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FocalTech — Interim / Quarterly Report 2021
Dec 29, 2021
52342_rns_2021-12-29_0be6f9e3-3795-4154-aa73-68e9df7a31f8.pdf
Interim / Quarterly Report
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FocalTech Systems Co., Ltd. and Subsidiaries
Consolidated Financial Statements for the Six Months Ended June 30, 2021 and 2020
Notice to Readers
The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.
Independent Accountants’ Review Report
To the Board of Directors of FocalTech Systems Co., Ltd.
Introduction
We have reviewed the accompanying consolidated balance sheets of FocalTech Systems Co., Ltd. and its subsidiaries (collectively, the “Company”) as of June 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended June 30, 2021 and 2020 and for the six months ended June 30, 2021 and 2020, as well as the consolidated statements of changes in equity and cash flows for the six months period ended June 30, 2021 and 2020, and the related notes to the consolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.
Scope of Review
Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Basis for Qualified Conclusion
As disclosed in Note 12 to the consolidated financial statements, the financial statements of non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of June 30, 2021 and 2020, combined total assets of these non-significant subsidiaries were NT$534,371 thousand and NT$504,174 thousand, respectively, representing 3% and 4%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$77,747 thousand and NT$164,050 thousand, respectively, representing 1% and 5%, respectively, of the consolidated total liabilities; for the six months and six months ended June 30, 2021 and 2020, the amounts of combined comprehensive loss of these subsidiaries were NT$67,581 thousand,NT$58,563 thousand, NT$115,682 thousand and NT$84,052 thousand ,respectively, representing (3%), (402%), (4%), (92%).
Qualified Conclusion
Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true and fair view of the consolidated financial position of the Group as of June 30, 2021 and 2020, its consolidated financial performance and its consolidated cash flows for the six months period ended June 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
The engagement partners on the reviews resulting in this independent auditors' review report are Shiow-Ming Shue and Chih-Ming Shao.
Deloitte & Touche Taipei, Taiwan Republic of China August 10, 2021
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
| ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Financial assets at fair value through other comprehensive income - current (Note 8) Trade receivables, net (Note 10) Inventories (Note 11) Other financial assets (Note 9) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Property, plant and equipment (Note 13) Goodwill (Notes 14) Other intangible assets (Note 15) Deferred tax assets Other non-current assets (Note 30) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Trade payables (Note 17) Other payables (Note 18) Dividends payables (Note 26) Current tax liabilities (Notes 4) Other current liabilities (Notes 21) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities Net defined benefit liabilities - non-current (Note 4) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Notes 4, 20 and 25) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Employee stock options Restricted stock for employees Employee share options – expired Total capital surplus Retained earnings Other equity Exchange differences from translating the financial statements of foreign operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income Unearned employee compensation Total other equity Treasury shares Equity attributable to owners of the parent NON-CONTROLLING INTERESTS (Note 20) Total equity TOTAL |
June 30, 2021 Amount % $ 5,960,588 36 344,760 2 56,612 - 2,553,517 16 1,944,013 12 1,073,059 6 415,512 3 12,348,061 75 320,044 2 183,917 1 1,286,016 8 1,237,268 8 55,170 - 58,711 - 951,549 6 4,092,675 25 $ 16,440,736 100 $ 765,245 5 2,018,743 12 1,057,947 7 - - 770,901 5 209,765 1 4,822,601 30 57,351 - 23,132 - 612,484 4 10,400 - 703,367 4 5,525,968 34 2,163,561 13 4,733,704 29 79,812 1 9,972 - 1,178,545 7 34,134 - 6,036,167 37 3,964,135 24 (209,704) (1) 2,926 - (1,062,324) (7) (1,269,102) (8) (3,184) - 10,891,577 66 23,191 - 10,914,768 66 $ 16,440,736 100 |
December 31, 2020 Amount % $ 4,011,682 33 - - - - 1,633,900 13 1,755,142 14 1,385,936 11 184,262 2 8,970,922 73 234,662 2 247,974 2 1,321,940 11 1,237,268 10 63,202 - 85,154 1 183,931 1 3,374,131 27 $12,345,053 100 $ 523,648 4 1,731,109 14 1,037,431 8 - - 433,121 4 230,944 2 3,956,253 32 53,213 1 23,366 - 490,361 4 10,400 - 577,340 5 4,533,593 37 2,103,532 17 4,725,445 38 69,361 1 14,903 - - - 33,933 - 4,843,642 39 1,012,301 8 (125,038) (1) 2,722 - - - (122,316) (1) (24,316) - 7,812,843 63 (1,383) - 7,811,460 63 $ 12,345,053 100 |
June 30, 2020 | |||
|---|---|---|---|---|---|---|
| Amount $ 4,011,682 - - 1,633,900 1,755,142 1,385,936 184,262 8,970,922 234,662 247,974 1,321,940 1,237,268 63,202 85,154 183,931 3,374,131 $12,345,053 $ 523,648 1,731,109 1,037,431 - 433,121 230,944 3,956,253 53,213 23,366 490,361 10,400 577,340 4,533,593 2,103,532 4,725,445 69,361 14,903 - 33,933 4,843,642 1,012,301 (125,038) 2,722 - (122,316) (24,316) 7,812,843 (1,383) 7,811,460 $ 12,345,053 |
Amount % $ 3,013,886 26 - - 18,103 - 1,418,244 12 2,747,726 24 1,144,662 10 208,993 2 8,551,614 74 52,493 - 60,836 1 1,299,218 11 1,237,268 11 71,118 1 101,496 1 137,272 1 2,959,701 26 $ 11,511,315 100 $ - - 1,781,723 16 787,809 7 150,000 1 391,427 3 166,169 1 3,277,128 28 31,412 1 23,885 - 258,070 2 10,400 - 323,767 3 3,600,895 31 2,999,949 26 4,714,404 41 49,201 1 28,502 - - - 33,933 - 4,826,040 42 172,824 2 (65,094) (1) 2,290 - - - (62,804) (1) (43,074) - 7,892,935 69 17,485 - 7,910,420 69 $ 11,511,315 100 |
The accompanying notes are an integral part of the consolidated financial statements.
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
| REVENUE (Note 21) COST OF REVENUE (Note 11 and 22) GROSS PROFIT OPERATING EXPENSES (Note 22, 25, 27 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Finance costs(Note 22) Interest income Gain on financial assets and liabilities at fair value through profit or loss Other gains and losses - net (Loss) gain on foreign exchange Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 23) NET INCOME OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations |
For the Three Months EndedJune 30 | For the Three Months EndedJune 30 | For the Three Months EndedJune 30 | For theSix Months EndedJune 30 | For theSix Months EndedJune 30 | For theSix Months EndedJune 30 | For theSix Months EndedJune 30 | |||
|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||
| Amount % $ 5,772,267 100 (2,864,511) (50) 2,907,756 50 (131,285) (2 ) (146,890 ) (3 ) (590,733) (10) (868,908) (15) 2,038,848 35 (2,406) - 6,959 - 221,560 4 179,208 3 (43,147) (1) 362,174 6 2,401,022 41 (301,932) (5) 2,099,090 36 (82,088) (1 ) |
Amount % $ 2,767,596 100 (2,154,414) (78) 613,182 22 (76,412) (3 ) (82,364 ) (3 ) (346,949) (12) (505,725) (18) 107,457 4 - - 16,158 1 (1,830 ) - 5,669 - 8,506 - 28,503 1 135,960 5 (34,876) (1) 101,084 4 (85,874) (3 ) |
Amount $ 10,122,121 (5,585,781) 4,536,340 (244,796) (259,569) (1,067,633) (1,571,998) 2,964,342 (4,757) 14,578 259,321 195,830 (49,879) 415,093 3,379,435 (443,394) 2,936,041 (87,058) |
% 100 (55) 45 (2 ) (3 ) (11) (16) 29 - -1 3 2 (1) 4 33 (4) 29 (1 ) |
Amount % $ 5,677,233 100 (4,424,222) (78) 1,253,011 22 (170,566) (3 ) (169,681) (3 ) (734,602) (13) (1,074,849) (19) 178,162 3 (1,078) - 35,678 1 (4,592) - 19,321 - 11,277 - 60,606 1 238,768 4 (78,286) (1) 160,482 3 (70,016) (1 ) (Continued) |
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)
| Unrealized gain(loss) from debt instrument investments measured at fair value through other comprehensive loss Items that may be reclassified subsequently to profit or loss Total other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET INCOME ATTRIBUTABLE TO: Owners of the Parent Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Parent Non-controlling interests EARNINGS PER SHARE (Note 24) Basic Diluted |
For the Three Months EndedJune 30 | For the Three Months EndedJune 30 | For the Three Months EndedJune 30 | For theSix Months EndedJune 30 | For theSix Months EndedJune 30 | For theSix Months EndedJune 30 | ||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Amount % 267 - (81,821) (1) (81,821) (1) $ 2,017,269 35 $ 2,106,351 36 (7,261) - $ 2,099,090 36 $ 2,027,109 35 (9,840) - $ 2,017,269 35 $ 10.43 $ 9.95 |
Amount % (625) - (86,499) (3) (86,499) (3) $ 14,585 1 $ 106,638 4 (5,554) - $ 101,084 4 $ 21,627 1 (7,042) - $ 14,585 1 $ 0.38 $ 0.36 |
Amount % 204 - (86,854) (1) (86,854) (1) $ 2,849,187 28 $ 2,952,091 29 (16,050) - $ 2,936,041 29 $ 2,867,629 28 (18,442) - $ 2,849,187 28 $ 14.70 $ 13.93 |
Amount % 540 - (69,476) (1) (69,476) (1) $ 91,006 2 $ 172,824 3 (12,342) - $ 160,482 3 $ 104,213 2 (13,207) - $ 91,006 2 $ 0.62 $ 0.59 |
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| $ | $ | $ | $ | |||||
The accompanying notes are an integral part of the consolidated financial statements
(Concluded)
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)
| (In Thousands of New Taiwan Dollars) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BALANCE, JANUARY 1, 2020 Reduction on capital surplus to offset accumulated deficits Cash distribution from additional paid-in capital Net income for the six months ended June 30, 2020 Other comprehensive income (loss) for the six months ended June 30, 2020, net of income tax Total comprehensive income (loss) for the six months ended June 30, 2020 Compensation cost of employee share options (Note 20 and 25) Treasury shares transferred to employees (Note 20 and 25) Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) BALANCE, JUNE 30, 2020 BALANCE, JANUARY 1, 2021 Net income for the six months ended June 30, 2021 Other comprehensive income (loss) for the six months ended June 30, 2021, net of income tax Total comprehensive income (loss) for the six months ended June 30, 2021 Compensation cost of employee share options (Note 20 and 25) Treasury shares transferred to employees (Note 20 and 25) Increase in non-controlling interests Changes in ownership interests in subsidiaries Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) Issuance of restricted stock employees (Note 4 . 20 and 25) Compensation cost of restricted stock to employees (Note 4 . 20 and 25) BALANCE, JUNE 30, 2021 |
Equity Attributable toOwners of the Parent | Total $ 7,697,478 - (150,000) 172,824 (68,611) 104,213 9,961 224,084 7,199 $ 7,892,935 $ 7,812,843 2,952,091 (84,462) 2,867,629 8,396 22,929 - (257) 6,326 57,490 116,221 $ 10,891,577 |
Non-controlling Interests $ 30,692 - - (12,342) (865) (13,207) - - - $ 17,485 $ (1,383) (16,050) (2,392) (18,442) - - 42,759 257 - - - $ 23,191 |
Total Equity | |||||||||
| Share Capital Ordinary Shares $ 2,996,759 - - - - - - - 3,190 $ 2,999,949 $ 2,103,532 - - - - - - - 2,539 57,490 - $ 2,163,561 |
Capital Surplus $ 5,145,377 (183,307) (150,000) - - - 9,961 - 4,009 $ 4,826,040 $ 4,843,642 - - - 8,396 1,797 - - 3,787 1,178,545 - $ 6,036,167 |
Retainted Earnings $ (183,307) 183,307 - 172,824 - 172,824 - - - $ 172,824 $ 1,012,301 2,952,091 - 2,952,091 - - - (257) - - - $ 3,964,135 |
Other Equity | Unearned employee compensation $ - - - - - - - $ - $ - - - - - - - - - (1,178,545) 116,221 $ (1,062,324) |
Treasury Shares $ (267,158) - - - - - - 224,084 - $ (43,074) $ (24,316) - - - - 21,132 - - - - - $ (3,184) |
||||||||
| Exchange Differences from Translating the Financial Statement of Foreign Operations $ 4,057 - - - (69,151) (69,151) - - - $ (65,094) $ (125,038) - (84,666) (84,666) - - - - - - - $ (209,704) |
Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income $ 1,750 - - - 540 540 - - - $ 2,290 $ 2,722 - 204 204 - - - - - - - $ 2,926 |
||||||||||||
| $ 7,728,170 - (150,000) 160,482 (69,476) 91,006 9,961 224,084 7,199 $ 7,910,420 $ 7,811,460 2,936,041 (86,854) 2,849,187 8,396 22,929 42,759 - 6,326 57,490 116,221 $ 10,914,768 |
The accompanying notes are an integral part of the consolidated financial statements.
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
| CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net (gain) loss on financial assets at fair value through profit or loss Finance costs Interest income Compensation costs of employee share options Compensation cost of restricted stock to employees (Gain) loss on disposal of investments Reversal gain on write-off of inventories Unrealized (gain) loss on foreign exchange Changes in operating assets and liabilities Financial assets mandatorily measured at fair value through profit or loss Trade receivables Inventories Other current assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash inflow (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Acquisition of intangible assets Decrease in other financial assets Increase in refundable deposits Increase in other non-current assets Interest received Net cash (outflow) inflow from investing activities |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
|
|---|---|---|---|
| 2021 $ 3,379,435 38,483 7,992 (259,321) 4,757 (14,578) 8,396 116,221 (95,298) (93,601) (21,921) (78,498) (925,390) (106,921) (232,850) 295,005 35,971 (19,170) (234) 2,038,478 (4,776) (68,649) 1,965,053 - (17,983) - 292,317 (550,188) (218,006) 15,633 (478,227) |
2020 $ 238,768 38,989 28,128 4,592 1,078 (35,678) 9,961 - 40,928 - (10,206) (41,956) 2,446 (1,184,099) 141,548 (200,984) (157,692) 59,623 (193) (1,064,747) (1,078) (29,169) (1,094,994) 102,002 (9,475) (147) 440,123 - (2,122) 45,871 576,252 (Continued) |
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)
| CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Increase (decrease) in guarantee deposits Issuance of restricted stock employees Exercise of employee share options Treasury shares transferred to employees Increase in non-controlling interests Net cash inflow financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
|
|---|---|---|---|
| 2021 $ 243,494 122,231 57,490 6,326 22,929 42,759 495,229 (33,149) 1,948,906 4,011,682 $ 5,960,588 |
2020 $ - (136,297) - 7,199 224,084 - 94,986 (23,861) (447,617) 3,461,503 $ 3,013,886 |
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES
1. GENERAL INFORMATION
FocalTech Systems Co., Ltd. (the “FocalTech” or the “Company”), formerly named as Orise Technology Co., Ltd., was incorporated in the Republic of China (“ROC”) in January 2006 and moved to Hsinchu Science Park in April in the same year. The Company’s shares have been listed on the Taiwan Stock Exchange (“TSE”) since July 2007. On January 2, 2015, the Company acquired FocalTech Corporation, Ltd. through a share swap and renamed on January 17, 2015. This acquisition was comprehensively considered as a reverse merger, where FocalTech Corporation, Ltd. was treated as the acquirer in the financial statements. The Company mainly engages in the research, development, design, manufacturing, and sales of solutions regarding to human and machine interface devices, such as Display Driver IC, Touch Control IC and so on.
The consolidated financial statements are presented in the Company’s functional currency of New Taiwan dollars.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Company’s board of directors on July 29, 2021.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
- a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).
The initial application of the amendments to the IFRSs endorsed and issued in to effect by the FSC did not have a significant impact on the Group’s accounting policies.
- b.
Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB Annual Improvements to IFRS Standards 2018–2020 January 1, 2022 (Note 1) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 2) Amendments to IAS 16 “Property, Plant and Equipment-Proceeds January 1, 2022 (Note 3) before Intended Use”
— Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a January 1, 2022 (Note 4) Contract”
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Note 1: The amendments to IFRS 9 will be applied prospectively to modifications or exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
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Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
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Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
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Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have impact on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.
- c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 2) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities January 1, 2023 (Note 4) arising from a Single Transaction”
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Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
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Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
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Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
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Note4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have impact on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- a. Statement of compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.
b. Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis, except for financial instruments measured at fair value and the net defined benefit liabilities recognized in the amount of the present value of defined benefit obligation less the fair value of any plan assets.
The evaluation of fair value could be classified into Level 1 to Level 3 by the observable intensity and importance of related input value:
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1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
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2) Level 2 inputs are 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
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3) Level 3 inputs are unobservable inputs for the asset or liability.
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c. Basis of consolidation
The detail information, holding percentages, and main business of the subsidiaries could be found in Note 12.
- d. Other significant accounting policies
Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2020.
- 1) Retirement benefits
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, and adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.
- 2) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income and the tax rate that would be applicable to expected total annual earnings.
- 3) Share-based payment arrangements
Restricted shares for employees
The fair value at the grant date of the restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in other equity - unearned employee benefits.
When restricted shares for employees are issued, other equity - unearned employee benefits is recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees.
At the end of each reporting period, the Group revises its estimate of the number of restricted shares for employees that are expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a
corresponding adjustment to capital surplus - restricted shares for employees.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Critical accounting judgments, estimations and assumptions applied in these consolidated financial statements are consistent with those in the consolidated financial statements for the year ended December 31, 2020.
6. CASH AND CASH EQUIVALENTS
| Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities within three months) |
June 30, 2021 December 31, 2020 $ 2,794 $ 2,182 3,380,923 3,668,013 2,576,871 341,487 $ 5,960,588 $ 4,011,682 |
June 30, 2020 $ 8,513 1,617,438 1,387,935 |
|---|---|---|
$ 3,013,886 |
The interest rate intervals at the end of the reporting period were as follows:
| June 30, | December 31, | June 30, | |
|---|---|---|---|
| 2021 | 2020 | 2020 | |
| Demand deposits | 0.001%-0.35% | 0.001%-0.35% | 0.001%-0.35% |
| Time deposits | 0.03%-0.33% | 0.1%-0.35% |
0.2%-2% |
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
| Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed ordinary shares Non–Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds Structured Investments |
June 30, 2021 December 31, 2020 $ 344,760 $- $ 150,792 $ 72,186 62,345 52,579 106,907 109,897 $ 320,044 $ 234,662 |
June 30, 2020 $- $ 11,016 41,477 - $ 52,493 |
|---|---|---|
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
| June 30, | December 31, | December 31, | June 30, | |
|---|---|---|---|---|
| 2021 | 2020 | 2020 | ||
| Investments in debt instruments | ||||
| Current | ||||
| Foreign investments | ||||
| Fixed income bonds | $ 56,612 | $ | - |
$ 18,103 |
| Non–Current | ||||
| Foreign investments | ||||
| Fixed income bonds | $ 183,917 | $ | 247,974 | $ 60,836 |
| Yield rates | 1.801%-4.117% | 1.801%-4.117% | 2.837%-4.117% | |
| OTHER FINANCIAL ASSETS | ||||
| June 30, | December 31, | June 30, | ||
| 2021 | 2020 | 2020 | ||
| Time deposits with original maturities more than | ||||
| three months | $ 1,073,059 | $ 1,385,936 | $ 1,144,662 | |
| Interest rate intervals | 0.1%-2.92% | 0.2%-4.18% | 0.38%-4.18% | |
| TRADE RECEIVABLES, NET | ||||
| June 30, | December 31, | June 30, | ||
| 2021 | 2020 | 2020 | ||
| Trade receivables | $ 2,553,517 | $ 1,633,900 | $ 1,418,244 |
9. OTHER FINANCIAL ASSETS
10. TRADE RECEIVABLES, NET
The average credit term for sales of goods was 60-120 days. In order to minimize credit risk, management of the Group has delegated a team responsible for determining line of credit, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade receivable at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this regard, the Group’s management believes the Group’s credit risk was significantly reduced.
The Group applies the simplified approach prescribed by IFRS 9, which permits the use of allowances of expected credit losses over the lifetime for all trade receivables. The expected credit losses on trade receivables are estimated by using an allowance matrix with references to past customer default records, customer’s current financial position, and general economic conditions of the industry. Due to the past experiences, there is no significant difference in the loss patterns of different customer groups. Therefore, the allowance matrix does not further distinguish the customer base, and only sets the expected credit loss rate based on the overdue days of trade receivable.
The following table details the loss allowance of trade receivables based on the Group’s allowance matrix. June 30, 2021
Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount and Amortized cost June 30, 2020 Expected credit loss rate Gross carrying amount and Amortized cost |
Non Past Due 0% $ 2,192,773 Non Past Due 0% $ 1,593,485 Non Past Due 0% $ 1,307,235 |
Overdue 1-60 Days 0% $ 360,744 Overdue 1-60 Days 0% $ 40,401 Overdue 1-60 Days 0% $ 111,009 |
Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ 14 Overdue 61-180 Days 0% $ - |
Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ - |
Total | ||
|---|---|---|---|---|---|---|---|
| 0% $ 2,553,517 Total |
|||||||
| 0% $ 1,633,900 Total |
|||||||
| 0% $ 1,418,244 |
11. INVENTORIES
| Finished goods Work in process Raw materials and supplies |
June 30, 2021 December 31, 2020 $ 439,554 $ 418,694 1,024,760 1,025,201 479,699 311,247 $ 1,944,013 $ 1,755,142 |
June 30, 2020 $ 615,005 1,158,210 974,511 $ 2,747,726 |
|---|---|---|
The cost of goods sold were NT$2,864,511 thousand and NT$2,154,414 thousand, including reverse of write-off of inventories of NT$77,858 thousand and NT$0 thousand for the three months ended June 30, 2021 and 2020. The cost of goods sold were NT$5,585,781 thousand and NT$4,424,222 thousand, including the reverse of write-off of inventoriesNT$93,601 thousand and NT$0 thousand for the six months ended June 30, 2021 and 2020. Above mentioned gains from price recovery of inventory are resulted from sales of slow moving inventory.
12. SUBSIDIARIES
Details of the Company’s subsidiaries included in the consolidated financial statements were as follows:
| Investor Investee Main Businesses |
Percentage of Ownership |
|---|---|
| June 30, 2021 December 31, 2020 June 30, 2020 |
|
| FocalTech Systems Co., Ltd. FocalTech Corporation, Ltd. Investment activity FocalTech Electronics, Ltd. Investment activity |
100% 100% 100% 100% 100% 100% |
| FocalTech Systems Co., Ltd. And FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. Investment activity |
66.45% 67.15% 67.15% Note1.2 |
| FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. Research, development, manufacturing and sale of integrated circuits |
100% 100% 100% Note2 |
| FocalTech Corporation,Ltd. FocalTech Systems, Inc. Investment activity |
100% 100% 100% |
| FocalTech Systems, Inc. FocalTech Systems, Ltd. Investment activity |
100% 100% 100% |
| FocalTech Systems, Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Design and research of integrated circuits FocalTech Electronics Co.,Ltd. Import and export of integrated circuits |
100% 100% 100% 100% 100% 100% Note2 |
| FocalTech Electronics, Ltd. FocalTech Electronics (Shanghai) Co., Ltd. Sales support and post-sales service for affiliates’ IC products FocalTech Electronics (Shenzhen) Co., Ltd. Research, development, manufacturing and sale of integrated circuits Hefei PineTech Electronics Co.,Ltd. Research, development and sale of integrated circuits |
100% 100% 100% Note2 100% 100% 100% 100% 100% 100% Note2 |
Note1: FocalTech Smart Sensors, Ltd. issued its ordinary shares but the Group did not subscribe according to the shareholding ratio causing changes in the shareholding ratio.
Note2: Immaterial subsidiaries of the Company, whose financial statements had not been reviewed by auditors.
13. PROPERTY, PLANT AND EQUIPMENT
Cost Balance, January 1, 2020 Additions Reclassification Effect of foreign currency exchange differences |
Buildings Development Equipment $ 1,322,961 $ 285,660 - 7,218 - (258 ) (33,559 ) (3,222 ) |
Office Equipment $ 15,548 2,063 (76 ) (340 ) |
Information Equipment $ 42,621 194 334 (1,004 ) |
Leasehold Improve- ments $ 38,388 - - (358 ) |
Total $ 1,705,178 9,475 - (38,483 ) |
|---|---|---|---|---|---|
Balance, June 30, 2020 Accumulated depreciation Balance, January 1, 2020 Depreciation Reclassification Effect of foreign currency exchange differences Balance, June 30, 2020 Carrying amounts as of June 30, 2020 Cost Balance, January 1, 2021 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance, June 30, 2021 Accumulated depreciation Balance, January 1, 2021 Depreciation Disposals Effect of foreign currency exchange differences Balance, June 30, 2021 Carrying amounts as of December 31, 2020 and January 1, 2021 Carrying amounts as of June 30, 2021 |
Buildings Development Equipment $ 1,289,402 $ 289,398 $ 84,761 $ 174,368 17,452 19,813 - - (2,423 ) (1,941 ) $ 99,790 $ 192,240 $ 1,189,612 $ 97,158 $ 1,343,090 $ 292,977 - 15,334 - (750 ) - (158 ) (15,613 ) (3,825 ) $ 1,327,477 $ 303,578 $ 121,696 $ 203,722 17,797 19,129 - (750 ) (1,558 ) (2,607 ) $ 137,935 $ 219,494 $ 1,221,394 $ 89,255 $ 1,189,542 $ 84,084 |
Office Equipment $ 17,195 $ 12,431 447 10 (230 ) $ 12,658 $ 4,537 $ 11,557 186 - 105 (99 ) $ 11,749 $ 9,574 283 - (74 ) $ 9,783 $ 1,983 $ 1,966 |
Information Equipment $ 42,145 $ 33,752 1,277 (10 ) (785 ) $ 34,234 $ 7,911 $ 38,869 2,463 - 53 (435 ) $ 40,950 $ 29,561 1,274 - (309 ) $ 30,526 $ 9,308 $ 10,424 |
Leasehold Improve- ments $ 38,030 $ 38,388 - - (358 ) $ 38,030 $ - $ 38,604 - - - (167 ) $ 38,437 $ 38,604 - - (167 ) $ 38,437 $ - $ - |
Total $ 1,676,170 $ 343,700 38,989 - (5,737 ) |
|---|---|---|---|---|---|
$ 376,952 $ 1,299,218 $ 1,725,097 17,983 (750 ) - (20,139 ) |
|||||
$ 1,722,191 $ 403,157 38,483 (750 ) (4,715 ) |
|||||
$ 436,175 $ 1,321,940 $ 1,286,016 |
Property, plant and equipment were depreciated on a straight-line basis over the estimated useful lives as follows:
Buildings 45-50 years Development equipment 3-5 years Office equipment 3-5 years Information equipment 3-5 years Leasehold improvements 1-5 years
Property, plant and equipment were pledged as collateral. Refer to Note 30.
14. GOODWILL
| Ending balance |
June 30, 2021 December 31, 2020 $ 1,237,268 $ 1,237,268 |
June 30, 2020 $ 1,237,268 |
|---|---|---|
Considering the synergy of integration of LCD driver and touch controller under the industry trend, the reverse merger was triggered by FocalTech Corporation, Ltd. on January 2, 2015, accounted for goodwill according to business combination. The Group estimated cash flows from sales of IDC (Integrated Driver Controller) based on smartphone market growth rate and market share. Refer to Note 14 in financial statements in 2020 for related information.
15. OTHER INTANGIBLE ASSETS
| Cost Balance, January 1, 2020 Additions Effect of foreign currency exchange differences Balance, June 30, 2020 Accumulated amortization Balance, January 1, 2020 Amortization expenses Effect of foreign currency exchange differences Balance, June 30, 2020 Carrying amounts as of June 30, 2020 Cost Balance, January 1, 2021 Effect of foreign currency exchange differences Balance, June 30, 2021 |
Licenses and Franchises $ 127,719 - (1,273) $ 126,446 $ 109,676 17,756 (1,284) $ 126,148 $ 298 $ 122,262 (2,255) $ 120,007 |
Software $ 154,970 147 (1,781) $ 153,336 $ 148,376 2,779 (1,680) $ 149,475 $ 3,861 $ 148,247 (2,952) $ 145,295 |
Patents Trademark $ 76,704 $ 74,000 - - (6) - $ 76,698 $ 74,000 $ 39,152 $ 37,000 3,893 3,700 (6) - $ 43,039 $ 40,700 $ 33,659 $ 33,300 $ 76,708 $ 74,000 (3) - $ 76,705 $ 74,000 |
Total $ 433,393 147 (3,060) |
|---|---|---|---|---|
$ 430,480 |
||||
$ 334,204 28,128 (2,970) |
||||
$ 359,362 |
||||
$ 71,118 |
||||
$ 421,217 (5,210) |
||||
$ 416,007 |
| Accumulated amortization Balance, January 1, 2021 Amortization expenses Effect of foreign currency exchange differences Balance, June 30, 2021 Carrying amounts as of December 31, 2020and January 1, 2021 Carrying amounts as of June 30, 2021 |
Licenses and Franchises $ 122,130 79 (2,255) $ 119,954 $ 132 $ 53 |
Software $ 144,543 320 (2,912) $ 141,951 $ 3,704 $ 3,344 |
Patents Trademark $ 46,942 $ 44,400 3,893 3,700 (3) - $ 50,832 $ 48,100 $ 29,766 $ 29,600 $ 25,873 $ 25,900 |
Total $ 358,015 7,992 (5,170) $ 360,837 $ 63,202 $ 55,170 (concluded) |
|---|---|---|---|---|
Other intangible assets were amortized on a straight-line basis over the estimated useful lives as follows:
Licenses and franchises 3-5 years Software 1-5 years Patents 7-10 years Trademark 10 years
16. SHORT-TERM BORROWINGS
| Unsecured bank loans Secured bank loans Annual interest rate Unsecured bank loans Secured bank loans |
June 30, 2021 December 31, 2020 $ 580,000 $ 480,000 185,245 43,648 $ 765,245 $ 523,648 0.88-1.00% 0.88-1.06% 2.65-4.52% 4.1% |
June 30, 2020 $ - - $ - |
|---|---|---|
Properties, plants and equipment are pledged as collateral for the bank loans, please refer to Note 30.
17. TRADE PAYABLES
| Trade payables |
June 30, 2021 December 31, 2020 $ 2,018,743 $ 1,731,109 |
June 30, 2020 $ 1,781,723 |
|---|---|---|
The average credit period on purchases was 30-60 days. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
18. OTHER PAYABLES
| Payable for rebates Payable for salaries and bonuses Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others |
June 30, 2021 December 31, 2020 $ 483,105 $ 423,800 411,047 467,979 13,935 13,977 46,562 47,598 103,298 84,077 $1,057,947 $1,037,431 |
June 30, 2020 $ 374,918 296,558 14,191 49,520 52,622 $ 787,809 |
|---|---|---|
19. RETIREMENT BENEFIT
Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2020 and 2019, were NT$46 thousand, NT$91 thousand, NT$92 thousand and NT$182 thousand for the three months ended June 30, 2021 and 2020, and six months ended June 30, 2021 and 2020, respectively.
20. EQUITY
- a. Share capital
Ordinary shares (par value at NT$10 per share)
| Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued |
June 30, 2021 December 31, 2020 500,000 500,000 $ 5,000,000 $ 5,000,000 216,356 210,353 $ 2,163,561 $ 2,103,532 |
June 30, 2020 500,000 |
|---|---|---|
$ 5,000,000 |
||
299,995 |
||
$ 2,999,949 |
b. Capital surplus
| BALANCE, JANUARY 1, 2020 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Employee treasury share vested Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Employee share options expired BALANCE, JUNE 30, 2020 |
Additional Paid-in Capital (1) $5,037,671 (183,307 ) (150,000 ) - - 10,040 - $ 4,714,404 |
Treasury Shares (1) $ 48,662 - - 539 - - - $ 49,201 |
Restricted stock for employees (3) $ - - - - - - - $ - |
Employee Share Options (3) $ 25,510 - - (539 ) 9,961 (6,031 ) (399) $ 28,502 |
Employee Share Options -Expired (2) $ 33,534 - - - - 399 $ 33,933 |
Total | |||
|---|---|---|---|---|---|---|---|---|---|
| $5,145,377 (183,307 ) (150,000 ) - 9,961 4,009 - $ 4,826,040 |
| BALANCE, JANUARY 1, 2021 Treasury shares transferred to employees Employee treasury share vested Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Employee share options expired Issuance of restricted stock for employees BALANCE, JUNE 30, 2021 |
Additional Paid-in Capital (1) Treasury Shares (1) $4,725,445 $ 69,361 - 1,797 - 8,654 - - 8,259 - - - - - $ 4,733,704 $ 79,812 |
Restricted stock for employees (3) Employee Share Options (3) Employee Share Options -Expired (2) $ - $ 14,903 $ 33,933 - - - - (8,654 ) - - 8,396 - - (4,472 ) - - (201 ) 201 1,178,545 - - $ 1,178,545 $ 9,972 $ 34,134 |
Total $4,843,642 1,797 - 8,396 3,787 - 1,178,545 |
|---|---|---|---|
$ 6,036,167 |
-
1) This type of capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (at a certain percentage of the Company’s capital surplus annually).
-
2) This type of capital surplus may be used to offset a deficit.
-
3) This type of capital surplus cannot be used for any purposes.
-
c. Retained earnings and dividend policy
The amendments to the Company’s Articles of Incorporation had been approved by the Company’s shareholders’ meeting held on June 20, 2019, which stipulate that earnings distribution may be made on a quarterly basis after the close of each quarter.
According to The Company’s amended Articles of Incorporation, when the Company distributed earnings belonging to the first three quarters, it shall first estimate and reserve taxes to be paid, offset its deficits, estimate and reserve employees’ compensation and remuneration to directors. Second, the Company set aside a legal capital reserve at 10% of the remaining earnings and set aside or reverse special reserve in accordance with the laws and regulations. Third any remaining profit along with any undistributed retained earnings at the beginning shall be used by the Company’s board of directors. The board of directors shall propose the distribution of retained earnings after considering operational situations. When the retained earnings are distributed in form of stock, the resolution shall be approved by the shareholders’ meeting. When the retained earnings are distributed in form of cash, the resolution shall be approved by the board of directors.
When the Company has earnings at the end of the year, it shall pay taxes, offset its losses, set aside 10% as legal reserve, then set aside or reverse a special reserve in accordance with relevant laws or regulations. The Board of Directors shall propose a distribution for the remaining earnings, along with the unappropriated retained earnings of previous years. Earnings distribution may be made in the form of shares after an approved resolution made by the shareholders’ meeting. Pursuant to the Company Act, the distributable dividends and bonuses or the legal reserve and the capital reserve (stipulated in Article 241, Paragraph 1 of the Company Act) in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition to a report of such distribution shall be submitted to the shareholders’ meeting.
Before the amendment of the Company’s Articles of Incorporation on shareholders’ meeting on June 20, 2019, the earning distribution is only allowed after yearly closing by the approval of the shareholders’ meeting. The remaining retained earnings and dividends policy are consistent.
On June 20, 2020, the shareholders’ meeting resolved that the Company’s Articles of Incorporation amended on June 20, 2019 shall be revised back to the previous version.
See Note 22(d) for policy stipulated in the Articles of Incorporation regarding to the remuneration for
employees and directors.
Considering current and future development plans, investment conditions, capital requirements, and market competition situations and shareholder benefits, the Company would appropriate the dividends to the shareholders not less than 10% of the current year’s earnings. The dividends could be paid in cash or shares. The cash portion should be equal or more than 10% of the total dividends. It is allowed not to distribute any cash dividend if the cash amount per share is less than NT 0.5.
Legal reserve should be appropriated from earnings until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.
The Company’s shareholders’ meeting was held on June 20, 2020. The resolution was as follows. The Company offset the loss of NT$183,307 thousand from additional paid-in capital and the cash distribution of NT$150,000 thousand, i.e. NT$0.50291032 per share, from additional paid-in capital of share issue premium
To increase the return on shareholders’ equity, the Company was approved for reduction of capital in the Company’s shareholders’ meeting on June 20, 2020. Company’s share capital was reduced by $899,721 thousand, and estimated to eliminate 89,972 thousand shares of the Company. Each share will be returned by $3 and the ratio of capital reduction is 30%. The reduction of capital was approved by Financial Supervisory Commission on September 2, 2020. The record date of capital reduction was September 8, 2020, and the date of completion of capitalization change registration was on September 14, 2020. The fund of capital reduction was returned to the company’ shareholders on October 28[th] , 2020.
The board of directors proposed the earnings distribution on April, 28 2021 as follows:
| The board of directors proposed the earnings distribution on April, 28 2021 as follows: | |
|---|---|
Legal reserve Special reserve Cash dividends Cash dividends per share |
2020 $ 101,230 |
$ 122,316 |
|
$ 700,000 |
|
$ 3.32 |
The Group suspends its originally scheduled shareholders’ meeting in response to the FSC’s announcement: “For pandemic prevention, the FSC demands public companies to postpone their shareholders’ meeting”. The appropriation of earnings for 2020 will be resolved on the shareholders’ meeting that will be held on Aug 19,2021.
d. Treasury stock
| Shares | |
|---|---|
| (In Thousands) | |
| Number of shares on January 1, 2020 | 10,978 |
| Decrease during the period | (9,247) |
| Number of shares on June 30, 2020 | 1,731 |
| Number of shares on January 1, 2021 | 778 |
| Decrease during the period | (676) |
| Number of shares on June 30, 2021 | 102 |
The detailed information for other treasure stock transferred to employees programs could be found in
Note 25 (b).
The treasury shares held by the company cannot be pledged and no dividend and voting right is attached in accordance with the Regulations of Securities and Exchange Act.
e. Unearned employee compensation
| For the Six | |
|---|---|
| Months Ended | |
| June 30 | |
| Balance, beginning | $ - |
| Issuance of shares | ( 1,178,545) |
| Share-based payment expenses recognized | 116,221 |
| Balance, ending | ($1,062,324) |
In the shareholders’ meeting on June 20, 2020, approved a restricted share plan for employees, and board of directors approved to issue 5,749 thousand share on April 7 2021. Refer Note 25 (c). f. Non-controlling interests
| Balance, beginning Net loss Other comprehensive income (loss) Exchange differences from translating the financial statements of foreign operations Non-controlling interests subscribing subsidiary new shares issuing for cash Changes in ownership interests in subsidiaries Balance, ending |
For the Six Months Ended June 30 |
|---|---|
| 2021 2020 ($ 1,383) $ 30,692 ( 16,050) ( 12,342) ( 2,392) ( 865) 42,759 - 257 - 23,191 17,485 |
21. REVENUE
| IC for human and machine interface devices Contract balances Contract liabilities Sales of goods |
For the Three Months Ended June 30 2021 2020 $ 5,772,267 $ 2,767,596 June 30, 2021 $ 161,030 |
For the Three Months Ended June 30 2021 2020 $ 5,772,267 $ 2,767,596 June 30, 2021 $ 161,030 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|---|---|
| 2021 $ 5,772,267 |
2021 $ 10,122,121 December 31, 2020 $ 149,430 |
$ | 2020 5,677,233 June 30, 2020 $ 113,015 |
||||
22. NET INCOME
a. Financial costs
| For the Three Months Ended June 30 2021 2020 Interest on bank loans $ 2,406 $ - Interest on deposits - - $ 2,406 $ - b. Depreciation and amortization For the Three Months Ended June 30 2021 2020 Property, plant and equipment $ 19,323 $ 19,330 Intangible assets 3,995 5,137 $ 23,318 $ 24,467 An analysis of deprecation by function Operating costs $ 133 $ 179 Operating expenses 23,185 24,288 $ 23,318 $ 24,467 c. Employee benefits expense For the Three Months Ended June 30 2021 2020 Post-employment benefits Defined contribution plans $ 7,212 $ 6,885 Defined benefit plans (Note 19) 46 91 Share-based payments (Note 25) 119,779 6,983 Other employee benefits 479,372 315,130 Total employee benefits expense $ 606,409 $ 329,089 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|
| 2021 2020 $ 4,317 $ - 440 1,078 $ 4,757 $ 1,078 For the Six Months Ended June 30 |
||||
| 2021 2020 $ 38,483 $ 38,989 7,992 28,128 $ 46,475 $ 67,117 $ 268 $ 375 46,207 66,742 $ 46,475 $ 67,117 For the Six Months Ended June 30 |
||||
| 2021 $ 14,206 92 124,617 973,194 $ 1,112,109 |
2020 $ 13,898 182 9,961 671,695 $ 695,736 |
| An analysis of employee benefits expense by function Operating costs Operating expenses |
For the Three Months Ended June 30 2021 2020 $ 49,805 $ 29,912 556,604 299,177 $ 606,409 $ 329,089 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $ 49,805 556,604 $ 606,409 |
2021 $ 87,622 1,024,487 $ 1,112,109 |
2020 $ 59,157 636,579 $ 695,736 |
d. The remuneration of employees and directors
According to the Company’s Articles of Incorporation, the distributable compensation to employees and remuneration to directors shall not be less than 1% and not more than 1.5%, respectively, of net profit before income tax. The accrued employees’ compensation and remuneration of directors for the three months and six months ended June 30, 2021 and 2020 are as follows:
Amount
| For the Three Months Ended June 30 2021 2020 Cash Cash Employees’ compensation $ 23,274 $ 24,502 Remuneration of directors $ 1,225 $ 2,722 |
For the Six Months Ended June 30 2021 2020 Cash Cash $ 103,514 $ 24,502 $ 6,024 $ 2,722 |
|---|---|
If there is any change in the proposed amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.
The board of directors resolved the remuneration of employees and directors on February 4[th] ,2021 as follows;
| Employees’ compensation Remuneration of directors |
Cash | |
|---|---|---|
| $ 123,450 $ 7,214 |
There is no difference between the actual amount of remuneration of employees and directors paid and that accounted for in 2020 financial statements.
Information on the employees’ compensation and remuneration to directors resolved by the Company’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.
23. INCOME TAXES
a. Major components of tax expense recognized in profit or loss:
| Current income tax expense recognized in the current period Deferred income tax expense recognized in the current period Other income tax adjustments Income tax expense (benefit) recognized in profit or loss |
For the Three Months Ended June 30 2021 2020 $ 279,605 $ 30,409 22,327 3,133 - 1,334 22,327 4,467 $ 301,932 $ 34,876 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $ 279,605 22,327 - 22,327 $ 301,932 |
2021 $ 412,913 30,481 - 30,481 $ 443,394 |
2020 $ 61,490 15,462 1,334 16,796 $ 78,286 |
b. Income tax assessments
The Company’s tax returns through 2018, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.’s tax returns through 2019 have been examined by the tax authorities.
24. EARNINGS PER SHARE
| Basic earnings per share Diluted earnings per share |
For the Three Months Ended June 30 2021 2020 $ 10.43 $ 0.38 $ 9.95 $ 0.36 |
Unit: NT$ Per Share For the Six Months Ended June 30 |
Unit: NT$ Per Share For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $ 10.43 $ 9.95 |
2021 $ 14.70 $ 13.93 |
2020 $ 0.62 $ 0.59 |
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
| Earnings used in the computation of basic earnings per share |
For the Three Months Ended June 30 2021 2020 $2,106,351 $ 106,638 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $2,106,351 |
2021 $2,952,091 |
2020 $ 172,824 |
Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares)
| Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Treasure share issued to employee Employees stock options (share) Restricted stock for employees( share) The compensation to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share |
For the Three Months Ended June 30 2021 2020 202,022 280,422 8,774 17,803 490 506 202 - 103 - 211,591 298,731 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 202,022 8,774 490 202 103 211,591 |
2021 200,842 9,687 536 102 735 211,902 |
2020 279,628 14,362 524 - - 294,514 |
25. SHARE-BASED PAYMENT ARRANGEMENTS
The Group did not have stock option plan issued for employees and share buyback program for the six months ended June 30, 2021 and 2020. The detailed information could be found in Note 25 of the consolidated financial statements of the year ended December 31, 2020.
- a. Employee stock option plan
Information on outstanding options for the six months ended June 30, 2021 and 2020 is as follows: June 30, 2021
| Employee Stock Option Plan |
BeginningBalance | BeginningBalance | Options exercised | Options exercised | Options | expired | EndingBalance | EndingBalance |
|---|---|---|---|---|---|---|---|---|
| Units of Option 398,199 397,500 |
Weighted- Average Exercise Price (NT$) |
Units of Option |
Weighted- Average Exercise Price (NT$) $ 31.64 15.90 |
Units of Option |
Weighted- Average Exercise Price (NT$) |
Units of Option 252,799 277,000 |
Weighted- Average Exercise Price (NT$) |
|
| 2006 2015 |
$ 26.25 15.90 |
(145,400) (108,500) |
- ( 12,000) |
$ - 15.90 |
$ 23.78 15.90 |
June 30, 2020
| Employee Stock Option Plan |
BeginningBalance Units of Option Weighted- Average Exercise Price (NT$) 805,599 $ 23.49 677,500 12.20 |
Options exercised | Options exercised | Options | expired | EndingBalance | EndingBalance |
|---|---|---|---|---|---|---|---|
| Units of Option 805,599 677,500 |
Units of Option |
Weighted- Average Exercise Price (NT$) |
Units of Option |
Weighted- Average Exercise Price (NT$) |
Units of Option 577,599 562,500 |
Weighted- Average Exercise Price (NT$) |
|
| 2006 2015 |
(228,000) (91,000 ) |
$ 26.70 12.20 |
- (24,000) |
$ - 12.20 |
$ 22.23 12.20 |
- b. Treasure stock transferred to employees
Information about treasure stock transferred to employees as follows:
| Items The 4thtreasure stock transferred to employeeProgram The 5thtreasure stock transferred to employeeProgram |
The date of board of directors approved |
Buyback shares (In thousand share) 8,000 7,689 |
Transferred shares (In thousand share) Adjustment due to capital reduction (In thousand share) 7,952 ( 46 ) 7,116 ( 473 ) |
Shares not transferred yet (In thousand share) 2 100 |
Transferred price (in dollar) |
|---|---|---|---|---|---|
| 2018/7/26 2018/8/23 |
33.69 (Adjusted) 33.96 (Adjusted) |
Information about treasure stock transferred to employees for the six months ended June 30, 2021s as follows:
The 4th Shares Buy Back Program The 5th Shares Buy Back Program
| Employee subscription base date 2020/03/20 2021/04/07 Total |
Shares transferred (In Thousands) |
The fair value of the right to subscribe (NT$) $ 3.30 181.90 |
Employee subscription base date 2019/05/07 2019/11/08 2020/03/20 2020/11/16 2021/04/07 Total |
Shares transferred (In Thousands) 4,651 60 1,399 434 572 7,116 |
The fair value of the right to subscribe (NT$) |
|---|---|---|---|---|---|
7,848 104 |
$ - - 3.70 1.90 181.70 |
||||
7,952 |
c. Restricted stock for employees
The Company’s shareholders’ meeting resolved to issue restricted stocks for employees up to 6,000 thousand shares on June 20, 2020, and the issued price is NT$10 per share. The restricted stocks plan was approved by Financial Supervisory Commission on August 12, 2020. The information of the issued resolved by board of directors is as follow:
| Grant date |
Fair | valueper share(in dollar) | Actual shares of issued(in thousand) |
Actual shares of issued(in thousand) |
|---|---|---|---|---|
| 2021/04/07 | $ 205 | 5,749 |
After the employees were granted restricted stock, the employees will be vested in the stocks if they fulfill both service period and performance condition. The vesting condition are as follows:
-
a. Upon service for two years. the shares vested in 50% to employees.
-
b. Upon service for three years. the shares vested in 25% to employees.
-
c. Upon service for four years. the shares vested in 25% to employees.
The constraints of restricted stock are as follows:
-
a. Employees can not dispose, pledged, transferred, and give to others the granted shares until they are vested.
-
b. The rights of restricted stock is same as ordinary share including attendance, propose, speak, voting right and so on.
-
c. Stock dividends and cash dividends yielding from restricted stock will be distributed to employees in the current year, and will not be restricted.
-
d. National employee should transfer the granted shares to trustee appointed by the Company immediately. Before they are vested, the restricted should be kept in trustee. Non-national employee’ granted share should be kept by bank appointed by the Company.
The Company will buy back the restricted shares at issued price and write off the shares if employees do not fulfill the vesting condition.
Compensation cost of aforementioned share-based payments for the six months ended June 30, 2021 and 2020 was as follows:
| Shares buyback programs Restricted stock for employees Adjustment account: Capital surplus - employee stock options Other equity - unearned employee compensation |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
|
|---|---|---|---|
| 2021 $ 8,396 116,221 $124,617 $ 8,396 116,221 $124,617 |
2020 $ 9,961 - $ 9,961 $ 9,961 - $ 9,961 |
26. NON-CASH TRANSACTIONS
The cash dividends of 2019 resolved by the shareholder’s meeting was NT$150,000 thousand and was not distributed as of June 30, 2020. (Referring to Note 20)
27. OPERATING LEASE ARRANGEMENTS
The Group as Lessee
The Company and its subsidiaries have lease contracts in relation to office, plant and part of office equipment, and they would expire by June, 2022. Those agreements are short-term leases and qualified for the recognition exemption to leases so the Company does not recognize right-of-use assets and lease liabilities for these leases. The committed payments for the short-term leases were $9,284 thousand and $9,721 thousand as of June 30, 2021 and 2020.
The lease payments recognized in profit or loss were as follows:
| lease payment | For the Three Months Ended June 30 2021 2020 $ 8,422 $ 8,973 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $ 8,422 |
2021 $ 16,952 |
2020 $ 17,716 |
28. FINANCIAL INSTRUMENTS
- a. Fair value of financial instruments that are not measured at fair value
The Group’s management believes the carrying amounts of financial assets and financial liabilities not measured at fair value approximate their fair values.
- b. Fair value of financial instruments that are measured at fair value on a recurring basis
| 1) | Fair value hierarchy June 30, 2021 Financial assets at FVTPL Listed ordinary shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds December 31, 2020 Financial assets at FVTPL Listed ordinary shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds June 30, 2020 Financial assets at FVTPL Listed ordinary shares Private funds Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds |
Level 1 $ 495,552 - - $ 495,552 $ - Level 1 $ 72,186 - - $ 72,186 $ - Level 1 $ 11,016 - $ 11,016 $ - |
Level 2 $ - - 106,907 $ 106,907 $ 240,529 Level 2 $ - - 109,897 $ 109,897 $ 247,974 Level 2 $ - - $ - $ 78,939 |
Level 3 $ - 62,345 - $ 62,345 $ - Level 3 $ - 52,579 - $ 52,579 $ - Level 3 $ - 41,477 $ 41,477 $ - |
Total $ 495,552 62,345 106,907 |
|---|---|---|---|---|---|
$ 664,804 |
|||||
$ 240,529 |
|||||
Total $ 72,186 52,579 109,897 |
|||||
$ 234,662 |
|||||
$ 247,974 |
|||||
Total $ 11,016 41,477 |
|||||
$ 52,493 |
|||||
$ 78,939 |
There were no transfers between Level 1 and Level 2 for the six months ended June 30, 2021 and 2020.
- 2) Reconciliation of Level 3 fair value measurements of financial instruments
Financial assets at FVTPL Balance, beginning of period Purchases Disposals Recognized in profit or loss(other income or loss) Effect of foreign exchange differences Balance, end of period |
For the Six Months Ended June 30 | For the Six Months Ended June 30 | For the Six Months Ended June 30 |
|---|---|---|---|
| 2021 $ 52,579 9,179 (181) 1,356 (588) $ 62,345 |
2020 $ 45,423 1,028 - (4,678) (296) $ 41,477 |
- 3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement
The fair values of foreign fixed income bonds are determined by quoted market prices provided by the independent third party. The fair values of structured investments are determined by quoted prices provided by the seller.
- 4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement
The fair values of non-publicly traded equity investments are mainly determined by using the market approach, with reference to the recent financing activities of investees or the market transaction prices and status of the similar instruments. The Group evaluated and selected the suitable valuation method with discretion, but the use of different valuation models or fair values may result in different valuation results.
- c. Categories of financial instruments
| June 30, | December 31, | December 31, | June 30, | |||
|---|---|---|---|---|---|---|
| 2021 | 2020 | 2020 | ||||
| Financial assets | ||||||
| Fair value through profit or loss (FVTPL) | ||||||
| Mandatorily at FVTPL | $ | 644,804 |
$ | 234,662 |
$ | 52,493 |
| Amortized cost (Note 1) | 10,309,321 | 7,203,983 | 5,695,838 | |||
| Financial assets at FVTOCI | ||||||
| Investments in debt instruments | 240,529 | 247,974 | 78,939 | |||
| Financial liabilities | ||||||
| Amortized cost (Note 2) | 4,454,419 | 3,782,549 | 2,977,602 |
-
1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other financial assets and refundable deposits (categorized in other non-current assets).
-
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowing, trade payables, other payables, dividends payables and guaranteed deposits received.
-
d. Financial risk management objectives and policies
The Group’s major financial instruments include cash and cash equivalents, trade receivable, other financial assets, financial assets at FVTPL, financial assets at FVTOCI, trade and other payables. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations
of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign exchange risk, interest rate risk and other price risk), credit risk and liquidity risk.
The board of directors is solely responsible for establishing and monitoring the framework of risk management of the Group. The chairman is authorized by the board of directors to develop and monitor the risk management policy of the Group with the operation center of the Group, and regularly reported the situation to the board of directors.
The Group’s financial risk management policies are established for identifying and analyzing the financial risks to the Group, evaluating the impacts of the financial risks, and conducting the financial-risk aversion policies. The financial risk management policies are periodically reviewed to reflect changes in the market and the operations. The Group devotes to build a disciplined and constructive control environment through proper internal controls, such as training and establishing managerial principles and operation procedures in order to have all employees aware of their own roles and responsibilities.
The Group’s management oversees the Group operation in compliance with financial risk management policies and reviews the appropriateness of risk management structure under supervision of the board of directors. Internal auditors, in assistance to the board of directors, perform periodical and exceptional reviews on the controls and procedures of financial risk management and report the results of review to the board of directors.
1) Market risk
The major financial risks from the Group’s operations were foreign exchange risk (referred to a) and interest rate risk (referred to b).
a) Foreign exchange risk
The carrying amounts of the Group’s monetary assets and monetary liabilities denominated in foreign currency at the end of the reporting period are shown in Note 31.
Sensitivity analysis
The Group was mainly exposed to the U.S. dollar. The following table details the Group’s sensitivity to a 5% appreciate and depreciate in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation value at the end of the reporting period by a 5% change in foreign currency rates. A positive number in below table indicates an increase in pre-tax profit or equity associated with a 5% depreciation of the New Taiwan Dollar against the U.S. dollar.
Profit or loss/ equity |
USD Impact | USD Impact | |
|---|---|---|---|
| For the Six Months Ended June 30 | |||
| 2021 $ 174,171(i) |
2020 $ (11,260)(i) |
- i. This was mainly attributable to the outstanding balances of USD deposits, trade receivables, bank loans, trade payables, other payables, other current assets, other non-current assets, other current liabilities and other non-current liabilities.
b) Interest rate risk
The Group was exposed to interest rate risk primarily related to its investments in fixed-rate time deposits, bonds, floating-rate demand deposits and structured investments. The time deposits were at fixed interest rates, and bonds were at fixed rates or with guaranteed minimal interest rates and carried. Therefore, changes in interest rates would not affect estimated profit or loss regarding to the financial instruments above.
Financial assets exposed to interest rates at the end of the reporting period were as follows:
| Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets |
June 30, 2021 December 31, 2020 $ 3,890,459 $ 1,975,397 $ 765,245 $ 523,648 $ 3,485,961 $ 3,777,910 |
June 30, 2020 $ 2,611,536 $- $ 1,617,438 |
|---|---|---|
Sensitivity analysis
The below sensitivity analysis was determined based on the Company’s exposure to interest rates for non-derivative instruments as of the end of the reporting period. An increase or a decrease of 25 basis points was used when reporting interest rate risk internally to key management and represents management’s assessment of the reasonably possible change in interest rates.
If interest rates had been 25 basis points higher/ lower and all other variables were held constant, the Company’s pre-tax profit for the six months ended June 30, 2021 and 2020 would increase/ decrease by NT$4,357 thousand and NT$2,022 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 Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation could arise from the carrying amounts of the financial assets as recognized in the balance sheets.
The Company’s major credit risk of trade receivables mainly came from its top 5 customers. Ongoing credit evaluation of the financial condition of the customers is performed.
As of June 30, 2021, trade receivables from top 5 customers are 58% of total trade receivables. The credit concentration risk of other trade receivables was insignificant.
Credit risk management for investments in debt instruments
The Company’s investments in debt instruments are financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. The Company’s policy allows it only to invest in those with credit ratings equal to or higher than the investment grade and with low credit risk after the impairment assessment. Credit rating information is provided by independent rating institutions. The Company continuously tracks external rating information to monitor changes in credit risk of the invested debt instruments, and also examines other information such as the bond yield curve and material information concerning the debtors to assess whether the credit risk of the debt instrument investment has increased significantly after the original recognition.
The Company assesses the 12-month expected credit loss based on the probability of default and loss given default provided by external credit rating agencies. The current credit risk assessment policies and carrying amount of investments in debt instruments for each credit rating are as follows:
| Category Performing Category Performing Category Performing |
Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss |
Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0% |
Carrying Amount as of June 30, 2021 |
Carrying Amount as of June 30, 2021 |
|---|---|---|---|---|
| $ 240,529 Carrying Amount as of December 31, 2020 |
$ 240,529 | |||
| $ 247,974 Carrying Amount as of June 30, 2020 |
$ 247,974 | |||
| $ 78,939 |
- 3) Liquidity risk
The Company manages its liquidity risk by monitoring and maintaining adequate cash and cash equivalents to fund its operations and mitigate the impacts of fluctuations in cash flows.
As of June 30, 2021, December 31, 2020, and June 30, 2020, the available unused short-term bank loan facilities were set out in (b) Financing credit line.
- a) Liquidity and interest rate risk tables for non-derivative financial liabilities
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments, including principal and interest.
June 30, 2021
| Non-interest bearing Fixed interest rate liabilities December 31, 2020 Non-interest bearing Fixed interest rate liabilities June 30, 2020 Non-interest bearing b) Financing credit line Unsecured bank line of credit Amount used Amount unused Secured bank loans credits Amount used Amount unused |
On Demand or Less than 1 Year 1-5 Years $ 3,076,491 $ 612,484 765,444 - $ 3,841,935 $ 612,484 On Demand or Less than 1 Year 1-5 Years $ 2,768,322 $ 490,361 523,866 - $ 3,292,188 $ 490,361 On Demand or Less than 1 Year 1-5 Years $ 2,719,532 $ 258,070 June 30, 2021 December 31, 2020 June 30, 2020 $ 631,214 $ 495,665 $ - 768,786 204,335 800,000 $ 1,400,000 $ 700,000 $ 800,000 $ 185,245 $ 43,648 $ - 246,015 392,832 - $ 431,260 $ 436,480 $ - |
|---|---|
29. TRANSACTIONS WITH RELATED PARTIES
a. Balances, transactions, revenue and expenses between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.
b. Compensation of key management personnel
| Long-term employee benefits Short-term employee benefits Post-employment benefits Share-based payments |
For the Three Months Ended June 30 2021 2020 $ (58) $ - 39,595 12,586 135 135 19,489 1,383 $ 59,161 $ 14,104 |
For the Six Months Ended June 30 |
For the Six Months Ended June 30 |
||
|---|---|---|---|---|---|
| 2021 $ (58) 39,595 135 19,489 $ 59,161 |
2021 $ 12,713 53,596 261 20,189 $ 86,759 |
2020 $ 21,870 23,360 270 2,160 $ 47,660 |
30. PLEDGED ASSETS
The following assets were provided as collateral for import customs duties:
| Properties, plants and equipment – net of buildings Pledge deposits (categorized in other non-current assets) |
June 30, 2021 December 31, 2020 $ 512,538 $ 524,487 4,000 4,000 $ 516,538 $ 528,487 |
June 30, 2020 $ - 8,000 $ 8,000 |
|---|---|---|
31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The following information was aggregated by the foreign currencies other than functional currencies of the Group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:
June 30, 2021
| Foreign | ||||
|---|---|---|---|---|
| Currencies | ||||
| (thousand) | Exchange Rate | NT$(thousand) | ||
| Financial assets | ||||
| Monetary items | ||||
| USD | $ | 252,432 |
27.86(USD:NTD) | $ 7,032,755 |
| USD | 21,581 | 601,261 | ||
| Financial liabilities | ||||
| Monetary items | ||||
| USD | 119,305 | 27.86 (USD:NTD) | 3,323,835 |
|
| USD | 29,676 | 826,765 |
December 31, 2020
| Foreign | ||||
|---|---|---|---|---|
| Currencies | ||||
| (thousand) | Exchange Rate | NT$(thousand) | ||
| Financial assets | ||||
| Monetary items | ||||
| USD | $ | 147,429 |
28.48 (USD:TWD) | $ 4,198,767 |
| USD | 2,459 | 70,018 | ||
| RMB | 12,369 | 6.5249 (USD:RMB)) | 53,988 |
|
| Financial liabilities | ||||
| Monetary items | ||||
| USD | 105,765 | 28.48 (USD: TWD) | 3,012,178 |
|
| USD | 2,354 | 67,049 | ||
| June 30, 2020 |
| Foreign | ||||
|---|---|---|---|---|
| Currencies | ||||
| (thousand) | Exchange Rate | NT$(thousand) | ||
| Financial assets | ||||
| Monetary items | ||||
| USD | $ | 83,550 |
29.63 (USD: TWD) | $ 2,475,574 |
| USD | 4,220 | 125,031 | ||
| Financial liabilities | ||||
| Monetary items | ||||
| USD | 89,496 | 29.63 (USD: TWD) | 2,651,760 |
|
| USD | 5,874 | 174,054 |
32. SEGMENT INFORMATION
Segment information is provided to business decision makers to allocate resources and assesse segment performance. The Company operates the business of the sales and development of human and machine interface devices related IC under a single operation unit. Thus, the information of separate operating segments is not applicable.