Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

T3EX Annual Report 2017

Jun 27, 2018

52176_rns_2018-06-27_33abb259-4c49-4d8f-a205-8a1ff9dac3f4.pdf

Annual Report

Open in viewer

Opens in your device viewer

2017 Annual Report Printed on 05 30, 2018

0

Spokesperson

Name: Echo Wan Title: General Manager of T3EX Holdings Tel: 886-2-2753-2093 E-mail:[email protected]

Headquarters, Branches and Plant

Headquarters Address: 12F., No.563, Sec.4, Zhongxiao E. Rd., Xinyi District, Taipei 11072, Taiwan Tel: 886-2- 2753-2093

Deputy Spokesperson

Name: Jack Lai Title: CEO of THI Group Ocean Business Tel: 886-2-2753-2093 E-mail:[email protected]

Stock Transfer Agent

CAPITAL SECURITIES CORP. Address: Capital Center, No.101, Songren Rd., Xinyi Dist., Taipei City 11073, Taiwan, R.O.C. Tel: 886-2-2703-5000 Website: http://www.capital.com.tw

Auditors

KPMG Accounting Firm Auditors: Peggy Chen, HENG- SHENG LIN Address: 68F, TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei, 11049, Taiwan, R.O.C. Tel.: 886-2-8101-6666 Website: http://www.kpmg.com.tw

Overseas Securities Exchange: None

Corporate Website

http://www.t3ec-group.com

1

Contents

I. Letter to Shareholders ............................................................................................ 3 II. Company Profile 2.1 Date of Incorporation.............................................................................................. 5 2.2 Company History ……… ...................................................................................... 5 III. Corporate Governance Report 3.1 Organization............................................................................................................ 6 3.2 Directors, Supervisors and Management Team………………………………8 3.3 Implementation of Corporate Governance ........................................................... 22 3.4 Information Regarding the Company’s Audit Fee and Independence.................. 52 3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders……………………………………………………………………..54 3.6 Relationship among the Top Ten Shareholders………..……....………...………55 3.7 Ownership of Shares in Affiliated Enterprises…………………………………56 IV. Capital Overview 4.1 Capital and Shares………………………………………………………….……57 4.2 Bonds…………….………………………………………………………….……61 4.3 Global Depository Receipts ….…………………………………………….……63 4.4 Employee Stock Options…………………………………………………………63 4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions…63 4.6 Financing Plans and Implementation……………………………………...……..63 V. Operational Highlights 5.1 Business Activities……………………………………………………………….65 5.2 Market and Sales Overview…………………………………….………..………77 5.3 Human Resources……….……………………………………………………….83 5.4 Environmental Protection Expenditure………….……………………………….84 5.5 Employee Relations………………………………………………………………84 5.6 Important Contracts………………………………………………………………85 VI. Financial Information 6.1 Five-Year Financial Summary………………………………………….………..86 6.2 Five-Year Financial Analysis…………………………………………….……90 6.3 Supervisors’ Report in the Most Recent Year………………………….……94 6.4 Consolidated Financial Statements for the Years Ended December 31, 2017 and 2016, and Independent Auditors’ Report…………………………………… .…95 6.5 Financial Statements for the Years Ended December 31, 2017 and 2016, and Independent Auditors’ Report………………...………………….…95

1

VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status…………………………………………………….95 7.2 Analysis of Financial Performance………………………………………..……96 7.3 Analysis of Cash Flow………………………………………..………………96 7.4 Major Capital Expenditure Items……………………………………………97 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year……….…98 7.6 Analysis of Risk Management………………………………………………….98 VIII. Special Disclosure 8.1 Summary of Affiliated Companies……………………………………..….…100 8.2 Private Placement Securities in the Most Recent Years………………………108 8.3 Any Events in 2017 and as of the Date of this Annual Report that had Significant Impacts on Shareholders ‘Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan……………………...108

2

Letter to Shareholders

Now, I hereby thanks to every shareholders on behalf of T3EX group for your cares and supports. The Company still keeps the strong business foundation and sensitive market insight to expand the business scale and increase global operating locations including Taiwan, Hong Kong, China, Japan, Korea, Vietnam, Thailand, Cambodia, Singapore, Malaysia, and Indonesia. By effective group resource integration, the Company not only provide an international logistics services but also provide comprehensive logistics such as customs declaration, warehousing, delivering, and supply-chain management. Via deep local culture cultivation and more potential markets development, the Company anticipates that the brand will step to a level of global market leader.

2017 Review

2017 Review
Expressed in thousands of
New Taiwan Dollars
2017		 2016 YoY
Revenue 10,537,008 9,744,113 8.14%
Gross Profit 1,924,035 1,794,218 7.24%
Gross Margin 18.26% 18.41% -0.15%
Operatingincome 396,445 193,165 105%
Profit after tax 252,737 121,176 108%
EPS(Dollars) 2.07 1.11 86%

The rise of ocean and air freight resulted in the company’s year 2017 revenue increased 8.14% compared to year 2016. And through a strong expense control execution, the company’s operating expense decreased 4.6% compared to year 2016. The year 2017 profit after tax reached NT$ 252,737 thousands, increased by 108% over the same period last year. The year 2017 EPS reached NT$2.07(YoY 86% growth).

On the performance results of various products, ocean revenue was NT$5.905 billion, increased by 5.95% over the same period last year. The gross profit reached NT$ 1.132 billion, increased by 1.41% over the same period last year. In year 2017, the turnaround of global economic increased ocean trade activities, so the Company’s ocean freight volume increased by 4.09% over the same period last year. About the ocean freight, because the shipping capacity was nearly equal to cargo demand, the ocean freight was risen compared to last year, the freight growth rate in USWC, USEC and Europe respectively was 21%, 22%, 12%.

Air revenue in year 2017 was NT$ 3.03 billion, increased by 18.95% over the same period last year. The gross profit reached NT$ 0.427 billion, increased by 8.01% over the same period last year. In year 2017, the global electronical industry grew up fast, such as global vehicle electronics investment, the release of consumer electronical product, the surge of global virtual currency, the spread of global game competition, which enhanced the volume of cross-border air cargo from electronical supply chain. The speedy development of global cross border e-commerce also

3

resulted the high demand of air cargo. The company’s air freight volume increased by 13.63% over the same period last year. However, the air space didn’t expand to meet the growth of air cargo, the air freight was risen up since the start of the year. Especially in 4Q 2017, the oil price surged and the air freight also reached the historic hike in this two years.

Logistics revenue in year 2017 was NT$ 1.629 billion, down by 1.04% over the same period last year. The gross profit was NT$ 0.365 billion, increased by 29.15% over the same period last year. The decrease of logistics revenue as a result of the downgrade of China last-mile logistics service and the reduction of the low profit orders. The company’s logistics revenue decreased but profit increased.

2018 Outlook

In 1Q 2018, the global economic is growing stably. The company’s revenue was NT$ 2.439 billion, merely increased 0.07% than last year, but the profit grew 122% compared to the same period last year. The main reason were the growth of freight volume and the efficiency of custom structured adjustment.

Looking forward this year, about the international freight, the Company expect the shipping capacity is still oversupply, and the ocean freight should depend on the shipping capacity adjustment from shipping companies. The air freight would rise by international oil price soaring. For the cargo demand, the Company expect the global trade activities is still strong, the freight volume could grow. However, the US-China trade war is still unclear, and it would affect the future global trade. About the China logistics market, the domestic consumption is still sharply growing, the Company expect the import cargo will grow speedily, the import supply-chain logistics services is the next growth momentum.

Future operating strategy and development plan

Thanks to the fast growth of cross-border e-commerce, logistics become the key role of integration of virtual and actual economic. The logistics service providers should transform labor-intensive module to supply-chain service providers.

The Company will continue to integrate internal resource with the asset-light strategy. The below are the main operating strategy and development plan in this year:

  1. Expand the China-Russia-Europe Railway Service.

  2. Through B2B2C warehouse system combination and logistics platform cooperation provide total the logistics total solution services of warehouse-truck transport-express.

  3. Combination overseas locations and agents with China warehouse and transportation service to develop import logistics.

  4. Develop cross border e-commerce logistics including Inter-Asia, USA and Europe area.

We will continue to strengthen our expertise and create greater values for our shareholders.

Chairman: David Yen

4

I. Company Profile

2.1 Date of Incorporation : 02 04, 1987

The date of foundation ： T.H.I. Group was set up on 02 04, 1987. In August 2012,

the Company changed its name- T3EX Global Holdings Corp.

2.2 Company History

MM, Year Milestones
08, 2012 The Company transformed into holdings company and changed its company
name- T3EX Global Holdings Corpthrough Special Shareholders’ Meeting.
02, 2013 The Company invested 30% shares of Joint venture in Indonesia-PT. Dexter
Eurekatama.
10, 2013 The Companyset upT.H.I. Online, enteringinto e-commerce business.
01, 2014 The logistics e-commerce platform T.H.I. Online was built by adopting an
O2O logistics business model.
01, 2014 The Companyissued NTD 300,000,000 convertible bond to reimburse debts.
03,2014 The Company finished par value NTD 100,000,000 fundraising to increase
operatingcapital.
01,2015 The company established T.H.I. GROUP SINGAPORE PTE LTD, the
operatingheadquarters in Southeast Asia.
03,2015 The companyraised our shareholdings in THI & Maruzen Inc. to 51%.
08,2015 To reinforce ASEAN plus three regional deployment, the company acquired a
30% stake in Korean logistics company- LOGI International Co., Ltd.
11,2015 To step into e-commerce logistics, the Company acquired 68% shares of
Shanghai EXer Logistics Co.,Ltd.
12,2015 To deeply develop warehousing and transportation services in China, we
acquired 60% shares of T-Cube Global Logistics Co., Ltd.
04,2016 The company established THI Logistics (Malaysia) SDN BHD, the operating
headquarters in Southeast Asia.
12,2016 The company changed its listing from GreTai Securities Market to the Taiwan
Stock Exchange.
6,2017 To expand New Zealand and Australia business, the company invested
Shanghai Moorluk International ShippingCo.,Ltd.

5

II. Corporate Governance Report

3.1 Organization

3.1.1 Organizational Chart

==> picture [491 x 552] intentionally omitted <==

----- Start of picture text -----

General Shareholders Meeting
Supervisors
Board of Directors
Remuneration Committee
Risk Management Committee
Corporate Governance and
Sustainability Committee
Chairman Internal Audit Department
Operating Management Committee
General Manager
General Manager Office
Human Resource Information Technology Financial Management
Department
Department
Department
----- End of picture text -----

6

3.1.2 Major Corporate Functions

Department Functions
Remuneration Committee To make recommendations to the Board on the Company’s
policy and structure for all Directors, and senior
management remuneration and on the establishment of a
formal
and
transparent
procedure
for
developing
remunerationpolicy.
Risk Management
Committee		 The company entire risk management structure covers the
board of directors, the audit committee, upper management,
risk management units and other business units.
The board of directors holds ultimate responsibility. Its
major goal is promoting and implementing the company’s
overall risk management.
Corporate Governance and
SustainabilityCommittee		 To assist the board to supervises the progress of corporate
governance and CSR and to report regularly.
Operating Management
Committee		 The board of directors holds ultimate responsibility. It major
goal is assisting group to deal with the big issue and
reportingtopresident and the Board.
Internal Audit Department To identify deficiencies in the internal control system, assess
the effectiveness and efficiency of operations, and provide
appropriate
improvement
suggestions
to
ensure
the
effectiveness of the internal control system as well as for
continuous improvement.
Financial Management
Department		 Responsible for the summarization and supply of accounting
information, management and operation of finance and
investment, annual budgeting, credit control.
Human Resource
Department		 Responsible for the planning and execution of human
resource management, and planning and execution of
general affairs.
Information Technology
Department		 Responsible for the planning, controlling, design, and
implementation of the dataprocessing.
General Manager Office Responsible for holding the board of meetings, shareholders
meetings and others functional meeting, maintaining the
public relations, investor relations, company branding and
stock affairs, and executing the corporate governance and
CSR.

7

3.2 Directors, Supervisors and Management Team

3.2.1 Directors and Supervisors

3.2.1 Directors and Supervisors 3.2.1 Directors and Supervisors 3.2.1 Directors and Supervisors 3.2.1 Directors and Supervisors 3.2.1 Directors and Supervisors 3.2.1 Directors and Supervisors
05 30, 2018
Title Nationality/
Country of
Origin
Name		 Sex Date
Elected		 Term
(Years)
Date
First
Elected		 Shareholding
when Elected		 Current
Shareholding		 Spouse &
Minor
Shareholding
Shareholding
by Nominee
Arrangement
Experience
（Education）		 Other Position Executives,
Directors or
Supervisors who are
spouses or within
two degrees of
kinship
Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation
Director R.O.C. David Yen Male 05.31.
2016		 3 01.16
1993		 1,225,197
1.05
796,490
0.67
0
0
3,339,143
(Hope Oc
ean)

2.82
 The founder of
T3EX group
 Shipping &
Transportation
Management in
NTOU		  Group chairman of T3EX
The board of director:
Dynamic Ocean Group, T.H.I.
logistic, T-Cube logistics, T.H.I. &
Maruzen, Hope Ocean, Taiwan
Express, and EXer logistics,
Moorluk International Shipping.
 Chairman:
THI Logistics, THI group
(Shanghai), and YHI
International,THI logistics		 None None None

8

Director R.O.C. Jack Lai Male 05.31.
2016		 3 05.31.
2016		 1,865,566
1.60		 1,917,552
1.62		 491,154 0.41
0		 0  The associate vice
president of T3EX
 DBA in National
Taipei University.		  The CEO of THI Group ocean
business.
 The board of director:
PT. Dexter Eurekatama, THI group
(Shanghai), THI Logistics,YHI
International, THI Malaysia, T.H.I.
Singapore., LOGI International, THI
HK , and THI Vietnam, EXer
logistics, Moorluk International
Shipping.
 The chairman and board of
director of T-Cube logistics.
None		 None None
Director R.O.C. Tony Lin Male 05.31.
2016		 3 05.31.
2016		 1,258,116
1.08		 1,290,728
1.09
0
0
0
-
 EMBA in NUS
 DBA in TIAS
 The GM of
DIMERCO		  The CEO of THI Group Air
business
 The board of director:
T-Cube logistics, T.H.I. & Maruzen,
LOGI International., THI Singapore,
THI Group (Shanghai), Taiwan
Express.,EXer Logistics., THI
Logistics, YHI International, Fresh
beautyenterprise
None		 None None
Director BVI Hope Ocean
International
Ltd		 06.17.
2013		 3 05.31.
2016		 2,849,003 3.92 3,273,798 2.82 0 0 0 0 - - None None None
R.O.C. Representativ
e:
Ji-Zhi Hsieh		 Male 0 0 0 0 0 0 0 0 Major in CCU
Natural
Resource.		  The GM and board of director of
Mei-Ton Rubber.
 The president of CHIEF
OVERSEA Trading.
 The board of director of
Cambodia Asia Flour Mill Corp.
 THI Logistics board director		 None None None
Director Samoa Dynamic
Ocean Group
Limited		 05.31.
2016		 3 06.20
2007		 5,086,865 4.37 3,912,398
3.30
0
0		 0 0 - - None None None

9

R.O.C. Representativ
e:
Carl Wei		 Male 143,484 0.12 146,347
0.12
0
0		 0 0  DBA in Fu Jen
Catholic University
 The CEO of THI
Logistics Sea
business..
 Manager of JI YE
Shipping
 Manager of
Taiming Shipping
Agent
 The vice president
of Kuang Ming
Shipping Corp.
 The senior vice
president of
YANG MING
MARINE
TRANSPORT
CORP.
The director of Moorluk
International Shipping.		 None None None
Director R.O.C. Benison Hsu Male 05.31.
2016		 3 06.28
2011		 1,153,734 0.99 1,191,762 1.00
0		 0 0 0  MBA in Tulane
University.
 The founder of
Taiwan Express		  The president of Taiwan Express.
 The board of director:
THI logistics, TEC logistics
(Shenzhen), TEC logistics (Hong
Kong) , TEC logistics (USA) ,
Taiwan Express (USA) , Hiview
Logistics, Central Taiwan Science
Park Logistics., and GGA Corp.,
INMAX SDN. BHD.
 The supervisor of Orient Air
GeneralSalesAgent.
None		 None None

10

Director R.O.C. Li-Chiu
Chang		 Male 05.31.
2016		 3 06.17.
2013		 0 0 0 0 0 0 0 0  Master of insurance
in NCU.
 Financial
Supervisory
Commission
 The president of
Yuanta Securities.
 The GM of Dahwa
Securities.
 The auditor, chief,
and leader of
Financial
Supervisory
Commission
 The auditor of
National Taxation
Bureau of Taipei

 Chairman:
FOCI Fiber Optic Communications,
Panion & BF Biotec Inc.,
Herbiotek Co., Ltd,
 Board of Independent director :
TA YA ELECTRIC WIRE &
CABLE, ACME Electronics,
Tanvex BioPharma, Inc..
 The CEO of Sun Ten Group.
 The highest consultant of Yuanta
Securities
 Board of director:
Sun Ten International,, SHI DING
Venture Capital.

None		 None None
Director R.O.C. Ming-Hsu
Tsai		 Male 05.31.
2016		 3 05.31.
2016		 0 0 0 0 0 0 0 0  Master of Public
Administration in
NCU.
 The senior vice
president of
YANG MING
MARINE
TRANSPORT
CORP.
 The chairman of
Kuang Ming
ShippingCorp.		 The independent
director of YANG
MING MARINE
TRANSPORT CORP.		 None None None
Supervisor
R.O.C.		 YI-WEI
INVESTMEN
T		 05.31. 3 06.17.
2013		 411,192 0.57 1,296,889 1.11 0 0 0 0 None None None

11

R.O.C. Representativ
e:
Chin-Chou
Hsu		 Male 63,256 0.05 64,518 0.05 0 0 0 0  Master of
Economics in
NTU.
 Master of
Economic in Unites
State John Hopkins
University.
 The director of
Department of
International Affairs
of FSC.
 The deputy chief of
Insurance Bureau
of FSC.
 The chairman of
SinoPac Venture
Capital.


 The independent
director of ALLIED
CIRCUIT Co, Ltd.
 The independent
director of Polaris
Pharma Co, Ltd.		 None None None
Supervisor R.O.C. BAO-JYUE
INVESTME
NT		 05.31.
2016		 3 05.31.
2016		 514,323 0.44 524,588
0.44		 0 0 0 None None None

R.O.C.		 Representativ
e:
Mao-Jen
Chen		 Male 0 0 0 0 0 0 0 0  MBA in Tulane
University.
 Mechanical
Engineering in
NCKU.
 The business
minister of Chin
Fong Machine
Industrial.		 The president of CHUN-DI Corp. None None None
Supervisor
R.O.C.		 Shen-Li Liao Male 05.31.
2016		 2 06.04
2014		 0 0 0 0 0 0 0 0  MBA in NCU.
 The supervisor of
Amazing
Microelectronic
Corp.		  The partner of Candor Taiwan
CPAs
 The supervisor of Taiwan
Express.
 The supervisor of SolidPro
Technology.		 None None None

12

05,30, 2018

Major shareholders of the institutional shareholders

Name of Institutional
Shareholders		 Major Shareholders
DYNAMIC OCEAN GROUP
LIMITED
David Yen (33.43%), Mark Richard Laufer (66.57%)
Hope Ocean International Ltd David Yen (100%)
BAO-JYUE INVESTMENT SIOU-JIN WANG (100%)
YI-WEI INVESTMENT Ltd JIN-CIN YANG (31.70%), HUA-MEI HUNG HSU (23.05%)
SHU- HUA YANG (6.92%), JIN-YI YANG (6.92%), SHU-HUEI PEN (6.92%), SHU- FEN YAN (6.92%), YONG-
CHANG LI (6.92%), CHUN-CHIEH CHANG (10.66%)

Major shareholders of the Company’s major institutional shareholders: None

13

05 30, 2018

Professional qualifications and independence analysis of directors and supervisors

Criteria
Name		 Meet One of the Following Professional Qualification Requirements, Together with at Least
Five Years Work Experience		 Meet One of the Following Professional Qualification Requirements, Together with at Least
Five Years Work Experience		 Meet One of the Following Professional Qualification Requirements, Together with at Least
Five Years Work Experience		 Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Independence Criteria(Note) Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Independent
Director
An Instructor or Higher
Position in a Department of
Commerce, Law, Finance,
Accounting, or Other
Academic Department Related
to the Business Needs of the
Company in a Public or Private
Junior College, College or
University
A Judge, Public Prosecutor,
Attorney, Certified Public
Accountant, or Other
Professional or Technical
Specialist Who has Passed a
National Examination and been
Awarded a Certificate in a
Profession Necessary for the
Business of the Company
Have Work Experience in the
Areas of Commerce, Law,
Finance, or Accounting, or
Otherwise Necessary for the
Business of the Company		 1 2 3 4 5 6 7 8 9 10
David Yen - - - - - - None
Jack Lai - - None
Hope Ocean
International Ltd
Representative:
Ji-Zhi Hsieh		 - - - None
Dynamic Ocean
Group Limited
Representative:
Carl Wei		 - - - None
TonyLin - - None
Benison Hsu - - None
Li-Chiu Chang - - 3
Ming-Hsu Tsai - - 1
YI-WEI
INVESTMENT		 - - - None
Representative:
Chin-Chou Hsu		 - - - 2

14

BAO-JYUE
INVESTMENT
Representative:
Mao-Jen Chen		 - None
Shen-Li Liao - - None

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

  1. Not an employee of the Company or any of its affiliates.

  2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.

  3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

  4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

  5. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings.

  6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.

  7. Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.

  8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

  9. Not been a person of any conditions defined in Article 30 of the Company Law.

  10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

15

3.2.2 Management Team

Title Nationality/
Country of
Origin		 Name Sex Date
Effective
Shareholding
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding
Shareholding
by Nominee
Arrangement
Shareholding
by Nominee
Arrangement

Experience（Education）		 Other Position Managers who are Spouses
or Within Two Degrees of
Kinship		 Managers who are Spouses
or Within Two Degrees of
Kinship		 Managers who are Spouses
or Within Two Degrees of
Kinship
Shares ％ Shares ％ Shares ％ Title Name Relation
General
Manager &
Spokesman		 R.O.C. Echo
Wan		 Female 05,31
2016		 92,000 0.08
576		 0 0 0  The CAO of T3EX.
 Senior manager of SinoPac
securities underwriting department.
 MBA of NCU
 Major Accounting in Fu Jen
Catholic		 None None None None
Vice
President		 R.O.C. Allen
Hou		 Male 03,26,
2013		 14,790 0.01 0 0 0 0  The CFO of massage chairs group
of Johnson Health Tech.
 The CFO of GRAND HALL
ENTERPRISE.
 The CFO of Avalue Technology.
 Major in NTU Economics.
 MBA inCUNY		  The CFO of T3EX Global
Holdings and Taiwan
Express.
 The board of directors of
THI logistics, Taiwan
Express, and T.H.I. &
MaruzenCo.,Ltd.
None		 None None
Senior
Manager		 R.O.C. Melonie
Lin
Female		 03,14,
2016		 144,145 0.12
0		 0 0 0  National Taipei University of
Business
 Manager of Operator Department
of THI Logistics.
 Manager of Administrative
Department of THI		  The supervisor of Hiview
Logistics.
 Manager of Internal Audit
Department		 None None None

3.2.3 Remuneration of Directors, Supervisors, President, and Vice President

Remuneration of Directors

Year 2017 Unit: NT$ thousands

16

Title
Name		 Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total
Compensation
(A+B+C+D+E+F
+G) to Net Income
(%)		 Ratio of Total
Compensation
(A+B+C+D+E+F
+G) to Net Income
(%)
Compensation
Paid to
Directors from
an Invested
Company
Other than the
Company’s
Subsidiary
Base
Compensation
(A)
Severance Pay (B)
Bonus to
Directors(C)		 Allowances (D)
Salary, Bonuses, and
Allowances (E)		 Severance Pay (F) Profit Sharing- Employee Bonus (G)
The
com
pan
y
All
companies
in the
consolidate
d financial
statements		 The
company
Companies
in the
consolidate
d financial
statements
The
company
Companies in
the consolidated
financial
statements
The
company		 Companies
in the
consolidate
d financial
statements
The
compa
ny		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company
Companies
in the
consolidate
d financial
statements
The company		 Companies in the
consolidated financial
statements		 The
compa
ny		 Companies in
the
consolidated
financial
statements
Cash Stock Cash Stock
Presi
dent
David
Yen		 0
 0 0 0 5,642 5,642 1,200 1,200 2.85 2.85 0 29,133 0 890 600 0 600 0 3.09 15.60 0
Dire
ctors
Tony Lin
Dire
ctors
Jack Lai
Dire
ctor		 Hope Ocean
International Ltd
Representative:
Ji-Zhi Hsieh
Dire
ctor		 Dynamic Ocean Group
Limited
Representative:
Carl Wei
Dire
ctor		 PCL TRANSASIA
INTERNATIONAL
LTD
Representative:
Eric Lin(Note1)
Dire
ctor		 Li-Chiu Chang
Dire
ctor		 Ming-Hsu Tsai
(Note 1)
Dire
ctor		 Benison Hsu

17

PCL TRANSASIA INTERNATIONAL Dire LTD ctor Representative: Peggy Lin (Note2)

Note1: 2017/02/10 on board.

Note2:2017/02/10 quit.

Range of Remuneration Name of Directors Name of Directors Name of Directors Name of Directors
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
The company Companies in the
consolidated financial
statements		 The company Companies in the
consolidated financial
statements
Under NT$ 2,000,000 David Yen, Jack Lai,
Benison Hsu, Peggy Lin,
Tony Lin, Li-Chiu Chang,
Ming-Hsu Tsai、Carl Wei、
Ji-Zhi Hsieh、Eric Lin

David Yen, Jack Lai,
Benison Hsu, Peggy Lin,
Tony Lin, Li-Chiu
Chang, Ming-Hsu Tsai、
Carl Wei、 Ji-Zhi Hsieh,
Eric Lin		 David Yen, Jack Lai, Benison
Hsu, Peggy Lin, Tony Lin,
Li-Chiu Chang, Ming-Hsu
Tsai、Carl Wei、 Ji-Zhi Hsieh,
Eric Lin
Peggy Lin, Li-Chiu
Chang, Ming-Hsu Tsai、
Carl Wei, Ji-Zhi Hsieh, Eric
Lin
NT$2,000,001 ~ NT$5,000,000 0 0 0 Jack Lai,
NT$5,000,001 ~ NT$10,000,000 0 0 0 Benison Hsu,TonyLin
NT$10,000,001 ~ NT$15,000,000 0 0 0 David Yen
NT$15,000,001 ~ NT$30,000,000 0 0 0 0
NT$30,000,001~ NT$50,000,000 0 0 0 0
NT$50,000,001 ~ NT$100,000,000 0 0 0 0
Over NT$100,000,000 0 0 0 0
Total 10 10 10 10

18

Remuneration of Supervisors

Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands Year 2017 Unit: NT$ thousands
Title Name Remuneration Ratio of Total Remuneration (A+B+C)
to Net Income (%)		 Compensation Paid
to Supervisors from
an Invested
Company Other than
the Company’s
Subsidiary
Base Compensation
(A)		 Bonus to Supervisors(B) Allowances (C)
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in
the consolidated
financial
statements
The
company		 Companies in the
consolidated financial
statements
The company		 Companies in the
consolidated
financial statements
Supervisors
YI-WEI
INVESTMENT
Representative:
Chin-Chou Hsu		 - - 627 627 120 120 0.311 0.311 None
Supervisors Shen-Li Liao - - 627 627 120 120 0.311 0.311 None
Supervisors
BAO-JYUE
INVESTMENT
Representative:
Mao-Jen Chen		 - - 627 627 120 120 0.311 0.311 None
Range of Remuneration Name of Supervisors Name of Supervisors
Total of (A+B+C)
The company Companies in the consolidated
financial statements
Under NT$ 2,000,000 Shen-Li Liao, YI-WEI INVESTMENT Representative:
Chin-Chou Hsu
BAO-JYUE INVESTMENT Representative:
Mao-Jen Chen		 Shen-Li Liao, YI-WEI INVESTMENT Representative:
Chin-Chou Hsu
BAO-JYUE INVESTMENT Representative:
Mao-Jen Chen
NT$2,000,001 ~ NT$5,000,000 0 0

19

NT$5,000,001 ~ NT$10,000,000 0 0
NT$10,000,001 ~ NT$15,000,000 0 0
NT$15,000,001 ~ NT$30,000,000 0 0
NT$30,000,001 ~ NT$50,000,000 0 0
NT$50,000,001 ~ NT$100,000,000 0 0
Over NT$100,000,000 0 0
Total 3 3

Remuneration of the President and Vice President

Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None		 Year 2017 Unit: NT$ thousands
Salary(A)
Severance Pay (B)
Bonuses and
Allowances (C)
Profit Sharing- Employee
Bonus (D)
Ratio of total
compensation
(A+B+C+D) to net
income (%)
Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
Cash Stock
Cash
Stock
4,852
6,912
210
282
1,207
1,667
300
0
300
0
2.74
3.82
None
Title Name Salary(A) Severance Pay (B) Bonuses and
Allowances (C)		 Profit Sharing- Employee
Bonus (D)		 Ratio of total
compensation
(A+B+C+D) to net
income (%)		 Compensation paid to
the President and Vice
President from an
Invested Company
Other Than the
Company’s
Subsidiary
The
company		 Companies in
the
consolidated
financial
statements

The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The company		 Companies in the
consolidated
financial
statements

The
company		 Companies
in the
consolidated
financial
statements
Cash Stock Cash Stock
General
Manager		 Echo Wan 4,852 6,912 210 282 1,207 1,667 300 0 300 0 2.74 3.82 None
Vice
President		 Allen
Hou
Vice
President		 Leo Liu

20

Range of Remuneration
The company Companies in the consolidated
financial statements
Under NT$ 2,000,000 Leo Liu, -
NT$2,000,001 ~ NT$5,000,000 Echo Wan, Allen Hou Leo Liu, Echo Wan, Allen Hou
NT$5,000,001 ~ NT$10,000,000 -
NT$10,000,001 ~ NT$15,000,000
-		 -
NT$15,000,001 ~ NT$30,000,000 - -
NT$30,000,001 ~ NT$50,000,000 - -
NT$50,000,001 ~ NT$100,000,000
-		 -
Over NT$100,000,000 - -
Total 3 3

Unit: NT$ thousands

Title Name Employee
Bonus
- in Stock
(Fair Market
Value)
Employee
Bonus
- in Cash		 Total
Ratio of Total
Amount to Net
Income (%)
Executive
Officers		 General
Manager		 Echo
Wan		 0 400 400 0.17
Vice
President		 Leo Liu
Vice
President		 Allen
Hou
Senior
Manager		 Melonie
Lin

3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

  • A. The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income.

21

Year 2017 2016
The
company		 Companies in the
consolidated
financial statements
The
company		 Companies in the
consolidated
financial
statements
Total remuneration paid to
directors and supervisors.		 9,683 39,706 10,379 46,218
Ratio of total remuneration paid
to directors and supervisors to
net income(%).		 4.03 16.54 7.95 35.42
Total remuneration paid to
presidents and vicepresidents.		 6,569 9,161 14,076 20,582
Ratio of total remuneration paid
to presidents and vice
presidents to net income (%).		 2.74 3.82 10.79 15.77

  • A. Comparing to 2016, the decline of the ratio of total remuneration paid to directors,

  • supervisors, president, and vice president to net income in 2017 was caused by of increasing income profit of 2017 and part of executive of director’s resignation since 31 May, 2016.

  • B. According to the Company’s Article of Incorporation, more than 0.5% of profit of the current year distributable as employees' compensation and less than 0.3% of the current year distributable as directors and supervisors’ compensation shall be definitely specified in the Articles of Incorporation. However, the company's accumulated losses shall have been covered.

  • C. The remuneration of presidents and vice presidents shall be propose by the Remuneration Committee which evaluated and determined in accordance with the individual performance, achievements and the market trends, and submitted to Board of Directors for discussion before sent to the shareholders’ meeting for resolution.

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

A total of 8(A) meetings of the Board of Directors were held in 2017/1/1 to 2018/5/31. The attendance of directors were as follows:

Title Name Attendance in
Person (B)
By Proxy		 Attendance
Rate (%)
【Ｂ/Ａ】		 Remarks
Chairman David Yen 8 0 100.00
Director Hope Ocean International
Ltd Representative:
Ji-Zhi Hsieh		 7 1 87.50
Director Benison Hsu 8 0 100.00

22

Director Dynamic Ocean Group
Limited Representative:
Carl Wei		 7 1 87.50
Director Jack Lai 7 1 87.50
Director Tony Lin 8 0 100.00
Director PCL TRANSASIA
INTERNATIONAL LTD
Representative: Eric Lin		 4 0 80.00 2017.2.10
on board
2018.3.16
resignation
Independent
director		 PCL TRANSASIA
INTERNATIONAL LTD
Representative: PeggyLin		 0 0 0.00 2017.2.10
resignation
Independent
director		 Li-Chiu Chang 6 2 75.00
Chairman Ming-Hsu Tsai 8 0 100.00

Other mentionable items:

  1. If there are circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors’ meetings objected to by independent directors or subject to qualified opinion and recorded or declared in writing, the dates of the meetings, sessions, contents of motion, all independent

directors’ opinions and the company’s response should be specified:

Board Meeting Date Contents of Motion Independent
director’s
opinions and
company’s
response		 Resolution Article 14-3 of
Securities
2017/3/20
(First Meeting in
2017)		 Amendment to the Operational
procedures for Acquisition and
Disposal of Assets.		 No opinion Pass V
Evaluation of 2017 the
Company’s audit fee and
independence.		 No opinion Pass V
Approval of endorsement and
guarantee to the bank loan
contracts for the Company’s
subsidiary-T-Cube logistics.		 No opinion Pass V
2017/5/5
(Second Meeting in
2017)		 Approval of loaning funds to
the Company’s subsidiary-
EXer Logistics from the
Company’s subsidiary- THI
(Shanghai) group.		 The board
agreed that this
case is the final
fundraising		 Pass V
Approval of loaning funds to
the Company’s subsidiary-		 No opinion Pass V

23

Taiwan Express.
Approval of endorsement and
guarantee to the bank loan
contracts for the Company’s
subsidiary-EXer logistics.		 No opinion Pass V
2017/8/11
(Third Meeting in
2017)		 Approval of investing the
private placement shares of
YANG MING MARINE
TRANSPORT CORP.		 No opinion Pass V
Approval of investing the
fundraising of YANG MING
MARINE TRANSPORT
CORP.		 No opinion Pass V
Approval of endorsement and
guarantee to the bank loan
contracts for the Company’s
subsidiary-THI Shanghai
logistics and YaoHwa
International Forwarder.		 No opinion Pass V
Approval of endorsement and
guarantee to the bank loan
contracts for the Company’s
subsidiary-EXer logistics.		 No opinion Pass V
Approval of the contract of
Forward Exchange Agreement		 No opinion Pass V
2017/11/8
(Forth Meeting in
2017)		 Approval of loaning funds to
the Company’s subsidiary-
EXer Logistics from the
Company’s subsidiary- THI
(Shanghai) group.		 The board
agreed to delete
the content of
quarantine
clause		 Pass V
Approval of loaning funds to
the Shanghai Moorluk
International Shipping Co.,Ltd.
from the Company’s
subsidiary- THI (Shanghai)
group.		 No opinion Pass V
2017/12/14
(Fifth Meeting in		 Approval of loaning funds to
the Company’s subsidiary-		 No opinion Pass V

24

2017) Taiwan Express.
2018/3/26
(First Meeting in
2018)		 Amendment to the Operational
procedures for Acquisition and
Disposal of Assets.		 No opinion Pass V
Amendment to the
“Operational Procedures for
Endorsements and
Guarantees”.		 No opinion Pass V
Amendment to the Operational
procedures for Acquisition and
Disposal of Assets.		 No opinion Pass V
Approval of endorsement and
guarantee to the bank loan
contracts for the Company’s
subsidiary-T-Cube logistics.		 No opinion Pass V
2018/5/7
(Second Meeting in
2018)		 Approval for the EXer logistics
fundraising from THI shanghai
logistics.		 No opinion Pass V
Approval of the auditor’s
assignment.		 No opinion Pass V
Approval of loaning funds to
the Company’s subsidiary-
Taiwan Express.		 No opinion Pass V
Approval of the contract of
Forward Exchange Agreement		 No opinion Pass V
Approval of the Company’s
endorsement andguarantee.		 No opinion Pass V

  1. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None.

    1. Measures taken to strengthen the functionality of the board: The Company has followed the “ Rules and Procedures of Board of Directors ” , disclosed the related information at website and established the IR Contact institute to maintain shareholders’ relations. Besides, the Board of Directors also has established a Remuneration Committee to assist the board in carrying out its various duties.

3.3.2 Attendance of Supervisors at Board Meetings

A total of 8 (A) meetings of the Board of Directors were held in 2017/1/1 to 2018/5/31. The attendance of directors were as follows:

25

Title Name Attendance
in Person(B)		 Attendance Rate (%)
【Ｂ/Ａ】		 Remarks
Supervisor YI-WEI INVESTMENT
Representative:
Chin-Chou Hsu		 8 100.00
Supervisor BAO-JYUE INVESTMENT
Representative:
Mao-JenChen		 7 87.50
Supervisor Shen-Li Liao 7 87.50

Other mentionable items:

  1. Composition and responsibilities of supervisors:

  2. (1) Communications between supervisors and the Company's employees and shareholders (e.g. communication channels and methods, etc.): The Company has set up a supervisor’s mailbox: [email protected], so that employees and shareholders have adequate access to the supervisors for communications.

  3. (2) Communications between supervisors and the Company's chief internal auditor and CPA (e.g. items, methods and results of the audits of corporate finance or operations, etc.):

  4. A. Communications with the chief internal auditor: Supervisors hold the supervisors meeting each quarter and maintain minutes of the meetings. The directors, president and the Company's top management are then notified of important discussions and resolutions. All supervisors had attended on each occasion, and the chief internal auditor was also present at the meetings to report on audit operations and major internal auditing matters, including execution, reporting, and monitoring of the supervisors’ instructions. In addition, supervisors obtained audit reports on a monthly basis, which were submitted by the chief internal auditor.

  5. B. Communications with the CPA: Supervisors have held supervisors examination meeting and have obtained the examined reports. All supervisors attended on each occasion, and the CFO, chief internal auditor and CPAs were also present at the meetings to discuss related subjects, including execution, reporting and monitoring of the supervisors’ instructions.

  6. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of the meetings, sessions, contents of motion, resolutions of the directors’ meetings and the company’s response to the supervisor’s opinion should be specified: The board of directors have followed the supervisor’s suggestion to execute the related issues.

26

3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
1. Does the company establish and disclose the
Corporate Governance Best-Practice Principles
based on “Corporate Governance Best-Practice
Principles for TWSE/TPEx Listed
Companies”?		 V The Company has established the Corporate Governance Best-Practice
Principles based on “Corporate Governance Best-Practice Principles for
TWSE/TPEx Listed Companies”. The information has been disclosed on
the Company’s website.		 None
2. Shareholding structure & shareholders’ rights
(1) Does the company establish an internal
operating procedure to deal with
shareholders’ suggestions, doubts, disputes
and litigations, and implement based on the
procedure?
(2) Does the company possess the list of its
major shareholders as well as the ultimate		 V
V		 In addition to the existing hotline and email channels, the Company has
established an internal operating procedure, and has designated
appropriate departments, such as Investor Relations, Public Relations,
and stock affairs to handle shareholders’ suggestions, doubts, disputes
and litigation.
The CEO office is responsible for collecting the updated information of
major shareholders and the list of ultimate owners of those shares.		 None

27

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
owners of those shares?
(3) Does the company establish and execute the
risk management and firewall system within
its conglomerate structure?
(4) Does the company establish internal rules
against insiders trading with undisclosed
information?

V
V		 Rules are made to strictly regulate the activities of trading, endorsement
and loans between the Company and its affiliates. In addition, the
“Criteria of Internal Control Mechanism for a Public Company”,
outlined by the Financial Supervisory Commission when drafting the
guidelines for the “Supervision and Governance of Subsidiaries”, was
followed in order to implement total risk control with respect to
subsidiaries.
To protect shareholders’ rights and fairly treat shareholders, the
Company has established the internal rules to forbid insiders trading on
undisclosed information. The Company has also strongly advocated
these rules in order to prevent any violations.
3. Composition and Responsibilities of the Board
of Directors
(1) Does the Board develop and implement a
diversified policy for the composition of its
members?		 V Member diversification is considered by the Board members. Factors
taken into account include, but are not limited to gender, age, cultures,
educational background, race, professional experience, skills, knowledge		 None

28

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(2) Does the company voluntarily establish
other functional committees in addition to
the Remuneration Committee and the Audit
Committee?
(3) Does the company establish a standard to
measure the performance of the Board, and
implement it annually?		 V and terms of service. The Board objectively chooses candidates to meet
the goal of member diversification.
In order for the sound supervision and reinforcement of management, the
Company established the Nomination and Risk Management Committee
in addition to the Remuneration Committee. These functional
committees shall be responsibilities for the Board of Directors.
The board of directors shall have the knowledge, skills, and experience
necessary to perform their duties. To achieve the ideal goal of corporate
governance, the board of directors shall possess the following abilities:
1. Ability to make operational judgments.
2. Ability to perform accounting and financial analysis.
3. Ability to conduct management administration.
4. Ability to conduct crisis management.
5. Knowledge of the industry.
6. An international market perspective.

29

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(4) Does the company regularly evaluate the
independence of CPAs?		 V 7. Ability to lead.
8. Ability to make policy decisions.
The Company evaluates the independence of CPAs annually, ensuring
that that they are not stakeholders such as a Board member, supervisor,
shareholder or person paid by the Company.
4. Does the Company established a full- (or part-)
time corporate governanceunit or personnel to
be in charge of corporate governance affairs
(including
but
not
limited
to
furnish
information required for business execution by
directors, handle matters relating to board
meetings and shareholders’ meetings according
to laws, handle corporate registration and
amendment registration, record minutes of
board meetings and shareholders meetings,
etc.)?









V
The Chairman appointed the current General Manager as the Company’s
Board secretariat. The board secretariat is in charge of assisting in related
affairs, including furnishing information required for business decisions
by Directors, handling matters relating to Board meetings, Committees
meetings and Shareholders’ meetings and recording minutes of relevant
meetings, handling corporate registration and amendment registration,
communicating with investors and handing shareholders meetings,etc..
None
5. Does the company establish a communication V
The Company provides detailed contact information, including telephone

30

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
channel and build a designated section on its
website for stakeholders, as well as handle all
the issues they care for in terms of corporate
social responsibilities?		 numbers and email addresses in the “IR Relations” section of the
corporate website. In addition, personnel are in place to exclusively deal
with issues of social responsibility, ensuring that various interested
parties have channels to communicate with the Company.
6. Does the company appoint a professional
shareholder service agency to deal with
shareholder affairs?		 V
The Company designates CAPITAL SECURITIES CORP. to deal with
shareholder affairs.		 None
7. Information Disclosure
(1) Does the company have a corporate website
to disclose both financial standings and the
status of corporate governance?
(2) Does the company have other information
disclosure channels (e.g. building an
English website, appointing designated
people to handle information collection and
disclosure, creating a spokesman system,		 V
V
The Company has set up a Chinese/English website
(www.t3ex-group.com.tw) to disclose information regarding the
Company’s financials, business and corporate governance status.
The Company has assigned an appropriate person to handle information
collection and disclosure. Contact person: Linda Hsu, TEL:
+886-2-2753-2093
The Company has established a spokesman system. Investor conference
information is disclosed on the corporate website.		 None

31

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
webcasting investor conferences)?
8. Is there any other important information to
facilitate a better understanding of the
company’s corporate governance practices
(e.g., including but not limited to employee
rights, employee wellness, investor relations,
supplier relations, rights of stakeholders,
directors’ and supervisors’ training records, the
implementation of risk management policies
and risk evaluation measures, the
implementation of customer relations policies,
and purchasing insurance for directors and
supervisors)?		 V Employee rights and wellness are stated in internal policies as required
by relevant laws and regulations. The Company maintains good
relationship with customers and suppliers and fulfills its duties as a
responsible corporate citizen. Internal control, auditing and
self-evaluation procedures are in place, while the Company also
purchases insurance coverage for its directors.		 None
9. The improvement status for the result of Corporate Governance Evaluation announced by Taiwan Stock Exchange.
The Companywas ranked in top21%~35% in Corporate Governance Evaluation in 2017. The implementation status is improving.

32

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee

The Remuneration Committee assists the Board in discharging its responsibilities relating to the Company’s compensation and benefits policies, plans and programs, and the evaluation of the directors’ and executives’ compensation.

The Chairman of the Remuneration Committee convened four regular meetings in 2015. The Remuneration Committee Charter is available on the Company’s corporate website.

A. Professional Qualifications and Independence Analysis of Remuneration Committee Members

Title Criteria
Name
Meets One of the Following Professional Qualification
Requirements, Together with at Least Five Years’ Work
Experience
Meets One of the Following Professional Qualification
Requirements, Together with at Least Five Years’ Work
Experience
Meets One of the Following Professional Qualification
Requirements, Together with at Least Five Years’ Work
Experience		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Independence Criteria
(Note)		 Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Remuneration
Committee
Member		 Remarks
An instructor or
higher position in
a department of
commerce, law,
finance,
accounting, or
other academic
department related
to the business
needs of the
Company in a
public or private
junior college,
college or
university
A judge, public
prosecutor, attorney,
Certified Public
Accountant, or other
professional or
technical specialist
who has passed a
national examination
and been awarded a
certificate in a
profession necessary
for the business of the
Company		 Has work
experience in the
areas of
commerce, law,
finance, or
accounting, or
otherwise
necessary for the
business of the
Company		 1 2 3 4 5 6 7 8
Independent
director		 Li-Chiu
Chang		 V V V V V V V V V
2

Independent
director		 Ming-Hsu
Tsai		 V V V V V V V V V
1
Other Guo-Yuan
Chen		 V V V V V V V V V
None

Note: Please tick the corresponding boxes that apply to a member during the two years prior to being

elected or during the term(s) of office.

  1. Not an employee of the Company or any of its affiliates.

  2. Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.

  3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.

33

  1. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs.

  2. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.

  3. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.

  4. Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.

  5. Not a person of any conditions defined in Article 30 of the Company Law.

B. Attendance of Members at Remuneration Committee Meetings

There are 3 members in the Remuneration Committee.

A total of 3 (A) meetings of the Remuneration Committee were held in 2017/1/1 to

2018/5/30. The attendance of directors were as follows:

Title Name Attendance in
Person (B)
By Proxy		 Attendance
Rate (%)
【Ｂ/Ａ】		 Remarks
Convener Li-Chiu Chang 3 0 100
Committee
Member		 Ming-Hsu Tsai 3 0 100
Committee
Member		 Guo-Yuan Chen 3 0 100

Other mentionable items:

  1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None.

  2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

34

3.3.5 Corporate Social Responsibility

Evaluation Item Implementation Status1 Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Explanation2
1.Corporate Governance Implementation
(1) Does the company declare its corporate
social responsibility policy and examine
the results of the implementation?
(2) Does the company provide educational
training on corporate social responsibility
on a regular basis?		 V
V		 CSR management system has been established to oversee the
Company’s corporate social responsibility, environmental and
occupational health, and implementation of safety measures.
Based on the management system, CSR, environmental, safety,
and health issues can be monitored and addressed. The Company
not only sets up CSR objectives and targets, but also performs
internal & external audits. After each audit, proposals containing
corrective and preventive actions are reviewed by the
management to ensure compliance.
The Company carries out regular trainings sessions and
propaganda on corporate social responsibility with its employees
every year. For new employees, training on personnel rules,
management systems, business ethics, morals, and all other
CSR-related subjects are carried out on their first working day to
clarifytheir due responsibilities and obligations.
None
None
(3) Does the company establish exclusively
(or concurrently) dedicated first-line
managers authorized bythe board to be in
V		 Under the hands-on leadership of our company Chairman and
first-line managers, we have designated dedicated personnel,
striven to internalize CSR aspart of T3EXgroupemployees'		 None

35

Evaluation Item Implementation Status1 Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Explanation2
charge of proposing the corporate social
responsibility policies and reporting to the
board?		 DNA, and embraced international standards in an effort to
become model international corporate citizens.
(4) Does the company declare a reasonable
salary remuneration policy, and integrate
the employee performance appraisal
system with its corporate social
responsibility policy, as well as establish
an effective reward and disciplinary
system?		 V For 2014, the salary remuneration policy has been instituted. In
order to focus our employees on improving their performance
and enhancing the value of T3EX Group, the objective of the
remuneration policy is to ensure that a competitive remuneration
package is maintained and benchmarked with others. In addition,
T3EX Group recently established a new reward and disciplinary
system based on the employee performance appraisal system
which includes our corporate social responsibility policy as one
of the most important criteria for evaluation.
None
2.Sustainable Environment Development
(1) Does the company endeavor to utilize all
resources more efficiently and use
renewable materials which have low
impact on the environment?		 V The major business of the company is international logistics
forwarding which has low impact on environment. At the same
time, the company still focus on enhancing the utilization of
resource and increasing the efficient of trucks and warehouses
through developingsmart logistics.		 None
(2) Does the company establish proper
environmental management systems
based on the characteristics of their
industries?		 V The company has utilized the smart technology to develop smart
logistics. In order to increase the efficient of the trucks and
warehouses and reduce the emission of the CO2.		 None
(3) Does the companymonitor the impact of V The companyis the logistics services industryso the impact of None

36

Evaluation Item Implementation Status1 Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Explanation2
climate change on its operations and
conduct greenhouse gas inspections, as
well as establish company strategies for
energy conservation and carbon
reduction?		 climate change would not have important impact on it. The
company still has strictly controlled the electricity and water
utilization and energy conservation.
3. Preserving Public Welfare
(1) Does the company formulate appropriate
management policies and procedures
according to relevant regulations and the
International Bill of Human Rights?		 V T3EX group not only complies with local regulations but also
upholds the internationally-recognized human rights of workers
and respects the United Nations Universal Declaration on
Human Rights, and the International Labor Organization’s
fundamental conventions on core labor standards. T3EX group
hires all employees equally based on his or her job qualifications
regardless of gender, religion, race, nationality or political
affiliation.		 None
(2) Has the company set up an employee
hotline or grievance mechanism to handle
complaints with appropriate solutions?
V		 T3EX Group offers an Employee Relations Hotline on website
that provides a channel for employees to express their opinions
regarding their work and the overall work environment. The
employee relations team ensures all cases are handled with care
under the supervision of the first-line managers.		 None
(3) Does the company provide a healthy and
safe working environment and organize
training on health and safety for its
employees on a regular basis?		 V The company has provided a healthy and safe working
environment and organize training on health and safety for
employees. The subsidiary also award the AEO certification
which stands for thequalityof workingenvironment.		 None

37

Evaluation Item Implementation Status1 Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Explanation2
(4) Does the company setup a
communication channel with employees
on a regular basis, as well as reasonably
inform employees of any significant
changes in operations that may have an
impact on them?		 V T3EX Group values two-way communications and is committed
to keeping the communication channels between the
management level and their subordinates, as well as among
peers, open and transparent. To ensure that employees’ opinions
and voices are heard, and their issues are addressed effectively,
impartial submission mechanisms, including quarterly
labor-management communication meetings, are in place to
provide timely support. Continuous efforts are made to reinforce
mutual and timely employee communications, based on multiple
channels and platforms, which, in turn, fosters harmonious labor
relations and creates a win-win situation for the Company and its
employees. At the same time, efforts are made to ensure that
employees are informed of currentpolicies.
None
(5) Does the company provide its employees
with career development and training
sessions?		 V T3EX Group not only assesses and provides feedback on
employees’ skills and interests, but also offers training and
development activities that match their career development
objectives andjob needs.		 None
(6) Does the company establish any
consumer protection mechanisms and
appealing procedures regarding research
development, purchasing, producing,
operating and service?		 V The company set up the stakeholder area on
www.t3ex-group.com which can provide the appealing
channel for the customers. At the same time, the company
also build an online service team, THI ONLINE platform
to serve customers.		 None

38

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Explanation2
(7) Does the company advertise and label its
goods and services according to relevant
regulations and international standards?		 V When labeling and advertising its products worldwide, T3EX
Group consistently honors regional and national regulations
without misleading its customers by exaggerating the
informationprovided.		 None
(8) Does the company evaluate the records
of suppliers’ impact on the environment
and society before taking on business
partnerships?		 V The Company has hundreds of suppliers in different regions, and
engages in mutual learning for common progress in the areas of
social and environmental matters, such as hazardous substance
control, environmental protection, labor safety and health,
human rights, conflict metals, and carbon footprint. At the same
time, suppliers are required to voluntarily inform the Company
of any violations against the corporate social responsibility
policy.
None
(9) Do the contracts between the company
and its major suppliers include
termination clauses which come into
force once the suppliers breach the
corporate social responsibility policy and
cause appreciable impact on the
environment and society?		 V The employees will follow the supplier management policy of
the company when signing contracts with suppliers. If suppliers
breach the corporate social responsibility policy and cause
appreciable impact on the environment and society, T3EX
Group may terminate any agreements depend on the supplier
management policy.		 none
4.Enhancing Information Disclosure
(1) Does the company disclose relevant and
reliable information regarding its
corporate social responsibility on its		 V The company set up the stakeholder area on
www.t3ex-group.com which disclosed the relevant and reliable
information regarding the corporate social responsibility.		 None

39

Implementation Status1 Deviations from “the
Corporate Social
Evaluation Item Yes No Abstract Explanation2 Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
website and the Market Observation Post
System(MOPS)?

  1. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: None

  2. Other important information to facilitate better understanding of the company’s corporate social responsibility practices ： A. Since 2013, T3EX Group has been committed to joining the social contributions through cnYES for the disadvantage group. B. The colleagues of T3EX Group helped the intellectually disabled children to sell cookies in one day for showing their caring. C. The subsidiary, Taiwan Express, donated the funds for making angel cakes with Sunny Hills. The funds will help the disadvantage children to finish their study.

  3. D. The company sponsored YANG MING CULTURAL FOUNDATION to hold the 2017&2018 Keelung Child Artist Festival. E. THI logistics Zhengzhou branch donated 50% of reward to Zhengzhou Orphanage in year 2015 to 2016.

  4. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions: None.

40

3.3.6 Ethical Corporate Management

3.3.6 Ethical Corporate Management
Evaluation Item Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
1. Establishment of ethical corporate management
policies and programs
(1) Does the company declare its ethical corporate
management policies and procedures in its
guidelines and external documents, as well as
the commitment from its board to implement the
policies?
(2) Does the company establish policies to prevent
unethical conduct with clear statements
V
V		 The Company’s Ethical Corporate Management
Best-Practice Principles is a guideline to provide
high ethical standards for all employees. The
principles are disclosed in the annual report and on
the company website. The Board of Directors and
the management place the greatest importance in
adopting the highest standards of integrity and
ethics in corporate management and employee
work conduct. Bribery, corruption, deception, and
all other forms of improper conduct are prohibited.
The Company’s Ethical Corporate Management
Best-Practice Principles have established		 None

41

Evaluation Item Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
regarding relevant procedures, guidelines of
conduct, punishment for violation, rules of
appeal, and the commitment to implement the
policies?
(3) Does the company establish appropriate
precautions against high-potential unethical
conducts or listed activities stated in Article 2,
Paragraph 7 of the Ethical Corporate		 preventive measures against the following:
(a) offering and accepting bribes;
(b) illegal political donations;
(c) improper charitable donations or
sponsorship;
(d) Offering or accepting unreasonable gifts or
hospitality, or other inappropriate benefits.
The aforementioned principles and related
regulations were announced and disseminated to
employees, managers and Board of Directors to
enhance integrity and self-discipline.
In order to prevent any unethical conduct, all
employees must disclose any matters that have or
may have the appearance of undermining the
Principle, such as anyactual orpotential conflict

42

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
Management Best-Practice Principles for
TWSE/TPEx Listed Companies?		 of interest.
2. Fulfill operations integrity policy
(1) Does the company evaluate business partners’
ethical records and include ethics-related clauses
in business contracts?
(2) Does the company establish an exclusively (or
concurrently) dedicated unit supervised by the
Board to be in charge of corporate integrity?
V
V		 The Company holds annual business meetings,
conveying our integrity requirements to all our
business partners. In addition, an ethic-related
clause is included in every business contract. If
there is any breach of the clause, the Company
may terminate the partnership at any time without
any further obligation or compensation.
The Company assigned CEO office under the
Board’s supervision and submits reports to the
Board of Directors.		 None

43

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(3) Does the company establish policies to prevent
conflicts of interest and provide appropriate
communication channels, and implement it?
(4) Has the company established effective systems
for both accounting and internal control to
facilitate ethical corporate management, and are		 V
V		 The Company follows the Company Act, the
Securities and Exchange Act, Business Entity
Accounting Act, Political Donations Act, Law
Against Accepting Bribes Act, Government
Procurement Act, Act on Recusal of Public
Servants Due to Conflicts of Interest and other
relevant regulations for listed companies. The
Company also conducts due diligence before
trading with upstream and downstream companies
to minimize the risks. At the same time, the
Company has made a hotline available for
submissions of regarding conflicts of interest.
The Company has established accounting and
internal control systems to ensure integrity in our
operations. After internal auditors have analyzed

44

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
they audited by either internal auditors or CPAs
on a regular basis?
(5) Does the company regularly hold internal and
external educational trainings on operational
integrity?		 V and reviewed the annual audit program according
to the risk evaluation results, the Company will
compiles them into an audit report.
The Company carries out regular training for
employees every quarter. For new employees,
training on ethical rules, conflicts of interest,
business morals, and all other related subjects are
carried out during their first week of work. All
employees are required to receive integrity training
for at least two hours each year.
3. Operation of the integrity channel
(1) Does the company establish both a
reward/punishment system and an integrity
hotline? Can the accused be reached byan		 V The Company establishes various reporting
channels so that employees and relevant people
can report improper business behaviors through		 None

45

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
appropriate person for follow-up?
(2) Does the company establish standard operating
procedures for confidential reporting on
investigating accusation cases?
(3) Does the company provide proper whistleblower
protection?
V
V		 the system. After a confidential investigation,
anyone who violates the regulations on operational
integrity will be punished according to the
Company’s regulations on reward and punishment.
In cases of illegal conduct, legal actions will be
taken as well.
The Company has in place SOPs authorized by the
Board which could be applied on any confidential
investigations on such cases.
The Company takes whistleblower protection
seriously since the core purpose is protection from
unlawful reprisal for diligent employees who step
forward to identify potential wrongdoing. The

46

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
Company has a dedicated hotline for
whistleblower protection whether first-line
managers and the Board if necessary, can directly
review and determine appropriate actions against
reprisal of complaints.
4. Strengthening information disclosure
(1) Does the company disclose its ethical corporate
management policies and the results of its
implementation on the company’s website and
MOPS?
V		 The Company’s Ethical Corporate Management
Best-Practice Principles and the results of our
implementation have been posted on the
Company’s Chinese / English website and MOPS.		 None
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice
Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.
There have been no differences.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and
amend itspolicies).None.

Note: Regardless of whether the evaluation item is achieved or not, the company shall state an appropriate explanation.

47

3.3.7 Corporate Governance Guidelines and Regulations:

Please refer to the Company’s website at www. t3ex-group.com.

3.3.8 Other Important Information Regarding Corporate Governance

  1. The board approved to establish the Corporate Governance & Sustainability Committee on 26, March 2018. To assist the board to supervise the company’s progress of corporate governance and sustainable plan.

  2. The Company instituted the Procedures for Handling Material Inside Information.

3.3.9 Internal Control Systems

  • Statement of Internal Control System:

T3EX Global Holdings Corp

Statement of Internal Control System

Date: March 26, 2018

Based on the findings of self-assessment, T3EX Global Holding Corp states the following with regard to its internal control system in 2017:

  1. T3EX is fully aware that establishing, operating and maintaining an internal control system are the responsibilities of its Board of Directors and management. The aim of the internal control system is to provide reasonable assurance to operating effectiveness and efficiency (including profitability, performance and safeguarding of assets), reliability of financial reporting and compliance of applicable laws and regulations.

  2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the aforementioned three objectives. Moreover, the effectiveness of an internal control system may be subject to changes of environmental or circumstances. Nevertheless, the internal control system of T3EX contains self-monitoring mechanism and T3EX takes corrective actions whenever a deficiency is identified.

  3. T3EX evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal

Control System by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each component further contains several items. Please refer to the Regulations for details.

  1. T3EX has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

  2. Based on the findings of the evaluation mentioned in the preceding paragraph, T3EX believes that, as of December 31, 2017, its internal control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with the

48

applicable laws and regulations, were effective in design and operation, and reasonably assured achievement of the above-stated objectives.

  1. This Statement will be integral part of T3EX’s Annual Report for the year 2017, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Law.

  2. This Statement has been passed by the Board of Directors in their meeting held on March 26, 2018 with zero of night attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

==> picture [105 x 101] intentionally omitted <==

T3EX Global Holdings Corp. David Yen Chairman Echo Wan General Manager

  • If the Company is requested by the SEC to retain CPA’s service for examining internal control system, the Independent Auditor’s Report must be disclosed: None

3.3.10 Major Resolutions of Shareholders’ Meeting and Board Meetings

  • Shareholders’ meeting:
Shareholders’ meeting:
Date Major resolutions Implementation of Resolutions
06,19,2017 1. Approval of the 2016 business report and financial
statements.
2. Approval of the proposal for distribution of 2016 profits
3. Approval of the amendment of the Operational
procedures for Acquisition and Disposal of Assets.		 All resolutions of the
Shareholders’ Meeting have
been implemented in accordance
with the resolutions.
  • Board meeting:
Date: Major resolutions
02,06,2017 Approval of investing the private placement shares of YANG MING
MARINE TRANSPORT CORP.
03,20,2017 1. Approval of the 2016financial statements.
2. Approval of the 2016 audited financial statements.
3. Approval of the distribution of the 2016 compensation of
directors and supervisors and employee bonus.
4. Approval of the distribution of 2016 retained earnings.
5. Proposal for 0 payout ratio of major subsidiaries’ 2016 earnings.
6. Approval of cancellation of the Company’s subsidiary- Wai
Hung Cargo Transport Co., Ltd
7. Approval of the Company’s “Statement of Internal Control
System”.

49

  1. Proposal of the sixth share buyback cancellation. 9. Amendment to the Operational procedures for Acquisition and Disposal of Assets. 10. Amendment to the Corporate Governance Best Practice Principles. 11. Amendment to the Corporate Social Responsibility Best Practice Principles. 12. Approved the scheduling of 2017 annual general shareholders’ meeting. 13. Evaluation of 2017 the Company’s audit fee and independence. 14. Approval of endorsement and guarantee to the bank loan contracts for the Company’s subsidiary-T-Cube logistics. 15. Approval of the bank financial contracts. 05,05,2017 1. Approval of loaning funds to the Company’s subsidiary- EXer Logistics from the Company’s subsidiary- THI (Shanghai) group. 2. Amendment to the “Rule of Manager Retirement”. 3. Approval of loaning funds to the Company’s subsidiary- Taiwan Express. 4. Approval of endorsement and guarantee to the bank loan contracts for the Company’s subsidiary-EXer logistics. 5. Approval of the bank financial contracts. 08,11,2017 1. Approval of Release the Prohibition on Directors from Participation in Competitive Business. 2. Approval of investing the private placement shares of YANG MING MARINE TRANSPORT CORP. 3. Approval of investing the fundraising of YANG MING MARINE TRANSPORT CORP. 4. Purchase D&O insurance for directors and supervisors. 5. Approval of the amendment of the company’s subsidiaries of the Operational procedures for Acquisition and Disposal of Assets. 6. Approval of the bank financial contracts. 7. Approval of endorsement and guarantee to the bank loan contracts for the Company’s subsidiary-THI Shanghai logistics and YaoHwa International Forwarder. 8. Approval of endorsement and guarantee to the bank loan contracts for the Company’s subsidiary-EXer logistics. 9. Approval of the contract of Forward Exchange Agreement. 11,08,2017 1. The assignment of deputy spokesman. 2. The assignment of the subsidiaries’ board of directors. 3. Approval of the amendment of the Rules of Procedure for Board

50

of Directors Meetings. 4. Approval of the Rules of the Scope of Powers of Independent Directors 5. Approval of the downsizing plan of EXer logistics. 6. Approval of loaning funds to the Company’s subsidiary- EXer Logistics from the Company’s subsidiary- THI (Shanghai) group. 7. Approval of loaning funds to the Shanghai Moorluk International Shipping Co.,Ltd. from the Company’s subsidiaryTHI (Shanghai) group. 8. Approval of the bank financial contracts. 9. Approval of the distribution of T.H.I. GROUP VIETNAM CO., LTD’s retained earnings. 12,14,2017 1. Approval of the Year 2018 business plan and financial budget. 2. Approval of the Year 2018 internal audit plan. 3. Approval of loaning funds to the Company’s subsidiary- Taiwan Express. 4. Approval of the bank financial contracts. 03,26,2018 1. Approval of the distribution of the 2017 compensation of directors and supervisors and employee bonus. 2. Approval of the 2017 financial statements. 3. Approval of the 2017 audited financial statements. 4. Approval of the distribution of 2017 retained earnings. 5. Approval for cash distribution out of capital surplus 6. The subsidiaries’ earnings distribution of 2017. 7. Proposal for 0 payout ratio of major subsidiaries’ 2017 earnings. 8. Approval of the Company’s “Statement of Internal Control System”. 9. Amendment to the Operational procedures for Acquisition and Disposal of Assets 10. Amendment to the “Procedures for Ethical Management and Guidelines for Conduct” 11. Amendment to the “Operational Procedures for Endorsements and Guarantees”. 12. Institute the standard to measure the performance of the Board. 13. Approved the scheduling of 2018annual general shareholders’ meeting. 14. Evaluation of 2018 the Company’s audit fee and independence. 15. Approved the assignment of the subsidiaries of board of directors. 16. Instituted the Corporate Governance and Sustainability Committee and approved the 2017 CSR report project.

51

  1. Approval of the bank financial contracts. 18. Approval of endorsement and guarantee to the bank loan contracts for the Company’s subsidiary-T-Cube logistics. 05,07,2018 1. Approval for the EXer logistics fundraising from THI shanghai logistics. 2. Approval of the assignment of Shanghai Moorluk International Shipping Co.,Ltd board of directors. 3. Approval of the auditor’s assignment. 4. Approval of the scope and outline of 2017 CSR report. 5. Approval of loaning funds to the Company’s subsidiary- Taiwan Express. 6. Approval of the bank financial contracts. 7. Approval of the Company’s endorsement and guarantee. 8. Approval of the contract of Forward Exchange Agreement.

3.3.11 Major Issues of Record or Written Statements Made by Any Director or

Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None.

3.3.12 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D: None

3.4 Information Regarding the Company’s Audit Fee and Independence 3.4.1 Audit Fee

Accounting Firm Name of CPA Period Covered by CPA’s
Audit		 Remarks
KPMG
Accounting Firm		 Peggy Chen &
HENG- SHENG LIN		 2017.01.01~2017.12.31

Note: If the Company has changed CPA or Accounting Firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason.

Unit: NT$ thousands

Fee Items
Fee Range		 Fee Items
Fee Range		 Audit Fee Non-audit Fee Total
1 Under NT$ 2,000,000 709 709
2 NT$2,000,001 ~ NT$4,000,000
3 NT$4,000,001 ~ NT$6,000,000 4,530 4,530
4 NT$6,000,001 ~ NT$8,000,000
5 NT$8,000,001 ~ NT$10,000,000
6 Over NT$100,000,000

52

Unit: NT$ thousands

Accounting
Firm		 Name of
CPA
Audit
Fee		 Non-audit Fee Non-audit Fee Period Covered by
CPA’s Audit		 Remarks

System
of
Design		 Company
Registration		 Human
Resource
Others		 Subtotal
KPMG
Accounting
Firm		 Peggy
Chen		 4,530
-		 - - 709 709 2017/1/1~2017/12/31 None-Audit Fee
Others: TP Fee, Audit
report translation.
HENG-
SHENG
LIN

3.4.2 Replacement of CPA: None

A. Regarding the former CPA

Replacement Date May 7, 2018 May 7, 2018 May 7, 2018 May 7, 2018 May 7, 2018
Replacement
reasons
and
explanations
KPMG Accounting Firm internal rotation.
Describe whether the Company
terminated or the CPA did not
accept the appointment
Parties
Status
CPA		 The Company
Termination
of
appointment
None		 None
No
longer
accepted
(continued)
appointment
None		 None
Other
issues
(except
for
unqualified issues) in the audit
reports within the last twoyears

None
Differences with the company Yes - Accounting principles or practices
- Disclosure of Financial Statements
- Audit scope or steps
- Others
None
Remarks/specifydetails:
Other Revealed Matters None

53

B. Regarding the successor CPA

B. Regarding the successor CPA
Name of accounting firm KPMG Accounting Firm
Name of CPA WistonYu and MeganWu
Date of appointment May 07, 2018
Consultation results and opinions on
accounting treatments or principles with
respect to specified transactions and the
company's financial reports that the
CPA
might
issue
prior
to
the
engagement.		 None
Succeeding CPA’s written opinion of
disagreement toward the former CPA		 None

3.4.3 Audit Independence

The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates during 2017.

3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Unit: Shares

Title Name 2017 2017 As of May.30, 2018 As of May.30, 2018
Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)		 Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)
Chairman David Yen 15,000
-
-
-
Director TonyLin -
-
-
-
Director Jack Lai -
-
-
-
Director Hope Ocean International Ltd -
-
-
-
Representative:Ji-Zhi Hsieh -
-
-
-
Director Dynamic Ocean GroupLimited -
-
-
-
Representative: Carl Wei (3,000) -
-
-
Independent Director Li-Chiu Chang -
-
-
-
Independent Director Ming-Hsu Tsai -
-
-
-
Director Benison Hsu -
-
-
-
Director PCL TRANSASIA INTERNATIONAL
LTD(03,16,2018 dismissed)
-
-
-
-
Representative:Peggy Lin
(02,10,2017 dismissed)		 - None
Representative: Eric Lin
(03,16,2018 dismissed)		 -
-
-
-
Supervisor YI-WEI INVESTMENT -
-
-
1,296,000
Representative: Chin-Chou Hsu -
-
-
-
Supervisor BAO-JYUE INVESTMENT -
-
-
-
Representative: Mao-Jen Chen -
-
-
-

54

Title Name 2017 2017 As of May.30, 2018 As of May.30, 2018
Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)		 Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)
Supervisor Shen-Li Liao -
-
-
-
Vice President Leo Liu(08,31,2017 dismissed) -
-
None
Vice President Allen Hou (3,000) -
-
-
General Manager Echo Wan (38,119) -
-
-
Manager of The Internal
Audit Department
Melonie Lin		 -
-
-
-

3.5.1 Shares Trading with Related Parties: None.

3.5.2 Shares Pledge with Related Parties: None.

3.6 Relationship among the Top Ten Shareholders

As of As of 04/28/2018 Unit: shares/ % 04/28/2018 Unit: shares/ %
Name Current
Shareholding		 Spouse’s/min
or’s
Shareholding		 Shareholding
by Nominee
Arrangement		 Name and Relationship Between
the Company’s Top Ten
Shareholders, or Spouses or
Relatives Within Two Degrees		 Rema
rks
Shares Shares Shares % Shares % Name Relationship
Dynamic
Ocean
Group
Limited		 3,912,398 3.30 - - - - Hope Ocean
International Ltd		 Same
Representati
ve		 -
Representative: David Yen 796,490 0.67 -
Hope Ocean International
Ltd		 3,339,143 2.82 - - - - Dynamic Ocean
Group Limited		 Same
Representative		 -
Representative: David Yen 796,490 0.67 - - - - -
YOU-YI Ltd 3,225,000 2.72 -
-
-
-
None
 None -
Representative: GUO-YAN
LIAO		 1,420,000 1.20 -
-
-
-		 -
CHANG-JIE International 3,078,969 2.60 - - - - PEI-SI LIMITED Spouses with
the
representative.		 -
Representative:
Benison Hsu		 1,191,762 1.01
Yu-Lian ZengLi 2,552,000 2.15 -
-
-
-		 None None -
CING-LAI YANG 2,061,798 1.74 -
-
-
-		 None None -
Custodian Bank of Taiwan
Investment Account of
Global Flexible
International Parners		 2,054,565 1.73 -
-
-
-		 None None -
LongYinginvestment Ltd 1,938,229 1.63 -
-
-
-		 None None -
Representative:
Hsiao-Hui Chiu		 - - -
-
-
-		 None None -
Jack Lai 1,917,552 1.61 - - - - None None -
PEI-SI LIMITED 1,792,611 1.51 - - - - CHANG-JIE
International		 Spouses with
the
representative		 -
Representative:
TSAI- CHUAN Liu		 - -

55

3.7 Ownership of Shares in Affiliated Enterprises

Unit: shares/ %

Affiliated
Enterprises		 Ownership by the Company Ownership by the Company Direct or Indirect
Ownership by
Directors,
Supervisors,
Managers		 Direct or Indirect
Ownership by
Directors,
Supervisors,
Managers		 Total Ownership Total Ownership
Shares % Shares
%		 Shares %
T.H.I. GroupLtd(in BVI) 1,000,000 100 0
0		 1,000,000 100
Greatline International
Limited		 4,050,000 100 0
0		 4,050,000 100
T.H.I. GROUP VIETNAM
CO.,LTD		 4,950,000,000 99 0
0		 99 51
T.H.I. GROUP (BANGKOK)
CO., LTD.
0		 49 0
0		 0 49
THI & Maruzen Co.,Ltd. 0 51 0
0		 0 51
T.H.I. GROUP
SINGAPORE PTE. LTD.		 850,000 91.40 0
0		 850,000 91.40
THI Logistics (Malaysia)
SDN BHD		 180,000 90 0
0		 180,000 90
Fresh BeautyEnterprise Ltd. 60 60 0
0		 60 60
Eastern union holdings
limited		 0 60 0
0		 0 60
LOGI International Co.,Ltd. 16,285 30 0
0		 16,285 30
Taiwan Express
Logistic Co.,Ltd.		 35,958,400 100 0
0		 35,958,400 100
T.H.I. Logistics
Ltd		 13,000,000 100 0
0		 13,000,000 100
T.H.I. GROUP
(CAMBODIA)CO.,LTD.		 0 100 0
0		 0 100
PT. Dexter Eurekatama 12,000 30 0
0		 12,000 30
T.H.I. GroupLtd(in HK) 12,480,000 100 0
0		 12,480,000 100
T.H.I. Group
(Shanghai)Ltd.		 0 100 0
0		 0 100
Shanghai Yaohwa
International Forwarder Co.,
Ltd.		 0 100 0
0		 0 100
Shanghai Moorluk
International Shipping
Co.,Ltd.		 0 30 0
0		 0 30
Taiwan Express
(HK)Co.,Ltd.		 0 100 0
0		 0 100
EXer Logistics Co.,Ltd. 0 84.195 0
0		 0 84.195

56

T-Cube Global Logistics Co.,
Ltd		 0 60 0
0		 0 60
TEC Logistics
Co.,Ltd		 1,000,000 100 0
0		 1,000,000 100
Orient Air General Sales
Agent Co.,		 60,000 30 0
0		 60,000 30
Hiview Logistics
Co.,Ltd		 5,000,000 97.51% 0
0		 5,000,000 97.51
Taiwan Express(USA)INC. 100,000 100 0
0		 100,000 100
TEC LOGISTICS(USA),
INC		 200 100 0
0		 200 100
TEC Logistics
(Shenzhen)Co.,Ltd.		 0 100 0
0		 0 100

IV. Capital Overview 4.1 Capital and Shares 4.1.1 Source of Capital

A. Issued Shares

As of 04/28/2018 As of 04/28/2018 As of 04/28/2018
Month/
Year		 Par
Value
(NT$)		 Authorized Capital Paid-in Capital Remark
Shares Amount
(NT$ thousands)		 Shares Amount
(NT$ thousands)		 Sources of Capital Capital
Increased
by
Assets
Other
than Cash
Other
04,2015 10 120,000 1,200,000 101,477 1,014,755 Issuing new shares for
conversion of Convertible
bond NT$74,310 thousand
and issuing employee stock
option NT$300thousand.		 none 04/02/2015
Jin So Son Tzi
No.10401056120
08,2015 10 120,000 1,200,000 111,478 1,114,776 Issuing new shares for
capital fundraising
NT$100,000 thousand.		 none 08/19/2015
Jin So Son Tzi
No.10401172110
09,2015 10 120,000 1,200,000 115,107 1,151,067 Issuing new shares for
earnings capitalization
NT$36,291 thousand.		 none 09/25/2015
Jin So Son Tzi
No.10401199780
12,2015 10 120,000 1,200,000 116,042 1,160,421 Issuing new shares for
conversion of Convertible
bond NT$6,049 thousand
and issuing employee stock
option NT$3,305thousand.		 none 12/01/2015
NO.10401250280
08,2016 10 120,000
1,200,000		 118,335 1,183,347 Issuing new shares for
earnings capitalization
NT$22,927 thousand.		 none 08/17/2016
Jin So Son Tz
No.10501198620
11,2016 10 120,000
1,200,000		 118,972 1,189,723 Issuing new shares for
conversion of Convertible
bond NT$2,296 thousand
and issuing employee stock
option NT$4,080thousand.		 none 11/25/2016
Jin So Son Tz
NO.10501272680
04,2017 10 120,000
1,200,000		 118,565 1,185,654 Issuing new shares for
conversion of Convertible
bond NT$19,296 thousand,		 none 04/17/2017
Jin So Son Tz
No.10601043760

57

issuing employee stock option NT$275thousand, and cancelling buy back shares NT$23,640thousand.

B. Type of Stock

Share Type Authorized Capital Authorized Capital Remarks
Issued Shares Un-issued Shares Total Shares
Public Shares Private Shares
Note1
Common Share
118,565,402		 0 1,434,598 120,000,000

C. Information for Shelf Registration: None.

4.1.2 Status of Shareholders

As of 04/28/2018

As of 04/28/2018
Item Government
Agencies		 Financial
Institutions		 Other
Juridical
Persons		 Domestic
Natural
Persons		 Foreign
Institutions &
Natural Persons		 Total
Number of
Shareholders		 0 1 167 22,090 63 22,321
Shareholding
(shares)		 0 100,000 21,901,863 76,065,767 20,497,772 118,565,402
Percentage (%) 0 0.08 18.47 64.16 17.29 100.00

4.1.3 Shareholding Distribution Status

A. Common Shares

As of 4/28/2018

Class of Shareholding
(Unit: Share)		 Number of
Shareholders		 Shareholding (Shares) Percentage
1 ~ 999 14,524 508,730 0.43
1,000 ~ 5,000 5,467 11,197,612 9.44
5,001 ~ 10,000 1,104 8,153,672 6.88
10,001 ~ 15,000 426 5,082,438 4.29
15,001 ~ 20,000 215 3,857,952 3.25
20,001 ~ 30,000 193 4,690,905 3.96
30,001 ~ 40,000 95 3,259,880 2.75
40,001~50,000 50 2,293,134 1.93
50,001 ~ 100,000 132 9,424,364 7.95
100,001 ~ 200,000 55 7,868,565 6.64
200,001 ~ 400,000 19 5,404,832 4.56
400,001 ~ 600,000 8 3,969,664 3.35
600,001 ~ 800,000 7 5,227,103 4.41
800,001 ~ 1,000,000 1 929,564 0.78
1,000,001 or over 25 46,696,987 39.39
Total 22,321 118,565,402 100.00

58

B. Preferred Shares: The Company did not issue any preferred shares.

4.1.4 List of Major Shareholders

4.1.4 List of Major Shareholders
As of 4/28/2018
Shareholder's Name Shareholding
Shares Percentage
Dynamic Ocean GroupLimited 3,912,398 3.30
Hope Ocean International Ltd 3,339,143 2.82
YOU-YI Ltd 3,225,000 2.72
CHANG-JIE International 3,078,969 2.60
Yu-Lian ZengLi 2,552,000 2.15
CING-LAI YANG 2,061,798 1.74
Custodian Bank of Taiwan Investment 1.73
Account of Global Flexible International 2,054,565
Parners
LongYinginvestment Ltd 1,938,229 1.63
Jack Lai 1,917,552 1.62
PEI-SI LIMITED 3,474,611 1.51

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$ Unit: NT$
Items 2016 2017 01/01/2018-05/30/2018
Market Price per Share
Highest Market Price 30.30 27.70 26.20
Lowest Market Price 19.00 20.10 21.50
Average Market Price 23.29 22.77 23.80
Net Worth per Share
Before Distribution 18.90 19.23 20.03
After Distribution 17.86 － －
Earnings per Share
Weighted Average Shares
(thousand shares)		 117,184 115,867 115,796
Diluted Earnings Per Share 1.11 2.07 0.54
Adjusted Diluted Earnings Per Share － － －
Dividends per Share
Cash Dividends 0.8 1.4（Note 4） －
Stock Dividends
 Dividends from Retained Earnings － － －
 Dividends from Capital Surplus － － －

59

Accumulated Undistributed Dividends － － －
Return on Investment
Price / Earnings Ratio (Note 1) 20.98 11 －
Price / Dividend Ratio (Note 2) 29.11 16.26 －
Cash Dividend Yield Rate (Note 3) 3.43% 6.15% －

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 4: Earning Distribution was already approved by the Company’s board of director on 03/26/2018 but not be approved by shareholders’ meeting.

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

The distribution of the dividends of the Company will coordinate with the surplus of that year based on the principle of stabilization. The board of directors shall propose the allocation ratio and propose it at the shareholders’ meeting. The appropriated earnings shall more than 50% of the current year after tax profit. If the earnings available for appropriation less than the current year after tax profit, it shall be allocated in earnings available for appropriation. Cash dividends shall not be less 10% of total shareholder dividends.

B. Proposed Distribution of Dividend

The proposal for the distribution of 2017 profits was passed at the meeting of the board of directors on 03 26, 2018. The Company had a proposal for withdrawing NT$ 104,216,762 from distributable earnings for cash dividends, and the Company also had a proposal for distributing NT$46,318,561 from capital surplus. It will be discussed at the annual shareholders’ meeting.

4.1.7The Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate:

Pursuant to Regulations Governing the Publication of Financial Forecasts of Public Companies, the Company don’t disclose financial forecast. It does not apply.

4.1.8 Employee and Directors' and Supervisors' Remuneration ：

  • A. Information Relating to Employee Bonus and Directors’ and Supervisors’ Remuneration in the Articles of Incorporation:

  • More than 0.5% of profit of the current year distributable as employees' compensation and less than 0.3% of the current year distributable as directors and supervisors’ compensation shall be definitely specified in the Articles of Incorporation. However, the company's accumulated losses shall have been covered.

  • B. The Estimated Basis for Calculating the Employee Bonus and Directors’ and Supervisors’ Remuneration

  • I. 0.5% of profit before tax for employees’ compensation and 3% of profit before tax for directors and supervisors’ compensation.

  • II. Shall there be any difference between the actual amount of dividend approved by Board of Directors Meeting and that of the estimation, it will be deemed as the changes in accounting estimates and will be recognized

60

in the profit and loss account of the distributing year.

  • C. Profit Distribution for Employee and Directors’ and Supervisors’ Remuneration for 2017 Approved in Board of Directors Meeting:

  • I. Proposed distribution of cash dividend to employees and remuneration to directors.

  • The proposal for the distribution of 2017 remuneration was passed at the meeting of the board of directors on 03 26, 2018.

  • a. Employee Remuneration – in Cash: NT$1,253,737

  • b. Directors' and Supervisors' Remuneration: NT$ 7,522,416

  • II.Proposed stock dividend to employees and its ratio to total net income and total dividend to employees: None.

  • 4.1.8 The Actual Distribution of the Employee and Directors' and Supervisors' Remuneration in Last Year ：

Remuneration in Last Year： Remuneration in Last Year： Remuneration in Last Year：
Item Actual
Distribution		 Income
Statement		 Variation Resolution
Employee Remuneration – in
Cash		 691,803 691,803 0 None
Directors' and Supervisors'
Remuneration		 4,150,809 4,150,809 0
4.1.9 Buyback of Treasury Stock
Treasury stocks:
BatchOrder		 4thBatch 5thBatch 6thBatch (Note) 7thBatch
Purpose of
buy-back		 Transfer to
employee		 Transfer to employee Maintain the company's
credit and shareholders'
rights andinterests.

Transfer to employee
Timeframe of
buy-back		 2015/09/09~
2015/09/11		 2015/12/22~
2016/02/16		 2016/12/14~
2017/01/11		 2017/01/23~
2017/02/10
Price range 18.00~39.00 per
share		 21.00~33.00 per share 15.00~25.00 per share 15.00~25.00 per share
Class, quantity of
shares bought back		 220,000 shares 1,188,000 shares 2,364,000 shares 1,361,000 shares
Value of shares
bought-back (in
NT$ thousands)		 5,697,700 32,846,365 51,610,776 28,785,357
Shares
sold/transferred		 0 0 2,364,000 shares
cancelled		 0
Accumulated
number of company
sharesheld
220,000 shares		 1,408,000 shares 1,408,000 shares 2,769,000 shares
Percentage of total
company shares
held(%)		 0.19% 1.19% 1.19% 2.34%

4.2 Bonds

4.2.1 Corporate Bonds

4.2 Bonds
4.2.1 Corporate Bonds
Corporate Bond Type 3rd Domestic Unsecured Convertible Bond
Issue date June9,2015
Denomination NT$10,000,000
Issuingand transaction location Taipei Exchange
Issueprice Issue bydenomination
Totalprice NT$300,000,000

61

Coupon rate Coupon rate 0%
Tenor 3 years
Maturity: June9,2018
Guarantee agency None
Consignee E.SUN Bank
Underwriting institution KGI SECURITIES
Certified lawyer Handsome Attomeys-at-law, YA-WEN CHIU
CPA KPMG Accounting Firm
Peggy Chen &
HENG- SHENG LIN
Repayment method Unless previously redeemed, repurchased and
cancelled or converted, the bonds will be
repayin lumpsum upon maturitywith cash.
Outstanding principal NT$232,300,000
Terms of redemption or advance
repayment		 Pursuant on the Rules of 3rd Domestic
Unsecured Convertible Bond
Restrictive clause Pursuant on the Rules of 3rd Domestic
Unsecured Convertible Bond
Name of credit rating agency, rating date,
ratingof corporate bonds		 None
Other
rights
attached		 As of the printing date of this
annual report, converted
amount of (exchanged or
subscribed) ordinary shares,
GDRs or other securities		 The bond has converted 16,835 shares.
Issuance and conversion
(exchange or subscription)
method		 Pursuant on the Rules of 3rd Domestic
Unsecured Convertible Bond
Issuance and conversion, exchange or
subscription method, issuing condition
dilution, and impact on existing
shareholders’ equity		 None
Transfer agent None

4.2.2 Convertible Bonds

4.2.2 Convertible Bonds 4.2.2 Convertible Bonds
Corporate bond type 3rd Domestic Unsecured Convertible Bond

Item		 Year
 2017 2018/1/1~2018/5/30
Market
price of the
convertible
bond		 Highest 112.00 106.00
Lowest 100.65 99.60
Average 106.97 100.96
Convertible Price NT$25.9 NT$25.9

62

per share
Issue date and conversion
price at issuance		 Issue Date: 2015/6/9
Conversionprice at issuance: NT$32.6/share
Conversion methods Issuingof new stocks

4.2.3 Exchangeable Bonds: None

4.2.4 Shelf Registration for Issuing Bonds: None

4.2.5 Corporate Bonds with Warrants: None

4.3 Global Depository Receipts: None

4.4 Employee Stock Options: None

4.4.1 Issuance of Employee Stock Options: None

4.4.2 List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock Options: None

4.4.4 List of Executives Receiving New Restricted Employee Shares and the Top Ten Employees with New Restricted Employee Shares: None.

4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.

4.6 Financing Plans and Implementation

In the Company’s past three years and as of the date the annual report is printed, for the previous capital increase plans which have not been completed, or the implementation completion dates of which are less than three years away from the reporting (application) dates, the relevant plan contents and implementation status are explained as follows:

  • 4.6.1. Capital increase plan in 2015 and the 3rd domestic unsecured convertible bond:

  • Total funds required for the plan: NT$600.6 million

  • Source of funds:

  • (1) 10,000,000 ordinary shares for capital increase were issued with a par

    • value of NT$10 each and an issuing price of NT$25. The expected amount to be raised was NT$250 million. The case was declared to the FSC and effective based on the FSC’s letter dated May 13, 2015 ref. Jin-Guan-Zheng-Fa No. 1040014509.

  • (2) 3,000 3rd domestic unsecured convertible bonds were issued with a par value of NT$100,000 each and a same issuing price as the par value. The expected amount to be raised was NT$300 million with a duration of three years and a coupon rate of 0%. The case was declared to the FSC and effective based on the FSC’s letter dated May 13, 2015 ref. Jin-Guan-Zheng-Fa No. 10400145091.

  • The Plan and Progress Schedule ：

Unit: NT$ thousands

Item The End of
Projected
Date		 Total
Amount		 Progress
Schedule
2Q 2015

63

Repayment
Bank Debt		 2Q 2015 250,000 520,000
The Projected
Benefits		 The Company in the financing projects expects to
use NT$250 million for the repayment of bank
loans to reduce the interest burden of borrowing
from financial institutions. It is expected that the
interest expense can be reduced by about
NT$5,177,000 which will appropriately alleviate the
financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks

Unit: NT$ thousands

financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks
Unit: NT$ thousands		 financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks
Unit: NT$ thousands		 financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks
Unit: NT$ thousands		 financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks
Unit: NT$ thousands		 financial burden of the Company and enhance the
solvency, as well make the financial structure sound
to facilitate the Company's overall operation
development and reduce liquidityrisks
Unit: NT$ thousands
Item The End
of
Projected
Date
Total
Amount
Progress Schedule
2Q 2015
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2015 4Q 2015 1Q 2016 2Q 2016
Operation
Capital
Increasing		 2Q 2016 350,600
40,000		 175,000 45,000 45,000 45,600
The
Projected
Benefits		 In the project NT$350.6 million will be used to replenish working capital.
According to the Company’s average short-term bank borrowing rate of
1.30%, it is expected that the interest expense can be reduced by about
NT$1,899,000 in 2015 and NT$4,558,000 in each of the following years.
  1. The implementation of finance plan：
Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Item Total
Amount		 Implementation Accumulated 4Q
2015		 1Q 2016 Accumulated
1Q2015		 The Reason
of Ahead or
Behind of
Schedule
Repayment
Bank Debt		 250,000 Amount Projected 250,000
-		 - Projected 250,000


Actual 250,000
-		 - Actual 250,000

Executive
Progress
(%)		 Projected
100%
-		 - Projected
100%
Actual 100%
-		 - Actual 100%
Operation
Capital		 350,600
Amount		 Projected 260,000 Projected 45,000 Projected 305,000 The
expense
expenditure
was higher
Actual 302,156 Actual 48,444 Actual 350,600
Increasing Executive Projected 74.16% Projected 12.84% Projected 86.99%

64

Progress
(%)		 Actual 86.18% Actual 13.82% Actual 100%
than
projected
plan.
Total 600,600 Amount Projected 510,000 Projected 45,000 Projected 555,000


Actual 552,156 Actual 48,444 Actual 600,600

Executive
Progress
(%)		 Projected 84.91% Projected 7.49% Projected 92.40%
Actual 91.93% Actual 8.07% Actual 100%
  1. This financing project (capital increase +CB) is mainly for repayment of bank loans and increase operating capital to improve the financial structure and enhance the competitiveness of the Company’s operation:
Note: Current Ratio Total Liabilities/Total
Assets
Before Fundraising
(Year2014)		 138.36 56.18
After Fundraising
(Year 2015)		 206.67 46.77

Note: Audited Financial Report

I. Operational Highlights

5.1 Business Activities

With the fast pace of development, today the business scope of the Company and its subsidiaries includes ocean freight, air freight, customs declaration, warehousing, inland transportation, supply chain management, e-commerce, logistics and other integrated logistics services. There are global operating locations throughout Taiwan, China, Northeast Asia, Southeast Asia and other areas. As a professional integrated logistics service provider, in addition to actively expand overseas strongholds, it works with strategic alliance partners both at home and abroad to enhance its competitive advantage. Internally the Company adopts professional information management and strictly requires the operation norm of staff and services to provide customers with a full range of logistic services.

5.1.1 Business Scope

  • (1)The main content of business:

  • A. International freight:

  • a. Ocean freight.

  • b. Air freight.

  • c. Cross Border China-Europe Rail Transport.

  • B. Domestic logistics:

  • a. Customs declaration.

65

b. Warehousing.

  • c. Inland transportation.

  • C. Supply chain management and customize services.

D.E-commerce logistics.

  • E. The design and plan of logistics

  • F. The logistics related investments.

  • (2) Revenue distribution:

Unit ； NT$ thousands

Main Business 2015 2015 2016 2016 2017 2017 2018Q1 2018Q1
Sales % Sales % Sales % Sales %
International Ocean Freight 5,932,345
60.93		 5,573,415 57.20 5,904,952 56.04 1,408,822 57.75
International Air Freight 2,538,009
26.07		 2,524,980 25.91 3,003,392 28.50 660,773 27.09
Logistics 1,266,558
13.00		 1,645,718 16.89 1,628,664 15.46 369,837 15.16
Total 9,736,912 100.00 9,744,113 100.00 10,537,008 100.00 2,439,432 100.00

(3) Main products:

A. Ocean freight

The Company and its subsidiaries have flexible price and cargo space abilities and decades of stable cooperation with shipping companies and agents with a NVOCC business certificate. In the China Freight Industry Awards sponsored by China Shipping Weekly which is regarded by the industry as the "Oscar for the shipping industry", the subsidiary T.H.I. group (Shanghai) Ltd. received a top 10 award on integrated freight forwarding services and top three on network coverage, and has cargo space contracts with 2M Alliance 、 Ocean Alliance 及 THE Alliance. The focus is mainly the Transpacific Coast lines, and it constantly opens up new lines in North Continental Port, Middle East, South America, Eastern Mediterranean and Southeast Asia. Based on its dense service locations in Greater China and the Asia Pacific region, combined with cooperative agencies throughout the world, the Company provides customers with Less than full container load (LCL) single container order services, Full container load (FCL) services, Special container transport, Door-to-door services, Sea-air transport service , and Sea-air-land transport services. B. Air freight:

The Company and its subsidiaries provide transnational corporate service and customized cargo transportation planning capability, are issued Class I and II air accreditation certificates by Civil Aviation Administration of China. The Company’s subsidiary-Taiwan Express acquired “Hala Certification” which issued by JAKIM. The Company’s subsidiaries also

66

received air freight agent qualification from major global airlines such as EVA, China Airlines (CI), Cathay Pacific (CX), China Eastern Airlines (MU), Air China(CA), XIAMEN Airlines (MF), Hong Kong Aviation (HX), Air Canada(AC), ANA(NH), Turkish Airlines(TK), Thai Airways(TG), British Airways(BA), LATAM Chile(LA), Air Asia(D7), Qatar Airways(QR), KLM Royal Dutch Airlines(KLM), Korean Air(KE),Vietnam Airlines(VN), Asiana Airlines, etc., as well as the freight agent qualification in Taiwan area from Air New Zealand (NZ), Russian Aviation (RU), Iceland Air (FI), Tampa La (TA) and Brunei Airlines (BI). The Company cooperates with global agents to provide global transportation arrangements, Less than full container load (LCL) services, combined land, sea and air multimodal transport, import transportation, bill of lading production and goods packaging services, special cargo export arrangements, commodity inspection, sanitation inspection and animal and plant quarantine service.

  • C. Domestic logistics:

  • a. Customs declaration: The Company is the top 5 customs broker in Taiwan and also an AA grade customs broker in China with locations in major ports and airports. It has set up customs departments to provide enterprises of all types with inspection, customs clearance/declaration, customs inspection, checking and other services, and according to the customer’s business nature customizes logistic solutions in special customs-supervised areas.

  • b. Warehousing services: With the support of advanced WMS system, the Company’s warehousing management team has advanced management and application equipment, is equipped with an upscale safety control system and obtained ISO9001 2008 international quality management system certification to provide versatile storage management services. The Company has its own warehouses in major locations, and cooperates with local warehousing and storage vendors in other service locations to provide customers with a base for transit.

  • c. Inland transportation: The Company’s customized delivery team is supported with a TMS system and full cargo transportation tracking mechanism (GPS), has formed vehicle fleets in the operations locations in Taiwan, Hong Kong, Shenzhen, Guangzhou and Shanghai, and cooperates with local transportation vendors in other locations. The modes of transportation include roads and railways, and the distribution objects cover factories, dealers, shopping malls and supermarkets.

67

  • d. E-commerce logistics: The Company provides customers with comprehensive logistics warehousing distribution solutions, integrating the group resources, and customized terminal delivery services which truly solve the customer's logistics, capital flow, and information flow problems.

  • D. Cross Border China-Europe Rail Transport:

The Company has more than 30 offices in China and the long-term cooperation of dozens of agencies in Europe and Asia. It provides door-to-door domestic transportation, transit, and bonded warehouse arrangements.

  • E. Supply chain management ：

The Company uses the Group’s sea, air and land resources and global cooperative agents to provide customers with services for procurement of raw materials, warehousing management of raw materials and finished products in the production process, packaging, sorting, labeling, inspection, transit and distribution, as well as helping customers in marketing channel establishment and maintenance. The Company provides a full range of logistics management services for customer relationship management and maintenance and information feedback.

F. Customized services ：

  • a. With the customized sea and air transport, sea and river transport, sea and railway transport and joint sea transport, the Company provides cross-border logistic services via sea, air, road and rail transport to connect Chinese inland with Southeast Asia, Central Asia and European inland.

  • b. Reverse logistic services: After delivering customer goods to the destination, the Company provides disposal, recycling and recovery related transport services for second-hand assets to save operating expenses for customers.

  • c. Cold chain logistics: The Company develops specialized logistic transport of chemicals, agricultural and marine products and biotechnological products to provide consumers, suppliers and retailers with a cold chain logistics model for integrated demands.

  • d. Cargo insurance broker: The Company is awarded a license for the cargo insurance brokerage business by the China Insurance Regulatory Commission, and provides customer cargo insurance, acts as an agent for customers to make claims to insurance companies, and acts on behalf of insurance companies to issue original insurance certificates.

68

G. Logistics information services:

Through the Group’s information system, the Company provides booking information, bill of lading information query, status of the global cargo tracking system and statistical reports. The Company provides information services for every link from order taking to cargo delivery to the destination, and gives rapid and timely information feedback.

H. Introduce the AEO (Authorized Economic operator) system ：

To provide customers with safer, faster and more convenient services, the Company’s subsidiary T.H.I. Logistics and Taiwan Express introduced the AEO supply chain security management system and passed the certification. This system emphasizes that every link in the entire cargo process shall comply with safety regulations to ensure reduction of human errors, sabotages and information leakage in the supply chain system which may result in a risk of damage to the cargo. In particular, European and American countries attach considerable importance to the security of supply chain management, and this system will be promoted to the whole world. Enterprises which are AEO certified will enjoy at the customs clearance of all countries preferential treatments, such as a lower cargo sample testing rate and a shortened testing process, to improve market competitiveness and provide customers with better protection.

I. The logistics service planform of T3EX group:

==> picture [286 x 229] intentionally omitted <==

  • (4) Plans to develop new products (services):

  • A . Construction of business to business (B2B2C) warehousing services

  • Under the traditional model, the products of the same brand are stored in the B2B warehouse and B2C warehouse separately for sales in physical stores and

69

sales on e-commerce platforms. In other words, it is the stock separation model. To improve the logistics efficiency for the customer effectively, it plans to integrate the B2B warehousing management ability of Shanghai T-cube logistics Co., Ltd, the sub-subsidiary of the Company, and the B2C warehousing management ability of Shanghai EXer Logistics Co., Ltd., so as to link up with the B2B and B2C warehousing systems through the information system. In this way, it achieves the inventory sharing model, and performs distribution and delivery operations under the same warehousing system. Then the products are delivered through the collaborative warehouse model of “professional warehouse+ express service”. It aims to link up with the online and offline inventories to reduce the overall stock and the second transportation cost effectively, improve the turnover efficiency of the supply chain, increase the turnover rate of the inventory, and even help the operators obtain more complete data in the entire supply chain.

B. Financial supply chain services

It is quite hard for Chinese SMEs to apply for bank loans due to their small scale. In the sales and purchasing cycles, these enterprises will encounter the requirements of raw material purchasing and inventory management capital, as well as the delay of collection of receivables. It will result in an inadequate capital chain, and even affect the balance of the entire supply chain.

The Company plans to provide funds to the upstream and downstream of the supply chain by taking its own credit as the guarantee in the bank. This may create more logistics businesses, and improve the market competitiveness. Moreover, it may break through the current situation of freight forwarding price competition and establish strategic partnership with the customer in the long term. The logistics plays the main role, while finance plays a supplementary role, so as to realize the integration of logistics, information flow, capital flow and business flow.

5.1.2 Industry Overview

  • (1) Current Industry Status and Development

The Company is an investment holding company of the logistics industry. Its main businesses include comprehensive logistics services such as ocean freight, air freight, customs declaration, warehousing, inland transportation, supply chain management and e-commerce logistics, with its global operations offices located in Taiwan, China, Northeast Asia and Southeast Asia. The trend of the global logistics management model and the advent of a regional logistics era have led to a huge demand for global logistics services, and the freight forwarding industry therefore must also go global. With the fact that international giants with global

70

logistics and transportation capacities are snatching the Asian market, ocean shipper alliances are reshuffling, the One Belt One Road program is bringing about cross-border competition within the logistics industry and a change in global trade activities, the Company plans to continue seeking domestic and international strategic alliance partners to enhance its competitive advantage, provide customers with comprehensive and all-round logistics services and embed them in the global supply chain systems. An overview of the industries which the Company is in, including the ocean freight market, the air freight market and the logistics market, are described respectively as follows:

A. Ocean Freight Market Overview

The shipping industry was revitalized since the 4th quarter of 2016, with the freight rate increased continuously. In 2017, the freight rate of lines in the east of America even reached US$3,000 (FEU). However, since the second half of 2017, the new ships were put into use successively. According to the statistics of Alphaliner, a shipping information institution, as of the end of 2017, the number of the global container ships is 5,177, with the TEU of 21,100,000, achieving a growth rate of 3.7% if compared with the same period in the last year. The new global shipping capacity reached as high as 671,641 TEU, with an increase rate of 140% if compared with that in 2016. Since the shipping companies are optimistic towards the shipping market during 2019~2020, the shipping capacity of the new container ships to be delivered in 2018 will reach 1,400,000 TEU. It is estimated that the shipping capacity of the carrier fleet will be increased by 6%, which is reflected in the trend of freight rate, as shown in the table below. With the expansion of the new shipping capacity, the freight rate started to decline since 2017. It is estimated that the freight rate this year still needs to be determined based on the situation of shipping capacity as adjusted by the shipping companies.

YoY 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
USWC 55% 77% 22% -22% -22%
USEC 49% 37% 33% -21% -20%
Europe 11% 68% 0.6% -10% -4%

Source: The Company.

In terms of the demands, the global economy grows slowly in 2018. As predicted by Marsoft, a shipping advisory institution, the shipping demands in 2018 are 5.3% on average. The supply-demand balance in the shipping market will be achieved in 2019. In addition, according to the sulfur limit requirements announced by International Maritime Organization (IMO) which is confirmed to take effect in 2020, the ships with fuel containing more than 0.5% sulfur will be restricted from sailing. The shipping companies will renew the old ships successively. In the middle and long terms, the container supply and demand will be relatively balanced.

71

==> picture [271 x 198] intentionally omitted <==

B. Air Freight Market Overview

As shown by the data of International Air Transport Association (IATA), the global air freight demands in 2017 (if calculated based on the FTK) was increased by 9.0% if compared with that in the previous year. It is double of the annual growth rate in 2016 (3.6%). In terms of capacity, the global transportation capacity (if calculated based on the available FTK) is only increased by 3%, while the growth of demand is three times the growth of transportation capacity. It is reflected in the freight rate in 2017, which achieved an average growth of 20%~25%.

As predicted by the International Monetary Fund (IMF), the actual annual average growth rate will reach 3.1%, and the global trade will be increased by 3.9%. At the beginning of 2018, the index of new orders in the global manufacturing industry was increased by 1.3% if compared with that in 2017, which hit a new high in the past seven years. Together with the increase of the number of global cross-border e-commerce platforms and the increase of investment in the semi-conductor industry, IATA predicts that the air freight demands will achieve a growth rate of 4.3% in 2018.

==> picture [276 x 170] intentionally omitted <==

72

Source: IATA

In terms of supply, in recent years, the trade channels from China to Europe and the North America, as well as the channels between the destinations within Asia are growing dramatically. According to the CADAS Qianzhan Industry Research Institute, the global wide-body jet delivery quantity is 407 items in 2018, with a growth rate of 6.5% if compared with that (382 items) in 2017. As for the main trade lines, driven by the recovery of the global economy and the increase of the number of cargo airplanes, the transportation capacity of the trade lines between Asia and North America will achieve a growth rate of 5.1% in the next five years. Moreover, the transportation capacity of the trade lines between the Mideast, and Europe and Asia will achieve higher growth, namely, 8.3%.

However, the air freight market is impacted by the international petroleum price, political environment and trade policies dramatically. The international petroleum price increased from US$40/barrel in 2016 to US$80/barrel currently, so the fuel cost of the airlines increased rapidly. It is expected that the air freight rate will keep rising taking into account the factors of high fuel surcharge and air transportation demand. Moreover, the issues such as the China-US trade conflicts and the tariff of cars imported from the US and Europe also affect the development of the air freight market.

C. International Railway Market Overview

The logistics costs of the China-EU Railway are 70% cheaper than the air freight costs, and the logistics time is 50% shorter than the ocean freight time. The China-EU Railway now covers over 10 cities of mainland China, including Chongqing, Zhengzhou, Chengdu, Wuhan, Suzhou, Yiwu, Shihezi, Kunming, Hefei, Dalian and Harbin, and uses these cities as hubs to cover mainland China's main economic regions to reach 11 cities of 7 foreign countries. Since China launched the "One Belt One Road" strategy, the China-EU Railway has opened a number of normalized routes, so that China's non-coastal cities can also develop low-cost and short-duration international logistics business.

73

The China-Europe railway was opened in July 2013, with the number of lines operated in China reaching 65, and the destinations were increased to 43, which can reach 42 cities of 14 countries in Europe. Until April 15, 2018, a total of 7891 China-Europe railway has been in operation accumulatively, and the percent of return trains is increased dramatically. The operation efficiency is improved significantly.

With the rapid development of cross-border e-commerce platforms, the large e-commerce logistics companies started to use the China-Europe railway in transportation. JD Logistics opened Hamburg-Xi’an Premium Train in May this year to build Xi’An into the inland cross-border logistic distribution center. It is expected that the model of China-Europe railway + cross-board e-commerce platform will break through the bottleneck of international trade in the inland cities.

The freight forwarder of the China-EU Railway does not face the traditional high entry barrier for freight forwarders, while having a good relationship with the railway authorities of various locations, the customer resources of the European overseas agents and a professional business operations team. These will be a breakthrough in the highly competitive logistics market.

D. Logistics Market Overview

In the Boao Forum for Asia held in April this year, Chinese President Xi Jinping stated that China would spare no effort in export expansion and promotion of trade balance. As reported by the Chinese Securities Journal, the related departments such as MOFCOM are drafting the “Guidelines for Expanding Import and Promoting Foreign Trade Balance”. China will hold the first China International Import Expo in November this year. Moreover, it plans to apply the experience of import pilot zones such as Shanghai, Tianjin, Suzhou and Ningbo to other regions, so as to establish more platforms of import expansion. Under the vigorous promotion of policies made by the Chinese government, the import logistics of China becomes the target contested by all operators.

(2)Relationship with Up-, Middle- and Downstream Companies

International Logistics supply chain- Export to USA, Canada and Europe.

T3EX group is an international forwarder. The below content is an example of export procedure. After receiving cargos, the company collaborated with truck companies, warehouse suppliers, customs agencies, container shipping companies, railway companies, airplane companies and overseas agents to deliver the cargos to receivers.

74

==> picture [441 x 142] intentionally omitted <==

(3) Macro Economic, Product Trends and Competition

A. International Logistics:

Since the 4[th] quarter of 2016, the global economy is recovered slowly, which drives the growth of global trade volume. It is expected that the global trade volume and transportation volume will be relatively active, which will maintain a growth trend. However, with the continuous rise of the international petroleum price, the awareness of international environmental protection, as well as the increase of operating cost of the shipping companies and airlines, the cost will be transferred to the suppliers gradually. In the meantime, the Electronic Logging Device (ELD) was implemented in the US in December 2017. The truck transportation in the harbor region is in short supply. As a result, the US port-inland land transportation cost is increased accordingly. Under the above circumstance, the freight forwarder that can provide diverse transportation services and sign contracts with multiple suppliers and overseas agents can reduce the risk brought by the operating cost. 。

The Company has a professional international logistics team, over 400 oversea agencies and a good ship and air company relation, so the Company has good competitiveness in international logistic development. Besides, since 2015, the Company has continue to develop the China-Europe Rail business project, setting up project team in China’s Zhengzhou, Suzhou, Chendu, Chongqing, Hefei, Harbin, and Shenyang to actively promote the new business channel with European agencies and corporate with China’s rail company. The the China policy of the "Belt and Road Initiative", the Company has more competitiveness.

B. China Domestic Logistics:

In recent year, a decline of China’s economic growth, an increase of consumer market and a booming of e-commerce and Online to offline module influenced the china’s logistics develop. The Company predicted that the need of logistics total solution service which include import, declaration, warehousing and transportation will increase. The Company will integrate every business to develop B2BB2C logistics service.

5.1.3 Research and Development

The Company is in the logistics industry, and the key in enhancing the quality of logistics technology is the logistics system. The company has set up an IT software development department responsible for the integration of sea and air

75

import and export, customs declaration, warehousing and other front-end operation and sales systems, and connected them with the back-end accounting management operating system in order to provide customers with the support systems required for a one-stop logistics service.

5.1.3.1 Research and Development Expense in Recent Year:

Not applicable as the development costs of the logistics system are the salaries of the IT staff and the purchase costs for the software; the costs are included in the management fee and no R&D department is set up.

5.1.3.2 Research and Development Accomplishments in the Recent Year:

Not applicable as the development costs of the Company's logistics system are those expenses entailed for the integration of front-end and back-end information.

5.1.4 Long Term and Short Term Business Development Plans

5.1.4.1 Short Term Business Development Plan

  • A. Developing high-margin long-distance services:

Based on International logistics, the Company has 400 plus oversea agencies which located in the global main cities such as United States, Canada, Europe, Asia, New Zealand and Australia. The Company will continue to maintain a strong relations with its agencies to develop high-margin long-distance service and increase LCL business which regard the Greater China Market as based market in order to decrease operating cost as well as increase management efficiency.

B. Set up rail project team to develop the cross-border rail freight business:

To following the China policy of the "Belt and Road Initiative", the Company has setting up rail project team in China’s Zhengzhou, Suzhou, Chendu, Chongqing, Hefei, Harbin, and Shenyang to actively promote the new business channel with European agencies. In the future, the Company will continue to earned long-term business contracts with several major import/export enterprises and keep maintain the original customers including high-technology industry, clothing industry, toy industry and food industry to reach economic benefits.

C. Continuing the cultivation of logistic talents with international perspectives:

The number-one business philosophy of the Company and its subsidiaries: people-oriented - emphasis on "professionalism". The professional services related to international sea and air transport are not only transport arrangements, but also interaction and contact with agents, maintenance of good partnerships with airlines or shipping companies and cultivation of long-term relationships with customers. All these must rely on professional knowledge and rich experience.

76

The Company and its subsidiaries through sound internal pre-service and in-service training provide every employee with the most comprehensive preparation to offer to customers professional and complete services. Meanwhile, through annual meetings and regular overseas job rotations employees can have a broader view of the world for their provision of the most professional service.

  • D. Combine the resource of T3EX Group to develop cross-border e-commerce logistics.

With the rapid development of cross-border e-commerce platforms, the cross-border logistics service tends to be more important. In terms of the cross-border logistics from China and Taiwan to the US and Europe, T3EX plans to transport cargos to the US and Europe through its sea, air and railway transportation models in Asia. The overseas agents in the US and Europe assists in the import, customs declaration, warehousing and distribution services. In terms of the cross-border logistics related to imports from the e-commerce platforms in the US, Europe, Japan or Korea to China and Taiwan, T3EX transports the cargos to China and Taiwan through its sea, air and railway transportation models. With the group import, customs declaration, warehousing and distribution teams, the inland transportation is completed.

5.1.4.2 Long Term Business Development Plan

  • A. Construction of business to business (B2B2C) warehousing services.

  • B. Financial supply chain services

(The detail please see the chapter of Plans to develop new products)

5.2 Market and Sales Overview

5.2.1 Market Analysis

5.2.1.1 Sales (Service) Regions

ket and Sales Overview
rket Analysis
ales(Service) Regions
Year
Area		 2017年 2016 年
Amount (%) Amount (%)
China and HongKong 7,841,614 74.42 7,440,921 76.36
Taiwan 2,101,116 19.94 1,859,424 19.08
Eastern Asia 594,278 5.64 443,768 4.55
Total 10,537,008 100.00 9,744,113 100.00

The Company and its subsidiaries are logistic service providers, and the main service targets are importers and exporters around the world. The current main business

77

contents are import and export shipping contracts, import and export air cargo contracts and customs clearance, warehousing and land transport services, and the business pattern is mainly export-oriented freight services with export to markets mainly in North America, Europe, Asia, Japan and other advanced countries.

5.2.1.2 Market Share

Among the world’s top ten container ports in 2017, Chinese ports accounted for 70%. In the Group's shipping business, 90% is export business, and nearly 70% is export from China to Europe, the United States and Canada. The Group has set up its own locations or has agents in the world's top ten container ports, and in the total throughput of the world's top ten container ports in 2017, in the unit of TEU for export, the Group's export and import was 273,634 TEU in 2017, representing about 0.12% of the world's top ten container ports’ throughput.

The world’s top ten container ports in 2017:

2017 2016 Port Country 10 Thousand TEU
1 1 Port of Shanghai China 4,023
2 2 Port of Singapore Singapore 3,367
3 3 Port of Shenzhen China 2,521
4 4 China 2,461
Port of Ningbo-Zhoushan
5 6 Port of Busan Korea 2,140
6 5 Port of Hong Kong China 2,076
7 8 Port of Guangzhou China 2,037
8 7 Port of Qingdao China 1,826
9 9 Dubai Port United Arab Emirates 1,544
10 10 Port of Tianjin China 1,521
Total 23,516

Resource: www.snet.com.cn

About the Company’s air cargo market share, Asia-USA, Asia-Europe, and Asia-Asia are the main routes. According to the data of Airports Council International, the world top ten cargo volume airports in 2017 centralized in Asia, USA and Europe airports. The Group has set up its own locations or has agents in this area, so this could the reference of in calculating market share. The Group's total air cargo volume was

78

66,347 tons, accounting for about 0.21% of the world top ten cargo volume airports in 2017.

2017 2016 Airport Country Cargo Tonnes
1 1 Hong Kong China 5,049,898
2 2 MEMPHIS USA 4,336,752
3 3 Shanghai China 3,824,280
4 4 INCHEON Korea 2,921,691
5 6
USA		 2,713,230
ANCHORAGE AK(ANC)
6 5 DUIBAI(DXB) 2,654,494
United Arab Emirates
7 7 USA 2,602,695
LOUISVILLE KY(SDF)
8 8 TOKYO(NRT) Japan 2,336,427
9 11 TAIPEI(TPE) Taiwan 2,269,585
10 9 PARIS(CDG) France 2,195,229
Total 30,904,281

5.2.1.3 Market Demand, Supply and Growth

A. Ocean Freight Market:

According to the maritime consultant Marsoft, the estimated supply growth rate of the global container shipping industry have been oversupplying till the end of 2018. Especially in 2Q2018, the launch of the new container ships would cause the supply gap reach 1%.

pply gapreach 1%.
Date Source:Marsoft 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1
Supply Growth Rate 5.7% 6.4% 5.6% 5.4% 5.1%
Demand Growth Rate 5.1% 5.3% 5.4% 5.1% 5.1%
Oversupply 0.6% 1% 0.2% 0.3% 0%

B. Air Freight Market:

As predicted by the International Monetary Fund (IMF), the actual annual average growth rate will reach 3.1%, and the global trade will be increased by 3.9%. At the beginning of 2018, the index of new orders in the global manufacturing industry was increased by 1.3% if compared with that in 2017,

79

which hit a new high in the past seven years. Together with the increase of the number of global cross-border e-commerce platforms and the increase of investment in the semi-conductor industry, IATA predicts that the air freight demands will achieve a growth rate of 4.3% in 2018.

In terms of supply, in recent years, the trade channels from China to Europe and the North America, as well as the channels between the destinations within Asia are growing dramatically. According to the CADAS Qianzhan Industry Research Institute, the global wide-body jet delivery quantity is 407 items in 2018, with a growth rate of 6.5% if compared with that (382 items) in 2017. As for the main trade lines, driven by the recovery of the global economy and the increase of the number of cargo airplanes, the transportation capacity of the trade lines between Asia and North America will achieve a growth rate of 5.1% in the next five years. Moreover, the transportation capacity of the trade lines between the Mideast, and Europe and Asia will achieve higher growth, namely, 8.3%.

C. Logistics Market

The logistics business of the Company is mainly oriented towards the Chinese market, and China's logistics activities are closely related to China's industrial activities and consumer demand. From the following table, it can be found that the growth rate of the total import value, industrial production value, consumption retail value and cargo volume are all growing in 2017~2018, and it can be predicted that China's logistics market demand will have a positive growth in 2018.

in 2018.
1Q2018 2017 2016
Total import valuegrowth rate 18.9% 15.9% -5.5%
Industrialproductiongrowth rate 6.8% 6.6% 6.0%
Retail salesgrowth rate of social consumergoods 9.8 10.2% 10.4%
Cargo Volume 6.3% 9.3% 5.7%

Source: National Bureau of Statistics of the People’s Republic of China

5.2.1.4 Competitive Advantages

A. International layout strategy.

The Company and its subsidiaries already had a clear market positioning at their inception, and their market layout process can be broadly divided into three stages. In the beginning stage the Taiwanese electronics industry and other basic industries already had a larger base, so the Company and its subsidiaries targeted the domestic market demand and provided basic trade services. The second stage started from 1990, when domestic manufacturers started moving overseas for cheap raw materials and labor, especially in Southeast Asia and China. To serve customers the Company also expanded from Taiwan to mainland China and broadly set up business locations in China. To cope with the continuing growth of international trade, the Company and its subsidiaries also expanded the scope of business and transitioned from the early ocean freight services into a logistics

80

investment holding company. Under the holding company platform, the sub-groups can not only provide customers with more services and customer coverage by the complement of product lines and talents, but can also make more effective use of resources and enhance logistics management efficiency. The Company and its subsidiaries have so far set up more than 70 service locations in Hong Kong, mainland China, Vietnam, Thailand, Cambodia, Indonesia, Singapore, Japan, Korea and Malaysia, and established their own international network of agents in more than 100 countries and regions with the service network covering more than 400 locations.

  • B. A wealth of logistics experience and professionals.

The Company and its subsidiaries have many years of experience and expertise as well as logistic operations professionals, are very familiar with the Chinese lifestyle and vendors’ sales models and can provide customers with door-to-door and even end-to-end transport. In the future the scope of services will expand to a full-range logistics service mode covering "warehousing and storage management" and "logistics center". When multinational companies cannot agree with the quality of service of the local logistics industry in China, and the foreign logistics industry is unable to grasp the mainland’s market ecology, the Company and its subsidiaries will become their most suitable supply chain partners.

  • C. Long-term and stable cooperative relations with many shipping companies and airlines.

The Company has established long-term and close business relationships with a number of shipping companies such as the three largest container shipping companies Yangming Shipping, Evergreen Shipping, Wan Hai Lines, and also has cooperation with world-class airlines such as NYK, CMA, OOCL, COSCO, Evergreen, Macau, Cathay Pacific and China Eastern Airlines. The Company has signed a freight forwarding agreement and become a market strategy partner with Shanghai Dazhong Transportation Group to jointly develop the business in Taiwan and the mainland. Greater benefits can be reaped with the mutual and complementary advantages of both parties.

5.2.1.5 Disadvantages and Responsive Strategies

The main targets of international freight services are importers and exporters. The current rapid development of liberalization and globalization of international trade has provided a good niche for the development of the logistics industry. Presently the Company and its subsidiaries have the following advantages to move towards a large-scale professional logistic group.

Advantage ：

  • Brand: A Taiwanese brand, acting as a platform for integrated services in Taiwan, Hong Kong and China, has the advantage of bridging localization and internationalization.

  • Distribution: The Company has a complete network of location in Asia and a global network of agents.

81

  • Product: The Company offers sea, land, air, river, railway transport, warehousing and a full range of supply chain logistics management services.

  • Stable cooperative relations: The Company has established long-term and close business relationships with a number of shipping companies.

  • Human: The Company has a team of professional, innovative and dedicated logistics specialists.

  • Information: T3EX’s advanced ERP system, WMS, SCM and e-commerce management enable us to provide customized information management services.

Disadvantage:

  • Risk of variation in currency exchange rate.

  • Inflation: The cost increase and the consumption decline.

  • Unstable reginal political and economic circumstance.

  • Unstable international freight.

Responsive Strategies

For external market changes, immediate react and adjust the business strategy; adjust business and route configuration, and continue to expand cooperation with the industry as well as upstream and downstream manufacturers through acquisitions and strategic alliances to reduce operational risks.

5.2.2 Application of Major Products

Services of the Company and its subsidiaries are mainly integrated international logistics services, which cover comprehensive supply chain management services from the procurement of goods and raw materials and sea, air or land freight transport services for raw materials used in the production process to the packaging, sorting, storage, transit, distribution of semi-finished products and finished products as well as the final document production and management services for customers, the establishment of marketing channels and information feedback.

5.2.3 Supply of Major Material: It not apply.

5.2.4 M Major Suppliers in the Last Two Calendar Years: It not apply.

5.2.4.1 Major Clients in the Last Two Calendar Years: It not apply.

5.2.5 Production in the Last Two Years (Group)

Unit: NT$ thousands

Year 2016 2016 2017 2017
Quantity/
Amount		 Quantity Amount Quantity Amount
82
Major Products TEU CBM TON Shipment TEU CBM TON Shipment
Sea Export 229,614 517,314
-
-		 3,987,555 249,122 528,814
-		 - 4,292,099
Sea Import 24,224 240,472
-
-		 490,802 24,512 43,094 - - 481,072
Air Export -
-		 38,360
-		 1,742,589 - - 43,950
-		 2,133,823
Air Import -
-		 20,030
-		 386,940 - - 22,397
-		 442,435
Logistics -
-
188,466 1,363,009 - - - 198,420 1,263,544
Total 253,838 757,786 58,390 188,466 7,949,895 273,634 571,908 66,347 198,420 8,612,973

Variation: Through the strategy of developing the total solution logistics, the Company could more effectively control cost and increase gross margin.

5.2.6 Shipments and Sales in the Last Two Years (Group)

Unit: NT$ thousands

Year 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017
Quantity/
Amount		 Quantity Amount
 Quantity Amount
Major
Products		 TEU CBM TON Shipment TEU CBM TON Shipment
Sea Export 229,614 517,314
-
-		 4,979,218 249,122 528,814
-		 - 5,303,075
Sea Import 24,224 40,472
-
-		 594,197 24,512 43,094 - - 601,877
Air Export - - 8,360
-		 2,036,784
-		 - 43,950
-		 2,458,612
Air Import - - 20,030
-		 488,196 - - 22,397
-		 544,780
Logistics - - 188,466 1,645,718
-		 - - 198,420 1,628,664
Total
 253,838 757,786 8,390 188,466 9,744,113 273,634 571,908 66,347 198,420 10,527,008

Variation ： Through the strategy of developing the total solution logistics, the Company increased businesses and profit.

5.3 Human Resources

I. T3EX Global Holdings Corp.

Year
Number of
Employees
Sales
Administrative Person
Total
Average Age
Average Years of Service
Education
Ph.D.
Masters		 Year 2016 2017 Data as of ending data in the current year


Sales
Administrative Person
Total		 0 0 0

32		 26 28
32 26 28
40.51 40.50 40.28
5.33 5.2 5.19

Ph.D.
Masters		 0.00% 0.00%
0.00%
15.63% 15.38%
14.29%

83

Bachelor’s Degree 84.38% 84.62%
85.71%
Senior High School 0.00% 0.00% 0.00%
Below Senior High
School		 0.00% 0.00% 0.00%

II. T3EX Group

Year 2016 2017 Data as of ending data in the current year
Number of
Employees		 Sales 1,293 1,209 1,197
Administrative Person
275		 314 295
Total 1,568 1,523 1,492
Average Age 34.87 37 36.61
Average Years of Service 5.26 6.3 6.05
Education Ph.D. 0.00% 0.00% 0.00%
Masters 1.40% 2.43% 2.48%

Bachelor’s Degree		 52.87% 72.23% 73.33%
Senior High School 17.16% 15.34% 14.81%
Below Senior High
School		 28.57% 10.00% 9.38%

5.4 Environmental Protection Expenditure

In 2017 and as of the date of this annual report, the Company did not incur any loss or receive any penalty for major environmental pollution. There are designated personnel within the company who are in charge of environmental protection in compliance with the legal requirements. Waste clearance and disposal, emission discharge and environmental measurement have been conducted and controlled by management procedures.

5.5 Employee Re lations

5.5.1 Employee’s Welfare and Benefit

a. Employee welfare and benefit

Employee welfare and benefit are provided by both the Company and the Company’s Employee Welfare Committee. Corporate benefit program offered to employees include group insurance, travel insurance on business trips, meal subsidies, year-end bonus, performance bonus, etc. The details of welfare and benefit will be announced through announcement, company’s website and e-hr system.

b. Professional training program

84

We place great emphasis on career planning and talent development for employees by encouraging employees to attend internal and external training programs. Internal training programs include courses for core competence and professional development to enhance employees’ capabilities, while external training programs include seminars or conferences organized by external parties that provide excellent training opportunities for employees.

Internal Program ：

Internal Training Times Training Expense
510 classes 1,810hours NT$ 540,000
External Program：
External Training Times Training Expense
55classes 520hours NT$ 350,000

c. The retirement policy:

The Company’s retirement policy is in accordance with the provisions in the Labor Standards Law and Labor Pension Act of the Republic of China.

  • d. Employee rights

The Company always emphasizes employee benefits as well as harmonious labor relations, and we highly value employee’s opinions and feedbacks, which can be submitted via employee mailbox, conferences and emails. Employees can fully express their opinions, raising any labor issues to promote and maintain a positive labor relationship.

  • e. Employees code of conduct

  • Pursuing sustainable corporate development and embracing integrity is our highest guiding principle, and the Company has established Business Ethic Guidelines. Based on the Business Ethic Guideline, employees are required to strictly follow the moral standards and advocate honesty, integrity and confidentiality to protect ’

  • the rights of the Company and shareholders and enhance the Company s competitiveness.

5.5.2 Any current or potential loss resulting from labor disputes and prevention

actions for the past two years and as of the date of this annual report.

There have not been any material losses resulting from major labor disputes for the past two years and as of the date of this annual report.

5.6 Important Contracts

A. Transportation:

Counterparty Period Major Contents Restrictions
1 CHINA AIRLINE 2016.10.22 ~ 2018.10.22 Air Transportation None
2 China Eastern 2017.02.08~2019.02.07 Air Transportation None

85

3 YANG MING MARINE 2018.05.01~2019.04.30 Sea Transportation None
4 EVER GREEN LINE 2018.04.18~2019.04.30 Sea Transportation None
5 COSCO SHIPPING 2018.05.01 ~ 2019.04.30 Sea Transportation None

B. Agency:

Counterparty Period Major Contents Restrictions
1 A Company 2012.10.25~2013.10.24
(AutomaticallyRenew One Year)		 Agency Agreement Privacy
2 B Company 2014.12.15~2015.12.14
(AutomaticallyRenew One Year)		 Agency Agreement Privacy
3 C Company 2014.11.18~2015.11.17
(AutomaticallyRenew One Year)		 Agency Agreement Privacy
4 D Company 2013.2.18~2014.12.17
(AutomaticallyRenew One Year)		 Agency Agreement Privacy
5 E Company 2014.11.18~2015.11.17
(AutomaticallyRenew One Year)		 Agency Agreement Privacy

C. Sales:

Counterparty Period Major Contents Restriction
s
1 F Company 2017.11.01-2018.12.31 Forwarder Agreement Privacy
2 ICompany 2017.01.16~2021.06.30
(AutomaticallyRenew One Year)		 Logistics Service Privacy
3 Anhui SIANG WEI
Logistics		 2016.12.22~2018.12.31 Forwarder Agreement None
4 JCompany 2017.06.27-2018.06.27 Forwarder Agreement None
5 Jiangsu Feiliks
International Logistics
Co.,Ltd.		 2017.07.11-2018.12.31 Forwarder Agreement None

D. Others:

Counterparty Period Major Contents Restrictions
1 Cathay Century
Insurance		 2017.09.11~2018.09.11 Directors and Officers
Liability Insurance		 The Coverage Limit is US$4,000,000
2 CTBC Bank 2017.09.30-2018.09.30 Financial loan None

VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed Balance Sheet

Consolidated Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousands

Year
Item		 Financial Summary for The Last Five Years Summary for The Last Five Years Summary for The Last Five Years Summary for The Last Five Years 1Q2018
2013 2014 2015 2016
 2017

86

Current assets Current assets 2,360,757 3,011,312 3,385,769 3,481,349 3,824,345 3,719,956
Property, Plant and
Equipment		 265,059 276,664 337,171 314,067 301,090 294,146
Intangible assets 333,371 326,560 720,469 658,732 630,309 626,557
Other assets 271,542 325,738 315,250 359,297 421,807 459,034
Total assets 3,230,729 3,940,274 4,758,659 4,813,445 5,177,551 5,099,693
Current
liabilities		 Before
distribution		 1,706,197 1,627,457 1,564,095 2,013,714 2,700,287 2,521,557
After
distribution		 1,774,276 1,772,621 1,770,436 2,106,351 - -
Non-current
liabilities		 108,953 283,346 558,519 414,237 84,657 84,212
Total
liabilities		 Before
distribution		 1,815,150 1,910,803 2,122,614 2,427,951 2,784,944 2,605,769
After
distribution		 1,883,229 2,055,967 2,328,955 2,520,588 - -
Equity attributable to
shareholders of the
parent		 1,388,541 1,992,136 2,506,418 2,259,199 2,279,473 2,375,212
Capital stock 794,297 983,981 1,160,421 1,195,264 1,185,655 1,185,655
Capital surplus 410,144 629,395 867,214 865,337 872,754 872,754
Retained
earnings		 Before
distribution		 201,493 284,581 390,641 285,955 424,932 487,913
After
distribution		 104,237 103,126 161,373 193,318 - -
Other equity interest 3,840 115,412 98,778 (25,556) (137,519) (104,761)
Treasury stock (21,233) (21,233) (10,636) (61,801) (66,349) (66,349)
Non-controlling
interest		 27,038 37,335 129,627 126,295 113,134 118,712
Total
equity		 Before
distribution		 1,415,579 2,029,471 2,636,045 2,385,494 2,392,607 2,493,924
After
distribution		 1,347,500 1,884,307 2,429,704 2,292,857 - -

6.1.2 Condensed Individual Balance Sheet

Condensed Individual Balance Sheet- Based on IFRS

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial Summary for The Last Five Years
2013 2014 2015 2016 2017
Current assets 307,659 120,195 308,347 375,269 411,485

87

Property, Plant and
Equipment		 Property, Plant and
Equipment		 183,414 198,954 198,754 192,995 188,478
Intangible assets 7,001 6,560 11,227 8,151 22,614
Other assets 1,890,329 2,233,894 2,792,687 2,779,735 2,989,286
Total assets 2,388,403 2,559,603 3,311,015 3,556,150 3,611,863
Current
liabilities		 Before
distribution
940,106		 345,360 306,249 743,136 1,310,103
After
distribution
1,008,185		 635,688 512,590 835,773 -
Non-current
liabilities		 59,756 222,107 498,348 353,815 22,287
Total
liabilities		 Before
distribution
999,862		 567,467 804,597 1,096,951 1,332,390
After
distribution
1,067,941		 712,631 1,010,938 1,189,588 -
Capital stock 794,297 983,981 1,160,421 1,195,264 1,185,655
Capital surplus 410,144 629,395 867,214 865,337 872,754
Retained
earnings		 Before
distribution
201,493		 284,581 390,641 285,955 424,932
After
distribution
104,237		 103,126 161,373 193,318 -
Other equity interest 3,840 115,412 98,778 (25,556) (137,519)
Treasury stock (21,233) (21,233) (10,636) (61,801) (66,349)
Total Before
distribution
1,388,541		 1,992,136 2,506,418 2,259,199 2,279,473
equity After
distribution
1,320,462		 1,846,972 2,300,077 2,166,562 -

6.1.3 Condensed Statement of Comprehensive Income/Condensed Statement of

Income

Consolidated Condensed Statement of Comprehensive Income – Based on IFRS

Unit: NT$ thousands

Year
Item		 Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years 1Q2018
2013 2014 2015 2016 2017
Operatingrevenue 8,323,514 9,729,513 9,736,912 9,744,113 10,537,008 2,439,432
Grossprofit 1,395,725 1,659,065 1,877,272 1,794,218 1,924,035 454,507
Income from
operations		 166,796 225,141 312,196
193,165
396,445
85,622
Non-operating income
and expenses		 (2,896) 48,765 85,061
33,439
(42,416)		 (17,469)

88

Income before tax 163,900 273,906 397,257
226,604
354,029
68,153
Net income (Loss) 108,691 206,665 303,900
121,176
252,737
65,723
Other comprehensive
income
(income after tax)		 52,373 111,077 (24,070) (137,465) (118,393)
5,122
Total comprehensive
income		 161,064 317,742 279,830 (16,289)
134,344		 101,317
Net income
attributable to
shareholders of the
parent		 104,380 199,512 293,820 130,487
240,110
62,422
Net income
attributable to
non-controlling
interest		 4,311 7,153 10,080 (9,311)
12,627
3,301
Comprehensive
income attributable to
Shareholders of the
parent		 156,728 307,445 270,881 248
125,685
95,739
Comprehensive
income attributable to
non-controlling
interest		 4,336 10,297 8,949 (16,537)
8,659
5,578
Earningsper share 1.40 2.20 2.70 1.11
2.07
0.54

6.1.3 Condensed Individual Statement of Income

Condensed Individual Statement of Income- Based on IFRS

Unit: NT$ thousands

ear
Item		 Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years
2013 2014 2015 2016 2017
Operatingrevenue 149,770 272,824 415,213 230,812 289,873
Grossprofit 101,936 190,484 292,966 140,614 207,935
Income from operations 101,936 190,484 292,966 140,614 207,935
Non-operating income
and expenses		 2,450 10,107 1,902 (7,096) 34,037
Income before tax 104,386 200,591 294,868 133,518 241,972
Net income(Loss) 104,380 199,512 293,820 130,487 240,110
Other comprehensive
income
(income after tax)		 52,348 107,933 (22,939) (130,239) (114,425)
Total comprehensive
income		 156,728 307,445 270,881 248 125,685

89

Net income attributable to
shareholders of theparent		 104,380 199,512 293,820 130,487 240,110
Net income attributable to
non-controllinginterest		 - - - - -
Comprehensive income
attributable to
Shareholders of the
parent		 156,728 307,445 270,881 248 125,685
Comprehensive income
attributable to
non-controllinginterest		 - - - - -
Earningsper share 1.40 2.20 2.70 1.11 2.07

6.1.4 Auditors’ Opinions from 2013 to 2017

Year CPA’s Name CPA Firm
Auditing Opinion
2013 PeggyChen & HENG- SHENG LIN KPMG Unqualified
2014 PeggyChen & HENG- SHENG LIN KPMG Unqualified
2015 PeggyChen & HENG- SHENG LIN KPMG Modified Unqualified
2016 PeggyChen & HENG- SHENG LIN KPMG Unqualified
2017 PeggyChen & HENG- SHENG LIN KPMG Unqualified

6.2 Five-Year Financial Analysis

6.2.1 Consolidated Financial Analysis

Consolidated Financial Analysis – Based on IFRS


Item		 Year Financial Analysis for the Last Five
Years		 Financial Analysis for the Last Five
Years		 Financial Analysis for the Last Five
Years		 Financial Analysis for the Last Five
Years		 Financial Analysis for the Last Five
Years		 1Q2018
2013 2014 2015 2016 2017
Financial
structure (%)		 Debt Ratio 56.18 48.49 44.61 50.44 53.79 51.10

Ratio of long-term capital to
property, plant and equipment		 575.17 835.97 947.46 891.44 822.77 876.48
Solvency (%) Current ratio 138.36 185.03 216.47 172.88 141.63 147.53

Quick ratio		 134.93 182.72 213.68 170.82 139.88 145.22
Interest earned ratio(times) 12.75 25.67 41.73 9.67 13.85 13.35
Operating
performance		 Accounts receivable turnover
(times)		 5.91 6.21 6.20 6.22 6.14 6.14
Average collectionperiod 61.78 58.78 58.87 58.68 59.44 59.4
Inventoryturnover(times) - - - - - -
Accounts payable turnover
(times)		 10.58 10.28 9.88 10.14 10.22 10.30
Average days in sales - - - - - -
Property, plant and
equipment turnover(times)		 30.20 35.92 31.72 29.92 34.26 32.09
Total assets turnover(times) 2.69 2.71 2.24 2.04 2.11 1.97
Profitability Return on total assets(%) 3.89 6.02 6.94 3.18 5.26 1.35

90

Return on stockholders'
equity (%)		 8.35 12.00 13.06 5.48 10.58 2.69
Pre-tax income to paid-in
capital(%)		 20.63 27.84 34.23 18.96 29.86 5.75
Profit ratio(%) 1.31 2.12 3.12 1.24 2.40 2.69
Earningsper share(NT$) 1.40 2.20 2.70 1.11 2.07 0.54
Cash flow Cash flow ratio (%) 5.64 13.90 32.73 0.43 5.68 6.77
Cash flow adequacy ratio (%) 97.83 69.22 90.20 104.00 93.04 113.22
Cash reinvestment ratio (%) 5.09 7.35 13.75 註3 3.12 8.44
Leverage Operating leverage 3.63 3.19 2.96 3.70 2.14 2.29
Financial leverage 1.09 1.05 1.03 1.16 1.07 1.07
Analysis of financial ratio differences for the last two years.
1.
Interest earned ratio (times):The increase of income before tax expense and interest expense
caused the increase of ratio.
2.
Ratios of profitability: The growth of profit in 2017 caused the increase of profitability.
3.
Ratios of cash flow: The growth of cash flow activity caused the increase of ratio.
4.
Operating leverage: The increase of operating profit caused the decline of operating leverage.

Note 1: Equations:

1. Capital Structure

  • (1) Debt ratio = Total liability / Total assets

(2) Ratio of long-term capital to property, plant and equipment = (Net shareholders’ equity + Long-term liability) / Net

property, plant and equipment

  1. Solvency

  2. (1) Current ratio: Current assets / current liability

  3. (2) Quick ratio = (Current assets – Inventory – Prepaid expense) / current liability

  4. (3) Times interest earned = Net income before tax and interest expense / Interest expense of the year

3. Operating ability

  • (1) Account receivable turnover (including accounts receivable and notes receivable derived from business operations) =

Net sales / Average accounts receivable (including accounts receivable and notes receivable derived from business

operation)

  • (2) Days sales in accounts receivable = 365 / Account receivable turnover

  • (3) Inventory turnover = Cost of goods sold / Average inventory amount

(4)Account payable turnover (including accounts payable and notes payable derived from business operation) = Cost of

goods sold / Average accounts payable (including accounts payable and notes payable derived from business operation)

  • (5) Average days in sales = 365 / Inventory turnover

  • (6) Fixed assets turnover = Net sales / Net fixed assets

  • (7) Total assets turnover = Net sales / Total assets

4. Profitability

  • (1) Return on assets = (Net income (loss) + interest expense x (1-tax rate)) / Average total assets

91

(2) Return on shareholders’ equity = Net income (loss) / Net average shareholders’ equity

(3) Return to issued capital stock = Net income before tax / Issued capital stock

  • (4) Profit ratio = Net income (loss) / Net sales

(5) Basic earnings per share = (Net income – preferred stock dividend) / Weighted average stock shares issued

  1. Cash flow

(1) Cash flow ratio = Bet cash flow from operating activity / Current liability

(2) Cash flow adequacy ratio = Net cash flow from operating activity in the past 5 years / (Capital expenditure + Inventory interest + Cash dividend) in the past 5 years

(3) Cash + reinvestment ratio = (Net cash flow from operating activity – Cash dividend) / (Fixed assets + Long term investment + Other assets + Working capital)

  1. Balance

(1) Degree of operating leverage = (Net operating income – Variable operating cost and expense) / Operating income)

(2) Degree of financial leverage = Operating income / (Operating income – interest expense)

Note 2: The net cash flow in operating activity is negative, it not apply.

6.2.2 Individual Financial Analysis

Individual Financial Analysis- Based on IFRS


Item		 Year Financial Analysis for Financial Analysis for Financial Analysis for the Last Five Years the Last Five Years
2013 2014 2015 2016 2017
Financial structure (%) Debt Ratio 41.86 22.17 24.30 32.68 36.89

Ratio of long-term capital to
property, plant and
equipment		 789.63 1,112.94 1,511.80 1,353.93 1,221.24
Solvency (%) Current ratio 32.73 34.80 100.69 50.50 31.41
Quick ratio 29.98 31.69 97.20 49.02 30.81
Interest earned ratio(times) 10.78 22.12 38.26 6.37 12.52
Operating
performance		 Accounts receivable
turnover(times)		 15.93 8.70 8.89 4.81 6.28
Average collectionperiod 23 42 41 76 58
Inventoryturnover(times) - - - - -
Accounts payable turnover
(times)		 9.65 12.64 43.01 50.59 60.14
Average days in sales - - - - -
Property, plant and
equipment turnover(times)		 0.81 1.43 2.09 1.18 1.52
Total assets turnover(times) 0.07 0.11 0.14 0.07 0.08
Profitability Return on total assets(%) 5.26 8.38 10.23 4.53 7.39
Return on stockholders'
equity (%)		 8.18 11.80 13.06 5.48 10.58
Pre-tax income to paid-in
capital(%)		 13.14 20.39 25.41 11.17 20.41
Profit ratio(%) 69.69 73.13 70.76 56.53 82.83
Earningsper share(NT$) 1.40 2.21 2.70 1.11 2.07

92

Cash flow Cash flow ratio (%) Note1 Note1 Note1 Note1 Note1
Cash flow adequacy ratio
(%)		 48.73 14.84 7.58 0.03 -
Cash reinvestment ratio (%) Note1 Note1 Note1 Note1 Note1
Leverage Operating leverage 1.00 1.00 1.00 1.00 1.00
Financial leverage 1.12 1.05 1.03 1.21 1.11
Analysis of financial ratio differences for the last two years.
1. Current ratio & quick ratio: The increase of bank loan caused the decline of ratio.
2. Interest earned ratio (times):The increase of income before tax expense and interest expense caused the
decline of ratio.
3. Accounts payable turnover & Average collection period: The increase of investment profit caused the
increase of turnover rate and the decrease of collection period.
4. Property, plant and equipment turnover & Total assets turnover: The ratio increased in 2017 due to the
increase in sales.
5. Ratios of profitability: The growth of profit in 2017 caused the increase of profitability.

  1. Accounts payable turnover & Average collection period: The increase of investment profit caused the increase of turnover rate and the decrease of collection period.

  2. Property, plant and equipment turnover & Total assets turnover: The ratio increased in 2017 due to the increase in sales.

Note1: it was negative.

Note2:

  1. Capital Structure

  2. (1) Debt ratio = Total liability / Total assets

(2) Ratio of long-term capital to property, plant and equipment = (Net shareholders ’ equity + Long-term liability)

/ Net property, plant and equipment

  1. Solvency

  2. (1) Current ratio: Current assets / current liability

  3. –

  4. (2) Quick ratio = (Current assets Inventory Prepaid expense) / current liability

(3) Times interest earned = Net income before tax and interest expense / Interest expense of the year

3. Operating ability

(1) Account receivable turnover (including accounts receivable and notes receivable derived from business

operations) =

Net sales / Average accounts receivable (including accounts receivable and notes receivable derived from

business operation)

  • (2) Days sales in accounts receivable = 365 / Account receivable turnover

  • (3) Inventory turnover = Cost of goods sold / Average inventory amount

(4)Account payable turnover (including accounts payable and notes payable derived from business operation) =

Cost of goods sold / Average accounts payable (including accounts payable and notes payable derived from business operation)

  • (5) Average days in sales = 365 / Inventory turnover

  • (6) Fixed assets turnover = Net sales / Net fixed assets

  • (7) Total assets turnover = Net sales / Total assets

93

  1. Profitability

  2. (1) Return on assets = (Net income (loss) + interest expense x (1-tax rate)) / Average total assets

(2) Return on shareholders ’ equity = Net income (loss) / Net average shareholders ’ equity

  • (3) Return to issued capital stock = Net income before tax / Issued capital stock

  • (4) Profit ratio = Net income (loss) / Net sales

– (5) Basic earnings per share = (Net income preferred stock dividend) / Weighted average stock shares

issued

  1. Cash flow

  2. (1) Cash flow ratio = Bet cash flow from operating activity / Current liability

(2) Cash flow adequacy ratio = Net cash flow from operating activity in the past 5 years / (Capital expenditure + Inventory interest + Cash dividend) in the past 5 years

– (3) Cash + reinvestment ratio = (Net cash flow from operating activity Cash dividend) / (Fixed assets + Long term investment + Other assets + Working capital)

6. Balance

  • (1) Degree of operating leverage = (Net operating income Variable operating cost and expense) / Operating income)

  • (2) Degree of financial leverage = Operating income / (Operating income interest expense)

6.3 Supervisors’ Report in the Most Recent Year

T3EX Global Holdings Corp. Audit Report by Supervisors

Date: March 2 6 , 201 8

The Board of Directors has prepared the T3EX Global Holdings Corporation’s (“the Company)” 2017 Business Report, financial statements, and proposal for earning distribution. The CPA firm of KPMG was retained to audit the Company’s financial statements and has issued an audit report relating to the financial statements. The above Business Report, financial statements, and earning distribution proposal have been examined and determined to be correct and accurate by the Supervisor of T3EX Global Holdings Corporation. Pursuant to Article 219 of the Company Act, we hereby submit this report.

Submitted to:

2018 Regular Shareholders’ Meeting of the Company

Supervisor: YI-WEI INVESTMENT Representative Chin-Chou Hsu

Supervisor: BAO-JYUE INVESTMENT Representative: Mao-Jen Chen

==> picture [84 x 37] intentionally omitted <==

==> picture [89 x 30] intentionally omitted <==

Supervisor: Shen-Li Liao

94

6.4 Consolidated Financial Statements of the Parent Company and Subsidiary in

the Most Recent Year: Please refer page 109-184

6.5 Non-Consolidated Financial Statements of the Most Recent Year:

Please refer page 185-248

6.6 Financial Difficulties Encountered By the Company and the Related Party in

the Most Recent Year and Up to the Date of the Annual Report: None.

VII. Review of Financial Position, Management Performance and Risk Management.

7.1 Analysis of Financial Status

Unit: NT$ thousands

Year
Item		 2016 2017 Difference Difference
Amount %
Current Assets 3,481,349
3,824,345
342,996
9.85
Fixed Assets 314,067
301,090
(12,977)
(4.13)
Intangible Assets 658,732
630,309
(28,423)
(4.31)
Other Assets 359,297
421,807
62,510
17.40
Total Assets 4,813,445
5,177,551
364,106
7.56
Current Liabilities 2,013,714
2,700,287
686,573
34.09
Long-term Liabilities 414,237
84,657
(329,580)
(79.56)
Total Liabilities 2,427,951
2,784,944
356,993
14.70
Capital stock 1,195,264
1,185,655
(9,609)
(0.80)
Capital surplus 865,337
872,754
7,417
0.86
Retained Earnings 285,955
424,932
138,977
48.60
Other Equity (25,556)
(137,519)
(111,963)
438.11
Treasury Stock (61,801)
(66,349)
(4,548)
7.36
Non-controlling interests 126,295
113,134
(13,161)
(10.42)
Total Stockholders' Equity
2,385,494
2,392,607
7,113
0.30

95

Analysis of changes in financial ratios:

Current Liabilities: The increase was due to increase the bank loan for operating need.

Long-term Liabilities: The 3rd domestic unsecured convertible bond was reclassified to current liabilities which caused the decrease of long-term liabilities.

Retained Earnings: The growth of 2017 profit caused the increase of retained earnings.. Other Equity: The decrease due to the the loss of foreign exchange from USD devaluation.

Effect of changes on the company’s future business and Future response action:

The foreign loss was an unrealized loss, so it doesn’t have big effect on the Company.

7.2 Analysis of Financial Performance

Unit: NT$ thousands

Year
Item		 2016 2017 Difference Difference
Amount %
Sales 9,744,113 10,537,008
792,895
8.14
Cost of Sales 7,949,895 8,612,973
663,078
8.34
Gross Profit 1,794,218 1,924,035
129,817
7.24
OperatingExpenses 1,601,053 1,527,590
(73,463)		 (4.59)
OperatingIncome 193,165
396,445
203,280
105.24
Non-operatingIncome and Expenses 33,439
(42,416)		 (75,855) (226.85)
Income Before Tax 226,604
354,029
127,425
56.23
Tax Expense 105,428
101,292
(4,136)		 (3.92)
Net Income 121,176
252,737
131,561
108.57
Analysis of changes in financial ratios:
Operating Income: The increase was due to the growth of gross profit.
Non-operating Income and Expenses: The Company recognized the foreign exchange
loss.
Income Before Tax: The increase was due to the growth of gross profit.
Net Income: The increase was due to thegrowth ofgrossprofit.

Effect of changes on the company’s future business and Future response action:

The Company will continue to develop international logistics business with oversea,

expand new locations, and deeply develop warehousing, customs declaration, and

inland transport to become a total solution logistics company.

7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Year

96

Unit: NT$ thousands

Year
Item		 2016 2017 Variance Variance
Amount (%)
Cash flows from operatingactives 8,719 153,312 144,593 1,658.37
Cash flows from investingactives (288,998) (305,981) (16,983) 5.88
Cash flows from financingactives 178,712 281,567 102,855 57.55
Net cash flows (101,567) 128,898 230,465 (226.91)
Analysis of financial ratio change:
Cash flows from operating actives: The increase were due to the growth of profit before tax.
Cash flows from investing actives: The increase of investment caused the increase of cash
outflow.
Cash flows from financingactives: The increase of bank loan caused the increase of cash inflow.

Cash flows from financing actives: The increase of bank loan caused the increase of cash inflow.

7.3.2 Remedy for Cash Deficit and Liquidity Analysis:

In light of positive cash flows, remedial actions are not required.

7.3.3 Cash Flow Analysis for the Coming Year

Unit: NT$ thousands

Estimated Cash
and Cash
Equivalents,
Beginning of
Year
(1)		 Estimated
Net Cash
Flow from
Operating
Activities
(2)		 Estimated Net
Cash Flow from
Investing
Activities
(3)		 Estimated Net
Cash Flow
from
Financing
Activities
(4)
Cash Surplus
(Deficit)
(1)+(2)+(3)+(4)
1,491,532
150,000
(200,000)		 250,000
1,691,532
Analysis of 2018 cash flow:
Cash flows from operating actives: The Company will continue to develop business
to bring more cash flows.
Cash flows from investing actives: The Company is planning to purchase IT
equipment for integrating logistics and financial information system.
Cash flows from financing actives: The Company will continue to do some financial
plans for developing business.
Remedy for Cash Deficit and Liquidity Analysis:
In light ofpositive cash flows,remedial actions are not required.

Cash flows from operating actives: The Company will continue to develop business to bring more cash flows.

Cash flows from investing actives: The Company is planning to purchase IT equipment for integrating logistics and financial information system.

Cash flows from financing actives: The Company will continue to do some financial plans for developing business.

7.4 Major Capital Expenditure Items: None.

7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year

7.5.1 Investment policy:

The policy is pursuant on the “Procedures of Acquisition and Disposal of Assets” and Internal Control System.

7.5.2 The reason of profits or Losses:

The Company and its subsidiaries’ investment profit in 2017 were mainly due to the profits of THI Logistics, THI Group (Shanghai) Ltd, and THI Group (HK) Ltd.,

97

Taiwan Express, and T-Cube logistics. The investment loss were mainly due to the loss of Sanghai EXer Logistics. The loss of Sanghai EXer Logistics was mainly due to the distribution volume has not yet reached a scale of economy which caused loss. The Company had doing the downsize plan to reach the breakeven since the end of 2017. In 1Q2017 the loss decreased 110% compared to 1Q2016.

7.5.3 Investment plans for the coming year:

The Company will continue to invest locations in China and Southern Asia.

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

(1) Interest rate

Unit: NT$ thousands

Item\Year 2017 1Q2018
Interest Expenses (A) 27,556 5,520
Revenue(B) 10,537,008 2,439,432
Operating Profit(C) 396,445 85,622
(A)/(B) 0.26% 0.23%
(A)/(C) 6.95% 6.45%

Going forward, the Company will continue to carefully monitor interest rate movements, adopt proper hedging strategies, and make use of capital markets financing instruments to ensure that our financing costs are at a comparatively low level.

(2) Foreign exchange rates

Unit: NT$ thousands

Item\Year 2017 1Q2018
Foreign Exchange (A) (47,318) (22,775)
Revenue (B) 10,537,008 2,439,432
(A) / (B) -0.45% -0.93%

The Company has a clear operating strategy and risk control procedure to respond to changes in the spot exchange rate, stays in close contact with financial institutions, and adjusts its foreign exchange strategy to minimize the risk of exchange rate accordingly.

(3) Inflation

The impact of inflation does not currently have a significant impact on the Company’s profits and business operations. The Company will continue to maintain a good relations with shipping companies, airline companies, and overseas agencies to decrease the risk of inflation or deflation.

98

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

(1) High-Risk, High-Leverage Investment:

In 2017 and as of the date of this annual report, the Company has not conducted any high-risk and/or high-leverage investment.

  • (2) Loaning or Endorsement Guarantees:

The Company and its subsidiaries conduct loaning or endorsement guarantees according to the internal policy “Operational Procedures for Endorsements and Guarantees” and the “Procedures for Loaning of Funds.”. Procedures and risk evaluation are conducted in accordance with this policy.

  • (3) Derivatives Transactions:

The Company and its subsidiaries conduct derivatives transactions according to the internal

policy “the Operational procedures for Acquisition and Disposal of Assets”

7.6.3 Future Research & Development Projects and Corresponding Budget

The Company did not conduct any research & development projects.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

The Company consistently pays close attention to any changes in local and foreign policies and makes appropriate amendments to our systems when necessary. During 2016 and as of the date of publication of this annual report, changes in related laws have not had a significant impact on our operations.

7.6.5 Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales

The Company attaches great importance to improvements in technology and carefully monitors market trends and assesses the impact they may have on the company’s operations.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures

Since its inception, the Company has consistently maintained an ethical business philosophy and fulfilled its social responsibilities. Aside from working to strengthen internal management and conforming to all relevant corporate governance requirements, the Company has also organized numerous public welfare activities.

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans

The Company has no ongoing merger and acquisition activities. In considering

99

future M&A activities, the Company will evaluate their efficiency, risks, vertical integration and other factors in accordance with its internal control system.

7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans

The Company has no factory expansion plans.

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration

The Company has consistently focused on identifying alternative sources for purchasing, and has worked to diversify its customer base in order to reduce the concentration of sales.

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%

The shareholdings of the Company’s directors and supervisors have been stable during the last few years. The Company has no shareholders of 10%.

7.6.11 Effects of, Risks Relating to and Response to the Changes in Management

Rights

The structure of our principal shareholders is solid. A strong professional management team is in place to maximize both shareholders and the Company’s best interest. Accordingly, we believe that the risk of changing in management rights that would cause damage to the Company is mitigated. In addition, our risk management department is responsible to monitor any related risks and report to the Board. Our policy is to maintain a steady ownership and management structure. As of the date of this Annual Report, such risks were not identified by the Company.

7.6.12 Litigation or Non-litigation Matters

(1) Major ongoing lawsuits, non-lawsuits or administrative lawsuit: None.

(2) Major ongoing lawsuits, non-lawsuits or administrative lawsuits caused by directors, supervisors or shareholders with over 10% shareholdings: None.

7.6.13 Other Major Risks: None.

VIII. Special Disclosure

8.1 Summary of Affiliated Companies:

8.1.1 Affiliated Companies Cha

100

T3EX Global Holdings Corp.

==> picture [799 x 407] intentionally omitted <==

----- Start of picture text -----

100% 100% 100% 60% 100% 99% 49% 100% 30%
T.H.I. Logistics Greatline T.H.I. Group Fresh Beauty Taiwan Express T.H.I. GROUP T.H.I. GROUP T.H.I. GROUP PT. Dexter
Ltd Internation Ltd enterprises LTD Logistic Co., Ltd. Vietnam Co., Ltd (BANGKOK) Co., (CAMBODIA) Co., Eurekatama
100%
100% 100% TEC Logistics 91.4%
Eastern union
THI Group Limited Co., Ltd T.H.I.GROUP 51%
holdings limited
(H.K) SINGAPORE
THI &
100% 100% 97.51% PTE LTD
Hiview Logistics Maruzen
Shanghai Yaohwa T-Cube Global Co., Ltd Co., Ltd
Logistics Co., Ltd
International
Forwarder Co., Ltd. 100% Taiwan Express LOGI
(USA),INC International
100%
Co., Ltd.
T.H.I. Group 100%
TEC LOGISTICS
(Shanghai) Ltd. 90%
(USA),INC
THI LOGISTICS
84.195% 30%
Orient Air General (MALAYSIA)
EXer Logistics Sales Agent Co., SDN.SHD
Co.,Ltd.
100%
30% Taiwan Express
(HK) Co., Ltd.
EXer Logistics
100%
Co.,Ltd.
TEC Logistics
(Shenzhen) Co., Ltd.
----- End of picture text -----

101

8.1.2 The Detail Information of Affiliated Companies

Unit: thousands

Unit: thousands
Name of Subisidary Foundation
Date
Address		 Share Capital
Major Business
Greatline International Limited 2001.06.08 P.O.Box 438, Road Town, Tortola, British Virgin islands. USD4,050 Offshore holdings company
T.H.I. GroupLtd(BVI) 2001.03.22 P.O.Box 3444, Road Town, Tortola, British Virgin Islands. USD1,000 Offshore settlement company
T.H.I. Group Limited (HK) 1988.04.29 Rm601-7,Prosperity Millennia Plaza, 663 King's Rd.,Quarry
Bay,HK.		 HKD12,480 Air & sea freight forwarding
T.H.I. Group (Shanghai) Ltd. 2001.03.05 10F, Kaikai Plaza, No 888 Wanhangdu Road, Jinan District,
Shanghai,200042		 USD3,060 Air & sea freight forwarding
and customs clearance
Shanghai Yaohwa International
Forwarder Co.,Ltd		 2004.07.28 Room 5F/Room F2, No.61 YangShuPu Road, Shanghai, P.R.
China		 USD1,700 Air & sea freight forwarding
and customs clearance
T.H.I. Logistics Ltd 2012.06.21 12F. , No. 563 , Sec . 4, Zhongxiao E. Rd . Xinyi District ,
Taipei City11072,Taiwan		 NTD130,000 Air & sea freight forwarding
T.H.I. Group Vietnam Co., Ltd 2007.12.24 Floor 7, No 09 Dinh Tien Hoang, Dakao, Ward,Dist 1, ,
Hochiminh city		 VND5,000,000 Air & sea freight forwarding
and packaging
T.H.I. GROUP (BANGKOK)
COMPANY LIMITED		 2009.04.07 2/22 Iyara Tower, 6th Fl., Unit 603,Chan Rd., Thungwatdon,
Sathorn,Bangkok		 THB5,000 Air & sea freight forwarding
andpackaging
T.H.I. GROUP (CAMBODIA) Co.,
Ltd.		 2012.03.19 5th Floor, #66 SSN Building, Norodom Bvld, Phnom Penh,
Cambodia		 USD150 Air & sea freight forwarding
T.H.I.GROUP SINGAPORE PTE
LTD		 2014.11.06 115 AIRPORT CARGO ROAD#06-19 CARGO AGENTS
BUILDING C SINGAPORE (819466)		 SGD930,000 Air & sea freight forwarding
THI & Maruzen Co., Ltd 2010.07.14 5F, Sailor No.3 BLDG 1-21-4 Nihonbashi Kakigaracho
Chuo-ku,Tokyo Japan 103-0014		 JPY60,000,000 Air & sea freight forwarding
Taiwan Express Logistic Co., Ltd. 1992.09.04 3F, No. 16, Section 1, Nánjīng East Rd, Jhongshan District
Taipei City,Taiwan		 NTD359,584 Air & sea freight forwarding
and customs clearance

102

Taiwan Express (HK) Co., Ltd. 1997.11.17 13005E-13006E,13/F., ATL Logistics Centre B, Berth 3, Kwai
ChungContainer Terminal,Kwai Chung,N.T.		 HKD70,550 Freight forwarding, customs
clearance,and distribution
TEC Logistics Co., Ltd 2003.10.13 3F, No. 16, Section 1, Nánjīng East Rd, Jhongshan District
Taipei City,Taiwan		 NTD10,000 Freight forwarding, customs
clearance,and distribution
Taiwan Express (USA) INC. 2010.02.18 409 N. OAK STREET, INGLEWOOD, CA 90302 USD1,000 Freight forwarding, customs
clearance,and distribution
Hiview Logistics Co., Ltd 1970.01.20 802, 8F, No. 6, Lìxíng 6th Rd, Dong District Hsinchu City,
Taiwan		 NTD68,000 Freight forwarding, customs
clearance,and distribution
TEC Logistics (Shenzhen) Co., Ltd. 2005.02.06 Room28B-C, Office Building, Wan Chen Square,
Wong-KwongPort Shenzhen,China		 HKD48,550 Freight forwarding, customs
clearance,and distribution
TEC LOGISTICS(USA), INC 2010.08.04 167-16 146th Ave. Jamaica, NY11434, USA USD290 Freight forwarding, customs
clearance,and distribution
Fresh Beauty enterprises LTD. 2014.08.21 Level 5,Development Bank of Samoa Building, Beach
Road,Apia,Samoa		 USD1,751 Offshore holdings company
Eastern union holdings limited 2014.08.15 Room 7C WORLD TRUST TOWER 50 STANLEY STREET
CENTRAL,HK.		 USD1,751 Offshore holdings company
T-Cube Global Logistics Co., Ltd 2015.08.07 Rm.803,8F，Changhui building.,No.799,yin xiang
road,Shanghai,P.R.China 201802		 RMB11,000 Warehousing and distribution
EXer Logistics Co.,Ltd. 2015.08.12 No.536, ShenglongRoad, SongjiangDistrict, Shanghai RMB11,123 Express
THI LOGISTICS (MALAYSIA)
SDN.BHD		 2016.01.26 13-2, Jalan Mahogani 5/KS7,Bandar Botanic, 41200 Selangor
Darul Ehsan Malaysia		 USD200 Air & sea freight forwarding
andpackaging

103

8.1.3: Shareholding of Directors, Supervisors, Managers of Affiliated Companies

Affiliated
Companies		 Position Name Current shareholding Current shareholding
Shares Sharehold
ing ratio
GREATLINE
INTERNATIO
NAL LIMITED		 Investor T3EX Global Holdings Corp. 4,050,000 100%

Representative		 David Yen - -
THI GROUP
LIMITED(H.K)		 Investor GREATLINE
INTERNATIONAL LIMITED		 12,480,000 100%

Director		 Jack Lai - -
Director & GM Billy Yuen - -
T.H.I Group
Ltd		 Investor T3EX Global Holdings Corp. 1,000,000 100%
T.H.I. Group
(Shanghai) Ltd.		 Investor THI GROUP LIMITED(H.K) - 100%
Chairman David Yen - -
Representative Jack Lai
Director & GM Jack Lai - -
Director Tony Lin - -
Supervisor Irene Lee - -
Shanghai
Yaohwa
International
Forwarder Co.,
Ltd		 Investor THI GROUP LIMITED(H.K) - 100%
Chairman David Yen - -
Representative Tony Lin
Director & GM Tony Lin - -
Director Jack Lai - -
Supervisor Helen Zheng - -
T-Cube Global
Logistics Co.,
Ltd		 Investor Eastern union holdings limited - 100%
Chairman Jack Lai - -
Representative Peter Liu - -
Director David Yen - -
Director TonyLin - -
Director HUI- CHAO HU - -
Supervisor Helen Zheng - -
EXer Logistics
Co.,Ltd.		 Investor T.H.I. Group (Shanghai) Ltd. - 84.195%
Investor CHUN-TSANG Investment 3.7910%
Chairman RU- SHIU CHANG - -
Representative

104

Director
Director LE-HUA LIU - 5.4330%
Director CHIEN- HUA LIU - 6.5810%
Director David Yen - -
Director Jack Lai - -
Director Sandy Shen - -
Director Tony Lin - -
Director Helen Zheng - -
Director HSIAO- CHENG SHE - -
Supervisor Hong-Ji Ruan - -
Eastern union
holdings limited		 Investor Fresh Beauty enterprises LTD. - 100%
Representative Jack Lai - -
Director
Fresh Beauty
enterprises
LTD.		 Investor T3EX Global Holdings Corp. 60 60%
NEW CONCEPT
INVESTMENT LIMITED		 40 40%
Director Jack Lai - -
Director TonyLin - -
Director Liu Chuandong
T.H.I. Group
Vietnam Co.,
Ltd		 Investor T3EX Global Holdings Corp. 4,950,000,000 99%
DAI HOA INTERNATIONAL
TRANSPORTATION CO.,LTD
50,000,000		 1%
Representative Jack Lai - -
T.H.I. GROUP
(BANGKOK)
COMPANY
LIMITED		 Investor T3EX Global Holdings Corp. - 49%
Boonpen Chuparkpien - 30%
Parnurut Punputtapong - 20%
Representative Jack Lai - 1%

105

T.H.I. GROUP
(CAMBODIA)
Co., Ltd.		 Investor T3EX Global Holdings Corp. - 100%
Director Jack Lai - -
T.H.I.GROUP
SINGAPORE
PTE LTD		 Investor T3EX Global Holdings Corp. 850,000 91.39%
Investor KANG LEE CHING
SHAREEN		 80,000 8.61%
Director Jack Lai - -
Director TonyLin - -
Director KANG LEE CHING
SHAREEN		 - -
THI
LOGISTICS
(MALAYSIA)
SDN.BHD		 Investor T3EX Global Holdings Corp. 1,350,000 90%
Cindy Thong LAI YOONG 75,000 5%
Chang KOK KEONG 75,000 5%
Director Jack Lai - -
Director Cindy Thong LAI YOONG - -
Director Chang KOK KEONG - -
THI & Maruzen
Co., Ltd		 Investor T3EX Global Holdings Corp. 3,060 51%
Satoshi Ikeda 2,000 33.33%
Maruzen Showa Co., ltd 940 15.67%
Representative Satoshi Ikeda - -
Director Satoshi Ikeda - -
Director TonyLin - -
Director Allen Hou - -
Director David Yen - -
Director Hideaki Suzuki - -
Taiwan Express
Logistic Co.,
Ltd.		 Investor T3EX Global Holdings Corp. 35,958,400 100%
Chairman/GM Benison Hsu - -

Director		 Andy Wan - -
Director Allen Hou - -
Director David Yen - -
Director Tony Lin - -
Supervisor Shen-Li Liao - -
T.H.I. Logistics
Ltd		 Investor T3EX Global Holdings Corp. 13,000,000 100%
Chairman
&GM		 David Yen - -
Director Jack Lai - -
Director TonyLin - -

106

Director Benison Hsu
Director Allen Hou
Supervisor Ji-Zhi Hsieh - -
Taiwan Express
(USA) INC.
Investor		 Taiwan Express Logistic Co.,
Ltd.		 100,000 100%
Director Benison Hsu - -
Director TSAI- CHUAN Liu - -
TEC Logistics
(USA) INC.		 Investor Taiwan Express Logistic Co.,
Ltd.		 200 100%
Director Benison Hsu - -
Director TSAI- CHUAN Liu - -
TEC Logistics
Co., Ltd		 Investor Taiwan Express Logistic Co.,
Ltd.		 1,000,000 100%
Chairman Benison Hsu - -
Director AndyWan - -
Director Julie Chen - -
Supervisor Melonie Lin - -
Hiview
Logistics Co.,
Ltd		 Investor Taiwan Express Logistic Co.,
Ltd.		 5,000,000 97.51%
Chairman Julie Chen - -
Director Benison Hsu - -
Supervisor Melonie Lin - -
Taiwan Express
(HK) Co., Ltd.
Investor		 Taiwan Express Logistic Co.,
Ltd.		 - 100%
Director Benison Hsu - -
TEC Logistics
(Shenzhen) Co.,
Ltd.		 Investor Taiwan Express (HK) Co., Ltd. - 100%
Director Benison Hsu - -
Director Allen Chiu - -
Director MING-SHIN JOU - -

8.1.4 The Operating Condition of Affiliated Companies ：

Unit: NT$ thousands

Affiliated Companies Share
Capital		 Total
Assets		 Total
liabilities		 Total equity Revenue Operating
Income
Net
Income		 EPS
Amount Amount
T.H.I. Group Ltd 35,000
96,417		 21,916
74,501
15,659
(722)		 3,962
0
GREATLINE INTERNATIONAL 134,428 1,468,332
0		 1,468,332
0
(307)		 165,604
0

107

LIMITED
T.H.I. Logistics Ltd 130,000 255,421 113,854 141,567 1,026,263 13,116
7,972
0
THI GROUP LIMITED(H.K) 48,448 1,589,401 126,239 1,463,162 926,315 119,110 166,034
0
T.H.I. Group (Shanghai) Ltd. 92,883 1,524,024 607,688 916,336 5,389,360 219,722 57,275
0
Shanghai Yaohwa International
Forwarder Co., Ltd		 55,031 138,308 25,181 113,127 243,101
8,036
5,668
0
T.H.I. Group Vietnam Co.,LTD 9,534
71,480		 10,641
60,839		 239,201 11,286 11,045
0
T.H.I. GROUP (BANGKOK) CO.,
LTD.		 4,841
32,262
3,188
29,074
76,978
6,382
4,027
0
T.H.I. GROUP (CAMBODIA) Co., Ltd.
4,462
9,485
1,341
8,144
29,930
101
47
0
T.H.I. Group Singapore PTE. LTD. 20,939
22,439
8,290
14,149
62,686
2,189
870
0
T.H.I. Logistics (Malaysia) SDN. BHD 11,535
13,998
7,991
6,007
30,798		 (1,234) (1,356) 0
T.H.I. & Maruzen Co. Ltd. 15,660
64,507		 35,930
28,577		 191,253
9,206
6,105
0
Fresh Beauty Enterprises Ltd. 57,411 147,456
0		 147,456
0
0		 37,397
0
Eastern union holdings limited 57,411 147,442
0		 147,442
0
0		 37,261
0
T-Cube Global Logistics Co., Ltd 54,610 234,957 87,728 147,229 487,340 47,953 37,621
0
EXer Logistics Co.,Ltd. 52,107
23,228		 10,198
13,030		 153,086 (56,779) (63,602) 0
Taiwan Express Logistic Co., Ltd. 359,584 935,193 466,158 469,035 1,049,464 16,321 36,879
0
Taiwan Express (USA) INC. 31,629
33,424
(77)		 33,501
0
0
0
0
TEC Logistics Co., Ltd 10,000
32
195
(163)		 0
0
0
0
Hiview Logistics Co., Ltd 68,000 137,366 43,827
93,539		 204,663 27,699 22,251
0
Taiwan Express (HK) Co., Ltd. 266,807 423,538 94,343 329,195 554,413
(90)		 4,891
0
TEC Logistics (Shenzhen) Co., Ltd. 183,901 234,958 76,619 158,339 468,532
6,176
3,094
0
TEC LOGISTICS(USA), INC 8,549
13,753
829
12,924
0
0
0
0
Wai Hung Cargo Transport Co., Ltd. 375
0
0
0
0
0
0
0

8.2 Private Placement Securities in the Most Recent Years: None.

8.3 Any Events in 2017 and as of the Date of this Annual Report that had

Significant Impacts on Shareholders ’ Right or Security Prices as Stated in Item

2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None.

108

Independent Auditors’ Audit Report

The Board of Directors T3EX Global Holdings Corp.

Opinion

We have audited the consolidated financial statements of T3EX Global Holdings Corp.(“the Company”) and its subsidiaries (“the Group”), which comprise the consolidated statement of balance sheet as of December 31, 2016 and 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity and cash flows for the year ended December 31,2016 and 2015, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2016 and 2015,and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide an opinion on these matters, separately.

1. Revenue recognition

Please refer to Note 4(m) "Revenue recognition" of consolidated financial statements and Note 6(v) "Revenue" for the details of operating revenues of consolidated financial statements.

How the matter was addressed in our audit:

The Group mainly engages in sea and air freight forwarding, and total logistics solution. Therefore, the revenue is a matter to the users of the consolidated financial statements. Consequently, this is one of the key assessment areas our audit focus on.

Our audit procedures included:

Understanding the internal control on revenue recognition applied by the management and assessing whether appropriate accounting policy is applied; performing the analysis on revenue from the top ten customers to verify whether or not any unusual transaction has incurred; performing the sampling procedures to verify records and supporting document of the transactions; selecting a period before and after the reporting date to assess whether revenue recognized in the correct period.

  1. Goodwill and other intangible assets impairment assessment

109

Please refer to Notes 4(j) and (k) "The non-financial assets impairment" of consolidated financial statements, Note 5 for assumptions on the accounting estimates and assumptions on the impairment of goodwill and other intangible assets of the consolidated financial statements, and Note 6(i) for the details of the intangible assets in consolidated financial statements.

How the matter was addressed in our audit:

The accounting policy applying to the goodwill and other intangible assets arising from acquisition transactions is with the uncertainty estimation. Consequently, this is one of the key assessment areas our audit focus on.

Our the principal audit procedures included:

Understanding the internal control on the impairment assessment of the goodwill and other intangible assets; selecting significant goodwill and other intangible assets; obtaining impairment assessment reports issued by an external expert engaged by the management; assessing model, parameters and assumptions applying to the financial information forecast; and evaluating whether the assessment for goodwill and other intangible assets was based on the accounting policies.

3. Account receivable evaluation

Please refer to Note 4(f) "impairment of financial assets" of consolidated financial statements, Note 5 "Estimation uncertainty of the impairment of the receivable" of consolidated financial statements and Note 6(e) "impairment of the receivables" of consolidated financial statements.

How the matter was addressed in our audit:

The group deal with its main customers on credit, so Group's receivables are exposed to the credit risk. When the customer defaults, the receivables may be impaired. Since the collectability assessment of receivables depends on management's judgment. Consequently, this is one of the key assessment areas our audit focus on.

Our principal audit procedures included:

Understanding impairment policy applied to the receivables by the management; assessing whether it is based on appropriate accounting policies. Inquiring the management whether there was any receivable with difficulty to collect; performing a sampling procedure to check the correctness of the aging of receivables and to review the collection of receivables in the subsequent period to understand if there was any significant overdue receivables to evaluate the provisions for impairment of receivables are adequate.

Other Matter

T3EX Global Holdings Corp. has prepared its parent-company-only financial statements as of and for the years then ended December 31, 2016 and 2015, on which we have expressed an unqualified opinion.

110

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance including supervisor are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  1. Assess for purpose of identifying the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Evaluated for purposes of determining the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we determine that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

111

  1. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 20, 2017 Opinion

We have audited the consolidated financial statements of T3EX Global Holdings Corp.(“the Company”) and its subsidiaries (“the Group”), which comprise the consolidated statement of balance sheet as of December 31, 2017 and 2016, the consolidated statement of comprehensive income, consolidated statement of changes in equity and cash flows for the year ended December 31, 2017 and 2016, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2017 and 2016,and its consolidated financial performance and its consolidated cash flows for the years ended December 31,2017 and 2016 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of

112

the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide an opinion on these matters, separately.

1. Revenue recognition

Please refer to Note 4(m) "Revenue recognition" of consolidated financial statements and Note 6(u) "Revenue" for the details of operating revenues of consolidated financial statements.

How the matter was addressed in our audit:

The Group mainly engages in sea and air freight forwarding, and total logistics solution. Therefore, the revenue is a matter to the users of the consolidated financial statements. Consequently, this is one of the key assessment areas our audit focus on.

Our audit procedures included:

Understanding the internal control on revenue recognition applied by the management and assessing whether appropriate accounting policy is applied; performing the analysis on revenue from the top ten customers to verify whether or not any unusual transaction has incurred; performing the sampling procedures to verify records and supporting document of the transactions; selecting a period before and after the reporting date to assess whether revenue recognized in the correct period.

2. Goodwill and other intangible assets impairment assessment

Please refer to Notes 4(j) and (k) "The non-financial assets impairment" of consolidated financial statements, Note 5 for assumptions on the accounting estimates and assumptions on the impairment of goodwill and other intangible assets of the consolidated financial statements, and Note 6(i) for the details of the intangible assets in consolidated financial statements.

How the matter was addressed in our audit:

The accounting policy applying to the goodwill and other intangible assets arising from acquisition transactions is with the uncertainty estimation. Consequently, this is one of the key assessment areas our audit focus on.

Our principal audit procedures included:

Understanding the internal control on the impairment assessment of the goodwill and other intangible assets; selecting significant goodwill and other intangible assets; obtaining impairment assessment reports issued by an external expert engaged by the management; assessing model, parameters and assumptions applying to the financial information forecast; and evaluating whether the assessment for goodwill and other intangible assets was based on the accounting policies.

3. Account receivable evaluation

Please refer to Note 4(f) "impairment of financial assets" of consolidated financial statements, Note 5 "Estimation uncertainty of the impairment of the receivable" of consolidated financial statements and Note 6(e) "impairment of the receivables" of consolidated financial statements.

How the matter was addressed in our audit:

The group deal with its main customers on credit, so Group's receivables are exposed to the credit risk. When the customer defaults, the receivables may be impaired. Since the collectability assessment of receivables depends on management's judgment. Consequently, this is one of the key assessment areas our audit focus on.

Our principal audit procedures included:

Understanding impairment policy applied to the receivables by the management; assessing whether it is based

113

on appropriate accounting policies. Inquiring the management whether there was any receivable with difficulty to collect; performing a sampling procedure to check the correctness of the aging of receivables and to review the collection of receivables in the subsequent period to understand if there was any significant overdue receivables to evaluated the provisions for impairment of receivables are adequate.

Other Matter

T3EX Global Holdings Corp. has prepared its parent-company-only financial statements
as of and for the years then ended December 31, 2017 and 2016, on which we have expressed
an unqualified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance including supervisor are responsible for overseeing the Group’s financial reporting process.

Auditor ’ s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  1. Assess for purpose of identifying the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Evaluated for purposes of determining the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If

114

we determine that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’ s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  1. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  2. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 26, 2018

115

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents (notes 6(a), (y) & (z))
1110
Current financial assets at fair value through profit or loss－current
(notes 6(b) & (y))
1125
Available-for-sale financial assets－current(notes 6(c) & (y))
1150
Notes receivable(notes 6(e) & (y))
1170
Accounts receivable(notes 6(e) & (y))
1180
Accounts receivable-related parties (notes 6(e), (y) &7)
1470
Other current assets(notes 6(e), (g), (j), (y) & 8)
Current assets
Non-current assets:
1524
Non-current available-for-sale financial assets
(notes 6(c) & (y))
1543
Financial assets measured at cost－non current (notes 6(d) & (y))
1550
Equity-accounted investees (note 6(f))
1600
Property, plant and equipment (notes 6(h) & 8)
1805
Goodwill (notes 6(i))
1821
Other intangible assets (notes 6(i))
1840
Deferred tax assets (note 6(p))
1920
Refundable deposits (notes 6(y) & 8)
1995
Other non-current assets (notes 6(g), (j), (y) & 8)
Non-current assets
Total assets		 December 31, 2017
Amount
%
$ 1,491,532
29
7,131
-
126,823
2
65,899
1
1,697,982
33
4,056
-
430,922
8		 December 31, 2016
Amount
%
1,448,581
30

7,107 -
29,432
1
31,651
1
1,629,766
34
511
-
334,301
6
3,481,349
72

- -
38,800
1
60,753
1
314,067
6
563,329
12
95,403
2
43,044
1
140,462
3
76,238
2
1,332,096
28
4,813,445
100
Liabilities and Equity
Current liabilities:
2100
Short-term borrowings (notes 6(k) & (y))
2120
Financial liabilities at fair value through profit or loss-non current
(note 6(b), (m) & (y))
2150
Notes payable (note 6(y))
2170
Accounts payable (note 6(y))
2180
Accounts payable－related parties (notes 6(y) & 7)
2200
Other payables (note 6(y))
2230
Current tax liabilities
2321
Current portion of convertible bonds (notes 6(m) & (y))
2399
Other current liabilities (notes 6(g) & (y))
Current liabilities
Non-Current liabilities:
2500
Non-current financial liabilities at fair value through profit or loss
(notes 6(b), (m) & (y))
2530
Convertible bond payable (notes 6(m) & (y))
2640
Net defined benefit liability(note 6(o))
2670
Other liabilities (notes 6(g) & (y))
Non-current liabilities
Total liabilities
Equity attributable to owners of parent (notes 6(m), (p), (q) & (r)) :
3100
Share capital
3200
Capital surplus
3300
Retained earnings
3400
Other equity
3500
Treasury shares
Equity attributable to owners of the Company
36xx
Non-controlling interests
Total equity (note 6(a))
Total liabilities and equity		 December 31, 2017 December 31, 2017 December 31, 2017
Amount % Amount
3,824,345
73
92,400
2
38,800
1
66,585
1
301,090
6
527,494
10
102,815
2
42,421
1
137,153
3
44,448
1		 2,700,287
53
2,013,714
42
- -
2 -
-
-
290,691
5
84,657
2
82,709
2
-
-
40,835
1
84,657
2
414,237
8
2,784,944
55
2,427,951
50
1,185,655
22
1,195,264
25
872,754
17
865,337
17
424,932
8
285,955
7
(137,519)
(3)
(25,556)
(1)
(66,349)
(1)
(61,801)
(1)
1,353,206
27



2,279,473
43
2,259,199
47
113,134
2
126,295
3
2,392,607
45
2,385,494
50
$
5,177,551
100
4,813,445
100
$
5,177,551
100

116

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars, except for earnings per common share)

4000
Operating revenue (notes 6(u) &7)
5000
Cost of revenue (notes 6(n), (o), 7 & 12)
Gross profit
Operating expenses (notes 6(n), (o), (t) & 12)
6100
Selling expenses
6200
Administrative expenses
Total operating expenses
Net operating income
Non-operating income and expenses:
7010
Other income (note 6(v))
7020
Other gains and losses (note 6(g) & (x))
7060
Share of profit of equity-accounted investees (note 6(f))
7510
Financial cost (note 6(m) & (x))
Profit before tax
7950
Less: Tax (expense (note 6(p))
Profit for the year
8300
Other comprehensive income:
8310
Items that will not be reclassified subsequently to profit or loss:
8311
Remeasurements of defined benefit plans obligation
8349
Income tax related to items that will not be reclassified subsequently
Items that will not be reclassified subsequently to profit or loss
8360
Items that will may be reclassified subsequently to profit or loss:
8361
Exchange differences on translation in financial statements of foreign operation
8362
Unrealized gains (losses) on available-for-sale financial assets
8399
Income tax related to items that may be reclassified subsequently
Items that will may be reclassified subsequently to profit or loss
8300
Other comprehensive income(loss) for the year, net of income tax
Total comprehensive income
Profit attributable to:
Owners of parent company
Non-controlling interests
Comprehensive income attributable to:
Owners of parent company
Non-controlling interests
Basic earnings per share (note 6(s))
Earnings per share (TWD)
Diluted earnings per share (TWD)		 2017 %
100
82		 2016 %
100
82
18
12
4
16
2
-
1
-
-
3
1
2
-
-
-
(2)
-
-
(2)
(2)

2
-
2
-
-
-
1.11
1.04
Amount
$ 10,537,008
8,612,973		 Amount

9,744,113

7,949,895

1,924,035		 18

1,794,218

1,089,712
437,878		 11
4

1,135,050

466,003

1,527,590		 15

1,601,053

396,445		 3

193,165

9,708
(24,917)
349
(27,556)		 -
-
-
-

9,454

50,310

(201)
(26,124)

354,029
101,292		 3
1

226,604

105,428

252,737		 2

121,176

(2,462)
-		 -
-

(5,905)
-
(2,462) - (5,905)


(92,886)
(23,045)
-		 (1)
-
-

(125,138)

(6,422)
-
(115,931) (1)
(131,560)

(118,393)
(1)


(137,465)

$
134,344
1

(16,289)

$ 240,110
12,627		 2
-

130,487
(9,311)

$
252,737		 2
121,176

$ 125,685
8,659		 1
-

248
(16,537)

$
134,344		 1
(16,289)

$		 2.07
$ 1.93

117

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) 

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Balance at January 1, 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends
Stock dividends
Other changes in capital surplus:
Share-based payment transactions
Issue of common stock for convertible bonds
Issue new stocks for share base payment
Purchase of treasury share
Change in ownership interests in subsidiaries
Changes in non-controlling interests
Balance at December 31, 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Special reserve
Cash dividends
Issue of common stock for convertible bonds
Issue new stocks for share base payment
Purchase of treasury share
Retirement of treasury share
Changes in ownership interests in subsidiaries
Changes in non-controlling interests
Balance at December 31, 2017		 Share capital
Ordinary
shares
Capital surplus

-
-
-
-
130,487
130,487
-
-
-
-
130,487
(9,311)
121,176
-
-
-
-
(5,905)
(5,905)
(117,912)
(6,422)
(124,334)
-
(130,239)
(7,226)
(137,465)








-
-
-
-
124,582
124,582
(117,912)
(6,422)
(124,334)
-
248
(16,537)
(16,289)





-
-
27,217
-
(27,217)
-
-
-
-
-
-
-
-
-
-
-
-
(206,341)
(206,341)
-
-
-
-
(206,341)
-
(206,341)
22,927
-
-
-
(22,927)
(22,927)
-
-
-
-
-
-
-
-
(288)
-
-
-
-
-
-
-
-
(288)
-
(288)
7,836
9,337
-
-
-
-
-
-
-
-
17,173
-
17,173
4,080
1,142
-
-
-
-
-
-
-
-
5,222
-
5,222
-
-
-
-
-
-
-
-
-
(51,165)
(51,165)
-
(51,165)
-
(12,068)
-
-
-
-
-
-
-
-
(12,068)
12,068
-
-
-
-
-
-
-
-
-
-
-
-
1,137
1,137
1,195,264
865,337
138,575
7,116
140,264
285,955
(29,591)
4,035
(25,556)
(61,801)
2,259,199
126,295
2,385,494
-
-
-
-
240,110
240,110
-
-
-
-
240,110
12,627
252,737
-
-
-
-
(2,462)
(2,462)
(88,918)
(23,045)
(111,963)
-
(114,425)
(3,968)
(118,393)








-
-
-
-
237,648
237,648
(88,918)
(23,045)
(111,963)
-
125,685
8,659
134,344



-
-
13,049
-
(13,049)
-
-
-
-
-
-
-
-
-
-
-
18,440
(18,440)
-
-
-
-
-
-
-
-
-
-
-
-
(92,637)
(92,637)
-
-
-
-
(92,637)
-
(92,637)
13,756
15,544
-
-
-
-
-
-
-
-
29,300
-
29,300
275
77
-
-
-
-
-
-
-
-
352
-
352
-
-
-
-
-
-
-
-
-
(56,159)
(56,159)
-
(56,159)
(23,640)
(27,971)
-
-
-
-
-
-
-
51,611
-
-
-
-
19,767
-
-
(6,034)
(6,034)
-
-
-
-
13,733
(17,231)
(3,498)
-
-
-
-
-
-
-
-
-
-
-
(4,589)
(4,589)


$
1,185,655
872,754
151,624
25,556
247,752
424,932
(118,509)
(19,010)
(137,519)
(66,349)
2,279,473
113,134
2,392,607

118

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit and loss:
Depreciation
Amortization
Impairment loss on receivables
Change in fair value of financial assets and liabilities
Interest expense
Interest income
Cost of share-based payment transactions
Share of profit of equity-accounted investees
Loss (gain) on disposal of property, plant and equipment
Gain on evaluation of investments payable
Loss on impairment of goodwill
Gain on evaluation of investments payable
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in notes receivable
Decrease (increase) in accounts receivable
Decrease (increase) in accounts receivable－related parties
Increase in other current assets
Decrease (increase) in other operating assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in notes payable
Increase (decrease) in accounts payable
Increase (decrease) in accounts payable to related parties
Increase (decrease) in other payable
Increase (decrease) in other current liabilities
Increase in net defined benefit liability
Total changes in operating liabilities
Net changes in operating assets and liabilities
Net adjustments
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through profit or loss
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Acquisition of equity-accounted investee
The capital increase of subsidiary
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Acquisition of intangible assets
Decrease in investment payable
Decrease (increase) in other current and non-current assets
Dividends received
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings
Decrease (increase) in short-term notes and bills payable
Repayments of bonds
Repayments of long-term debt
Payment of cash dividends
Exercise of employee share options
Payments to acquire treasury shares
Change in non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2017
$ 354,029
40,656
16,451
3,442
(24)
27,556
(5,976)
-
(349)
2,004
(7,161)
31,892
(45,122)		 2016

226,604

43,767

20,446

1,634

129

26,124

(4,729)
(288)

201

(17,960)

(16,283)

36,092

-

63,369

89,133

(34,248)
(70,171)
(3,546)
(63,204)
(3,957)


2,031

(194,319)

910

(63,625)

(1,823)

(175,126)


(256,826)

14,873
(33,047)
(580)
17,572
(3,963)
(512)


3,141

131,383

1,004

(92,140)

3,097

(8,106)

(5,657)


38,379

(180,783)


(218,447)

(117,414)


(129,314)

236,615
5,976
(14,685)
(74,594)


97,290

4,729

(5,447)

(87,853)

153,312


8,719

-
(261,017)
55,342
(8,894)
(3,498)
(33,572)
2,478
3,309
(24,401)
(39,358)
-
3,630

296

(90,533)

95,991

(10,381)

-

(32,236)

23,210

(7,552)

(4,953)

(175,427)
(91,391)

3,978

(305,981)


(288,998)

500,000
-
(65,400)
-
(92,637)
352
(56,159)
(4,589)


451,000
(20,000)

-
(1,141)

(206,341)

5,222

(51,165)

1,137

281,567


178,712

(85,947)


(117,331)

42,951
1,448,581


(218,898)

1,667,479

$
1,491,532

1,448,581

119

(English Translation of Consolidated Financial State ments and Report Originally Issued in Chinese) 

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

( E x p r e s s e d i n T h o u s a n d s o f N e w T a i w a n D o ll a r s , U n l e s s O t h e r w i s e S p e ci fi e d )

( 1 ) C o m p a n y h i s t o r y

T3EX GLOBAL HOLDINGS CORP. (the “Company”) was incorporated on February 4, 1987, as a company limited by shares, and registered with the Ministry of Economic Affairs, R.O.C.. The address of the Group’s registered office is 12F, No. 563, Sec. 4, Zhongxiao E. Rd., Xinyi Dist., Taipei City, R.O.C.. The Group mainly engages in sea and air freight forwarding, distribution, packing, warehousing, logistics, and customs clearance.

The Group’s shares was listed at TWSE since December 22, 2016.

( 2 ) A p p r o v a l d a t e a n d p r o c e d u r e s o f t h e c o n s o li d a t e d fi n a n ci a l st a t e m e n t s :

The consolidated financial statements were authorized for issue by the board of directors on March 26, 2018.

( 3 ) N e w s t a n d a r d s , a m e n d m e n t s a n d i n t e r p r e t a ti o n s a d o p t e d :

  • (a) The impact of the International Financial Reporting Standards ( “IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2017:

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying
the Consolidation Exception"
Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint
Operations"
IFRS 14 "Regulatory Deferral Accounts"
Amendment to IAS 1 " Presentation of Financial Statements-Disclosure
Initiative
Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of
Depreciation and Amortization"
Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants"
Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions"
Amendment to IAS 27 "Equity Method in Separate Financial Statements"
Amendments to IAS 36 " Impairment of Non-Financial assets- Recoverable
Amount Disclosures for Non Financial Assets"
Amendments to IAS 39 " Financial Instruments-Novation of Derivatives and
Continuation of Hedge Accounting"
Annual Improvements to IFRSs 2010 2012 Cycle and 2011 2013 Cycle		 E f f e c ti v e d a t e
p e r I A S B
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
July 1, 2014

120

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
Annual Improvements to IFRSs 2012 2014 Cycle
IFRIC 21 "Levies"		 E f f e c ti v e d a t e
p e r I A S B
January 1, 2016
January 1, 2014

The Group assessed that the initial application of the above IFRSs would not have any material impact on the consolidated financial statements.

  • (b) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018 in accordance with Ruling No. 1060025773 issued by the FSC on July 14, 2017.

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
Amendment to IFRS 2 "Clarifications of Classification and Measurement of
Share-based Payment Transactions"
Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts"
IFRS 9 "Financial Instruments"
IFRS 15 "Revenue from Contracts with Customers"
Amendment to IAS 7 "Statement of Cash Flows -Disclosure Initiative"
Amendment to IAS 12 "Income Taxes- Recognition of Deferred Tax Assets for
Unrealized Losses"
Amendments to IAS 40 "Transfers of Investment Property"
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12
Amendments to IFRS 1 and Amendments to IAS 28
IFRIC 22 "Foreign Currency Transactions and Advance Consideration"		 E f f e c ti v e d a t e
p e r I A S B
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2017
January 1, 2018
January 1, 2018

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

  • (i) IFRS 9 "Financial Instruments"

IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" which contains classification and measurement of financial instruments, impairment and hedge accounting.

121

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

1) Classification- Financial assets

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial assets in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification. In addition, IAS 39 has an exception to the measurement requirements for investments in unquoted equity instruments that do not have a quoted market price in an active market (and derivatives on such an instrument) and for which fair value cannot therefore be measured reliable. Such financial instruments are measured at cost. IFRS 9 removes this exception, requiring all equity investments (and derivatives on them) to be measured at fair value.

Based on its assessment, the Group does not believe that the new classification requirements will have a material impact on its accounting for trade receivables, loans, investments in debt securities and investments in equity securities that are managed on a fair value basis. At December 31, 2017, the Group had equity investments classified as available-for-sale with a fair value of 219,223 thousand that are held for long-term strategic purposes. At initial application of IFRS 9, the Group has designated these investments as measured at FVOCI. Consequently, all fair value gains and losses will be reported in other comprehensive income, no impairment losses would be recognized in profit or loss and no gains or losses will be reclassified to profit or loss on disposal. The Group estimated the application of IFRS 9’s classification requirements on January 1, 2018 resulting in no significant impact on retained earnings and other equity.

  • 2) Impairment-Financial assets and contact assets

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (ECL) model. This will require considerable judgment as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis.

The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments, and to contract assets.

Under IFRS 9, loss allowances will be measured on either of the following bases:

  • ‧12-month ECLs. These are ECLs that result from possible default events within the 12 months after the reporting date; and

  • ‧Lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument.

122

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement always applies for trade receivables and contract assets without a significant financing component; an entity may choose to apply this policy also for trade receivables and contract assets with a significant financing component.

The Group estimated the application of IFRS 9’s impairment requirements on January 1, 2018 resulting in no significant impact.

  • 3)

Disclosures

IFRS 9 will require extensive new disclosures, in particular about hedge accounting, credit risk and expected credit losses. The Group’s assessment included an analysis to identify data gaps against current processes and the Group plans to implement the system and controls changes that it believes will be necessary to capture the required data.

4)

Transition

Changes in accounting policies resulting from the adoption of IFRS 9 will generally be applied retrospectively, except as described below.

  • ‧The Group will take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 generally will be recognized in retained earnings and reserves as at January 1, 2018.

  • ‧The following assessments have to be made on the basis of the facts and circumstances that exist at the date of initial application.

  • The determination of the business model within which a financial asset is held.

  • The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.

  • The designation of certain investments in equity instruments not held for trading as at FVOCI.

The Group estimated the application of IFRS 9 resulting in no significant impact on consolidated financial statements.

  • (ii) IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 "Revenue" and IAS 11 "Construction Contracts".

The Group has completed an initial assessment of the potential impact of the adoption of IFRS 15 on its consolidated financial statements.

123

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 1) Rending of services

The Group provided sea & air freight forwarding service and logistics integration service the Group recognize service revenue follow the progress of service provide. The Group estimate there is no significant difference in the timing of recognition of the revenue.

  • 2) Transition

The Group plans to adopt IFRS 15 using the cumulative effect method. Therefore, the comparative information will not be restated. The cumulative effect of initially applying IFRS 15 will be recognized as an adjustment to the opening balance of retained earnings at 1 January 2018. The Group plans to use the practical expedient in paragraph C5(a) of IFRS 15, under which, for contracts that are completed at the date of the initial application ( i.e. 1 January 2018) will not be restated.

  • (iii) Amendments to IAS 7 "Disclosure Initiative"

The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes.

To satisfy the new disclosure requirements, the Group intends to present a reconciliation between the opening and closing balances for liabilities with changes arising from financing activities.

  • (iv) Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Loss"

The amendments clarify the accounting for deferred tax assets for unrealized losses on debt instruments measured at fair value.

The Group estimated the application of the amendments resulting in both the deferred tax assets and the retained earnings will not have significant impact.

The actual impacts of adopting the standards may change depending on the economic conditions and events which may occur in the future.

  • (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

As of the date the following IFRSs that have been issued by the IASB, but not yet endorsed by the FSC:

N e w, Re v is e d o r A me nd e d St a nd a rd s a nd I nt e rp re t a ti o ns
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an
Investor and Its Associate or Joint Venture"
IFRS 16 "Leases"
IFRS 17 "Insurance Contracts"
IFRIC 23 "Uncertainty over Income Tax Treatments"
Amendments to IFRS 9 "Prepayment features with negative compensation"		 E f f e c ti v e d a t e
p e r I AS B
Effective date to
be determined
by IASB
January 1, 2019
January 1, 2021
January 1, 2019
January 1, 2019

124

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
Amendments to IAS 28 "Long-term interests in associates and joint ventures"
Annual Improvements to IFRS Standards 2015–2017 Cycle
Amendments to IAS 19“Plan Amendment, Curtailment or Settlement”		 E f f e c ti v e d a t e
p e r I A S B
January 1, 2019
January 1, 2019
January 1, 2019

Those which may be relevant to The Group are set out below:

Issuance /
Release Dates
January 13, 2016		 Standards or
Interpretations
IFRS 16 "Leases"		 Content of amendment
The new standard of accounting for
lease is amended as follows:
‧ For a contract that is, or contains,
a lease, the lessee shall recognize
a right of use asset and a lease
liability in the balance sheet. In
the statement of profit or loss and
other comprehensive income, a lessee
shall present interest expense on the
lease liability separately from the
depreciation charge for the right
of-use asset during the lease term.
‧ A lessor classifies a lease as either
a finance lease or an operating
lease, and therefore, the accounting
remains similar to IAS 17.

The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

( 4 ) S u m m a r y o f si g n ifi c a n t a c c o u n ti n g p o li ci e s :

The significant accounting policies have been applied consistently to all periods presented in these financial statements.

(a) Statement of compliance

These consolidated financial statements are prepared in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” (hereinafter referred to as the Regulations) and the IFRSs, International Accounting Standards (IAS), IFRIC Interpretations, and Standard Interpretations Committee (SIC) Interpretations endorsed by the FSC.

125

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (b) Basis of preparation

  • (i) Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for the following material items in the balance sheets:

  • 1) Financial instruments measured at fair value through profit or loss are measured at fair value (including derivative financial instruments);

  • 2) Available-for-sale financial assets are measured at fair value;

  • 3) Net defined benefit liability (asset) is recognized as plan assets, on fair value measurement, less the present value of the defined benefit obligation.

  • (ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The Group’s consolidated financial statements are presented in New Taiwan dollars, which are the Company’s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

  • (c) Basis of consolidation

  • (i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

  • (ii) List of subsidiaries included in the consolidated financial statements
Name of
investor
The Company
The Company
The Company
The Company		 Name of subsidiary
T.H.I Group Ltd. (in B.V.I.)
GREATLINE INTERNATIONAL
LIMITED (GREATLINE)
T.H.I GROUP VIETNAM CO., LTD.
T.H.I. GROUP (BANGKOK)
COMPANY LIMITED		 Principal activity
Offshore settlement center
Offshore Controlling company
Air & sea freight forwarding and
packaging
Air & sea freight forwarding and
packaging		 Percentage of shares held
December
31, 2017
December
31, 2016
100%
100%
100%
100%
99%
51%
49%
49%		 Remark
December
31, 2017
100%
100%
99%
49%
Please
refer to
Note 6(7)

126

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Name of
investor
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Fresh Beauty
Eastern Union
GREATLINE
T.H.I. HK
T.H.I. HK
T.H.I. Shanghai
TEC
TEC
TEC
TEC
TEC
TEC HK
TEC HK		 Name of subsidiary
Taiwan Express Logistic Co., Ltd. (TEC)
T.H.I. Logistics Ltd.
T.H.I. GROUP (CAMBODIA) Co., Ltd.
T.H.I. GROUP SINGAPORE PTE. LTD.
(SINGAPORE)
T.H.I. & Maruzen Co. Ltd.
T.H.I. Logistic (Malaysia) SDN. BHD
Fresh Beauty Enterprise Ltd. (Fresh
Beauty)
East Union Holdings Limited (East
Union)
T-Cube Global Logistics Co., Ltd.
T.H.I. GROUP LIMITED (in HK)
T.H.I. Group (Shanghai) Ltd. (T.H.I.
Shanghai)
Shanghai Yaohwa International
Forwarder Co., Ltd. (Shanghai Yaohwa)
EXer Logistics Co., Ltd.
Taiwan Express (HK) Co., Ltd. (TEC
HK)
Taiwan Express (USA) INC.
TEC Logistic Co., Ltd.
TEC Logistics (USA), Inc.
Hiview Logistics Co., Ltd.
TEC Logistics (Shenzhen) Co., Ltd.
Wai Hung (China-HK) Cargo Transport
Co., Ltd. (Wai Hung )		 Principal activity
Air & sea freight forwarding and
customs clearance
Air & sea freight forwarding
Air & sea freight forwarding
Air & sea freight forwarding
Air & sea freight forwarding
Air & sea freight forwarding
Offshore holding company
Offshore holding company
Warehousing and distribution
Air & sea freight forwarding
Air & sea freight forwarding and
customs clearance
Air & sea freight forwarding and
customs clearance
Express logistics company
Freight forwarding, customs clearance,
and distribution
Freight forwarding, customs clearance,
and distribution
Freight forwarding, customs clearance,
and distribution
Freight forwarding, customs clearance,
and distribution
Freight forwarding, customs clearance,
and distribution
Freight forwarding, customs clearance,
and distribution
Warehousing and distribution		 Percentage of shares held
December
31, 2017
December
31, 2016
100%
100%
100%
100%
100%
100%
91.40%
80%
51%
51%
90%
90
60%
60
100%
100
100%
100
100%
100%
100%
100%
100%
100%
88.94%
73.87%
100%
100%
100%
100%
100%
100%
100%
100%
97.51%
97.51%
100%
100%
-
%
100%		 Remark
December
31, 2017
100%
100%
100%
91.40%
51%
90%
60%
100%
100%
100%
100%
100%
88.94%
100%
100%
100%
100%
97.51%
100%
-
%
Please
refer to
Note 6(7)
Please
refer to
Note 6(7)
Please
refer to
Note 6(7)
Please
refer to
Note 6(7)
Please
refer to
Note 6(7)
Please
refer to
Note 6(7)
Note (a)

Note (a):This company has already been dissolved at 2017, and still liquidating at December 31, 2017.

(iii) Subsidiaries which are not included in the consolidated financial statements

None.

127

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (d) Classification of current and non-current assets and liabilities

An asset is classified as current when:

  • (i) It is expected to be realized as an asset or is intended to be sold or consumed in the entity’ normal operating cycle;

  • (ii) It is held primarily for the purpose of trading;

  • (iii) It is expected to be realized within twelve months after the reporting period; or

  • (iv) It is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

  • (i) It is expected to be settled in the entity’s normal operating cycle;

  • (ii) It is held primarily for the purpose of trading;

  • (iii) It is due to be settled within twelve months after the reporting period; or

  • (iv) The entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

  • (e) Cash and cash equivalents

Cash and cash equivalents comprise cash, cash in bank, and short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

  • (f) Financial instruments

Financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instruments.

  • (i) Financial assets

The Group classifies financial assets into the following categories: financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.

128

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 1) Financial assets at fair value through profit or loss

A financial asset is classified in this category if it is held for trading or is designated as such on initial recognition. A financial assets is classified as held for trading if it is acquired principally for the purpose of selling in the short term. The Group designates financial assets, other than those classified as held for trading, as at fair value through profit or loss at initial recognition under one of the following situations:

  • a) Designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

  • b) Performance of the financial asset is evaluated on a fair value basis.

  • c) A hybrid instrument contains one or more embedded derivatives.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein, which take into account any dividend and interest income, are recognized in profit or loss, and included in statement of comprehensive income. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured, are measured at amortized cost, and are included in financial assets measured at cost.

  • 2) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the other categories of financial assets. Available-for-sale financial assets are recognized initially at fair value, plus any directly attributable transaction cost. Subsequent to initial recognition, they are measured at fair value, and changes therein, other than impairment losses, interest income calculated using the effective interest method, dividend income, and foreign currency differences on available-for-sale debt instruments, are recognized in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassified to profit or loss, and recognized in other gains or losses under non-operating income and expenses. A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade-date accounting.

129

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

3) Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise trade receivables and other receivables. At initial recognition, these assets are recognized at fair value, plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses other than insignificant interest on short-term receivables. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade-date accounting.

4) Impairment of financial assets

A financial asset which is not at fair value through profit or loss is evaluated for impairment at every reporting date. A financial asset is impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a loss event) that occurred subsequent to the initial recognition of the asset and that a loss event (or events) has an impact on the future cash flows of the financial asset that can be estimated reliably

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults, or the disappearance of an active market for a security.

All individually significant receivables are assessed for specific impairment. Receivables that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries, and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than those suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flows discounted at the asset’s original effective interest rate.

An impairment loss in respect of a financial asset measured at cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversible in subsequent periods.

An impairment loss in respect of a financial asset is deducted from the carrying amount except for trade receivables, for which an impairment loss is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off against the allowance account. Any subsequent recovery from a written-off receivable is recorded in the allowance account. Changes in the allowance accounts are recognized in profit or loss.

130

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

If, in a subsequent period, the amount of impairment loss on a financial asset measured at amortized cost decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the decrease in impairment loss is reversed through profit or loss to the extent that the carrying value of the asset does not exceed its amortized cost before the impairment loss is recognized at the reversal date.

Impairment losses recognized on available-for-sale equity security are not reversed through profit or loss. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income, and accumulated in equity. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

  • 5) Derecoginition of financial assets

The Group derecognizes financial assets when the contractual rights of the cash inflow from the assets are terminated, or when the Group transfers substantially all the risks and rewards of ownership of the financial assets.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss shall be recognized in profit and loss.

The Group separates the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part derecognized and the amount of the consideration received or receivable for the part derecognized shall be recognized in profit or loss.

  • (ii) Financial liabilities and equity instruments

  • 1) Classification of debt or equity instruments

Debt or equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual agreement.

Equity instruments issued are recognized based on the amount of consideration received, less the direct issuance cost.

Compound financial instruments issued by the Group comprise convertible bonds payable that can be converted to share capital at the option of the holder when the number of shares to be issued is fixed.

The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

131

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Interest related to the financial liability is recognized in profit or loss. On conversion, the financial liability is reclassified to equity, without recognizing any gain or losses.

  • 2)

  • Financial liabilities at fair value through profit or loss

A financial liability is classified in this category if it is classified as held for trading or is designated as such on initial recognition.

A financial liability is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing in the short term. The Group designates financial liabilities, other than those classified as held for trading, as at fair value through profit or loss at initial recognition under one of the following situations:

  • a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring the assets or liabilities or recognizing the gains and losses thereon on a different basis;

  • b) Performance of the financial liabilities is evaluated on a fair value basis;

  • c) A hybrid instrument contains one or more embedded derivatives.

Attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value, and changes therein, which take into account any interest expense, are recognized in profit or loss.

  • 3)

Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss, which comprise loans and borrowings, and trade and other payables, are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in profit or loss.

  • 4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been discharged or cancelled, or has expired. The difference between the carrying amount of a financial liability derecognized and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

  • 5)

  • Offsetting of financial assets and liabilities

The Group presents financial assets and liabilities on a net basis when the Group has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

132

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (iii) Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are recognized initially at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.

(g) Investment in associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of investment includes transaction costs. The carrying amount of investment in associates includes goodwill arising from the acquisition, less any accumulated impairment losses.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, after adjustments to align their accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Group’s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus.

Unrealized profits resulting from transactions between the Group and an associate are eliminated to the extent of the Group’s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

  • (h) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset. The cost of software is capitalized as part of the property, plant and equipment if the purchase of the software is necessary for the property, plant and equipment to be capable of operating.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and depreciation method of that part are the same as those of another significant part of that same item.

133

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as other gains and losses.

(ii) Subsequent cost

Subsequent expenditure is capitalized only when it is probable that future economic benefits associated with the expenditure will flow to the Group. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred.

(iii) Depreciation

The depreciable amount of an asset is determined after deducting the asset’s residual value, and it shall be allocated on a systematic basis over the asset’s useful life. Items of property, plant and equipment with the same useful life may be grouped together in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss.

If there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use will be the useful life of the asset; otherwise, the asset is depreciated over the shorter of the lease term and its useful life.

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

1) Building 5~50 years
2) Transportation 5~7 years
3) Office and other equipment 2~6 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

  • (i) Leased assets

  • (i) Lessor

A finance leased asset is recognized on a net basis as lease receivable. Initial direct costs incurred in negotiating and arranging an operating lease is added to the net investment of the leased asset. Finance income is allocated to each period during the lease term in order to produce a constant periodic rate of interest on the remaining balance of the receivable.

134

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Lease income from operating lease is recognized in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease is added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into the operating lease are spread over the lease term on a straight-line basis so that the lease income received is reduced accordingly.

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(ii) Lessee

Payments made under operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense over the term of the lease.

Contingent rent is recognized as expense in the periods in which they are incurred.

(j) Intangible assets

(i) Goodwill

  • 1) Recognition

Goodwill arising from the acquisition of subsidiaries is recognized as intangible assets.

  • 2) Measurement

Goodwill is measured at its cost, less impairment losses. Investments in associates are accounted for using the equity method. The carrying amount of the investment in associates includes goodwill, and impairment losses on such investment are recognized as part of the carrying amount of the investment and are not associated with goodwill or any other assets.

  • (ii) Other intangible assets

Other intangible assets that are acquired by the Company are measured at cost, less accumulated amortization and any accumulated impairment losses.

  • (iii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(i) Amortization

The depreciable amount of an intangible asset is calculated as the cost of the asset, less its residual value.

135

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and intangible assets with an indefinite useful life, from the date when they are made available for use. The estimated useful lives for the current and comparative periods are 3~10 years.

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any changes shall be accounted for as changes in accounting estimates.

(k) Impairment non financial assets

The Group assesses non financial assets for impairment (except for deferred income tax assets and employee benefits) at every reporting date, and estimates the recoverable amounts.

If it is not possible to determine the recoverable amount for an individual asset, then the Group will have to determine the recoverable amount for the asset’s cash-generating unit (CGU).

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value, less costs to sell, and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Such is deemed as an impairment loss, which is recognized immediately in profit or loss.

The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amount of that asset is estimated.

An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. In this case, the carrying amount of the asset is increased to its recoverable amount by reversing an impairment loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Notwithstanding whether indicators exist, recoverability of goodwill and intangible assets with indefinite useful lives or those not yet in use are required to be tested at least annually. Impairment loss is recognized if the recoverable amount is less than the carrying amount.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the acquirer ’s cash-generating units, or groups of cash-generating units, from the acquisition date, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.

If the carrying amount of a cash-generating units exceeds the recoverable amount of the unit, impairment loss is recognized and is allocated to reduce the carrying amount of each asset in the unit.

Reversal of an impairment loss for goodwill is prohibited.

136

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(l) Treasury stock

Repurchased shares are recognized as treasury shares (a contra-equity account) based on their repurchase price (including all directly accountable costs), net of tax. Gains on disposal of treasury “ － ” shares are accounted for as capital reserve treasury share transactions . Losses on disposal of treasury shares are offset against existing capital reserve arising from similar types of treasury shares. If the capital reserve is insufficient, such losses are charged to retained earnings. The carrying amount of treasury shares is calculated using the weighted-average method for different types of repurchase.

“ － ” “ ” When treasury shares are cancelled, capital reserve share premiums and share capital are debited proportionately. Gains on cancellation of treasury shares are charged to capital reserves arising from similar types of treasury shares. Losses on cancellation of treasury shares are offset against existing capital reserves arising from similar types of treasury shares. If capital reserve is insufficient, such losses are charged to retained earnings.

  • (m) Revenue

Revenue of the Group is mainly generated from providing logistic services. Revenue is recognized when service is rendered. Costs are recognized with revenues when they occur. Expenses are recognized as incurred on an accrual basis.

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of the defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The discount rate is the yield at the reporting date on market yields of government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are improved the expense of the increased benefit relating to past service by employees is recognized immediately in profit or loss.

137

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group reclassify the amounts recognized in other comprehensive income to retained earnings.

The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment or settlement comprises any resulting change in the fair value of plan assets, any change in the present value of the defined benefit obligation.

  • (iii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(o) Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

(p) Income tax

Income tax expenses include both current taxes and deferred taxes. Except for expenses that are related to business combinations, expenses recognized in equity or other comprehensive income directly, and other related expenses, all current and deferred taxes are recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years.

138

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are not recognized for the following:

  • (i) Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) at the time of the transaction.

  • (ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.

  • (iii) Initial recognition of goodwill.

Deferred taxes are measured based on the statutory tax rate on the reporting date or the actual legislative tax rate during the year of expected asset realization or debt liquidation.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

  • (i) The entity has the legal right to settle tax assets and liabilities on a net basis; and

  • (ii) The taxing of deferred tax assets and liabilities fulfills one of the scenarios below:

  • 1) levied by the same taxing authority; or

  • 2) levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset should be recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

(q) Business combinations

Goodwill is measured as the excess of the acquisition-date fair value of consideration transferred (including any non-controlling interest in the acquiree) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Group shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed and recognize any additional assets or liabilities that are identified in that review, and shall recognize a gain on the bargain purchase thereafter.

The Group are based on transaction-by-transaction basis and choose to measure the non-controlling at fair value at the date of acquisition, or by using identifiable net assets in proportion to non-controlling interests.

139

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

In a business combination achieved in stages, the Group shall re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss. In prior reporting periods, the Group may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be recognized on the same basis as would be required if the Group had directly disposed of the previously held equity interest. If the disposal of the equity interest required a reclassification to profit or loss, such amount shall be reclassified to profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition date, or recognize additional assets or liabilities to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date.

All the transaction costs incurred for the business combination are recognized immediately as the Group’s expenses when incurred, except for the issuance of debt or equity instruments.

Contingent consideration within the transfer pricing is recognized by the fair value on the date of purchase. If the change in fair value of the contingent consideration after the date of purchase is adjusted in the measurement period, the cost of acquisition is adjusted retrospectively and the goodwill is adjusted respectively. During the measurement period, the adjustments are retrospectively recognized at the acquisition date to reflect any new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date. For the change in fair value of the contingent consideration not during the measurement period, the accounting method is defined by the classification of its contingent consideration. The contingent consideration classified as equity cannot be re-measured, and the subsequent settlement should be adjusted within equity. The change in fair value of the contingent consideration classified as liability after the purchase date is recognized as income or other comprehensive income.

(r) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to ordinary shareholders of theGroup. The calculation of basic earnings per share is the profit attributable to the ordinary shareholders of the Group divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is the profit attributable to ordinary shareholders of the Group divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, such as convertible bonds, employee stock options, and employee bonus

140

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(s) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

( 5 ) S i g n if i c a n t a c c o u n ti n g a s s u m p ti o n s a n d j u d g m e n t s, a n d m a j o r s o u r c e s o f e s tim a t i o n u n c e r t a i n t y :

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Management continuously reviews the estimates and basic assumptions. Changes in accounting estimates are recognized in the period of change.

Information on critical judgments in applying accounting policies that may have risk of significant impact on the amounts recognized in the consolidated financial statements is disclosed in note(e), Note receivable, accounts receivable, and other receivables and note 6(i), Intangible assets.

( 6 ) E x p l a n a ti o n o f si g n ifi c a n t a c c o u n t s :

  • (a) Cash and cash equivalents
Cash on hand
Demand and checking deposits
Time deposits		 D e c e m b e r 3 1 ,
2 0 1 7
$ 17,529
1,129,908
344,095		 D e c e m b e r 3 1 ,
2 0 1 6
23,799
1,365,508
59,274
1 , 4 4 8 , 5 8 1

$
1 , 4 9 1 , 5 3 2

Refer to note 6(y) for the sensitivity analysis of the financial assets and liabilities of the Group.

  • (b) Financial assets/liabilities at fair value through profit or loss
Financial assets held for trading-current
Total
Financial asset of financial liability at fair value through
profit or loss
Current
Non-current		 D e c e m b e r 3 1 ,
2 0 1 7
$ 7,131		 D e c e m b e r 3 1 ,
2 0 1 6
7,107

$
7 , 1 3 1
7 , 1 0 7

$
2
-
$
-		 2

141

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(c) Available-for-sale financial assets

Investment in listed securities:
Stocks listed on domestic markets-current
Stocks listed on domestic private placement markets-non
current
Total		 D e c e m b e r 3 1 ,
2 0 1 7
$ 126,823
92,400		 D e c e m b e r 3 1 ,
2 0 1 6

29,432

-

$
2 1 9 , 2 2 3

2 9 , 4 3 2

If the equity prices had changed, and if it had been on the same basis for both years and assuming that all other variables had remained the same, the impact on other comprehensive income would have been as follows:

E q u i t y p ri c e a t
r ep o r ti ng d a t e		 2 0 1 7 2 0 1 6
O t h e r
c o m p r e h e n s i v e
i n c o m e( a f t e r t a x)
2 9 4		 P r o f it (l o s s )
( a f t e r t a x)
-
O t h e r
c o m p r e h e n s i v e
i n c o m e( a f t e r t a x)
$
2 , 1 9 2		 P r o f it (l o s s )
( a f t e r t a x)
I n c r e a s e 1 %
**D e c r e a s e 1 % **		 -

$
( 2, 1 9 2 )		 - ( 2 9 4 ) -

As of December 31, 2017 and 2016, there was no available-for-sale financial asset factored or provided as collateral.

  • －

  • (d) Financial assets measured at cost non-current

Domestic unlisted common shares

D e c e m b e r 3 1 ,
2 0 1 7
$
3 8 , 8 0 0		 D e c e m b e r 3 1 ,
2 0 1 6
3 8 , 8 0 0

The aforementioned investments held by the Group are measured at amortized cost at year-end. Given that the range of reasonable fair value estimates is large and the probability for each estimate cannot be reasonably determined, the Group management has determined that the fair value cannot be measured reliably.

As of December 31, 2017 and 2016, there was no financial asset measured at cost factored or provided as collateral.

142

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(e) Notes receivable, accounts receivable, and other receivables (including amount due from related parties)

Notes receivable
Accounts receivable
Other receivables (including doubtful receivables)
Less: Allowance for impairment loss		 D e c e m b e r 3 1 ,
2 0 1 7
$ 65,899
1,726,341
58,627
(37,317)		 D e c e m b e r 3 1 ,
2 0 1 6

31,651

1,652,402

64,017

(35,609)
1 , 7 1 2 , 4 6 1

$
1 , 8 1 3 , 5 5 0

Other receivable (including doubtful receivable) are listed under other current assets.

The Group’s aging analysis for over-due but not impaired receivables are as follows:

Over due less than 60 days
Over due 61~90 days
Over more than 90 days		 D e c e m b e r 3 1 ,
2 0 1 7
$ 424,904
26,655
-		 D e c e m b e r 3 1 ,
2 0 1 6

493,123

22,694
-
$
4 5 1 , 5 5 9
5 1 5 , 8 1 7

The Group believes that the unimpaired past-due amounts are still collectible, based on historical payment behavior and extensive analysis of customers’ financial position.

The movement in the allowance for impairment loss with respect to notes receivable, accounts receivable, and other receivables (including doubtful receivables) of the Group during fiscal years 2017 and 2016 was as follows:

Beginning balance as of January 1, 2017
Impairment loss recognized
Exchange rate effects and others
Balance as of December 31, 2017
Beginning balance as of January 1, 2016
Impairment loss recognized
Exchange rate effects and others
Balance as of December 31, 2016		 I n d i v i d u a ll y
a s s e s s e d
i mp a i r m e n t
$ 13,483
-
(469)		 C o l l e c ti v el y
a s s e s s e d
i mp a i r m e n t
22,126
3,442
(1,265)		 To t a l

35,609

3,442

(1,734)
3 7 , 3 1 7
To t a l

36,252

1,634

(2,277)
3 5 , 6 0 9

$
1 3 , 0 1 4
2 4 , 3 0 3

I n d i v i d u a ll y
a s s e s s e d
i mp a i r m e n t
$ 13,612
-
(129)
C o l l e c ti v el y
a s s e s s e d
i mp a i r m e n t
22,640
1,634
(2,148)

$
1 3 , 4 8 3
2 2 , 1 2 6

143

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

As of December 31, 2017 and 2016, there was no receivable factored or provided as collateral.

(f) Equity-accounted investees

  • (i) A summary of the Group’s financial information for equity-accounted investees at the reporting date is as follows:
Associates D e c e m b e r 3 1 ,
2 0 1 7
$
6 6 , 5 8 5		 D e c e m b e r 3 1 ,
2 0 1 6
6 0 , 7 5 3

No publicly quoted prices were available for the above associates.

In August of 2015, the Group acquired 30% of the shares of LOGI International Co., Ltd. at a cost of $9,666 thousand in order to improve its business performance and competitiveness.

The Group’s share of profit of associates in 2017 and 2016 is summarized as follows:

The Group’s share of profit of associates 2 0 1 7
$
3 4 9		 2 0 1 6
( 2 0 1 )

The financial information on associates of Group was as follows (before adjustment for the Group’s proportionate share):

The equity of the non-significant associates D e c e m b e r 3 1 ,
2 0 1 7
$
1 2 9 , 9 2 0		 D e c e m b e r 3 1 ,
2 0 1 6
11 5 , 9 4 5

The Group does not share any contingent liabilities of an associate incurred jointly with other investors. The Group also does not have any contingent liabilities because the Group is severally liable for all or part of the liabilities of the associate.

There are no significant restrictions on the ability of associates to transfer funds to the Group.

The Company acquired a 30% stake in Shanghai Sangium International Logistics Co., Ltd. On June 30, 2017 for the future implementation of the China Sca Air transport Integration. The Company’s main business Transports are by sea, air and land.

  • (ii) Guarantees

As of December 31, 2017 and 2016, there was no equity-accounted investment factored or provided as collateral.

144

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (g) Acquisition of subsidiaries

  • (i) Via business combination and strategic alliance, the Group set up a total solution provider for freight, warehousing and custom clearing business in Mainland China. The Group acquired 60% ownership of Fresh Beauty Enterprises Ltd. (Fresh Beauty) in December 31, 2015. Furthermore, Fresh Beauty acquired 100% ownership of T-Cube Global Logistics Co., Ltd. through Easter Union Holdings Limited. The primary businesses of T-Cube Global Logistics Co., Ltd. are warehousing and transportation services.

The above consideration includes cash and contingent considerations. The cash parts has been paid as of 2016. According to the share purchase agreement, the upper limit of contingent considerations, shall be deposited into its designated trust account, as of December 31, 2017 and 2016, the upper limit of unpaid contingent consideration should be deposited in the trust account amounted to CNY 1,722 thousand and CNY 19,644 thousand respectively. Are paid in installments based on the operating performance. The fair value of the aforementioned contingent considerations on December 31, 2017 and 2016 amounted to $7,600 thousand and $83,391 thousand respectively, of which $7,600 thousand and $42,556 thousand were recorded as other current liabilities respectively, and $0 thousand and $40,835 thousand were recorded as other non-current liabilities respectively. According to share purchase agreement, gain or loss on valuation of unpaid contingent consideration amounted to $45,122 thousand dollars and record as other loss or gain.

As of December 31, 2017 and 2016, the balance of the above contingent consideration deposited in the trust account amounted to $54,026 thousand and $91,391 thousand respectively, of which, $54,026 thousand and $43,867 thousand were recorded as other current assets respectively, $0 thousand and $47,524 thousand were recorded as other non-current assets respectively.

  • (ii) To enhance the strategic of logistics service in China, the Group purchased 68% ownership of EXer Logistics Co., Ltd. in December 2015. The primary services of EXer Logistics Co., Ltd. are express, general cargo logistics, agency and warehouse management.

EXer Logistics Co., Ltd., in September 2016, increased its capital amounted to CNY9,594 thousand dollars. All increased capital was subscribed by T.H.I GROUP Ltd. (Shanghai). The ownership of EXer Logistics Co., Ltd. held by T.H.I Group Ltd. (Shanghai) increased from 68% to 73.87% after the capital increased. The capital surplus of the Group decreased by $12,068 thousand because T.H.I GROUP Ltd. (Shanghai) did not subscribe the increased on the original ownership ratio.

In addition, EXer Logistics Co., Ltd., in February and September 2017, increased its capital amounted to CNY10,765 thousand dollars and CNY6,000 thousand dollars. All increased capital was subscribed by T.H.I GROUP Ltd. (Shanghai). The ownership of EXer Logistics Co., Ltd., held by T.H.I GROUP Ltd. (Shanghai) increase from 73.87% to 88.940% after the capital increased. The capital surplus and retain earning of the Group decreased by $5,937 thousand and $6,034 thousand.

145

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (iii) As of May 2017, the Group has reached a new capital of SGD $530 thousand dollars with Singapore as the subsidiary. In addition, after capital has increased, the shareholding ratio grew from an original of 80% to the most recent of 91.40%.

  • (iv) As of December 31, 2017, the Company has purchased the non-controlling interests of T.H.I. Group Vietnam Co, Ltd., wherein the proportion of its shareholding increased from 51% to 99%. The Company increased its additional paid-in capital of $25,703 thousands due to the changes in equity which result from the purchase of the interest mentioned above.

(h) Property, plant and equipment

The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for the years ended December 31, 2017 and 2016, were as follows:

Cost or deemed cost：
Balance on January 1, 2017
Additions
Disposals
Effect of movement in exchange rates and
others
Balance on December 31, 2017
Balance on January 1, 2016
Additions
Disposals
Effect of movement in exchange rates and
others
Balance on December 31, 2016
Depreciation and impairment loss：
Balance on January 1, 2017
Depreciation
Disposals
Effect of movement in exchange rates and
others
Balance on December 31, 2017
Balance on January 1, 2016
Depreciation
Disposals
Effect of movement in exchange rates and
others
Balance on December 31, 2016
Net book value:：
At December 31, 2017
At December 31, 2016
At January 1, 2016		 Land
$ 132,594
-
-

-
$
132,594		 Land
$ 132,594
-
-

-
$
132,594		 Buildings
69,299
-
-
-
69,299		 Transportation
Equipment
152,209
10,400
(13,753)
(2,877)
145,979		 Office and
Other
Equipment
178,180
23,172
(18,065)
(2,246)
181,041		 Total
532,282
33,572
(31,818)
(5,123)
528,913

$ 132,594
-
-

-
$
132,594
69,299
-
-
-
69,299
191,073
2,665
(37,569)
(3,960)
152,209
177,389
29,571
(20,006)
(8,774)
178,180
570,355
32,236
(57,575)
(12,734)
532,282

$ -
-
-

-
$
-
25,340
1,064
-
-
26,404
98,547
16,222
(12,362)
(1,586)
100,821
94,328
23,370
(14,974)
(2,126)
100,598
218,215
40,656
(27,336)
(3,712)
227,823
$ -
-
-

-
$
-
23,213
2,127
-
-
25,340
122,611
15,764
(35,817)
(4,011)
98,547
86,296
25,876
(16,508)
(1,336)
94,328
232,120
43,767
(52,325)
(5,347)
218,215
$
132,594
42,895
45,158
80,443
301,090

$
132,594
43,959
53,662
83,852
314,067

$
132,594
46,086
68,462
91,093
338,235

A summary of pledged assets as of December 31, 2017 and 2016 is found in note 8.

146

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(i) Intangible assets

The costs, amortization, and impairment loss of the intangible assets of the Group for the years ended December 31, 2017 and 2016, were as follows:

C o s t ::
Balance on January 1, 2017
Additions
Effect of movement in exchange rates
Balance on December 31, 2017
Balance on January 1, 2016
Additions
Effect of movement in exchange rates
Balance on December 31, 2016
Amortization and impairment loss:
Balance on January 1, 2017
Amortization
Impairment
Effect of movement in exchange rates
Balance on December 31, 2017
Balance on January 1, 2016
Amortization
Impairment
Effect of movement in exchange rates
Balance on December 31, 2016
B o o k v a l u e :
At December 31, 2017
At December 31, 2016
At January 1, 2016		 G o o d w i ll
$ 597,752
-
(4,652)		 O t h e r
i n t a n g i b l e
a s s e t s

176,931
24,401

(1,691)		 To t a l
774,683
24,401
(6,343)
7 9 2 , 7 4 1
781,872
4,953
(12,142)
7 7 4 , 6 8 3
115,951
16,451
31,892
(1,862)
1 6 2 , 4 3 2
61,404
20,446
36,092
(1,991)
11 5 , 9 5 1
6 3 0 , 3 0 9
6 5 8 , 7 3 2
7 2 0 , 4 6 8

$
5 9 3 , 1 0 0

1 9 9 , 6 4 1

$ 607,244
-
(9,492)

174,628
4,953

(2,650)

$
5 9 7 , 7 5 2

1 7 6 , 9 3 1

$ 34,423
-
31,892
(709)

81,528
16,451

-

(1,153)

$
6 5 , 6 0 6

9 6 , 8 2 6

$ -
-
36,092
(1,669)
61,404
20,446

-

(322)

$
3 4 , 4 2 3

8 1 , 5 2 8

$
5 2 7 , 4 9 4
1 0 2 , 8 1 5

$
5 6 3 , 3 2 9
9 5 , 4 0 3

$
6 0 7 , 2 4 4
11 3 , 2 2 4

Amortization of intangible assets of the Group for the years ended December 31, 2017 and 2016, was recognized as operating expenses in the consolidated profit and loss.

147

As of December 31, 2017 and 2016, the group assessed the provision of the impairment. Except the impairment loss described below, there was no other significant impairment loss of other intangible assets and goodwill.

Due to the intense competition in the express market in 2017 and 2016, the sales volume and unit price did not meet the management's expectation. So the synergy from the acquisition of EXer Logistics Co., Ltd. did not meet the original budget and the value of Goodwill was impacted. The Group recognized the impairment loss of Goodwill amounted to $31,892 and $36,092 thousand based on the valuation report issued by the external expert.

  • (j) Other current assets and other non-current assets

The Group’s other current assets and other assets were as follows:

Other receivables
Other financial assets－current
Other financial assets－non current
Others
Total		 D e c e m b e r 3 1 ,
2 0 1 7
$ 45,613
291,220
29,586
108,951		 D e c e m b e r 3 1 ,
2 0 1 6

50,534

193,850

65,329

100,826
4 1 0 , 5 3 9

$
4 7 5 , 3 7 0

Other financial assets consisted of contingent considerations which are deposited into its designated trust account and time deposits with a maturity period over three months, restricted bank deposits, and restricted time deposits.

(k) Short-term borrowings and short-term notes and bills payable

Unsecured bank loans
Secured bank loans
Total
Unused credit facilities
Interest rate		 D e c e m b e r 3 1, 2 0 1 7
$ 1,067,000
-		 D e c e m b e r 3 1, 2 0 1 7
$ 1,067,000
-		 D e c e m b e r 3 1 ,
2 0 1 6
447,000
120,000
5 6 7 , 0 0 0
1 , 1 0 5 , 2 7 5
**1 . 0 9 % ~ 1 . 1 9 % **
$
1 , 0 6 7 , 0 0 0

$
1 , 0 3 6 , 2 8 8

**1 . 0 5 % ~ 1 . 3 7 % **

Refer to note 8 for details of the related assets pledged as collateral.

148

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (l) Long-term borrowings

Long-term borrowings were as follows:

  • (i) Increase in and repayment of borrowings

For the year ended December 31, 2016, long term loans have been returned in full. For the years ended December 31, 2017 the repayments of bank loans were $1,141 thousand.

(ii) Security

Refer to note 8 for details of related assets pledged as collateral.

  • (m) Unsecured convertible bond payable
Proceeds from issue of convertible bond payable
Bond discount
Cumulative redeemed amount
Cumulative converted amount
Carrying amount of liability
Less: Current portion
Embedded derivative－put and call options (accounted for as
financial assets (liabilities) at fair value through profit or
loss－current and non-current)
Equity components－conversion options (accounted for as
capital surplus-stock option)
Embedded derivative－put and call options (accounted for as
evaluation gain (loss) on financial instruments)
Interest expense		 D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6

600,000

(8,969)
-

(205,800)
$ 300,000
(2,596)
-
(500)

296,904
(296,904)


385,231

(94,540)

$
-

2 9 0 , 6 9 1
$ ( 2 )
$ 1 4 , 6 5 7
2 0 1 7
( 2 )
1 9, 6 8 1
2 0 1 6
( 1 5 0 )

8 , 4 1 6
$ -
$
6 , 3 7 3

As of January 27, 2011, and January 23, 2014, and June 9, 2015, the Company had issued the 1st, 2nd and 3rd unsecured convertible bonds, respectively, amounting to $500,000 thousand dollars, $300,000 thousand dollars and $300,000 thousand dollars, respectively

The terms and conditions of the bonds are as follows:

  • (i) Coupon rate

Three times are zero.

149

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(ii) Issuance period

Five years for the 1st convertible bonds; three years for the 2nd, and 3rd.

  • (iii) Redemption option

For the 1st convertible bonds, at any time on or after February 28, 2011, and prior to December 18, 2015, when the closing price of the Group’s common shares on the TWSE is equal to or greater than 130% of the conversion price of the convertible bonds for 30 consecutive trading days, or more than 90% of the bonds have been redeemed, repurchased, or converted, the Company may redeem the bonds in cash at face value.

There is no redemption option for the 2nd convertible bonds.

For the 3rd convertible bonds, at any time on or after June 10, 2016, and prior to April 30, 2018, when the closing price of the Group’s common shares on the Gre Tai Securities Market is equal to or greater than 130% of the conversion price of the convertible bonds for 30 consecutive trading days, or more than 90% of the bonds have been redeemed, repurchased, or converted, the Company may redeem the bonds in cash at face value.

  • (iv) Put option of bondholders

On January 27, 2013, bondholders may request the Company to repurchase the 1st convertible bonds at face value. The Group had a $26,296 thousand dollars loss from repurchasing $332,600 thousand dollars of bonds.

There is no put option of bondholders for the 2nd and 3rd convertible bonds.

  • (v) Terms of conversion

  • 1) At any time one month after the issuing date to ten days before the expiry date, bondholders may request the Company to convert the bonds into stock.

  • 2) Conversion price

After the bonds were issued, whenever the numbers of common shares of the Company changes, or other convertible bonds are issued with a conversion price lower than the market price, the conversion price will be adjusted by the formula set in the terms. On December 31, 2017, the conversion prices of the 3rd convertible bonds, $25.9 (TWD).

Because of the 2nd bonds has expired on January 23, 2017, the Company has paid $65,400 thousand dollars.

150

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(n) Operating leases

Non-cancellable operating lease rentals are payable as follows:

Less than one year
Between one and five years		 D e c e m b e r 3 1 ,
2 0 1 7
$ 238,823
173,551
$
4 1 2 , 3 7 4		 D e c e m b e r 3 1 ,
2 0 1 6

218,809

188,078



4 0 6 , 8 8 7

For the years ended December 31, 2017 and 2016, operating lease expenses were $328,918 and $345,927, respectively.

(o) Employee benefits

(i) Defined benefit plan

The Group determined the movement in the present value of defined benefit obligations and the fair value of plan assets as follows:

Total present value of defined benefit obligations
Fair value of plan assets
Net defined benefit (liability) asset
The Group employee benefits liabilities:
Paid vacationliabilities-current		 D e c e m b e r 3 1 ,
20 1 7
$ (125,787)
41,130		 D e c e m b e r 3 1 ,
20 16
(120,690)
37,981
( 8 2 , 7 0 9 )
D e c e m b e r 3 1 ,
2 0 1 6
2 , 9 3 6

$
( 8 4 , 6 5 7 )

D e c e m b e r 3 1 ,
2 0 1 7
$
2 , 9 3 6

The Group makes defined benefit plan contributions to the pension fund account at Bank of Taiwan and to the manager pension fund account that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on years of service and average salary for the six months prior to retirement.

151

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

As of December 31, 2017, the pension fund account balance at Bank of Taiwan and the manager pension fund balance amounted to $23,786 and $17,344, respectively. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

  • 2) Movements in the present value of defined benefit obligation

The movements in the present value of the defined benefit obligation for the years ended December 31, 2017 and 2016 were as follows:

At January 1
Service costs and interest
Actuarial losses
Obligations paid
Others
At December 31		 2 0 1 7
$ 120,690
2,680
2,295
-
122		 2 0 1 6
122,414
15,155
5,780
(22,380)
(279)
$
1 2 5 , 7 8 7
1 2 0 , 6 9 0
  • 3) Movements in the fair value of plan assets

The movements in the fair value of the plan assets for the years ended December 31, 2017 and 2016 were as follows:

20 1 7
At January 1
$ 37,980
Net remeasurements of defined benefit liabilities
－Return on plan assets (excluding the
amounts included in net interest expense)
2,257
Contributions
1,060
Curtailment gain
-
Actuarial losses (gain)
(167)
At December 31
$
4 1 , 1 3 0		 20 16

37,503

491

5,858
(5,600)

(271)


3 7 , 9 8 1

152

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 4) Expenses recognized in profit or loss

The Group’s pension expenses recognized in profit or loss for the years ended December 31, 2017 and 2016, were as follows:

Current service cost
Gain on performance
Net interest on the net defined benefit liabilities
Prior service cost
Others		 2 0 1 7
$ 1,593
-
240
-
377		 2 0 1 6

102
(16,780)

1,473
12,954

-
$
2 , 2 1 0		 ( 2, 2 5 1 )
  • 5) Re-measurement of net defined benefit liability recognized in other comprehensive income

The Group’s net defined benefit liability recognized in other comprehensive income for the years ended December 31, 2017 and 2016 were as follows:

Cumulative amount, January 1
Recognized during the year
Cumulative amount, December 31		 2 0 1 7
$ (12,210)
(2,462)		 2 0 1 6
(6,305)
(5,905)

$
( 1 4 , 6 7 2 )
( 1 2 , 2 1 0 )
  • 6) Actuarial assumptions

The following are the Group’s primary actuarial assumptions at the reporting date:

Discount rate
Future salary increasing rate		 D e c e m b e r 3 1 ,
2 0 1 7
1.125%~1.625%
2.5%~3.5%		 D e c e m b e r 3 1 ,
2 0 1 6
1.13%~1.375%
2.50%~3.50%

The Group expects to make contributions of $2,142 to the defined benefit plans in the next year starting from December 31, 2017. The weighted average period of the defined benefit plans is 9.4~17.66 years.

153

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

7) Sensitivity analysis

The changes in the main actuarial assumptions might have an impact on the present value of the defined benefit obligation:

December 31, 2017
Discount rate
Future salary increasing rate		 E f f e c t s t o t h e d ef i n e d b e n ef it o b li g a ti o n
De c re a s e b y 0 . 25 %

3,126

(2,913)
I nc re a s e b y 0. 25 %
$ (3,005)
3,016

There is no change in other assumptions when performing the above-mentioned sensitivity analysis. In practice, assumptions may be interactive with each other. The method used in sensitivity analysis is consistent with that of the calculation used in the net pension liabilities.

The method and assumptions used on current sensitivity analysis is the same as those of the prior year.

  • (ii) Defined contribution plan

The Company contributes an amount at the rate of 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. After the Group’s contributions to the Bureau of Labor Insurance, there is no further legal or constructive obligation.

The Group’s pension costs under the defined contribution method were $95,031 and $99,266 for the years ended December 31, 2017 and 2016, respectively. Payments were made to the Bureau of Labor Insurance.

(p)

  • (i) The income tax expense for the years ended December 31, 2017 and 2016, was as follows:
Current income tax expense
Deferred income tax expense (benefit)
Income tax expense		 2 0 1 7
$ 100,669
623		 2 0 1 6

104,392

1,036
1 0 5 , 4 2 8
$
1 0 1 , 2 9 2

154

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

The reconciliation of income tax expense and profit before tax for the years ended December 31, 2017 and 2016 were as follows:

2 0 1 7
Profit before income tax
$ 354,029
Income tax on pre-tax financial income calculated at the
Company’s income tax rate
60,185
Effect of foreign jurisdiction tax rate differences
9,017
Changes in unrecognized temporary differences
19,976
Others
12,114
$
1 0 1 , 2 9 2		 2 0 1 7
$ 354,029		 2 0 1 6
226,604

38,523
17,184
31,924
17,797

$
1 0 1 , 2 9 2
1 0 5 , 4 2 8

  • (ii) Deferred tax assets and liabilities

  • 1) Unrecognized deferred tax assets and liabilities

As of December 31, 2017 and 2016, the temporary differences associated with investments in subsidiaries were not recognized as deferred income tax assets and liabilities as the Group has the ability to control the timing of reversal of these temporary differences which are not expected to reverse in the foreseeable future. The related amounts were as follows:

Unrecognized deferred tax assets

Aggregate temporary differences associated with
investments in subsidiaries
Tax losses
Unrecognized deferred liabilities
The tax losses are tax credits from the Company.
Unrecognized deferred tax liabilities		 D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6
1,966

4 0 , 0 5 4
$ 2,164
6 0 , 0 3 0
$
6 2 , 1 9 4



4 2 , 0 2 0

Aggregate temporary differences associated with
investments in subsidiaries		 D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6
2 4 0 , 11 2
$ 2 7 3 , 5 0 3

155

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 2) Recognized deferred tax assets and liabilities

The movements in deferred tax assets and liabilities for the years ended December 31, 2017 and 2016 were as follows:

Deferred tax assets:
Balance, January 1, 2016
Credited (debited) to profit or loss
Balance, December 31, 2016
Balance, January 1, 2017
Credited (debited) to profit or loss
Balance, December 31, 2017		 Defined
benefitplans		 Accrued
expense		 Others Total

42,008

1,036
$ 6,915
-
31,044
399
4,049

637
$
6,915
31,443
4,686

43,044

$ 6,915
-


31,443
3,310


4,686

(3,933)


43,044

(623)
$
6,915

34,753


753


42,421
  • 3) Examination and approval

The Company’s income tax returns through 2015 have been examined and approved by the Tax Authority.

  • 4) Imputation credit account and creditable ratio
Undistributed earnings commencing from January 1, 1998
Balance of imputation credit account
Creditable ratio for earnings distribution to R.O.C. residents		 D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6
$
1 4 0 , 2 6 4
Note
Note
2 0 1 7( e s ti m a t e d)
Note

$
1 , 3 3 6

2 0 1 6( a c t u a l)
**2 . 1 8 0 % **

The related information on the aforesaid imputation credit tax was prepared in accordance with Ruling No. 10204562810 issued by the Ministry of Finance, R.O.C., on October 17, 2013.

  • Note: According to the amendments to the "Income Tax Act” enacted by the office of the President of the Republic of China (Taiwan) on February 7, 2018, effective January 1, 2018, companies will no longer be required to establish, record, calculate, and distribute their ICA due to the abolishment of the imputation tax system.

  • (q) Share capital and other equity

As of December 31, 2017 and 2016, the authorized capital of the Company consisted of 1,200,000 thousand shares, of which 80,000 thousand shares were reserved for employee share options, with a par value of $10 (dollars) per share, and the issued capital was 118,565 thousand shares and 119,526 thousand shares, respectively.

156

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

The movements in outstanding shares for the years ended December 31, 2017 and 2016 were as follows:

Beginning balance, January 1
Addition: Stock dividend
Convertible bonds converted
Exercise of employee stock options
Decrease in treasure stock
Ending balance, December 31		 2 0 1 7 2 0 1 6
119,526
-
1,376
28
(2,364)
$
11 8 , 5 6 6
116,042
2,292

784

408

-


11 9 , 5 2 6

A resolution was approved during the shareholders’ meeting on March 24, 2011, for the issuance of common shares for cash within a year under private placement; with the number of shares issued not to exceed 8,400 thousand shares. Subsequently, a resolution was approved during the board meeting held on March 24, 2011, for the issuance of 8,400 thousand common shares under private placement, with a face value of $10 (dollars) per share, at $27.81 (dollars) per share, amounting to $233,604 thousand dollars. The capital increase was registered on March 30, 2011. The relevant statutory registration procedures have since been completed.

Above Common stock under private placement and the related stock dividends was public on December 8, 2016.

(i) Capital surplus

The components of capital surplus were as follows:

Paid-in capital derived from premium on issuance
of common shares
Surplus arising from bond conversion option
Surplus arising from treasury stock transactions
Surplus arising from long-term equity investments－
donated surplus and others
Surplus arising from premium from merger
Surplus arising from stock options		 D e c e m b e r 3 1 ,
2 0 1 7
$ 553,657
245,665
4,305
25,703
2,912
40,512		 D e c e m b e r 3 1 ,
2 0 1 6
564,672

228,566

21,060
5,937

2,912

42,190
8 6 5 , 3 3 7

$
8 7 2 , 7 5 4

In accordance with the R.O.C. Company Act amended in 2012, realized capital reserve can only be reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned realized capital reserve includes share premiums and donation. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserve to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

157

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(i) Retained earnings

According to the Company’s articles of incorporation, 10% of annual net earnings (net of income taxes), after deducting accumulated deficits, must be set aside 10% as legal reserve. Unless and until the accumulated legal reserve equals the Company’s total capital, the Company may set aside a special reserve in accordance to Article 41 of the Securities and Exchange Act. After the board of directors considers the Company’s budget for funding needs, financial structures, current period earnings, and steady profit distribution when proposing the distribution of earnings, the proposal should be resolved during the stockholders’ meeting.

1) Legal reserve

In accordance with the Company Act, 10 percent of net income should be set aside as statutory legal reserve until it is equal to share capital. If the Company experienced profit for the year, the meeting of shareholders shall decide on the distribution of the statutory legal reserve, either by new shares or by cash, of the portion that exceeds 25 percent of the actual share capital.

2) Special reserve

By choosing to apply exemptions granted under IFRS 1 “First-time Adoption of International Financial Reporting Standards ” during the Company ’ s first-time adoption of the International Financial Reporting Standards (IFRSs) endorsed by the Financial Supervisory Commission, cumulative translation adjustments (gains) shall be reclassified as retained earnings. The net increase in retained earnings due to the first-time adoption of IFRSs amounted to $7,116 thousand dollars. In accordance with Ruling No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, an increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special earnings reserve during earnings distribution, and when the relevant asset is used, disposed of, or reclassified, this special earnings reserve shall be reversed as distributable earnings proportionately. The carrying amount of special earnings reserve was $7,116 thousand dollars on December 31, 2017 and 2016.

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders’ equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. Special reserve amounted to $18,440 thousand dollars at December 31, 2017.

158

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

3) Earnings distribution

Earnings distribution for 2016 and 2015 was decided via the general meeting of the shareholders held on June 19, 2017 and June 3, 2016, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to common
shareholders:
Cash
Shares
Total		 2016
A mount per
share(dollars)
Total
a mount
$ 0.8
92,637
-
-
$
92,637		 2015
A mount per
share(dollars)
Total
a mount

1.800
206,341
0.2000
22,927

229,268		 2015
A mount per
share(dollars)
Total
a mount

1.800
206,341
0.2000
22,927

229,268		 2015
A mount per
share(dollars)
Total
a mount

1.800
206,341
0.2000
22,927

229,268
A mount per
share(dollars)

1.800
0.2000

229,268

There is no difference between the total amount of surplus distribution and the resolution of the Board of Directors of the Company, Information can be found at the public information station.

(ii) Treasury stock

The Company has acquired treasury stock and transferred it to its employees as an incentive. For the years ended December 31, 2017 and 2016 the movements of the treasury stock were as below.

Item January January 1, 2017
2,512		 1, 2017
2,512		 Increase

2,621

56,158
Increase
2,085
51,165		 Increase

2,621

56,158
Increase
2,085
51,165		 Increase

2,621

56,158
Increase
2,085
51,165		 Decrease

(2,364)

(51,610)
Decrease
-
-		 December 31, 2017
2,769
66,349
December 31, 2016
2,512
61,801		 December 31, 2017
2,769
66,349
December 31, 2016
2,512
61,801
Treasury stock acquired for transfer to
employees－shares (in thousand dollars)
Treasury stock acquired for transfer to
employees－amount
Item
$
**January 1, **		 $


61,801

2016
Treasury stock acquired for transfer to
employees－shares (in thousand dollars)
Treasury stock acquired for transfer to
employees－amount		 $ 427
10,636
51,165

As of December 31, 2017 and 2016, a total of 2,769 and 2,512 thousand shares, respectively, were not yet cancelled.

In accordance with the Securities and Exchange Act requirements, the number of shares repurchased should not exceed 10 percent of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Company’s retained earnings, share premium, and realized capital reserves. As of December 31, 2017, the balance of treasury stock was in compliance with the requirement. In accordance with the Securities and Exchange Act requirements, treasury shares held by the Company cannot be pledged and do not have any shareholders’ rights before their transfer.

159

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (r) Share-based payment

Information on share-based payment transactions as of December 31, 2017, was as follows:

Option grant date
Options grant units
Contract period
Grant recipients
Vesting conditions		 E m p l oy e e s t o c k op ti o n s
2012/7/11
2,000
Five years
Employees of the Company and its subsidiaries
Provide service for the next five years
  • (i) Determining the fair value

The Company adopted the Black-Scholes model to calculate the fair value of the stock options at the grant date, and the assumptions adopted in this valuation model were as follows:

Fair value at grant date
Share price at grant date
Exercise price
Expected volatility
Expected duration
Risk-free interest rate		 2 0 1 4
E m p l oy e e s t o c k op ti o n s
4.50
20.50
20.50
25.998%
4.00
0.951%

Expected volatility was decided on the basis of the historical weighted-average volatility and was adjusted based on publicly available information; the duration is decided based on the Group’s regulations on issuance; the expected dividend and risk-free interest rate are decided on the basis of government bonds. When the fair value is decided, conditions of service and non-market price performance are not taken into consideration.

  • (ii) Information on share-based payment plan

As of December 31, 2017 and 2016, outstanding units were 0 and 27, respectively.

For the years ended December 31, 2016, there were 408 units exercised at 12.8 (dollars).

For the years ended December 31, 2017, there were 27 units exercised at 12.8 (dollars).

  • (iii) Employee expense and liabilities

The Group’s expenses for share-based payment for the years ended December 31, 2017 and 2016 were $0 and $(288), respectively.

160

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (s) Earnings per share (EPS)

  • (i) Basic earnings per share

The basic earnings per share for the years ended December 31, 2017 and 2016, were calculated on the basis of profit attributable to common shareholders and the weighted-average number of outstanding common shares. Calculations were as follows:

  • 1) Profit attributable to common shareholders
Profit attributable to common shareholders 2 0 1 7 2 0 1 6
C o n t i n u i n g
op e r a ti o n s

1 3 0 , 4 8 7
C o n t i n u i n g
op e r a ti o n s
$
2 4 0 , 11 0
  • 2) Weighted-average number of outstanding common shares
Common shares as of January 1
Effect of treasury stock
Effect of stock dividends
Effect of employee stock options
Effect of conversion of convertible bonds
Weighted-average number of outstanding common
shares on December 31		 2 0 1 7 2 0 1 6
$ 119,526
(4,971)
-
23
1,289

$ 11 5 , 8 6 7
116,042

(1,391)
2,292

68

173

11 7 , 1 8 4
  • (i) Diluted earnings per share

The diluted earnings per share for the years ended December 31, 2017 and 2016 were calculated on the basis of profit attributable to common shareholders and the weighted-average number of outstanding common shares, with all potential common shares retroactively adjusted. Calculations were as follows:

  • 1) Profit attributable to common shareholders (diluted)
Profit attributable to common shareholders
(basic)
Interest on convertible bonds
Gains on revaluation of put and call options of
convertible bonds measured at fair value		 2 0 1 7
C o n t i n u i n g
op e r a ti o n s
$ 240,110
6,373
-
$
2 4 6 , 4 8 3		 2 0 1 6
C o n t i n u i n g
op e r a ti o n s
130,487

8,416
150

1 3 9 , 0 5 3

161

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 2) Weighted-average number of outstanding common shares (diluted)
Weighted-average number of outstanding
common shares (basic)
Effect of conversion of convertible bonds
Effect of employee stock dividends
Effect of stock options
Weighted-average number of outstanding
common shares on December 31 (diluted)		 2 0 1 7
$ 115,867
11,650
59
12		 2 0 1 6
117,184

16,191

42

221
$ 1 2 7 , 5 8 8
1 3 3 , 6 3 8

When the dilutive effect of stock options is calculated, the average market value is decided on the basis of the market price of the option during the outstanding period.

(t) Employees and directors, supervisors reward

Pursuant to the Company’s articles of incorporation, states if the Company profits this period they will set aside no less than 0.5% towards employee compensation and no more than 3% towards remuneration to directors and supervisors. If the Company has accumulated loss they must first reserve to cover the loss amount. The compensations mentioned afore include persons who meet the preset conditions of employees of the affiliate Company.

The Company accrued and recognized the employee compensation amounting to $1,253 and $692 for the year 2017 and 2016, respectively. And the directors’ and supervisors’ compensation is accrued and recognized amounting to $7,522 and $4,151 for the year 2017 and 2016, respectively. These amounts are calculated by using the Company’s pre-tax net profit for the period before deducting the amount of the remuneration to the employees and directors, multiplied by the distribution ratio of remuneration to the employees and directors under the Company’s articles of association, and expensed under operating costs or expenses for the year. If there would be any changes after the reporting date in the following year, the change of the amount would be treated as changes in accounting estimates and recognized as profit or loss in next year.

(u) Revenue

The Group’s net revenue for the years ended December 31, 2017 and 2016 were as follows:

Sea forwarding
Air forwarding
Logistics and others		 2 0 1 7
$ 5,904,952
3,003,392
1,628,664		 2 0 1 6
5,573,415
2,524,980
1,645,718
9 , 7 4 4 , 11 3

$
1 0 , 5 3 7 , 0 0 8

162

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(v) Other income

The Group’s other income for the years ended December 31, 2017 and 2016, was as follows:

Interest income
Dividend income
Other		 2 0 1 7
$ 5,976
3,630
102
$
9 , 7 0 8		 2 0 1 6

4,729

3,978

747
9 , 4 5 4
  • (w) Other gains and losses

The Group’s other gains and losses for the years ended December 31, 2017 and 2016, was as follows:

Foreign exchange gains (losses)
Gains on valuation of fair value of financial assets and
liabilities through profit or loss
Gain on disposal of property, plant and equipment
Gain on disposal of available-for-sale financial assets
Loss of goodwill impairment
Gains on evaluation of investment payable
Other		 2 0 1 7
$ (47,318)
24
(2,004)
7,161
(31,892)
45,122
3,990
$
( 2 4 , 9 1 7 )		 2 0 1 6

48,555
(129)

17,960

16,283

(36,092)

-

3,733


5 0 , 3 1 0

(x) Financial costs

The Group’s financial costs for the years ended December 31, 2017 and 2016, was as follows:

Interest expense
Bank borrowings
Amortization of the convertible bonds discount
Amortization of other financialliabilities		 2 0 1 7
$ 14,749
6,373
6,434		 2 0 1 6
5,411
8,416
12,297
2 6 , 1 2 4

$
2 7 , 5 5 6

163

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (y) Financial instruments

  • (i) Credit risk

    • 1) Exposure to credit risk

The carrying amount of financial assets represents the Group’s maximum credit exposure.

  • 2) Concentration of credit risk

Based on the characteristic of the industry, the Group has no significant transactions with any single customer.

For the years ended December 31, 2017 and 2016, there was no significant concentration of credit risk from the sales of the Group.

(ii) Liquidity risk

Based on the characteristic of the industry, the Group has no significant transactions with any single customer.

December 31, 2017
Non-derivative financial liabilities
Bank borrowings
Convertible bond payable
Trade and other payable
Investment payable (other current
and non－current liabilities)
December 31, 2016
Non-derivative financial liabilities
Bank borrowings
Convertible bond payable
Trade and other payables
Investment payable (other current
and non－current liabilities)		 Carrying
amount		 Contractual
cash flow
Within 6
months
6~12
months		 1~2years
-
-
-
-
-		 2~5years Over 5
years
-
-
-
-
-
$ 1,067,000
296,904
1,211,839
7,600
(1,083,005) (1,083,005)
-

(299,500)
(299,500)
-

(1,211,839) (1,211,839)
-
(7,600)
(7,600)
-

(2,601,944)
(2,601,944)
-		 -
-
-
-
-

$ 2,583,343

$ 567,000
385,231
1,210,020
83,391



(567,000)
(567,000)
-

406,000
106,500
-

(1,210,020) (1,210,020)
-
(91,391)
(43,868)
-

(1,462,411)
(1,714,388)
-		 -
299,500
-
(47,523)		 -

-
-

-

(1,989,252)		 -
-
-
-

-

$ 2,245,642
1,951,612

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

164

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(iii) Currency risk

  • 1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Unit: thousand

Financial assets
Monetary items
USD



HKD


CNY
TWD
Non-Monetary items
IDR
Financial liabilities
Monetary items
USD


HKD
CNY


TWD
 D e c e m b e r 3 1, 2 0 1 7 T W D
216,076
29,634
108,557
1,227,147
8,890
13,278
64,218
36,699
32,565
5,414
150,495
45,532
66,959
7,630
4,151
566,681
30,426
117
20,913
1,838
66,554
6,489
2,171
F o r eig n c u r r e n t
$ 7,080
971
3,557
40,209
2,269
3,389
16,391
8,148
7,230
1,202
150,495
20,417,891
2,194
250
136
18,568
7,766
26
4,643
408
66,554
6,489
2,171		 E x c h a ng e r a t e
USD：TWD 30.5192
USD：VND 25,016
USD：HKD 7.7897
USD：CNY 6.7759
HKD：TWD 3.9179
HKD：USD 0.1284
HKD：CNY 0.8699
CNY：TWD 4.5041
CNY：USD 0.14760
CNY：HKD 1.1496
CNY：TWD 0.2220
IDR：TWD 0.00223
USD：TWD 30.52
USD：VND 25,016
USD：HKD 7.7897
USD：CNY 6.7759
HKD：CNY 0.8699
CNY：TWD 4.5041
CNY：USD 0.1476
CNY：HKD 1.1496
TWD：USD 0.0328
TWD：HKD 0.2552
TWD：CNY 0.222

165

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Financial assets
Monetary items
USD



HKD


CNY
TWD
Non-Monetary items
IDR
Financial liabilities
Monetary items
USD


HKD

CNY


TWD		 D e c e m b e r 3 1, 2 0 1 6 T W D
120,561
17,006
55,537
1,239,297
10,436
208
16,760
15,105
18,156
702
77,359
51,040
100,876
3,582
1,581
388,563
5,821
2,863
4,810
41,844
2,079
124,694
F o r eig n c u r r e n t
$ 3,736
527
1,721
38,404
2,508
50
4,028
3,247
3,903
151
77,359
21,004,115
3,126
111
49
12,041
1,399
688
1,034
8,995
447
124,694		 E x c h a ng e r a t e
USD：TWD 32.27
USD：VND 25,015
USD：HKD 7.7552
USD：CNY 6.9370
HKD：TWD 4.1611
HKD：USD 0.1289
HKD：CNY 0.8944
CNY：TWD 4.6519
CNY：USD 0.14415
CNY：HKD 1.1179
CNY：TWD 0.2149
IDR：TWD 0.00243
USD：TWD 32.27
USD：VND 25,015
USD：HKD 7.7552
USD：CNY 6.9370
HKD：TWD 4.1611
HKD：CNY 0.8944
CNY：TWD 4.6519
CNY：USD 0.14415
CNY：HKD 1.1179
TWD：USD 0.0309









166

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • 2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the foreign currency exchange gains and losses on the translation of cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable, and other payables that are denominated in foreign currency. A 1% depreciation of the USD, HKD and CNY against the TWD as of December 31, 2017 and 2016 would have decreased the net income before tax by $11,190 and $8,971, respectively. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for both periods.

Due to the variety of the Group’s functional currency, the Group discloses its exchange gains and losses of monetary items collectively. For the years ended December 31, 2017 and 2016, the Group’s foreign exchange gains (losses), net (including realized and unrealized of monetary items) amounted to $(47,318) and $48,555, respectively.

  • (iv) Interest rate analysis

The following sensitivity analysis is based on the exposure to interest rate risk for derivative and non-derivative financial instruments on the reporting date.

For variable-rate instruments, the sensitivity analysis assumes the variable-rate liabilities are outstanding for the whole year.

If the interest rate had increased/decreased by 1%, the Group’s net income before tax would have decreased/increased by $10,670 and $5,670 for the years ended December 31, 2017 and 2016, respectively, assuming all other variable factors had remained constant. This is mainly due to the Group’s variable-rate borrowing.

  • (v) Fair value of financial instruments

  • 1) Fair value hierarchy

    • a) Categories and fair value of financial instruments

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It shall not include fair value information of the financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value and investments in equity instruments which do not have any quoted price in an active market in which the value cannot reasonably measured.

167

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Financial assets at fair value through profit or loss:
Derivative financial assets
Subtotal
Available-for-sale financial assets:
Stocks in listed companies
Subtotal
Loans and receivables:
Cash and cash equivalent
Note and accounts receivables, and other
receivables
Other financial assets (other current and
non-current assets)
Subtotal
Refundable deposits
Financial liabilities at fair value through profit or
loss:
Financial liabilities designated as fair value
through profit or loss
Financial liabilities at amortized cost:
Short term borrowings
Convertible bonds
Note and accounts payables
Other payable
Other payable (other current and non-current
liabilities)
Subtotal
Total
Financial assets at fair value through profit or loss:
Derivative financial assets
Subtotal
Available-for-sale financial assets:
Stocks in listed companies
Subtotal		 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 Total
7,131
Book value
$ 7,131		 Fair value
Level 1

7,131		 Level 2
-		 Level 3
-

7,131


7,131		 - -
7,131

219,223


126,823		 92,400 -
219,223

219,223


126,823
92,400		 -
219,223

1,491,532
1,767,937
333,801


-
-

-
-
-
-		 -
-
-
-
-
-

3,593,270

-		 - - -

137,153
-		 - - -

2
1,067,000
296,904
833,268
378,571
28,808
2,604,551		 -

-

-

-

-
-

-		 2
-
296,904
-
-
-
296,904		 -
-
-
-
-
28,808		 2
-
296,904
-
-
28,808
325,712

28,808

$
6,424,177

133,954
389,306
28,808
552,068




December 31, 2016
Total
7,107
Book value
$ 7,107		 Fair value
Level 1

7,107		 Level 2
-		 Level 3
-

7,107


7,107		 - -
7,107

29,432


29,432		 - -
29,432

29,432


29,432		 - -
29,432

168

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Loans and receivables：
Cash and cash equivalent
Note and accounts receivables, and other
receivables
Other financial assets (other current and
non-current assets)
Subtotal
Refundable deposits
Financial liabilities at fair value through profit
of loss:
Financial liabilities designated as fair value
through profit or loss
Financial liabilities at amortized cost:
Short term borrowings
Short term notes and bills payable
Note and accounts payables
Other payable
Payables on investments (other current and
noncurrent-others)
Subtotal
Total		 December 31, 2016 December 31, 2016 December 31, 2016 December 31, 2016
Book value
$ 1,448,581
1,661,928
259,179		 Fair value Total
-
-
-
Level 1 Level 2
-
-
-		 Level 3

-
-

-		 -
-
-

3,369,688

-		 - - -

140,462
-		 - - -

2
-		 2 - 2
567,000
385,231
852,021
360,935
110,823
-

-

-

-
-

-		 -
385,231
-
-
-
385,231		 -
-
-
-
83,391		 -
385,231
-
-
83,391
468,622

$ 2,276,010
83,391

$
5,682,239

36,539
385,233
83,391
505,163

b) Valuation techniques and assumptions used in fair value determination

Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm ’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments. The discounted cash flow method, or other valuation technique including a model using observable market data at the consolidated balance sheet date.

169

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Derivative financial instruments

Measurements of fair value of derivative financial instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow or option pricing models. Fair value of forward currency is usually determined by the forward currency exchange rate.

There were no transfers of financial assets from each level for the years ended December 31, 2017 and 2016.

  • (z) Financial risk management

  • (i) Overview

The nature and the extent of the Group’s risks arising from financial instruments, which ’ include credit risk, liquidity risk, and market risk, are discussed below. Also, the Group s objectives, policies, and procedures for measuring and managing risks are discussed below.

For more quantitative information about financial instruments, please refer to related notes to the financial statements.

(ii) Risk management framework

The board of directors has overall responsibility for the establishment and oversight of the risk management framework.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group ’ s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The board of directors oversees how management monitors the risks, which should be in compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation of the risks faced by the Group. Internal Audit undertakes regular reviews of the risk management controls and procedures and exception management, the results of which are reported to the Board of Directors.

170

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (iii) Credit risk

Credit risk means the potential loss to the Group if the client or the counterparty involved in a financial instrument transaction defaults. The primary potential credit risk is from the accounts receivable and investments of the Group.

  • 1) Accounts receivable and other receivables

The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. These limits are reviewed periodically.

To monitor credit risk, clients are grouped by their credit characteristics, including the amounts of accounts receivable, the period of aging, and the margin contribution for the Group. The major customers of the Group are concentrated in overseas agencies and large clients. Clients with high credit risk after evaluation would be placed on the restricted client list and be monitored by the board. Transactions with such clients would only be in cash in the future.

The Group establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables, other receivables, and investment. The components of this impairment allowance are a specific loss component that relates to individually significant exposure and a collective loss component for which a loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

  • 2) Investments

The credit risk exposure of the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Group’s finance department. As the Group deals with banks and other external parties with good credit standing and financial institutions, corporate organizations, and government agencies which are graded above investment level, the management believes that the Group does not have any compliance issues, and therefore, there is no significant credit risk.

  • 3) Guarantees

The Group has determined that financial guarantees can only be provided to the following companies:

  • a) Companies with a transaction relationship with the Group.

  • b) Companies in which the Group has more than 50% of the voting shares.

  • c) Companies which directly or indirectly hold more than 50% of the voting shares of T3EX Global Holdings Corp.

171

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

4) Liquidity risk

Liquidity risk is a risk that the Group is unable to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed ’ conditions, without incurring unacceptable losses or risking damage to the Group s reputation.

The Group actively expands its business to generate operating cash flow while it simultaneously manages the accounts receivable in a strict manner and controls its expenditure. In addition, the Group keeps good relationships with banks to obtain a sufficient credit limit for necessary cash demands in the operating cycle. Generally, the Group ensures that there is sufficient cash to cover expected operating expenditure, but excluding the potential influence of unexpected extreme conditions (i.e. nature disasters). The total amount of unused credit as of December 31, 2017, was $884,191 thousand dollars.

5) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The types of financial assets at fair value through profit or loss held by the Group are open-end funds and convertible bonds which are measured at fair value. Therefore, the Group is exposed to the risk of price changes in the beneficiary certificate market. The Group engages a professional agent to manage its financial assets. Parts of bank deposits, accounts receivable, and accounts payable are evaluated for foreign currency exposure. To manage the currency risk, the Group maintains its foreign currency net position within a certain limit. The convertible bonds held and issued by the Group are measured at fair value. This results in exposure to the risk of price changes in the equity and bond markets.

a) Currency risk

The Group is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollar (TWD), Chinese Yuan (CNY), US Dollar (USD), Hong Kong Dollar (HKD), Vietnam Dong (VND), and Thai Baht (THB).

172

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Regarding the currency risk from appreciation of the CNY, the Group uses foreign exchange contracts in order to manage its foreign exchange risk, and the contractual maturities are within one year of the reporting date.

Interest is denominated in the same currency as borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group, which mainly uses the TWD.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates.

b) Interest rate risk

Except for bank loans, there are no financial assets or financial liabilities with floating interest rates. The Group negotiates the price case by case to control the interest rate risk. Other market risk The Group signs contracts with large customers and vendors to keep sales and sources of supply stable. To maintain stable sales prices, the contents of contracts are reviewed every year in light of international economic conditions and market change.

  • c) Other market risk

  • (aa) Capital management

The board’s policy is to maintain a strong capital base in order to maintain investor, creditor, and market confidence and to sustain future development of the business. Capital consists of common shares, capital surplus, retained earnings, and non-controlling interests of the Group. The board of directors monitors the level of dividends to common shareholders.

The distribution of dividends of the Group follows the earnings of the year and is on a sustainable basis. When the board of directors drafts a proposal on appropriation and distribution of retained earnings, the dividend distribution shall not be lower than 50% of current earnings or unappropriated earnings, whichever is lower. However, the cash dividend shall not be lower than 10% of the total distribution of dividends.

173

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

The Group’s debt-to-equity ratios at the end of the reporting periods were as follows.

Total liabilities
Less: cash and cash equivalents
Net debt
Total equity
Less: amounts accumulated in equity relating to cash flow
hedges
Adjusted capital
Debt-to-equity ratio		 D e c e m b e r 3 1 ,
2 0 1 7
$ 2,784,944
1,491,532		 D e c e m b e r 3 1 ,
2 0 1 7
$ 2,784,944
1,491,532		 D e c e m b e r 3 1 ,
2 0 1 6

2,427,951

1,448,581

$
1 , 2 9 3 , 4 1 2

9 7 9 , 3 7 0

$ 2,392,607
-
$
2 , 3 9 2 , 6 0 7
2,385,494
-
2 , 3 8 5 , 4 9 4

**5 4 . 0 6 % **
**4 1 . 0 5 % **

From time to time, the Group purchases its own shares on the market; the timing of these purchases depends on market prices. Primarily, the shares are intended to be used for issuing shares under the Group’s share option scheme for employees. The purchase of treasury stock did not impact the Group’s capital management.

There were no changes in the Group’s approach to capital management during the year.

  • (ab) Investing and financing activities without cash flows

Convertible bonds were converted into common stock. Please refer to notes 6(m) and (q).

  • ( 7 ) R e l a t e d - p a r t y t r a n s a c ti o n s :

  • (a) Name of related-party and relationship:

There are relationship between related-party and the Group in the consolidated interim financial statement:

N a m e o f r el a t e d- p a r t y R e l a ti o n s h i p t o t h e G r o u p
PT Dexter Eurekatama
LOGI International Co., Ltd.
Orient Air General Sales Agent Co., LTD.
Shanghai Shangijun International Logistic Co.,
Ltd.		 Investment under equity method
Investment under equity method
Investment under equity method 30%

Investment under equity method 30%

  • (b) Other related-party transactions

  • (i) Revenue

Associates R e v e n u e
2 0 1 6
1 7 , 8 3 1		 A c c o u n t s re c ei v a b l e
D e c e m b e r 3 1 ,
2 0 1 6
5 11
2 0 1 7
$
2 2 , 9 0 0		 D e c e m b e r 3 1 ,
2 0 1 7
4 , 0 5 6

Trading terms of the above transactions require payments within 30 to 60 days or depending on the funding needs.

174

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

  • (ii) Cost of revenue
Associates C o s t o f r e v e n u e
2 0 1 6
1 3 , 6 9 4		 A c c o u n t s p ay a b l e
D e c e m b e r 3 1 ,
2 0 1 6
1 , 1 7 3
2 0 1 7
$
1 0 , 4 9 3		 D e c e m b e r 3 1 ,
2 0 1 7
5 9 4

Trading terms of the above transactions require payment within 30 to 60 days or depending on funding needs, and are not significantly different from those of third-party vendors.

  • (c) Transactions with key management personnel

  • (i) Guarantees

As of December 31, 2017 and 2016, certain directors had provided bank loan facility guarantees for the Group.

  • (ii) Key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Share-based payments		 2 0 1 7
$ 42,026
1,173
-
$
4 3 , 1 9 9		 2 0 1 6

47,531

14,334
177
6 2 , 0 4 2

( 8 ) P l e d g e d a s s e t s :

P l e dg e d a s s e t s O bj e c t D e c e m b e r 3 1 ,
2 0 1 7
$ 175,490
12,995
137,153
29,586		 D e c e m b e r 3 1 ,
2 0 1 6
178,600
24,259
140,462
17,805
Property, plant, and equipment
Other financial assets－current
Refundable deposits
Other financial assets－
non-current		 Short-term/long-term credit
facility and bank guarantees
Forward exchange
guarantees/credit
facility/logistics-related
guarantees
Logistics-related guarantees
Logistics-related guarantees

$
3 5 5 , 2 2 4
3 6 1 , 1 2 6

175

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

( 9 ) C o m m i t m e n t s a n d c o n ti n g e n c i e s :

  • (a) Guarantees issued by financial institutions for the Group for freight forwarding services were as follows:

(In thousand dollars)

HKD
TWD		 D e c e m b e r 3 1,
20 1 7
$ 3,900
44,750		 D e c e m b e r 3 1,
20 16

2,900

37,250

  • (b) In order to improve the quality of customer service, decrease operating costs, and increase competitiveness, the Group signed annual contracts with American-line sea cargo companies for a predetermined volume of containers.

  • (c) Promissory notes issued to the bank as collateral for short-term bank borrowings, logistics business, etc., were as follows.

Promissory notes D e c e m b e r 3 1 ,
2 0 1 7
$
9 0 0 , 4 6 5		 D e c e m b e r 3 1 ,
2 0 1 6
5 3 6 , 5 6 0

  • (d) The Group received a notification in 2016 from the court regarding a client claiming the damage of CNY4,212 thousand dollars for its loss on cargo. As of the reporting date, this case was still in progress, the Group did not accrue any provision for this case based on its assessment.

  • (e) In 2017, a client claimed the damage of $1,207 thousand dollars from the Group for its loss on cargo. The case is still in progress. The Group did not accrue any provision for this case based on its assessments.

( 1 0 ) L o s s e s D u e t o M a j o r D i s a s t e r s : N o n e.

( 1 1 ) S u b s e q u e n t E v e n t s :

  • (a) According to the amendments to the "Income Tax Act" enacted by the office of the President of the Republic of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is applicable upon filing the corporate income tax return commencing FY 2018. This increase does not affect the amounts of the current or deferred income taxes recognized on December 31, 2017. However, it will increase the Group’s current tax charge accordingly in the future.

  • (b) In March 2018, The Sub-subsidiary company T.H.I. Group (Shanghai) Ltd. signed a strategic framework cooperation agreement with China stock listed company Transfer Group’s (Stock Code:002010) subsidiary Logistics plat form-Ehuodi Ltd. The agreement defines the T.H.I Group (Shanghai) provides international logistics services, and Ehuodi Ltd provides end-of-city delivery services in China. Through a strategic alliance between the two parties, it provides more complete cross-border supply chain services.

176

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

( 1 2 ) O t h e r :

The personnel cost and depreciation and amortization expenses, categorized by function, were as follows.

2 0 1 7 2 0 1 7 2 0 1 7 2 0 1 6 2 0 1 6 2 0 1 6
O p e r a t i n g
c o s t s		 O p e r a t i n g
e xp e ns e s		 To t a l O p e r a t i n g
c o s t s		 O p e r a t i n g
e xp e ns e s		 To t a l
Personnel cost
Salaries
Labor and health insurance
Pension
Others
Depreciation expenses
Amortization expenses		 235,718
15,681
15,721
6,064
14,511
-
838,305

57,497

81,520

98,903

26,145
16,451		 1,074,023

73,178

97,241

104,967

40,656

16,451
319,172

20,801

15,764

8,780

9,790

-
845,593

60,363

81,251

92,521

33,977
20,446		 1,164,765

81,164

97,015

101,301

43,767

20,446

( 1 3 ) O t h e r d i s cl o s u r e s :

  • (a) Information on significant transactions:

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

(In Thousands of New Taiwan Dollars)

==> picture [498 x 188] intentionally omitted <==

----- Start of picture text -----

Highest
balance Collateral
of
financing Actual Range of Purpose Transactio
to other usage interest s of fund n Reasons Maximu
parties amount rates financin amount for for Individual m
Name of Name of Account name Relate during the Ending during the during g for the business short-ter Allowanc funding limit of
Numbe lender borrower d party period balance period the borrowe between m e for Item Valu loan fund
r period r two parties financing bad debt e limits financing
0 The Taiwan Other Yes 270,000 270,000 100,000 Monthly 2 - Trading - - 455,895 911,789
Company Express receivables- relate changes turnover
Logistic d patties in
Co., Ltd interest
rates
4 T.H.I. EXer Other Yes 40,888 27,336 2,278 Interest 2 - Trading - - 183,267 366,534
Group Logistics receivables- relate rate plus turnover
(ShanghaiCo., Ltd. d patties 0.5%
) Ltd.
4 T.H.I. Shanghai Other Yes 3,645 3,645 - 4 2 - Trading - - 183,267 366,534
Group Shangijun receivables- relate turnover
(Shanghai Internationad patties
) Ltd. l Logistic
Co., Ltd.
----- End of picture text -----

Note 1: The numbers indicated above represent the following: 0 for investor, 1 to 4 for investee.

Note 2:: Nature of lending: 1 for counterparties with transactions, and 2 for short-term operating capital.

Note 3: The ceiling on total loans granted by the Company to all parties is 40% of the net assets in the financial statements; the ceiling on total loans granted by the Company to each entity is 20% of the net assets in the financial statements.

Note 4: Ending facility balance approved by BOD.

177

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

Counter-party of
guarantee and
endorsement		 Counter-party of
guarantee and
endorsement		 Limitation
on		 Highest Balance of Property Ratio of
accumulated
amounts of
guarantees
and		 Parent
company		 Subsidiary
endorsement
s/		 Endorsement
s/
guarantees to
No.
Name of
guarantor		 Name Relationshi
p with the
Company		 amount of
guarantees
and
endorsement
s for a
specific
enterprise		 balance for
guarantees
and
endorsements
during
the period
guarantees
and
endorsements
as of
reporting date

Actual
usage
amount
during the
period
pledged for
guarantees
and
endorsemen
ts (Amount)

endorsements
to net worth
of the latest
financial
statements
Maximum
amount for
guarantees
and
endorsements

endorsement
s/
guarantees to
third parties
on behalf of
subsidiary
guarantees
to third
parties on
behalf of
parent
company		 third parties
on behalf of
companies in
Mainland
China
0 The
Company
Shanghai
Yaohwa
Internation
al
Forwarder
Co.,Ltd.



3		 455,89 5
27,91		 27,33 6
-		 - 1.20 %
911,78		 9
Y		 N Y
0 The
Company
T.H.I.
Group
(Shanghai)
Ltd. (T.H.I.
Shanghai)



3		 455,89 5
91,47		 0
45,56		 0
-		 - 2.00 %
911,78		 9
Y		 N Y
0 The
Company
Exer
Logistics
Co.,Ltd

3		 455,89 5
62,88		 7
22,78		 0
11,39		 0
-		 1.00 %
911,78		 9
Y		 N Y
0 The
Company
T Cube
Global
Logistics
Co.,Ltd.


3		 455,89 5
53,95		 27,33 6
24,02		 9
-		 1.20 %
911,78		 9
Y		 N Y
4 T.H.I.
Group
(Shanghai)
Ltd.


Exer
Logistics
Co., Ltd

3		 183,26 7
13,72		 13,66 - 1.49 %
366,53		 4
Y		 N Y
2 Shanghai
Yaohwa
Internation
al
Forwarder
Co.,Ltd.



T.H.I.
Group
(Shanghai)
Ltd.


3		 11,31 3
3,25		 6
3,18		 9
1,91		 9
-		 2.82 %
45,25		 N N Y
2 Shanghai
Yaohwa
Internation
al
Forwarder
Co.,Ltd.




Exer
Logistics
Co., Ltd


3		 11,31 3
9,14		 7
9,11		 2 - 8.05 %
45,25		 N N Y

Note 1: The numbers indicated above represent the following: 0 for investor, 1 onwards for investee

Note 2: The relationship between the guarantee provider and the receiver is as follows:

(1)The Company has transactions with its counterparties.

(2)The Company holds more than 50% of common shares of its subsidiary.

(3)The Company and its subsidiaries hold more than 50% of common shares of the investee company.

(4)The parent company holds more than 50% of its outstanding common shares (directly or indirectly) through a subsidiary.

(5)Companies within the same architectural field have signed a contractual agreement to provide mutual endorsements/ guarantees for the need of a specific construction project.

(6)The shareholders provide endorsements and/or guarantees for their mutually invested company in proportion to their shareholding percentage.

Note 3: (1)Total guarantees amount should not exceed 40% of the Company’s net assets in the financial statements if the following conditions are met:

Ownership of the Company should exceed 50%:

178

T 3 E X G L O B A L H O L D I N G S C O R P . A N D I T S S U B S I D I A R I E S

N o t e s t o t h e C o n s o li d a t e d F i n a n c i a l S t a t e m e n t s

Guarantee amount should not exceed 20% of the Company’s net assets

Ownership of the Company should not exceed 50%:

Guarantee amount should not exceed 20% of the Company’s net assets

The net assets stated above refer to the net assets from the Company’s most recently audited financial statements.

  • (2) Apart from the conditions listed above, guarantees for the purpose of business relations should not exceed the total amount of business transactions between the two parties, whichever is lower. The definition of business transactions could either be purchases or sales, whichever is higher.

  • (iii) Securities held as of December 31, 2017 (excluding investment in subsidiaries, associates and joint ventures)

(In Thousands of New Taiwan Dollars)

Name
of holder		 Category
and

name of
security		 Relationship
with company
Account
title		 Ending balance Ending balance Ending balance Ending balance Highest
ownership		 Note
Shares/Units
(thousand
dollars)		 Carrying value Percentag
e of
ownershi
p (%)		 Fair value
The
Compan
y
The
Compan
y
The
Compan
y
The
Compan
y
The
Compan
y
The
Compan
y
Taiwan
Express
Logistic
Co., Ltd.
(TEC)
T.H.I.
Logistics
Co. Ltd.		 Fund
Yuanta Wan
Tai Fund
Stock
Aerospace
Industrial
Developmen
t
Corporation
Stock
Chailease
Holding
Company
Limited
Stock
Yang Ming
Marine
Transport
Corp.
Stock
Yang Ming
Marine
Transport
Corp.
Stock
Dimerco
Express
Corporation

Stock
Central
Taiwan
Science
Park
Logistic
Co., Ltd.

Stock
Yang Ming
Marine
Transport
Corp.		 -
-
-
-
-
-
-
-		 Financial assets at
fair value through
profit or loss－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
non-current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current		 473,454
447,000
200,000
7,675,577
10,000,000
334,000
3,880,000

364
7,131

14,215

17,320

88,269

92,400

7,014

38,800
5		 -
-		 7,131
14,215
17,320
88,269
92,400
7,014
-
5
-

465,000

300,000

8,914,577

10,000,000

334,000
3,880,000

-		 (note 2)

179

Note 1: due to lack of market information, will not include in this report

  • (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock: None.

  • (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousand Dollars of New Taiwan Dollars)

Name of
company		 Counter-party Nature of
relationship		 Ending
balance		 Turnover
rate		 Overdue Overdue Amounts
received in
subsequent
period		 Allowance
for bad debts
Amount Action taken
T.H.I. Group (Shanghai)
Ltd.(T.H.I. Shanghai)		 T.H.I. Group Limited
(HK)		 Parent Company Other receivables
304,230
-		 - - -

  • (ix) Trading in derivative instruments:Please refer to notes 6(b)&(j).

  • (i) Business relationships and significant intercompany transactions:

(In Thousand Dollars of New Taiwan Dollars)

No. Name of company Name of
counter-party		 Nature of
relationship		 Intercompanytransactions Intercompanytransactions Intercompanytransactions Intercompanytransactions
Account name Amount Trading terms Percentage of the
consolidated
net revenue or total assets
1 T.H.I. Group (Shanghai)
Ltd.		 T.H.I. Group Limited
(in HK)
3
 Other receivable 304,230
"		 2.89%

Note 1: The numbers indicated above represent the following: 0 for the Parent company, 1 to 4 for its subsidiaries.

Note 2: The relations of the transactions represent the following:

  1. The Parent company to its subsidiaries.

  2. Subsidiaries to the Parent company.

  3. Subsidiaries to subsidiaries.

  4. Note 3: This chart will disclose sales, accounts and notes receivable, other receivables, purchases, accounts and notes payable, and other payables.

Note 4: The above transactions have been reversed in this financial report.

  • (b) Information on investees:

The following is the information on investees for the years ended December 31, 2017 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor Name of
investee		 Location Main
businesses
and
products		 Original investment amount Original investment amount Shares Balance as of December 31,2017 Balance as of December 31,2017 Balance as of December 31,2017 Net income
(losses)
of investee		 Share of
profits/losses of
investee		 Note

December 31,
2017		 December 31,
2016		 Percentage
of ownership		 Carrying
value		 Highest
percentage of
ownership
The Company
T.H.I.
British		 Offshore 35,00 0
35,00		 0
1,000,00		 0
100.00%		 74,501 100.00% 3,96 2
3,96		 2Subsidiarie
180
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
GREATLINE
INTERNATIONA
L LIMITED
Fresh Beauty
Enterprises Ltd.
TEC
TEC
TEC

TEC		 Group
Ltd.(in
B.V.I)

Greatline
Internationa
l Limited
(Greatline)

T.H.I
Group
Vietnam
Co., Ltd.

T.H.I.
Group
(Bangkok)
Co., Ltd.

T.H.I. &
Maruzen
Co., Ltd.

Taiwan
Express
Logistic
Co., Ltd.
(TEC)

T.H.I.
Logistics
Co. Ltd.

T.H.I.
Group
(Cambodia)
Co., Ltd.
PT. Dexter
Eurekatama

T.H.I.
Group
Singapore
Pte. Ltd.
(Singapore)

LOGI
Internationa
l Co., Ltd.

Fresh
Beauty
Enterprises
Ltd. (Fresh
Beauty)

T.H.I.
Logistics
(Malaysia)
SDN. BHD.

T.H.I.
Group
Limited
(HK)
(T.H.I. HK)

Eastern
Union
Holdings
Limited
(Eastern
Union)
Taiwan
Express
(HK) Co.,
Ltd. (TEC
HK)
TEC
Logistic
Co., Ltd.
Orient Air
General
Sales Agent
Co., Ltd.
Hiview
Logistics
Co., Ltd.

Virgin
Islands


British
Virgin
Islands



Vietnam



Thailand


Japan




Taiwan


Taiwan



Cambodia


Indonesia





Singapore

Korea




Samoa




Malaysia





Hong Kong





Hong Kong




Hong Kong


Taiwan



Taiwan

Taiwan		 settlement
center
Offshore
holding
company
Air & sea
freight
forwarding
and
packaging
Air & sea
freight
forwarding
and
packaging
Air & sea
freight
forwarding
Air & sea
freight
forwarding
and
customs
clearance
Air & sea
freight
forwarding
Air & sea
freight
forwarding
Air & sea
freight
forwarding
Air & sea
freight
forwarding
Air & sea
freight
forwarding
Offshore
holding
company
Air & sea
freight
forwarding
Air & sea
freight
forwarding
Offshore
holding
company
Freight
forwarding
, customs
clearance,
and
distributio
n
Freight
forwarding
, customs
clearance,
and
delivery
services
Freight
forwarding
, customs
clearance,
and
delivery
services
Freight
forwarding
, customs
clearance,
and		 (USD1,000)
134,42
(USD4,050)
8,36
(USD275)
2,37
(USD72)

10,36
(JPY31,130)
704,20

130,00

4,46
(USD150)

47,38
(USD1,598)

19,03
(USD850)

9,66
(USD300)
282,77
(CNY55,579)

10,38
(USD315)

139,94
(USD4,134)
57,41
(USD1,751)
266,80
(HKD70,550)

6,00

60
76,59
(USD1,000)
8

134,42
(USD4,050)
2

4,86
(USD159)
2

2,37
(USD72)
5

10,36
(JPY31,130)
0
704,20
0
130,00
2

4,46
(USD150)
1

47,38
(USD1,598)
2

7,62
(USD320)
6

9,66
(USD300)
5

282,77
(CNY55,579)
1

10,38
(USD315)
8

139,94
(USD4,134)
1

57,41
(USD1,751)
7

266,80
(HKD70,550)
0
6,00
0
60
0
76,59		 8
4,050,000
2
4,950,000,000
2
-
5
3,060
0
35,958,400
0
13,000,000
2
-
1
12,000
9
850,000
6
16,285
5
60
1
180,000
8
12,480,000
1
-
7
-
0
1,000,000
0
60,000
0
5,000,000		 100.00%

99.00%
49.00%

51.00%

100.00%

100.00%
100.00%

30.00%

91.40%

30.00%

60.00%

90.00%

100.00%
100.00%
100.00%

100.00%

30.00%

97.51%		 1,468,332

60,231

14,246

14,574

715,018

141,567

8,144

45,532

12,932

6,001

323,427

5,406

1,466,949

147,221

329,195

-

2,755

103,401		 100.00%

99.00%

49.00%

51.00%

100.00%

100.00%

100.00%

30.00%

91.40%

30.00%

60.00%

90.00%

100.00%

100.00%

100.00%
100.00%

30.00%

97.51%		 165,60

11,04

4,02

6,10

36,87

7,97

4

(390

87

(2,686

37,39

(1,356

166,03

37,26

4,89

-

4,55

22,25		 4
165,60
5
5,63
7
1,97
5
3,11
9
30,87
2
7,97
7
4
(3,241
0
85
(806
7
20,13
(1,221
4
166,03
1
37,26
1
4,89
-
6
1,15
1
21,69		 s
4Subsidiarie
s
3Subsidiarie
s
3Subsidiarie
s
3Subsidiarie
s
9Subsidiarie
s
2Subsidiarie
s
7Subsidiarie
s
Investment
under
equity
method
9Subsidiarie
s
Investment
under
equity
method
1Subsidiarie
s
Subsidiarie
s
4Subsidiarie
s
1Subsidiarie
s
1Subsidiarie
s
Subsidiarie
s
7Investment
under
equity
method
7Subsidiarie
s

181

==> picture [499 x 120] intentionally omitted <==

----- Start of picture text -----

distributio
n
TEC Taiwan United States Freight 31,629 31,629 100,000 100.00% 33,501 100.00% - - Subsidiarie
Express forwarding (USD1,000) (USD1,000) s
(USA), Inc. , customs
clearance,
and
distributio
n
TEC TEC United States Freight 8,549 8,549 200 100.00% 12,924 100.00% - - Subsidiarie
LOGISTIC forwarding (USD290) (USD290) s
S (USA), , customs
INC. clearance,
and
distributio
n
----- End of picture text -----

  • (c) Information on overseas branches and representative offices:

  • (i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of
investee		 Main
businesses
and
products		 Total
amount
of paid-in
capital		 Method
of
investment		 Accumulated
outflow of

investment from
Taiwan as of
January 1, 2016		 Investment flows Investment flows Accumulated
outflow of
investment from
Taiwan as of
December 31, 2017		 Net
income

(losses)
of the
investee		 Percentage
of
ownership

Highest
Percentage of
ownership		 Book
value		 Investment
income
(losses)		 Accumulated
remittance of
earnings in
current
period
Outflow Inflow
Shanghai
Yaohwa
International
Forwarder
Co., Ltd.
T.H.I. Group
(Shanghai)
Ltd.
Shanghai Kai
Hua Co.,
Ltd.Transport
and logistics
T-Cube
Global
Logistics Co.,
Ltd.
EXer
Logistics Co.,
Ltd.
TEC Logistics
(Shenzhen)
Co., Ltd.



Air & sea
freight
forwarding
and customs
clearance


Air & sea
freight
forwarding
and customs
clearance



Transport and
logistics



Warehousing
and company


Express
logistics
company


Freight
forwarding,
customs
clearance,
and
distribution



55,031
(USD1,700)




92,883
(USD2,600)

22,460
(5,000CNY)

54,610
(1,100USD)


52,107
(CNY11,123)





183,901
(HKD48,550)

(1)


(1)


(5)


(1)


(6)


(7)		 55,031
(USD1,700)
84,861
(USD2,600)
-
204,388
(6,185USD)
-
183,901
(HKD48,550)

-


-
-


39,358
(1,178USD)
-


-		 -
-
-


-
-
-
55,031
(USD1,700)

84,861
(USD2,600)

-

243,746
(7,363USD)

-

183,901
(HKD48,550)
5,668

57,275
(588)

37,621
(63,602)

3,094		 100.00%
100.00%
30.00%
60.00%
88.94%
100.00%		 100%
100%
30
60%
88.94%
100%
5,668

57,275

3,239

37,621

(86,096)

3,094
113,353

943,537

12,297

147,229

61,163

158,338
-

-

-

-

-

-

182

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as
of December 31,2017		 Investment Amounts Authorized by
Investment Commission,MOEA		 Upper Limit on Investment
390,168
( 11,863USD thousand)		 436,428
( 14,660USD thousand)		 1,367,684

Note 1: Investment in Mainland Chain via remittance through a third region.

  • Note 2: The investment gains or losses under the same period that have been recorded based on the investees’ audited financial statements.

Note 3: The actual amount invested by the Company in Mainland Chain at the end of this period.

Note 4: At the reporting date, the exchange between USD and TWD rate was 1:29.77.

Note 5: Shanghai Yaohwa International Forwarder Co., Ltd. directly invested in Shanghai Kai Hua Co., Ltd.

Note 6: T.H.I. Group (Shanghai) Ltd. directly invested in EXer Logistics Co., Ltd.

  • Note 7: The Company’s subsidiary, Taiwan Express Logistic Co., Ltd., invested in Mainland China via remittance through a third region. The upper limit of the investments is 60% of Taiwan Express Logistic Co., Ltd.’s net assets in the financial statements based on the “ REGULATIONS GOVERNING THE APPROVAL OFINVESTMENT OR TECHNICAL COOPERATION INMAINLAND CHINA” and have been approved by the Investment Commission Ministry of Economic Affairs amounting to $183,901 thousand (HKD48,550 thousand).

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

( 1 4 ) S e g m e n t i n f o r m a ti o n :

(a) General information

The Group’s reportable operating segments are the sea export and air export segments.

  • (b) Information on reportable segments’ income or loss, assets, liabilities, and measurement base and reconciliation

The Group has two reportable segments, as described below. These two segments are strategic business units of the Group. Each strategic business unit provides different services and is managed ’ separately on account of different professional knowledge and marketing tactics. The Group s chief operating decision makers review the internal management report on a monthly basis. The Group’s operating segment information and reconciliation were as follows:

183

Seg ment revenue
Seg ment gross profit
Seg ment assets
Seg ment revenue
Seg ment gross profit
Seg ment assets		 2017 Total

10,537,008

1,924,035
(note 1)
Total

9,744,113

1,794,218
(note 1)
Sea export
$ 5,911,006
1,142,423
(note 1)		 Air export

3,003,392

427,134
(note 1)		 Others
1,628,664
365,120
(note 1)
2016		 Adjust ment/
elimination

(6,054)

(10,642)
(note 1)
Sea export
$ 5,589,842
1,119,072
(note 1)		 Air export

2,524,980

395,451
(note 1)		 Others
1,645,718
278,393
(note 1)		 Adjust ment/
elimination

(16,427)

1,302
(note 1)

Note 1: Segment assets are not reviewed by the Group’s chief operating decision makers, and thus, they are disclosed as zero.

(c) Products and services information

Please refer to note 14(2).

(d) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of the customers and segment assets are based on the geographical location of the assets. The Group’s main business is the international sea and air freight forwarding services; therefore, external sales to customers are not divided geographically.

Non-current assets:

Taiwan
China and Hong Kong
Others		 2 0 1 7
$ 732,008
197,098
2,293		 2 0 1 6

688,150

281,700
2,949

$
9 3 1 , 3 9 9
9 7 2 , 7 9 9
  • (e) Major customers

The Group has no single customer that exceeds 10% of its sales.

184

I n d e p e n d e n t A u d it o r s ’ A u d i t R e p o r t

The Board of Directors T3EX Global Holdings Corp.

O p i n i o n

We have audited the consolidated financial statements of T3EX Global Holdings Corp.(“the Company”) and its subsidiaries (“the Group”), which comprise the consolidated statement of balance sheet as of December 31, 2017 and 2016, the consolidated statement of comprehensive income, consolidated statement of changes in equity and cash flows for the year ended December 31, 2017 and 2016, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2017 and 2016,and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

B a s i s f o r O p i n i o n

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

K e y A u d i t M a t t e r s

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide an opinion on these matters, separately.

1. Revenue recognition

Please refer to Note 4(n) "Revenue recognition" of consolidated financial statements and Note 6(u) "Revenue" for the details of operating revenues of consolidated financial statements.

How the matter was addressed in our audit:

The Group mainly engages in sea and air freight forwarding, and total logistics solution. Therefore, the revenue is a matter to the users of the consolidated financial statements. Consequently, this is one of the key assessment areas our audit focus on.

185

Our audit procedures included:

Understanding the internal control on revenue recognition applied by the management and assessing whether appropriate accounting policy is applied; performing the analysis on revenue from the top ten customers to verify whether or not any unusual transaction has incurred; performing the sampling procedures to verify records and supporting document of the transactions; selecting a period before and after the reporting date to assess whether revenue recognized in the correct period.

2. Goodwill and other intangible assets impairment assessment

Please refer to Notes 4(k) and (l) "The non-financial assets impairment" of consolidated financial statements, Note 5 for assumptions on the accounting estimates and assumptions on the impairment of goodwill and other intangible assets of the consolidated financial statements, and Note 6(i) for the details of the intangible assets in consolidated financial statements.

How the matter was addressed in our audit:

The accounting policy applying to the goodwill and other intangible assets arising from acquisition transactions is with the uncertainty estimation. Consequently, this is one of the key assessment areas our audit focus on.

Our the principal audit procedures included:

Understanding the internal control on the impairment assessment of the goodwill and other intangible assets; selecting significant goodwill and other intangible assets; obtaining impairment assessment reports issued by an external expert engaged by the management; assessing model, parameters and assumptions applying to the financial information forecast; and evaluating whether the assessment for goodwill and other intangible assets was based on the accounting policies.

3. Account receivable evaluation

Please refer to Note 4(g) "impairment of financial assets" of consolidated financial statements, Note 5 "Estimation uncertainty of the impairment of the receivable" of consolidated financial statements and Note 6(e) "impairment of the receivables" of consolidated financial statements.

How the matter was addressed in our audit:

The group deal with its main customers on credit, so Group's receivables are exposed to the credit risk. When the customer defaults, the receivables may be impaired. Since the collectability assessment of receivables depends on management's judgment. Consequently, this is one of the key assessment areas our audit focus on.

Our the principal audit procedures included:

Understanding impairment policy applied to the receivables by the management; assessing whether it is based on appropriate accounting policies. Inquiring the management whether there was any receivable with difficulty to collect; performing a sampling procedure to check the correctness of the aging of receivables and to review the collection of receivables in the subsequent period to understand if there was any significant overdue receivables to evaluated the provisions for impairment of receivables are adequate.

O t h e r M a t t e r

T3EX Global Holdings Corp. has prepared its parent-company-only financial statements as of and for the years then ended December 31, 2017 and 2016, on which we have expressed an unqualified opinion.

186

R e s p o n s i b iliti es o f M a n a g e m e n t a n d T h o s e C h a r g e d w i t h G o v e r n a n c e f o r t h e C o n s o li d a t e d F i n a n ci a l St a t e m e n t s

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance including supervisor are responsible for overseeing the Group’s financial reporting process.

A u d i t o r ’ s R e s p o n s i b ilitie s f o r t h e A u d i t o f t h e C o n s o li d a t e d F i n a n c i a l St a t e m e n t s

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  1. Assess for purpose of identifying the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Evaluated for purposes of determining the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we determine that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’ s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

187

  1. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 26, 2018

188

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents (notes 6(a), (y) & (z))
1110
Current financial assets at fair value through profit or loss－current
(notes 6(b) & (y))
1125
Available-for-sale financial assets－current(notes 6(c) & (y))
1150
Notes receivable(notes 6(e) & (y))
1170
Accounts receivable(notes 6(e) & (y))
1180
Accounts receivable-related parties (notes 6(e), (y) &7)
1470
Other current assets(notes 6(e), (g), (j), (y) & 8)
Current assets
Non-current assets:
1524
Non-current available-for-sale financial assets
(notes 6(c) & (y))
1543
Financial assets measured at cost－non current (notes 6(d) & (y))
1550
Equity-accounted investees (note 6(f))
1600
Property, plant and equipment (notes 6(h) & 8)
1805
Goodwill (notes 6(i))
1821
Other intangible assets (notes 6(i))
1840
Deferred tax assets (note 6(p))
1920
Refundable deposits (notes 6(y) & 8)
1995
Other non-current assets (notes 6(g), (j), (y) & 8)
Non-current assets
Total assets		 December 31, 2017
Amount
%
$ 1,491,532
29
7,131
-
126,823
2
65,899
1
1,697,982
33
4,056
-
430,922
8		 December 31, 2016
Amount
%
1,448,581
30

7,107 -
29,432
1
31,651
1
1,629,766
34
511
-
334,301
6
3,481,349
72

- -
38,800
1
60,753
1
314,067
6
563,329
12
95,403
2
43,044
1
140,462
3
76,238
2
1,332,096
28
4,813,445
100
Liabilities and Equity
Current liabilities:
2100
Short-term borrowings (notes 6(k) & (y))
2120
Financial liabilities at fair value through profit or loss-non current
(note 6(b), (m) & (y))
2150
Notes payable (note 6(y))
2170
Accounts payable (note 6(y))
2180
Accounts payable－related parties (notes 6(y) & 7)
2200
Other payables (note 6(y))
2230
Current tax liabilities
2321
Current portion of convertible bonds (notes 6(m) & (y))
2399
Other current liabilities (notes 6(g) & (y))
Current liabilities
Non-Current liabilities:
2500
Non-current financial liabilities at fair value through profit or loss
(notes 6(b), (m) & (y))
2530
Convertible bond payable (notes 6(m) & (y))
2640
Net defined benefit liability(note 6(o))
2670
Other liabilities (notes 6(g) & (y))
Non-current liabilities
Total liabilities
Equity attributable to owners of parent (notes 6(m), (p), (q) & (r)) :
3100
Share capital
3200
Capital surplus
3300
Retained earnings
3400
Other equity
3500
Treasury shares
Equity attributable to owners of the Company
36xx
Non-controlling interests
Total equity (note 6(a))
Total liabilities and equity		 December 31, 2017 December 31, 2017 December 31, 2017
Amount % Amount
3,824,345
73
92,400
2
38,800
1
66,585
1
301,090
6
527,494
10
102,815
2
42,421
1
137,153
3
44,448
1		 2,700,287
53
2,013,714
42
- -
2 -
-
-
290,691
5
84,657
2
82,709
2
-
-
40,835
1
84,657
2
414,237
8
2,784,944
55
2,427,951
50
1,185,655
22
1,195,264
25
872,754
17
865,337
17
424,932
8
285,955
7
(137,519)
(3)
(25,556)
(1)
(66,349)
(1)
(61,801)
(1)
1,353,206
27



2,279,473
43
2,259,199
47
113,134
2
126,295
3
2,392,607
45
2,385,494
50
$
5,177,551
100
4,813,445
100
$
5,177,551
100

189

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars, except for earnings per common share)

2017
Amount
4000
Operating revenue (notes 6(u) &7)
$ 10,537,008
5000
Cost of revenue (notes 6(n), (o), 7 & 12)
8,612,973
Gross profit
1,924,035
Operating expenses (notes 6(n), (o), (t) & 12)
6100
Selling expenses
1,089,712
6200
Administrative expenses
437,878
Total operating expenses
1,527,590
Net operating income
396,445
Non-operating income and expenses:
7010
Other income (note 6(v))
9,708
7020
Other gains and losses (note 6(g) & (x))
(24,917)
7060
Share of profit of equity-accounted investees (note 6(f))
349
7510
Financial cost (note 6(m) & (x))
(27,556)
Profit before tax
354,029
7950
Less: Tax (expense (note 6(p))
101,292
Profit for the year
252,737
8300
Other comprehensive income:
8310
Items that will not be reclassified subsequently to profit or loss:
8311
Remeasurements of defined benefit plans obligation
(2,462)
8349
Income tax related to items that will not be reclassified subsequently
-
Items that will not be reclassified subsequently to profit or loss
(2,462)
8360
Items that will may be reclassified subsequently to profit or loss:
8361
Exchange differences on translation in financial statements of foreign operation
(92,886)
8362
Unrealized gains (losses) on available-for-sale financial assets
(23,045)
8399
Income tax related to items that may be reclassified subsequently
-
Items that will may be reclassified subsequently to profit or loss
(115,931)
8300
Other comprehensive income(loss) for the year, net of income tax
(118,393)
Total comprehensive income
$
134,344
Profit attributable to:
Owners of parent company
$ 240,110
Non-controlling interests
12,627
$
252,737
Comprehensive income attributable to:
Owners of parent company
$ 125,685
Non-controlling interests
8,659
$
134,344
Basic earnings per share (note 6(s))
Earnings per share (TWD)
$
Diluted earnings per share (TWD)
$		 2017 %
100

82		 2016 %
100
82
Amount
$ 10,537,008
8,612,973		 Amount
9,744,113
7,949,895

1,924,035

18
1,794,218		 18

1,089,712
437,878

11

4
1,135,050
466,003		 12
4

1,527,590

15
1,601,053		 16

396,445

3
193,165		 2

9,708
(24,917)
349
(27,556)
-
-
-

-
9,454
50,310
(201)
(26,124)		 -
1
-
-

354,029
101,292

3

1
226,604
105,428		 3
1

252,737

2
121,176		 2

(2,462)
-
-
-
(5,905)
-		 -
-
(2,462)
-		 (5,905) -


(1)
-
-
(125,138)
(6,422)
-		 (2)
-
-
(115,931)
(1)		 (131,560) (2)

(118,393)


(1)
(137,465)
(2)

$
134,344

1
(16,289)

$ 240,110
12,627
2

-
130,487
(9,311)		 2
-

$
252,737
2
121,176		 2

$ 125,685
8,659
1

-
248
(16,537)		 -
-

$
134,344
1
(16,289)		 -

$		 2.07 1.11
1.04
$ 1.93

190

(English Translation of Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP.

Statements of Changes in Equity

For the years ended December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Balance at January 1, 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends
Stock dividends
Other changes in capital surplus:
Share-based payment transactions
Issue of common stock for convertible bonds
Issue new stocks for share base payment
Purchase of treasury share
Change in ownership interests in subsidiaries
Changes in non-controlling interests
Balance at December 31, 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Special reserve
Cash dividends
Issue of common stock for convertible bonds
Issue new stocks for share base payment
Purchase of treasury share
Retirement of treasury share
Changes in ownership interests in subsidiaries
Changes in non-controlling interests
Balance at December 31, 2017		 Share capital
Ordinary
shares
Capital surplus

-
-
-
-
130,487
130,487
-
-
-
-
130,487
(9,311)
121,176
-
-
-
-
(5,905)
(5,905)
(117,912)
(6,422)
(124,334)
-
(130,239)
(7,226)
(137,465)








-
-
-
-
124,582
124,582
(117,912)
(6,422)
(124,334)
-
248
(16,537)
(16,289)





-
-
27,217
-
(27,217)
-
-
-
-
-
-
-
-
-
-
-
-
(206,341)
(206,341)
-
-
-
-
(206,341)
-
(206,341)
22,927
-
-
-
(22,927)
(22,927)
-
-
-
-
-
-
-
-
(288)
-
-
-
-
-
-
-
-
(288)
-
(288)
7,836
9,337
-
-
-
-
-
-
-
-
17,173
-
17,173
4,080
1,142
-
-
-
-
-
-
-
-
5,222
-
5,222
-
-
-
-
-
-
-
-
-
(51,165)
(51,165)
-
(51,165)
-
(12,068)
-
-
-
-
-
-
-
-
(12,068)
12,068
-
-
-
-
-
-
-
-
-
-
-
-
1,137
1,137
1,195,264
865,337
138,575
7,116
140,264
285,955
(29,591)
4,035
(25,556)
(61,801)
2,259,199
126,295
2,385,494
-
-
-
-
240,110
240,110
-
-
-
-
240,110
12,627
252,737
-
-
-
-
(2,462)
(2,462)
(88,918)
(23,045)
(111,963)
-
(114,425)
(3,968)
(118,393)








-
-
-
-
237,648
237,648
(88,918)
(23,045)
(111,963)
-
125,685
8,659
134,344



-
-
13,049
-
(13,049)
-
-
-
-
-
-
-
-
-
-
-
18,440
(18,440)
-
-
-
-
-
-
-
-
-
-
-
-
(92,637)
(92,637)
-
-
-
-
(92,637)
-
(92,637)
13,756
15,544
-
-
-
-
-
-
-
-
29,300
-
29,300
275
77
-
-
-
-
-
-
-
-
352
-
352
-
-
-
-
-
-
-
-
-
(56,159)
(56,159)
-
(56,159)
(23,640)
(27,971)
-
-
-
-
-
-
-
51,611
-
-
-
-
19,767
-
-
(6,034)
(6,034)
-
-
-
-
13,733
(17,231)
(3,498)
-
-
-
-
-
-
-
-
-
-
-
(4,589)
(4,589)


$
1,185,655
872,754
151,624
25,556
247,752
424,932
(118,509)
(19,010)
(137,519)
(66,349)
2,279,473
113,134
2,392,607

。

191

(English Translation of Financial Statements and Report Originally Issued in Chinese)

T3EX GLOBAL HOLDINGS CORP.

Statements of Cash Flows

For the years ended December 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit and loss:
Depreciation
Amortization
Impairment loss on receivables
Change in fair value of financial assets and liabilities
Interest expense
Interest income
Cost of share-based payment transactions
Share of profit of equity-accounted investees
Loss (gain) on disposal of property, plant and equipment
Gain on evaluation of investments payable
Loss on impairment of goodwill
Gain on evaluation of investments payable
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in notes receivable
Decrease (increase) in accounts receivable
Decrease (increase) in accounts receivable－related parties
Increase in other current assets
Decrease (increase) in other operating assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in notes payable
Increase (decrease) in accounts payable
Increase (decrease) in accounts payable to related parties
Increase (decrease) in other payable
Increase (decrease) in other current liabilities
Increase in net defined benefit liability
Total changes in operating liabilities
Net changes in operating assets and liabilities
Net adjustments
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through profit or loss
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Acquisition of equity-accounted investee
The capital increase of subsidiary
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Acquisition of intangible assets
Decrease in investment payable
Decrease (increase) in other current and non-current assets
Dividends received
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings
Decrease (increase) in short-term notes and bills payable
Repayments of bonds
Repayments of long-term debt
Payment of cash dividends
Exercise of employee share options
Payments to acquire treasury shares
Change in non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2017
$ 354,029
40,656
16,451
3,442
(24)
27,556
(5,976)
-
(349)
2,004
(7,161)
31,892
(45,122)		 2016
226,604
43,767
20,446
1,634
129
26,124
(4,729)
(288)
201
(17,960)
(16,283)
36,092
-
89,133
2,031
(194,319)
910
(63,625)
(1,823)
(256,826)
3,141
131,383
1,004
(92,140)
3,097
(8,106)
38,379
(218,447)
(129,314)
97,290
4,729
(5,447)
(87,853)
8,719
296
(90,533)
95,991
(10,381)
-
(32,236)
23,210
(7,552)
(4,953)
(175,427)
(91,391)
3,978
(288,998)
451,000
(20,000)
-
(1,141)
(206,341)
5,222
(51,165)
1,137
178,712
(117,331)
(218,898)
1,667,479
1,448,581

63,369

(34,248)
(70,171)
(3,546)
(63,204)
(3,957)

(175,126)

14,873
(33,047)
(580)
17,572
(3,963)
(512)

(5,657)

(180,783)

(117,414)

236,615
5,976
(14,685)
(74,594)

153,312

-
(261,017)
55,342
(8,894)
(3,498)
(33,572)
2,478
3,309
(24,401)
(39,358)
-
3,630

(305,981)

500,000
-
(65,400)
-
(92,637)
352
(56,159)
(4,589)

281,567

(85,947)

42,951
1,448,581

$
1,491,532

192

( E n g l i s h T r a n s l a ti o n of F i n a n c i a l S t a t e m e n t s a n d R e p o r t O r i g i n a ll y I s s u e d i n C h i n e s e )

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

F o r t h e y e a r s e n d e d D e c e m b e r 3 1, 2 0 1 6 a n d 2 0 1 5

( E x p r e s s e d i n T h o u s a n d s o f N e w T a i w a n D o ll a r s , U n l e s s O t h e r w i s e S p e ci fi e d )

( 1 ) C o m p a n y h i s t o r y

T 3 E X G L O B A L H O L D I N G S C O R P . (t h e “ C o m p a n y ” ) w a s i n c o r p o r at e d o n F e b r u a r y 4 , 1 9 8 7 , as a c o m p a n y li m it e d b y s h a r e s, a n d r e g i st er e d w it h t h e M i n i str y o f E c o n o m i c A f f ai r s, R . O . C .. T h e a d d r e s s o f t h e C o m p a n y ’ s r e g i st er e d o ffi c e is 1 2 F , N o . 5 6 3 , S e c. 4, Z h o n g x i a o E . R d ., X i n yi D i st., T ai p ei C it y, R . O . C .. T h e C o m p a n y m ai n l y e n g a g e s i n i n d u s tri al in v e s t m e n t h o l d i n g s.

T h e C o m p a n y ’ s s h a r e s w a s li st e d at T W S E si n c e D e c e m b e r 2 2 , 2 0 1 6 .

( 2 ) A p p r o v a l d a t e a n d p r o c e d u r e s o f t h e fi n a n ci a l s t a t e m e n t s :

T h e p a r e n t - c o m p a n y o n l y fi n a n ci al st at e m e n t s w e r e a ut h o ri z e d f o r is s u e b y th e b o a r d o f di r e ct o r s o n M a r c h 2 6 , 2 0 1 8 .

( 3 ) N e w s t a n d a r d s , a m e n d m e n t s a n d i n t e r p r e t a ti o n s a d o p t e d :

  • ( a) T h e i m p a ct o f t h e I n t er n ati o n al Fi n a n ci al R e p o r ti n g S t a n d a r d s ( “ I F R S s ” ) e n d o r s e d b y t h e F i n a n ci al S u p e r vi s o r y C o m m i s s i o n , R . O . C . ( “ F S C ” ) w h i c h h a v e alr e a d y b e e n a d o p t e d.

T h e f o ll o w i n g n e w s t a n d a r d s, i nt er p r et ati o n s a n d a m e n d m e n t s h a v e b e e n e n d o r s e d b y t h e F S C a n d a r e eff e cti v e f o r a n n u a l p e ri o d s b e g i n n i n g o n o r aft er J a n u a r y 1, 2 0 1 7 :

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
A m e n d m e n t s t o I F R S 1 0 , IF R S 1 2 a n d I A S 2 8 " I n v e s t m e n t E n titi es : A p p l yi n g
t h e C o n s o li d ati o n E x c e p t i o n "
A m e n d m e n t s t o I F R S 1 1 " A c c o u n ti n g f o r A c q u i siti o n s o f I n t er e st s i n J o i n t
O p e r ati o n s "
I F R S 1 4 " R e g u l at o r y D e f e r r al A c c o u n t s "
A m e n d m e n t t o I A S 1 " P r e s e n t ati o n o f Fi n a n ci al St at e m e n t s - D i s cl o s u r e I niti ati v e
A m e n d m e n t s t o I A S 1 6 a n d I A S 3 8 " C l a rifi c ati o n o f A c c e p t a b l e M e t h o d s o f
D e p r e ci ati o n a n d A m o rti z at i o n "
A m e n d m e n t s t o I A S 1 6 a n d I A S 4 1 " A g r i c u lt u r e: B e a r er P l a n t s "
A m e n d m e n t s t o I A S 1 9 " D e fi n e d B e n e fit P l a n s : E m p l o y e e C o n t ri b u ti o n s "
A m e n d m e n t t o I A S 2 7 " E q u it y M e t h o d i n S e p a r at e Fi n a n c i al St at e m e n t s "
A m e n d m e n t s t o I A S 3 6 " Im p a i r m e n t o f N o n - F i n a n ci a l a s s et s - R e c o v e r a b l e
A m o u n t D i s cl o s u r e s f o r N o n Fi n a n ci al A s s et s "
A m e n d m e n t s t o I A S 3 9 " F i n a n ci al I n s tr u m e n t s - N o v at i o n o f D e ri v ati v e s a n d
C o n ti n u ati o n o f H e d g e A c c o u n ti n g "
A n n u a l I m p r o v e m e n t s t o I F R S s 2 0 1 0 2 0 1 2 C y c l e a n d 2 0 1 1 2 0 1 3 C y c l e		 E f f e c ti v e d a t e
p e r I A S B
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 6
J u l y 1, 2 0 1 4
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 4
J a n u a r y 1 , 2 0 1 4
J u l y 1, 2 0 1 4

193

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
A n n u a l I m p r o v e m e n t s t o I F R S s 2 0 1 2 2 0 1 4 C y c l e
I F R I C 2 1 " L e v i e s "		 E f f e c ti v e d a t e
p e r I A S B
J a n u a r y 1 , 2 0 1 6
J a n u a r y 1 , 2 0 1 4

T h e C o m p a n y a s s e s s e d t h a t t h e i n iti al a p p li c ati o n o f th e a b o v e I F R S s w o u l d n o t h a v e a n y m a t e ri al i m p a ct o n t h e fi n a n ci al st at e m e n t s.

( b ) T h e i m p a ct o f I F R S e n d o r s e d b y F S C b u t n o t y et ef f e c ti v e

T h e f o ll o w i n g n e w s t a n d a r d s, i nt er p r et ati o n s a n d a m e n d m e n t s h a v e b e e n e n d o r s e d b y t h e F S C a n d a r e eff e cti v e f o r a n n u a l p e r i o d s b e g i n n i n g o n o r aft er J a n u a r y 1, 2 0 1 8 i n a c c o r d a n c e w i t h R u li n g N o . 1 0 6 0 0 2 5 7 7 3 i s s u e d b y t h e F S C o n J u l y 1 4 , 2 0 1 7 .

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
A m e n d m e n t t o I F R S 2 " C l a rifi c ati o n s o f C l a s si fi c ati o n a n d M e a s u r e m e n t o f
S h a r e - b a s e d P a y m e n t Tr a n s a cti o n s "
A m e n d m e n t s t o I F R S 4 " A p p l yi n g I F R S 9 Fi n a n ci al In s t r u m e n t s w it h I F R S 4
I n s u r a n c e C o n t r a ct s "
I F R S 9 " Fi n a n ci al I n st r u m e n t s "
I F R S 1 5 " R e v e n u e fr o m C o n t r a ct s w it h C u s t o m e r s "
A m e n d m e n t t o I A S 7 " St at e m e n t o f C a s h F l o w s - D i s c l o s u r e I n iti ati v e "
A m e n d m e n t t o I A S 1 2 " I n c o m e Ta x e s - R e c o g n iti o n o f D e f e r r e d Ta x A s s et s f o r
U n r e ali z e d L o s s e s "
A m e n d m e n t s t o I A S 4 0 " T r a n s f e r s o f I n v e s t m e n t P r o p e rt y "
A n n u a l I m p r o v e m e n t s t o I F R S St a n d a r d s 2 0 1 4 –2 0 1 6 C y c l e:
A m e n d m e n t s t o I F R S 1 2
A m e n d m e n t s t o I F R S 1 a n d A m e n d m e n t s t o I A S 2 8
I F R I C 2 2 " F o r ei g n C u rr e n c y Tr a n s a cti o n s a n d A d v a n c e C o n s i d e r ati o n "		 E f f e c ti v e d a t e
p e r I A S B
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 7
J a n u a r y 1 , 2 0 1 7
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 7
J a n u a r y 1 , 2 0 1 8
J a n u a r y 1 , 2 0 1 8

E x c e p t f o r t h e f o ll o w i n g ite m s , t h e C o m p a n y b e li e v e s t h at t h e a d o p ti o n o f t h e a b o v e I F R S s w o u l d n o t h a v e a n y m a t eri al i m p a ct o n its fi n a n ci al st at e m e n t s. T h e e x t e n t a n d i m p a ct o f si g n i fi c ati o n c h a n g e s ar e a s f o ll o w s :

  • (i) I F R S 9 " Fi n a n ci al I n st r u m e n t s "

I F R S 9 r e p l a c e s I A S 3 9 " F i n a n c i al I n st r u m e n t s: R e c o g n iti o n a n d M e a s u r e m e n t " w h i c h c o n t ai n s cl a s sifi c ati o n a n d m e a s u r e m e n t o f fi n a n ci al i n str u m e n ts, i m p a i r m e n t a n d h e d g e a c c o u n ti n g.

194

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

1 ) C l a s si fi c ati o n - Fi n a n ci al a s s et s

I F R S 9 c o n t ai n s a n e w cl a s sifi c ati o n a n d m e a s u r e m e n t a p p r o a c h f o r fi n a n ci al a s s et s t h at r efl e ct s t h e b u s i n e s s m o d e l i n w h i c h a s s et s ar e m a n a g e d a n d t h ei r c a s h fl o w c h a r a ct e ri sti cs. I F R S 9 c o n t ai n s t h r e e p ri n ci p al cl a s sifi c ati o n c at e g o ri e s f o r fin a n c i al a s s et s: m e a s u r e d at a m o r t i z e d c o s t, f air v al u e t h r o u g h ot h e r c o m p r e h e n s i v e i n c o m e ( F V O C I ) a n d f air v al u e th r o u g h p r o fit o r l o s s ( F V T P L ) . T h e st a n d a r d eli m i n at e s t h e e x i sti n g I A S 3 9 c at e g o ri e s o f h el d t o m a t u rit y, l o a n s a n d r e c ei v a b l e s a n d a v aila b l e f o r s al e. U n d e r I F R S 9 , d e ri v at i v e s e m b e d d e d i n c o n t r a ct s w h e r e t h e h o s t is a fi n a n ci al a s s et s i n t h e s c o p e o f t h e st a n d a r d ar e n e v e r b if u r c at e d . I n st e a d , t h e h y b r i d fi n a n ci al i n str u m e n t a s a w h o l e is a s s e s s e d f o r cl a s sifi c ati o n . I n a d d iti o n , I A S 3 9 h a s a n e x c e p ti o n t o t h e m e a s u r e m e n t r e q u i r e m e n t s f o r i n v e st m e n t s i n u n q u o t e d e q u it y i n st r u m e n t s t h at d o n o t h a v e a q u o t e d m a r k et p ri c e i n a n a cti v e m a r k et ( a n d d e r i v ati v e s o n s u c h a n i n st r u m e n t ) a n d f o r w h i c h f air v al u e c a n n o t t h e r ef o r e b e m e a s u r e d r eli a b l e. S u c h fi n a n ci a l i n str u m e n t s ar e m e a s u r e d at c o st. I F R S 9 r e m o v e s th i s e x c e p ti o n , r e q u i ri n g all e q u i t y i n v e st m e n t s ( a n d d e ri v ati v e s o n t h e m ) t o b e m e a s u r e d at f air v al u e.

B a s e d o n it s as s e s s m e n t, t h e C o m p a n y d o e s n o t b eli e v e t h at t h e n e w cl a s si fi c ati o n r e q u i r e m e n t s w i ll h a v e a m a t e ri al i m p a ct o n its a c c o u n ti n g f o r tr a d e r e c ei v a b l e s, l o a n s , i n v e st m e n t s i n d e b t s e c u ritie s a n d i n v e st m e n t s i n e q u ity s e c u r iti e s t h at ar e m a n a g e d o n a f air v al u e b a s i s. A t D e c e m b e r 3 1 , 2 0 1 7 , t h e C o m p a n y h a d e q u it y i n v e st m e n t s c la s sifi e d a s a v ail a b l e -f o r - s al e w it h a f air v al u e o f 2 1 9 , 2 1 8 t h o u s a n d a n d fi n a n ci al a s s et s m e a s u r e d at c o s t o f 0 t h o u s a n d t h at a r e h el d f o r l o n g -t e r m str at e g i c p u r p o s e s. A t i niti al a p p li c ati o n o f I F R S 9 , t h e C o m p a n y h a s d e s i g n at e d t h e s e i n v e s t m e n t s as m e a s u r e d at F V O C I . C o n s e q u e n tl y, all f air v al u e g ai n s a n d l o s s e s w i ll b e r e p o r t e d i n ot h e r c o m p r e h e n s i v e i n c o m e , n o i m p ai r m e n t l o s s e s w o u l d b e r e c o g n i z e d i n p r o fit o r l o s s a n d n o g ai n s o r l o s s e s w i ll b e r e cl a s si fi e d t o p r o fi t o r l o s s o n di s p o s al. T h e C o m p a n y e sti m a t e d t h e a p p li c ati o n o f I F R S 9 ’ s cl a s sifi c ati o n r e q u i r e m e n t s o n J a n u a r y 1, 2 0 1 8 w i ll n o t h a v e si g n i fi c a n t i m p a ct o n r et ai n e d e a r n i n g s a n d o t h e r e q u it y.

  • 2 ) I m p a i r m e n t - F i n a n ci al a s s et s a n d c o n t a ct a s s et s

I F R S 9 r e p l a c e s t h e ‘ i n c u r r e d l o s s ’ m o d e l i n I A S 3 9 w it h a f o r w a r d -l o o k i n g ‘ e x p e c t e d c r e d it l o s s ’ ( E C L ) m o d e l. T h i s w i ll r e q u i r e c o n s i d e r a b l e j u d g m e n t a s t o h o w c h a n g e s i n e c o n o m i c f a ct o r s af f e ct E C L s , w h i c h w i ll b e d et er m i n e d o n a p r o b a b i lit y - w e i g h t e d b a si s.

T h e n e w i m p ai r m e n t m o d e l w ill a p p l y t o fi n a n ci al a s s et s m e a s u r e d at a m o r ti z e d c o st o r F V O C I, e x c e p t f o r i n v e s t m e n t s i n e q u it y i n st r u m e n t s, a n d t o c o n t r a ct a s s et s.

U n d e r I F R S 9 , l o s s a ll o w a n c e s w i ll b e m e a s u r e d o n eith e r o f t h e f o ll o w i n g b a s e s :

  • ‧ 1 2 - m o n t h E C L s . T h e s e a r e E C L s t h at r e s u lt fr o m p o s si b l e d e f a u lt e v e n t s w it h i n t h e 1 2 m o n t h s aft er t h e r e p o r ti n g d at e; a n d

  • ‧ L i f eti m e E C L s . T h e s e a r e E C L s t h at r es u lt fr o m a ll p o s si b l e d e f a u lt e v e n t s o v e r t h e e x p e ct e d lif e o f a fi n a n ci al i n str u m e n t.

195

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

L i f eti m e E C L m e a s u r e m e n t a p p li e s if t h e cr e d it ris k o f a fi n a n ci al a s s et at t h e re p o rt i n g d at e h a s i n c r e a s e d si g n i fi c a n t l y si n c e i n iti al r e c o g n iti o n a n d 1 2 - m o n t h E C L m e a s u r e m e n t a p p li e s if it h a s n o t. A n e n t it y m a y d et e r m i n e t h at a fin a n c i al a s s et ’ s cr e d it ris k h a s n o t i n c r e a s e d si g n i fi c a n tl y if th e a s s et h a s l o w c r e d it ris k at t h e r e p o rti n g d at e. H o w e v e r, lif eti m e E C L m e a s u r e m e n t al w a y s a p p li e s f o r tr a d e r e c ei v a b l e s a n d c o n t r a c t as s et s w i t h o u t a si g n i fi c a n t fi n a n c i n g c o m p o n e n t; a n e n tit y m a y c h o o s e t o a p p l y t h i s p o lic y al s o f o r tra d e r e c ei v a b l e s a n d c o n t r a ct a s s et s w it h a si g n i fi c a n t fi n a n ci n g c o m p o n e n t.

T h e G r o u p d o n ’ t f o r e s e e t h at w i ll i m p a ct si g n i fi c a n t i m p a i r m e n t m e t h o d o l o g i e s t h at it w i ll a p p l y u n d e r I F R S 9 .

3 ) D i s c l o s u r e s

I F R S 9 w i ll r e q u i r e e x t e n si v e n e w d i s cl o s u r e s, i n p a rti c u l ar a b o u t h e d g e a c c o u n ti n g , c r e d it ris k a n d e x p e ct e d cr e d it l o s s e s. T h e C o m p a n y ’ s a s s e s s m e n t i n cl u d e d a n a n al y s i s t o i d e n tif y d at a g a p s a g ai n st c u r r e n t p r o c e s s e s a n d t h e C o m p a n y p l a n s t o i m p l e m e n t t h e s y s t e m a n d c o n t r o ls c h a n g e s t h at it b eli e v e s w i ll b e n e c e s s ar y t o c a p t u r e t h e re q u i r e d d at a.

  • 4 ) T r a n s iti o n

C h a n g e s i n a c c o u n ti n g p o l i ci e s r e s u lti n g fr o m t h e a d o p ti o n o f I F R S 9 w i ll g e n e r all y b e a p p li e d r et r o s p e cti v e l y, e x c e p t as d e s c ri b e d b el o w .

  • ‧ T h e C o m p a n y w i ll t a k e a d v a n t a g e o f t h e e x e m p ti o n all o w i n g it n o t t o re st at e c o m p a r ati v e i n f o r m a ti o n f o r p ri o r p e ri o d s w it h r es p e ct t o cl a s sifi c ati o n a n d m e a s u r e m e n t (i n cl u d i n g i m p ai r m e n t ) c h a n g e s. D i f f er e n c e s i n t h e c a r r yi n g a m o u n ts o f fi n a n ci al as s et s a n d fi n a n ci al li a b iliti es r e s u lti n g f r o m t h e a d o p ti o n o f I F R S 9 g e n e r all y w i ll b e r e c o g n i z e d i n r et ai n e d e a r n i n g s a n d r e s e r v e s a s at J a n u a r y 1 , 2 0 1 8 .

  • ‧ T h e f o ll o w i n g a s s e s s m e n ts h a v e t o b e m a d e o n t h e b a s i s o f t h e f a ct s a n d ci r c u m st a n c e s t h at e x i st at t h e d a t e o f i nitial a p p li c ati o n .

  • T h e d et e r m i n ati o n o f t h e b u si n e s s m o d e l w it hi n w h i c h a fi n a n ci al a s s et is h el d .

  • T h e d e si g n ati o n a n d r e v o c ati o n o f p r e vi o u s d e si g n ati o n s o f c e rt ai n fi n a n ci al a s s et s a n d fi n a n ci al li a b ilitie s a s m e a s u r e d at F V T P L .

  • T h e d e si g n a ti o n o f c ert ai n i n v e st m e n t s i n e q u it y i n str u m e n t s n o t h el d f o r tr a d i n g a s at F V O C I.

T h e C o m p a n y e sti m a t e d t h e a p p li c ati o n o f I F R S 9 r e s u lti n g i n n o si g n i fi c a n t im p a c t o n fi n a n ci al st at e m e n t.

196

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (ii) I F R S 1 5 R e v e n u e fr o m C o n t r a ct s w it h C u s t o m e r s

I F R S 1 5 e st a b li s h e s a c o m p r e h e n s i v e fr a m e w o r k f o r d e t er m i n i n g w h e t h e r, h o w m u c h a n d w h e n r e v e n u e i s r e c o g n i z e d . It r e p l a c e s e x i sti n g r e v e n u e r e c o g n iti o n g u i d a n c e, i n clu d i n g I A S 1 8 " R e v e n u e " a n d I A S 1 1 " C o n s t r u cti o n C o n t r a ct s ".

T h e C o m p a n y h a s c o m p l et e d a n i n iti al as s e s s m e n t o f t h e p o t e n ti al i m p a ct o f t h e a d o p ti o n o f I F R S 1 5 o n its fi n a n ci al st a t e m e n t s.

1 ) T r a n s iti o n

T h e C o m p a n y p l a n s t o a d o p t I F R S 1 5 u si n g t h e c u m u lati v e ef f e ct m e t h o d . T h e r e f o r e, t h e c o m p a r ati v e i n f o r m a ti o n w ill n o t b e r e st at e d . T h e c u m u l ati v e ef f e ct o f i n iti all y a p p l yi n g I F R S 1 5 w i ll b e r e c o g n i z e d a s a n a d j u st m e n t t o t h e o p e n i n g b a l a n c e o f r et ai n e d e a r n i n g s at 1 J a n u a r y 2 0 1 8 . T h e C o m p a n y p l a n s t o u s e t h e p r a cti c al e x p e d i e n t i n p a r a g r a p h C 5 ( a ) o f I F R S 1 5 , u n d e r w h i c h , f o r c o n t r a ct s t h at ar e c o m p l et e d at t h e d at e o f t h e i n iti a l a p p li c ati o n ( i. e. 1 J a n u a r y 2 0 1 8 ) w i ll n o t b e r e st at e d .

  • (iii) A m e n d m e n t s t o I A S 7 " D i s cl o s u r e I niti ati v e "

T h e a m e n d m e n t s r e q u i r e d i s cl o s u r e s t h at e n a b l e u s e r s o f fi n a n ci al st at e m e n t s t o e v a l u at e c h a n g e s i n li a b iliti es ari si n g f r o m fi n a n ci n g a cti viti e s, i n cl u d i n g b o t h c h a n g e s ari s i n g fr o m c a s h fl o w a n d n o n - c a s h c h a n g e s.

T o s ati s f y t h e n e w d i s cl o s u r e r e q u i r e m e n t s, t h e C o m p a n y i nt e n d s t o p r e s e n t a r e c o n cili ati o n b et w e e n t h e o p e n i n g a n d c l o si n g b al a n c e s f o r li a b ilitie s w it h c h a n g e s a ri si n g fr o m fi n a n ci n g a cti viti e s.

  • (i v) A m e n d m e n t s t o I A S 1 2 " R e c o g n iti o n o f D e f e r r e d T a x A s s et s f o r U n r e a li z e d L o s s "

T h e a m e n d m e n t s cl arif y t h e a c c o u n ti n g f o r d e f e r r e d ta x a s s et s f o r u n r e ali z e d l o s s e s o n d e b t i n str u m e n t s m e a s u r e d at f ai r v al u e.

T h e C o m p a n y e sti m a t e d t h e a p p li c ati o n o f t h e a m e n d m e n t s r e s u lti n g i n b o t h t h e d e f e rr e d t a x a s s et s a n d t h e r et ai n e d e a r n i n g s w i ll n o t h a v e a si g n i fi c a n t i m p a ct.

T h e a ct u a l i m p a ct s o f a d o p ti n g t h e st a n d a r d s m a y c h a n g e d e p e n d i n g o n t h e e c o n o m i c c o n d iti o n s a n d e v e n t s w h i c h m a y o c c u r i n t h e f u t u r e.

197

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

  • ( c) T h e i m p a ct o f I F R S i s s u e d b y I A S B b u t n o t y et e n d o r s e d b y t h e F S C

A s o f t h e d at e t h e f o ll o w i n g I F R S s t h at h a v e b e e n i s s u e d b y t h e I A S B , b u t n o t y e t e n d o r s e d b y t h e F S C :

N e w, R e v i s e d o r A m e n d e d St a n d a r d s a n d I n t e r p r e t a ti o n s
A m e n d m e n t s t o I F R S 1 0 a n d I A S 2 8 " S a l e o r C o n t ri b u ti o n o f A s s et s B et w e e n a n
I n v e s t o r a n d It s A s s o ci at e o r J oi n t Ve n t u r e "
I F R S 1 6 " L e a s e s "
I F R S 1 7 " I n s u r a n c e C o n t r a ct s "
I F R I C 2 3 " U n c e rt ai nt y o v e r I n c o m e Ta x Tr e at m e n t s "
A m e n d m e n t s t o I F R S 9 " P r e p a y m e n t f e at u r e s w it h n e g ati v e c o m p e n s ati o n "
A m e n d m e n t s t o I A S 2 8 " L o n g -t er m i n t er e st s i n a s s o ci at e s a n d j o i n t v e n t u r e s "
A n n u a l I m p r o v e m e n t s t o I F R S St a n d a r d s 2 0 1 5 –2 0 1 7 C y c l e
A m e n d m e n t s t o I A S 1 9“ P l a n A m e n d m e n t, C u r t ail m e n t o r S ettl e m e n t ”		 E f f e c ti v e d a t e
p e r I A S B
E ff e cti v e d at e t o
b e d et e r m i n e d
b y I A S B
J a n u a r y 1 , 2 0 1 9
J a n u a r y 1 , 2 0 2 1
J a n u a r y 1 , 2 0 1 9
J a n u a r y 1 , 2 0 1 9
J a n u a r y 1 , 2 0 1 9
J a n u a r y 1 , 2 0 1 9
J a n u a r y 1 , 2 0 1 9

T h o s e w h i c h m a y b e r el e v a n t t o T h e C o m p a n y a r e s et o u t b el o w :

  • Issuance / Standards or

  • Release Dates Interpretations Content of amendment

  • January 13, 2016 IFRS 16 "Leases" The new standard of accounting for lease is amended as follows: ‧ For a contract that is, or contains, a lease, the lessee shall recognize a right of use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present interest expense on the lease liability separately from the depreciation charge for the right of-use asset during the lease term.

  • ‧ A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17.

T h e C o m p a n y i s e v a l u ati n g t h e i m p a ct o n its fi n a n ci al p o s iti o n a n d fi n a n ci al p e rf o r m a n c e u p o n t h e i niti al a d o p ti o n o f t h e a b o v e m e n ti o n e d st a n d a r d s o r i nt er p r et ati o n s. T h e r e s u lts t h er e o f w i ll b e d i s cl o s e d w h e n t h e C o m p a n y c o m p l et e s its e v al u ati o n.

198

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

( 4 ) S u m m a r y o f si g n ifi c a n t a c c o u n ti n g p o li ci e s :

T h e si g n i fi c a n t a c c o u n ti n g p o li ci e s h a v e b e e n a p p li e d c o n s i st e n tl y t o all p e ri o d s p r e s e n t e d i n t h e s e fi n a n ci al st at e m e n t s.

  • ( a) S t at e m e n t o f c o m p li a n c e

T h e s e p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s ar e p r e p a r e d i n a c c o r d a n c e w it h t h e “ R e g u l ati o n s G o v e r n i n g t h e P r e p a r ati o n o f Fi n a n ci al R e p o rt s b y S e c u r iti e s Is s u e r s ” ( h e r ei n a ft e r r ef er r e d t o a s t h e R e g u l ati o n s ).

  • ( b ) B a s i s o f p r e p a r ati o n

  • (i) B a s i s o f m e a s u r e m e n t

T h e p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s h a v e b e e n p r e p a r e d o n a hi st o ri c a l c o st b a si s e x c e p t f o r t h e f o ll o w i n g m a t eri al it e m s i n t h e b al a n c e s h e et s :

  • 1 ) F i n a n ci al i n str u m e n t s m e a s u r e d at f air v al u e t h r o u g h p r o fit o r l o s s ar e m e a s u r e d at f ai r v a l u e (i n cl u d i n g d e ri v ati v e fi n a n ci al i n str u m e n t s );

  • 2 ) A v a i l a b l e -f o r - s al e fi n a n ci al as s et s ar e m e a s u r e d at f air v a l u e;

  • 3 ) N e t d e fi n e d b e n e fit li a b i lit y ( a s s et) is r e c o g n i z e d as p l a n a s s et s, o n f air v a l u e m e a s u r e m e n t, l es s t h e p r e s e n t v al u e o f t h e d e fi n e d b e n e fit o b li g ati o n .

  • (ii) F u n c ti o n al a n d p r e s e n t ati o n c u r r e n c y

T h e f u n cti o n a l c u rr e n c y o f e a c h G r o u p e n tit y is d et e r m i n e d b a s e d o n t h e p ri m a r y e c o n o m i c e n v i r o n m e n t i n w h i c h t h e e ntit y o p e r at e s. T h e C o m p a n y ’ s p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s ar e p r e s e n t e d i n N e w T a i w a n d o ll ar s, w h i c h ar e t h e C o m p a n y ’ s f u n cti o n al c u r r e n c y. A ll fi n a n ci al i n f o r m a ti o n p r e s e n t e d i n N e w T a i w a n d o ll ar s h a s b e e n r o u n d e d t o t h e n e a r e s t t h o u s a n d .

( c) F o r ei g n c u rr e n c y

  • (i) F o r ei g n c u rr e n c y tr a n s a cti o n s

T r a n s a cti o n s i n f o r ei g n c u r r e n ci e s ar e tr a n s l at e d t o t h e r e s p e cti v e f u n cti o n a l c u r r e n ci e s o f t h e C o m p a n y e n titi e s at e x c h a n g e r at e s at t h e d at e s o f t h e tr a n s a cti o n s. M o n e t a r y a s s et s a n d li a b iliti es d e n o m i n at e d i n f o r ei g n c u r r e n ci e s at t h e r e p o r ti n g d at e ar e r et r a n sl at e d t o t h e f u n cti o n a l c u rr e n c y at t h e e x c h a n g e r at e at t h at d at e. T h e f o r ei g n c u r r e n c y g ai n o r l o s s o n m o n e t ar y it e m s i s t h e di ff e r e n c e b et w e e n t h e a m o r ti z e d c o s t i n t h e f u n cti o n al c u r r e n c y at t h e b e g i n n i n g o f t h e p e ri o d a d j u s t e d f o r t h e ef f e cti v e i nt e r e s t a n d p a y m e n t s d u ri n g t h e p e ri o d .

N o n - m o n e t a r y a s s et s a n d lia b iliti es d e n o m i n a t e d i n f o r ei g n c u r r e n ci e s t h at ar e m e a s u r e d at f air v a l u e ar e r etr a n s l at e d t o t h e f u n cti o n a l c u r r e n c y at t h e e x c h a n g e r at e at t h e d at e t h at t h e f ai r v a l u e w a s d et er m i n e d . N o n - m o n e t a r y it e m s i n a f o r e i g n c u r r e n c y t h at ar e m e a s u r e d b a s e d o n h i st o ri c al c o s t a r e tr a n s l at e d u s i n g t h e e x c h a n g e r at e at t h e d at e o f tr a n s a cti o n s.

199

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

F o r ei g n c u rr e n c y d i ff er e n c e s a ri si n g o n r et r a n s l ati o n a r e r e c o g n i z e d i n p r o fit o r l o s s e x c e p t f o r t h e r etr a n s l ati o n o f n o n - m o n et ar y a v ail a b l e -f o r - s al e e q u it y i n st r u m e n t s, w h o s e d iff er e n c e s a r e r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e .

(ii) F o r ei g n o p e r ati o n s

T h e a s s et s a n d li a b iliti es o f f o r ei g n o p e r ati o n s, i n cl u d i n g g o o d w i ll a n d f ai r v al u e a d j u s t m e n t s a ri si n g o n a c q u i siti o n , ar e tr a n s l at e d t o t h e C o m p a n y ’ s f u n cti o n al c u r r e n c y at e x c h a n g e r at e s at t h e r e p o rti n g d at e. T h e i n c o m e a n d e x p e n s e s o f f o r ei g n o p e r ati o n s ar e tr a n s l at e d t o t h e G r o u p ’ s f u n cti o n a l c u rr e n c y at t h e a v e r a g e r at e. F o r ei g n c u r r e n c y d i ff er e n c e s a r e r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e .

W h e n a f o r ei g n o p e r ati o n is d i s p o s e d o f s u c h t h at c o n t r o l, si g n i fi c a n t i n fl u e n c e, o r j oi nt c o n t r o l is l o st, t h e c u m u l ati v e a m o u n t i n t h e tr a n s l ati o n r e s e r v e r el at e d t o t h at f o r ei g n o p e r ati o n i s r e cl a s sifi e d t o p r o fit o r l o s s as p a rt o f t h e g ai n o r l o s s o n d i s p o s al. W h e n t h e C o m p a n y d i s p o s e s o f a n y p a rt o f its i nt er e s t i n a s u b si d i ar y t h at i n cl u d e s a f o r ei g n o p e r ati o n w h i l e r et ai n i n g c o n t r o l, t h e r el e v a n t p r o p o r ti o n o f t h e c u m u l ati v e a m o u n t i s r e attri b u t e d t o n o n - c o n t r o lli n g i nt er e st. W h e n t h e C o m p a n y d i s p o s e s o f o n l y p a rt o f in v e s t m e n t i n a n a s s o ci at e o f j oi nt v e n t u r e t h at i n cl u d e s a f o r ei g n o p e r ati o n w h i l e r et ai ni n g s i g n i fi c a n t o r j oi n t c o n t r o l, t h e r el e v a n t p r o p o rti o n o f t h e c u m u l ati v e a m o u n t i s r e cl a s sifi e d t o p r o fit o r l o s s.

W h e n t h e s ettl e m e n t o f a m o n e t ar y it e m r e c ei v a b l e f r o m o r p a y a b l e t o a f o r ei g n o p e r ati o n i s n eit h e r p l a n n e d n o r li k el y i n t h e f o r e s e e a b l e f u t u r e, t h e f o r ei g n c u r r e n c y g ai n s a n d l o s s e s a ri si n g fr o m s u c h it e m s a r e c o n s i d e r e d t o f o r m p a rt o f n et i n v e st m e n t i n t h e f o r ei g n o p e r ati o n a n d ar e r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e , a n d p r e s e n t e d i n t h e tr a n s l atio n r e s er v e i n e q u it y.

  • ( d ) C l a s si fi c ati o n o f c u rr e n t a n d n o n - c u r r e n t a s s et s a n d li a b i liti e s

A n a s s et is cl a s sifi e d a s c u r r e n t w h e n :

  • (i) It is e x p e ct e d t o b e r e ali z e d a s a n a s s et o r is i nt e n d e d t o b e s o l d o r c o n s u m e d i n t h e e n tit y ’ s n o r m a l o p e r ati n g c y c l e;

  • (ii) It is h el d p ri m a ril y f o r t h e p u r p o s e o f tr a d i n g ;

  • (iii) It is e x p e ct e d t o b e r e ali z e d w it hi n t w e l v e m o n t h s a ft er t h e r e p o r ti n g p e ri o d ; o r

  • (i v) It is c a s h o r a c a s h e q u i v a l e n t, u n l e s s it is r e stri ct e d f r o m b ei n g e x c h a n g e d o r u s e d t o s ettl e a li a b ilit y f o r at le a st t w e l v e m o n t h s aft er t h e r e p o r ti n g p e ri o d .

A l l ot h e r a s s et s ar e cl a s sifi e d a s n o n - c u r r e n t.

  • A li a b ilit y is cl a s sifi e d a s c u r r e n t w h e n :

  • (i) It is e x p e ct e d t o b e s ettl e d in t h e e n tit y ’ s n o r m a l o p e r ati n g c y c l e;

  • (ii) It is h el d p ri m a ril y f o r t h e p u r p o s e o f tr a d i n g ;

  • (iii) It is d u e t o b e s ettle d w it h i n t w e l v e m o n t h s aft er t h e r e p o r ti n g p e ri o d ; o r

200

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (i v) T h e e n tit y d o e s n o t h a v e a n u n c o n d iti o n al ri g h t t o d e f er s ettle m e n t f o r at l e a st tw e l v e m o n t h s a ft er t h e r e p o rti n g p e ri o d . T e r m s o f a li a b ilit y t h at c o u l d , at t h e o p ti o n o f t h e c o u n t e r p a rt y, r e s u lt i n its s ettl e m e n t b y i s s u i n g e q u it y i n st r u m e n t s d o n o t af f e ct its cl a s sifi c ati o n .

  • ( e) C a s h a n d c a s h e q u i v al e n t s

C a s h a n d c a s h e q u i v a l e n t s c o m p r i s e c a s h, c a s h i n b a n k , a n d s h o r t -t er m , hi g h l y li q u i d i n v e s t m e n t s t h at ar e r e a d il y c o n v e rti b l e t o k n o w n a m o u n t s o f c a s h a n d ar e s u b j e ct t o a n in s i g n i fi c a n t ris k o f c h a n g e s i n v a l u e. T i m e d e p o s it s w h i c h m e et t h e a b o v e d e fi niti o n a n d ar e h el d f o r t h e p u r p o s e o f m e e t i n g s h o rt -t er m c a s h c o m m i t m e n t s r at h e r t h a n f o r i n v e s t m e n t o r o t h e r p u r p o s e s s h o u l d b e r e c o g n i z e d a s c a s h e q u i v a l e n t s.

’ Bank overdrafts that are repayable on demand and form an integral part of the Group s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

  • (f ) F i n a n ci al i n str u m e n t s

F i n a n ci al as s et s a n d fi n a n c i al li a b iliti e s ar e i niti all y r e c o g n i z e d w h e n t h e C o m p a n y b e c o m e s a p a rt y t o t h e c o n t r a ct u al p r o v i si o n s o f t h e i n st r u m e n t s.

  • (i) F i n a n ci a l as s et s

T h e C o m p a n y cl a s si fi e s fin a n c i al as s et s i nt o t h e f o llo w i n g c at e g o r i e s: fi n a n ci al as s et s at f ai r v a l u e t h r o u g h p r o fit o r l o s s, a v ail a b l e -f o r -s al e fi n a n ci al as s et s, a n d l o a n s a n d r e c ei v a b l e s.

  • 1 ) F i n a n ci al as s et s at f air v al u e t h r o u g h p r o fit o r l o s s

A fi n a n ci al a s s et is cl a s sifie d i n t hi s c at e g o r y if it is h e l d f o r tr a d i n g o r i s d e s i g n at e d a s s u c h o n i niti al r e c o g n iti o n . A fi n a n ci al as s et s is cla s s ifi e d a s h el d f o r tr a d i n g if it is a c q u i r e d p ri n ci p all y f o r t h e p u r p o s e o f s elli n g i n t h e s h o r t t er m . T h e C o m p a n y d e si g n at e s fi n a n ci al a s s et s, ot h e r t h a n t h o s e cl a s sifi e d a s h el d f o r tr a d i n g , a s at f air v a l u e th r o u g h p r o fit o r l o s s at i niti al r e c o g n iti o n u n d e r o n e o f t h e f o llo w i n g sit u ati o n s :

  • a ) D e s i g n ati o n eli m i n at e s o r si g n i fi c a n tl y r e d u c e s a m e a s u r e m e n t o r r e c o g n iti o n i n c o n s i st e n c y t h at w o u l d o t h e r w i s e ari s e.

  • b ) P e r f o r m a n c e o f t h e fi n a n ci a l a s s et is e v al u at e d o n a f air v al u e b a si s.

  • c ) A h y b ri d i n str u m e n t c o n t ai n s o n e o r m o r e e m b e d d e d d e ri v ati v e s.

F i n a n ci al a s s et s i n t hi s c at e g o r y a r e m e a s u r e d at f air v al u e at i niti al r e c o g n iti o n . A t t ri b u t a b l e tr a n s a cti o n c o s ts ar e r e c o g n i z e d i n p r o fit o r l o s s a s i n c u r r e d . Fi n a n ci al a s s et s at f air v al u e t h r o u g h p r o fit o r l o s s ar e m e a s u r e d at f air v al u e, a n d c h a n g e s t h e r ei n , w h i c h t a k e i nt o a c c o u n t a n y d i vi d e n d a n d i nt e r e st i n c o m e , ar e r e c o g n i z e d i n p r o fit o r l o s s, a n d i n cl u d e d i n st at e m e n t o f c o m p r e h e n s i v e i n c o m e . A r e g u l a r w a y p u r c h a s e o r s al e o f fi n a n ci al as s et s is r e c o g n i z e d a n d d e r e c o g n i z e d , as a p p li c a b l e, u si n g tra d e d a t e a c c o u n ti n g .

201

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

I n v e s t m e n t s i n e q u it y i n str u m e n t s t h at d o n o t h a v e a q u o t e d m a r k et p ri c e i n a n a cti v e m a r k e t, a n d w h o s e f ai r v al u e c a n n o t b e r eli a b l y m e a s u r e d , ar e m e a s u r e d at a m o r ti z e d c o s t, a n d ar e i n cl u d e d i n fi n a n ci a l a s s et s m e a s u r e d at c o st.

2 ) A v a i l a b l e -f o r - s al e fi n a n ci al as s et s

A v a i l a b l e -f o r - s al e fi n a n ci al as s et s ar e n o n - d e ri v ati v e f i n a n ci al a s s et s t h at ar e d e s i g n at e d a s a v ail a b l e f o r s al e o r ar e n o t cl a s sifi e d i n a n y o f t h e o t h e r c at e g o ri e s o f fi n a n ci a l as s et s. A v a i l a b l e -f o r - s al e fi n a n ci al as s et s ar e r e c o g n i z e d i nitiall y at f ai r v al u e, p l u s a n y d i r e ct l y attri b u t a b l e tr a n s a cti o n c o s t. S u b s e q u e n t t o i niti al r e c o g n iti o n , t h e y ar e m e a s u r e d at f ai r v a l u e, a n d c h a n g e s t h e r ei n, o t h e r t h a n i m p a i r m e n t l o s s e s, i nt er e st i n c o m e c al c u l at e d u si n g t h e e ff e cti v e i nt er e st m e t h o d , di vi d e n d i n c o m e , a n d f o r ei g n c u r r e n c y d i f f er e n c e s o n a v ail a b l e -f o r -s al e d e b t i n str u m e n t s, ar e r e c o g n i z e d i n ot h e r c o m p r e h e n s i v e i n c o m e a n d p r e s e n t e d i n t h e f ai r v al u e r e s e r v e i n e q u it y. W h e n a n i n v e st m e n t is d e r e c o g n i z e d , t h e g ai n o r l o s s a c c u m u l at e d i n e q u it y i s r e cl a s sifi e d t o p r o f it o r l o s s, a n d r e c o g n i z e d i n ot h e r g ai n s o r l o s s e s u n d e r n o n - o p e r ati n g i n c o m e a n d e x p e n s e s. A r e g u l ar w a y p u r c h a s e o r s al e o f fi n a n ci al as s et s s h a ll b e r e c o g n i z e d a n d d e r e c o g n i z e d , a s a p p li c a b l e , u s i n g tr a d e - d at e a c c o u n ti n g.

3 ) L o a n s a n d r e c ei v a b l e s

L o a n s a n d r e c ei v a b l e s ar e fi n a n ci al a s s et s w it h fi x e d o r d et er m i n a b l e p a y m e n t s t h at a r e n o t q u o t e d i n a n a cti v e m a r k et. L o a n s a n d r e c ei v a b l e s c o m p r i s e tr a d e r e c ei v a b le s a n d o t h e r r e c ei v a b l e s. A t i niti al r e c o g n iti o n , t h e s e a s s et s ar e r e c o g n i z e d at f air v al u e, p l u s a n y d i r e ctl y attri b u t a b l e tr a n s a cti o n c o s t s. S u b s e q u e n t t o i niti al r e c o g n iti o n , lo a n s a n d r e c ei v a b l e s ar e m e a s u r e d a t a m o r ti z e d c o s t u si n g t h e e f f e cti v e i nt er e st m e t h o d , le s s a n y i m p a i r m e n t l o s s e s o t h e r t h a n i n si g n i fi c a n t i nt er e st o n s h o rt -t er m r e c ei v a b l e s. A r e g u l a r w a y p u r c h a s e o r s al e o f fin a n c i al as s et s is r e c o g n i z e d a n d d e r e c o g n i z e d , as a p p li c a b l e, u s i n g tr a d e - d at e a c c o u n ti n g .

  • 4 ) I m p a i r m e n t o f fi n a n ci al a s s et s

A fi n a n ci al a s s et w h i c h is n o t at f air v a l u e t h r o u g h p r o fit o r l o s s is e v a l u a t e d f o r i m p a i r m e n t at e v e r y r e p o rt i n g d at e. A fi n a n ci al a s s et is i m p a i r e d if, a n d o n l y if, t h e r e i s o b j e cti v e e vi d e n c e o f i m p ai r m e n t a s a r e s u lt o f o n e o r m o r e e v e n t s ( a l o s s e v e n t ) t h a t o c c u rr e d s u b s e q u e n t t o t h e i niti al r e c o g n iti o n o f t h e a s s et a n d t h at a l o s s e v e n t ( o r e v e n t s ) h a s a n i m p a ct o n t h e f ut u r e c a s h fl o w s o f t h e fi n a n ci al a s s et t h at c a n b e e sti m a t e d r eli a b l y

O b j e cti v e e vi d e n c e t h at fi n a n ci al a s s et s ar e i m p ai r e d in c l u d e s d e f a u lt o r d eli n q u e n c y b y a d e b t o r, re str u ct u ri n g o f a n a m o u n t d u e t o t h e C o m p a n y o n t er m s t h at t h e C o m p a n y w o u l d n o t c o n s i d e r o t h e r w i s e, i n d i c ati o n s t h at a d e b t o r o r is s u e r w i ll e n t er b a n k r u p t c y, a d v e r s e c h a n g e s i n t h e p a y m e n t st a t u s o f b o r r o w e r s o r is s u e r s, e c o n o m i c c o n d iti o n s t h at c o r r el at e w i t h d e f a u lt s, o r t h e di s a p p e a r a n c e o f a n a cti v e m a r k et f o r a s e c u rit y.

202

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

A l l i n d i vi d u a ll y si g n i fi c a n t r e c ei v a b l e s ar e a s s e s s e d f o r s p e ci fi c i m p ai r m e n t. R e c ei v a b l e s t h at ar e n o t i n d i vi d u all y sig n i fi c a n t ar e c o ll e cti v el y a s s e s s e d f o r i m p ai r m e n t b y g r o u p i n g t o g et h e r as s et s w it h si m i l a r ris k c h a r a ct eri sti c s. I n a s s e s si n g c o ll e cti v e i m p ai r m e n t, t h e C o m p a n y u s e s h i st o ri c al tre n d s o f t h e p r o b a b i lit y o f d e f a u lt, t h e ti m i n g o f r e c o v e ri es, a n d t h e a m o u n t o f l o s s i n c u r r e d , a dj u st e d f o r m a n a g e m e n t ’ s j u d g m e n t a s t o w h e t h e r c u rr e n t e c o n o m i c a n d c r e d it c o n d iti o n s ar e s u c h t h at t h e a ct u al l o s s e s ar e li k el y t o b e g r e at er o r le s s t h a n t h o s e s u g g e s t e d b y h i st o ri c al tr e n d s .

A n i m p a i r m e n t l o s s i n r e s p e ct o f a fi n a n ci al a s s et m e a s u r e d at a m o r ti z e d c o s t is c a l c u l at e d a s t h e di ff e r e n c e b et w e e n its c a r r yi n g a m o u n t a n d t h e p r e s e n t v al u e o f it s e s ti m a t e d f ut u r e c a s h fl o w s di s c o u n t e d at t h e a s s et ’ s o r i gi n al ef f e cti v e i nt e r e st r a t e.

A n i m p a i r m e n t l o s s i n r e s p e ct o f a fi n a n ci al as s et m e a s u r e d at c o s t is c al c u l at e d a s t h e d i ff e r e n c e b et w e e n its c a r r yi n g a m o u n t a n d t h e p r e s e n t v al u e o f t h e e sti m a t e d f u t u r e c a s h fl o w s d i s c o u n t e d at t h e c u rr e n t m a r k et r at e o f r et u r n f o r a si m i l ar fi n a n ci al as s et. S u c h i m p a i r m e n t l o s s is n o t r e v e r si b l e i n s u b s e q u e n t p e ri o d s.

A n i m p a i r m e n t l o s s i n r e s p e ct o f a fi n a n ci al a s s et is d e d u c t e d f r o m t h e c a r r yi n g a m o u n t e x c e p t f o r tr a d e r e c ei v a b l e s, f o r w h i c h a n i m p a i r m e n t l o s s i s r efl e ct e d i n a n allo w a n c e a c c o u n t a g ai n st t h e r e c ei v a b l e s. W h e n it is d et er m i n e d a r e c ei v a b l e is u n c o ll e ctib l e, it i s w r itt e n o ff a g ai n st t h e all o w a n c e a c c o u n t. A n y s u b s e q u e n t r e c o v e r y f r o m a w ri tt e n - o f f r e c ei v a b l e is r e c o r d e d i n th e all o w a n c e a c c o u n t. C h a n g e s i n t h e all o w a n c e a c c o u n t s a r e r e c o g n i z e d i n p r o fit o r l o s s.

If, i n a s u b s e q u e n t p e ri o d , th e a m o u n t o f i m p a i r m e n t lo s s o n a fi n a n ci al as s et m e a s u r e d at a m o rti z e d c o st d e c r e a s e s a n d t h e d e c r e a s e c a n b e r el at e d o b j e cti v el y t o a n e v e n t o c c u r ri n g a ft er t h e i m p a i r m e n t w a s r e c o g n i z e d , t h e d e c r e a s e i n im p a i r m e n t l o s s is r e v e r s e d t h r o u g h p r o fit o r l o s s t o t h e e x t e n t t h at t h e c ar r yi n g v al u e o f t h e a s s et d o e s n o t e x c e e d it s a m o rti z e d c o st b e f o r e t h e im p a i r m e n t l o s s is r e c o g n i z e d at t h e r e v e r s al d at e.

I m p a i r m e n t l o s s e s r e c o g n i z e d o n a v ail a b l e -f o r - s al e e q u it y s e c u rit y ar e n o t r e v e r s e d t h r o u g h p r o fit o r l o s s. A n y s u b s e q u e n t r e c o v e r y in t h e f air v al u e o f a n im p a i r e d a v ail a b l e -f o r -s al e e q u it y s e c u rit y i s r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e , a n d a c c u m u l at e d i n e q u it y. If , i n a s u b s e q u e n t p e ri o d , t h e f ai r v al u e o f a n im p a i r e d a v ail a b l e -f o r -s al e d e b t s e c u rit y i n c r e a s e s a n d t h e i n c r e a s e c a n b e r el at e d o b j e cti v e l y t o a n e v e n t o c c u rri n g aft er t h e i m p ai r m e n t l o s s w a s r e c o g n i z e d , t h e n i m p ai r m e n t l o s s i s r e v e r s e d , w it h t h e a m o u n t o f t h e r e v e r s al r e c o g n i z e d i n p r o fit o r l o s s.

5 ) D e r e c o g i n iti o n o f fi n a n ci al a s s et s

T h e C o m p a n y d e r e c o g n i z e s fi n a n ci al a s s et s w h e n th e c o n t r a ct u al ri g h t s o f th e c a s h i n fl o w fr o m t h e a s s et s ar e te r m i n at e d, o r w h e n t h e C o m p a n y tr a n s f er s s u b s t a n ti all y all t h e ri s k s a n d r e w a r d s o f o w n e r s h i p o f t h e fi n a n ci al a s s et s.

O n d e r e c o g n iti o n o f a fi n a n ci al a s s et i n its e n tir et y, th e d i ff er e n c e b et w e e n t h e c a rr y i n g a m o u n t a n d t h e s u m o f t h e c o n s i d e r ati o n r e c e i v e d o r r e c ei v a b l e a n d a n y c u m u l ativ e g ai n o r l o s s s h a ll b e r e c o g n i z e d in p r o fit a n d l o s s.

203

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T h e C o m p a n y s e p a r at e s th e p a rt t h at c o n ti n u e s t o b e r e c o g n i z e d a n d t h e p a r t t h at i s d e r e c o g n i z e d b a s e d o n t h e r el ati v e f ai r v al u e s o f t h o s e p a rt s o n t h e d at e o f t h e tr a n s f er. T h e di ff e r e n c e b et w e e n t h e c a r r yi n g a m o u n t all o c at e d t o t h e p a rt d e r e c o g n i z e d a n d t h e a m o u n t o f t h e c o n s i d e r atio n r e c ei v e d o r r e c ei v a b l e f o r t h e p a rt d e r e c o g n i z e d s h a ll b e r e c o g n i z e d i n p r o fit o r l o s s.

  • (ii) F i n a n ci al li a b iliti es a n d e q u it y i n st r u m e n t s

  • 1 ) C l a s si fi c ati o n o f d e b t o r e q u it y i n st r u m e n t s

D e b t o r e q u it y i n str u m e n t s is s u e d b y t h e G r o u p ar e cl a s sifi e d a s fi n a n ci al li a b i liti es o r e q u it y i n a c c o r d a n c e w i t h th e s u b s t a n c e o f t h e c o n t r a ct u a l a g r e e m e n t.

E q u it y i n str u m e n t s i s s u e d a r e r e c o g n i z e d b a s e d o n t h e a m o u n t o f c o n s i d e r ati o n r e c ei v e d , le s s t h e d ir e ct is s u a n c e c o st .

C o m p o u n d fi n a n ci al i n str u m e n t s is s u e d b y t h e G r o u p c o m p r i s e c o n v e r ti b l e b o n d s p a y a b l e t h at c a n b e c o n v e rt e d t o s h a r e c a p it al at t h e o p ti o n o f t h e h o l d e r w h e n t h e n u m b e r o f s h a r e s t o b e i s s u e d i s fi x e d .

T h e li a b ilit y c o m p o n e n t o f a c o m p o u n d fi n a n ci al i n str u m e n t is r e c o g n i z e d i n iti ally at t h e f air v al u e o f a si m i l ar li a b ilit y t h at d o e s n o t h a v e a n e q u it y c o n v e r si o n o p ti o n . T h e e q u i t y c o m p o n e n t is r e c o g n i z e d i niti all y at t h e di ff er e n c e b et w e e n t h e f air v al u e o f t h e c o m p o u n d fi n a n ci al i n str u m e n t a s a w h o l e a n d t h e f a ir v al u e o f t h e li a b ilit y c o m p o n e n t. A n y d i r e ctl y attri b u t a b l e tr a n s a cti o n c o s t s ar e all o c at e d t o t h e li a b ilit y a n d e q u i t y c o m p o n e n t s i n p r o p o rti o n to t h ei r i niti al c ar r yi n g a m o u n t s.

S u b s e q u e n t t o i niti al r e c o g n iti o n , t h e li a b ilit y c o m p o n e n t o f a c o m p o u n d fi n a n ci a l i n str u m e n t is m e a s u r e d at a m o r ti z e d c o st u si n g t h e ef f e cti v e i nt er e st m e t h o d . T h e e q u i t y c o m p o n e n t o f a c o m p o u n d fi n a n ci al i n str u m e n t i s n o t r e - m e a s u r e d s u b s e q u e n t to i niti al r e c o g n iti o n.

I n t er e st r el at e d t o t h e fi n a n ci al li a b ilit y is r e c o g n i z e d in p r o fit o r l o s s. O n c o n v e r s i o n , t h e fi n a n ci al li a b ilit y i s r e cl a s si fi e d t o e q u it y, w it h o u t r e c o g n i zi n g a n y g ai n o r l o s s e s.

  • 2 ) F i n a n ci al li a b iliti es at f air v al u e t h r o u g h p r o fit o r l o s s

A fi n a n ci al li a b ilit y i s cl a s s ifi e d i n t hi s c at e g o r y if it is cl a s sifi e d a s h el d f o r tr a d i n g o r i s d e s i g n at e d a s s u c h o n i n iti a l r e c o g n iti o n .

A fi n a n ci al li a b ilit y i s cl a s sifi e d a s h el d f o r tr a d i n g if it is a c q u i r e d p ri n ci p all y f o r t h e p u r p o s e o f s elli n g o r r e p u r c h a s i n g i n t h e s h o r t t er m . T h e G r o u p d e s i g n at e s fin a n c i a l li a b iliti es, ot h e r t h a n t h o s e cl a s sifi e d a s h el d f o r tr a d i n g , a s at f air v al u e t h r o u g h p r o fit o r l o s s at i niti al r e c o g n iti o n u n d e r o n e o f t h e f o ll o w i n g si t u ati o n s :

  • a ) S u c h d e si g n ati o n eli m i n at e s o r si g n i fi c a n tl y r e d u c e s a m e a s u r e m e n t o r r e c o g n iti o n i n c o n s i st e n c y t h at w o u l d ot h e r w i s e ari s e f r o m m e a s u r i n g t h e a s s et s o r li a b iliti es o r r e c o g n i zi n g t h e g ai n s a n d lo s s e s t h e r e o n o n a d if f er e n t b a s i s;

  • b ) P e r f o r m a n c e o f t h e fi n a n ci a l li a b iliti e s i s e v al u at e d o n a f ai r v al u e b a s i s;

204

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • c ) A h y b ri d i n str u m e n t c o n t ai n s o n e o r m o r e e m b e d d e d d e ri v ati v e s.

A t t ri b u t a b l e tr a n s a cti o n c o s t s ar e r e c o g n i z e d i n p r o f it o r l o s s a s i n c u r r e d . F i n a n ci a l li a b iliti es at fair v al u e t h r o u g h p r o fit o r l o s s ar e m e a s u r e d at f air v al u e, a n d c h a n g e s t h e r ei n, w h i c h t a k e i n t o a c c o u n t a n y i n t er e st e x p e n s e, a r e r e c o g n i z e d i n p r o fit o r l o s s.

3 ) O t h e r fi n a n ci al li a b iliti es

F i n a n ci al li a b iliti es n o t cl a s sifi e d a s h el d f o r tr a d i n g o r d e si g n at e d a s at f air v al u e t h r o u g h p r o fit o r l o s s, w h i c h c o m p ri s e l o a n s a n d b o r r o w i n g s, a n d tr a d e a n d o t h e r p a y a b l e s, a r e m e a s u r e d at f air v al u e, p l u s a n y d i r e ctl y attri b u t a b l e tr a n s a cti o n c o st at t h e ti m e o f i niti a l r e c o g n iti o n. S u b s e q u e n t to i niti al r e c o g n iti o n , t h e y ar e m e a s u r e d at a m o r ti z e d c o s t c a l c u l at e d u si n g t h e ef f e ctiv e i nt er e st m e t h o d . I n t er e st e x p e n s e n o t c a p it ali z e d a s c a p it al c o s t is r e c o g n i z e d i n p r o fit o r l o s s.

  • 4 ) D e r e c o g n iti o n o f fi n a n ci al li a biliti e s

T h e C o m p a n y d e r e c o g n i z e s a fi n a n ci al li a b ilit y w h e n its c o n t r a ct u al o b li g ati o n h a s b e e n d i s c h a r g e d o r c a n c ell e d , o r h a s e x p i r e d . T h e di f f er e n c e b et w e e n t h e c a r r yi n g a m o u n t o f a fi n a n ci al li a b ilit y d e r e c o g n i z e d a n d t h e c o n s i d e r ati o n p ai d (i n cl u d i n g a n y n o n - c a s h a s s et s tr a n s f e rr e d o r li a b iliti es a s s u m e d ) is r e c o g n i z e d i n p r o f it o r l o s s.

  • 5 ) O f f s etti n g o f fi n a n ci al a s s et s a n d li a b iliti es

T h e C o m p a n y p r e s e n t s fi n a n ci al a s s et s a n d li a b iliti es o n a n et b a s i s w h e n t h e C o m p a n y h a s t h e l e g a ll y e n f o r c e a b l e ri g h t t o o f f s et a n d i nt e n d s t o s ettl e s u c h fi n a n ci al a s s et s a n d li a b iliti es o n a n et b a s i s o r to r e ali z e t h e a s s et s a n d s ettle t h e li a b iliti e s si m u lt a n e o u sl y.

(iii) D e ri v ati v e fi n a n ci al i n str u m e n t s

T h e C o m p a n y h o l d s d e ri v a ti v e fi n a n ci al i n str u m e n t s to h e d g e it s f o r ei g n c u r r e n c y a n d i n t er e s t r at e e x p o s u r e s. D e ri v ati v e s ar e r e c o g n i z e d i niti all y at f air v al u e, a n d attri b u t a b l e tr a n s a cti o n c o s t s ar e r e c o g n i z e d i n p r o fit o r l o s s as i n c u r r e d . S u b s e q u e n t t o i niti al r e c o g n iti o n , d e ri v ati v e s a r e m e a s u r e d at f air v al u e, a n d c h a n g e s t h e r ei n ar e r e c o g n i z e d i n p r o fit o r l o s s.

  • ( g ) I n v e s t m e n t i n a s s o ci at e s

A s s o c i at e s ar e t h o s e e n titi e s i n w h i c h t h e C o m p a n y h a s si g n i fi c a n t i n fl u e n c e, b u t n o t c o n t r o l, o v e r t h e fi n a n ci al a n d o p e r ati n g p o li ci e s.

I n v e s t m e n t s i n as s o ci at e s a r e a c c o u n t e d f o r u si n g t h e e q u it y m e t h o d a n d ar e r e c o g n i z e d i n iti all y at c o s t. T h e c o s t o f i n v e s t m e n t i n cl u d e s tr a n s a cti o n c o s t s. T h e c a r r yi n g a m o u n t o f i n v e s t m e n t i n a s s o ci at e s i n cl u d e s g o o d w i l l ari si n g f r o m t h e a c q u i siti o n , l e s s a n y a c c u m u l at e d i m p ai r m e n t l o s s e s.

205

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T h e p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s i n cl u d e t h e C o m p a n y ’ s s h a r e o f t h e p r o fit o r l o s s a n d o t h e r c o m p r e h e n s i v e i n c o m e o f e q u it y - a c c o u n t e d i n v e st e e s, aft er a d j u st m e n t s t o ali g n t h ei r a c c o u n ti n g p o li ci e s w it h t h o s e o f t h e C o m p a n y, f r o m t h e d at e t h at si g n i fi c a n t i n f l u e n c e c o m m e n c e s u n til t h e d at e t h at si g n i fi c a n t i n fl u e n c e c e a s e s. When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Group ’ s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus.

U n r e ali z e d p r o fit s r e s u lti n g fr o m t r a n s a cti o n s b et w e e n t h e C o m p a n y a n d a n a s s o c i at e ar e eli m i n at e d t o t h e e x t e n t o f t h e C o m p a n y ’ s i nt er e st i n t h e a s s o ci at e. U n r e ali z e d l o s s e s o n tr a n s a cti o n s w i t h a s s o ci at e s ar e eli m i n at e d i n t h e s a m e w a y, e x c e p t t o t h e e x t e n t t h at t h e u n d e r l yi n g as s et is i m p a i r e d .

W h e n t h e C o m p a n y ’ s s h a r e o f l o s s e s e x c e e d s its i n t e r e st i n a n a s s o ci at e, t h e c a r r yi n g a m o u n t o f t h e i n v e st m e n t, i n cl u d i n g a n y l o n g -t er m i n t er e st s t h at fo r m p a rt t h er e o f, is r e d u c e d t o z er o , a n d t h e r e c o g n iti o n o f f u rt h e r l o s s e s is di s c o n ti n u e d e x c e p t t o t h e e x t e n t t h at t h e C o m p a n y h a s a n o b li g ati o n o r h a s m a d e p a y m e n t s o n b e h a lf o f t h e i n v e st e e.

( h ) I n v e s t m e n t i n s u b si di a ri es

T h e s u b s i di a ri es, w h i c h ar e c o n t r o ll e d b y t h e C o m p a n y, ar e e v al u at e d u si n g t h e e q u it y m e t h o d w h e n p r e p a ri n g t h ei r fi n a n ci al st a t e m e n t s. U n d e r t h e e q u it y m et h o d , t h e n et i n c o m e , o t h e r c o m p r e h e n s i v e i n c o m e a n d e q u it y o f p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s ar e t h e s a m e a s t h o s e o f t h e n e t i n c o m e , ot h e r c o m p r e h e n s i v e i n c o m e a n d e q u it y i n t h e e q u it y attri b u t a b l e t o t h e o w n e r s o f t h e p a r e n t c o m p a n y i n t h e c o n s o li d at e d fi n a n ci al st at e m e n t s.

T h e C o m p a n y h a s r e c o g n i z e d t h e c h a n g e s i n e q u it y o f its s u b si di a ri es u n d e r s h a r e h o l d e r ’ s e q u it y.

(i) P r o p e rt y, p l a n t a n d e q u i p m e n t

(i) R e c o g n iti o n a n d m e a s u r e m e n t

It e m s o f p r o p e rt y, p l a n t a n d e q u i p m e n t ar e m e a s u r e d at c o st, le s s a c c u m u l at e d d e p r e ci ati o n a n d a c c u m u l at e d i m p a i r m e n t lo s s e s. C o s t i n cl u d e s e x p e n d it u r e t h at is dir e ctl y attri b u t e d t o t h e a c q u i siti o n o f t h e a s s et. T h e c o st o f s o ft w a r e is c a p i t ali z e d a s p a rt o f t h e p r o p e rt y, p l a n t a n d e q u i p m e n t if t h e p u r c h a s e o f t h e s o ft w a r e i s n e c e s s a r y f o r t h e p r o p e rt y, p l a n t a n d e q u i p m e n t t o b e c a p a b l e o f o p e r ati n g .

E a c h p a rt o f a n it e m o f p r o p e r t y, p l a n t a n d e q u i p m e n t w i t h a c o s t t h at is si g n i fi c a n t i n r el ati o n t o t h e t ot al c o s t o f t h e it e m s h a ll b e d e p r e ci at e d s e p a r at el y, u n l e s s t h e u s e f u l lif e a n d d e p r e ci ati o n m e t h o d o f t h a t p a rt ar e t h e s a m e a s t h o s e o f a n o t h e r si g n i fi c a n t p a r t o f t h at s a m e it e m .

T h e g ai n o r l o s s ari si n g fro m t h e d e r e c o g n iti o n o f a n it e m o f p r o p e rt y, p l a n t a n d e q u i p m e n t s h a ll b e d et er m i n e d a s t h e d iff er e n c e b et w e e n t h e n et di s p o s al p r o c e e d s , if a n y, a n d t h e c a rr yi n g a m o u n t o f t h e it e m , a n d it s h a ll b e r e c o g n i z e d a s ot h e r g ai n s a n d l o s s e s.

206

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

(ii) S u b s e q u e n t c o st

S u b s e q u e n t e x p e n d it u r e i s c a p it ali z e d o n l y w h e n it is p r o b a b l e t h at f ut u r e e c o n o m i c b e n e fit s a s s o ci at e d w i t h t h e e x p e n d it u r e w i ll fl o w t o t h e C o m p a n y . T h e c a r r yi n g a m o u n t o f t h o s e p a rt s t h at ar e r e p l a c e d i s d e r e c o g n i z e d . O n g o i n g r e p ai r s a n d m a i n t e n a n c e ar e e x p e n s e d a s i n c u rr e d .

(iii) D e p r e ci ati o n

T h e d e p r e ci a b l e a m o u n t o f a n a s s et is d et er m i n e d a fte r d e d u c ti n g t h e a s s et ’ s r e s i d u a l v al u e , a n d it s h a ll b e all o c at e d o n a s ys t e m a ti c b a s i s o v e r t h e a s s et ’ s u s e f u l lif e. It e m s o f p r o p e rt y, p l a n t a n d e q u i p m e n t w it h t h e s a m e u s e f u l lif e m a y b e g r o u p e d t o g et h e r i n d et e r m i n i n g t h e d e p r e ci ati o n c h a r g e. T h e r e m a i n d e r o f t h e it e m s m a y b e d e p r e c i at e d s e p a r at el y. T h e d e p r e ci ati o n c h a r g e f o r e a c h p e ri o d s h a ll b e r e c o g n i z e d i n p r o fit o r l o s s.

If t h er e i s re a s o n a b l e c e rt ain t y t h at t h e l es s e e w i ll o b t a i n o w n e r s h i p b y t h e e n d o f t h e l e a s e t e r m , t h e p e ri o d o f e x p e ct e d u s e w i ll b e t h e u s e f u l lif e o f t h e as s et; ot h e r w i s e, t h e a s s et is d e p r e ci at e d o v e r t h e s h o rt er o f t h e l e a s e t er m a n d it s u s ef u l lif e.

L a n d h a s a n u n li m i t e d u s e f u l lif e a n d t h e r ef o r e is n o t d e p r e ci at e d .

T h e e sti m a t e d u s ef u l li v e s f o r t h e c u r r e n t a n d c o m p a r ati v e y e a r s o f si g n i fic a n t it e m s o f p r o p e rt y, p l a n t a n d e q u i p m e n t ar e a s f o ll o w s :

1 ) B u i l d i n g 5 ~ 5 0 y e a r s 2 ) O f fi c e a n d o t h e r e q u i p m e n t 3 ~ 5 y e a r s

D e p r e ci ati o n m e t h o d s , u s e f u l li v e s, a n d r e si d u al v al u e s ar e r e vi e w e d at e a c h r e p o r ti n g d at e. If e x p e ct ati o n s d iff er fr o m p r e vi o u s e sti m a t e s, t h e c h a n g e i s a c c o u n t e d f o r a s a c h a n g e i n a c c o u n ti n g e sti m a t e.

(j) L e a s e d a s s et s

  • (i) L e s s o r

A fi n a n c e l e a s e d a s s et is r e c o g n i z e d o n a n et b a si s as l e a s e r e c ei v a b l e. I niti a l dir e ct c o st s i n c u rr e d i n n e g o ti ati n g a n d ar r a n g i n g a n o p e r ati n g l e a s e is a d d e d t o t h e n et i n v e st m e n t o f t h e le a s e d a s s et. Fi n a n c e i n c o m e i s all o c at e d t o e a c h p e ri o d d u ri n g t h e l e a s e t er m i n o r d e r t o p r o d u c e a c o n s t a n t p e ri o d i c r at e o f i nt er e st o n t h e r e m a i ni n g b al a n c e o f t h e r e c ei v a b l e.

L e a s e i n c o m e fr o m o p e r atin g l e a s e i s r e c o g n i z e d i n p r o fit o r l o s s o n a str ai g h t -lin e b a s i s o v e r t h e l e a s e t er m . I n iti al dir e c t c o st s i n c u r r e d i n n e g o ti at i n g a n d a r r a n g i n g a n o p e r ati n g l e a s e i s a d d e d t o t h e c a rr yi n g a m o u n t o f t h e l e a s e d a s s et a n d r e c o g n i z e d a s a n e x p e n s e o v e r t h e l e a s e t er m o n t h e s a m e b a si s a s t h e l e a s e i n c o m e . I n c e n ti v e s g r a n t e d t o t h e l e s s e e t o e n t er i nt o t h e o p e r ati n g l e a s e ar e s p r e a d o v e r t h e l e a s e t er m o n a str ai g h t -li n e b a s i s s o t h at t h e le a s e i n c o m e r e c ei v e d is r e d u c e d a c c o r d i n g l y.

C o n ti n g e n t r e n t s ar e r e c o g n i z e d a s i n c o m e i n t h e p e r i o d w h e n t h e l e a s e a d j u st m e n t s a r e c o n fi r m e d .

207

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (ii) L e s s e e

P a y m e n t s m a d e u n d e r o p e r ati n g l e a s e ( e x cl u d i n g i n s u r a n c e a n d m a i n t e n a n c e e x p e n s e s ) a r e r e c o g n i z e d i n p r o fit o r l o s s o n a str ai g h t -li n e b a s i s o v e r t h e t er m o f t h e l e a s e. L e a s e i n c e n ti v e s r e c ei v e d a r e r e c o g n i z e d a s a n i nt e g r al p a rt o f t h e t o t al le a s e e x p e n s e o v e r t h e t er m o f t h e l e a s e.

C o n ti n g e n t r e n t is r e c o g n i z e d a s e x p e n s e i n t h e p e ri o d s i n w h i c h t h e y a r e i n c u r r e d .

( k ) I n t a n g i b l e a s s et s

  • (i) O t h e r i nt a n g i b l e a s s et s

O t h e r i nt a n g i b l e a s s et s th at ar e a c q u i r e d b y t h e C o m p a n y ar e m e a s u r e d at c o st, le s s a c c u m u l at e d a m o rti z ati o n a n d a n y a c c u m u l at e d i m p a i r m e n t l o s s e s.

  • (ii) S u b s e q u e n t e x p e n d it u r e

S u b s e q u e n t e x p e n d it u r e is c a p it ali z e d o n l y w h e n it i n c r e a s e s t h e f u t u r e e c o n o m i c b e n e fit s e m b o d i e d i n t h e s p e ci fi c a s s et t o w h i c h it r el at e s. A ll o t h e r e x p e n d it u r e s, i n cl u d i n g e x p e n d it u r e o n i nt e r n a ll y g e n e r at e d g o o d w i ll a n d b r a n d s, ar e r e c o g n i z e d i n p r o fit o r l o s s as i n c u r r e d .

  • (i) A m o rti z ati o n

T h e d e p r e ci a b l e a m o u n t o f a n i nt a n g i b l e a s s et is c alc u l at e d a s t h e c o s t o f t h e a s s et, le s s its r e si d u al v al u e.

A m o rti z ati o n i s r e c o g n i z e d i n p r o fit o r l o s s o n a str ai g h t -li n e b a s i s o v e r t h e e stim a t e d u s e f u l li v e s o f i nt a n g i b l e a s s et s, ot h e r t h a n g o o d w i ll a n d i n t a n g i b l e a s s et s w it h a n i n d e fi n it e u s e f u l life, fr o m t h e d at e w h e n t h e y a r e m a d e a v ail a b l e f o r u s e. T h e e sti m a t e d u s e f u l li v e s f o r t h e c u rr e n t a n d c o m p a r ati v e p e ri o d s ar e 3 ~ 7 y e a r s.

T h e r e si d u al v al u e, a m o rti z ati o n p e ri o d , a n d a m o r ti z atio n m e t h o d f o r a n i nt a n g i b l e a s s et w it h a fi nit e u s e f u l lif e s h all b e r e v i e w e d at le a st a n n u a ll y at e a c h fi s c al y e a r - e n d . A n y c h a n g e s s h a ll b e a c c o u n t e d f o r a s c h a n g e s i n a c c o u n ti n g e sti m a t e s.

  • (l) I m p a i r m e n t － n o n - d e ri v ati v e fi n a n ci al a s s et s

T h e C o m p a n y a s s e s s e s n o n - d e ri v ati v e fi n a n ci al a s s et s f o r i m p ai r m e n t ( e x c e p t fo r d e f er r e d i n c o m e t a x a s s et s a n d e m p l o y e e b e n e fit s) at e v e r y r e p o r ti n g d a t e, a n d e sti m a t e s t h e r e c o v e r a b l e a m o u n t s.

If it is n o t p o s si b l e t o d et er m i n e t h e r e c o v e r a b l e a m o u n t f o r a n i n d i vi d u a l a s s et, th e n t h e G r o u p w i ll h a v e t o d et er m i n e t h e r e c o v e r a b l e a m o u n t f o r t h e a s s et ’ s c a s h - g e n e r ati n g u n it ( C G U ) .

T h e r e c o v e r a b l e a m o u n t f o r a n i n d i vi d u a l a s s et o r a c a s h - g e n e r ati n g u n it is t h e h i g h e r o f its f air v al u e , le s s c o s t s t o s ell, a n d its v a l u e i n u s e. If, a n d o n l y if, th e r e c o v e r a b l e a m o u n t o f a n a s s et is l es s t h a n its c a rr yi n g a m o u n t, t h e c a rr yi n g a m o u n t o f t h e a s s et is r e d u c e d t o its r e c o v e r a b l e a m o u n t. S u c h i s d e e m e d a s a n i m p ai r m e n t lo s s, w h i c h i s r e c o g n i z e d i m m e d i at el y i n p r o fit o r l o s s.

208

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T h e C o m p a n y a s s e s s e s at t h e e n d o f e a c h r e p o rti n g p e r i o d w h et h e r t h e r e is a n y i n d i c ati o n t h at a n i m p a i r m e n t l o s s r e c o g n i z e d i n p ri o r p e ri o d s f o r a n a s s et ot h e r t h a n g o o d w i ll m a y n o l o n g e r e x i st o r m a y h a v e d e c r e a s e d . If a n y s u c h i n d i c ati o n e x i st s, t h e r e c o v e r a b l e a m o u n t o f t h at a s s et is e sti m a t e d .

A n i m p ai r m e n t l o s s r e c o g n i z e d i n p ri o r p e ri o d s f o r a n as s et ot h e r t h a n g o o d w i ll is r e v e r s e d if, a n d o n l y if, t h e r e h a s b e e n a c h a n g e i n t h e e sti m a t e s u s e d t o d et er m i n e t h e a s s et ’ s r e c o v e r a b l e a m o u n t si n c e t h e l a st i m p ai r m e n t l o s s w a s r e c o g n i z e d . I n t h is c a s e, t h e c a r r yi n g a m o u n t o f t h e a s s et i s i n c r e a s e d t o its r e c o v e r a b l e a m o u n t b y r e v e r si n g a n i m p ai r m e n t l o s s.

A n i m p a i r m e n t l o s s i n r e s p e ct o f g o o d w i ll is n o t r e v e r s e d . F o r o t h e r a s s et s, a n i m p a i r m e n t l o s s is r e v e r s e d o n l y t o t h e e x t e n t t h at t h e a s s et ’ s c a r r yi n g a m o u n t d o e s n o t e x c e e d t h e c a r r yi n g a m o u n t t h at w o u l d h a v e b e e n d et e r m i n e d , n et o f d e p r e ci ati o n o r a m o r ti z ati o n, if n o i m p a i r m e n t l o s s h a d b e e n r e c o g n i z e d .

N o t w i t h s t a n d i n g w h et h e r i n d i c at o r s e x i st, r e c o v e r a b ilit y o f g o o d w i ll a n d i nt a n g i b l e a s s et s w i t h i n d e fi nit e u s e f u l li v e s o r t h o s e n o t y et i n u s e a r e r e q u i r e d t o b e t e st e d at l e a s t a n n u a ll y. I m p ai r m e n t l o s s is r e c o g n i z e d if t h e r e c o v e r a b l e a m o u n t i s l es s t h a n t h e c a r r yi n g a m o u n t.

F o r t h e p u r p o s e o f i m p a i rm e n t t e sti n g , g o o d w i ll a c q u i r e d i n a b u si n e s s c o m b i n ati o n is all o c at e d t o e a c h o f t h e a c q u i r e r ’ s c a s h - g e n e r ati n g u n its, o r g r o u p s o f c a s h - g e n e r atin g u n it s, fr o m t h e a c q u i siti o n d at e, irr e s p e ctiv e o f w h et h e r ot h e r a s s et s o r li a b iliti es o f t h e a c q u i r e e ar e a s si g n e d t o t h o s e u n it s o r g r o u p s o f u n i ts.

If t h e c a rr yi n g a m o u n t o f a c a s h - g e n e r ati n g u n it s e x c e e d s t h e r e c o v e r a b l e a m o u n t o f t h e u n it, i m p a i r m e n t l o s s is r e c o g n i z e d a n d i s all o c at e d t o r e d u c e t h e c ar r yi n g a m o u n t o f e a c h a s s et i n t h e u n it.

R e v e r s al o f a n i m p ai r m e n t lo s s f o r g o o d w i ll is p r o h i b ite d .

( m ) T r e a s u r y st o c k

R e p u r c h a s e d s h a r e s ar e re c o g n i z e d a s tr e a s u r y s h a r e s ( a c o n t r a - e q u it y a c c o u n t ) b a s e d o n t h ei r r e p u r c h a s e p ri c e (i n cl u d i n g all dir e ctl y a c c o u n t a b l e c o st s), n et o f t a x . G ai n s o n d is p o s a l o f tr e a s u r y s h a r e s ar e a c c o u n t e d f o r a s “ c a p it al r es er v e － t r e a s u r y s h a r e tr a n s a cti o n s ” . L o s s e s o n di s p o s al o f tr e a s u r y s h a r e s ar e o ff s et a g ai n st e x i sti n g c a p it al r e s er v e a ri si n g f r o m si m i l a r t y p e s o f tr e a s u r y s h a r e s . If t h e c a p it al r e s e r v e i s in s u ffi ci e n t, s u c h l o s s e s ar e c h a r g e d t o r et ai n e d e a r n i n g s . T h e c a rr yi n g a m o u n t o f tr e a s u r y s h a r e s is c al c u l at e d u si n g t h e w ei g h t e d - a v e r a g e m e t h o d f o r dif f er e n t t y p e s o f r e p u r c h a s e.

W h e n tr e a s u r y s h a r e s ar e c a n c e ll e d , “ c a p it al r es er v e － s h a r e p r e m i u m s ” a n d “ s h a r e c a p i t a l ” a r e d e b it e d p r o p o rti o n at el y . G ai n s o n c a n c ell ati o n o f tr e a s u r y s h a r e s ar e c h a r g e d t o c a p it al r e s er v e s a ri si n g fr o m si m i l ar t y p e s o f tr e a s u r y s h a r e s. L o s s e s o n c a n c e ll ati o n o f tr e a s u r y s h a r e s ar e o ffs e t a g ai n s t e x i sti n g c a p it al r e s e r v e s a ri si n g f r o m si m i l a r t y p e s o f tr e a s u r y s h a r e s. If c a p it al r e s er v e i s i n s u ffi ci e n t, s u c h l o s s e s ar e c h a r g e d t o r et ai n e d e a r n i n g s.

( n ) R e v e n u e

R e v e n u e o f t h e C o m p a n y is m ai n l y g e n e r at e d f r o m p r o vi d i n g m a n a g e m e n t s e r vi c e s. R e v e n u e i s r e c o g n i z e d w h e n s er vi c e i s r e n d e r e d . C o s t s ar e r e c o g n i z e d w it h r e v e n u e s w h e n t h e y o c c u r.

209

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

( o ) E m p l o y e e b e n e fit s

  • (i) D e fi n e d c o n t ri b u ti o n p l a n s

O b li g ati o n s f o r c o n t ri b u tio n s t o d e fi n e d c o n t ri b u tio n p e n s i o n p l a n s ar e r e c o g n i z e d a s a n e m p l o y e e b e n e fit e x p e n s e in p r o fit o r l o s s i n t h e p e ri o d s d u ri n g w h i c h s e r vi c e s ar e r e n d e r e d b y e m p l o y e e s.

(ii) D e fi n e d b e n e fit p l a n s

A d e fi n e d b e n e fit p l a n i s a p o s t - e m p l o y m e n t b e n e fit p la n o t h e r t h a n a d e fi n e d c o n tri b u ti o n p l a n . T h e C o m p a n y ’ s n et o b lig ati o n i n r e s p e ct o f t h e d e fi n e d b e n e f it p e n si o n p l a n s is c al c u l at e d s e p a r at el y f o r e a c h p l a n b y e s ti m a ti n g t h e a m o u n t o f f u t u r e b e n e fit t h at e m p l o y e e s h a v e e a r n e d i n r et u r n f o r t h eir s er vi c e i n t h e c u r r e n t a n d p ri o r p eri o d s; T h at b e n e f it is d i s c o u n t e d t o d et er m i n e its p r e s e n t v al u e . T h e f air v al u e o f a n y p l a n a s s et s i s d e d u ct e d . T h e d is c o u n t r at e i s t h e yi el d at t h e r e p o rti n g d at e o n m a r k et yi el d s o f g o v e r n m e n t b o n d s t h at h a v e m a t u rit y d at e s a p p r o x i m a ti n g t h e t er m s o f t h e C o m p a n y ’ s o b li g ati o n s a n d t h at ar e d e n o m i n at e d i n t h e s a m e c u r r e n c y i n w h i c h t h e b e n e f its ar e e x p e ct e d t o b e p ai d.

T h e c al c u l ati o n i s p e rf o r m e d a n n u a ll y b y a q u a lifi e d a ct u a r y u s i n g t h e p r o j e ct e d u n it cr e d it m e t h o d . W h e n t h e c al c u l a ti o n r e s u lt s i n a b e n e fit t o t h e C o m p a n y, t h e r e c o g n i z e d a s s et i s li m it e d t o t h e t ot al o f t h e p r e s e n t v al u e o f e c o n o m i c b e n e f it s a v ail a b l e i n t h e f o r m o f a n y f u t u r e r ef u n d s fr o m t h e p l a n o r r e d u cti o n s i n f ut u r e c o n t ri b u t i o n s t o t h e p l a n . I n o r d e r t o c al c u l at e t h e p r e s e n t v al u e o f e c o n o m i c b e n e fits, c o n s i d e r ati o n is gi v e n t o a n y m i n i m u m f u n d i n g r e q u i r e m e n t s t h at a p p l y t o a n y p l a n i n t h e G r o u p . A n e c o n o m i c b e n e fit is a v ail a b l e t o t h e C o m p a n y if it is re ali z a b l e d u r i n g t h e lif e o f t h e p l a n , o r o n s ettle m e n t o f t h e p l a n li a b iliti es.

W h e n t h e b e n e fit s o f a p l a n a r e i m p r o v e d t h e e x p e n s e o f t h e i n c r e a s e d b e n e f it rel ati n g t o p a st s e r vi c e b y e m p l o y e e s is r e c o g n i z e d i m m e d i at el y i n p r o fit o r l o s s.

R e m e a s u r e m e n t s o f t h e n et d efi n e d b e n e fit li a b ilit y ( a s s et), w h i c h c o m p r i s e ( 1 ) a ct u a ri al g ai n s a n d l o s s e s, ( 2 ) t h e r et u r n o n p l a n a s s et s ( e x cl u d i n g i nt er e st) a n d ( 3 ) t h e ef f e ct o f t h e a s s et c eili n g (if a n y, e x cl u d i n g i n t er e st), ar e r e c o g n i z e d i m m e d i at el y i n ot h e r c o m p r e h e n s i v e i n c o m e . T h e G r o u p r e cl a s sif y t h e a m o u n t s r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e t o r et ai n e d e a r n i n g s.

T h e G r o u p r e c o g n i z e s g ai n s o r l o s s e s o n t h e c u rt ail m e n t o r s ettl e m e n t o f a d e fi n e d b e n e fit pl a n w h e n t h e c u rt ail m e n t o r s ettl e m e n t o c c u r s. T h e g a i n o r l o s s o n c u rt ail m e n t o r s ettle m e n t c o m p ri s e s a n y r e s u lti n g c h a n g e i n t h e f air v al u e o f p la n a s s et s, a n y c h a n g e i n t h e p r e s e n t v al u e o f t h e d e fi n e d b e n e fit o b li g ati o n .

(iii) S h o rt -t er m e m p l o y e e b e n e f its

S h o rt -t er m e m p l o y e e b e n e fit o b li g ati o n s a r e m e a s u r e d o n a n u n d i s c o u n t e d b a si s a n d ar e e x p e n s e d a s t h e r el at e d s er v i c e i s p r o vi d e d .

A li a b ilit y i s re c o g n i z e d fo r t h e a m o u n t e x p e ct e d t o b e p ai d u n d e r s h o rt -t er m c a s h b o n u s o r p r o fit-s h a ri n g p l a n s if t h e C o m p a n y h a s a p r e s e n t l e g a l o r c o n s t r u cti v e o b li g atio n t o p a y t h i s a m o u n t a s a r e s u lt o f p a st s er vi c e p r o vi d e d b y t h e e m p l o y e e, a n d t h e o b lig ati o n c a n b e e s ti m a t e d r eli a b l y.

210

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

( p ) S h a r e - b a s e d p a y m e n t

T h e g r a n t - d at e f air v al u e o f s h a r e - b a s e d p a y m e n t a w a r d s g r a n t e d t o e m p l o y e e s i s r e c o g n i z e d a s e m p l o y e e e x p e n s e s, w it h a c o rr e s p o n d i n g i n c r e a s e in e q u it y, o v e r t h e p e ri o d t h at t h e e m p l o y e e s b e c o m e u n c o n d iti o n a ll y e n titl e d t o t h e a w a r d s. T h e a m o u n t r e c o g n i z e d a s a n e x p e n s e is a d j u s t e d t o r efl e ct t h e n u m b e r o f a w a r d s f o r w h i c h t h e r el at e d s e r vi c e a n d n o n - m a r k et p e r f o r m a n c e c o n d iti o n s a r e e x p e ct e d t o b e m e t, s u c h t h at t h e a m o u n t u lti m a t el y r e c o g n i z e d a s a n e x p e n s e is b a s e d o n t h e n u m b e r o f a w a r d s t h at m e e t t h e r el at e d s er vi c e a n d n o n - m a r k et p e r f o r m a n c e c o n d iti o n s at t h e v e sti n g d at e.

F o r s h a r e - b a s e d p a y m e n t a w a r d s w it h n o n - v e s ti n g c o n d iti o n s, t h e g r a n t - d at e f ai r v al u e o f t h e s h a r e - b a s e d p a y m e n t is m e a s u r e d t o r e fl e ct s u c h c o n d iti o n s, a n d t h e r e is n o tr u e - u p f o r d iff er e n c e s b et w e e n e x p e ct e d a n d a ct u al o u t c o m e s .

  • ( q ) I n c o m e t a x

I n c o m e t a x e x p e n s e s i n cl u d e b o t h c u r r e n t t a x e s a n d d e f e r r e d t a x e s. E x c e p t f o r e x p e n s e s t h at ar e r el at e d t o b u s i n e s s c o m b i n ati o n s, e x p e n s e s r e c o g n i z e d i n e q u it y o r ot h e r c o m p r e h e n s i v e i n c o m e d i r e ctl y, a n d ot h e r r el at e d e x p e n s e s, all c u r r e n t a n d d e f e r r e d t a x e s ar e r e c o g n i z e d in p r o fit o r l o s s.

C u r r e n t t a x e s i n cl u d e t a x p a y a b l e s a n d t a x d e d u cti o n r e c ei v a b l e s o n t a x a b l e g ai n s (l o s s e s ) f o r t h e y e a r c al c u l at e d u si n g t h e stat ut o r y t a x r at e o n t h e r e p o rti n g d at e o r t h e a ct u al le g i sl ati v e t a x r at e, a s w e l l a s t a x a d j u s t m e n t s r el a t e d t o p ri o r y e a r s.

D e f e rr e d t a x e s ari s e d u e t o t e m p o r a r y d i ff e r e n c e s b et w e e n t h e c a r r yi n g a m o u n t s o f a s s et s a n d li a b iliti es f o r fi n a n ci al r e p o rti n g p u r p o s e s a n d t h ei r r e s p e cti v e t a x b a s e s. D e f e rr e d t a x e s ar e n o t r e c o g n i z e d f o r t h e f o ll o w i n g :

  • (i) A s s et s a n d li a b iliti e s t h a t ar e i n iti all y r e c o g n i z e d b u t ar e n o t r el at e d t o t h e b u si n e s s c o m b i n ati o n a n d h a v e n o e f f e ct o n n et i n c o m e o r t a x a b l e g ai n s (l o s s e s ) at t h e ti m e o f t h e tr a n s a cti o n .

  • (ii) T e m p o r a r y d i ff er e n c e s ari s i n g f r o m e q u it y i n v e s t m e n t s i n s u b si d i ari e s o r j oi nt v e n t u r e s w h e r e t h e r e is a hi g h p r o b a b ilit y th at s u c h t e m p o r a r y d if f er e n c e s w i ll n o t r e v e r s e.

  • (iii) I n iti al r e c o g n iti o n o f g o o d w i ll.

D e f e rr e d t a x e s ar e m e a s u r e d b a s e d o n t h e st at u t o r y t a x r at e o n t h e r e p o rti n g d at e o r t h e a ct u a l le g i s l ati v e t a x r at e d u ri n g th e y e a r o f e x p e ct e d a s s et r e ali z ati o n o r d e b t li q u i d ati o n .

D e f e rr e d t a x a s s et s a n d li a b iliti e s m a y b e o f f s et a g ai n st e a c h ot h e r if t h e f o ll o w i n g c rit eri a a r e m e t :

  • (i) T h e e n tit y h a s t h e l e g al ri g h t t o s ettl e t a x a s s et s a n d li a b i liti e s o n a n et b a si s; a n d

  • (ii) T h e t a x i n g o f d e f err e d t a x a s s et s a n d li a b iliti e s f u lfills o n e o f t h e s c e n a ri o s b el o w :

  • 1 ) L e v i e d b y t h e s a m e t a x i n g a u t h o r it y; o r

211

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • 2 ) L e v i e d b y d iff er e n t t a x i n g a u t h o r iti e s, b u t w h e r e e a c h s u c h a u t h o rit y i nt e n d s t o s ettl e t a x a s s et s a n d li a b iliti e s ( w h e r e s u c h a m o u n t s ar e si g n i fi c a n t ) o n a n et b a si s e v e r y y e a r o f t h e p e ri o d o f e x p e ct e d a s s et re a li z ati o n o r d e b t li q u i d at i o n o r w h e r e t h e ti m i n g o f a s s et r e ali z ati o n a n d d e b t li q u i d a ti o n i s m a t c h e d .

A d e f e rr e d t a x a s s et s h o u l d b e r e c o g n i z e d f o r t h e c a rr y f o r w a r d o f u n u s e d t a x l o s s e s, u n u s e d t a x c r e d its, a n d d e d u cti b l e t e m p o r a r y d i f f er e n c e s t o t h e e x t e nt t h at it is p r o b a b l e t h at fu t u r e t a x a b l e p r o fit w i ll b e a v ail a b l e a g ai n s t w h i c h t h e u n u s e d t a x l o s s e s, u n u s e d t a x cr e d it s, a n d d e d u cti b l e t e m p o r a r y d i f f e r e n c e s c a n b e u tili z e d . S u c h u n u s e d t a x l o s s e s, u n u s e d t a x cr e d its, a n d d e d u cti b l e t e m p o r a r y d i f f e r e n c e s s h a ll als o b e r e - e v a l u at e d e v e r y y e a r o n th e fi n a n ci al r e p o r ti n g d at e, a n d a d j u st e d b a s e d o n t h e p r o b a b i lit y t h at f ut u r e t a x a b l e p r o fit w ill b e a v ail a b l e a g ai n s t w h i c h t h e u n u s e d t a x l o s s e s, u n u s e d t a x cr e d it s, a n d d e d u cti b l e t e m p o r a r y d i ff e r e n c e s c a n b e utili z e d .

(r ) B u s i n e s s c o m b i n ati o n s

G o o d w i ll is m e a s u r e d a s th e e x c e s s o f t h e a c q u i siti o n - d at e f ai r v al u e o f c o n s i d e r ati o n tr a n s f err e d (i n cl u d i n g a n y n o n - c o n t r o lli n g i nt e r e s t i n t h e a c q u i r e e ) o v e r t h e n et o f t h e a c q u i s iti o n - d at e a m o u n t s o f t h e i d e n tifi a b l e a s s et s a c q u i r e d a n d li a b iliti es a s s u m e d ( g e n e r all y at f ai r v al u e ). If t h e r e si d u a l b a l a n c e i s n e g ati v e, t h e C o m p a n y s h all r e - a s s e s s w h et h e r it h a s c o r r e ctl y i d e n tifie d all o f t h e a s s et s a c q u i r e d a n d li a b iliti e s a s s u m e d a n d r e c o g n i z e a n y a d d iti o n al as s et s o r li a b iliti es th at ar e i d e n tifi e d i n t h at r e vi e w , a n d s h a ll r e c o g n i z e a g ai n o n t h e b a r g ai n p u r c h a s e t h e r e a ft er.

T h e C o m p a n y i s b a s e d o n tr a n s a cti o n - b y -t r a n s a cti o n b a s i s a n d c h o o s e t o m e a s u r e t h e n o n - c o n t r o lli n g at f air v a l u e at t h e d at e o f a c q u i siti o n , o r b y u s i n g i d e n tifi a b l e n et a s s et s i n p r o p o rti o n t o n o n - c o n t r o lli n g i nt er e st s.

I n a b u s i n e s s c o m b i n ati o n a c h i e v e d i n st a g e s, t h e C o m p a n y s h a ll r e - m e a s u r e its p r e vi o u s l y h el d e q u it y i nt e r e st i n t h e a c q u i r e e at its a c q u i siti o n - d at e f ai r v al u e a n d r e c o g n i z e t h e r e s u lti n g g ai n o r l o s s , if a n y, i n p r o fit o r l o s s. In p ri o r r e p o r ti n g p e ri o d s, t h e C o m p a n y m a y h a v e r e c o g n i z e d c h a n g e s i n t h e v a l u e o f its e q u it y i n t er e st in t h e a c q u i r e e i n ot h e r c o m p r e h e n s i v e i n c o m e . If s o, th e a m o u n t t h at w a s r e c o g n i z e d i n ot h e r c o m p r e h e n s i v e i n c o m e s h all b e r e c o g n i z e d o n t h e s a m e b a s i s a s w o u l d b e r e q u i r e d if t h e C o m p a n y h a d d i r e ctl y di s p o s e d o f t h e p r e vi o u s l y h el d e q u it y i nt e r e st. If t h e di s p o s a l o f t h e e q u it y i nt e r e st r e q u i re d a r e cl a s si fi c ati o n t o p r o f it o r l o s s, s u c h a m o u n t s h al l b e r e cl a s sifi e d t o p r o fit o r l o s s.

If t h e i niti al a c c o u n ti n g f o r a b u si n e s s c o m b i n ati o n i s i n c o m p l et e b y t h e e n d o f th e r e p o rti n g p e ri o d i n w h i c h t h e c o m b i n ati o n o c c u r s, t h e C o m p a n y s h all r e p o rt i n its fi n a n ci al st at e m e n t s p r o v i si o n a l a m o u n t s f o r t h e it e m s f o r w h i c h t h e a c c o u n ti n g i s i n c o m p l et e. D u r i n g t h e m e a s u r e m e n t p e ri o d , t h e C o m p a n y s h a ll r etr o s p e cti v el y a d j u st t h e p r o vi si o n al a m o u n t s r e c o g n i z e d at t h e a c q u i siti o n d at e, o r r e c o g n i z e a d d iti o n a l a s s et s o r li a b iliti es t o r efl e ct n e w i n f o r m a ti o n o b t ai n e d a b o u t f a ct s a n d ci r c u m s t a n c e s t h at e x i st e d a s o f t h e a c q u i siti o n d at e. T h e m e a s u r e m e n t p e ri o d s h a ll n o t e x c e e d o n e y e a r fr o m t h e a c q u i siti o n d at e.

A l l t h e tr a n s a cti o n c o st s in c u rr e d f o r t h e b u s i n e s s c o m b i n ati o n ar e r e c o g n i z e d i m m e d i at el y a s t h e C o m p a n y ’ s e x p e n s e s w h e n i n c u r r e d , e x c e p t f o r t h e i s s u a n c e o f d e b t o r e q u it y i n s tr u m e n t s.

212

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

C o n ti n g e n t c o n si d e r ati o n w i t h i n t h e tr a n s f er p ri ci n g is r e c o g n i z e d b y t h e f air v a l u e o n t h e d at e o f p u r c h a s e. If t h e c h a n g e i n fair v al u e o f t h e c o n ti n g e n t c o n si d e r ati o n a ft er t h e d at e o f p u r c h a s e i s a d j u st e d i n t h e m e a s u r e m e n t p e ri o d , t h e c o st o f a c q u i siti o n is a d j u st e d r etr o s p e cti v el y a n d t h e g o o d w i ll is a d j u st e d r e s p e cti v el y. D u r i n g t h e m e a s u r e m e n t p e ri o d , t h e a dj u st m e n t s a r e r etr o s p e cti v el y r e c o g n i z e d at t h e a c q u i siti o n d at e t o r e fl e ct a n y n e w i n f o r m a ti o n o b t ai n e d a b o u t f a ct s a n d ci r c u m s t a n c e s t h at e x i st e d a s o f t h e a c q u i siti o n d at e. T h e m e a s u r e m e n t p e rio d s h a ll n o t e x c e e d o n e y e a r fr o m t h e a c q u i sitio n d at e. F o r t h e c h a n g e i n f air v al u e o f t h e c o n ti n g e n t c o n si d e r ati o n n o t d u r i n g t h e m e a s u r e m e n t p e ri o d , t h e a c c o u n ti n g m et h o d is d e fi n e d b y t h e cl a s sifi c ati o n o f its c o n ti n g e n t c o n s i d e r ati o n . T h e c o n ti n g e n t c o n s i d e r atio n cl a s sifi e d a s e q u it y c a n n o t b e r e - m e a s u r e d , a n d t h e s u b s e q u e n t s ettle m e n t s h o u l d b e a d j u st e d w i t h i n e q u it y. T h e c h a n g e i n f air v a l u e o f t h e c o n ti n g e n t c o n s i d e r ati o n cla s s ifi e d a s li a b ilit y aft er th e p u r c h a s e d at e i s r e c o g n i z e d a s i n c o m e o r o t h e r c o m p r e h e n s i v e i n c o m e.

( s ) E a r n i n g s p e r s h a r e

T h e C o m p a n y d i s cl o s e s t h e b a si c a n d d il u t e d e a r n i n g s p e r s h a r e attri b u t a b l e t o o r d i n a r y s h a r e h o l d e r s o f t h e C o m p a n y . T h e c al c u lati o n o f b a si c e ar n i n g s p e r s h a r e i s t h e p r o fit attri b u t a b l e t o t h e o r d i n a r y s h a r e h o l d e r s o f t h e C o m p a n y d i vi d e d b y t h e w e i g h t e d - a v e r a g e n u m b e r o f o r d i n a r y s h a r e s o u t st a n d i n g . T h e c al c u l atio n o f d il ut e d e a r n i n g s p e r s h a r e is t h e p r o fit attrib u t a b l e t o o r d i n a r y s h a r e h o l d e r s o f t h e C o m p a n y d i vi d e d b y t h e w e i g h t e d - a v e r a g e n u m b e r o f o r d i n a r y s h a r e s o u t st a n d i n g aft er a d j u st m e n t f o r t h e ef f e ct s o f all dil uti v e p o t e n ti al o r d i n a r y s h a r e s, s u c h a s c o n v e rti b l e b o n d s, e m p l o y e e st o c k o p ti o n s, a n d e m p l o y e e b o n u s

(t) Operating segments

T h e C o m p a n y d i s cl o s e s t h e o p e r ati n g s e g m e n t i n f o r m a t i o n i n its c o n s o li d at e d fi n a n ci al st at e m e n t s. T h e r e f o r e, it n e e d n o t b e d i s cl o s e d i n it s p a r e n t - c o m p a n y - o n l y fi n a n ci al st at e m e n t s.

( 5 ) S i g n if i c a n t a c c o u n ti n g a s s u m p ti o n s a n d j u d g m e n t s, a n d m a j o r s o u r c e s o f e s tim a t i o n u n c e r t a i n t y :

T h e p r e p a r ati o n o f t h e c o n s o li d at e d a n n u a l fi n a n ci al stat e m e n t s i n c o n f o r m i t y w it h t h e I F R S s e n d o r s e d b y t h e F S C r e q u i r e s m a n a g e m e n t t o m a k e j u d g m e n t s, e stim a t e s a n d a s s u m p t i o n s t h at aff e ct t h e a p p li c ati o n o f t h e a c c o u n ti n g p o li ci e s a n d t h e r e p o rt e d a m o u n t o f a s s et s, li a b iliti es, i n c o m e a n d e x p e n s e s. A ct u al r e s u lt s m a y d i ff er fr o m t h e s e e sti m at e s.

M a n a g e m e n t c o n ti n u o u s l y r e vi e w s t h e e sti m a t e s a n d b a s i c a s s u m p t i o n s. C h a n g e s i n a c c o u n ti n g e sti m a t e s a r e r e c o g n i z e d i n t h e p e ri o d o f c h a n g e.

I n f o r m a ti o n o n criti c al j u d g m e n t s i n a p p l yi n g a c c o u n ti n g p o li ci e s t h at m a y h a v e ris k o f si g n i fi c a n t i m p a ct o n t h e a m o u n t s r e c o g n i z e d i n t h e c o n s o li d a t e d fi n a n ci al st at e m e n t s i s di s cl o s e d i n n o t e 6 ( e ), E q u it y - a c c o u n t e d i n v e st e e s .

213

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

( 6 ) E x p l a n a ti o n o f si g n ifi c a n t a c c o u n t s :

  • ( a) C a s h a n d c a s h e q u i v al e n t s
C a s h o n h a n d
D e m a n d a n d c h e c k i n g d e p o sits
Ti m e d e p o s it s
 D e c e m b e r 3 1 ,
2 0 1 7
$ 1 4 7
2 , 9 6 7
6 3 , 7 8 4		 D e c e m b e r 3 1 ,
2 0 1 6
4 6 0
8 4 7
3 1 , 1 0 3
3 2 , 4 1 0

$
6 6 , 8 9 8

R e f e r t o n o t e 6 ( s ) f o r t h e s e n s iti vit y a n al y s i s o f t h e fi n a n ci al as s et s a n d li a b iliti es o f t h e C o m p a n y.

  • ( b ) F i n a n ci al as s et s/li a b iliti e s a t f air v a l u e t h r o u g h p r o fit o r l o s s
F i n a n ci al as s et s h el d f o r tr a d i n g
F i n a n ci al li a b iliti es d e s i g n a t e d a s at f air v al u e t h r o u g h p r o fit
o r l o s s - N o n - c u rr e n t
F i n a n ci al li a b iliti es d e s i g n a t e d a s at f air v al u e t h r o u g h p r o fit
o r l o s s - C u r r e n t		 D e c e m b e r 3 1 ,
2 0 1 7
$
7 , 1 3 1		 D e c e m b e r 3 1 ,
2 0 1 6
7 , 1 0 7
-
2

$
2
$
-
  • ( c) A v a i l a b l e -f o r - s al e fi n a n ci al as s et s
I n v e s t m e n t i n list e d s e c u ritie s ：
St o c k s list e d o n d o m e s ti c m a r k e t s －c u r r e n t
St o c k li st e d o n d o m e s ti c p ri v at e p l a c e m e n t m a r k et s －n o n
c u r r e n t
To t al		 D e c e m b e r 3 1 ,
2 0 1 7
$ 1 2 6 , 8 1 8
9 2 , 4 0 0		 D e c e m b e r 3 1 ,
2 0 1 6
2 9 , 4 3 2
-
2 9 , 4 3 2

$
2 1 9 , 2 1 8

If t h e e q u it y p ri c e s h a d c h a n g e d , a n d if it h a d b e e n o n t h e s a m e b a si s f o r b o t h y e a r s a n d a s s u m i n g t h at all ot h e r v a ri a b l e s h a d re m a i n e d t h e s a m e , t h e im p a c t o n o t h e r c o m p r e h e n si v e i n c o m e w o u l d h a v e b e e n a s f o ll o w s :

E q u i t y p ri c e a t
r ep o r ti ng d a t e		 2 0 1 7 p r o f it (l o s s )
( a f t e r- t a x)
-		 2 0 1 6
o t h e r
c o m p r e h e n s i v e
i n c o m e( a f t e r- t a x)
$
2 , 1 9 2		 o t h e r
c o m p r e h e n s i v e
i n c o m e( a f t e r- t a x)
2 9 4		 p r o fit (l o s s )
( a f t e r- t a x)
I n c r e a s e 1 %
D e c r e a s e 1 %		 -

$
( 2, 1 9 2 )		 - ( 2 9 4 ) -

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h er e w a s n o a v ail a b l e -f o r - s al e fi n a n ci a l as s et f a ct o r e d o r p r o v i d e d a s c o ll at er al.

214

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • ( d ) N o t e s r e c ei v a b l e, a c c o u n t s re c ei v a b l e, a n d o t h e r r e c ei v a b l e s (i n cl u d i n g a m o u n t d u e f r o m r el at e d p a r ti es )
A c c o u n t s r e c ei v a b l e
O t h e r r e c ei v a b l e s (i n cl u d i n g d o u b t f u l r e c ei v a b l e s )
L e s s : A ll o w a n c e f o r i m p a i rm e n t l o s s		 D e c e m b e r 3 1 ,
2 0 1 7
4 5 , 7 2 6
1 0 0 , 0 0 0
-		 D e c e m b e r 3 1 ,
2 0 1 6
4 6 , 5 2 0
2 0 4 , 8 5 5
-
$
1 4 5 , 7 2 6		 2 5 1 , 3 7 5

A s o f D e c e m b e r 3 1 , 2 0 1 7 , t h e C o m p a n y d o e s n o t h a v e a n y o v e r - d u e a c c o u n t s r e c ei v a b l e a n d o t h e r r e c ei v a b l e s (i n cl u d i n g t h o s e fr o m its r el at e d p a rti e s ) .

T h e r e w e r e n o m o v e m e n t s i n t h e all o w a n c e o f d o u b t f u l r e c ei v a b l e s w it h r e s p e ct t o n o t e s r e c ei v a b l e, a c c o u n t s r e c ei v a b l e, a n d o t h e r r e c ei v a b l e s f o r t h e C o m p a n y d u r i n g t h e fi s c al y e a r s 2 0 1 7 a n d 2 0 1 6 .

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , n o r e c ei v a b l e s w e r e p l e d g e d a s c o ll at er al.

( e) E q u it y - a c c o u n t e d i n v e st e e s

A s u m m a r y o f t h e C o m p a n y ’ s fi n a n ci al i n f o r m a ti o n f o r e q u it y - a c c o u n t e d i n v e st e e s at t h e r e p o rti n g d at e i s a s f o ll o w s :

Subsidiary
A s s o c i at e s		 D e c e m b e r 3 1 ,
2 0 1 7
$ 2 , 8 3 8 , 3 7 8
5 1 , 5 3 3		 D e c e m b e r 3 1 ,
2 0 1 6

2 , 6 6 5 , 6 3 7

5 7 , 8 4 9

$
2 , 8 8 9 , 9 11


2 , 7 2 3 , 4 8 6
  • (i) S u b s i d i ar y

P l e a s e r ef er t o t h e c o n s o li d at e d fi n a n ci al st at e m e n t s f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 .

(ii) A s s o c i at e s

N o p u b li cl y q u o t e d p ri c e s w e r e a v ail a b l e f o r t h e a b o v e a s s o ci at e s.

T h e fi n a n ci al i n f o r m a ti o n o n a s s o ci at e s o f C o m p a n y w a s a s f o ll o w s ( b e f o r e a d j u st m e n t f o r t h e C o m p a n y ’ s p r o p o rti o n at e s h a r e ):

T h e e q u it y o f t h e n o n - s i g n i fi c a n t a s s o ci at e s D e c e m b e r 3 1 ,
2 0 1 7
$
9 7 , 5 9 6		 D e c e m b e r 3 1 ,
2 0 1 6
1 0 6 , 2 6 7

T h e C o m p a n y d o e s n o t s h a r e a n y c o n ti n g e n t li a b ilitie s o f a n a s s o ci at e i n c u r r e d j oi n tl y w i t h o t h e r i n v e s t o r s. T h e C o m p a n y al s o d o e s n o t h a v e a n y c o n ti n g e n t li a b iliti es b e c a u s e t h e C o m p a n y i s s e v e r all y li a b l e f o r all o r p a rt o f t h e li a b iliti es o f t h e a s s o ci at e.

215

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T h e r e ar e n o si g n i fi c a n t r e stri cti o n s o n t h e a b ilit y o f a s s o ci at e s t o tr a n s f er f u n d s t o t h e C o m p a n y .

T h e C o m p a n y a c q u i r e d a 3 0 % st a k e i n S h a n g h ai S h a n g ij u m I n t e r n ati o n al L o g i sti c s C o ., Lt d . o n J u n e 3 0 , 2 0 1 7 f o r t h e f u t u r e i m p l e m e n t ati o n o f th e C h i n a S e a A i r tr a n s p o r t I nt e g r ati o n . T h e C o m p a n y ’ s m a i n b u s i n e s s tr a n s p o rt s ar e b y s e a a ir a n d l a n d .

  • (iii) G u a r a n t e e s

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h e r e w a s n o e q u it y - a c c o u n t e d i n v e st m e n t f a ct o r e d o r p r o v i d e d a s c o ll at er al.

  • (i v) L o s s o f i m p ai r m e n t;

D u e t o t h e i nt e n s e c o m p e ti ti o n i n t h e e x p r e s s m a r k et i n 2 0 1 7 a n d 2 0 1 6 t h e s al e s v o l u m e a n d u n it p ri c e d i d n o t m e e t t h e m a n a g e m e n t's e x p e ct ati o n . S o t h e s y n e r g y f r o m t h e a c q u i siti o n o f E X e r L o g i sti c s C o ., Lt d. d i d n o t m e e t t h e o ri gi n al b u d g e t a n d t h e v al u e o f G o o d w i ll w a s i m p a ct e d . T . H . I G r o u p ( S h a n g a i ) Lt d . r e c o g n i z e d t h e im p a i r m e n t l o s s o f G o o d w i l l a m o u n t e d t o $ 3 1 , 8 9 2 t h o u s a n d a n d $ 3 6 , 0 9 2 t h o u s a n d b a s e d o n t h e v al u ati o n r e p o r t is s u e d b y t h e e x t e r n a l e x p e rt.

(f ) A c q u i siti o n o f s u b si d i ari e s

(i) V i a b u si n e s s c o m b i n ati o n a n d str at e g i c alli a n c e, t h e G r o u p s et u p a t ot al s o l utio n p r o vi d e r f o r fr ei g h t, w a r e h o u s i n g a n d c u s t o m cl e a ri n g b u si n e s s i n M a i n l a n d C h i n a. T h e G r o u p a c q u i r e d 6 0 % o w n e r s h i p o f F r e s h B e a u t y E n t e r p ri s e s L t d. ( F r e s h B e a u t y) i n D e c e m b e r 3 1 , 2 0 1 5 . F u rt h e r m o r e, F r e s h B e a u t y a c q u i r e d 1 0 0 % o w n e r s h i p o f T C u b e G l o b a l L o g i stic s C o ., Lt d . t h r o u g h E a s t er U n i o n H o l d i n g s L i m i t e d . T h e p ri m a r y b u s i n e s s e s o f T C u b e G l o b a l L o g i sti c s C o ., Lt d . ar e w a r e h o u s i n g a n d tr a n s p o rt ati o n s e r vi c e s. T h e a b o v e c o n s i d e r ati o n in c l u d e s c a s h a n d c o n ti n g e n t c o n s i d e r atio n s. T h e c a s h p a rt s h a s b e e n p ai d a s o f 2 0 1 6 . A c c o r d i n g t o t h e s h a r e p u r c h a s e a g r e e m e n t, t h e u p p e r li m i t o f c o n ti n g e n t c o n s i d e r ati o n s, s h all b e d e p o s it e d i n t o its d e si g n at e d tr u s t a c c o u n t, as o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h e u p p e r lim i t o f u n p ai d c o n ti n g e n t c o n s i d e r ati o n s h o u l d b e d e p o s it e d i n t h e tr u st a c c o u n t a m o u n t e d to C N Y 1 , 7 2 2 t h o u s a n d a n d C N Y 1 9 , 6 4 4 t h o u s a n d r e s p e cti v el y. A r e p ai d i n i n st all m e n t s b a s e d o n t h e o p e r ati n g p e rf o r m a n c e. T h e f ai r v al u e o f t h e a f o r e m e n t i o n e d c o n ti n g e n t c o n s i d e r ati o n s o n D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 a m o u n t e d t o $ 7 , 6 0 0 t h o u s a n d a n d $ 8 3 , 3 9 1 t h o u s a n d r e s p e cti v el y, o f w h i c h $ 7 , 6 0 0 t h o u s a n d a n d $ 4 2 , 5 5 6 t h o u s a n d w e r e r e c o r d e d a s ot h e r c u r r e n t li a b iliti e s r e s p e cti v el y, a n d $ 0 t h o u s a n d a n d $ 4 0 , 8 3 5 t h o u s a n d w e r e r e c o r d e d a s o t h e r n o n - c u r r e n t li a b iliti es r e s p e cti v el y. A c c o r d i n g t o s h a r e p u r c h a s e a g r e e m e n t, g ai n o r l o s s o n v a l u ati o n o f u n p ai d c o n ti n g e n t c o n s i d e r ati o n a m o u n t e d t o $ 4 5 , 1 2 2 t h o u s a n d s a n d r e c o r d e d a s ot h e r l o s s o r g ai n .

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h e b al a n c e o f t h e a b o v e c o n ti n g e n t c o n si d e r ati o n d e p o s it e d i n t h e tr u st a c c o u n t a m o u n t e d t o $ 5 4 , 0 2 6 t h o u s a n d a n d $ 9 1 , 3 9 1 t h o u s a n d r e s p e cti v el y, o f w h i c h, $ 5 4 , 0 2 6 t h o u s a n d a n d $ 4 3 , 8 0 7 t h o u s a n d w e r e r e c o r d e d a s ot h e r c u rr e n t a s s et s r e s p e cti v el y, $ 0 t h o u s a n d a n d $ 4 7 , 5 2 4 t h o u s a n d w e r e r e c o r d e d a s ot h e r n o n - c u r r e n t a s s et s r e s p e cti v el y.

216

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (ii) T o e n h a n c e t h e str at e g i c o f l o g i sti cs s er vi c e i n C h i n a, t h e C o m p a n y p u r c h a s e d 6 8 % o w n e r s h i p o f E X e r L o g i sti c s C o ., Lt d . i n D e c e m b e r 2 0 1 5 . T h e p ri m a r y s e r vi c e s o f E X e r L o g i sti c s C o . , L t d . ar e e x p r e s s, g e n e r al c a r g o l o g i sti c s, a g e n c y a n d w a r e h o u s e m a n a g e m e n t.

E X e r L o g i sti c s C o ., Lt d ., i n S e p t e m b e r 2 0 1 6 , i n c r e a s e d its c a p it al a m o u n t e d t o C N Y C N Y 9 , 5 9 4 t h o u s a n d s . A ll i n cr e a s e d c a p it al w a s s u b s c ri b e d b y T . H . I G R O U P L t d . ( S h a n g h ai ). T h e o w n e r s h i p o f E X e r L o g i stic s C o ., Lt d. h el d b y T . H . I G R O U P L t d . ( S h a n g h ai ) in c r e a s e d f r o m 6 8 % t o 7 3 . 8 7 % a ft er t h e c a p it al i n c r e a s e d . T h e c a p it al s u r p l u s o f t h e G r o u p d e c r e a s e d b y 1 2 , 0 6 8 t h o u s a n d b e c a u s e T . H . I G R O U P L t d . ( S h a n g h ai ) di d n o t s u b s c ri b e t h e i n c r e a s e d o n t h e o ri gi n al o w n e r s h i p r ati o.

I n a d d iti o n, E X e r L o g i sti c s C o ., Lt d., i n F e b r u a r y a n d S e p t e m b e r 2 0 1 7 , i n c r e a s e d it s c a p it al a m o u n t e d t o 1 0 , 7 6 5 t h o u s a n d s a n d 6, 0 0 0 t h o u s a n d s . A ll i n c r e a s e d c a p it al w a s s u b s c ri b e d b y T . H . I G R O U P L t d . ( S h a n g h ai ). T h e o w n e r s h i p o f E X e r L o g i sti c s C o ., Lt d., h e l d b y T . H . I G R O U P L t d . ( S h a n g h ai ) in c r e a s e f r o m 7 3 . 8 7 % t o 8 8 . 9 4 % a ft e r t h e c a p it al i n c r e a s e d . T h e c a p it al s u r p l u s a n d r et ai n e ar n i n g o f t h e G r o u p d e c r e a s e d b y 5, 9 3 7 t h o u s a n d a n d 6 , 0 3 4 t h o u s a n d .

  • (iii) A s o f M a y 2 0 1 7 , t h e C o m p a n y h a s r e a c h e d a n e w c a p it al o f S G D $ 5 3 0 t h o u s a n d d o ll a rs w i t h S i n g a p o r e a s t h e s u b s i d i ar y . I n a d d iti o n , aft er c a p it al h a s i n c r e a s e d , t h e s h a r e h o l d i n g r ati o g r e w fr o m a n o ri g i n al o f 8 0 % t o t h e m o s t r e c e n t o f 9 1 . 4 0 % .

  • (i v) A s o f D e c e m b e r 3 1 , 2 0 1 7 , t h e C o m p a n y h a s p u r c h a s e d t h e n o n - c o n t r o lli n g i nt e r e st s o f T . H . I. G r o u p V i et n a m C o , L t d., w h e r ei n t h e p r o p o rti o n o f its s h a r e h o l d i n g i n c r e a s e d fr o m 5 1 % t o 9 9 % . T h e C o m p a n y i n c r e a s e d its a d d iti o n al p ai d -i n c a p it al o f $ 2 5 , 7 0 3 t h o u s a n d s d u e t o t h e c h a n g e s i n e q u it y w h i c h r e s u lt fr o m t h e p u r c h a s e o f t h e i nt er e st m e n ti o n e d a b o v e.

  • ( g ) P r o p e rt y, p l a n t a n d e q u i p m e n t

T h e c o s t, d e p r e ci ati o n , a n d i m p a i r m e n t l o s s o f t h e p r o p e rt y, p l a n t a n d e q u i p m e n t o f t h e C o m p a n y f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w e r e a s f o ll o w s :

C o s t o r d e e m e d c o s t:
Balance on January 1, 2017
Additions
Balance on December 31, 2017
Balance on January 1, 2016
Additions
Balance on December 31, 2016
D e p r e c i a ti o n a n d i m p a i r m e n t l o s s :
Balance on January 1, 2017
Depreciation
Balance on December 31, 2017		 L a n d
$ 132,594
-		 B u i l d i ng s O f f i c e a n d
O t h e r
Eq u ip m e n t		 To t a l

233,473

1,098
2 3 4 , 5 7 1

233,112

361
2 3 3 , 4 7 3

40,478

5,615
4 6 , 0 9 3
69,299
31,580
-
1,098
$
1 3 2 , 5 9 4
6 9 , 2 9 9
3 2 , 6 7 8

$ 132,594
-

69,299
31,219
-
361
$
1 3 2 , 5 9 4		 6 9 , 2 9 9
3 1 , 5 8 0

$ -
-

25,340
15,138
1,064
4,551
$
-

2 6 , 4 0 4
1 9 , 6 8 9

217

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

Balance on January 1, 2016
Depreciation
Balance on December 31, 2016
N e t b o o k v a l u e :
At December 31, 2017
At December 31, 2016
At January 1, 2016		 L a n d
$ -
-		 B u i l d i ng s O f f i c e a n d
O t h e r
Eq u ip m e n t		 To t a l

34,358

6,120
4 0 , 4 7 8
1 8 8 , 4 7 8
1 9 2 , 9 9 5
1 9 8 , 7 5 4
24,277
10,081
1,063
5,057
$
-

2 5 , 3 4 0
1 5 , 1 3 8
$
1 3 2 , 5 9 4

4 2 , 8 9 5
1 2 , 9 8 9

$
1 3 2 , 5 9 4

4 3 , 9 5 9
1 6 , 4 4 2

$
1 3 2 , 5 9 4

4 5 , 0 2 2
2 1 , 1 3 8

A s u m m a r y o f p l e d g e d a s s e ts as o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 i s f o u n d i n n o t e 8 .

( h ) I n t a n g i b l e a s s et s

T h e c o s t s, a m o rti z ati o n , a n d i m p ai r m e n t l o s s o f t h e in t a n g i b l e a s s et s o f t h e C o m p a n y f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w e r e a s f o ll o w s :

C o s t ::
B a l a n c e o n J a n u a r y 1 , 2 0 1 7
A d d iti o n s
B a l a n c e o n D e c e m b e r 3 1 , 2 0 1 7
B a l a n c e o n J a n u a r y 1 , 2 0 1 6
A d d iti o n t h r o u g h a c q u i siti o n
B a l a n c e o n D e c e m b e r 3 1 , 2 0 1 6
A m o rti z ati o n a n d i m p a i r m e n t l o s s :
B a l a n c e o n J a n u a r y 1 , 2 0 1 7
A m o r ti z ati o n
E f f e ct o f m o v e m e n t i n e x c h a n g e r at e s
B a l a n c e o n D e c e m b e r 3 1 , 2 0 1 7
B a l a n c e o n J a n u a r y 1 , 2 0 1 6
A m o r ti z ati o n
B a l a n c e o n D e c e m b e r 3 1 , 2 0 1 6
B o o k v a l u e :
A t D e c e m b e r 3 1 , 2 0 1 7
A t D e c e m b e r 3 1 , 2 0 1 6
A t J a n u a r y 1 , 2 0 1 6		 O t h e r I n t a ng i b l e A s s e t s
$ 3 0 , 8 0 9
1 7 , 2 5 1

$
4 8 , 0 6 0

$ 2 9 , 8 3 7
9 7 2
$
3 0 , 8 0 9

$ 2 2 , 6 5 8
2 , 7 8 8
-
$
2 5 , 4 4 6

$ 1 8 , 6 0 9
4 , 0 4 9

$
2 2 , 6 5 8

$
2 2 , 6 1 4

$
8 , 1 5 1

$
11 , 2 2 8

A m o rti z ati o n o f i n t a n g i b l e a s s et s o f t h e C o m p a n y f o r th e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w a s r e c o g n i z e d a s o p e r ati n g e x p e n s e s i n t h e i n d i vi d u al p r o fit a n d l o s s.

218

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (i) S h o r t -t er m b o r r o w i n g s a n d s h o rt -t er m n o t e s a n d b ills p a y a b l e
U n s e c u r e d b a n k l o a n s
S e c u r e d b a n k l o a n s
To t al
U n u s e d cr e d it f a ciliti es
I n t er e st r at e		 D e c e m b e r 3 1, 2 0 1 7
$ 8 8 0 , 0 0 0
-		 D e c e m b e r 3 1, 2 0 1 7
$ 8 8 0 , 0 0 0
-		 D e c e m b e r 3 1 ,
2 0 1 6
3 6 0 , 0 0 0
1 2 0 , 0 0 0
$
8 8 0 , 0 0 0
4 8 0 , 0 0 0

$
6 4 0 , 0 0 0
5 4 0 , 0 0 0

**1 . 0 5 % ~ 1 . 3 7 % **
**1 . 0 9 % ~ 1 . 1 9 % **

R e f e r t o n o t e 8 f o r d et ails o f t h e r el at e d a s s et s p l e d g e d a s c o ll at er al.

  • (j) C o n v e rti b l e b o n d p a y a b l e
P r o c e e d s fr o m i s s u e o f c o n v e rti b l e b o n d p a y a b l e
B o n d d i s c o u n t
C u m u l ati v e r e d e e m e d a m o u n t
C u m u l ati v e c o n v e rt e d a m o u n t
C a r r yi n g a m o u n t o f li a b ility
L e s s : C u rr e n t p o rti o n
E m b e d d e d d e ri v ati v e －p u t a n d c all o p ti o n s ( a c c o u n t e d f o r a s
fi n a n ci al a s s et s (li a b iliti es ) at f air v al u e t h r o u g h p r o fit o r
l o s s －c u r r e n t a n d n o n - c u r r e n t )
E q u it y c o m p o n e n t s －c o n v e rsi o n o p ti o n s ( a c c o u n t e d f o r a s
c a p it al s u r p l u s )
E m b e d d e d d e ri v ati v e －p u t a n d c all o p ti o n s ( a c c o u n t e d f o r a s
e v a l u ati o n g ai n (l o s s ) o n fin a n c i al i n str u m e n t s )
I n t er e st e x p e n s e		 D e c e m b e r 3 1 ,
2 0 1 7

D e c e m b e r 3 1 ,
2 0 1 6
6 0 0 , 0 0 0
( 8, 9 6 9 )
-
( 2 0 5 , 8 0 0 )
$ 3 0 0 , 0 0 0
( 2, 5 9 6 )
-
( 5 0 0 )

2 9 6 , 9 0 4
( 2 9 6 , 9 0 4 )


3 8 5 , 2 3 1
( 9 4 , 5 4 0 )

$
-
2 9 0 , 6 9 1
$ ( 2 )
$ 1 4 , 6 5 7
2 0 1 7
( 2 )
1 9, 6 8 1
2 0 1 6
( 1 5 0 )
8 , 4 1 6
$ -
$
6 , 3 7 3

A s o f J a n u a r y 2 7 , 2 0 1 1 , a n d J a n u a r y 2 3 , 2 0 1 4 , a n d J u n e 9, 2 0 1 5 , t h e C o m p a n y h a d i s s u e d t h e 1 st, 2 n d a n d 3 r d u n s e c u r e d c o n v e rti b l e b o n d s , r es p e ctiv e l y, a m o u n ti n g t o $ 5 0 0 , 0 0 0 , $ 3 0 0 , 0 0 0 a n d $ 3 0 0 , 0 0 0 , r e s p e cti v e l y

T h e t er m s a n d c o n d iti o n s o f t h e b o n d s a r e a s f o ll o w s :

  • (i) C o u p o n r at e

T h r e e ti m e s ar e z e r o .

219

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • (ii) Is s u a n c e p e ri o d

F i v e y e a r s f o r t h e 1 st c o n v e rti b l e b o n d s ; t h r e e y e a r s f o r t h e 2 n d , a n d 3 r d .

  • (iii) R e d e m p ti o n o p ti o n

F o r t h e 1 st c o n v e rti b l e b o n d s, at a n y ti m e o n o r aft er F e b r u a r y 2 8 , 2 0 1 1 , a n d p ri o r t o D e c e m b e r 1 8 , 2 0 1 5 , w h e n t h e cl o s i n g p ri c e o f t h e C o m p a n y ’ s c o m m o n s h a r e s o n t h e G r e T a i S e c u riti e s M a r k e t is e q u a l t o o r g r e at e r t h a n 1 3 0 % o f t h e c o n v e r s i o n p ri c e o f t h e c o n v e r ti b l e b o n d s f o r 3 0 c o n s e c u ti v e tr a d i n g d a y s , o r m o r e t h a n 9 0 % o f t h e b o n d s h a v e b e e n r e d e e m e d , r e p u r c h a s e d , o r c o n v e rt e d , t h e C o m p a n y m a y r e d e e m t h e b o n d s i n c a s h at f a c e v al u e.

T h e r e i s n o r e d e m p ti o n o p tio n f o r t h e 2 n d c o n v e r ti b l e b o n d s.

F o r t h e 3 r d c o n v e rti b l e b o n d s, at a n y ti m e o n o r aft er J u n e 1 0 , 2 0 1 6 , a n d p ri o r t o A p r i l 3 0 , 2 0 1 8 , w h e n t h e cl o si n g p ri c e o f th e C o m p a n y ’ s c o m m o n s h a r e s o n t h e T W S E i s e q u a l t o o r g r e at e r t h a n 1 3 0 % o f t h e c o n v e r si o n p ri c e o f t h e c o n v e rti b l e b o n d s f o r 3 0 c o n s e c u ti v e tr a d i n g d a y s , o r m o r e t h a n 9 0 % o f t h e b o n d s h a v e b e e n r e d e e m e d , re p u r c h a s e d , o r c o n v e r t e d , t h e C o m p a n y m a y r e d e e m t h e b o n d s i n c a s h at f a c e v a l u e.

  • (i v) P u t o p ti o n o f b o n d h o l d e r s

O n J a n u a r y 2 7 , 2 0 1 3 , b o n d h o l d e r s m a y r e q u e s t t h e C o m p a n y t o r e p u r c h a s e t h e 1 s t c o n v e rti b l e b o n d s at f a c e v a l u e. T h e C o m p a n y h a d a $ 2 6 , 2 9 6 l o s s fr o m r e p u r c h a si n g $ $ 3 3 2 , 6 0 0 o f b o n d s .

T h e r e i s n o p u t o p ti o n o f b o n d h o l d e r s f o r t h e 2 n d a n d 3 r d c o n v e rti b l e b o n d s.

  • ( v ) T e r m s o f c o n v e r si o n

  • 1 ) A t a n y ti m e o n e m o n t h a ft er t h e i s s u i n g d at e t o t e n d a y s b e f o r e t h e e x p i r y d at e, b o n d h o l d e r s m a y r e q u e s t t h e C o m p a n y t o c o n v e rt t h e b o n d s i nt o st o c k .

  • 2 ) C o n v e r si o n p ri c e

A f t e r t h e b o n d s w e r e i s s u e d , w h e n e v e r t h e n u m b e r s o f c o m m o n s h a r e s o f t h e C o m p a n y c h a n g e s, o r ot h e r c o n v e r tib l e b o n d s ar e i s s u e d w it h a c o n v e r si o n p ri c e l o w e r th a n t h e m a r k e t p ri c e, t h e c o n v e r si o n p ri c e w i ll b e a d j u st e d b y t h e f o r m u l a s et i n t h e t erm s . O n D e c e m b e r 3 1 , 2 0 1 7 , t h e c o n v e r si o n p ri c e s 3 r d c o n v e rt i b l e b o n d s, $ 2 5 . 9 ( d o ll ar s ).

B e c a u s e o f t h e 2 n d b o n d s h a s e x p i r e d o n J a n u a r y 2 3 , 2 0 1 7 , t h e C o m p a n y h a s p ai d $ 6 5 , 4 0 0 t h o u s a n d s .

220

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

( k ) E m p l o y e e b e n e fit s

(i) D e fi n e d b e n e fit p l a n

T h e C o m p a n y d et e r m i n e d th e m o v e m e n t i n t h e p r e s e n t v al u e o f d e fi n e d b e n e fit o b li g ati o n s a n d t h e f air v al u e o f p l a n a s s et s a s f o ll o w s :

To t al p r e s e n t v a l u e o f d e fi n e d b e n e fit o b li g ati o n s
F a i r v a l u e o f p l a n a s s et s
N e t d e fi n e d b e n e fit (li a b ilit y ) a s s et
T h e C o m p a n y e m p l o y e e b e n e f it li a b iliti es as f o ll o w s :
P ai d v a c ati o n li a b ilit y - c u r r e n t		 D e c e m b e r 3 1 ,
2 0 1 7
$ ( 3 6 , 3 0 2 )
1 4 , 0 1 5
$
( 2 2 , 2 8 7 )
D e c e m b e r 3 1 ,
2 0 1 7
$
2 2 9		 D e c e m b e r 3 1 ,
2 0 1 6

( 3 6 , 0 1 4 )

1 3 , 7 2 7



( 2 2 , 2 8 7 )


D e c e m b e r 3 1 ,
2 0 1 6
2 2 9

T h e G r o u p m a k e s d e fi n e d b e n e fit p l a n c o n t ri b u ti o n s t o t h e p e n s i o n f u n d a c c o u n t at B a n k o f T a i w a n a n d t o t h e m a n a g e r p e n si o n f u n d a c c o u n t t h a t p r o v i d e s p e n s i o n s f o r e m p l o y e e s u p o n r etir e m e n t. T h e p l a n s ( c o v e r e d b y t h e L a b o r S t a n d a r d s L a w ) e n title a r etir e d e m p l o y e e t o r e c ei v e a n a n n u a l p a y m e n t b a s e d o n y e a r s o f s er vi c e a n d a v e r a g e s al ar y f o r t h e si x m o n t h s p ri o r t o r etir e m e n t.

1 ) C o m p o s iti o n o f p l a n a s s et s

T h e C o m p a n y all o c at e s p e n s i o n f u n d s i n a c c o r d a n c e w i t h t h e R e g u l ati o n s f o r R e v e n u e s, E x p e n d it u r e s, S a f e g u a r d a n d U t ili z ati o n o f t h e L a b o r R etir e m e n t F u n d , a n d s u c h f u n d s a r e m a n a g e d b y t h e L a b o r P e n s i o n F u n d S u p e r vi s o r y C o m m i tt e e. W i t h r e g a r d t o t h e u tili z ati o n o f t h e f u n d s , m i n i m u m e a r n i n g s s h all b e n o l e s s t h a n t h e e a r n i n g s attai n a b l e fr o m t w o - y e a r ti m e d e p o s its w it h i nt er e st r at e s o f f er e d b y l o c a l b a n k s.

A s o f D e c e m b e r 3 1 , 2 0 1 7 , t h e p e n s i o n f u n d a c c o u n t b al a n c e at B a n k o f T ai w a n a n d t h e m a n a g e r p e n s i o n f u n d b al a n c e a m o u n t e d t o $ 1 , 6 9 4 t h o u s a n d a n d $ 1 2 , 3 2 1 t h o u s a n d , r e s p e cti v el y. F o r i n f o r m a ti o n o n t h e utili z ati o n o f t h e la b o r p e n s i o n f u n d a s s et s, in c l u d i n g t h e a s s et all o c ati o n a n d yi eld o f t h e f u n d , p l e a s e r ef er to t h e w e b s it e o f t h e L a b o r P e n s i o n F u n d S u p e r v i s o r y C o m m i tte e.

  • 2 ) M o v e m e n t s i n t h e p r e s e n t v al u e o f d e fi n e d b e n e f it o b li g ati o n

T h e m o v e m e n t s i n t h e p r e s e n t v a l u e o f t h e d e fi n e d b e n e f it o b li g ati o n f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o ll o w s :

A t J a n u a r y 1
S e r v i c e c o st s a n d i nt er e st
A c t u a ri al l o s s e s
A t D e c e m b e r 3 1		 2 0 1 7
$ 3 6 , 0 1 4
3 8 6
( 9 8 )		 2 0 1 6
3 6 , 8 6 4
5 7 3
( 1, 4 2 3 )

$
3 6 , 3 0 2
3 6 , 0 1 4

221

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • 3 ) M o v e m e n t s i n t h e f air v al u e o f p l a n a s s et s

T h e m o v e m e n t s i n t h e f ai r v al u e o f t h e p l a n a s s et s fo r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o llo w s :

A t J a n u a r y 1
E x p e c t e d r et u r n o n p l a n a s s et s
C o n t ri b u ti o n s
A c t u a ri al l o s s e s
A t D e c e m b e r 3 1		 2 0 1 7
$ 1 3 , 7 2 7
1 4 6
2 0 5
( 6 3 )		 2 0 1 6
1 2 , 1 2 4
1 8 4
1 , 4 9 3
( 7 4 )

$
1 4 , 0 1 5
1 3 , 7 2 7
  • 4 ) E x p e n s e s r e c o g n i z e d i n p r o fit o r l o s s

T h e C o m p a n y ’ s p e n s i o n e x p e n s e s r e c o g n i z e d i n p r o fit o r l o s s f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w e r e a s f o ll o w s :

N e t i nt er e st o n t h e n et d e fi n e d b e n e fit li a b iliti es 20 1 7
$
2 4 0		 20 16
3 8 9

T h e a b o v e n et p e n s i o n g ai n s a n d l o s s e s ar e r e c o g n i z e d u n d e r o p e r ati n g e x p e n s e s.

  • 5 ) R e c o g n iti o n o f t h e o t h e r - c o m p r e h e n s i v e g ai n s (l o s s e s ) r e m e a s u r e m e n t s o f d e fi n e d b e n e fit p l a n s.

T h e c o m p a n y r e c o g n iti o n o f t h e o t h e r c o m p r e h e n s i v e g ai n s (l o s s e s ) o n r e m e a s u r e m e n t s o f d e fi n e d b e n e fit p l a n s f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o ll o w :

C u m u l ati v e a m o u n t, J a n u a r y 1
R e c o g n i z e d d u ri n g t h e y e a r
C u m u l ati v e a m o u n t, D e c e m b e r 3 1		 2 0 1 7
$ ( 2, 8 7 1 )
( 3 5 )		 2 0 1 6
( 1, 5 2 2 )
( 1, 3 4 9 )

$
( 2, 9 0 6 )
( 2, 8 7 1 )

6 ) A c t u a ri al as s u m p t i o n s

T h e f o ll o w i n g ar e t h e C o m p a n y ’ s p ri m a r y a ct u a ri al a s s u m p ti o n s at t h e r e p o rti n g d at e:

D i s c o u n t r at e
F u t u r e s al ar y i n c r e a si n g r at e		 D e c e m b e r 3 1 ,
2 0 1 7
1 . 3 7 5 %
3 . 5 0 0 %		 D e c e m b e r 3 1 ,
2 0 1 6
1 . 1 2 5 %
3 . 0 0 0 %

T h e C o m p a n y e x p e ct s t o m a k e c o n t ri b u ti o n s o f $ 6 8 t h o u s a n d d o ll ar s t o t h e d e fi n e d b e n e fit p l a n s i n t h e n e x t y e a r st arti n g fr o m D e c e m b e r 3 1 , 2 0 1 7 . T h e w e i g h t e d a v e r a g e p e ri o d o f t h e d e fi n e d b e n e fi t p l a n s i s 1 4. 6 3 y e a r s.

222

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

7 ) S e n s iti vit y a n a l y s i s

W h e n c a l c u l ati n g t h e p r e s e n t v al u e o f t h e d e fi n e d b e n e fit o b li g ati o n s, t h e G r o u p u s e s j u d g m e n t s a n d e sti m a ti o n s t o d et e r m i n e t h e a ct u a ri al a s s u m p ti o n s, i n cl u d i n g t h e d is c o u n t r at e s a n d f u t u r e s al a r y c h a n g e s, as o f t h e e n d o f t h e r e p o r ti n g p e ri o d . A n y c h a n g e s i n t h e a ct u a ri al as s u m p ti o n s m a y si g n i fi c a n tl y i m p a c t t h e a m o u n t o f t h e d e fi n e d b e n e fit o b li g ati o n s.

T h e c h a n g e s i n t h e m a i n a c t u a ri al a s s u m p ti o n s m i g h t h a v e a n i m p a ct o n t h e p r e s e n t v a l u e o f t h e d e fi n e d b e n e fit o b li g ati o n :

D e c e m b e r 3 1 , 2 0 1 7
D i s c o u n t r at e
F u t u r e s al ar y i n c r e a si n g r at e
D e c e m b e r 3 1 , 2 0 1 6
D i s c o u n t r at e
F u t u r e s al ar y i n c r e a si n g r at e		 E f f e c t s t o t h e d ef i n e d b e n ef it o b li g a ti o n
D e c r e a s e b y 0 . 2 5 %
2 8 9
( 2 6 6 )
3 3 0
( 3 0 4 )
I n c r e a s e b y 0. 2 5 %
$ ( 2 8 3 )
2 7 2
( 3 2 4 )
3 0 9

T h e r e is n o c h a n g e i n o t h e r as s u m p t i o n s w h e n p e r f o r m i n g t h e a b o v e - m e n ti o n e d s e n siti vit y a n al y s i s. In p r a cti c e, a s s u m p t i o n s m a y b e i nt er a cti v e w it h e a c h ot h e r. T h e m e t h o d u s e d i n s e n s iti vit y a n a l y s i s is c o n s i st e n t w it h t h at o f t h e c al c u l ati o n u s e d i n t h e n et p e n si o n li a b iliti es.

T h e m e t h o d a n d a s s u m p t i o n s u s e d o n c u r r e n t s e n s iti vi t y a n a l y s i s is t h e s a m e a s th o s e o f t h e p ri o r y e a r.

(ii) D e fi n e d c o n t ri b u ti o n p l a n

T h e C o m p a n y c o n t ri b u t e s a n a m o u n t at t h e r at e o f 6 % o f e a c h e m p l o y e e ’ s m o n t h l y w a g e s t o t h e l a b o r p e n s i o n p e r s o n al a c c o u n t at t h e B u r e a u o f L a b o r I n s u r a n c e i n a c c o r d a n c e w i t h t h e p r o v i si o n s o f t h e L a b o r P e n s i o n A c t. A f t e r t h e C o m p a n y ’ s c o n t ri b u ti o n s t o t h e B u r e a u o f L a b o r I n s u r a n c e, t h er e is n o f u rt h e r le g al o r c o n s tr u ctiv e o b li g ati o n .

T h e C o m p a n y ’ s p e n s i o n c o s t s u n d e r t h e d e fi n e d c o n t ri b u ti o n m e t h o d w e r e $ 1, 4 2 8 t h o u s a n d a n d $ 1 , 7 3 3 t h o u s a n d f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , r e s p e ctiv e l y. P a y m e n t s w e r e m a d e t o t h e B u r e a u o f L a b o r I n s u r a n c e.

(l) I n c o m e t a x

  • (i) T h e i n c o m e t a x e x p e n s e f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w a s a s f o ll o w s :
C u r r e n t i n c o m e t a x e x p e n s e
I n c o m e t a x e x p e n s e		 2 0 1 7
$ 1 , 8 6 2		 2 0 1 6

3 , 0 3 1

$
1 , 8 6 2

3 , 0 3 1

223

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T h e r e c o n cili ati o n o f i n c o m e t a x e x p e n s e a n d p r o fit b e f o r e t a x f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o ll o w s :

P r o fit b e f o r e i n c o m e t a x
I n c o m e t a x o n p r e -t a x fi n a n ci al i n c o m e c a l c u l at e d
at t h e C o m p a n y ’s i n c o m e t a x r at e
C h a n g e s i n u n r e c o g n i z e d t e m p o r a r y d i ff er e n c e s
Gains that does not affect income tax expense
S u rt a x o n u n d i stri b u t e d e ar n i n g s
O t h e r s		 2 0 1 7
$ 2 4 1 , 9 7 2		 2 0 1 6
1 3 3 , 5 1 8

4 1 , 1 3 5
( 3 3 , 3 3 2 )
( 8, 9 5 0 )
6 3 6
2 , 3 7 3
2 2 , 6 9 8
( 2 5 , 3 1 5 )
( 3, 7 5 3 )
1 , 5 6 8
7 , 8 3 3

$
1 , 8 6 2
3 , 0 3 1

  • (ii) D e f e rr e d t a x a s s et s a n d li a b iliti e s

  • 1 ) U n r e c o g n i z e d d e f err e d t a x a s s et s a n d li a b iliti es

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h e t e m p o r ar y di ff e r e n c e s a s s o ci at e d w i t h i n v e st m e n t s i n s u b s i d i ari e s w e r e n o t r e c o g n i z e d a s d ef e r r e d i n c o m e t a x a s s et s a n d li a b iliti es a s t h e G r o u p h a s t h e a b ilit y t o c o n t r o l t h e tim i n g o f r e v e r s al o f t h e s e t e m p o r a r y d i ff e r e n c e s w h i c h a r e n o t e x p e ct e d t o r e v e r s e i n th e f o r e s e e a b l e f ut u r e. T h e r el at e d a m o u n t s w e r e a s f o ll o w s :

Ta x l o s s e s U n r e c o g n i z e d d e f er r e d t a x li a b iliti e s
U n r e c o g n i z e d d e f err e d t a x a s s et s		 D e c e m b e r 3 1 ,
2 0 1 7
$
2 6 2 , 4 2 2
$
2 , 1 6 4		 D e c e m b e r 3 1 ,
2 0 1 6
2 2 8 , 8 9 2

1 , 9 6 6
  • 2 ) R e c o g n i z e d d e f e rr e d t a x a s s et s a n d li a b iliti es

T h e m o v e m e n t s i n d e f er r e d t a x a s s et s a n d li a b iliti e s f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o llo w s :

D e f e r r e d t a x a s s e ts :
Balance, January 1, 2016
Balance, December 31, 2016
Balance, January 1, 2017
Credited (debited) to profit or loss
Balance, December 31, 2017		 D e f i n e d b e n e f i t
p l a n s		 O t h e r s To t a l

6,549
$ 4,094
2,455

$
4 , 0 9 4


2 , 4 5 5


6 , 5 4 9

$ 4,094
-


2,455
-


6,549
-
$
4 , 0 9 4
2 , 4 5 5
6 , 5 4 9
  • 3 ) E x a m i n ati o n a n d a p p r o v a l

T h e C o m p a n y ’ s i n c o m e t a x r et u r n s t h r o u g h 2 0 1 5 h a v e b e e n e x a m i n e d a n d a p p r o v e d b y t h e T a x A u t h o rit y.

224

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

4 ) I m p u t ati o n cr e d it a c c o u n t a n d c r e d it a b l e r ati o

U n d i st ri b u t e d e a r n i n g s c o m m e n c i n g f r o m J a n u a r y 1, 1 9 9 8
B a l a n c e o f i m p u t ati o n cr e d i t a c c o u n t
C r e d it a b l e r ati o f o r e ar n i n g s di stri b u ti o n t o R . O . C . r e sid e n t s		 D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6
1 4 0 , 2 6 4
1 , 3 3 6
2 0 1 6( a c t u a l)
**2 . 1 8 % **
( N o t e )
( N o t e )
2 0 1 7( e s ti m a t e d)
( N o t e )

T h e r el at e d i n f o r m a ti o n o n t h e a f o r e s ai d i m p u t ati o n cr e d it t a x w a s p r e p a r e d in a c c o r d a n c e w i t h R u li n g N o . 1 0 2 0 4 5 6 2 8 1 0 i s s u e d b y t h e M i n i str y o f Fi n a n c e, R . O . C ., o n O c t o b e r 1 7 , 2 0 1 3 .

N o t e : A c c o r d i n g t o t h e a m e n d m e n t s t o t h e "I n c o m e T a x A c t " e n a ct e d b y t h e o f fic e o f t h e P r e si d e n t o f t h e R e p u b li c o f C h i n a (T a i w a n ) o n F e b r u a r y 7, 2 0 1 8 , ef f e cti v e J a n u a r y 1 , 2 0 1 8 , c o m p a n i e s w i ll n o l o n g e r b e r e q u i r e d t o est a b li s h, r e c o r d , c al c u l at e, a n d d i stri b u t e t h ei r I C A d u e t o t h e a b o li s h m e n t o f t h e i m p u t at i o n t a x s y s t e m . T h e i n f o r m a t i o n p r e s e n t e d a b o v e i s f o r r ef er e n c e o n l y.

( m ) S h a r e c a p it al a n d ot h e r e q u i t y

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , t h e a u t h o ri z e d c a p it al o f t h e C o m p a n y c o n si st e d o f $ 1 , 2 0 0 , 0 0 0 t h o u s a n d s h a r e s, o f w h i c h $ 8 0 , 0 0 0 t h o u s a n d s h a r e s w e r e r e s e r v e d f o r e m p l o y e e s h a r e o p ti o n s, w it h a p a r v al u e o f 1 0 ( d o ll ar s ) p e r s h a r e, a n d t h e i s s u e d c a p i t al w a s 1 1 8 , 5 6 5 t h o u s a n d s h a r e s a n d 1 1 9 , 5 2 6 t h o u s a n d s h a r e s, r e s p e cti v e l y.

T h e m o v e m e n t s i n o u t st a n d i n g s h a r e s f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o ll o w s :

B e g i n n i n g b a l a n c e, J a n u a r y 1
A d d i ti o n : S t o c k di vi d e n d
C o n v e rti b l e b o n d s c o n v e r t e d
E x e r ci s e o f e m p l o y e e st o c k o p ti o n s
D e c r e a s e i n tr e a s u r e st o c k
E n d i n g b a l a n c e, D e c e m b e r 3 1		 2 0 1 7 2 0 1 6

1 1 6 , 0 4 2
2 , 2 9 2

7 8 4

4 0 8

-
$ 1 1 9 , 5 2 6
-
1 , 3 7 6
2 8
( 2, 3 6 4 )

$
11 8 , 5 6 6

11 9 , 5 2 6

A r e s o l u ti o n w a s a p p r o v e d d u ri n g t h e s h a r e h o l d e r s ’ m e eti n g o n M a r c h 2 4 , 2 0 1 1 , f o r t h e is s u a n c e o f c o m m o n s h a r e s f o r c a s h w it hi n a y e a r u n d e r p ri v at e p l a c e m e n t; w it h t h e n u m b e r o f s h a r e s i s s u e d n o t t o e x c e e d 8 , 4 0 0 t h o u s a n d s h a r e s. S u b s e q u e n t l y, a r e s o l u ti o n w a s a p p r o v e d d u ri n g t h e b o a r d m e e t i n g h el d o n M a r c h 2 4 , 2 0 1 1 , f o r t h e i s s u a n c e o f $ 8 , 4 0 0 t h o u s a n d c o m m o n s h a r e s u n d e r p ri v a t e p l a c e m e n t, w it h a f a c e v a l u e o f $ 1 0 ( d o ll ar s ) p e r s h a r e, at $ 2 7 . 8 1 ( d o ll ar s ) p e r s h a r e, a m o u n ti n g t o $ 2 3 3 , 6 0 4 t h o u s a n d d o ll ars . T h e c a p it al i n c r e a s e w a s r e g i st er e d o n M a r c h 3 0 , 2 0 1 1 . T h e r el e v a n t st at u t o r y r e g i str ati o n p r o c e d u r e s h a v e si n c e b e e n c o m p l et e d .

225

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

A b o v e C o m m o n s t o c k u n d e r p ri v at e p l a c e m e n t a n d t h e r el at e d st o c k d i vi d e n d s w a s p u b li c o n D e c e m b e r 8, 2 0 1 6 .

(i) C a p it al s u r p l u s

T h e c o m p o n e n t s o f c a p it al s u r p l u s w e r e a s f o ll o w s :

P ai d -i n c a p it al d e ri v e d fr o m p r e m i u m o n i s s u a n c e o f
c o m m o n s h a r e s
S u r p l u s ari si n g fr o m b o n d c o n v e r s i o n o p ti o n
S u r p l u s ari si n g fr o m t r e a s u r y st o c k tr a n s a cti o n s
S u r p l u s ari si n g fr o m l o n g -t e r m e q u it y i n v e st m e n t s －
d o n at e d s u r p l u s a n d o t h e r s
S u r p l u s ari si n g fr o m p r e m i u m f r o m m e r g e r
S u r p l u s ari si n g fr o m s t o c k o p ti o n s		 D e c e m b e r 3 1 ,
2 0 1 7
$ 5 5 3 , 6 5 7
2 4 5 , 6 6 5
4 , 3 0 5
2 5, 7 0 3
2 , 9 1 2
4 0 , 5 1 2		 D e c e m b e r 3 1 ,
2 0 1 6
5 6 4 , 6 7 2
2 2 8 , 5 6 7
2 1 , 0 6 0
5, 9 3 6
2 , 9 1 2
4 2 , 1 9 0

$
8 7 2 , 7 5 4
8 6 5 , 3 3 7

I n a c c o r d a n c e w it h t h e R . O . C . C o m p a n y A c t a m e n d e d i n 2 0 1 2 , r e ali z e d c a p it a l r e s e r v e c a n o n l y b e r e cl a s sifi e d a s s h a r e c a p it al o r di stri b u t e d a s c a s h d i vi d e n d s aft er o f f s ettin g l o s s e s. T h e a f o r e m e n ti o n e d r e ali z e d c a p it al r e s er v e i n cl u d e s s h a r e p r e m i u m s a n d d o n ati o n . In a c c o r d a n c e w i t h t h e S e c u riti e s O f f e rin g a n d Is s u a n c e G u i d e li n e s, t h e a m o u n t o f c a p it al r es e r v e t o b e r e cl a s sifi e d u n d e r s h a r e c a p it al s h all n o t e x c e e d 1 0 p e r c e n t o f t h e a ct u a l s h a r e c a p i t al a m o u n t.

(i)

R e t ai n e d e a r n i n g s

A c c o r d i n g t o t h e C o m p a n y ’ s a rti cl e s o f i n c o r p o r at i o n , 1 0 % o f a n n u a l n et e a r n i n g s ( n et o f i n c o m e t a x e s ), aft er d e d u c ti n g a c c u m u l at e d d e fi cit s, m u s t b e s et a si d e 1 0 % a s le g al r e s er v e . U n l e s s a n d u n til t h e a c c u m u l at e d l e g al r e s e r v e e q u al s t h e C o m p a n y ’ s t ot al c a p it al, t h e C o m p a n y m a y s et asi d e a s p e ci al r e s er v e i n a c c o r d a n c e t o A r ti cl e 4 1 o f t h e S e c u riti e s a n d E x c h a n g e A c t. A ft er t h e b o a r d o f di r e ct o r s c o n s i d e r s t h e C o m p a n y ’ s b u d g et f o r f u n d i n g n e e d s , fi n a n ci al str u ct u r e s , c u r r e n t p e ri o d e ar n i n g s, a n d st e a d y p r o fit di strib u ti o n w h e n p r o p o s i n g t h e d i stri b u ti o n o f e a r n i n g s, t h e p r o p o s a l s h o u l d b e r e s o l v e d d u ri n g t h e st o c k h o l d e r s ’ m e e ti n g .

1 ) L e g a l r e s e r v e

I n a c c o r d a n c e w i t h t h e C o m p a n y A c t, 1 0 p e r c e n t o f n et i n c o m e s h o u l d b e s et a s i d e a s st at u t o r y l e g al r e s e r v e u n til it is e q u al t o s h a r e c a p it al. If t h e C o m p a n y e x p e ri e n c e d p r o fi t f o r t h e y e a r, t h e m e e ti n g o f s h a r e h o l d e r s s h all d e ci d e o n t h e d i stri b u ti o n o f t h e stat ut o r y le g al r e s er v e, eit h e r b y n e w s h a r e s o r b y c a s h , o f t h e p o rti o n t h at e x c e e d s 2 5 p e r c e n t o f t h e a ct u al s h a r e c a p it al.

226

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

2 ) S p e ci al r e s e r v e

B y c h o o s i n g t o a p p l y e x e m p t i o n s g r a n t e d u n d e r IF R S 1 “ F i r st -ti m e A d o p ti o n o f I n t er n ati o n a l Fi n a n ci al R e p o rti n g S t a n d a r d s ” d u ri n g t h e C o m p a n y ’ s fi rst-ti m e a d o p ti o n o f t h e I n t er n ati o n a l Fi n a n ci al R e p o rti n g S t a n d a r d s ( I F R S s ) e n d o r s e d b y t h e F i n a n ci al S u p e r vi s o r y C o m m i s s i o n, c u m u l ati v e tr a n sl ati o n a d j u st m e n t s ( g ai n s ) s h all b e r e cl a s sifi e d a s r et ai n e d e a r n i n g s. T h e n et i n cr e a s e i n r et ai n e d e a r n i n g s d u e t o t h e first -ti m e a d o p ti o n o f I F R S s a m o u n t e d t o $ 7 , 1 1 6 . I n a c c o r d a n c e w it h R u l i n g N o . 1 0 1 0 0 1 2 8 6 5 i s s u e d b y t h e Fi n a n ci al S u p e r vi s o r y C o m m i s s i o n o n A p r il 6, 2 0 1 2 , a n i n c r e a s e i n r et ai n e d e a r n i n g s d u e t o t h e fir st -ti m e a d o p ti o n o f I F R S s s h all b e r e c la s sifi e d a s s p e ci al e a r n i n g s r e s e r v e d u ri n g e a r n i n g s di stri b u tio n , a n d w h e n t h e r el e v a n t as s et i s u s e d , d i s p o s e d o f, o r r e cla s s ifi e d , t hi s s p e ci al e a r n i n g s r e s e r v e s h all b e r e v e rs e d a s d i stri b u t a b l e e a r n i n g s p r o p o r ti o n at el y. T h e c a r r yi n g a m o u n t o f s p e ci al e ar n i n g s r e s er v e w a s $ 7 , 1 1 6 t h o u s a n d o n D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 .

I n a c c o r d a n c e w it h t h e g u i d eli n e s o f t h e a b o v e R u li n g , a p o rti o n o f c u r r e n t - p e ri o d e a r n i n g s a n d u n d i stri b u t e d p r i o r - p e ri o d e a r n i n g s s h all b e r e cl a s sifi e d a s s p e ci al e a r n i n g s r e s er v e d u ri n g e a r n i n g s d i s tri b u ti o n . T h e a m o u n t t o b e r e cl a s sifi e d s h o u l d b e e q u al t o t h e d i ff e r e n c e b et w e e n t h e t o t al n et c u r r e n t - p e ri o d r e d u cti o n o f s p e ci al e a r n i n g s r es er v e r e s u lti n g fr o m t h e fir st -tim e a d o p ti o n o f I F R S s a n d t h e c a r r yi n g a m o u n t o f o t h e r s h a r e h o l d e r s ’ e q u it y a s s t at e d a b o v e. Si m i l a rl y, a p o r ti o n o f u n d i stri b u t e d p ri o r - p e ri o d e a r n i n g s s h all b e r e cl a s si f i e d a s s p e ci al e a r n i n g s r e s e r v e ( w h i c h d o e s n o t q u alif y f o r e a r n i n g s d i stri b u ti o n ) t o a c c o u n t f o r c u m u l a ti v e c h a n g e s t o ot h e r s h a r e h o l d e r s ’ e q u i t y p e rt ai ni n g t o p ri o r p e ri o d s d u e t o t h e fir st -ti m e a d o p ti o n o f I F R S s . A m o u n t s o f s u b s e q u e n t r e v e r s als p e rt ai n i n g t o t h e n et r e d u cti o n o f ot h e r s h a r e h o l d e r s ’ e q u it y s h al l q u a lif y f o r a d d iti o n al d i s tri b u ti o n s. S p e c i al e a rin g r e s e r v e a m o u n t e d t o $ 1 8 , 4 4 0 t h o u s a n d s at D e c e m b e r 3 1 , 2 0 1 7

3 ) E a r n i n g s di stri b u ti o n

E a r n i n g s di stri b u ti o n f o r 2 0 1 6 a n d 2 0 1 5 w a s d e ci d e d vi a t h e g e n e r al m e e ti n g o f t h e s h a r e h o l d e r s h el d o n J u n e 1 9 , 2 0 1 7 a n d J u n e 3, 2 0 1 6 , r e s p e cti v el y. T h e r el e v a n t d i vi d e n d d i stri b u ti o n s t o s h a r e h o l d e r s w e r e a s f o ll o w s :

Dividends distributed to common
shareholders:
Cash
Shares
Total		 2 0 1 2 0 1 6
To t a l
a m o u n t		 2 0 1 5 2 0 1 5
To t a l
a m o u n t
206,341
22,927
A m o u n t p e r
s h a r e( d o ll a r s)

1.800
0.2

92,637
-
$
9 2 , 6 3 7
2 2 9 , 2 6 8

T h e r e i s n o d iff er e n c e b et w e e n t h e t ot al a m o u n t o f s u r p l u s di stri b u ti o n a n d t h e r e s o l u ti o n o f t h e B o a r d o f D i r e ct o r s o f t h e C o m p a n y, a n d t h e r e l e v a n t i n f o r m a ti o n c a n b e f o u n d at t h e p u b li c i n f o r m a ti o n st ati o n .

227

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(ii) T r e a s u r y st o c k

T h e C o m p a n y h a s a c q u i r e d tr e a s u r y st o c k a n d tr a n s f e r r e d it t o its e m p l o y e e s a s a n i n c e n ti v e . F o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 t h e m o v e m e n t s o f t h e tr e a s u r y st o c k w e r e a s b e l o w .

Item 2 0 1 6 Increase
2,621
56,158
Increase		 Increase
2,621
56,158
Increase		 Increase
2,621
56,158
Increase		 Decrease

(2,364)

(51,610)
Decrease

-

-		 December 31, 2017
2,769
66,349
December 31, 2016
2,512
61,801		 December 31, 2017
2,769
66,349
December 31, 2016
2,512
61,801		 December 31, 2017
2,769
66,349
December 31, 2016
2,512
61,801
Treasury stock acquired for transfer to
employees－shares (in thousands)
Treasury stock acquired for transfer to
employees－amount
Item		 $
**January **		 $ 2,512


61,801

**1, **
2016
Treasury stock acquired for transfer to
employees－shares (in thousands)
Treasury stock acquired for transfer to
employees－amount		 $ 427
2,085
10,636
51,165
61,801

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , a t o t al o f $ 2, 7 6 9 t h o u s a n d s a n d $ 2 , 5 1 2 t h o u s a n d s s h a r e s , r e s p e cti v el y, w e r e n o t y et c a n c ell e d .

I n a c c o r d a n c e w it h t h e S e c u riti e s a n d E x c h a n g e A c t re q u i r e m e n t s, t h e n u m b e r o f s h a r e s r e p u r c h a s e d s h o u l d n o t e x c e e d 1 0 p e r c e n t o f all s h a r e s o u t st a n d i n g . A l s o, t h e v al u e o f t h e r e p u r c h a s e d s h a r e s s h o u l d n o t e x c e e d t h e s u m o f t h e C o m p a n y ’ s r et ai n e d e a r n i n g s, s h a r e p r e m i u m , a n d r e a li z e d c a p it al r e s er v e s. A s o f D e c e m b e r 3 1 , 2 0 1 7 , t h e b al a n c e o f tr e a s u r y st o c k w a s i n c o m p li a n c e w it h t h e r e q u i r e m e n t. I n a c c o r d a n c e w it h t h e S e c u riti e s a n d E x c h a n g e A c t r e q u i r e m e n t s, tr e a s u r y s h a r e s h e l d b y t h e C o m p a n y c a n n o t b e p l e d g e d a n d d o n o t h a v e a n y s h a r e h o l d e r s ’ r i g h t s b e f o r e t h ei r tr a n s f e r.

( n ) S h a r e - b a s e d p a y m e n t

I n f o r m a ti o n o n s h a r e - b a s e d p a y m e n t tr a n s a cti o n s a s o f D e c e m b e r 3 1 , 2 0 1 7 , s h a r e - b a s e d p a y m e n t tr a n s a cti o n s l o s e e ffi c a c y o n J u l y 1 0 , 2 0 1 7 , w a s a s f o llo w s :

E m p l o y e e s t o c k o p ti o n s O p t i o n g r a n t d at e 2 0 1 2 / 7 / 11 O p t i o n s g r a n t u n it s 2 , 0 0 0 C o n t r a ct p e ri o d F i v e y e a r s G r a n t r e ci pi e n t s E m p l o y e e s o f t h e C o m p a n y a n d its s u b si d i ari e s Ve s ti n g c o n d iti o n s P r o v i d e s e r vi c e f o r t h e n e x t fi v e y e a r s

228

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(i) D e t e r m i n i n g t h e f air v al u e

T h e C o m p a n y a d o p t e d t h e B l a c k - S c h o l e s m o d e l t o c alc u l at e t h e f ai r v al u e o f t h e st o c k o p ti o n s at t h e g r a n t d at e, a n d t h e a s s u m p t i o n s a d o p t e d i n t hi s v al u ati o n m o d e l w e r e a s f o llo w s :

F a i r v a l u e at g r a n t d at e
S h a r e p ri c e at g r a n t d at e
E x e r ci s e p ri c e
E x p e c t e d v o l atilit y
E x p e c t e d d u r ati o n
R i s k -fr e e i n t er e st r at e		 2 0 1 4
E m p l oy e e s t o c k op ti o n s
4 . 5 0
2 0 . 5 0
2 0 . 5 0
2 5 . 9 9 8 %
4 . 0 0
0 . 9 5 1 %

E x p e c t e d v o l atilit y w a s d e ci d e d o n t h e b a si s o f t h e h ist o ri c al w e i g h t e d - a v e r a g e v o l atilit y a n d w a s a d j u st e d b a s e d o n p u b li cl y a v ai l a b l e i n f o r m a ti o n ; t h e d u r ati o n i s d e ci d e d b a s e d o n t h e G r o u p ’ s r e g u l ati o n s o n is s u a n c e; t h e e x p e ct e d d i vi d e n d a n d ri s k -f r e e i nt er e st r at e ar e d e ci d e d o n t h e b a si s o f g o v e r n m e n t b o n d s . W h e n t h e f ai r v a l u e i s d e ci d e d , c o n d iti o n s o f s er vi c e a n d n o n - m a r k et p ri c e p e rf o r m a n c e ar e n o t t a k e n i nt o c o n s i d e r ati o n .

  • (ii) I n f o r m a ti o n o n s h a r e - b a s e d p a y m e n t p l a n

A s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , o u t st a n d i n g u n it s w e r e 0 a n d 2 7 , r es p e cti v e l y .

F o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 6 , t h er e w e r e 4 0 8 u n it s, o f 1 2 . 8 ( d o ll ar s ).

F o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 , t h er e w e r e 27 u n its e x e r ci s e d at $ 1 2 . 8 ( d o ll ar s ).

  • (iii) E m p l o y e e e x p e n s e a n d li a b iliti e s

T h e C o m p a n y ’ s e x p e n s e s f o r s h a r e - b a s e d p a y m e n t f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e $ 0 t h o u s a n d a n d $ 1 7 t h o u s a n d , r e s p e ctiv e l y.

T h e e x p e n s e s t o t h e s u b si d i ari e s o f t h e C o m p a n y f o r s h a r e - b a s e d p a y m e n t f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e $ 0 t h o u s a n d a n d $ ( 3 0 5 ) t h o u s a n d , r e s p e cti v el y .

229

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

( o ) E a r n i n g s p e r s h a r e ( E P S )

  • (i) B a s i c e ar n i n g s p e r s h a r e

T h e b a s i c e ar n i n g s p e r s h a r e f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , w e r e c al c u l at e d o n t h e b a si s o f p r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s a n d t h e w ei g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g c o m m o n s h a r e s. C a l c u l ati o n s w e r e a s f o ll o w s :

  • 1 ) P r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s
2 0 1 7
C o n t i n u i n g
op e r a ti o n s
P r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s
$
2 4 0 , 11 0
2 )
W e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g c o m m o n s h a r e s
2 0 1 7
C o m m o n s h a r e s a s o f J a n u a r y 1
$ 1 1 9 , 5 2 6
E ff e ct o f tr e a s u r y st o c k
( 4, 9 7 1 )
E ff e ct o f st o c k di vi d e n d s
-
E ff e ct o f e m p l o y e e st o c k o p ti o n s
2 3
E ff e ct o f c o n v e r si o n o f c o n v e r ti b l e b o n d s
1 , 2 8 9
W e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g c o m m o n
s h a r e s o n D e c e m b e r 3 1
$ 11 5 , 8 6 7
D i l u t e d e a r n i n g s p e r s h a r e
T h e d il u t e d e a r n i n g s p e r s h a r e f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1
c a l c u l at e d o n t h e b a si s o f p r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s a n d t h e
n u m b e r o f o u t st a n d i n g c o m m o n s h a r e s, w it h all p o t e n tial c o m m o n s h a r e s r et
C a l c u l ati o n s w e r e a s f o ll o w s:
1 )
P r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s ( d il ut e d )
2 0 1 7
C o n t i n u i n g
op e r a ti o n s
P r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s ( b a si c) $ 2 4 0 , 1 1 0
I n t er e st o n c o n v e rti b l e b o n d s
6 , 3 7 3
G a i n s o n r e v a l u ati o n o f p u t a n d c all o p ti o n s o f
c o n v e rti b l e b o n d s m e a s u r e d at f air v al u e
-
$
2 4 6 , 4 8 3		 2 0 1 7
C o n t i n u i n g
op e r a ti o n s
$
2 4 0 , 11 0		 2 0 1 6
C o n t i n u i n g
op e r a ti o n s

1 3 0 , 4 8 7

s h a r e s
2 0 1 7

2 0 1 6
$ 1 1 9 , 5 2 6
( 4, 9 7 1 )
-
2 3
1 , 2 8 9
1 1 6 , 0 4 2

( 1, 3 9 1 )
2 , 2 9 2

6 8

1 7 3

11 7 , 1 8 4
7 a n d 2 0 1 6 w e r e
w e i g h t e d - a v e r a g e
r o a ctiv e l y a d j u s t e d .
2 0 1 6
C o n t i n u i n g
op e r a ti o n s

1 3 0 , 4 8 7

8 , 4 1 6
1 5 0

1 3 9 , 0 5 3
C o n t i n u i n g
op e r a ti o n s
$ 2 4 0 , 1 1 0
6 , 3 7 3
-
$
2 4 6 , 4 8 3
  • (i) D i l u t e d e a r n i n g s p e r s h a r e

T h e d il u t e d e a r n i n g s p e r s h a r e f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e c a l c u l at e d o n t h e b a si s o f p r o fit attri b u t a b l e t o c o m m o n s h a r e h o l d e r s a n d t h e w e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g c o m m o n s h a r e s, w it h all p o t e n tial c o m m o n s h a r e s r et r o a ctiv e l y a d j u s t e d . C a l c u l ati o n s w e r e a s f o ll o w s:

230

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

2 ) W e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g c o m m o n s h a r e s ( d il ut e d )

W e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g
c o m m o n s h a r e s ( b a s i c)
E ff e ct o f c o n v e r si o n o f c o n v e r ti b l e b o n d s
E ff e ct o f e m p l o y e e st o c k di v i d e n d s
E ff e ct o f st o c k o p ti o n s
W e i g h t e d - a v e r a g e n u m b e r o f o u t st a n d i n g
c o m m o n s h a r e s o n D e c e m b e r 3 1 ( d il ut e d )		 2 0 1 7

2 0 1 6
11 7 , 1 8 4
1 6 , 1 9 1
4 2
2 2 1
$ 11 5 , 8 6 7
1 1 , 6 5 0
5 9
1 2
$ 1 2 7 , 5 8 8 1 3 3 , 6 3 8

W h e n t h e dil u ti v e e f f e ct o f st o c k o p ti o n s is c al c u l at e d , t h e a v e r a g e m a r k et v a l u e i s d e ci d e d o n t h e b a si s o f t h e m a r k e t p ri c e o f t h e o p ti o n d u r i n g t h e o u t st a n d i n g p e ri o d .

( p ) E m p l o y e e s a n d d ir e ct o rs, s u p e r vi s o r s r e w a r d

P u r s u a n t t o t h e C o m p a n y ’ s a rti cl e s o f i n c o r p o r ati o n , st at es if t h e C o m p a n y p r o f it s t hi s p e ri o d t h e y w i ll s et a si d e n o l e s s t h a n 0. 5 % t o w a r d s e m p l o y e e c o m p e n s ati o n a n d n o m o r e t h a n 3 % t o w a r d s r e m u n e r ati o n t o di r e ct o rs a n d s u p e r vi s o r s. If t h e C o m p a n y h a s a c c u m u l at e d lo s s t h e y m u s t firs t r e s er v e t o c o v e r t h e l o s s a m o u n t. T h e c o m p e n s ati o n s m e n ti o n e d a f o r e i n cl u d e p e r s o n s w h o m e e t t h e p r e s et c o n d iti o n s o f e m p l o y e e s o f t h e af fili at e C o m p a n y.

F o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , r e m u n e r ati o n o f e m p l o y e e s a n d d i r e ct o r s o f $ 1 , 2 5 3 t h o u s a n d , $ 6 9 2 t h o u s a n d , $ 7 , 5 2 2 t h o u s a n d a n d $ 4 , 1 5 1 t h o u s a n d , r e s p e ctiv e l y. T h e s e a m o u n t s a r e c al c u l at e d b y u s i n g t h e C o m p a n y ’ s p r e -t a x n et p r o f it f o r t h e p e ri o d b e f o r e d e d u cti n g t h e a m o u n t o f t h e r e m u n e r ati o n t o th e e m p l o y e e s a n d d i r e ct o r s, m u lti p li e d b y t h e di stri b u ti o n r ati o o f r e m u n e r ati o n t o t h e e m p l o y e e s a n d d i r e ct o r s u n d e r t h e C o m p a n y ’ s a rti cl e s o f a s s o ci ati o n , a n d e x p e n s e d u n d e r o p e r ati n g c o s t s o r e x p e n s e s f o r t h e y e a r s e n d e d . If t h er e w o u l d b e a n y c h a n g e s aft e r t h e r e p o rti n g d at e i n t h e fo ll o w i n g y e a r, t h e c h a n g e o f t h e a m o u n t w o u l d b e tre at e d a s c h a n g e s i n a c c o u n ti n g e sti m a t e s a n d r e c o g n i z e d a s p r o fit o r l o s s i n t h at y e a r.

( q ) N e t R e v e n u e

T h e C o m p a n y ’ s n et r e v e n u e f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w e r e a s f o ll o w s :

M a n a g e m e n t i n c o m e
S h a r e s o f p r o fit o f e q u it y - a c c o u n t e d i n v e s t e e s		 2 0 1 7
$ 5 4 , 9 6 7
2 3 4 , 9 0 6		 2 0 1 6
5 8 , 6 8 2
1 7 2 , 1 3 0

$
2 8 9 , 8 7 3
2 3 0 , 8 1 2

231

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(r ) N o n - o p e r ati o n i n c o m e a n d e x p e n s e s

  • (i) O t h e r g ai n s a n d l o s s e s

T h e C o m p a n y ’ s o t h e r g ai n s a n d l o s s e s ar e a s f o ll o w :

F o r ei g n e x c h a n g e g ai n s (l o s s e s )
G a i n s o n v al u ati o n o f f air v al u e o f fi n a n ci al a s s et s a n d
li a b iliti es t h r o u g h p r o fit o r l o s s
G a i n o n di s p o s al o f a v ail a b le -f o r- s al e fi n a n ci al a s s et s
D i v i d e n d i n c o m e
G a i n s o n e v a l u ati o n o f i n v e st m e n t p a y a b l e
O t h e r		 2 0 1 7
$ ( 4, 7 5 7 )
2 4
6 , 8 8 7
1 , 6 9 0
4 5 , 1 2 2
-		 2 0 1 6
( 2, 2 4 3 )
( 1 2 9 )
1 1 , 5 6 9
2 , 0 3 8
-
9
$
4 8 , 9 6 6		 11 , 2 4 4

(ii) O t h e r i n c o m e

T h e C o m p a n y ’ s o t h e r r e v e n u e ar e a s f o ll o w :

I n t er e st i n c o m e
R e n t al i n c o m e
O t h e r i n c o m e		 2 0 1 7
$ 2 , 4 6 9
3 , 5 6 4
3 4		 2 0 1 6
2 , 6 8 2
3 , 5 6 4
2 8 4
$
6 , 0 6 7		 6 , 5 3 0

(iii) F i n a n c e c o s t s

T h e C o m p a n y ’ s fi n a n ci al c o s t s ar e a s f o ll o w :

I n t er e st c o st s
B a n k l o a n
A m o r ti z ati o n o f t h e c o n v e rti b l e b o n d s di s c o u n t
O t h e r fi n a n ci alliabilitiesa m o r ti z ati o n		 2 0 1 7
$ 8 , 1 8 8
6 , 3 7 3
6 , 4 3 5		 2 0 1 6
4 , 1 5 7
8 , 4 1 6
1 2 , 2 9 7

$
2 0 , 9 9 6
2 4 , 8 7 0

232

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • ( s ) F i n a n ci al i n str u m e n t s

  • (i) C r e d it ris k

    • 1 ) E x p o s u r e t o cr e d it ris k

      • T h e c a rr yi n g a m o u n t o f f i n a n ci al a s s et s r e p r e s e n t s t h e C o m p a n y ’ s m a x i m u m c r e d it e x p o s u r e.

    • 2 ) C o n c e n t r ati o n o f cr e d it ris k

      • B a s e d o n t h e c h a r a ct e ri sti c o f t h e i n d u s tr y, t h e C o m p a n y h a s n o si g n i fi c a n t tr a n s a cti o n s w i t h a n y si n g l e c u s t o m e r.

  • (ii) L i q u i d it y ri s k

T h e f o ll o w i n g t a b l e s h o w s t h e c o n t r a ct u al m a t u riti e s o f fi n a n ci al li a b iliti e s, i n cl u d i n g e sti m a t e d i nt er e st p a y m e n t s a n d e x cl u d i n g t h e i m p a ct o f n etti n g a g r e e m e n t s.

December 31, 2017
Non-derivative financial liabilities
Bank borrowings
Convertible bond payable
Trade and other payable
Investment payable (other current
and non－current liabilities)
December 31, 2016
Non-derivative financial liabilities
Bank borrowings
Convertible bond payable
Trade and other payables
Investment payable (other current
and non－current liabilities)		 Carrying
amount		 Contractual
cash flow
Within 6
months
6~12
months

(880,833)
(880,833)
-

(299,500)
(299,500)
-

(124,857)
(124,857)
-
(7,600)
(7,600)
-

(1,312,790)
(1,312,790)
-		 1~2years
-
-
-
-
-		 2~5years Over 5
years
-
-
-
-
-
$ 880,000
296,904
124,857
7,600
$
1,309,361		 -
-
-
-
-

$ 480,000
385,231
124,077
83,391



(480,400)
(480,400)
-

(406,000)
(106,500)
-

(124,077)
(124,077)
-
(91,391)
(43,868)
-

(1,101,868)
(754,845)
-		 -
(299,500)
-
(47,523)		 -

-
-

-

-		 -
-
-
-
-

$
1,072,699
(347,023)

T h e C o m p a n y d o e s n o t e x p e ct t h at t h e c a s h fl o w s i n cl u d e d i n t h e m a t u rit y a n al y s is c o u l d o c c u r si g n i fi c a n tl y e a rli er o r at sig n i fi c a n tl y di ff e r e n t a m o u n ts.

233

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(iii) C u r r e n c y ri s k

  • 1 ) E x p o s u r e t o f o r ei g n c u r r e n c y ri s k

T h e C o m p a n y ’ s si g n i fi c a n t e x p o s u r e t o f o r ei g n c u r r e n c y ri s k w a s a s f o ll o w s :

U n i t: t h o u s a n d

Financial assets
Monetary item
USD
Non-monetary item
IDR
Financial liabilities
Monetary item
USD		 D e c e m b e r 3 1, 2 0 1 7 D e c e m b e r 3 1, 2 0 1 6
T W D
97,449
51,040
83,391
F o r e i g n
c u r r e n cy		 E x c h a ng e r a t e T W D F o r e i g n
c u r r e n cy		 E x c h a ng e r a t e
$ 3,112
20,417,891
1,771
30.5192

0.00223

30.5192		 94,975
45,532
54,050
3,020

21,004,115

2,584
32.27

0.00243

32.27

  • 2 ) S e n s iti vit y a n a l y s i s

T h e C o m p a n y ’ s e x p o s u r e t o f o r ei g n c u r r e n c y ris k ari s e s fr o m t h e f o r ei g n c u r r e n c y e x c h a n g e g ai n s a n d l o s s e s o n t h e tr a n s l ati o n o f c a s h a n d c a s h e q u i v a l e n t s, a c c o u n t s r e c ei v a b l e, ot h e r r e c ei v a b le s, l o a n s, a c c o u n t s p a y a b l e, a n d o t h e r p a y a b l e s th at a r e d e n o m i n at e d i n f o r ei g n c u r r e n c y. A 1 % d e p r e ci ati o n o f t h e U S D , H K D a n d C N Y a g ai n st t h e T W D a s o f D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 w o u l d h a v e d e c r e a s e d t h e n et i n c o m e b e f o r e t a x b y $ 4 0 9 t h o u s a n d a n d $ 1 4 0 t h o u s a n d , r e s p e cti v el y. T h e a n a l y s i s a s s u m e s t h at all o t h e r v a ri a b l e s r e m a i n c o n st a n t. T h e a n al y s i s is p e r f o r m e d o n t h e s a m e b a si s fo r b o t h p e ri o d s.

  • 3 ) E x c h a n g e g ai n s a n d l o s s e s o n m o n e t a r y it e m s :

T h e c u rr e n c y o f t h e C o m p a n y h a s a w i d e r a n g e o f f o r ei g n c u r r e n c y it e m s , s o t h at t h e e x c h a n g e o f i n f o r m a ti o n o n m o n et ar y it e m s ar e di s clo s e d . F o r t h e y e a r 2 0 1 7 a n d 2 0 1 6 , f o r ei g n e x c h a n g e g ai n s a n d l o s s e s (i n cl u d i n g r e ali z e d a n d u n r e ali z e d ) ar e ( 4, 7 5 7 ) t h o u s a n d a n d ( 2 , 2 4 3 ) t h o u s a n d .

(i v) I n t er e st r at e a n a l y s i s

T h e f o ll o w i n g s e n s iti vit y a n a l y s i s is b a s e d o n t h e e x p o s u r e t o i nt er e st r at e ri s k f o r d e ri v ati v e a n d n o n - d e ri v ati v e fi n a n ci a l i n str u m e n t s o n t h e r e p o rtin g d at e.

F o r v a ri a b l e -r at e i n str u m e n t s, t h e s e n s iti vit y a n a l y s i s as s u m e s t h e v a ri a b l e -r at e li a b iliti es ar e o u t st a n d i n g f o r t h e w h o l e y e a r.

234

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

If t h e i nt e r e st r at e h a d i n c r e a s e d / d e c r e a s e d b y 1 % , th e C o m p a n y ’ s n et i n c o m e b e f o r e t a x w o u l d h a v e d e c r e a s e d /i n c r e a s e d b y $ 8 , 8 0 0 t h o u s a n d a n d $ 4 , 8 0 0 t h o u s a n d f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 , r e s p e cti v el y, a s s u m i n g all ot h e r v a ri a b l e f a ct o r s h a d r e m a i n e d c o n s t a n t. T h i s is m a i n l y d u e t o t h e C o m p a n y ’ s v a ri a b l e -r at e b o r r o w i n g .

  • ( v ) F a i r v a l u e o f fi n a n ci al i n stru m e n t s

  • 1 ) F a i r v a l u e hi e r a r c h y

    • a ) C a t e g o ri e s a n d f air v a l u e o f fi n a n ci al i n str u m e n t s

T h e f o ll o w i n g t a b l e s h o w s t h e c a r r yi n g a m o u n t s a n d f air v a l u e s o f fi n a n ci al a s s et s a n d fi n a n ci al li a b iliti es, i n cl u d i n g t h ei r le v el s i n t h e f air v al u e hi er a r c h y. It s h all n o t i n cl u d e f air v al u e i n f o r m a t i o n o f t h e fi n a n ci al a s s e ts a n d fi n a n ci al li a b iliti es n o t m e a s u r e d at f air v al u e if t h e c a r r yi n g a m o u n t i s a r e a s o n a b l e a p p r o x i m a ti o n o f f a ir v a l u e a n d i n v e s t m e n t s i n e q u it y i n str u m e n t s w h i c h d o n o t h a v e a n y q u o t e d p ri c e i n a n a cti v e m a r k et i n w h i c h th e v al u e c a n n o t r e a s o n a b l y m e a s u r e d .

Financial assets at fair value through profit or loss:
Derivative financial assets

Available-for-sale financial assets
Publicly held shares

Loans and receivables:
Cash and cash equivalent
Note and accounts receivables, and other
receivables
Other current and noncurrent assets

Financial liabilities at fair value through profit or
loss:
Financial liabilities designated as fair value
through profit or loss

Short term borrowings
Convertible bonds
Note and accounts payables
Other payable
Payables on investments (other current and
noncurrent-others)
 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 Total
7,131
Book value
$ 7,131		 Fair value
Level 1

7,131		 Level 2
-		 Level 3
-

7,131


7,131		 - -
7,131

$ 219,218


126,818		 92,400 -
219,218

219,218


126,818
92,400		 -
219,218

$ 66,898
145,726
64,912


-
-

-
-
-
-		 -
-
-
-
-
64,912

277,536

-		 - -
-

$ 2
2
-

-		 2
2		 -
-		 2
2
$ 880,000
296,904
981
123,876
7,601
1,309,362
-

-

-

-
-

-		 -
296,904
-
-
-
296,904		 -
-
-
-
7,601
7,601		 -
296,904
-
-
7,601
304,505

$
1,813,249

133,949
389,306
7,601
530,856

235

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

Book value
Financial assets at fair value through profit or loss：
Derivative financial assets
$ 7,107

7,107
Available-for-sale financial assets
Publicly held shares
$ 29,432

29,432
Loans and receivables：
Cash and cash equivalent
$ 32,410
Note and accounts receivables, and other
receivables
251,375
Other financial assets
91,391

375,176
Refundable deposits
$ 2,176
Financial liabilities designated as fair value
through profit or loss
2
Short term borrowings
$ 480,000
Convertible bonds
385,231
Note and accounts payables
1,744
Other payable
122,333
Payables on investments (other current and
noncurrent-others)
83,391

1,072,699
$
1,484,416		 December 31, 2016 December 31, 2016 December 31, 2016 December 31, 2016 Total
7,107
Fair value
Level 1

7,107		 Level 2
-		 Level 3
-

7,107


7,107		 - -
7,107

$ 29,432


29,432		 - -
29,432

29,432


29,432		 - -
29,432

$ 32,410
251,375
91,391


-
-

91,391		 -
-
-		 -
-
-
-
-
91,391

375,176


91,391		 - -
91,391

$ 2,176

-		 - -
-

2
-		 2 - 2
$ 480,000
385,231
1,744
122,333
83,391
1,072,699
-

-

-

-
-

-		 -
385,231
-
-
-
385,231		 -
-
-
-
83,391		 -
385,231
-
-
83,391
468,622

83,391

$
1,484,416

127,930
385,233
83,391
596,554

b ) V a l u ati o n t e c h n i q u e s a n d a s s u m p ti o n s u s e d i n f ai r v al u e d et e r m i n ati o n

N o n - d e ri v ati v e fi n a n ci al i n str u m e n t s

T h e f air v al u e o f fi n a n ci al in s t r u m e n t s, w h i c h ar e c a r rie d at f ai r v al u e t h r o u g h p r o fit o r l o s s a n d ar e tr a d e d i n a ct i v e m a r k et s, is b a s e d o n t h e q u o t e d m a r k et p ri c e.

W h e n t h e q u o t e d m a r k et p ri c e s c a n b e o b t ai n e d t h r o u g h e x c h a n g e m a r k et s, d e al e r m a r k e t s, b r o k e r e d m a r k et s, i n d u s t ri al u n i o n , p ri ci n g o r g a n i z ati o n o r a u t h o riti e s, a n d tr a n s a cti o n s w h i c h o c c u r r e d f r e q u e n tl y, t h e fi n a n ci al i n str u m e n t s w i ll b e cl a s sifi e d t o a cti v e m a r k et s.

W h e n t h e af o r e m e n ti o n e d c o n d iti o n s ar e n o t m e t, a n d t h e r e i s a si g n i fi c a n t d i ff e r e n c e b et w e e n t h e b u yi n g a n d t h e s elli n g p ri c e s o r tr a n s a cti o n s w h i c h d o n o t o c c u rr e d fr e q u e n tl y, t h e fi n a n ci al i n str u m e n t s w i ll b e c la s sifi e d t o i n a cti v e m a r k et.

E x c e p t f o r t h e af o r e m e n t i o n e d fi n a n ci al i n str u m e n ts, t h e f ai r v al u e o f o t h e r fi n a n ci al i n str u m e n t s is d et e r m i n e d b y u s i n g t h e v al u a ti o n t e c h n i q u e s o r t h e q u o t e d p ri c e fr o m a c o u n t er p a r t y. T h e f air v al u e o f fin a n c i al i n str u m e n t s t h r o u g h v a l u ati o n t e c h n i q u e s i s d et er m i n e d b y t h e p r e s e n t v a l u e o f ot h e r fi n a n c i al i n str u m e n t s w it h si m i l a r c h a r a ct e ri sti cs, di s c o u n t e d c a s h fl o w , o t h e r v al u ati o n t e c h n i q u e s a n d o b s e r v a b l e d at a o f v al u ati o n m o d e l o n t h e r e p o r ti n g d at e.

236

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

D e ri v ati v e fi n a n ci al i n str u m e n t s

T h e f ai r v al u e i s b a s e d o n t h e g e n e r al a c c e p t e d v a l u at i o n m o d e l. T h e f air v al u e o f f o r w a r d e x c h a n g e c o n t r a ct is b a s e d o n t h e f o r w a r d e x c h a n g e r at e. E m b e d d e d d e ri v ati v e fi n a n ci al i n str u m e n t is b a s e d o n t h e o p ti o n p ri ci n g m o d e l o r ot h e r v a l u ati o n t e c h n i q u e s.

T h e r e w e r e n o tr a n s f e r s o f fi n a n ci al as s et s fr o m e a c h l e v el f o r t h e y e a r s e n d e d D e c e m b e r 3 1 , 2 0 1 7 a n d 2 0 1 6 .

  • (t) F i n a n ci al ri s k m a n a g e m e n t

  • (i) O v e r v i e w

T h e n at u r e a n d t h e e x t e n t o f t h e C o m p a n y ’ s ri s k s a ri si n g fr o m fi n a n ci al i n str u m e n t s, w h i c h i n cl u d e cr e d it ris k, li q u i d ity ri s k, a n d m a r k et ris k, ar e d i s c u s s e d b el o w . A l s o , th e G r o u p ’ s o b j e cti v e s, p o li ci e s, a n d p r o c e d u r e s f o r m e a s u r i n g a n d m a n a g i n g ri s k s ar e d i s c u s s e d b el o w .

  • 1 ) C r e d it ris k

  • 2 ) L i q u i d it y ri s k

  • 3 ) M a r k e t ris k

F o r m o r e q u a n tit ati v e i n f o r m a t i o n a b o u t fi n a n ci al i n st r u m e n t s, p l e a s e r ef er t o r elat e d n o t e s t o t h e fi n a n ci al st at e m e n t s.

  • (ii) R i s k m a n a g e m e n t fr a m e w o r k

T h e b o a r d o f di r e ct o r s h a s o v e r all r e s p o n s i b ilit y f o r t h e e st a b li s h m e n t a n d o v e r si g h t o f t h e ri s k m a n a g e m e n t fr a m e w o r k .

T h e C o m p a n y ’ s ri s k m a n a g e m e n t p o li ci e s ar e e st a b li s h e d t o i d e n tif y a n d a n a l y z e t h e ris k s f a c e d b y t h e C o m p a n y, t o s et a p p r o p ri at e ri s k li m it s a n d c o n t r o l s, a n d t o m o n it o r ri s k s a n d a d h e r e n c e t o li m i t s. R i s k m a n a g e m e n t p o li ci e s a n d s y s t e m s a r e r e vi e w e d r e g u larl y t o r efl e c t c h a n g e s i n m a r k et c o n d itio n s a n d t h e C o m p a n y ’ s a cti viti es. T h e C o m p a n y, t h r o u g h it s tr ai ni n g a n d m a n a g e m e n t st a n d a r d s a n d p r o c e d u r e s, ai m s t o d e v e l o p a d i s ci p li n e d a n d c o n s t r u cti v e c o n t r o l e n vi r o n m e n t i n w h i c h all e m p l o y e e s u n d e r st a n d t h eir r o l e s a n d o b li g ati o n s.

T h e b o a r d o f d ir e ct o r s o v e r s e e s h o w m a n a g e m e n t m o n i t o r s t h e ri s k s, w h i c h s h o u l d b e i n c o m p li a n c e w it h t h e C o m p a n y ’ s ri s k m a n a g e m e n t p o li ci e s a n d p r o c e d u r e s, a n d r e vi e w s t h e a d e q u a c y o f t h e ri s k m a n a g e m e n t fr a m e w o r k i n r el at i o n o f t h e ri s k s f a c e d b y t h e C o m p a n y. I n t er n al A u d it u n d e rt a k e s re g u l a r r e vi e w s o f t h e ris k m a n a g e m e n t c o n t r o l s a n d p r o c e d u r e s a n d e x c e p ti o n m a n a g e m e n t, t h e r e s u lt s o f w h i c h a r e r e p o rt e d t o t h e B o a r d o f D i r e ct o r s.

237

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(iii) C r e d it ris k

C r e d it ris k m e a n s t h e p o t e n ti al l o s s t o t h e C o m p a n y i f t h e cli e n t o r t h e c o u n t er p a rt y i n v o l v e d i n a fi n a n ci al i n str u m e n t tra n s a cti o n d e f a u lt s. T h e p rim a r y p o t e n ti al cr e d it ris k is fr o m t h e a c c o u n t s r e c ei v a b l e a n d i n v e s t m e n t s o f t h e C o m p a n y.

  • 1 ) A c c o u n t s r e c ei v a b l e a n d o t h e r r e c ei v a b l e s

F o r t h e y e a r s e n d e d D e c e m b e r 3 1, 2 0 1 7 a n d 2 0 1 6 , t h e r e w a s n o si g n i fi c a n t c o n c e n t r ati o n o f c r e d it ri s k fr o m t h e s al e s o f t h e G r o u p .

T h e s o u r c e o f r e v e n u e o f th e C o m p a n y i s fr o m t h e G r o u p a n d its s u b si di a ri e s, a s s u c h , t h e r e is n o cr e d it ris k.

T h e C o m p a n y e s t a b li s h e s a n i m p ai r m e n t all o w a n c e t h at r e p r e s e n t s its e stim a t e o f i n c u rr e d l o s s e s i n r e s p e ct o f tr a d e r e c ei v a b l e s, ot h e r r e c ei v a b l e s, a n d i n v e s t m e n t. T h e c o m p o n e n t s o f t hi s i m p ai r m e n t all o w a n c e ar e a s p e c ifi c l o s s c o m p o n e n t t h at r e lat e s t o i n d i vi d u a ll y si g n i fi c a n t e x p o s u r e a n d a c o ll e cti v e l o s s c o m p o n e n t f o r w h i c h a lo s s w a s i n c u rr e d b u t n o t i d e n tifi e d . T h e c o ll e cti v e c o m p o n e n t i s b a s e d o n h i st o ri c al p a y m e n t e x p e ri e n c e o f si m i l a r fi n a n ci al a s s et s.

2 ) I n v e s t m e n t s

T h e c r e d it ris k e x p o s u r e o f t h e b a n k d e p o s it s, fi x e d i n c o m e i n v e s t m e n t s, a n d o t h e r fi n a n ci al i n str u m e n t s is m e a s u r e d a n d m o n it o r e d b y t h e C o m p a n y ’ s fi n a n c e d e p a rt m e n t. A s t h e C o m p a n y d e al s w it h b a n k s a n d o t h e r e x t e r n a l p arti es w it h g o o d cr e d it st a n d i n g a n d fi n a n ci al i n stit uti o n s, c o r p o r at e o r g a n i z ati o n s, a n d g o v e r n m e n t a g e n ci e s w h i c h a r e g r a d e d a b o v e i n v e st m e n t l e v e l, t h e m a n a g e m e n t b eli e v e s t h at t h e C o m p a n y d o e s n o t h a v e a n y c o m p li a n c e i s s u e s, a n d t h e r e f o r e, t h er e i s n o si g n i fic a n t cr e d it ris k.

3 ) G u a r a n t e e s

T h e C o m p a n y h a s d et er m i n e d t h at fi n a n ci al g u a r a n t e e s c a n o n l y b e p r o v i d e d t o t h e f o ll o w i n g c o m p a n i e s :

  • a ) C o m p a n i e s w it h a tr a n s a ctio n r el ati o n s h i p w it h t h e C o m p a n y.

  • b ) C o m p a n i e s i n w h i c h t h e C o m p a n y h a s m o r e t h a n 5 0 % o f t h e v o ti n g s h a r e s.

  • c ) C o m p a n i e s w h i c h di r e ctl y o r i n d i r e ctl y h o l d m o r e t h a n 5 0 % o f t h e v o ti n g s h a r e s o f T 3 E X G l o b a l H o l d i n g s C o r p .

238

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

4 ) L i q u i d it y ri s k

L i q u i d it y ris k i s a ri s k t h at t h e C o m p a n y i s u n a b l e t o m e e t t h e o b li g ati o n s a s s o ci at e d w i t h its fi n a n ci al li a b iliti es t h at a r e s ettl e d b y d e li v e ri n g c a s h o r a n o t h e r fi n a n ci al as s et. T h e G r o u p ’ s a p p r o a c h t o m a n a g i n g li q u i d it y i s t o e n s u r e, as m u c h a s p o s s i b l e, t h at it al w a y s h a s s u ffi ci e n t li q u i dit y t o m e e t it s li a b iliti e s w h e n d u e, u n d e r b o t h n o r m a l a n d stre s s e d c o n d iti o n s, w it h o u t i n c u r rin g u n a c c e p t a b l e l o s s e s o r ris ki n g d a m a g e t o t h e G r o u p ’ s r e p u t ati o n .

T h e C o m p a n y a cti v el y e x p a n d s its b u si n e s s t o g e n e r at e o p e r ati n g c a s h fl o w w h i l e it si m u lt a n e o u s l y m a n a g e s th e a c c o u n t s r e c ei v a b l e i n a stri ct m a n n e r a n d c o n tr o ls it s e x p e n d it u r e. In a d d iti o n , th e C o m p a n y k e e p s g o o d r el ati o n s h i p s w it h b a n k s t o o b t ai n a s u ffi ci e n t cr e d it li m i t f o r n e c e s s a r y c a s h d e m a n d s i n th e o p e r ati n g c y c l e. G e n e r a ll y, t h e C o m p a n y e n s u r e s t h at t h e r e is s u f fi ci e n t c a s h t o c o v e r e x p e ct e d o p e r ati n g e x p e n d it u r e, b u t e x c l u d i n g t h e p o t e n tial i n fl u e n c e o f u n e x p e ct e d e x t r e m e c o n d iti o n s (i. e. n at u r e d i s a st er s ). T h e t ot al a m o u n t o f u n u s e d cr e d it as o f D e c e m b e r 3 1 , 2 0 1 7 , w a s $ 6 4 0 , 0 0 0 .

5 ) M a r k e t ris k

M a r k e t ri s k is t h e ris k t h a t c h a n g e s i n m a r k et p ri c e s , s u c h a s f o r ei g n e x c h a n g e r at e s, i nt er e st rat e s, a n d e q u it y p ri c e s, w i ll af f e ct t h e C o m p a n y ’ s i n c o m e o r t h e v a l u e o f it s h o l d i n g s o f fi n a n ci al i n str u m e n t s. T h e o b j e cti v e o f m a r k et ri s k m a n a g e m e n t is t o m a n a g e a n d c o n t r o l m a r k et ri s k e x p o s u r e s w it h i n a c c e p t a b l e p a r a m e t e r s, w h i l e o p ti m i zi n g t h e r et u r n .

T h e t y p e s o f fi n a n ci al as s et s at f air v al u e t h r o u g h p r o f it o r l o s s h el d b y t h e C o m p a n y a r e o p e n - e n d f u n d s a n d c o n v e rti b l e b o n d s w h i c h ar e m e a s u r e d at f air v al u e. T h e r e f o r e, t h e C o m p a n y i s e x p o s e d t o t h e ri s k o f p ri c e c h a n g e s i n t h e b e n e fi ci ar y c e rtifi c at e m a r k et. T h e C o m p a n y e n g a g e s a p r o f e s si o n a l a g e n t t o m a n a g e i ts fi n a n ci al a s s et s. P a rt s o f b a n k d e p o s its, a c c o u n t s r e c ei v a b l e, a n d a c c o u n t s p a y a b l e a r e e v al u at e d f o r f o r ei g n c u r r e n c y e x p o s u r e. T o m a n a g e t h e c u r r e n c y ri s k, t h e C o m p a n y m a i n t ai n s its f o r ei g n c u rr e n c y n e t p o s iti o n w i t h i n a c ert ai n lim i t. T h e c o n v e r ti b l e b o n d s h e l d a n d i s s u e d b y t h e C o m p a n y a r e m e a s u r e d at f air v al u e. T h i s r es u lt s i n e x p o s u r e t o t h e ris k o f p ri c e c h a n g e s i n t h e e q u it y a n d b o n d m a r k et s.

a ) C u r r e n c y ri s k

I n t er e st is d e n o m i n at e d i n th e s a m e c u r r e n c y a s b o r r o w i n g s . G e n e r all y, b o rr o w i n g s a r e d e n o m i n at e d i n c u r r e n ci e s t h at m a t c h t h e c a s h fl o w s g e n e r at e d b y t h e u n d e rl yi n g o p e r ati o n s o f t h e C o m p a n y, w h i c h m a i n l y u s e s t h e T W D .

I n r e s p e ct o f ot h e r m o n et ar y a s s et s a n d li a b iliti es d e n o m i n a t e d i n f o r ei g n c u rr e n ci e s , t h e C o m p a n y e n s u r e s t h at its n et e x p o s u r e is k e p t t o a n a c c e p t a b l e l e v e l b y b u y i n g o r s elli n g f o r ei g n c u r r e n ci e s at s p o t r at e s.

239

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

T 3 E X G L O B A L H O L D I N G S C O R P .

b ) I n t er e st r at e ri s k

E x c e p t f o r b a n k l o a n s, t h e r e ar e n o fi n a n ci al as s et s o r fi n a n ci al li a b iliti es w i t h fl o ati n g i nt er e st r at e s. T h e G r o u p n e g o ti at e s t h e p ri c e c a s e b y c a s e t o c o n t r o l th e i nt er e st r at e ri s k.

( u ) C a p it al m a n a g e m e n t

T h e b o a r d ’ s p o li c y i s t o m a i n t ai n a str o n g c a p it al b a s e i n o r d e r t o m a i n t ai n i n v e s t o r, cr e d it o r, a n d m a r k e t c o n fi d e n c e a n d t o s u s t ai n f ut u r e d e v e l o p m e n t o f t h e b u si n e s s. C a p it al c o n s i st s o f c o m m o n s h a r e s, c a p it al s u r p l u s, r et a i n e d e a r n i n g s, a n d n o n - c o n tr o lli n g i n t er e st s o f t h e C o m p a n y. T h e b o a r d o f d ir e c t o r s m o n it o r s t h e l e v e l o f d i vi d e n d s t o c o m m o n s h a r e h o l d e r s.

T h e d i stri b u ti o n o f di vi d e n d s o f t h e C o m p a n y f o ll o w s t h e e a r n i n g s o f t h e y e a r a n d is o n a s u st ai n a b l e b a s i s. W h e n t h e b o a r d o f dir e ct o r s d r aft s a p r o p o s al o n a p p r o p ri ati o n a n d d i str i b u ti o n o f r et ai n e d e a r n i n g s, t h e d i vi d e n d d i stri b u ti o n s h all n o t b e l o w e r th a n 5 0 % o f c u r r e n t e ar n i n g s o r u n a p p r o p ri a t e d e a r n i n g s, w h i c h e v e r is l o w e r. H o w e v e r, t h e c a s h di vi d e n d s h all n o t b e l o w e r t h a n 1 0 % o f t h e t o t a l d i stri b u ti o n o f di vi d e n d s.

T h e C o m p a n y ’ s d e b t -t o - e q u it y r ati o s at t h e e n d o f t h e r e p o rti n g p e ri o d s w e r e a s f o ll o w s .

To t al li a b iliti es
L e s s : c a s h a n d c a s h e q u i v al e n t s
N e t d e b t
To t al e q u it y
L e s s : a m o u n t s a c c u m u l at e d i n e q u it y r el ati n g t o c a s h flo w
h e d g e s
A d j u st e d c a p it al
D e b t -t o - e q u it y r ati o		 D e c e m b e r 3 1 ,
2 0 1 7
D e c e m b e r 3 1 ,
2 0 1 6
1 , 0 9 6 , 9 5 1
3 2 , 4 1 0
$ 1 , 3 3 2 , 3 9 0
6 6 , 8 9 8

$
1 , 2 6 5 , 4 9 2

1 , 0 6 4 , 5 4 1

$ 2 , 2 7 9 , 4 7 3
-
$
2 , 2 7 9 , 4 7 3

2 , 2 5 9 , 1 9 9
-
2 , 2 5 9 , 1 9 9

**5 5 . 5 2 % **
**4 7 . 1 2 % **

F r o m ti m e t o ti m e, t h e C o m p a n y p u r c h a s e s its o w n s h a r e s o n t h e m a r k et; th e ti m i n g o f t h e s e p u r c h a s e s d e p e n d s o n m a r k et p ri c e s. P ri m a r il y, t h e s h a r e s a r e i nt e n d e d t o b e u s e d f o r i s s u i n g s h a r e s u n d e r t h e C o m p a n y ’ s s h a r e o p ti o n s c h e m e f o r e m p l o y e e s . T h e p u r c h a s e o f tr e a s u r y st o c k d i d n o t i m p a ct t h e C o m p a n y ’ s c a p it al m a n a g e m e n t.

T h e r e w e r e n o c h a n g e s i n th e C o m p a n y ’ s a p p r o a c h t o c a p it al m a n a g e m e n t d u ri n g t h e y e a r.

  • ( v ) I n v e s ti n g a n d fi n a n ci n g a ctiv iti e s w it h o u t c a s h fl o w s

C o n v e rti b l e b o n d s w e r e c o n v e rt e d i n t o c o m m o n st o c k . Pl e a s e r ef e r t o n o t e s 6 (j) a n d ( m ) .

240

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

( 7 ) R e l a t e d - p a r t y t r a n s a c ti o n s :

  • ( a) P a r e n t c o m p a n y a n d u lti m a t e c o n t r o lli n g p a rt y

T h e C o m p a n y i s t h e u lti m a t e c o n t r o lli n g p a rt y o f t h e C o m p a n y.

  • ( b ) N a m e a n d r el ati o n s h i p w it h rel at e d p a rti e s

T h e f o ll o w i n g s ar e e n titi es t h at h a v e h a d tr a n s a cti o n s w i t h r el at e d p a rt y d u ri n g t h e p e ri o d s c o v e r e d i n t h e c o n s o li d at e d fi n a n ci al s t at e m e n t s.

N a m e o f s u b s i d i a r y

R e l a ti o n s h i p t o t h e G r o u p

N a m e o f s u b s i d i a ry R e l a ti o n s h ip t o t h e G r o
T. H . I G r o u p L t d . (i n B . V. I.) S u b s i d i ar y c o m p a n y
G R E AT L I N E I N T E R N AT I O N A L L I M I T E D S u b s i d i ar y c o m p a n y
( G R E AT L I N E )
T. H . I G r o u p Vi et n a m C o ., L t d . S u b s i d i ar y c o m p a n y
T. H . I. G r o u p ( B a n g k o k ) C o m p a n y L i m i t e d S u b s i d i ar y c o m p a n y
Ta i w a n E x p r e s s L o g i sti c s C o ., Lt d . ( T E C ) S u b s i d i ar y c o m p a n y
T. H . I L o g i sti c s C o ., Lt d . S u b s i d i ar y c o m p a n y
T. H . I. G r o u p ( C a m b o d i a ) C o ., Lt d. S u b s i d i ar y c o m p a n y
T. H . I. G r o u p S i n g a p o r e P t e . Lt d. ( S i n g a p o r e ) S u b s i d i ar y c o m p a n y
T. H . I. & M a r u z e n C o . L t d . S u b s i d i ar y c o m p a n y
F r e s h B e a u t y E n t e r p ri s e s L t d. S u b s i d i ar y c o m p a n y
E a s t er n U n i o n H o l d i n g s Li m i t e d S u b s i d i ar y c o m p a n y
T- C u b e G l o b a l L o g i sti c s C o ., Lt d. S u b s i d i ar y c o m p a n y
T. H . I. G r o u p L i m it e d ( H K ) ( T. H . I. H K ) S u b s i d i ar y c o m p a n y
T. H . I. G r o u p ( S h a n g h ai ) Lt d . ( T. H . I. S h a n g h ai ) S u b s i d i ar y c o m p a n y
S h a n g h ai Ya o h w a I n t e r n atio n a l F o r w a r d e r C o ., Lt d. S u b s i d i ar y c o m p a n y
( S h a n g h ai Ya o h w a )
E x e r L o g i sti c s C o ., Lt d. S u b s i d i ar y c o m p a n y
Ta i w a n E x p r e s s ( H K ) C o ., L t d . ( T E C H K ) S u b s i d i ar y c o m p a n y
Ta i w a n E x p r e s s ( U S A ) I N C . S u b s i d i ar y c o m p a n y
T E C L o g i sti cs C o ., Lt d. S u b s i d i ar y c o m p a n y
T E C L O G I S T I C S ( U S A ) , IN C S u b s i d i ar y c o m p a n y
H i v i e w L o g i sti c s C o ., Lt d. S u b s i d i ar y c o m p a n y
T E C L o g i sti cs ( S h e n z h e n ) C o ., Lt d . S u b s i d i ar y c o m p a n y
W a i H u n g C a rg o Tr a n s p o rt C o ., Lt d . S u b s i d i ar y c o m p a n y
T. H . I. L o g i sti c s ( M a l a y s i a ) S D N . B H D S u b s i d i ar y c o m p a n y
P T D e x t e r E u r e k at a m a I n v e s t m e n t u n d e r e q u it y m et h o d
L O G I I n t e r n ati o n al C o ., Lt d . I n v e s t m e n t u n d e r e q u it y m et h o d
S h a n g h ai S h a n g ij u m I n t er n ati o n al L o g i sti c C o ., Lt d . I n v e s t m e n t u n d e r e q u it y m et h o d

241

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • ( c) T r a n s a cti o n s w it h k e y m a n a g e m e n t p e r s o n n e l

K e y m a n a g e m e n t p e r s o n n e l c o m p e n s ati o n c o m p r i s e d :

S h o r t -t er m e m p l o y e e b e n e f its
P o s t - e m p l o y m e n t b e n e fit s
S h a r e - b a s e d p a y m e n t s		 2 0 1 7
$ 1 0 , 3 7 2
2 1 1
-		 2 0 1 6
2 0 , 2 5 4
7 6 8
6 5
$
1 0 , 5 8 3		 2 1 , 0 8 7

  • ( d ) O t h e r r el at e d - p a rt y tr a n s a ct i o n s

  • (i) R e v e n u e

T h e S i g n i fi c a n t o p e r ati n g in c o m e o f t h e C o m p a n y a n d its o u t st a n d i n g b al a n c e ar e a s f o ll o w s :

T.H.I. Group (Shanghai) Ltd. (T.H.I.
Shanghai)
Taiwan Express Logistics Co., Ltd.
(TEC)
Other subsidiaries
Subsidiary		 R e v e n u e
2 0 1 6

36,455

8,376

13,851		 A c c o u n t s r e c e i v a b l e
D e c e m b e r
3 1, 2 0 1 6

36,455

3,777

6,288
2 0 1 7
$ 34,662
8,104
12,201		 D e c e m b e r
3 1, 2 0 1 7
34,662
4,355
6,709

$
5 4 , 9 6 7

5 8 , 6 8 2
4 5 , 7 2 6

4 6 , 5 2 0

T r a d i n g t er m s o f t h e a b o v e tr a n s a cti o n s r e q u i r e p a y m e n t s w it hi n 3 0 t o 6 0 d a y s o r d e p e n d i n g o n t h e f u n d i n g n e e d s .

  • (ii) O t h e r p a y a b l e s
T. H . I. G r o u p ( S h a n g h ai ) Lt d . ( T. H . I S h a n g h ai )
O t h e r s u b si di a ri e s
S u b s i d i ar y		 D e c e m b e r 3 1 ,
2 0 1 7
$ 8 0 , 1 4 0
1 9 , 2 6 4		 D e c e m b e r 3 1 ,
2 0 1 6
8 0 , 1 4 0
1 9 , 2 6 4

$
9 9 , 4 0 4
9 9 , 4 0 4

A m o u n t s r e c ei v e d o n b e n e f it o f s u b s i d i ar y.

242

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

(iii) L o a n s t o s u b s i di ar y

T h e C o m p a n y ’ s l o a n s t o s u b s i di ar y a n d i nt er e st i n c o m e a r e a s f o ll o w :

Ta i w a n E x p r e s s L o g i sti c s C o ., Lt d . ( T E C )
O t h e r s u b si di a ri e s
L o a n s t o s u b s i di ar y
I n t er e st i n c o m e (r e c o r d e d in o t h e r i n c o m e )		 D e c e m b e r 3 1 ,
2 0 1 7
$ 1 0 0 , 0 0 0
-		 D e c e m b e r 3 1 ,
2 0 1 6

2 0 0 , 0 0 0
4 , 8 5 5
$
1 0 0 , 0 0 0

2 0 4 , 8 5 5

2 0 1 7
$
2 , 1 5 2

2 0 1 6

2 , 6 8 2

T h e C o m p a n y ’ s l o a n a n d r el ati o n s h i p ar e a c c r u e d a s t h e a v e r a g e i nt er e s t r at e o f t h e s h o rt -t er m b o rr o w i n g s o f th e fi n a n ci al i n stit uti o n s i n th e c u r r e n t y e a r, a n d ar e u n s e c u r e d l o a n s, a n d n o b a d d e b t s ar e r e q u i re d a ft er t h e a s s e s s m e n t.

(i v) R e n t In c o m e (r e c o r d e d i n o t h e r i n c o m e )

S u b s i d i ar y 2 0 1 7
$
3 , 5 6 4		 2 0 1 6
3 , 5 6 4

I n c o m e fr o m o ffi c e r e n t al t o s u b s i di ar y, t h e r e n t is b a s e d o n t h e m a r k et p ric e a n d b e i n g c o ll e ct e d m o n t h l y.

( 8 ) P l e d g e d a s s e t s :

P l e dg e d a s s e t s O bj e c t D e c e m b e r 3 1 ,
2 0 1 7		 D e c e m b e r 3 1 ,
2 0 1 6

1 7 6 , 5 5 3

2 , 1 7 6
P r o p e r t y, p l a n t, a n d e q u i p m e n t
O t h e r fi n a n ci al a s s et s －n o n - c u rr e n t		 S h o r t -t er m / l o n g -t er m
c r e d it f a cilit y a n d b a n k
g u a r a n t e e s
L o g i sti c s -r el at e d
g u a r a n t e e s		 $ 1 7 5 , 4 9 0
4 2 6
$
1 7 5 , 9 1 6


1 7 8 , 7 2 9

( 9 ) C o m m i t m e n t s a n d c o n ti n g e n c i e s :

( a) T h e s u b - s u b s i d i ar y c o m p a n y T . H . I G r o u p ( S h a n g h ai ) Lt d. r e c ei v e d a n o tifi c ati o n i n 2 0 1 6 fr o m t h e c o u rt r e g a r d i n g a cli e n t cl a i m i n g t h e d a m a g e o f C N Y $ 4 , 2 1 2 t h o u s a n d s f o r its l o s s o n c a r g o . A s o f t h e r e p o rti n g d at e, t hi s c a s e w a s still p r o g r e s s. T h e G r o u p d i d n o t a c c r u e a n y p r o v i si o n f o r t hi s c a s e b a s e d o n its a s s e s s m e n t.

243

T 3 E X G L O B A L H O L D I N G S C O R P .

N o t e s t o t h e Fi n a n c i a l S t a t e m e n t s

  • ( b ) T h e s u b - s u b s i di a r y o f t h e C o m p a n y, T ai w a n E x p r e s s L o g i sti c C o ., Lt d ., r e c ei v e d a n o tifi c ati o n f r o m t h e c o u rt st ati n g t h at a cli e n t cl ai m e d a l o s s o n st o c k d a m a g e o f t h e C o m p a n y a m o u n t t o U S D 1 , 2 0 7 t h o u s a n d s . A s o f t h e r e p o rt i n g d at e, t hi s c a s e is still i n p r o g r e s s; t h er ef o r e, b a s e d o n a s s e s s m e n t, t h e C o m p a n y d i d n o t a c c r u e a n y p r o vi si o n f o r t hi s c a s e.

  • ( c) P r o m i s s o r y n o t e s is s u e d t o t h e b a n k a s c o ll at er al f o r s h o r t -t er m b a n k b o r r o w i n g s , l o g i sti c s b u si n e s s , et c., w e r e a s f o ll o w s .

P r o m i s s o r y n o t e s D e c e m b e r 3 1 ,
2 0 1 7
$
8 8 0 , 0 0 0		 D e c e m b e r 3 1 ,
2 0 1 6
5 2 0 , 0 0 0

( 1 0 ) L o s s e s D u e t o M a j o r D i s a s t e r s : N o n e.

( 1 1 ) S u b s e q u e n t E v e n t s :

  • ( a) A c c o r d i n g t o t h e a m e n d m e n t s t o t h e " I n c o m e T a x A c t " e n a ct e d b y t h e o f fi c e o f th e P r e s i d e n t o f t h e R e p u b li c o f C h i n a ( T ai w a n ) o n F e b r u a r y 7, 2 0 1 8 , a n in c r e a s e i n t h e c o r p o r at e i n c o m e t a x r at e fr o m 1 7 % t o 2 0 % i s a p p li c a b l e u p o n fili n g t h e c o r p o r at e in c o m e t a x r et u r n c o m m e n ci n g F Y 2 0 1 8 . T h i s i n c r e a s e d o e s n o t aff e ct t h e a m o u n t s o f t h e c u r r e n t o r d e f er r e d i n c o m e t a x e s r e c o g n i z e d o n D e c e m b e r 3 1 , 2 0 1 7 . H o w e v e r, it w i ll in c r e a s e t h e G r o u p ’ s c u r r e n t t a x c h a r g e a c c o r d i n g l y i n t h e f u t u r e.

  • ( b ) I n M a r c h 2 0 1 8 , T h e S u b -s u b s i di a r y c o m p a n y T . H . I. G r o u p ( S h a n g h ai ) Lt d . si g n e d a str at e g i c fr a m e w o r k c o o p e r ati o n a g r e e m e n t w it h C h i n a st o c k list e d c o m p a n y T r a n s f e r G r o u p ’ s ( S t o c k C o d e : 0 0 2 0 1 0 ) s u b si di a r y L o g i sti c s p l at f o r m - E h u o d i Lt d. T h e a g r e e m e n t d e fi n e s t h e T . H . I G r o u p ( S h a n g h ai ) p r o vi d e s i nt er n ati o n al l o g i sti c s s er vi c e s, a n d E h u o d i L t d p r o v i d e s e n d - o f - cit y d eli v e r y s e r vi c e s i n C h i n a. T h r o u g h a str at e g i c alli a n c e b et w e e n t h e t w o p a rti e s, it p r o vi d e s m o r e c o m p l e t e c r o s s - b o r d e r s u p p l y c h ai n s e r vi c e s.

( 1 2 ) O t h e r :

T h e p e r s o n n e l c o st a n d d e p r e ci ati o n a n d a m o r ti z ati o n e x p e n s e s, c at e g o ri z e d b y f u n cti o n , w e r e a s f o ll o w s .

P e r s o n n e l c o st 2 0 1 7 2 0 1 7 2 0 1 7 2 0 1 6 2 0 1 6 2 0 1 6
O p e r a t i n g
c o s t s		 O p e r a t i n g
e xp e n s e s		 To t a l O p e r a t i n g
c o s t s		 O p e r a t i n g
e xp e n s e s		 To t a l
S a l a ri e s
L a b o r a n d h e alt h i n s u r a n c e
P e n s i o n
O t h e r s
D e p r e ci ati o n e x p e n s e s
A m o r ti z ati o n e x p e n s e s		 4 6 , 3 3 7
2 , 4 5 2
1 , 6 6 8
1 , 1 9 6
5 , 6 1 5
2 , 7 8 8
-
-
-
-
-
-		 4 6 , 3 3 7
2 , 4 5 2
1 , 6 6 8
1 , 1 9 6
5 , 6 1 5
2 , 7 8 8
4 1 , 5 4 7
3 , 0 1 7
2 , 1 2 2
1 , 5 2 2
6 , 1 2 0
4 , 0 4 9
-
-
-
-
-
-		 4 1 , 5 4 7
3 , 0 1 7
2 , 1 2 2
1 , 5 2 2
6 , 1 2 0
4 , 0 4 9

I n 2 0 1 7 a n d 2 0 1 6 , t h e a v e r a g e n u m b e r o f e m p l o y e e s w e r e 2 8 a n d 3 3 , r e s p e cti v el y.

244

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP. Notes to Consolidated Financial Statements

(13) Other disclosures:

  • (a) Information on significant transactions:

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers ” for the Group:

  • (i) Loans to other parties:
No
(Note 1)		 Name of
lender		 Name of
borrower		 Account
name		 affiliates Highest
balance
during the
period		 Balance
as of
December
31, 2016
(Note 4)
Appropriated
credit as of
December 31,
2016		 Range of
interest
rates during
the period
Type of
financing
(Note 2)		 Transaction
amounts		 Purpose
of fund
financing of
the
borrower
Allowance
for bad debt		 Guarantee Guarantee Guarantee Guarantee
Item Value
0
4
4		 The
Company
T.H.I. Group
(Shanghai)
Ltd.
T.H.I. Group
(Shanghai)
Ltd.
Taiwan
Express
Logistic Co.,
Ltd.


EXer
Logistics Co.,
Ltd.


Shanghai
Shangijum
International
Logistic Co.,
Ltd.


Other
receivables-
related
patties


Other
receivables-
related
patties




Other
receivables-
related
patties


Yes



Yes



Yes		 270,000
40,888
3,645
270,000

27,336

3,645
100,000

2,278

-
Quarterly
changes in
interest rates
0.05%
4.35

2
2
2		 -
-
-		 Trading
turnover
Trading
turnover
Trading
turnover
-

-

-		 -
-
-		 459,067
183,267
183,267
911,789

366,534

366,534

Note 1: The numbers indicated above represent the following: 0 for investor, 1 to 4 for investee.

Note 2:: Nature of lending: 1 for counterparties with transactions, and 2 for short-term operating capital.

Note 3: The ceiling on total loans granted by the Company to all parties is 40% of the net assets in the financial statements; the ceiling on total loans granted by the Company to each entity is 20% of the net assets in the financial statements.

Note 4: Ending facility balance approved by BOD.

  • (ii) Guarantees and endorsements for other parties:
No. Endorsemen
t/guarantee
Provider		 Counter-party/
guarantee receiver		 Counter-party/
guarantee receiver		 Limit of
guarantee/
endorsement
amount for
receiving pary

Maximum
balance		 Ending
balance		 Actual amount
used
Property
Endorsement
and guarantee
secured by
assets		 Percentage of
accumulated


guarantee
amount to net
assets value from
the latest
financial
statement
Limit of total
guarantee/
endorsement
amount		 Classified as
endorsement
and guarantee
to subsidiary
by parent
company		 Classified as
endorsement


and
guarantee to
parent
company by
parent
subsidiary		 Classified as
endorsement
and
guarantee to
companies in
Mainland
China
Name Relation
0
0
0
0
4
2
2
The
Company

The
Company

The
Company

The
Company
T.H.I. Group
(Shanghai)
Ltd.

Shanghai
Yaohwa
International
Forwarder
Co., Ltd.

Shanghai
Yaohwa
International
Forwarder
Co., Ltd.
Shanghai
Yaohwa
International
Forwarder
Co., Ltd.

T.H.I. Group
(Shanghai)
Ltd. (T.H.I.
Shanghai)

Exer Logistics
Co., Ltd

T Cube Global
Logistics Co.,
Ltd.


Exter
Logisitcs Co.,
Ltd.




T.H.I. Group
(Shanghai)
Ltd.




Exter Logistic
Co., Ltd.		 2



3

3


3


2


3

3		 455,895
455,895
455,895
455,895
183,267
11,313
11,313
27,911

91,470

62,887

53,951

13,721

3,256

9,147
27,336

45,560

22,780

27,336

13,668

3,189

9,112
-

-

11,390

24,029

-

1,919

-		 -
-

-

-
-

-
-		 1.20%
2.00%
1.00%
1.20%
1.49%
2.82%
8.05%
911,789

911,789

911,789

911,789

366,534

45,251

45,251
Y

Y

Y

Y

Y

N

N		 N
N
N
N
N
N
N		 Y
Y
Y
Y
Y
Y
Y

Note 1: The numbers indicated above represent the following: 0 for investor, 1 onwards for investee

245

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP.

Notes to Consolidated Financial Statements

Note 2: The relationship between the guarantee provider and the receiver is as follows:

(1)The Company has transactions with its counterparties.

(2)The Company holds more than 50% of common shares of its subsidiary.

(3)The Company and its subsidiaries hold more than 50% of common shares of the investee company.

(4)The parent company holds more than 50% of its outstanding common shares (directly or indirectly) through a subsidiary.

(5)Companies within the same architectural field have signed a contractual agreement to provide mutual endorsements/ guarantees for the need of a specific construction project.

(6)The shareholders provide endorsements and/or guarantees for their mutually invested company in proportion to their shareholding percentage.

Note 3: (1)Total guarantees amount should not exceed 40% of the Company’s net assets in the financial statements if the following conditions are met:

Ownership of the Company should exceed 50%:

Guarantee amount should not exceed 20% of the Company’s net assets

Ownership of the Company should not exceed 50%:

Guarantee amount should not exceed 20% of the Company’s net assets

The net assets stated above refer to the net assets from the Company’s most recently audited financial statements.

(2) Apart from the conditions listed above, guarantees for the purpose of business relations should not exceed the total amount of business transactions between the two parties, whichever is lower. The definition of business transactions could either be purchases or sales, whichever is higher.

  • (iii) Securities held as of December 31, 2017 (excluding investment in subsidiaries, associates and joint ventures):
Company’s m Category and
Types and issuer of
marketable securities
Nature of the
relationship		 Account name Endingbalance Endingbalance Endingbalance Endingbalance Notes
Number
of shares		 Book value Ownership% Fair value
The Company

The Company

The Company

The Company

The Company

The Company
 Fund
Yuanta Wan Tai
Fund
StockSoonest.
Express Co., Ltd.
StockChailease
Holding Company
Limited
StockYang Ming
Marine Transport
Crop.
StockYang Ming
Marine Transport
Crop.
StockDimerco
Express Corporation		 -


-

-

-

-

-
 Financial assets at
fair value through
profit or loss－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
non-current
Available-for-sale
financial assets－
current
Available-for-sale
financial assets－
current		 473,454
447,000
200,000
10,000,000
7,675,577
334,000
7,131

14,215

17,320

92,400

88,269

7,014
-
%

1.70%

0.02%

0.43%

0.33%

0.26%
7,131

14,215

17,320

92,400

88,269

7,014



(note1)

Note 1: due to lack of market information, will not include in this report

  • (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

  • (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:None

246

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP.

Notes to Consolidated Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company
which has
accounts
receivable
Counterparty		 Relationship Ending balance
of accounts
receivable
(in thousands)		 Turnover Past-due receivables
from relatedparty		 Past-due receivables
from relatedparty		 Received
subsequently
(in thousands)		 Allowance for
bad debt
Amount method
T.H.I. Group
(Shanghai) Ltd.
T.H.I. Group Limited
(HK)
Parent company
 Other receivables
304,230
-		 - -
(Note) 1)
-

(ix) Trading in derivative instruments:Please refer to notes 6(b) & (j).

(b) Information on investees:

Relevant information about reinvestment for 2016 is as follows:

(In Thousands of New Taiwan Dollars)

Investor Investee Location Main Businesses and
Products		 Investment Amount Investment Amount Balance as of December 31,2017 Balance as of December 31,2017 Balance as of December 31,2017 Balance as of December 31,2017 Balance as of December 31,2017 Balance as of December 31,2017

December 31,2017 December 31,2016 Shares Percentage of
Ownership		 Carrying
value
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
GREATLINE
INTERNATI
ONAL
LIMITED
Fresh Beauty
Enterprises
Ltd.
TEC
TEC
TEC
TEC
TEC
TEC		 T.H.I. Group Ltd.(in B.V.I)
Greatline International
Limited (Greatline)
T.H.I Group Vietnam Co.,
Ltd.
T.H.I. Group (Bangkok)
Co., Ltd.
T.H.I. & Maruzen Co., Ltd.
Taiwan Express Logistic
Co., Ltd. (TEC)
T.H.I. Logistics Co. Ltd.
T.H.I. Group (Cambodia)
Co., Ltd.
PT. Dexter Eurekatama
T.H.I. Group Singapore
Pte. Ltd. (Singapore)
LOGI International Co.,
Ltd.
Fresh Beauty Enterprises
Ltd. (Fresh Beauty)
T.H.I. Logistics (Malaysia)
SDN. BHD


T.H.I. Group Limited (HK)
(T.H.I. HK)

Eastern Union Holdings
Limited (Eastern Union)
Taiwan Express (HK) Co.,
Ltd. (TEC HK)
TEC Logistic Co., Ltd.
Orient Air General Sales
Agent Co., Ltd.
Hiview Logistics Co., Ltd.
Taiwan Express (USA),
Inc.
TEC LOGISTICS (USA),
INC.		 British Virgin Islands
British Virgin Islands
Vietnam
Thailand
Japan
Taiwan
Taiwan
Cambodia
Indonesia
Singapore
Korea
Samoa
Malaysia
Hong Kong
Hong Kong
Hong Kong
Taiwan
Taiwan
Taiwan
United States
United States		 Offshore settlement
center
Offshore holding
company
Air & sea freight
forwarding and
packaging
Air & sea freight
forwarding and
packaging
Air & sea freight
forwarding
Air & sea freight
forwarding and customs
clearance
Air & sea freight
forwarding
Air & sea freight
forwarding
Air & sea freight
forwarding
Air & sea freight
forwarding
Air & sea freight
forwarding
Offshore holding
company
Air & sea freight
forwarding
Air & sea freight
forwarding
Offshore holding
company
Freight forwarding,
customs clearance, and
distribution
Freight forwarding,
customs clearance, and
delivery services
Freight forwarding,
customs clearance, and
delivery services
Freight forwarding,
customs clearance, and
distribution
Freight forwarding,
customs clearance, and
distribution
Freight forwarding,
customs clearance, and
distribution
35,000
(USD1,000)

134,428
(USD4,050)


8,362
(USD275)


2,372
(USD72)

10,365
(JPY31,130)


704,200

130,000

4,462
(USD150)

47,381
(USD1,598)

19,032
(USD850)

9,666
(USD300)

282,775
(CNY55,579)

10,381
(USD315)

139,948
(USD4,314)

57,411
(HKD1,751)


266,807
(HKD70,550)


6,000


600


76,590


31,629
(USD1,000)


8,549
(USD290)

35,000
(USD1,000)


134,428
(USD4,050)


4,862
(USD159)


2,372
(USD72)


10,365
(JPY31,130)

704,200

130,000


4,462
(USD150)


47,381
(USD1,598)


7,629
(USD320)


9,666
(USD300


282,775
(CNY55,579)


10,381
(USD315)


139,948
(USD4,314)


57,411
(HKD1,751)


266,807
(HKD70,550)

6,000

600

76,590


31,629
(USD1,000)


8,549
(USD290)
1,000,000

4,050,000

4,950,000,000


-

3,060

35,958,400

13,000,000

-

12,000

850,000

16,285


60

180,000
12,480,000

-

-

1,000,000

60,000

5,000,000

100,000


200
100.00%

100.00%

99.00%
49.00%

51.00%

100.00%

100.00%
100.00%

30.00%

91.40%

30.00%

60.00%

90.00%

100.00%
100.00%
100.00%

100.00%

30.00%

97.51%

100.00%

100.00%
74,501

1,468,332

60,231

14,246

14,574

715,018

141,567

8,144

45,532

12,932

6,001

323,427

5,406

1,466,949

147,221

329,195

-

2,755

103,401

33,501

12,924
3,962

165,604

11,045

4,027

6,105

36,879

7,972

47

(390)

870

(2,686)

37,397

(1,356)

166,034

37,621

4,891
-

4,556

22,251

-

-
3,962

165,604

5,633

1,973

3,113

30,879

7,972

47

(3,241)

859

(806)

20,131

(1,221)

166,034

37,621

4,891
-

1,367

21,697
-
-		 Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries

Investment
under equity
method
Subsidiaries

Investment
under equity
method
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries

Investment
under equity
method
Subsidiaries
Subsidiaries
Subsidiaries

247

(English Translation of Financial Report Originally Issued in Chinese) T3EX GLOBAL HOLDINGS CORP. Notes to Consolidated Financial Statements

  • (c) Information on investment in mainland China

  • (i) Name, major operations and related information of investee in Mainland China:

(In Thousands of New Taiwan Dollars)

Names of
PRC investee
companies		 Major
operations		 Amounts of
paid-in capital
(in thousands)		 Method of
investment		 Investment
transferred from

Taiwan,
beginning
of period
(in thousands)		 Year ended December
31,2014		 Year ended December
31,2014		 Investment

transferred from
Taiwan, end of
period
(in thousands)
Investee net
income		 Direct and

indirect
shareholding
percentage by
the Company		 Current gains

or losses on
investment
recognized
(in thousands)
Carrying
value of
investment, end
of period
(in thousands)
Repatriated
gains on
investment,
end ofperiod
Remittance
Repatriation
Shanghai
Yaohwa
International
Forwarder Co.,
Ltd.
T.H.I. Group
(Shanghai) Ltd.
Shanghai
Shangijum
Internaional
Logsitic Co.,
Ltd.
T-Cube Global
Logistics Co.,
Ltd.
EXer Logistics
Co., Ltd.
TEC Logistics
(Shenzhen) Co.,
Ltd.
Air & sea
freight
forwarding
and customs
clearance

Air & sea
freight
forwarding
and customs
clearance




Warehousing
and logistics


Warehousing
and company

Express
logistics
company


Freight
forwarding,
customs
clearance, and
distribution



55,031
(USD1,700)




92,883
(USD3,060)

22,460
CNY5,000

54,610
(CNY11,000)


52,107
(CNY11,123)




183,901
(HKD48,550)

Note 1


Note 1


(1)


Note 1


Note 5


Note 6
55,031
(USD1,700)

84,861
(USD2,600)
-

204,388
(USD6,185)

-
183,901
(HKD48,550)

-


-
-


39,358
(USD1,178)
-


-		 -
-
-


-
-
-		 55,031
(USD1,700)
84,861
(USD2,600)
-
243,746
(USD7,363)
-
183,901
(HKD48,550)

5,668


57,275
(588)


37,621
(63,602)


3,094
100.00%

100.00%

30.00%

60.00%

88.94%

100.00%		 5,668
57,275
3,239
37,621
(86,096)
3,094
113,353

943,537

12,280

147,229

61,163

158,338
-

-

-

-

-

-
  • (ii) Limitation on investment in Mainland China:
Cumulative remittance from Taiwan, end of
the period (Note3)
Amount of investment approved by the
Investment Commission, Ministry of
EconomicAffairs (Note4)
Limit on the amount of investment in
Mainland China
390,168
( 11,863USD thousand)		 436,428
( 14,660USD thousand)		 1,367,684

Note 1: Investment in Mainland Chain via remittance through a third region.

Note 2: The investment gains or losses under the same period that have been recorded based on the investees’ audited financial statements.

Note 3: The actual amount invested by the Company in Mainland Chain at the end of this period.

Note 4: At the reporting date, the exchange between USD and TWD rate was 1:29.77.

Note 5: T.H.I. Group (Shanghai) Ltd. directly invested in EXer Logistics Co., Ltd.

  • Note 6: The Company’s subsidiary, Taiwan Express Logistic Co., Ltd., invested in Mainland China via remittance through a third region. The upper limit of the investments is 60% of Taiwan Express Logistic Co., Ltd.’s net assets in the financial statements based on the “REGULATIONS GOVERNING THE APPROVAL OFINVESTMENT OR TECHNICAL COOPERATION INMAINLAND CHINA” and have been approved by the Investment Commission Ministry of Economic Affairs amounting to $183,901 thousand (HKD48,550 thousand).

  • (iii) Significant transactions:

(14) Segment information:

Please refer to the consolidated financial statements for the years ended December 31, 2017.

248

Representation Letter

T h e e n titi es t h at ar e r e q u i r e d t o b e i n cl u d e d i n t h e c o m b i n e d fi n a n ci al stat e m e n t s o f T 3 E X G L O B A L H O L D I N G S C O R P. a s o f a n d f o r t h e y e a r e n d e d D e c e m b e r 3 1 , 2 0 1 7 u n d e r t h e C rit eri a G o v e r n i n g t h e P r e p a r ati o n o f A ffili ati o n R e p o rt s, C o n s o li d at e d B u s i n e s s R e p o rt s, a n d C o n s o li d at e d Fi n a n ci al St at e m e n t s o f A f f ili at e d E n t er p ri s e s ar e t h e s a m e a s t h o s e i n cl u d e d i n t h e c o n s o li d at e d fi n a n ci al st at e m e n t s p r e p a r e d i n c o n f o r m i t y w it h I n t er n ati o n a l Fi n a n ci al R e p o rti n g St a n d a r d s N o . 1 0 e n d o r s e d b y t h e Fi n a n ci al S u p e r v i s o r y C o m m i s s i o n. I n a d d iti o n , t h e i n f o r m a ti o n r e q u i r e d to b e di s cl o s e d i n t h e c o m b i n e d fi n a n ci al st at e m e n ts i s i n cl u d e d i n t h e c o n s o li d at e d fi n a n ci al st at e m e n t s. C o n s e q u e n tl y, T 3 E X G L O B A L H O L D I N G S C O R P. a n d it s S u b s i d i ari e s d o n o t p r e p a r e a s e p a r at e s et o f c o m b i n e d fi n a n ci al st at e m e n t s.

C o m p a n y n a m e : T 3 E X G L O B A L H O L D I N G S C O R P. C h a i r m a n : D a v i d Ye n D a t e : M a r c h 2 6 , 2 0 1 8

249

More from T3EX

Declaration of Voting Results & Voting Rights Announcements 2026
Jun 5
Regulatory Filings 2026
Jun 3
Investor Presentation 2026
May 22
Investor Presentation 2026
May 22
Report Publication Announcement 2026
May 22
Regulatory Filings 2026
May 20
Regulatory Filings 2026
May 15
Interim / Quarterly Report 2026
May 15
Regulatory Filings 2026
May 15
Interim / Quarterly Report 2026
May 14
View all filings →