnings returns through 2010 of the Corporation
and income tax returns through 2010 and undistributed earnings returns through 2009 of Gueishan
Island have been assessed and cleared by the tax authorities.
19. EARNINGS PER SHARE
Unit: NT$ Per Share
June 30
2013
2012
Basic earnings per share
Diluted earnings per share
$
$
0.15
0.15
$
$
0.04
0.03
June 30
2013
2012
$
$
0.38
0.38
$
$
1.30
1.25
The earnings and weighted average number of ordinary shares outstanding in the computation of earnings
per share were as follows:
Net Profit for the Period
June 30
2013
2012
Profit for the period attributable to
owners of the Corporation
Effect of dilutive potential ordinary
share:
Convertible bonds
Earnings used in the computation
of diluted earnings per share
$
60,305
$
-
$
60,305
- 40 -
13,020
149
$
13,169
June 30
2013
2012
$ 148,950
(989)
$ 147,961
$ 477,076
(3,272)
$ 473,804
Weighted average number of ordinary shares outstanding (in thousand shares):
June 30
2013
2012
Weighted average number of
ordinary shares in computation
of basic earnings per share
Effect of dilutive potential ordinary
shares:
Convertible bonds
Bonus issue to employee
Weighted average number of
ordinary shares used in the
computation of diluted earnings
per share
June 30
2013
2012
403,350
366,350
389,858
366,350
719
11,646
802
1,129
758
11,646
812
404,069
378,798
391,745
378,808
If the Group was able to settle the bonuses paid to employees by cash or shares, the Group presumed that
the entire amount of the bonus would be settled in shares and the resulting potential shares were included in
the weighted average number of shares outstanding used in the computation of diluted earnings per share, if
the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of
diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees
at their meeting in the following year.
20. BUSINESS COMBINATIONS
a. Subsidiaries acquired
Principal Activity
Gueishan Island
Marine Biology
Development
Co., Ltd.
Resort hotels and
entertainment
facilities services
Date of Acquisition
December 28, 2012
Proportion of
Voting Equity
Interests
Acquired (%)
Consideration
Transferred
100
$ 340,000
The Group acquired Gueishan Island marine Biology Development Co., Ltd. (“Gueishan Island”) in
order to continue the expansion of the Group’s operation in resort hotels service.
- 41 -
b. Assets acquired and liabilities assumed at the date of acquisition
Gueishan
Island
Current assets
Cash
Other current assets
Non-current assets
Property and equipment
Current liabilities
Other payables
Current portion of long-term borrowings
$
44
827
578,053
(443)
(160,000)
$ 418,481
c. Net cash outflow on acquisition of subsidiaries
Net Cash
Outflow
Consideration transferred
Less: Cash balance acquired
Less: Net cash outflow for the year ended December 31, 2012
$ 340,000
(44)
339,956
(99,956)
Net cash outflow for the six months ended June 30, 2013
$ 240,000
d. Impact of acquisitions on the results of the Group
The results of acquirees included in the consolidated statements of comprehensive income were as
follows:
For the Three
Months Ended
June 30
2013
Profit
Gueishan Island
$
(31)
For the Six
Months Ended
June 30
2012
$
(106)
21. NON-CASH TRANSACTIONS
For the six months ended June 30, 2013 and 2012, the Group entered into the following non-cash investing
and financing activities which were not reflected in the consolidated statement of cash flows:
a. As of June 30, 2013 and 2012, the Group reclassified long-term borrowings from the balance sheet date
of $2,405,126 thousand and $2,289,820 thousand, respectively to current portion of long-term
borrowings.
b. For the six months ended June 30, 2012, the real estate title to the joint construction project had been
transferred to the counter-parties (see Note 11); therefore, the Group derecognized non-current assets
classified as held for sale of $832,710 thousand, advance real estate receipts of $828,462 thousand
(classified under other current liabilities) and deferred marketing expenses of $76,817 thousand
(classified under other current assets).
- 42 -
The Group reclassified non-current assets classified as held for sale of $16,103 thousand to other
non-current assets due to its failure to complete the sales plan.
c. As described in Note 16, the appropriations of earnings for 2012 and 2011 had been approved in the
stockholders’ meetings on June 19, 2013 and June 28, 2012, respectively; it was resolved that a cash
dividend of $403,350 thousand and $549,525 thousand to be distributed, respectively. As of June 30,
2013 and 2012, the cash dividends were not yet to be paid.
22. CAPITAL MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as going
concerns while providing sufficient return to stakeholders through the optimization of the debt and equity
balance.
The capital structure of the Group consists of net debt (borrowings offset by cash) and equity of the Group
(comprising share capital, capital surplus, retained earnings and other equity).
To do overall planning for the Group’s long-term development and the corresponding asset scale needed,
the Group evaluates vessels needed and the corresponding capital expenditures to achieve the planning
shipping capacity and future growth; In addition, considering the nature of industry, future development of
the Group and factors such as changes in the external environment, the Group evaluates future needs of
capital and proposed dividends to ensure the Group will be able to continue as going concerns, to return the
earnings to stockholders while taking account of the interest of other stakeholders, as well as to maintain
the optimal capital structure to enhance stockholders’ value in long term. Management of the Group
reviews capital structure and evaluates the risk that might involve considering different capital structures on
a regular basis. Generally, the Group adopts prudent risk management strategies.
23. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments
1) Fair value of financial instruments not carried at fair value
The management of the Group considers that the carrying amounts of financial assets and financial
liabilities including the cash and cash equivalents, trade receivables, other financial assets,
short-term borrowings, short-term bills payable, notes and trade payable, other payable, dividend
payable, long-term borrowings and convertible bonds payable recognized in the consolidated
financial statements approximate their fair values. Held-to-maturity financial assets are measured
at amortized cost using the effective interest method. The fair value of financial assets measured
at cost cannot be estimated.
2) Fair value measurements recognized in the consolidated balance sheets
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
 Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;
 Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
- 43 -
 Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
June 30, 2013
Level 1
Financial assets at FVTPL
Derivative financial
assets
Non-derivative financial
assets held for trading
Financial liabilities at
FVTPL
Derivatives financial
liabilities
$
Level 2
-
$
Level 3
80,090
23,794
$
Total
-
-
$
80,090
-
23,794
$
23,794
$
80,090
$
-
$ 103,884
$
-
$
468
$
-
$
468
December 31, 2012
Level 1
assets
FVTPL
liabilities
$
Level 2
-
$
Level 3
1,392
155,537
$
Total
-
-
$
1,392
-
155,537
$ 155,537
$
1,392
$
-
$ 156,929
$
$
30,440
$
-
$
-
30,440
June 30, 2012
Level 1
Level 2
Level 3
Total
$ 133,762
$
-
$
-
$ 133,762
FVTPL
liabilities
$
$ 127,775
$
-
$ 127,775
-
- 44 -
January 1, 2012
Level 1
assets
$
Level 2
-
$
88,588
FVTPL
liabilities
$
88,588
$
-
Level 3
1,062
$
$
Total
-
$
-
1,062
88,588
1,062
$
-
$
89,650
$ 185,750
$
-
$ 185,750
There were no transfers between Level 1 and 2 for the six months ended June 30, 2013 and 2012.
3) Valuation techniques and assumptions applied for the purpose of measuring fair value
The fair values of financial assets and financial liabilities were determined as follows:
The fair values of financial assets with standard terms and conditions and traded in active liquid
markets are determined with reference to quoted market prices (includes listed shares, open-ended
fund and corporate bonds);
The fair values of derivative instruments were calculated using quoted prices. Where such prices
were not available, the estimates and assumptions used by the Group were consistent with those that
market participants would use for the financial instrument pricing.
b. Categories of financial instruments
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
January 1,
2012
Financial assets
Financial assets measured at
amortized cost
Cash
Trade receivables
Other financial assets
Held-to-maturity financial
assets
Financial assets measured at
cost
1,056,244
40,582
411,152
103,884
965,332
29,360
952,188
156,929
1,323,677
37,705
1,297,052
133,762
-
-
-
28,413
28,388
28,410
- 45 -
$
969,108
20,022
2,192,376
89,650
15,138
28,421
(Continued)
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
January 1,
2012
Financial liabilities
Financial liabilities measured at
amortized cost
Short-term borrowings
Short-term bills payable
Notes and trade payables
Dividend payable
Other payables
Convertible bonds payable
Long-term borrowings
(including current portion)
Financial liabilities at FVTPL
498,714
200,000
150,709
403,350
201,464
19,213,867
468
295,555
168,561
393,802
429,738
19,856,454
30,440
367,715
147,020
549,525
161,195
424,901
18,366,466
127,775
$
557,745
131,185
146,468
420,118
14,450,073
185,750
(Concluded)
c. Financial risk management objectives and policies
The Group’s main target of financial risk management was to manage the market risk related to
operating activity (including foreign currency risk, interest rate risk and other price risk), credit risk and
liquidity risk. To reduce the potential and detrimental influence of the fluctuations in market on the
Group’s financial performance, the Group was devoted to identify, estimate and hedge the uncertainties
of the market.
The Group’s significant financial activity was reviewed and approved by board of directors in
compliance with relative regulations and internal control policy. The Group must comply with
operating procedures related to financial risk management and delegation of authority and
responsibility.
1) Market risk
The Group's activities exposed it primarily to the financial risks of changes in foreign currency
exchange rates and interest rates.
a) Foreign currency risk
The Group’s operating activities were mainly traded in foreign currency, which exposed it
primarily to the financial risks of changes in foreign currency exchange rates. To avoid the
impairment of foreign currency denominated assets and future cash flow fluctuations arising
from exchange rate fluctuations, the Group monitored the exchange rate fluctuations timely and
regulated foreign currency position which mainly includes entering into currency-convertible
loan agreements according to future cash flow demand and current foreign currency position.
The convertible agreement could reduce the influence of the exchange rate fluctuations on the
Group’s income.
- 46 -
The carrying amounts of the Group's foreign currency denominated monetary assets and
monetary liabilities (including those eliminated on consolidation) at the end of the reporting
period were as follows:
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
Assets
USD
JPY
$
291,300
193,240
$
794,052
336,097
$
938,655
13,267
$
702,262
203,462
Liabilities
USD
JPY
48,360
1,108,858
335,843
1,250,917
66,789
8,257,539
572,599
5,176,965
Sensitivity analysis
The Group was mainly exposed to the USD and JPY
The following table details the Group’s sensitivity to a 5% increase and decrease in the
functional currency against the relevant foreign currencies. The sensitivity analysis included
only outstanding foreign currency denominated monetary items and adjusts their translation at
the end of the reporting period for a 5% change in foreign currency rates. A positive number
below indicates an increase in pre-tax profit associated with New Taiwan dollars strengthen 5%
against the relevant currency. For a 5% weakening of New Taiwan dollars against the relevant
currency, there would be an equal and opposite impact on pre-tax profit and the balances below
would be negative.
USD Impact
June 30
2013
2012
Profit or loss
$ 12,147 (i)
$ 43,593 (i)
JPY Impact
June 30
2013
2012
$ (45,781) (ii)
$ (412,214) (ii)
i) This was mainly attributable to the exposure outstanding on USD cash and other financial
assets, receivables and payables, foreign exchange forward contracts and currency option
contracts, which were not hedged at the end of the reporting period.
ii) This was mainly attributable to the exposure to outstanding JPY cash, long-term borrowings,
foreign exchange forward contracts and currency option contracts, which were not hedged at
the end of the reporting period.
b) Interest rate risk
The Group was exposed to interest rate risk arising from borrowing at both fixed and floating
interest rates. To reduce the influence of the market interest rate fluctuations, the Group
evaluated market interest rate fluctuations regularly, grasped the trend of interest rate
fluctuations and maintained a certain level of income giving consideration to security and
liquidity.
- 47 -
The carrying amount of the Group's financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows:
Fair value interest rate
risk
Financial assets
Cash flow interest rate
risk
Financial assets
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
955,116
800,000
515,554
19,112,581
1,074,317
1,279,738
849,400
19,302,009
1,942,723
1,508,336
682,217
17,650,746
January 1,
2012
$
2,636,575
1,527,863
524,767
13,900,073
The sensitivity analyses below were determined based on the Group’s exposure to interest rates
for non-derivative instruments at the end of the reporting period. For floating rate assets and
liabilities, the analysis was prepared assuming the amount of the assets and liabilities
outstanding at the end of the reporting period was outstanding for the whole year.
If interest rates had been 5 basis points higher/lower and all other variables were held constant,
the Group’s pre-tax profit for the six months ended June 30, 2013 and 2012 would
decrease/increase by $4,649 thousand and $4,242 thousand, respectively.
c) Other price risk
The Group’s other price risk was mainly attributable to the investments classified as financial
assets at fair value through profit or loss.
The sensitivity analyses below were determined based on the exposure to equity price risks at
the end of the reporting period.
If equity prices had been 5% higher/lower, pre-tax profit for the six months ended June 30, 2013
and 2012 would have increased/decreased by $242 thousand and $222 thousand, respectively.
2) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure
to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation
by the counterparties is arising from the carrying amount of the respective recognized financial
assets as stated in the consolidated balance sheets.
To maintain the quality of the trade receivable, the Group has built a credit risk management
procedure to reduce the credit risk from specific customer. The credit evaluation of individual
customer includes considering factors that will affect its payment ability such as financial condition,
past transaction records and current economic conditions. Credit risk of bank deposits,
fixed-income investments and other financial instruments with banks is evaluated and monitored by
the Group’s financial department. Since the counterparties are creditworthy banks and financial
institutions with good credit rating, thus, there’s no significant credit risk.
- 48 -
As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the carrying amount
of trade receivables were $40,582 thousand, $29,360 thousand, $37,705 thousand and $20,022
thousand and accounted for 0.14%, 0.10%, 0.13% and 0.08% of total assets, respectively. The
credit risk was limited because the counterparties are creditworthy.
3) Liquidity risk
The objective of liquidity risk management is to maintain adequate cash, marketable securities with
high liquidity and sufficient bank facilities that business operation requires and to ensure the Group
has sufficient financial flexibility.
The following table details the Group's remaining contractual maturity for its non-derivative
financial liabilities with agreed repayment periods. The tables had been drawn up based on the
undiscounted cash flows of financial liabilities from the earliest date on which the Group can be
required to pay.
Specifically, bank loans with a repayment on demand clause were included in the earliest time band
regardless of the probability of the banks choosing to exercise their rights. The maturity dates for
other non-derivative financial liabilities were based on the agreed repayment dates.
June 30, 2013
Less than
1 Year
2-3 Years
3-4 Years
4-5 Years
5+ Years
Non-derivative financial liabilities
Short-term bills payable
Dividend payable
Other payables
$
498,714
200,000
2,405,126
150,709
403,350
201,464
$
3,694,074
-
$
2,185,170
-
$
1,951,909
-
$
8,977,588
-
$ 3,859,363
$ 3,694,074
$ 2,185,170
$ 1,951,909
$ 8,977,588
Less than
1 Year
2-3 Years
3-4 Years
4-5 Years
5+ Years
December 31, 2012
Other payables
Current portion of convertible
bonds payable
$
295,555
2,166,922
168,561
393,802
$
3,692,869
-
$
2,371,548
-
$
1,953,822
-
$
9,671,293
-
429,738
-
-
-
-
$ 3,454,578
$ 3,692,869
$ 2,371,548
$ 1,953,822
$ 9,671,293
- 49 -
June 30, 2012
Less than
1 Year
2-3 Years
3-4 Years
4-5 Years
5+ Years
Dividend payable
Other payables
Current portion of convertible
bonds payable
$
367,715
1,864,919
147,020
549,525
161,195
$
3,370,886
-
$
2,761,741
-
$
1,839,083
-
$
8,529,837
-
424,901
-
-
-
-
$ 3,515,275
$ 3,370,886
$ 2,761,741
$ 1,839,083
$ 8,529,837
Less than
1 Year
2-3 Years
3-4 Years
4-5 Years
5+ Years
January 1, 2012
Other payables
Convertible bonds payable
$
557,745
1,579,131
131,185
146,468
-
$ 2,414,529
$
3,161,705
420,118
$ 3,581,823
$
1,774,500
-
$ 1,774,500
$
1,297,135
-
$
$ 1,297,135
6,637,602
-
$ 6,637,602
The Group meets its cash flow demand in operation mainly through financing of funds, which
includes using unused credit line and entering into new loan agreements with financial institutions.
As of June 30, 2013, the amount of unused financing facilities was $1,862,766 thousand. Thus,
there were no liquidity risk of inability to finance to fulfill contractual obligations.
24. TRANSACTIONS WITH RELATED PARTIES
Balances and transactions between the Corporation and its subsidiaries, which were related parties of the
Corporation, had been eliminated on consolidation and are not disclosed in this note. Details of
transactions between the Group and other related parties were disclosed below.
a. Trading transactions
The management income and commission revenue were obtained from providing related parties with
shipping services based on agreed terms.
Service Revenue
June 30
June 30
2013
2012
2013
2012
The entities under common
control by an individual or a
close member of the family
of the individual with the
Corporation
Related party in substance
$
2,099
172
$
2,275
-
$ 53,638
6,201
$
3,629
-
$
2,271
$
2,275
$ 59,839
$
3,629
- 50 -
Operating Costs
June 30
June 30
2013
2012
2013
2012
$ 31,511
$ 22,708
$ 62,286
$ 22,708
The balance of trade receivables from related parties (classified as trade receivables) at the end of the
reporting periods were as follows:
June 30, 2013
Corporation
$
1,895
December 31,
2012
$
-
June 30, 2012
$
-
January 1,
2012
$
-
The balance of prepayments from related parties (classified as other current assets) at the end of the
reporting periods were as follows:
June 30, 2013
$
-
December 31,
2012
$
8,422
June 30, 2012
$
8,665
January 1,
2012
$
-
As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the rental expense
(classified as operating cost) paid to related party in substance based on vessel lease contract were as
follows:
No later than one year
Later than one year and not
later than five years
June 30, 2013
December 31,
2012
June 30, 2012
$ 125,610
$ 125,212
$ 125,585
354,806
415,773
480,318
$ 480,416
$ 540,985
$ 605,903
January 1,
2012
$
-
$
-
b. Compensation of key management personnel
For the six months ended June 30, 2013 and 2012, the remuneration of directors and other members of
key management personnel were as follows:
June 30
2013
2012
Short-term employee benefits
Post-employment benefits
Share-based payments
June 30
2013
2012
$
3,170
118
-
$
3,439
118
-
$
5,987
236
991
$
9,092
236
-
$
3,288
$
3,557
$
7,214
$
9,328
- 51 -
The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.
c. Other transactions with related parties
The Corporation leased parts of the office and received rental revenue (classified as other revenue) from
related parties based on agreed contract.
June 30
2013
2012
Corporation
$
15
$
June 30
2013
2012
15
$
30
$
30
25. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were provided as collateral for bank borrowings:
Demand deposits (classified as
other financial assets)
Pledge deposits (classified as other
financial assets)
Building, net
Land
Vessel equipment, net
Prepayment for equipment
June 30, 2013
December 31,
2012
June 30, 2012
$
$
$
60,157
60,111
60,065
January 1,
2012
$
60,019
348,011
21,010
657,903
22,445,034
-
861,344
21,553
657,903
22,616,896
-
816,520
22,096
79,937
20,893,058
423,285
1,120,351
22,639
79,937
15,499,565
943,143
$ 23,532,115
$ 24,217,807
$ 22,294,961
$ 17,725,654
26. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the Group entered into vessel
construction contracts with some shipbuilding companies amounting to ￥ 5,100,000 thousand and
US$168,200 thousand, ￥ 5,100,000 thousand and US$41,500 thousand, ￥ 9,416,500 thousand and
US$41,500 thousand, and ￥25,874,500 thousand and US$41,500 thousand, respectively, and
￥1,133,000 thousand and US$16,634 thousand, ￥883,000 thousand and US$1,250 thousand,
￥2,349,000 thousand and US$9,755 thousand, and ￥5,910,000 thousand and US$3,460 thousand had
been paid, respectively.
- 52 -
27. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES
The significant financial assets and liabilities denominated in foreign currencies were as follows:
June 30, 2013
Foreign
Currencies
Carrying
Amount
Exchange Rate
Financial assets
Monetary items
USD
JPY
$
9,710
16,495
30.00
0.101 (JPY:USD)
1,612
1,725,774
30.00
0.101 (JPY:USD)
$
291,300
5,008
Monetary items
USD
JPY
48,360
523,945
December 31, 2012
Foreign
Currencies
Carrying
Amount
Exchange Rate
Financial assets
Monetary items
USD
JPY
JPY
RMB
EUR
$
27,343
845,052
67,796
2,233
248
29.04
0.3364 (JPY:NTD)
0.0116 (JPY:USD)
0.1584 (RMB:USD)
1.3485 (EUR:USD)
1,668,941
11,565
0.0116 (JPY:USD)
29.04
$
794,052
284,264
22,818
10,269
9,718
Monetary items
JPY
USD
561,383
335,843
June 30, 2012
Foreign
Currencies
Carrying
Amount
Exchange Rate
Financial assets
Monetary items
USD
EUR
JPY
RMB
$
31,414
362
35,341
2,026
- 53 -
29.880
1.257 (EUR:USD)
0.0126 (JPY:USD)
0.1573 (RMB:USD)
$
938,655
13,604
13,267
9,523
(Continued)
Foreign
Currencies
Carrying
Amount
Exchange Rate
Monetary items
JPY
USD
18,343,614
2,235
0.0126 (JPY:USD)
29.880
$
6,885,854
66,789
(Concluded)
January 1, 2012
Foreign
Currencies
Carrying
Amount
Exchange Rate
Financial assets
Monetary items
USD
JPY
EUR
$
19,196
370,895
569
30.275
0.0129 (JPY:USD)
1.294 (EUR:USD)
9,561,951
14,913
0.0129 (JPY:USD)
30.275
$
581,162
144,872
22,284
Monetary items
JPY
USD
3,734,898
451,499
28. SEGMENT INFORMATION
Information reported to the chief operating decision maker for the purpose of resource allocation and
assessment of segment performance focuses on the types of goods or services delivered or provided. For
the six months ended June 30, 2013, the Group has two reportable segments: Shipping segment and
tourist segment. Shipping segment mainly provides cargo shipping services and acts as a shipping agency.
Tourist segment mainly provides resort hotels service. For the six months ended June 30, 2012, the Group
is regarded as one operating segment and mainly provides cargo shipping services and acts as a shipping
agency.
a. Segment revenues and results
The following was an analysis of the Group’s revenue and results from continuing operations by
reportable segment.
Segment Revenues
June 30
2013
2012
Shipping
Tourist
Total
Interest expense
$ 2,220,297
$ 2,220,297
Profit before tax
- 54 -
$ 1,922,329
$ 1,922,329
Segment Income
June 30
2013
2012
$
288,474
(94)
288,380
(117,427)
$
658,945
658,945
(106,099)
$
170,953
$
552,846
Segment revenues reported above represented revenues generated from external customers. There
were no inter-segment sales for the six months ended June 30, 2013 and 2012.
b. Segment total assets
June 30, 2013
December 31,
2012
June 30, 2012
January 1,
2012
Shipping
Tourist
$ 28,654,521
584,000
$ 28,378,572
578,924
$ 28,093,565
-
$ 24,356,697
-
Consolidated total assets
$ 29,238,521
$ 28,957,496
$ 28,093,565
$ 24,356,697
Segment assets
- 55 -

Shih Wei Navigation Co., Ltd. and Subsidiaries

Transcription

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