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GEM Interim / Quarterly Report 2019

Dec 23, 2019

52099_rns_2019-12-23_5fe4c116-6766-4459-a759-9d9c534286b2.pdf

Interim / Quarterly Report

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GEM Terminal Ind. Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2019 and 2018 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders GEM Terminal Ind. Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of GEM Terminal Ind. Co., Ltd. and its subsidiaries (the “Group”) as of June 30, 2019 and 2018 and the related consolidated statements of comprehensive income for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018, the consolidated statements of changes in equity and cash flows for the six month then ended, 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

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.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2019 and 2018, its consolidated financial performance for the three months ended June 30, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2019 and 2018 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 Chen-Li Chen and Chiu-Yen Wu.

Deloitte & Touche Taipei, Taiwan Republic of China August 9, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the ROC and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the ROC.

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

  • 1 -

GEM TERMINAL IND. 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 other comprehensive income - current
(Note 8)
Notes receivable (Note 9)
Accounts receivable, net (Note 9)
Other receivables
Current tax assets (Note 4)
Inventories (Note 10)
Other financial assets - current (Notes 11 and 28)
Other current assets (Notes 15 and 28)
Total current assets
NONCURRENT ASSETS
Property, plant and equipment (Notes 13, 28 and 29)
Right-of-use assets (Notes 3, 4, 14, 27 and 28)
Deferred tax assets (Note 4)
Prepayments for equipment (Note 29)
Other financial assets - noncurrent (Note 11)
Long-term prepayments for lease (Notes 15 and 28)
Other noncurrent assets
Total noncurrent assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 18 and 28)
Short-term bills payable (Note 18)
Financial liabilities at fair value through profit or loss - current (Note 7)
Notes payable (Note 16)
Accounts payable (Note 16)
Other payables (Note 17)
Current tax liabilities (Note 4)
Lease liabilities - current (Notes 3, 4, 14 and 27)
Long-term borrowings - current portion (Notes 18 and 28)
Other current liabilities
Total current liabilities
NONCURRENT LIABILITIES
Long-term borrowings (Notes 18 and 28)
Deferred tax liabilities (Note 4)
Lease liabilities - noncurrent (Notes 3, 4, 14 and 27)
Net defined benefit liabilities (Note 4)
Total noncurrent liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 20)
Ordinary shares
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Total equity
TOTAL		 June 30, 2019
(Reviewed)
Amount
%
$ 968,783
17
122,319
2
131,155
2
962,984
17
17,020
-
146
-
1,026,617
18
193,377
3

218,118

4

3,640,519
63
1,838,084
32
98,241
2
126,771
2
19,910
1
1,714
-
-
-

8,366

-

2,093,086
37
$ 5,733,605
100
$ 833,674
14
100,000
2
-
-
93,319
2
380,391
7
170,619
3
1,424
-
1,599
-
809,809
14

10,453

-

2,401,288
42
670,815
12
80,350
1
5,389
-

25,719

1

782,273
14

3,183,561
56

1,692,000
29

271,315

5
343,170
6
40,765
1

203,766

3
587,701
10

(972
)

-

2,550,044
44
$ 5,733,605
100		 December 31, 2018
(Audited)
Amount
%
$ 1,501,888
25
93,727
2
86,222
1
1,083,129
18
8,745
-
2,502
-
809,566
14
176,980
3

140,197

2

3,902,956
65
1,861,249
31
-
-
129,798
2
20,411
-
1,696
-
90,040
2

5,616

-

2,108,810
35
$ 6,011,766
100
$ 884,377
15
100,000
2
832
-
185,096
3
493,159
8
178,335
3
5,480
-
-
-
613,128
10

7,649

-

2,468,056
41
899,451
15
78,732
1
-
-

26,221

1

1,004,404
17

3,472,460
58

1,692,000
28

271,315

5
343,170
6
-
-

273,586

4

616,756
10

(40,765
)
(1
)

2,539,306
42
$ 6,011,766
100		 June 30, 2018
(Reviewed)






















































Amount
%
$ 1,160,641
19
144,346
2
173,042
3
1,177,832
20
2,912
-
147
-
810,706
14
172,696
3

138,198

2

3,780,520
63
1,927,933
32
-
-
141,951
3
21,924
-
1,740
-
97,148
2

5,800

-

2,196,496
37
$ 5,977,016
100
$ 874,983
15
50,000
1
-
-
111,890
2
252,776
4
172,155
3
2,454
-
-
-
569,964
9

6,851

-

2,041,073
34
1,090,888
18
104,977
2
-
-

37,255

1

1,233,120
21

3,274,193
55

1,692,000
28

271,315

5
343,170
6
-
-

342,634

5

685,804
11

53,704

1

2,702,823
45
$ 5,977,016
100

The accompanying notes are an integral part of the consolidated financial statements.

  • 2 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Net Loss Per Share) (Reviewed, Not Audited)

OPERATING REVENUE,
NET (Note 21)

OPERATING COSTS (Note
10 and 22)

GROSS PROFIT

OPERATING EXPENSES
(Note 22)
Marketing
General and administrative
Research and development
Expected credit loss
reversed (Note 9)

Total operating
expenses

LOSS FROM OPERATIONS
NON-OPERATING INCOME
AND EXPENSES (Note
22)
Other income
Other gains and losses
Finance costs

Total non-operating
income and
expenses

CONSOLIDATED LOSS
BEFORE INCOME TAX
INCOME TAX EXPENSE
(BENEFIT) (Notes 4 and
23)

CONSOLIDATED NET
LOSS

OTHER COMPREHENSIVE
INCOME (LOSS) (Notes
20 and 23)
Items that will not be
reclassified subsequently
to profit or loss
Unrealized gain (loss) on
investments in equity
instruments designated
as at fair value through
other comprehensive
income		 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Six Months For the Six Months Ended June 30
2019 2018 2019 2018











Amount
%
$ 913,887
100

824,654

90

89,233

10
39,093
4

48,161
5

5,222
1

(1,833
)
-

90,643

10

(1,410
)
-
18,318
2
9,661
1

(13,742
)
(1
)

14,237

2
12,827
2

15,470

2

(2,643
)
-
(2,681 )
-








Amount
%
$ 1,071,158
100

1,001,544

94

69,614

6
38,266
3
49,972
5
8,232
1

(7,506
)

(1
)

88,964

8

(19,350
)

(2
)
5,909
1
21,223
2

(15,754
)

(2
)

11,378

1
(7,972 )
(1 )

2,900

-

(10,872
)

(1
)
(6,466 )
-








Amount
%
$ 1,691,763
100

1,516,579

90


175,184

10

74,331
4
94,861
6
8,851
-

(1,465
)
-


176,578

10


(1,394
)
-

21,936
1
(22,774 )
(1 )

(27,619
)
(2
)

(28,457
)
(2
)
(29,851 )
(2 )

5,418

-


(35,269
)
(2
)
11,880
1















Amount
%
$ 2,001,895
100

1,850,724

92

151,171

8

73,311
4

100,316
5

12,147
-

(2,592
)

-

183,182

9

(32,011
)

(1
)

8,403
-

4,863
-

(29,091
)

(1
)

(15,825
)

(1
)

(47,836 )
(2 )

(4,522
)

-

(43,314
)

(2
)

(9,130 )
-
(Continued)
  • 3 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Net Loss Per Share) (Reviewed, Not Audited)

Income tax relating to
items that will not be
reclassified
subsequently to profit
or loss

Items that may be
reclassified subsequently
to profit or loss
Exchange differences on
translating foreign
operations
Income tax relating to
items that may be
reclassified
subsequently to profit
or loss

Other comprehensive
income (loss) for the
period, net of
income tax

TOTAL COMPREHENSIVE
INCOME (LOSS) FOR
THE PERIOD

NET LOSS
ATTRIBUTABLE TO:
Owners of the Company

TOTAL COMPREHENSIVE
INCOME (LOSS)
ATTRIBUTABLE TO:
Owners of the Company

NET LOSS PER SHARE
(Note 24)

Basic

Diluted
 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Six Months For the Six Months Ended June 30
2019 2018 2019 2018








Amount
%
$ 271
-
(35,486 )
(4 )

(133
)
-

(38,029
)
(4
)
$ (40,672
)
(4
)
$ (2,643
)
-
$ (40,672
)
(4
)
$ (0.02
)
$ (0.02
)




Amount
%
$ 1,129
-
(16,358 )
(2 )

(2,611
)

-

(24,306
)

(2
)
$ (35,178
)

(3
)
$ (10,872
)

(1
)
$ (35,178
)

(3
)
$ (0.06
)
$ (0.06
)




Amount
%
$ (2,827 )
-
37,379
2

(425
)
-


46,007

3

$ 10,738

1

$ (35,269
)
(2
)
$ 10,738

1


$ (0.21
)

$ (0.21
)









Amount
%
$ 1,421
-

22,979
1

2,083

-

17,353

1
$ (25,961
)

(1
)
$ (43,314
)

(2
)
$ (25,961
)

(1
)
$ (0.26
)
$ (0.26
)
$ $ $ $
$ $ $ $
$ $ $
$

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

  • 4 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

BALANCE, JANUARY 1, 2019

Net loss for the six months ended June 30, 2019
Other comprehensive income for the six months ended June 30, 2019, net
of income tax

Total comprehensive income (loss) for the six months ended June 30, 2019
Appropriation of 2018 earnings
Special reserve

Disposal of investments in equity instruments designated as at fair value
through other comprehensive income

BALANCE, JUNE 30, 2019

BALANCE, JANUARY 1, 2018

Effect of retrospective application

BALANCE, JANUARY 1, 2018 AS ADJUSTED

Net loss for the six months ended June 30, 2018
Other comprehensive income (loss) for the six months ended June 30,
2018, net of income tax

Total comprehensive income (loss) for the six months ended June 30, 2018
Disposals of investments in equity instruments designated as at fair value
through other comprehensive income

BALANCE, JUNE 30, 2018
 Equity Attributable to the Owners of the Company Equity Attributable to the Owners of the Company Equity Attributable to the Owners of the Company Total
$ (40,765
)

-

46,007


46,007


-


(6,214
)

$ (972
)

$ 36,102


-


36,102

-

17,353


17,353


249

$ 53,704
 Total Equity
$ 2,539,306
(35,269 )

46,007

10,738

-

-
$ 2,550,044
$ 2,728,784

-

2,728,784
(43,314 )

17,353

(25,961
)

-
$ 2,702,823












Ordinary
shares
Capital Surplus
$ 1,692,000
$ 271,315

-
-

-

-


-

-


-

-


-

-

$ 1,692,000
$ 271,315

$ 1,692,000
$ 271,315


-

-


1,692,000

271,315

-
-

-

-


-

-


-

-

$ 1,692,000
$ 271,315
 Retained Earnings Total
$ 616,756
(35,269 )

-

(35,269
)

-

6,214
$ 587,701
$ 729,367

-

729,367
(43,314 )

-

(43,314
)

(249
)
$ 685,804		 Other Equity
Unrealized Loss
on Financial
Assets at Fair
Value Through
Unrealized
Other
Loss on
Comprehensive
Available-for-sale
Income
Financial Assets
$ (8,988
)
$ -

-
-

9,053

-


9,053

-


-

-


(6,214
)

-

$ (6,149
)
$ -

$ -
$ (3,166 )


(3,166
)

3,166


(3,166
)

-

-
-

(7,491
)

-


(7,491
)

-


249

-

$ (10,408
)
$ -
 Exchange
Differences on
Translating
Remeasurement
Foreign
of Defined
Operations
Benefit Plans
$ (37,167
)
$ 5,390

-
-

36,954

-


36,954

-


-

-


-

-

$ (213
)
$ 5,390

$ 33,232
$ 6,036


-

-


33,232

6,036

-
-

25,062

(218
)


25,062

(218
)


-

-

$ 58,294
$ 5,818












Unappropriated
Legal Reserve
Special Reserve
Earnings
$ 343,170
$ -
$ 273,586

-
-
(35,269 )

-

-

-


-

-

(35,269
)


-

40,765

(40,765
)


-

-

6,214

$ 343,170
$ 40,765
$ 203,766

$ 343,170
$ -
$ 386,197


-

-

-


343,170

-

386,197

-
-
(43,314 )

-

-

-


-

-

(43,314
)


-

-

(249
)

$ 343,170
$ -
$ 342,634

The accompanying notes are an integral part of the consolidated financial statements.

  • 5 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated loss before income tax
Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss reversed
Finance costs
Interest income
Dividend income
Loss on disposal of property, plant and equipment and fire loss, net
Write-down of inventories and fire damage
Other non-cash items
Changes in operating assets and liabilities
Notes receivable
Accounts receivable
Other receivables
Inventories
Other current assets
Financial liabilities held for trading
Notes payable
Accounts payable
Other payables
Other current liabilities
Net defined benefit liabilities
Cash used in operations
Interest received
Income tax paid
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through other
comprehensive income
Proceeds from disposal of financial assets at fair value through other
comprehensive income
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in other financial assets
Increase in other noncurrent assets
Increase in long-term prepayments for lease
Dividend received
Net cash used in investing activities		 Six Months Ended June 30 Six Months Ended June 30





2019
$ (29,851)
130,761
1,347
(1,465)
27,619
(4,567)
(59)
25,916
7,978
4,918
(44,933)
121,470
(8,376)
(225,220)
(80,276)
(2,983)
(91,777)
(112,768)
(9,696)
(145)
(9,526
)
(301,633)
4,668

(5,961
)

(302,926
)
(746,130)
730,201
(113,379)
51
(16,415)
(4,058)
-

59


(149,671
)		 2018
$ (47,836)
129,802
2,574

(2,592)
29,091

(4,939)

(1,541)
4,418
6,009
1,232

(22,579)
41,233

-

157,015

31,188

-

(37,080)

(337,646)

(3,472)

2,386

(7,557
)

(60,294)
5,654

(7,741
)

(62,381
)

(812,164)
770,464

(128,016)
508

97,254

(893)
(4,660)

1,541

(75,966
)
(Continued)
  • 6 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in short-term bills payable
Decrease in short-term bills payable
Increase in long-term borrowings
Repayment of long-term borrowings
Interest paid
Net cash used in financing activities
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH AND CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD		 Six Months Ended June 30 Six Months Ended June 30





2019
$ 796,014

(854,189)
100,000
(100,000)
250,000
(282,380)

(28,995
)

(119,550
)

39,042

(533,105)

1,501,888

$ 968,783
 2018
$ 407,696

(373,760)
50,000

(100,000)
374,933

(489,035)

(30,770
)

(160,936
)

29,200

(270,083)

1,430,724
$ 1,160,641

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

  • 7 -

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

GEM Terminal Ind. Co., Ltd. (the “Company”) was incorporated in July 1993 under the laws of the Republic of China (ROC). The Company mainly manufactures and sells the following products:

  • Series terminals, plug inserts, housing and electronic connectors for AC and DC power cords.

  • Electric and motor parts terminal.

  • Electric and communication terminal.

  • Optical communication passive devices.

  • Lead frames.

The Company’s shares have been listed on the Taiwan Stock Exchange since September 2001.

The consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were reported to the board of directors for issue on August 9, 2019.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their accounting treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement Contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

  • 8 -

Definition of a lease

The Group will elect to apply IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal and interest of lease liabilities are both classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Prepaid lease payments for land and property use rights located in China and Vietnam were recognized as prepayments for leases. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows.

The Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information is not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid lease payments. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

  • 1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

  • 2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

  • 3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.69%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease
commitments on December 31, 2018


Less: Recognition exemption for short-term leases

Less: Recognition exemption for leases of low-value assets


Undiscounted amounts on January 1, 2019

 $ 1,962
(970)
(224
)
$ 768

(Continued)

  • 9 -
Discounted amounts using the incremental borrowing rate on January 1, 2019

Add: Adjustments as a result of a different treatment of extension options
Lease liabilities recognized on January 1, 2019		 $ 755
3,592
$ 4,347
(Concluded)

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

Adjustments Adjustments
As Originally Arising from Adjusted
Stated on Initial Amount as of
January 1, 2019 Application January 1, 2019
Right-of-use assets $
-		 $ 96,742 $ 96,742
Other current assets 2,355 (2,355) -
Long-term prepayments for lease 90,040 (90,040
)		 -
Total effect on assets $ 92,395 $
4,347		 $ 96,742
Lease liabilities - current $
-		 $
694		 $ 694
Lease liabilities - noncurrent - 3,653 3,653
Total effect on liabilities $
-		 $
4,347		 $ 4,347
Total effect on equity $
-		 $
-		 $ -
  • b. The IFRSs endorsed by the FSC for application starting from 2020
New IFRSs
Amendments to IFRS 3 “Definition of a Business”
Amendments to IAS 1 and IAS 8 “Definition of Material”		 Effective Date
Announced by IASB
January 1, 2020 (Note 1)
January 1, 2020 (Note 2)

  • Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

  • Note 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the consolidated financial statements were reported to the board of directors, the Group is continuously assessing the possible impact that the application of standards and interpretations will have 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

New IFRSs

Effective Date Announced by IASB (Note)

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, 2021

  • 10 -

  • Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

As of the date the consolidated financial statements were reported to the board of directors, the Group is continuously assessing the possible impact that the application of standards and interpretations will have 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

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of IFRSs annual financial statements.

  • b. Basis of preparation

The consolidated financial statements, which have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  • 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  • 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

  • 3) Level 3 inputs are unobservable inputs for the asset or liability.

  • c. Basis of consolidation

The basis of preparation applied in the consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018.

See Note 12, table 5 and 6 for detailed information on subsidiaries (including percentages of ownership and main businesses).

  • d. Other significant accounting policy

Except for leases and the following, please refer to the summary of significant accounting policy in the consolidated financial statements for the year ended December 31, 2018.

  • 1) Leases

  • a) 2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

  • 11 -

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments (including fixed payments). The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is change in a lease term, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

b) 2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

  • 2) 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, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

  • 3) 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. The effect of a change in tax rate resulting from a change in tax law is recognized consistent with the accounting for the transaction itself which gives rise to the tax consequence, and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

  • 12 -

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

For the critical accounting judgments and key sources of estimation, uncertainty and assumption applied in these consolidated financial statements, please refer to the consolidated financial statements for the year ended December 31, 2018.

6. CASH AND CASH EQUIVALENTS

June 30, December 31, December 31, June 30,
2019 2018 2018
Cash on hand $
2,175		 $ 2,204 $
3,002
Checking accounts and demand deposits 759,327 1,144,415 769,455
Cash equivalents
Time deposits with original maturities less than
3 months 207,281 355,269 388,184
$
968,783		 $ 1,501,888 $ 1,160,641
a. The market rate intervals of cash equivalents at the end of the reporting period were as follows:
June 30, December 31, June 30,
2019 2018 2018
Time deposits (%) 0.55-2.35 0.55-2.58 0.45-2.55

b. The Group transacted with a variety of financial institutions with high credit quality to disperse credit risk, hence, there was no expected credit loss.

7. FINANCIAL LABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT - ONLY DECEMBER 31, 2018

The financial liabilities at FVTPL were copper futures held for trading. The copper futures did not meet the criteria of hedge effectiveness and, therefore, were not accounted for using hedge accounting. Outstanding copper futures were as follows:

Contract
Amount
Futures Month Lots (In thousands)
Copper futures
Refined copper March 2019 20 US$1,338
Refined copper May 2019 5 US$ 334
  • 13 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CURRENT

Investments in equity instruments at FVTOCI
Domestic listed shares

Overseas listed shares

 June 30,
2019
December 31,
2018
$ 21,180
$ 26,234


101,139

67,493

$ 122,319
$ 93,727
 June 30,
2018
$ 33,773

110,573
$ 144,346

These investments in equity instruments are not held for trading. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI.

For the six months ended June 30, 2019 and 2018, the Group acquired $746,130 thousand and $812,164 thousand of domestic and overseas listed shares for medium and long-term strategic purposes; the management designated these investments as at FVTOCI.

For the six months ended June 30, 2019 and 2018, the Group sold its domestic and overseas listed shares in order to manage credit concentration risk. The sold shares had a fair value of $730,201 thousand and $770,464 thousand and the Group transferred a gain of $6,214 thousand and a loss of $249 thousand from other equity to retained earnings.

The dividends for the three and six months ended June 30, 2019 were both $59 thousand, and for the three and six months ended June 30, 2018 were both $1,541 thousand. Those related to investments derecognized during the period were $1 thousand and $63 thousand and those related to investments held at the end of the reporting period were $58 thousand and $1,478 thousand.

9. NOTES AND ACCOUNTS RECEIVABLE, NET

Notesreceivable
Notes receivable - operating

Accounts receivable
At amortized cost
Gross carrying amount

Less: Allowance for impairment loss


Overdue receivable
At amortized cost
Gross carrying amount

Less: Allowance for impairment loss

 June 30,
2019
December 31,
2018

$ 131,155
$ 86,222

$ 971,909
$ 1,093,995


8,925

10,866

$ 962,984
$ 1,083,129


$ 616
$ -


616

-

$ -
$ -
 June 30,
2018
$ 173,042
$ 1,189,710

11,878
$ 1,177,832

$ -

-
$ -
  • 14 -

a. Notes and accounts receivable

The average credit period of sales of goods was 30-120 days. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, 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 debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivable. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of notes and accounts receivable based on the Group’s provision matrix.

June 30, 2019

Expected credit loss rate (%)

Gross carrying amount

Loss allowance (Lifetime ECL)


Amortized cost

December 31, 2018
Expected credit loss rate (%)
Gross carrying amount

Loss allowance (Lifetime ECL)

Amortized cost

June 30, 2018		 Not Past Due
0-0.6
$ 1,057,315


(4,260
)

$ 1,053,055

Not Past Due
0-0.6
$ 1,117,705


(4,888
)

$ 1,112,817
 Past Due
1to 60 Days
0.5-10
$ 42,774


(2,150
)

$ 40,624

Past Due
1to 60 Days
2-10
$ 58,633


(3,302
)

$ 55,331
 Past Due
61 to 90 Days

30-55
$ 795


(429
)

$ 366

Past Due
61 to 90 Days

20-50
$ 1,586


(744
)

$ 842
 Past Due
91 to 180 Days

30-60
$ -

-

$ -

Past Due
91 to 180 Days

30-60
$ 315

(166
)
$ 149
 Past Due
Over 180 Days
80-100
$ 2,180


(2,086
)

$ 94

Past Due
Over 180 Days
70-100
$ 1,978


(1,766
)

$ 212
 Total
$ 1,103,064

(8,925

$ 1,094,139
Total
$ 1,180,217

(10,866

$ 1,169,351
Expected credit loss rate (%)
Gross carrying amount
Loss allowance (Lifetime ECL)
Amortized cost		 Coll ateral not Provided Collateral P rovided
Past Due
Over 180 Days
6
$ 7,037


(422
)

$ 6,615
 Total
$ 1,362,752

(11,878
)
$ 1,350,874


Not Past Due
0-0.6
$ 1,302,102


(5,397
)
$ 1,296,705
 Past Due
1to 60 Days
2-10
$ 45,824


(2,076
)

$ 43,748
 Past Due
61 to 90 Days

20-55
$ 2,586


(986
)

$ 1,600
 Past Due
91 to 180 Days

30-60
$ 906


(455
)

$ 451
 Past Due
Over 180 Days
50-100
$ 2,651

(2,443
)
$ 208


Past Due
91 to 180 Days

6
$ 1,646


(99
)
$ 1,547
  • 15 -

The movements of the loss allowance of notes, accounts and overdue receivable were as follows:

Balance at January 1
Less: Loss allowance reversed
Amounts written off
Foreign exchange gains and losses
Balance at June 30		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 10,866

(1,465)
-

140

$ 9,541
 2018
$ 15,473
(2,592)
(1,255)

252
$ 11,878
  • b. Credit risk of notes and accounts receivable

The Group’s receivables are significantly concentrated in certain individuals, most of which have similar business operations and economic features. Concentration of credit risk occurs when the counterparties to financial instrument transactions are individuals or groups engaged in similar activities or activities in the same region, which would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

The balances of the notes and accounts receivable from certain customers with significant carrying amounts as of each reporting date were as follows:

Group A

INVENTORIES
Work in process

Finished goods
Raw materials
Supplies

 June 30,
2019
December 31,
2018
$ 138,617
$ 146,965

June 30,
2019
December 31,
2018

$ 227,740
$ 161,590

289,853
217,798
445,505
367,997

63,519

62,181

$ 1,026,617
$ 809,566
 June 30,
2018
$ 165,464
June 30,
2018
$ 141,165
272,456
330,939

66,146
$ 810,706

10. INVENTORIES

All operating costs recognized for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018 were the cost of inventories, which included the following items:

Write-down (reversal of
write-down) of inventories

Fire damage (Note 22)
Others

 For the Three Months
Ended June 30		 For the Three Months
Ended June 30

For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 7,013

-

4,187

$ 11,200
 2018
$ (6,864)
-

(1,895
)
$ (8,759
)		 2019
$ 5,483

2,495

3,257

$ 11,235
 2018
$ 6,009
-

2,011
$ 8,020
  • 16 -

11. OTHER FINANCIAL ASSETS

June 30, December 31, June 30,
2019 2018 2018
Time deposits with original maturities more than
3 months
 $ 174,140 $ 155,815
 $ 159,195
Pledge time deposits 9,718 9,632 10,266
Refundable deposits
11,233
13,229
4,975
$ 195,091 $ 178,676
 $ 174,436
Current
 $ 193,377
$ 176,980
 $ 172,696
Noncurrent
1,714
1,696
1,740
$ 195,091 $ 178,676
 $ 174,436
a. The market rate intervals of other financial assets at the end of the reporting period were as follows:
June 30, December 31, June 30,
2019 2018 2018
Time deposits (%) 1.35-2.80
0.30-1.55		 1.35-1.55

  • b. The counterparty of the Group’s time deposits were banks with good credit and no significant default concerns, hence, there was no expected credit loss.

  • c. Refer to Note 28 for the pledge information of other financial assets.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements were as follows:

Name of Investor
Name of Investee
Main Businesses and
Products
The Company
Global Electronics
Terminal (Cayman) Co.,
Ltd. (Global Cayman)
Note 1
Genius Terminal Co., Ltd.
(Genius)
Notes 1 and 2
GEM Terminal (Cayman)
Co., Ltd. (GEM Cayman)
Note 1
Global Cayman
Vibo Gem International
Co., Ltd. (Vibo)
Notes 1 and 2
Global Electronics
Terminal (HK) Co., Ltd.
(Global HK)
Note 2
Genius
Genius Terminal (HK)
Ltd. (Genius HK)
Note 2
GEM Cayman
Vietnam Gem Electronic
and Metal Co., Ltd
(GEM VN)
Note 3
Vibo
Suzhou Gem
Opto-Electronics
Terminal Co., Ltd. (GEM
Suzhou)
Note 3
Dongguan Gem
Electronics & Metal Co.,
Ltd. (GEM Dongguan)
Note 3		 Percentage of Ownership (%)
June 30,
2019
December 31,
2018
June 30,
2018
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
  • 17 -

Note 1: International investment.

Note 2: International trading.

  • Note 3: Production of hardware; machine processing; electroplating for metal processing; production and processing of molds and related accessories; plastic products and related plastic accessory production.

13. PROPERTY, PLANT, AND EQUIPMENT

The Company purchased agricultural land of $7,908 thousand that cannot be transferred to the Company because of statutory limitations; thus, the Company registered the property rights in the name of related party in substance, Su Chung-Hong. The land is mortgaged to the Company and the agreement stipulated unconditional conveyance of the land to the Company.

  • a. Movements of cost and accumulated depreciation were as follows:

Six months ended June 30, 2019


Cost
Balance at January 1, 2019

Additions
Fire damage
Disposal
Effect of foreign currency exchange
differences

Balance at June 30, 2019

Accumulated depreciation
Balance at January 1, 2019

Depreciation expenses
Fire damage
Disposal
Effect of foreign currency exchange
differences

Balance at June 30, 2019

Carrying amounts at December 31, 2018
and January 1, 2019

Carrying amounts at June 30, 2019
 Land
$ 146,218

-
-
-

-

$ 146,218

$ -

-
-
-

-

$ -

$ 146,218

$ 146,218
 Buildings
Machinery and
Equipment
Transportation
Equipment
$ 1,054,182
$ 1,564,038
$ 61,923

1,305
61,797
1,454
(13,591 )
(9,188 )
-
(292 )
(13,278 )
(583 )

7,487

(3,187
)

493

$ 1,049,091
$ 1,600,182
$ 63,287

$ (474,555 )
$ (904,637 )
$ (43,065 )

(21,860 )
(53,943 )
(1,543 )
1,413
1,252
-
227
11,971
562

(2,022
)

(4,198
)

(397
)

$ (496,797
)
$ (949,555
)
$ (44,443
)

$ 579,627
$ 659,401
$ 18,858

$ 552,294
$ 650,627
$ 18,844
 Others
$ 773,416

56,556
(4,969 )
(21,196 )

8,555

$ 812,362

$ (424,392 )
(51,429 )
936
20,769

(2,982
)
$ (457,098
)
$ 349,024

$ 355,264
 Construction
in Progress
and
Equipment to
be Inspected
$ 108,121

5,207

-

-

1,509

$ 114,837

$ -


-
-
-

-

$ -

$ 108,121

$ 114,837
 Total
$ 3,707,898
126,319
(27,748 )
(35,349 )

14,857
$ 3,785,977
$ (1,846,649 )
(128,775 )
3,601
33,529

(9,599
)
$ (1,947,893
)
$ 1,861,249
$ 1,838,084

Six months ended June 30, 2018


Cost
Balance at January 1, 2018

Additions
Disposal
Effect of foreign currency
exchange differences

Balance at June 30, 2018
 Land

$ 146,218
-
-

-

$ 146,218
 Buildings
$ 1,046,950


15,777

(5,682 )

18,925

$ 1,075,970
 Machinery
and
Equipment
Transportation
Equipment
$ 1,629,392
$ 57,436

41,141
5,339
(148,672 )
(4,318 )

22,431

867

$ 1,544,292
$ 59,324
 Others
Construction
in Progress
and
Equipment to
be Inspected
Total

$ 690,093 $ 176,368
$ 3,746,457
69,332
(3,855 )
127,734
(16,568 )
-
(175,240 )

12,066

1,128

55,417
$ 754,923
$ 173,641
$ 3,754,368
(Continued)
  • 18 -

Accumulated depreciation
Balance at January 1, 2018

Depreciation expenses
Disposal
Effect of foreign currency
exchange differences

Balance at June 30, 2018

Carrying amounts at June 30,
2018
 Land

$ -
-
-

-

$ -

$ 146,218
 Buildings
$ (430,535 )

(22,843 )

5,682

(13,887
)
$ (461,583
)
$ 614,387
 Machinery
and
Equipment
Transportation
Equipment
$ (972,172 ) $ (48,426 )
(58,757 )
(1,333 )
144,927
4,333

(27,750
)
(954
)
$ (913,752
) $ (46,380
)
$ 630,540
$ 12,944
 Others
Construction
in Progress
and
Equipment to
be Inspected
Total

$ (361,678 ) $ -
$ (1,812,811 )
(46,869 )
-
(129,802 )
15,372
-
170,314

(11,545
)

-

(54,136
)
$ (404,720
)$ -
$ (1,826,435
)
$ 350,203
$ 173,641
$ 1,927,933
(Concluded)
  • b. Estimated useful lives

Depreciation is provided on a straight-line basis over the estimated useful lives as follows:

Buildings
Factory facilities 5-25 years
Building facilities 5-25 years
Main buildings of the factory 19-50 years
Main buildings of the office 20-55 years
Machinery and equipment 5-10 years
Transportation equipment 4-12 years
Others 3-15 years

  • c. Refer to Note 28 for the carrying amount of property, plant and equipment pledged as collateral for bank borrowings.

  • d. Investing activities affecting both cash and non-cash items

Acquisition of property, plant and equipment
Capitalized interest
Decrease in prepayments for equipment
Decrease (increase) in payable for purchase of equipment
Cash paid		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 126,319

(1,039)
(501)

(11,400
)

$ 113,379
 2018
$ 127,734
(1,546)
(829)

2,657
$ 128,016

14. LEASE ARRANGEMENTS

  • a. Right-of-use assets - 2019
June 30, 2019
Carrying amounts
Land $ 68,531
Buildings
29,710
$ 98,241
  • 19 -
For the Three For the Three For the Six
Months Ended Months Ended
June 30, 2019 June 30, 2019
Additions to right-of-use assets $ - $ 2,582
Depreciation charge for right-of-use assets
Land $ 468 $ 935
Buildings 526 1,051
$ 994 $ 1,986
b. Lease liabilities - 2019
June 30, 2019
Carrying amounts
Current $ 1,599
Noncurrent $ 5,389
Range of discount rate for lease liabilities were all 1.69%.

c. Material lease-in activities and terms

The Group leases land and buildings for the use as plants and offices with lease terms of 1 to 50 years, refer to Note 15. However, partial land lease of $5,424 thousand are in the process of obtaining the land use right certificate as of June 30, 2019. The Group does not have bargain purchase options to acquire the leasehold land and buildings but have extension options at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Refer to Note 28 for the carrying amount of right-of-use assets pledged as collateral for bank borrowings.

15. PREPAYMENT FOR LEASE

December 31,
2018

Current (included in other current assets)
$ 2,355

Noncurrent (included in long-term prepayments for lease)

90,040

$ 92,395
 June 30,
2018
$ 2,386

97,148
$ 99,534

Prepayments for lease are for land use rights and property use rights in China and Vietnam. The years of use for land use rights in China is 50 years, which will expire from December 2046 to September 2061 in a row. The years of use for land and property use rights in Vietnam are 40-50 years, which will expire from October 2054 to December 2066 in a row.

Refer to Note 28 for the carrying amount of prepayments for lease pledged as collateral for bank borrowings.

  • 20 -

16. NOTES PAYABLE AND ACCOUNTS PAYABLE

The Group’s notes payable and accounts payable were from operating activities and were not secured by collaterals.

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms, therefore, no interest was charged on the outstanding accounts payable.

17. OTHER PAYABLES

Payable for purchase of equipment

Payable for salaries and bonuses
Payable for freight
Payable for service fees
Payable for utilities expense
Payable for tax
Payable for pension
Payable for employees’ compensation and
remuneration of directors and supervisors
Others

 June 30,
2019
December 31,
2018

$ 48,767
$ 37,367

44,339
45,430
15,816
18,091
7,135
13,385
4,870
6,250
2,871
1,619
839
9,830
-
-

45,982

46,363

$ 170,619
$ 178,335
 June 30,
2018
$ 44,620
39,860
15,963
7,427
3,167
20,489
802
2,539

37,288
$ 172,155

Other payables - others were payables for labor and health insurance and interests, etc.

18. BORROWINGS

a. Short-term borrowings

Unsecured borrowings

Secured borrowings (Note 28)

 June 30,
2019
December 31,
2018

$ 309,815
$ 387,051


523,859

497,326

$ 833,674
$ 884,377
 June 30,
2018
$ 254,249

620,734
$ 874,983

The annual interest rates of short-term borrowings were as follows:

June 30, December 31, June 30,
2019 2018 2018
Unsecured borrowings (%) 1.15-3.80 1.25-3.60 1.35-3.35
Secured borrowings (%) 2.94-4.57 3.48-4.57 3.10-4.35
  • b. Short-term bills payable

The annual interest rates of short-term bills payable were as follows:

  • 21 -
June 30, December 31, June 30,
2019 2018 2018
Short-term bills payable (%) 1.29-1.34 1.17-1.24 1.14

As of June 30, 2019 and December 31, 2018, commercial papers of $50,000 thousand were issued and granted by China Bills Finance Corporation and International Bills Corporation, respectively. As of June 30, 2018, commercial paper was issued and granted by International Bills. The commercial papers above were issued with one year revolving credit facilities.

  • c. Long-term borrowings
Unsecured borrowings

Secured borrowings (Note 28)

Less: Current portion

 June 30,
2019
December 31,
2018

$ 1,425,833
$ 1,433,917


54,791

78,662

1,480,624
1,512,579

809,809

613,128

$ 670,815
$ 899,451
 June 30,
2018
$ 1,598,251

62,601
1,660,852

569,964
$ 1,090,888

The annual interest rates of long-term borrowings were as follows:

June 30, December 31, June 30,
2019 2018 2018
Unsecured borrowings (%) 1.49-2.06 1.49-2.06 1.49-2.06
Secured borrowings (%) 4.00 3.75-4.00 3.50
The maturity date of long-term borrowings were as follows:
June 30, December 31, June 30,
2019 2018 2018
Long-term borrowings October 2019- January 2019- July 2018-
June 2022 November 2022 November 2022

Under the loan agreements with certain banks, the Group should maintain certain financial ratios based on reviewed semiannual and audited annual consolidated financial statements. The financial ratio of the Group as of June 30, 2019, December 31, 2018 and June 30, 2018, were in compliance with the requirements stated in the loan agreements.

19. RETIREMENT BENEFIT PLANS

For the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018, employee benefit expenses in respect of the Group’s defined benefit retirement plans were $229 thousand, $304 thousand, $458 thousand and $607 thousand, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2018 and 2017.

  • 22 -

20. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands)

Shares authorized

Number of shares issued and fully paid (in
thousands)

Shares issued
 June 30,
2019
December 31,
2018

221,000

221,000

$ 2,210,000
$ 2,210,000


169,200

169,200

$ 1,692,000
$ 1,692,000
 June 30,
2018

221,000
$ 2,210,000


169,200
$ 1,692,000

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital Surplus

May be used to offset a deficit, distributed
as cash dividends, or transferred
to ordinaryshares
Issuance of ordinary shares

Treasury share transactions

 June 30,
2019
December 31,
2018



$ 266,411
$ 266,411


4,904

4,904

$ 271,315
$ 271,315
 June 30,
2018
$ 266,411

4,904
$ 271,315

The 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 ordinary shares (limited to a certain percentage of the Company’s capital surplus and to once a year).

c. Retained of Earnings and Dividend Policy

According the dividend policy in the Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit (except when legal reserve equals to the Company’s paid-in capital, may also set aside or not), setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the stockholders’ meeting for distribution of dividends and bonuses to stockholders.

The Company’s dividend policy is in line with the Company’s operating scale and research and development needs as well as the status of the economy and industry in order to maintain sound management and promote stockholders’ long-term interests. Thus, the Company adopted Residual dividend policy as its stockholder dividends’ policy. Company’s profits may be distributed in the form of cash and/or stock. However, distribution of profits should preferably be in the form of cash dividend. Cash dividends should be at least 10% of total dividends. But if a cash dividend is less than $0.2, the Company may choose to appropriate stock dividends instead.

  • 23 -

The legal reserve may be used to offset deficits. 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 deficit compensation for 2018 and 2017 were approved in the stockholders’ meeting on June 25, 2019 and June 13, 2018, respectively. A special reserve of $40,765 thousand was approved in the stockholder’s meeting on June 25, 2019.

  • d. Other Equity Items

  • 1) Exchange differences on translating foreign operations

Balance at January 1
Effect of change in tax rate
Recognized during the period
Exchange differences on translating the financial
statements of foreign operations
Balance at June 30		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ (37,167)

-

36,954

$ (213
)
 2018
$ 33,232
2,914

22,148
$ 58,294
  • 2) Unrealized loss on financial assets at FVTOCI
Balance at January 1
Recognized during the period
Unrealized gain (loss) - equity instruments
Cumulative unrealized gain (loss) of equity instruments
transferred to retained earnings due to disposal
Balance at June 30
Remeasurement of defined benefit plans
Balance at January 1
Effect of change in tax rate
Balance at June 30		 For the Six Months
Ended June 30


2019
2018
$ (8,988)
$ (3,166)
9,053
(7,491)

(6,214
)

249
$ (6,149
)
$ (10,408
)
For the Six Months
EndedJune 30
2019
2018
$ 5,390
$ 6,036
-

(218
)
$ 5,390
$ 5,818
2019
$ 5,390

-

$ 5,390

  • 3) Remeasurement of defined benefit plans

  • 24 -

21. OPERATING REVENUE

Revenue from contracts with
customers
Revenue from sale of goods

a. Contract balances (Note 9)
Notes receivable

Accounts receivable, net

 For the Three Months
Ended June 30
2019
2018
$ 913,887
$ 1,071,158
June 30,
2019
December 31,
2018
$ 131,155
$ 86,222
962,984
1,083,129
$ 1,094,139
$ 1,169,351		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30






2019
$ 1,691,763

June 30,
2018
$ 173,042
1,177,832

$ 1,350,874
 2018
$ 2,001,895
January 1,
2018
$ 150,463
1,216,725
$ 1,367,188
  • b. Disaggregation of revenue

Refer to Note 32 for the disaggregation of revenue and revenue of segment information.

22. CONSOLIDATED LOSS BEFORE INCOME TAX

Consolidated loss before income tax including following items:

a. Other income

Interest income

Dividends
Fire damage insurance claims
income
Others

 For the Three Months
Ended June 30
2019
2018
$ 2,423
$ 3,150
59
1,541
14,021
-

1,815

1,218
$ 18,318
$ 5,909		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 2,423

59
14,021

1,815

$ 18,318

2019
$ 4,567

59
14,021

3,289

$ 21,936
 2018
$ 4,939
1,541
-

1,923
$ 8,403

In January 2019, a fire accident occurred in the certain area of Subsidiary GEM VN, causing damage to some inventories and property, plant and equipment and recognizing the loss as operating costs and non-operating losses, respectively. According to the investigation report from the claim adjuster, GEM VN estimated the insurance claim receivable to be $14,021 thousand recognized as non-operating income. As of August 9, 2019, GEM VN still negotiated with the insurance company for the insurance claim.

  • 25 -

b. Other gains and losses

Foreign exchange gains, net

Loss on disposal of property,
plant and equipment, net
Fire damage (Note 13)
Others

 For the Three Months
Ended June 30
2019
2018
$ 10,443
$ 22,932
(617)
(1,420)
-
-

(165
)

(289
)
$ 9,661
$ 21,223		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 10,443

(617)
-

(165
)

$ 9,661


2019
$ 6,186

(1,769)
(24,147)

(3,044
)

$ (22,774
)
 2018
$ 9,873
(4,418)
-

(592
)
$ 4,863

c. Finance costs

Interest expense of borrowings
Interest on lease liabilities
Less: Amounts included in
the cost of
qualifying assets

 For the Three Months
Ended June 30
2019
2018
$ 14,238
$ 16,487
29
-

525

733
$ 13,742
$ 15,754		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
$ 14,238

29

525

$ 13,742

2019
$ 28,599

59

1,039

$ 27,619
 2018
$ 30,637
-

1,546
$ 29,091

Information about capitalized interest was as follows:

Capitalized interest (classified
under property, plant and
equipment and prepayments
for equipment)
Capitalization rate (%)
Depreciation and amortization
Property, plant and equipment
Prepayments for lease
(including current/noncurrent
portion)
Right-of-use assets
Other assets

 For the Three Months
Ended June 30
2019
2018
$ 525
$ 733
1.60-4.80
1.66-4.56
For the Three Months
Ended June 30
2019
2018
$ 63,947
$ 67,505
-
594
994
-

741

638
$ 65,682
$ 68,737		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30
2019
2018
$ 1,039
$ 1,546
1.54-4.92
1.33-5.16
For the Six Months
Ended June 30


2019
$ 63,947

-
994

741

$ 65,682

2019
$ 128,775

-
1,986

1,347

$ 132,108
 2018
$ 129,802
1,258
-

1,316
$ 132,376

d. Depreciation and amortization

  • 26 -

Other assets were long-term prepayments for computer software, etc.

An analysis of depreciation by
function
Operating costs

Operating expenses


An analysis of amortization by
function
Operating costs

Operating expenses


e. Employee benefits expense
Short-term employee benefits

Post-employment benefits
Defined contribution plans
Defined benefit plans (Note
19)



An analysis of employee
benefits expense by function
Operating costs

Operating expenses

 For the Three Months
Ended June 30
2019
2018
$ 55,380
$ 58,369
9,561

9,136
$ 64,941
$ 67,505
$ 35
$ 71
706

1,161
$ 741
$ 1,232
For the Three Months
Ended June 30
2019
2018
$ 136,158
$ 129,008
7,793
8,557

229

304

8,022

8,861
$ 144,180
$ 137,869
$ 109,027
$ 101,223
35,153

36,646
$ 144,180
$ 137,869		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30










2019
2018
$ 111,346
$ 111,674

19,415

18,128
$ 130,761
$ 129,802
$ 71
$ 140

1,276

2,434
$ 1,347
$ 2,574
For the Six Months
Ended June 30







2019
$ 136,158

7,793

229


8,022

$ 144,180

$ 109,027

35,153

$ 144,180





2019
$ 250,697

14,934

458


15,392

$ 266,089

$ 196,876


69,213

$ 266,089
 2018
$ 251,728
16,465

607

17,072
$ 268,800
$ 194,240

74,560
$ 268,800

f. Employees’ compensation and remuneration of directors and supervisors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation and remuneration of directors and supervisiors at rates of no less than 3% and $2,100 thousand, respectively, of net profit before income tax, employees’ compensation and remuneration of directors and supervisors. For the six months ended June 30, 2019 and 2018, the Company had incurred net loss, hence, no employees’ compensation and remuneration of directors and supervisors were accrued for the period.

For the year ended December 31, 2018, the Company had incurred net loss, hence, no employees’ compensation and remuneration of directors and supervisors were accrued for the year. The appropriations of employees’ compensation and remuneration of directors and supervisors for 2017 resolved by the board of directors on March 23, 2018 were as below:

  • 27 -
Employees’ compensation
Remuneration of directors and supervisors		 Amount
2018
$ 439
2,100

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2017.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

23. INCOME TAX

  • a. Income tax recognized in profit or loss

The major components of income tax expense (benefit) are as follows:

Current tax
In respect of the current
period

Adjustments for prior
periods


Deferred tax
In respect of the current
period
Effect of change in tax rate
Adjustments for prior
periods


Income tax expense (benefit)
recognized in profit or
loss
 For the Three Months
Ended June 30
2019
2018
$ (991)
$ 2,461

2,354

591

1,363

3,052
4,126
(152)
-
-

9,981

-

14,107

(152
)
$ 15,470
$ 2,900		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30





2019
$ (991)


2,354


1,363

4,126
-

9,981


14,107

$ 15,470




2019
$ (900)


2,692


1,792

(7,155)
-


10,781


3,626

$ 5,418
 2018
$ 2,461

1,201

3,662
4,234
(12,418)

-

(8,184
)
$ (4,522
)

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss is recognized in full in the period which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings was reduced from 10% to 5%.

  • 28 -

b. Income tax recognized directly in equity

For the Three Months
Ended June 30
2019
2018
Current Tax
Disposal of investments in
equity instruments
designated as at FVTOCI
$ (2,469)
$ -
Deferred tax
Disposal of investments in
equity instruments
designated as at FVTOCI
2,388

473
Income tax benefit (expense)
recognized directly in equity
$ (81
)
$ 473
Income tax recognized in other comprehensive income (loss)
For the Three Months
Ended June 30
2019
2018
Deferred tax
Effect of change in tax rate
$ -
$ -
In respect of the current
period
Translations of foreign
operations
(133)
(2,611)
Fair value changes of
financial assets at
FVTOCI
271

1,129
Income tax benefit (expense)
recognized in comprehensive
income (loss)
$ 138
$ (1,482
)		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30


2019
2018
$ (2,469)
$ -

-

(185
)
$ (2,469
)
$ (185
)
For the Six Months
Ended June 30


2019
$ -

(425)
(2,827
)

$ (3,252
)
 2018
$ 2,696
(831)

1,639
$ 3,504

c. Income tax recognized in other comprehensive income (loss)

d. Income tax assessments

The tax returns of the Company through 2017 have been assessed by the tax authorities.

GEM Dongguan, GEM Suzhou and GEM VN had completed the filing of their income tax returns through 2018 with the tax authorities.

24. NET LOSS PER SHARE (EPS)

There is no diluted effect for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018 for net loss incurred. The net loss and weighted average number of ordinary shares outstanding used in the computation of EPS were as follows:

  • 29 -

Net loss for the periods attributable to owners of the Company

For the Three Months
Ended June 30
For the Six Months
Ended June 30
2019
2018
2019
2018
Net loss used in the computation of
basic/diluted EPS
$ (2,643
)
$ (10,872
)
$ (35,269
)
$ (43,314
)
Weighted average number of ordinary shares outstanding (in thousand shares)		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30
2018
$ (43,314
)
Weighted average number of
ordinary shares in computation
of basic/diluted EPS		 For the Three Months
Ended June 30
2019
2018
169,200
169,200		 For the Six Months
Ended June 30
2019
2018
169,200
169,200

25. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns through the optimization of the debt and equity balance. The capital structure of the Group consists of net debt and equity of the Group. The Group is not subject to any externally imposed capital requirements, except to maintain certain financial ratios specified under loan agreements. (Refer to Note 18)

Key management personnel of the Group review the capital structure on a quarterly basis. The capital structure comprises the consideration of costs and risks. The Group balances the overall capital structure based on recommendations of the key management personnel.

26. FINANCIAL INSTRUMENTS

  • a. Fair value of financial instruments not measured at fair value

The Group’s management considers that the carrying amounts of financial assets and financial liabilities which are not measured at fair value approximate their fair values.

  • b. Fair value of financial instruments measured at fair value on a recurring basis

June 30, 2019

Financialassets atFVTOCI
Investments in equity
instruments
Domestic listed shares

Overseas listed shares

 Level 1
$ 21,180

101,139

$ 122,319
 Level 2
$ -


-

$ -
 Level 3
$ -


-

$ -
 Total
$ 21,180

101,139
$ 122,319
  • 30 -

December 31, 2018

Financialassets atFVTOCI
Investments in equity
instruments
Domestic listed shares

Overseas listed shares


Financial liabilities at FVTPL
Derivative instruments
Copper futures

June 30, 2018
Financialassets atFVTOCI
Investments in equity
instruments
Domestic listed shares

Overseas listed shares

 Level 1
$ 26,234


67,493

$ 93,727

$ 832

Level 1
$ 33,773

110,573

$ 144,346
 Level 2
$ -


-

$ -

$ -

Level 2
$ -


-

$ -
 Level 3
$ -


-

$ -

$ -

Level 3
$ -


-

$ -
 Total
$ 26,234

67,493
$ 93,727
$ 832
Total
$ 33,773

110,573
$ 144,346

There were no transfers between Level 1 and Level 2 for the six months ended June 30, 2019 and 2018.

  • c. Categories of financial instruments
June 30, December 31, June 30,
2019 2018 2018
Financialassets
Measured at amortized cost (Note 1) $ 2,275,033 $ 2,858,660
 $ 2,688,863
Financial assets at FVTOCI
Equity instruments 122,319 93,727 144,346
Financial liabilities
Measured at amortized cost (Note 2) 3,058,627 3,353,546 3,122,656
Financial liabilities at FVTPL
Held for trading - 832 -

Note 1: Included cash and cash equivalents, notes receivable, net of accounts receivable, other receivables and other financial assets.

  • Note 2: Included short-term borrowings, short-term bills payable, notes payable, accounts payable, other payables, and long-term borrowings (including current portion).

  • 31 -

d. Financial risk management objectives and policies

The Group’s major financial instruments include equity investments, notes receivable, accounts receivable, other financial assets, borrowings, short-term bills payable, notes payable, accounts payable and lease liabilities. The Group’s corporate treasury function provides services to the business, coordinates access to financial markets, and monitors and manages the financial risks relating to the operations of the Group through that analyze exposures to risks. These risks include market risk, credit risk and liquidity risk.

The corporate treasury function reports monthly to the Group’s management personnel.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There has been no change to the Group’s exposure to market risks or the manner in which these risk are managed and measured.

a) Foreign currency risk

The Group had foreign currency denominated trades, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) exposed to foreign currency risk at the end of the reporting year are set out in Note 30.

Sensitivity analysis

The Group was mainly exposed to the USD and HKD.

The sensitivity rate used when reporting foreign currency risk internally to key management personnel is 1%. The sensitivity analysis included only outstanding foreign currency denominated monetary items at the end of the reporting period. A positive (negative) number below indicates an increase (decrease) in pre-tax profit for a 1% weakening of the functional currency against the relevant currency.

USD
HKD		 For the Six Months
Ended June 30
2019
2018
$ 889
$ 1,474
1,518
2,421

b) Interest rate risk

The Group was exposed to interest rate risk because the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

  • 32 -
June 30, December 31, December 31, June 30,
2019 2018 2018
Fair value interest rate risk
Financial assets $
391,139		 $ 520,716
 $
557,645
Financial liabilities 692,012 942,286 1,149,450
Cash flow interest rate risk
Financial assets 759,196 1,144,284 769,323
Financial liabilities 1,729,274 1,554,670 1,436,385

Sensitivity analysis

The sensitivity analysis below was 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 liability outstanding at the end of the reporting period was outstanding for the whole period.

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the six months ended June 30, 2019 and 2018 would decrease/increase $4,850 thousand and $3,335 thousand, respectively, which was mainly a result of the changes in the floating interest rate bank deposits and borrowings.

c) Other price risk

The Group was exposed to equity price risk through its investments in equity securities. Equity investments are held for strategic rather than for trading purposes, the Group manages this exposure by maintaining a portfolio of investments with different risks.

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to equity price risk at the end of the reporting period. If equity prices had been 1% higher/lower, the pre-tax other comprehensive income for the six months ended June 30, 2019 and 2018 would increase/decrease by $1,223 thousand and $1,443 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. 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 the counterparties’ failure to discharge an obligation is the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheets.

The Group’s receivables are significantly concentrated in certain individuals. Accounts receivable from customers with significant carrying amounts were disclosed in Note 9.

3) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Group’s funding and liquidity management requirements.

  • 33 -

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and loan commitments, and continuously monitoring forecasted and actual cash flows as well as matching the maturity profiles of financial assets and liabilities.

  • a) Liquidity and interest risk rate tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon 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. The tables includes both interest and principal cash flows. 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 upon repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

On Demand
or Less than
1 Month
June 30,2019
Fixed interest rate liabilities
$ 200,807

Variable interest rate liabilities
80,139
Lease liabilities
-
Non-interest bearing

382,853

$ 663,799

December 31,2018
Fixed interest rate liabilities
$ 51,497

Variable interest rate liabilities
152,530
Non-interest bearing

500,833

$ 704,860

June 30,2018
Fixed interest rate liabilities
$ 172,382

Variable interest rate liabilities
40,330
Non-interest bearing

280,825

$ 493,537
 1-3 Months
$ 92,985

86,978
-

185,670

$ 365,633

$ 248,071

127,791

253,821

$ 629,683

$ 172,316

78,763

222,593

$ 473,672
 3 Months to
1 Year
$ 398,891
916,071
1,658

74,255

$ 1,390,875

$ 483,257
572,462

99,990

$ 1,155,709

$ 520,673
547,005

31,425

$ 1,099,103
 1-5 Years
$ -


679,794

4,852

-

$ 684,646

$ 175,930


733,934

-

$ 909,864

$ 303,897


803,187

-

$ 1,107,084
 5-10 Years
$ -
-
768

-
$ 768
$ -
-

-
$ -
$ -
-

-
$ -

Taking into account the Group’s financial position, management does not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. Management believes that such bank loans will be repaid in one year after the end of reporting period in accordance with the scheduled repayment dates set out in the loan agreements.

The amounts included above for variable interest rate non-derivative financial liabilities are subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Liquidity risk tables for derivative financial instruments - Only December 31, 2018

The following table details the Group’s liquidity analysis of its derivative financial instruments. The table is based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis.

  • 34 -
On Demand or
Less than 3 Months to
1 Month 1-3 Months 1 Year
Net settled
Copper Futures $ - $ (702
)		 $ (130
)
  • e. Transfers of financial assets

The Group transferred a portion of its banker’s acceptance bills in mainland China to some of its suppliers in order to settle the trade payables to these suppliers. As the Group has transferred substantially all risks and rewards relating to these bills receivable, it derecognized the full carrying amount of the bills receivable and the associated trade payables. However, if the derecognized bills receivable are not paid at maturity, the suppliers have the right to request that the Group pay the unsettled balance; therefore, the Group still has continuing involvement in these bills receivable.

The maximum exposure to loss from the Group’s continuing involvement in the derecognized bills receivable is equal to the face amounts of the transferred but unsettled bills receivable, and as of June 30, 2019, the face amounts of these unsettled bills receivable were $108,691 thousand. The unsettled bills receivable will be due in 1-4 months after the end of the reporting period. Taking into consideration the credit risk of these derecognized bills receivable, the Group estimates that the fair values of its continuing involvement are not significant.

During the six months ended June 30, 2019, the Group did not recognize any gains or losses upon the transfer of the banker’s acceptance bills. No gains or losses were recognized from the continuing involvement, both during the period or cumulatively.

27. TRANSACTIONS WITH RELATED PARTIES

Balances, transactions and revenues and expenses among the Group have been eliminated on consolidation and are not disclosed in this note. Details of transaction between the Group and other related parties were as follows:

  • a. Related party name and its relationship with the Group
Related Party Name
Su, Tun-Jen
Su, Tun-Yi
Su, Tun-Li
Su, Chung-Hong
Su, Bo-Chen		 Relationship with the Group
Related Party in Substance
Related Party in Substance
Related Party in Substance
Related Party in Substance
Related Party in Substance
  • b. Compensation of key management personnel
Short-term employee benefits
Post-employment benefits		 For the Three Months
Ended June 30
2019
2018
$ 2,900
$ 2,187
68

52
$ 2,968
$ 2,239		 For the Six Months
Ended June 30		 For the Six Months
Ended June 30

2019
$ 2,900

68

$ 2,968

2018
$ 5,398

136
$ 5,534		 2018
$ 4,303

105
$ 4,408
  • 35 -

The remuneration of directors and other members of key management is determined by the remuneration committee based on to the performance of individuals and market trends.

  • c. Lease arrangements

The Company leased its staff dormitory and Taipei office from related party in substance, Su, Tun-Jen, Su, Tun-Li, and Su, Tun-Yi. The rental terms were determined by negotiation. The rental rates were similar to the local market rate and the payment terms were at arm’s length.

The relevant information of the lease arrangements were as follows:

Acquisition of right-of-use
assets
Interest expense
Lease expense		 For the Three Months
Ended June 30
2019
2018
$ -
$ -
29
-
-
414		 For the Six Months
Ended June 30
2018
2018
$ 2,582
$ -
59
-
-
829

The balance of lease liabilities as of June 30, 2019 was $6,988 thousand.

  • d. Guarantees

The Group’s related party in substance, Su, Tun-Li, Su, Chung-Hong and Su, Bo-Chen, jointly provided the guarantee for the loans of the Group.

28. ASSETS PLEDGED AS COLLATERAL FOR SECURITY

The Group provided the following assets as collateral for the borrowings and bank’s acceptance:

Property, plant and equipment

Pledge deposits (under other financial assets-
current)
Right-of-use assets
Prepayments for lease (including current portion)

 June 30,
2019
December 31,
2018
$ 518,791
$ 550,759

9,718
9,632
23,414
-

-

23,494

$ 551,923
$ 583,885
 June 30,
2018
$ 546,463
10,266
-

24,347
$ 581,076

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The Group’s significant contingent liabilities and unrecognized commitments as of June 30, 2019, were as follows:

  • a. The amounts of contracts for the Group’s purchases of properties and materials were $400,627 thousand, of which $99,232 thousand had been paid.

  • b. Unused letters of credit for purchases of raw materials amounted to $8,874 thousand.

  • 36 -

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Group’s entities and the related exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

Foreign Carrying
Currencies Amount
(In Thousands) Exchange Rate (In Thousands)
June 30,2019
Financial assets
Monetary items
USD $
12,377		 31.06 (USD:NTD) $
384,421
USD 11,321 6.8717 (USD:RMB) 351,636
USD 11,338 7.804 (USD:HKD) 352,147
USD 2,797 23,318 (USD:VND) 86,872
HKD 3,164 3.98 (HKD:NTD) 12,594
HKD 62,734 1.1357 (HKD:RMB) 249,681
HKD 940 0.1281 (HKD:USD) 3,743
$ 1,441,094
Financial liabilities
Monetary items
USD 880 31.06 (USD:NTD) $
27,320
USD 2,359 6.8717 (USD:RMB) 73,272
USD 5,949 7.804 (USD:HKD) 184,762
USD 25,783 23,318 (USD:VND) 800,834
HKD 28,420 3.98 (HKD:NTD) 113,111
HKD 269 1.1357 (HKD:RMB) 1,072
$ 1,200,371
December31,2018
Financial assets
Monetary items
USD 11,821 30.7 (USD:NTD) $
362,897
USD 11,392 6.868 (USD:RMB) 349,729
USD 13,727 7.8276 (USD:HKD) 421,429
USD 2,997 23,222 (USD:VND) 92,010
HKD 2,777 3.922 (HKD:NTD) 10,890
HKD 57,788 0.8774 (HKD:RMB) 226,643
HKD 933 0.1278 (HKD:USD) 3,659
$ 1,467,257
Financial liabilities
Monetary items
USD 517 30.7 (USD:NTD) $
15,859
USD 3,161 6.868 (USD:RMB) 97,040
USD 5,780 7.8276 (USD:HKD) 177,459
USD 22,156 23,222 (USD:VND) 680,189
HKD 18,716 3.922 (HKD:NTD) 73,404
HKD 500 0.8774 (HKD:RMB) 1,961
$ 1,045,912
(Continued)
  • 37 -
Foreign Carrying
Currencies Amount
(In Thousands) Exchange Rate (In Thousands)
June 30,2018
Financial assets
Monetary items
USD $
10,075		 30.48 (USD:NTD) $
307,080
USD 6,669 6.630 (USD:RMB) 203,282
USD 13,509 7.844 (USD:HKD) 411,758
USD 3,434 22,935 (USD:VND) 104,674
HKD 5,685 3.886 (HKD:NTD) 22,092
HKD 82,468 0.845 (HKD:RMB) 320,472
HKD 924 0.127 (HKD:USD) 3,591
$ 1,372,949
Financial liabilities
Monetary items
USD 308 30.48 (USD:NTD) $
9,387
USD 3,973 6.630 (USD:RMB) 121,099
USD 5,586 7.844 (USD:HKD) 170,248
USD 18,983 22,935 (USD:VND) 578,610
HKD 25,490 3.886 (HKD:NTD) 99,054
HKD 1,292 0.845 (HKD:RMB) 5,021
$
983,419
(Concluded)

For the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018, realized and unrealized net foreign exchange gains were $10,443 thousand, $22,932 thousand, $6,186 thousand and $9,873 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the Group’s entities.

31. ADDITIONAL DISCLOSURES

  • a. Information about significant transactions and investees:

  • 1) Financing provided to others: Table 1.

  • 2) Endorsement/guarantee provided: None.

  • 3) Marketable securities held: Table 2.

  • 4) Marketable securities acquired and disposed at cost or price at least NT$300 million or 20% of the paid-in capital: None.

  • 5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital: None.

  • 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.

  • 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3.

  • 38 -

  • 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.

  • 9) Trading in derivative instruments: Note 7. For the six months ended June 30, 2019, net losses of futures contracts were $2,151 thousand. The transaction amount was not significant.

  • 10) Inter-Company business relationship and material transactions and its amount: Table 8.

  • 11) Information on investees: Table 5.

  • b. Information on investments in Mainland China

Information on any investee company in Mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the Mainland China areas: Table 6.

Any of the following significant transactions with investee companies in Mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses:

  • 1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 7.

  • 2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 3 and Table 7.

  • 3) The amount of property transactions and the amount of the resultant gains or losses: Table 7.

  • 4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None.

  • 5) The highest balance, the end of period balance, the interest rates range, and total current period interest with respect to financing of funds: Table 1.

  • 6) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Table 7 and Table 8.

32. SEGMENT INFORMATION

Information reported to the Group’s chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on type of goods or services delivered or provided.

Each entity of the Group is considered separate operating segment by the chief operating decision maker (CODM). For financial statements presentation purposes, these individual operating segments have been aggregated into a single operating segment taking into account the following factors:

  • a. these operating segments have similar production and sales processes;

  • b. these operating segments have similar main businesses and products; and

  • c. the finance and business of these operating segments as to the consolidated financial statements are not material.

  • 39 -

The Group’s reportable segments were as follows:

  • ․ The Company

  • ․ GEM Dongguan and Genius HK consolidated information

  • ․ GEM Suzhou and Global HK consolidated information

  • ․ Others

Segment revenues and results

The following was an analysis of the Group’s revenue, results from operations, segment assets and liabilities by reportable segment:

The Company
For the six months ended June 30,2019
Revenue from external customers
$ 251,862

Inter-segment revenues

254,562

Segment revenues
$ 506,424

Segment income (loss)
$ (21,555
)

Other income
Other gains and losses
Finance cost
Consolidated loss before income tax
Income tax
Consolidated net loss
June 30,2019

Segment assets
$ 4,593,015


Segment liabilities
$ 2,042,972


For the six months ended June 30,2018
Revenue from external customers
$ 287,396

Inter-segment revenues

55,914

Segment revenues
$ 343,310

Segment loss
$ (18,413
)

Other income
Other gains and losses
Finance cost
Consolidated loss before income tax
Income tax
Consolidated net loss
June 30,2018

Segment assets
$ 4,713,210


Segment liabilities
$ 2,010,387
 GEM
Dongguan&
Genius HK
$ 668,873


268,320

$ 937,193

$ 4,320

$ 1,651,438

$ 686,764

$ 811,195


300,125

$ 1,111,320

$ (3,964
)

$ 1,594,029

$ 582,616
 GEM
Suzhou&
Global HK
$ 770,813


709,190

$ 1,480,003

$ (7,779
)

$ 2,771,826

$ 731,162

$ 903,143


789,955

$ 1,693,098

$ (2,476
)

$ 2,981,196

$ 932,736
 Others
$ 215

485,933

$ 486,148

$ (11,198
)
$ 1,251,281

$ 854,259

$ 161

247,751

$ 247,912

$ (25,505
)
$ 1,081,976
(
$ 677,814
(		 Adjustment
and
Elimination
Consolidated
Amount
$ -
$ 1,691,763
(1,718,005
)

-
$ (1,718,005
)
$ 1,691,763
$ 34,818
$ (1,394 )
21,936
(22,774 )

(27,619
)
(29,851 )

(5,418
)
$ (35,269
)
$ (4,533,955
)
$ 5,733,605
$ (1,131,596
)
$ 3,183,561
$ -
$ 2,001,895
(1,393,745
)

-
$ (1,393,745
)
$ 2,001,895
$ 18,347
$ (32,011 )
8,403
4,863

(29,091
)
(47,836 )

4,522
$ (43,314
)
$ 4,393,395
)
$ 5,977,016
$ 929,360
)
$ 3,274,193
  • 40 -

TABLE 1

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

No. Lender Borrower Financial
Statement
Account		 Related
Parties		 Highest Balance
for the Period		 Ending Balance
(Note 2)		 Actual
Borrowing
Amount
(Notes 2 and 3)		 Interest
Rate		 Nature of
Financing		 Business
Transaction
Amounts		 Reason for
Short-term
Financing		 Allowance for
Impairment
Loss		 **Collateral ** **Collateral ** Financing Limit
for Each
Borrower		 Aggregate
Financing Limits		 Note
Item Value
0
1
2		 The Company
Vibo
Global Cayman		 GEM VN
GEM Suzhou
GEM Dongguan
GEM Suzhou
Global HK		 Other receivables
- related parties
Other receivables
- related parties
Other receivables
- related parties
Other receivables
- related parties
Other receivables
- related parties		 Yes
Yes
Yes
Yes
Yes		 $ 360,438
92,295
30,820
31,595
24,944		 $ 326,130
-
-
31,060
12,424		 $ 170,830
-
-
-
-		 2.1-3.2
2.8
2.8
2.8
2.8-3.2		 Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing		 $ -
-
-
-
-		 Business
development
Business
development
Business
development
Business
development
Business
development		 $ -
-
-
-
-		 -
-
-
-
-		 $ -
-
-
-
-		 $ 510,009
510,009
595,218
595,218
600,087		 $ 1,020,018
1,020,018
1,190,436
1,190,436
1,200,174		 Note 1
Note 1
Note 1
Note 1
Note 1
  • Note 1: Under the Company’s and the subsidiaries’ “Operational Procedures for Loaning Funds to Others,” if short-term financing is needed, total amounts of these financings should not exceed 40% of the Company’s and the subsidiaries’ stockholders’ equity, and individual financing should not exceed 20% of the Company’s and the subsidiaries’ stockholders’ equity.

Note 2: The exchange rate was US$1 : NT$31.06.

Note 3: It was eliminated on consolidation.

  • 41 -

TABLE 2

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD JUNE 30, 2019

(In Thousands of New Taiwan Dollars)

Holding Company Name Type and Name of Marketable Securities Relationship
with the Holding
Company		 Financial Statement Account June 30, 2019 June 30, 2019 June 30, 2019 Note
Shares Carrying
Amount		 Percentage of
Ownership		 Fair Value
The Company
GEM Suzhou		 Stock
ESON Precision Engineering Co., Ltd.
Tai Tung Communication Co., Ltd.
Innolux Corporation
Microdectronics Technology Inc.
Asia Pacific Telecom Co., Ltd.
Shin Kong Financial Holding
Stock
Yantai Changya Pioneer Wine Co., Ltd.
Huarun Dong’s Ejiao Co., Ltd.
China Minsheng Banking Corp., Ltd.
Bank of Beijing Co., Ltd.
Shede Spirits
Ningbo Boway Alloy Material
Luzhoulaojiao Group Co., Ltd.		 -
-
-
-
-
-
-
-
-
-
-
-
-		 Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - current		 57,000
248,000
575,000
179,000
601,000
222,880
122,668
192,927
1,150,000
230,000
73,600
1,000
1,000




$ 2,058
4,042
4,215
4,376
4,387

2,102

21,180
17,810
34,726
33,008
6,144
9,042
44

365

101,139
$ 122,319		 -
-
-
-
-
-
-
-
-
-
-
-
-




$ 2,058
4,042
4,215
4,376
4,387

2,102

21,180
17,810
34,726
33,008
6,144
9,042
44

365

101,139
$ 122,319
  • 42 -

TABLE 3

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2019

(In Thousands of New Taiwan Dollars)

Buyer Related Party Relationship Transaction Details Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes/Accounts Receivable
(Payable)		 Notes/Accounts Receivable
(Payable)		 Note
Purchases/Sales
Amount		 % to Total Payment Terms Unit Price Payment Term **Ending Balance ** % to Total
The Company
GEM Dongguan
GEM Suzhou
Global HK
GEM VN
Genius HK		 GEM VN
Genius HK
GEM Dongguan
Global HK
GEM Suzhou
Global HK
Genius HK
The Company
GEM Dongguan		 Subsidiary
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Subsidiary
Affiliate		 Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales		 $ 228,751
320,502
561,744
127,197
103,430
103,194
229,759
112,279
246,343		 45
37
39
9
40
25
55
17
38		 120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2		 $ 89,566
213,128
333,606
78,517
-
-
72,460
88,195
74,195		 33
35
38
9
-
-
97
26
21		 Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3

Note 1: The sales price of finished goods is not significantly different from those to third parties, except for the stated sales price of finished goods, there were no comparable transactions with third parties.

Note 2: The sales payment terms of intercompany sales are not significantly different from those to third parties.

Note 3: It was eliminated on consolidation.

  • 43 -

TABLE 4

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 2019

(In Thousands of New Taiwan Dollars)

Company Name Related Party Relationship Ending Balance (Notes 1 and 3) Ending Balance (Notes 1 and 3) Turnover Rate
(Note 2)		 Amount Amount Overdue
Actions Taken		 Amounts Received
in Subsequent
Period		 Allowance
Impairment		 for
Loss
The Company GEM VN Subsidiary $ 262,858 5.10 $ - - $ 45,169 $ -
GEM Suzhou GEM Dongguan Affiliate 334,375 3.46 - - 117,361 -
GEM Dongguan Genius HK Affiliate 215,402 3.28 - - 92,363 -
Genius HK The Company Subsidiary 113,125 3.13 - - 38,619 -

Note 1: It included accounts receivable and other receivables.

Note 2: The computation of Turnover Rate didn’t include other receivables.

Note 3: It was eliminated on consolidation.

  • 44 -

TABLE 5

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Original Investment Amount As of June 30, 2019 As of June 30, 2019 Net Income
(Loss) of the Investee		 Share of profit (Loss) Note
June 30,
2019		 December 31,
2018
Shares/ Units % Carrying Amount
The Company
Genius
Global Cayman
GEM Cayman		 Global Cayman
GEM Cayman
Genius
Genius HK
Vibo
Global HK
GEM VN		 Grand Cayman, Cayman Islands
Grand Cayman, Cayman Islands
British Virgin Islands
Hong Kong
Hong Kong
Hong Kong
Vietnam		 International investment
International investment
International investment and trading, etc.
International trading
Trading and investment
International trading
Production of hardware; machine processing;
electroplating for hardware processing;
production and processing of molds and related
accessories; plastic products and related plastic
accessory production;		 $ 1,295,208
392,669
23,282
90,134
1,541,063
3,747
386,780		 $ 1,295,208
392,669
23,282
90,134
1,541,063
3,747
386,780		 40,137,184
12,598,333
750,000
21,999,998
359,972,616
1,000,000
386,780		 100
100
100
100
100
100
100		 $ 2,885,188
251,980
83,208
83,591
2,976,089
8,581
256,054		 $ (5,048 )
(20,969 )
581
431
(5,638 )
255
(27,985 )		 $ (4,867 )
(20,970 )
581
475
(5,638 )
562
(20,821 )		 Notes 1 and 2
Notes 1 and 2
Note 1
Notes 1 and 2
Note 1
Notes 1 and 2
Notes 1 and 2

Note 1: It was eliminated on consolidation.

Note 2: Net of unrealized profits.

  • 45 -

TABLE 6

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2019

(In Thousands of New Taiwan Dollars; Unless Stated Otherwise)

Investee Company Main Businesses and Products Main Businesses and Products Paid-in Capital Method of
Investment		 Accumulated
Outward Remittance
for Investment from
Taiwan as of January
1, 2019		 Remittance of Funds Remittance of Funds Remittance of Funds Accumulated
Outward Remittance
for Investment from
Taiwan as of
June 30, 2019		 Net Loss of the
Investee		 % of
Ownership of
Direct or
Indirect
Investment		 Investment Loss
(Notes 1 and 3)		 Carrying Amount as
of June 30, 2019
(Notes 1 and 3)		 Accumulated
Repatriation of
Investment Income as
of June 30, 2019		 Note
Outward Inward
GEM Dongguan
GEM Suzhou		 Production of hardware; machine
processing; electroplating for metal
processing; production and
processing of molds and related
accessories; plastic products and
related plastic accessory production.
Production of hardware; machine
processing; electroplating for metal
processing; production and
processing of molds and related
accessories; plastic products and
related plastic accessory production.		 $ 766,005
1,133,092		 The investment
was made
through a
corporation
established
in a third
country to
invest in
companies
located in
Mainland
China.
The investment
was made
through a
corporation
established
in a third
country to
invest in
companies
located in
Mainland
China.		 $ 452,130
741,320		 $ -
-		 $ -
-		 $ 452,130
741,320		 $ (7,740 )
(8,244 )		 100
100		 $ (3,399 )
(1,652 )		 $ 837,488
2,017,276		 $ -
-
Upper Limit on the Amount of
Investment Stipulated by Investment
Commission, MOEA(Note 2)
$1,530,026
Investor Company Accumulated Outward Remittance for
Investment in Mainland China as of
June 30, 2019		 Investment Amounts Authorized by
Investment Commission, MOEA		 Upper Limit on the Amount of
Investment Stipulated by Investment
Commission, MOEA(Note 2)
The Company $1,193,450 $1,761,102
(US$56,700 thousand)		 $1,530,026

Note 1: Amount was recognized based on the reviewed financial statement.

Note 2: Under the “Principles Governing the Review of Investments or Technical Cooperation in Mainland China” issued by the Investment Commission on August 29, 2008, the maximum amount that can be invested in companies located in mainland China is 60% of the Company’s net value.

Note 3: It was eliminated on consolidation.

  • 46 -

TABLE 7

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES FOR THE SIX MONTHS ENDED JUNE 30, 2019

(In Thousands of New Taiwan Dollars)

Investee Company Counterparty Transaction Type Price Transaction Details Transaction Details Notes/Accounts Receivable
(Payable)		 Notes/Accounts Receivable
(Payable)		 Unrealized
(Gain) Loss		 Note
Payment Term Comparison with Normal Transaction Ending Balance
%
The Company
Genius HK
Global HK
Vibo
GEM VN		 GEM Suzhou
GEM Dongguan
GEM Dongguan
GEM Suzhou
GEM Suzhou
GEM Suzhou		 Sales
Purchase
Disposal of property,
plant, and equipment
Sales
Purchase
Sales
Purchase
Sales
Purchase
Purchase of property
plant, and equipment
Sales
Purchase		 $ 21,097
18,099
18,806
1,645
785
246,343
320,502
103,430
127,197
24,478
71,427
8,194		 120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing
120 days after monthly closing		 No significant difference with those to third
parties
No significant difference with those to third
parties
No comparable transactions with those in
the market
No significant difference with those to third
parties
No significant difference with those to third
parties
No significant difference with those to third
parties
No comparable transactions with those in
the market
No significant difference with those to third
parties
No comparable transactions with those in
the market
No comparable transactions with those in
the market
No comparable transactions with those in
the market
No comparable transactions with those in
the market		 $ 5,055
(1,904)
1,805
378
-
74,195
(213,128)
-
(78,517)
17,325
-
(8,111)		 2
-
1
-
-
21
66
-
82
18
-
4		 $ 6,290
(34)
11,273
464
(135)
2,175
-
345
(110)
2,944
(855)
-
  • 47 -

TABLE 8

GEM TERMINAL IND. CO., LTD. AND SUBSIDIARIES

INTERCOMPANY BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

No.
Company Name		 Counterparty Nature of
Relationship
(Note 2)		 Intercompany Transactions Intercompany Transactions

Financial Statement Item		 Amount
(Note 1)		 Terms Percentage of
Consolidated
Total Gross
Sales or Total
Assets
0 The Company Genius HK
Genius HK
Genius HK
Genius HK
GEM Suzhou
GEM Suzhou
GEM Suzhou
GEM Suzhou
GEM VN
GEM VN
GEM VN
GEM VN
GEM VN
GEM VN
GEM Dongguan
GEM Dongguan		 1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1		 Sales
Disposal of property, plant and equipment
Accounts receivable
Other receivables
Sales
Accounts receivable
Disposal of property, plant and equipment
Other receivables
Sales
Accounts receivable
Disposal of property, plant and equipment
Other receivables
Interest income
Other receivables
Sales
Accounts receivable		 $ 3,069
9,576
2,338
9,768
21,097
5,055
18,806
1,805
228,751
89,566
15,453
21
2,559
173,271
1,645
378		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Annual Interest rates are 2.8%-3.2%
According to working, capital conditions to change payment
deeding
Payment terms are 4 months
Payment terms are 4 months		 -
1
-
-
1
-
1
-
14
2
1
-
-
3
-
-
1 GEM Dongguan The Company
Genius HK
Genius HK
Genius HK
Genius HK
Genius HK
GEM Suzhou
GEM Suzhou
GEM Suzhou
GEM Suzhou
GEM Suzhou		 2
3
3
3
3
3
3
3
3
3
3		 Sales
Sales
Disposal of property, plant and equipment
Accounts receivable
Other income
Other receivables
Sales
Accounts receivable
Disposal of property, plant and equipment
Other income
Other receivables		 785
320,502
2,286
213,128
23
2,274
76,519
68,355
2,389
72
4,787		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months		 -
19
-
4
-
-
5
1
-
-
-
2 Genius HK The Company
The Company
The Company
GEM Dongguan
GEM Dongguan
GEM Dongguan
GEM VN
GEM VN		 2
2
2
3
3
3
3
3		 Sales
Accounts receivable
Other receivables
Sales
Accounts receivable
Other receivables
Sales
Accounts receivable		 112,279
88,195
24,930
246,343
74,195
408
78,737
47,926		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months		 7
2
-
15
1
-
5
1

(Continued)

  • 48 -
No.
Company Name		 Counterparty Nature of
Relationship
(Note 2)		 Intercompany Transactions Intercompany Transactions Intercompany Transactions Intercompany Transactions

Financial Statement Item		 Amount
(Note 1)		 Terms Percentage of
Consolidated
Total Gross
Sales or Total
Assets
3 Global HK The Company
The Company
GEM Suzhou
GEM Suzhou
GEM Suzhou
GEM VN
GEM VN		 2
2
3
3
3
3
3		 Sales
Accounts receivable
Sales
Unearned sales revenue
Other income
Sales
Accounts receivable		 $ 49,565
24,352
103,430
7,095
331
71,588
53,731		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months		 3
-
6
-
-
4
1
4 GEM Suzhou The Company
The Company
The Company
Global HK
Global HK
Global HK
Global HK
Global HK
GEM Dongguan
GEM Dongguan
GEM Dongguan
GEM Dongguan
GEM VN
GEM VN
GEM VN
GEM VN
GEM VN		 2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
3
3		 Sales
Accounts receivable
Disposal of property, plant and equipment
Sales
Accounts receivable
Disposal of property, plant and equipment
Other receivables
Other income
Sales
Accounts receivable
Disposal of property, plant and equipment
Other receivables
Sales
Disposal of property, plant and equipment
Other income
Accounts receivable
Other receivables		 18,099
1,904
21
127,197
78,517
24,478
17,325
385
561,744
333,606
866
769
8,194
2,023
22
8,111
2,025		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months		 1
-
-
8
1
1
-
-
33
6
-
-
-
-
-
-
-
5 Vibo GEM Suzhou
GEM Suzhou		 1
1		 Sales
Interest income		 71,427
202		 Payment terms are 4 months
Annual Interest rate is 2.8%		 4
-
6 Global Cayman Global HK 1 Interest income 140 Annual Interest rate is 3.2% -
7 GEM VN The Company
The Company
Genius HK
Genius HK
Global HK
Global HK
Vibo		 2
2
3
3
3
3
3		 Sales
Accounts receivable
Sales
Accounts receivable
Sales
Unearned sales revenue
Sales		 10,513
1,841
229,759
72,460
103,194
7,095
71,040		 Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months
Payment terms are 4 months		 1
-
14
1
6
-
4
(Concluded)

Note 1: It was eliminated on consolidation.

Note 2: 1) Parent to subsidiary

  • 2) Subsidiary to parent

  • 3) Subsidiary to subsidiary

  • 49 -

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