Taiwan Acceptance Corporation and Subsidiaries
Transcript of Taiwan Acceptance Corporation and Subsidiaries
Taiwan Acceptance Corporation and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2017 and 2016 and Independent Auditors’ Report
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DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES
The entities required to be included in the combined financial statements in accordance with the “Criteria
Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial
Statements of Affiliated Enterprises” as of and for the year ended December 31, 2017 are the same as
those included in the consolidated financial statements prepared in conformity with International
Financial Reporting Standard 10 “Consolidated Financial Statements.” Relevant information that should
be disclosed in the combined financial statements has all been disclosed in the consolidated financial
statements. Consequently, we have not prepared a separate set of combined financial statements.
Very truly yours,
TAIWAN ACCEPTANCE CORPORATION
By:
KUO-RONG CHEN
Chairman
March 26, 2018
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The descriptions of key audit matters of 2017 consolidated financial statement are as follows:
Estimated Impairment of Trade Receivable
As described in Note 5 to the accompanying consolidated financial statements, the determination of estimated
impairment of trade receivable takes into consideration the present value of estimated future cash flows forecast
by management based on foreseeable economic status. This is determined to be material to the financial
statements as a whole and involves significant management judgment; thus, this is determined as a key audit
matter. As of December 31, 2017, allowance for impairment loss of trade receivables was NT$2,495,848
thousand, representing 2.67% of total trade receivables; impairment loss of trade receivables recognized in the
consolidated statements of comprehensive income for the year ended December 31, 2017 was NT$1,429,980
thousand, representing 22.59% of operating expenses.
Our audit procedures included:
1. We understood the policies on impairment of trade receivable and assessed the reasonableness of
impairment of receivables by performing inquiry, inspection and re-performance of related internal
controls.
2. We involved our IT specialists in testing the system that generated trade-receivable related documents used
by management in performing controls.
3. We performed analytical procedures on current and prior years’ receivable balances and write-offs of
allowances for impairment to assess the reasonableness of the recognized impairment loss.
4. We assessed the data and model used in the estimation of receivable impairment, including collection of
impaired receivables and discount rates.
5. We calculated the impairment based on the impairment policy of the Group.
Calculation of Interest Revenue from Acquired Accounts Receivable
As described in Note 4 to the accompanying consolidated financial statements, interest revenue from acquired
accounts receivable consists of small amounts from a large number of debtors; interest revenue is recognized
throughout the periods of individual receivable acquisition contracts using effective interest rates. Contracts
involve various contract periods, principal amounts and interest rates, resulting in large data processing and
complex calculation. Thus, we determined calculation of interest revenue from acquired accounts receivable
as a key audit matter. For the year ended December 31, 2017, interest revenue recognized from acquired
accounts receivable was NT$3,888,908 thousand, representing 19.96% of operating revenue.
Our audit procedures included:
1. We involved our IT specialists in the evaluation of IT general control environment and logic of accounts
receivable interest revenue calculation system used by management.
2. We calculated interest revenue from acquired accounts receivable using effective interest rate to assess the
reasonableness of recognized revenue.
3. We performed analytical procedures using the ratio of the balances of receivables acquired to the
recognized interest revenue of current and prior years to assess the reasonableness of recognized revenue.
Other Matter
We have also audited the parent company only financial statements of the Company as of and for the years
ended December 31, 2017 and 2016 on which we have issued an unmodified opinion.
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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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and
International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC
Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial
Supervisory Commission of the Republic of China, 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 the audit committee, are responsible for overseeing the Group’s
financial reporting process.
Auditors’ 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 auditors’ 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 the auditing standards generally accepted in the Republic of China, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess 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. Conclude on 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 conclude that a
material uncertainty exists, we are required to draw attention in our auditors’ 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 auditors’ report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
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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.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision, and performance of the group audit. We remain solely
responsible for our audit opinion.
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 for the year ended December 31, 2017
and are therefore the key audit matters. We describe these matters in our auditors’ 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 Hsin-Wei Tai and
Yu-Wei Fan.
Deloitte & Touche
Taipei, Taiwan
Republic of China
March 26, 2018
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial
position, financial performance and cash flows in accordance with accounting principles and practices
generally accepted in the Republic of China and not those of any other jurisdictions. The standards,
procedures and practices to audit such consolidated financial statements are those generally applied in the
Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial
statements have been translated into English from the original Chinese version prepared and used in the
Republic of China. If there is any conflict between the English version and the original Chinese version or any
difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and
consolidated financial statements shall prevail.
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
ASSETS Amount % Amount %
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6) $ 2,861,100 2 $ 2,397,020 2
Financial assets at fair value through profit or loss - current (Notes 4 and 7) 19,728 - 11,155 -
Available-for-sale financial assets - current (Notes 4 and 8) - - 19,088 -
Debt investments with no active market - current (Notes 4, 11 and 33) 811,813 1 640,631 1
Notes and trade receivables from unrelated parties (Notes 4, 12 and 33) 90,033,859 66 74,041,648 67
Notes and trade receivables from related parties (Notes 4, 12 and 32) 1,107,904 1 524,052 1
Finance lease receivables (Notes 4 and 13) 17,952,213 13 12,648,089 11
Other receivables 478,477 1 466,415 -
Inventories (Notes 4 and 14) 452,006 - 252,489 -
Prepayments (Notes 4 and 32) 3,126,277 2 2,643,786 2
Other current assets (Note 32) 152,037 - 135,080 -
Total current assets 116,995,414 86 93,779,453 84
NON-CURRENT ASSETS
Held-to-maturity financial assets - non-current (Notes 4 and 9) 16,632 - 17,095 -
Debt investment with no active market - non-current (Notes 4, 11 and 33) 3,551 - 3,854 -
Investments accounted for using equity method (Notes 4 and 16) 261,461 - 237,281 -
Property, plant and equipment (Notes 4 and 17) 17,203,207 13 15,542,679 14
Intangible assets (Notes 4 and 18) 249,012 - 234,249 -
Deferred tax assets (Notes 4 and 26) 542,044 - 457,671 1
Long-term finance lease receivables (Notes 4 and 13) 948,688 1 1,019,284 1
Other non-current assets 93,523 - 103,309 -
Total non-current assets 19,318,118 14 17,615,422 16
TOTAL $ 136,313,532 100 $ 111,394,875 100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 19) $ 37,290,248 27 $ 29,139,641 26
Short-term bills payable (Note 19) 63,867,603 47 52,438,927 47
Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) - - 1,145 -
Derivative financial liabilities for hedging - current (Notes 4 and 10) 201 - - -
Notes and trade payables to unrelated parties 609,271 - 330,654 -
Notes and trade payables to related parties (Note 32) 838,321 1 526,326 1
Other payables 1,342,354 1 1,077,291 1
Current tax liabilities (Notes 4 and 26) 378,364 - 290,177 -
Provisions - current (Notes 4 and 21) 295,236 - 334,057 -
Current portion of long-term borrowings (Notes 4 and 19) 749,240 1 1,197,964 1
Bonds payable (Notes 4 and 20) 4,342,919 3 3,000,000 3
Guarantee deposits received 9,103,468 7 8,295,432 8
Other current liabilities 1,419,611 1 1,336,357 1
Total current liabilities 120,236,836 88 97,967,971 88
NON-CURRENT LIABILITIES
Long-term borrowings (Note 19) 1,199,177 1 748,936 1
Deferred tax liabilities (Notes 4 and 26) 765,878 1 693,913 -
Deferred revenue - non-current 416 - 4,012 -
Net defined benefit liabilities (Notes 4 and 22) 104,765 - 86,503 -
Total non-current liabilities 2,070,236 2 1,533,364 1
Total liabilities 122,307,072 90 99,501,335 89
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 23)
Capital stock 2,746,292 2 2,746,292 3
Capital surplus 2,541,960 2 2,541,960 2
Retained earnings
Legal reserve 1,677,032 1 1,503,725 1
Special reserve 266,047 - 35,588 -
Unappropriated earnings 3,682,666 3 3,096,921 3
Total retained earnings 5,625,745 4 4,636,234 4
Other equity (312,040) - (230,459) -
Total equity attributable to owners of the Company 10,601,957 8 9,694,027 9
NON-CONTROLLING INTERESTS (Note 23) 3,404,503 2 2,199,513 2
Total equity 14,006,460 10 11,893,540 11
TOTAL $ 136,313,532 100 $ 111,394,875 100
The accompanying notes are an integral part of the consolidated financial statements.
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2017 2016
Amount % Amount %
OPERATING REVENUE (Notes 4, 24 and 32)
Rental revenue $ 7,182,730 37 $ 6,835,538 39
Sales 3,215,449 16 3,370,006 19
Interest revenue from acquired accounts receivable 3,888,908 20 3,355,585 19
Interest revenue from loan 602,090 3 4,240 -
Interest revenue from installment sales 1,282,701 7 1,037,527 6
Agency revenue 613,540 3 768,211 4
Interest revenue from capital leases 2,207,081 11 1,704,557 10
Other operating revenue 489,606 3 498,589 3
Total operating revenue 19,482,105 100 17,574,253 100
OPERATING COSTS (Notes 25 and 32)
Rental cost 6,200,521 32 5,904,802 33
Cost of goods sold 2,976,058 15 3,124,633 18
Financing cost 1,488,810 8 923,554 5
Other operating cost 166,615 1 105,731 1
Total operating costs 10,832,004 56 10,058,720 57
GROSS PROFIT 8,650,101 44 7,515,533 43
OPERATING EXPENSES (Notes 25 and 32) 6,331,461 32 5,581,747 32
OTHER OPERATING INCOME AND EXPENSES,
NET (Notes 25 and 32) 730,684 4 574,770 3
PROFIT FROM OPERATIONS 3,049,324 16 2,508,556 14
NON-OPERATING INCOME AND EXPENSES
Other gains and losses (Note 25) 6,789 - (326,190) (2)
Other income 137,625 1 105,835 1
Share of profit or loss of associates and joint
ventures (Notes 4 and 16) 18,386 - 15,509 -
Gain (loss) from financial assets and liabilities at fair
value through profit or loss (Notes 4 and 7) 1,218 - 1,711 -
Net gain (loss) on disposal of property, plant and
equipment 4,040 - 51 -
Total non-operating income and expenses 168,058 1 (203,084) (1)
(Continued)
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2017 2016
Amount % Amount %
PROFIT BEFORE INCOME TAX $ 3,217,382 17 $ 2,305,472 13
INCOME TAX EXPENSE (Notes 4 and 26) 688,101 4 467,835 2
NET PROFIT FOR THE YEAR 2,529,281 13 1,837,637 11
OTHER COMPREHENSIVE INCOME (Note 23)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans (19,706) - (10,350) -
Share of the other comprehensive income of
associates and joint ventures accounted for
using the equity method (370) - (948) -
Income tax relating to items that will not be
reclassified subsequently to profit or loss 3,260 - 1,673 -
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translating foreign
operations (126,497) (1) (470,486) (3)
Cash flow hedges (201) - 721 -
Share of the other comprehensive income of
associates and joint ventures accounted for
using the equity method 2,722 - (2,145) -
Other comprehensive income (loss) for the year,
net of income tax (140,792) (1) (481,535) (3)
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR $ 2,388,489 12 $ 1,356,102 8
NET PROFIT ATTRIBUTABLE TO:
Owners of the Company $ 2,324,227 12 $ 1,733,071 10
Non-controlling interests 205,054 1 104,566 -
$ 2,529,281 13 $ 1,837,637 10
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the Company $ 2,228,897 11 $ 1,401,088 8
Non-controlling interests 159,592 1 (44,986) -
$ 2,388,489 12 $ 1,356,102 8
(Continued)
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2017 2016
Amount % Amount %
EARNINGS PER SHARE (Note 27)
Basic $8.46 $6.41
Diluted $8.46 $6.32
The accompanying notes are an integral part of the consolidated financial statements. (Concluded)
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
Equity Attributable to Owners of the Company
Other Equity
Exchange Unrealized
Unregistered Differences on Gain (Loss) on Unrealized
Capital from Retained Earnings Translating Available-for- (Losses) Gains Non-
Bond Capital Special Unappropriated Foreign sale Financial of Cash Flow controlling
Capital Stock Conversion Surplus Legal Reserve Reserve Earnings Operations Assets Hedges Total Total Interests Total Equity
BALANCE, JANUARY 1, 2016 $ 2,672,883 $ 6,299 $ 2,236,636 $ 1,361,220 $ 35,588 $ 2,784,503 $ 95,083 $ (1,053) $ (721) $ 93,309 $ 9,190,438 $ 2,242,326 $ 11,432,764
Appropriation of 2015 earnings:
Legal reserve - - - 142,505 - (142,505) - - - - - - -
Cash dividends distributed by the Company - - - - - (1,269,933) - - - - (1,269,933) - (1,269,933)
Cash dividends distributed by the subsidiaries - - - - - - - - - - - (110,668) (110,668)
Other changes in capital surplus
Changes in capital surplus from investments in
associates and joint ventures accounted for by using
the equity method - - 1,017 - - - - - - - 1,017 (1,017) -
Change in non-controlling interests - - - - - - - - - - - 113,858 113,858
Net profit for the year ended December 31, 2016 - - - - - 1,733,071 - - - - 1,733,071 104,566 1,837,637
Other comprehensive income (loss) for the year ended
December 31, 2016, net of income tax - - - - - (8,215) (323,310) (1,179) 721 (323,768) (331,983) (149,552) (481,535)
Total comprehensive income (loss) for the year ended
December 31, 2016 - - - - - 1,724,856 (323,310) (1,179) 721 (323,768) 1,401,088 (44,986) 1,356,102
Unregistered capital converted to capital stock 6,299 (6,299) - - - - - - - - - - -
Convertible bonds converted to capital stock 67,110 - 304,307 - - - - - - - 371,417 - 371,417
BALANCE, DECEMBER 31, 2016 2,746,292 - 2,541,960 1,503,725 35,588 3,096,921 (228,227) (2,232) - (230,459) 9,694,027 2,199,513 11,893,540
Appropriation of 2016 earnings:
Legal reserve - - - 173,307 - (173,307) - - - - - - -
Special reserve - - - - 230,459 (230,459) - - - - - - -
Cash dividends distributed by the Company - - - - - (1,320,967) - - - - (1,320,967) - (1,320,967)
Cash dividends distributed by the subsidiaries - - - - - - - - - - - (128,367) (128,367)
Net profit for the year ended December 31, 2017 - - - - - 2,324,227 - - - - 2,324,227 205,054 2,529,281
Other comprehensive income (loss) for the year ended
December 31, 2017, net of income tax - - - - - (13,749) (84,343) 2,963 (201) (81,581) (95,330) (45,462) (140,792)
Total comprehensive income (loss) for the year ended
December 31, 2017 - - - - - 2,310,478 (84,343) 2,963 (201) (81,581) 2,228,897 159,592 2,388,489
Issuance of common stock of subsidiaries - - - - - - - - - - - 1,173,765 1,173,765
BALANCE, DECEMBER 31, 2017 $ 2,746,292 $ - $ 2,541,960 $ 1,677,032 $ 266,047 $ 3,682,666 $ (312,570) $ 731 $ (201) $ (312,040) $ 10,601,957 $ 3,404,503 $ 14,006,460
The accompanying notes are an integral part of the consolidated financial statements.
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax $ 3,217,382 $ 2,305,472
Adjustments for:
Interest income (8,647,375) (7,011,740)
Depreciation expenses 4,896,647 4,633,072
Impairment loss recognized on trade receivables 1,664,162 1,431,729
Finance costs 1,488,810 923,554
Net (gain) loss on foreign currency exchange (160,984) 88,478
Reversal of provisions (38,821) (93,115)
Share of profit of associates and joint ventures (18,386) (15,509)
Amortization expenses 16,740 14,507
Net gain (loss) on disposal of property, plant and equipment (4,040) (51)
Government grants revenue (3,596) (20,504)
Impairment loss recognized on assets leased to others 1,299 30,372
Gain on disposal of investments accounted for using equity
method - (1,094)
Changes in operating assets and liabilities
Financial assets at fair value through profit or loss (8,573) 10,259
Notes and trade receivables from unrelated parties (17,518,628) (14,342,706)
Notes and trade receivables from related parties (583,852) (180,608)
Other receivables (18,669) (11,541)
Inventories (199,517) 152,540
Prepayments (507,318) 227,148
Other current assets (16,957) (8,146)
Finance lease receivables (5,438,567) (3,511,859)
Other operating assets (40,007) (50)
Financial liabilities at fair value through profit or loss (1,145) (1,759)
Notes and trade payables to unrelated parties 278,617 41,616
Notes and trade payables to related parties 311,995 47,131
Other payables 150,616 78,650
Available-for-sale operating assets held for rental to others (6,488,767) (4,561,225)
Proceeds from guarantee deposits received 863,617 720,609
Other current liabilities 83,251 10,242
Net defined benefit liabilities 1,816 (36,128)
Deferred revenue 3 (494)
Cash used in operations (26,720,247) (19,081,150)
Interest received 8,508,294 6,951,624
Interest paid (1,448,373) (887,724)
Income tax paid (605,731) (383,267)
Net cash used in operating activities (20,266,057) (13,400,517)
(Continued)
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in debt investments with no active market $ (170,683) $ 2,372,294
Acquisition of property, plant and equipment (128,574) (112,131)
Decrease in refundable deposits 49,793 5,991
Proceeds from disposal of property, plant and equipment 43,092 41,882
Acquisition of intangible assets (32,532) (97,761)
Proceeds from sale of available-for-sale financial assets 18,497 13,022
Acquisition of associates investment accounted for using equity
method (10,812) (8,746)
Dividend received 7,265 6,556
Net cash (outflow) inflow on acquisition of subsidiaries (1,235) 6,612
Net cash (used in) generated from investing activities (225,189) 2,227,719
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term bills payable 11,505,000 5,975,000
Proceeds from short-term borrowings 8,403,609 6,482,441
Dividends paid (1,449,334) (1,380,601)
Proceeds from issue of bonds payable 4,341,475 -
Repayments of bond payables (3,000,000) -
Proceeds from long-term borrowings 1,517 52,483
Increase in non-controlling interests 1,173,765 -
Net cash generated from financing activities 20,976,032 11,129,323
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES (20,706) (94,770)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 464,080 (138,245)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR 2,397,020 2,535,265
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 2,861,100 $ 2,397,020
The accompanying notes are an integral part of the consolidated financial statements. (Concluded)
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TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. GENERAL INFORMATION
Taiwan Acceptance Corporation (the “Company”) was incorporated in Taipei, Taiwan, Republic of China
(ROC) on April 12, 1990. The Company and its subsidiaries mainly focus on accounts receivable
purchasing and the equipment leasing business of related products such as automobiles namely new and
used cars, motorcycles, scooters, and consumer goods.
The Company’s shares were listed on the Taipei Exchange (formerly called the Taiwan GreTai Securities
Market) on December 4, 1999, and have been listed on the Taiwan Stock Exchange since September 19,
2001.
The Company’s parent company is Yulon Motor Company Ltd. (“Yulon Company”) which held 45.75% of
ordinary shares of the Company as of December 31, 2017 and 2016, respectively. The Company’s
ultimate parent company is Yulon Company.
The financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Company’s board of directors, and authorized
for issue on March 26, 2018.
3. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports
by Securities Issuers and the International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC)
(collectively, the “IFRSs”) endorsed and issued into effect by the FSC.
Except for the following, whenever applied, the initial application of the amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs
endorsed and issued into effect by the FSC would not have any material impact on the Group’s
accounting policies:
Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers
The amendments include additions of several accounting items and requirements for disclosures of
impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the
FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments
also include emphasis on certain recognition and measurement considerations and add requirements for
disclosures of related party transactions and goodwill.
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The amendments stipulate that other companies or institutions of which the chairman of the board of
directors or president serves as the chairman of the board of directors or the president, or is the spouse
or second immediate family of the chairman of the board of directors or president of the Group are
deemed to have a substantive related party relationship, unless it can be demonstrated that no control,
joint control, or significant influence exists. Furthermore, the amendments require the disclosure of
the names of the related parties and the relationship with whom the Group has significant transaction.
If the transaction or balance with a specific related party is 10% or more of the Group’s respective total
transaction or balance, such transaction should be separately disclosed by the name of each related
party.
When the amendments are applied retrospectively from January 1, 2017, the disclosures of related party
transactions are enhanced. Refer to Note 32 for related disclosures.
b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs
endorsed by the FSC for application starting from 2018.
New, Amended or Revised Standards and Interpretations
(the “New IFRSs”)
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2014-2016 Cycle Note 2
Amendment to IFRS 2 “Classification and Measurement of
Share-based Payment Transactions”
January 1, 2018
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts”
January 1, 2018
IFRS 9 “Financial Instruments” January 1, 2018
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
January 1, 2018
IFRS 15 “Revenue from Contracts with Customers” January 1, 2018
Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from
Contracts with Customers”
January 1, 2018
Amendment to IAS 7 “Disclosure Initiative” January 1, 2017
Amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealized Losses”
January 1, 2017
Amendments to IAS 40 “Transfers of Investment Property” January 1, 2018
IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”
January 1, 2018
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after
January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods
beginning on or after January 1, 2018.
Except for the following explanations, the Company considers that the application of the above
standards and interpretations will not cause any material changes to the accounting policies of the
Group.
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IFRS 9 “Financial Instruments” and related amendment
1) Recognition, measurement and impairment of financial assets
With regards to financial assets, all recognized financial assets that are within the scope of IAS 39
“Financial Instruments: Recognition and Measurement” are subsequently measured at amortized
cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated
below.
For the Group’s debt instruments that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, their classification and measurement are
as follows:
a) For debt instruments, if they are held within a business model whose objective is to collect the
contractual cash flows, the financial assets are measured at amortized cost and are assessed for
impairment continuously with impairment loss recognized in profit or loss, if any. Interest
revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by
both the collecting of contractual cash flows and the selling of financial assets, the financial
assets are measured at fair value through other comprehensive income (FVTOCI) and are
assessed for impairment. Interest revenue is recognized in profit or loss by using the effective
interest method, and other gain or loss shall be recognized in other comprehensive income,
except for impairment gains or losses and foreign exchange gains and losses. When the debt
instruments are derecognized or reclassified, the cumulative gain or loss previously recognized
in other comprehensive income is reclassified from equity to profit or loss.
Except for the above, all other financial assets are measured at fair value through profit or loss.
However, the Group may make an irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in other comprehensive income, with
only dividend income generally recognized in profit or loss. No subsequent impairment
assessment is required, and the cumulative gain or loss previously recognized in other
comprehensive income cannot be reclassified from equity to profit or loss.
Based on an analysis of the Group’s financial assets as at December 31, 2017 on the basis of the
facts and circumstances that exist at that date, the Group has performed an assessment of the impact
of IFRS 9 to the classification and measurement of financial assets as follows:
Debt investments classified as held-to-maturity financial assets and measured at amortized cost will
be classified as measured at amortized cost under IFRS 9 because on initial recognition, the
contractual cash flows that are solely payments of principal and interest on the principal outstanding
and these investments are held within a business model whose objective is to collect the contractual
cash flows.
IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit
Losses Model”. The credit loss allowance is required for financial assets measured at amortized
cost, investments in debt instruments measured at FVTOCI, lease receivables, contract assets
arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments
and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is
required for a financial asset if its credit risk has not increased significantly since initial recognition.
A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit
risk has increased significantly since initial recognition and is not low. However, a loss allowance
for full lifetime expected credit losses is required for trade receivables that do not constitute a
financing transaction.
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For purchased or originated credit-impaired financial assets, the Group takes into account the
expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate.
Subsequently, any changes in expected losses are recognized as a loss allowance with a
corresponding gain or loss recognized in profit or loss.
The Group has performed an assessment that the Group will apply the simplified approach to
recognize lifetime expected credit losses for trade receivables and lease receivables. In relation to
the debt instrument investments and the financial guarantee contracts, the Group will assess whether
there has been a significant increase in the credit risk to determine whether to recognize 12-month
or lifetime expected credit losses.
The Group has assessed that retrospectively applying the requirements for the classification,
measurement and impairment of financial assets under IFRS 9 will have no material impact on
assets, liabilities and equity as of January 1, 2018.
2) Hedge accounting
The main changes in hedge accounting amended the application requirements for hedge accounting
to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes
include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening
the risks eligible for hedge accounting of non-financial items; (2) changing the way the hedging cost
of derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing
retrospective effectiveness assessment with the principle of economic relationship between the
hedging instrument and the hedged item.
An assessment of the Group’s current hedging relationships indicates that they will qualify as
continuing hedging relationships upon application of IFRS 9.
Except for the above impacts, as of the date the consolidated financial statements were authorized for
issue, the Group continues assessing other possible impacts that application of the aforementioned
amendments and the related amendments to the Regulations Governing the Preparation of Financial
Reports by Securities Issuers will have on the Group’s financial position and financial performance, and
will disclose these other impacts when the assessment is completed.
c. New IFRSs in issue but not yet endorsed by the FSC
New IFRSs
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2015-2017 Cycle January 1, 2019
Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”
January 1, 2019 (Note 2)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
To be determined by IASB
IFRS 16 “Leases” January 1, 2019 (Note 3)
IFRS 17 “Insurance Contracts” January 1, 2021
Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”
January 1, 2019 (Note 4)
Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”
January 1, 2019
IFRIC 23 “Uncertainty Over Income Tax Treatments” January 1, 2019
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.
- 17 -
Note 3: On December 19, 2017, the FSC announced that IFRS 16 will take effect starting from
January 1, 2019.
Note 4: The Group shall apply these amendments to plan amendments, curtailments or settlements
occurring on or after January 1, 2019.
Except for the following explanations, the Company considers that the application of the above
standards and interpretations will not cause any material changes to the accounting policies of the
Group.
IFRS 16 “Leases”
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related
interpretations.
Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all
leases on the consolidated balance sheets except for low-value and short-term leases. The Group may
elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the
low-value and short-term leases. On the consolidated statements of comprehensive income, the Group
should present the depreciation expense charged on the right-of-use asset separately from interest
expense accrued on the lease liability; interest is computed by using effective interest method. On the
consolidated statements of cash flows, cash payments for the principal portion of the lease liability are
classified within financing activities; cash payments for interest portion are classified within operating
activities.
The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as
lessor.
When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to
each prior reporting period presented or retrospectively with the cumulative effect of the initial
application of this Standard recognized at the date of initial application.
IFRIC 23 “Uncertainty Over Income Tax Treatments”
IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should assume
that the taxation authority will have full knowledge of all related information when making related
examinations. If the Group concludes that it is probable that the taxation authority will accept an
uncertain tax treatment, the Group should determine the taxable profit, tax bases, unused tax losses,
unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its
income tax filings. If it is not probable that the taxation authority will accept an uncertain tax
treatment, the Group should make estimates using either the most likely amount or the expected value
of the tax treatment, depending on which method the entity expects to better predict the resolution of
the uncertainty. The Group has to reassess its judgments and estimates if facts and circumstances
change.
On initial application, the Group shall either apply IFRIC 23 retrospectively to each prior reporting
period presented and restate the information of comparative period, if this is possible without the use of
hindsight, or recognize the cumulative effect of the initial application of IFRIC 23 at the date of initial
application.
Except for the above impact, as of the date the financial statements were authorized for issue, the Group
is continuously assessing the possible impact that the application of other standards and interpretations
will have on the Group’s financial position and financial performance, and will disclose the relevant
impact when the assessment is completed.
- 18 -
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed by the FSC.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis, except for financial
instruments that are measured at fair value and net defined benefit liabilities which are recognized at the
present value of the defined benefit obligations less the fair value of the plan assets.
The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value
measurement inputs are observable and the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c. Level 3 inputs are unobservable inputs for the asset or liability.
Classification of Current and Non-current Assets and Liabilities
Current assets include:
a. Assets held primarily for the purpose of trading;
b. Assets expected to be realized within an operating cycle after the reporting period; and
c. Cash and cash equivalents.
Current liabilities include:
a. Liabilities held primarily for the purpose of trading;
b. Liabilities due to be settled within an operating cycle after the reporting period; and
c. Liabilities for which the Company does not have an unconditional right to defer settlement for at least
an operating cycle after the reporting period. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other assets and liabilities are classified as noncurrent.
The operating cycle of the Company, Shinshin Credit Corporation (“Shinshin”), TAC Leasing (Suzhou)
Co., Ltd. (“TAC Leasing (Suzhou)”), TAC Financial Leasing Co., Ltd., Yulon Motor Finance (China) Co.,
Ltd. and Yu Rich Financial Services Co., Ltd. (“Yu Rich”), all of which are more than one year, is used as
the basis for determining liquidity in the classification of balance sheet accounts.
- 19 -
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company, and the entities
controlled by the Company. Income and expenses of subsidiaries acquired or disposal of during the period
are included in the consolidated statement of profit or loss and other comprehensive income from the
effective date of acquisition up to the effective date of disposal. When necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies into line with those used by the
Company. All intra-group transactions, balances, income, and expenses are eliminated in full upon
consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company,
and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is recognized directly in equity and attributed to the
owners of the Company.
See Note 15, Table 8 and Table 9 for the detailed information of subsidiaries (including the percentage of
ownership and main business).
Foreign Currencies
In preparing the financial statements of each individual Group entity, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the
dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items
arising from settlement or translation are recognized in profit or loss in the year in which they arise.
Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations (including of the subsidiaries, associates and joint ventures in other countries or
currencies used different with the Company) are translated into New Taiwan dollars using exchange rates
prevailing at the end of each reporting period. Income and expense items are translated at the average
exchange rates for the year. Exchange differences arising are recognized in other comprehensive income,
attributed to the owners of the Company and non-controlling interests as appropriate.
Inventories
Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by
item. The Group provides dealers with display areas, and cars for display, and for sale, and charges
display fees till the cars are sold. Before the ownership of cars is transferred to dealers, the cars are treated
as the Group’s inventories.
Investments in Associates and Joint Ventures
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor
an interest in a joint venture.
The Group uses the equity method to account for its investments in associates and joint ventures.
Under the equity method, investments in an associate and a joint venture are initially recognized at cost and
adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of
the associate. The Group also recognizes the changes in the Group’s share of equity of associates and
joint ventures attributable to the Group.
- 20 -
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets
and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within
the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net
fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is
recognized immediately in profit or loss.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset
by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is
deducted from the carrying amount of the investment. Any reversal of that impairment loss is recognized
to the extent that the recoverable amount of the investment subsequently increases.
When a Group entity transacts with its associate, profits and losses resulting from the transactions with the
associate are recognized in the Group’ consolidated financial statements only to the extent of interests in the
associate that are not related to the Group.
Property, Plant and Equipment
Property, plant and equipment (including assets held under finance leases) are stated at cost, less recognized
accumulated depreciation and recognized accumulated impairment loss.
Depreciation of property, plant and equipment is recognized using the straight-line method. Each
significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are
depreciated over the lease term. The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a
prospective basis.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.
Intangible Assets
a. Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are initially measured at cost and
subsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and
amortization method are reviewed by the Company at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite
useful lives that are acquired separately are measured at cost less accumulated impairment loss.
b. Derecognition of intangible assets
On derecognition of an intangible asset, the difference between the net disposal proceeds and the
carrying amount of the asset is recognized in profit or loss.
Impairment of Tangible and Intangible Assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible
assets for any indication of impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss. When it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and wherever there is an indication that the asset may be impaired.
- 21 -
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting
impairment loss recognized in profit or loss.
When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount
(amortization or depreciation subtracted) that would have been determined had no impairment loss been
recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognized in profit or loss.
Financial Instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets, and financial liabilities (other than
financial assets, and financial liabilities at FVTPL) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.
a. Financial assets
All regular way purchases or sales of financial assets are recognized, and derecognized on a settlement
date basis.
1) Measurement category
Financial assets are classified into the following categories: Financial assets at FVTPL,
held-to-maturity investments, available-for-sale financial assets, and loans and receivables.
a) Financial assets at fair value through profit or loss
Financial assets are classified as at FVTPL when the financial assets is either held for trading or
it is designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gain or loss arising on
remeasurement recognized in profit or loss. Fair value is determined in the manner described
in Note 31.
b) Held-to-maturity financial assets
The central government bond which the Group has the positive intent and ability to hold until
maturity is classified as held-to maturity financial assets.
After initial recognition, held-to-maturity investments are measured at amortized cost using the
effective interest method less any impairment.
c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated as
available-for-sale or are not classified as loans and receivables, held-to-maturity investments or
financial assets at fair value through profit or loss.
- 22 -
Available-for-sale financial assets are measured at fair value. Changes in the carrying amount
of available-for-sale monetary financial assets relating to changes in foreign currency exchange
rates, interest income calculated using the effective interest method and dividends on
available-for-sale equity investments are recognized in profit or loss. Other changes in the
carrying amount of available-for-sale financial assets are recognized in other comprehensive
income and accumulated under the investments revaluation reserve account. When the
investment is disposed of or is determined to be impaired, the cumulative gain or loss that was
previously accumulated in the investments revaluation reserve account is reclassified to profit or
loss.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the
Company’s right to receive the dividends is established.
d) Loans and receivables
Loans and receivables (including cash and cash equivalents, notes and trade receivables, finance
lease receivables, debt investments with no active market and other receivables) are measured at
amortized cost using the effective interest method less any impairment, except for short-term
receivables when the effect of discounting is immaterial.
Cash equivalent includes time deposits with original maturities within 3 months from the date of
acquisition, highly liquid, readily convertible to a known amount of cash, and subject to an
insignificant risk of changes in value. These cash equivalents are held for the purpose of
meeting short-term cash commitments.
2) Impairment of financial assets
Financial assets, other than those measured at FVTPL, are assessed for indicators of impairment at
the end of each reporting period. Financial assets are considered when there is objective evidence
that, as a result of one or more events that occurred after the initial recognition of the financial asset,
the estimated future cash flows of the investment have been affected.
For financial assets carried at amortized cost, such as notes and trade receivables, finance lease
receivables and other receivables, assets are assessed for objective evidence of impairment
collectively even if they have been assessed as not impaired individually. Objective evidence of
impairment for a portfolio of receivables could include the Group’s past experience of collecting
payments, and an increase in the number of delayed payments, as well as observable changes in
national or local economic conditions that correlate with default on trade receivables.
For financial assets carried at amortized cost, impairment loss recognized is the difference between
the asset’s carrying amount and the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate.
If the impairment loss decreases, and the decrease can be related objectively to events occurring
after the recognition of impairment, the previously recognized impairment losses is reversed
through profit or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed do not exceed what the amortized cost would have been had the impairment
not been recognized.
For available-for-sale equity investments, a significant or prolonged decline in the fair value of the
security below its cost is considered to be objective evidence of impairment.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses
previously recognized in other comprehensive income are reclassified to profit or loss in the period
the asset is impaired.
- 23 -
In respect of available-for-sale equity securities, impairment loss previously recognized in profit or
loss is not reversed through profit or loss. Any increase in fair value subsequent to an impairment
loss is recognized in other comprehensive income. In respect of available-for-sale debt securities,
the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of
the investment can be objectively related to an event occurring after the recognition of the
impairment loss.
3) Derecognition of financial assets
The Group derecognizes financial assets only when the contractual rights to the cash flows from the
assets expire, or when it transfers the financial assets and substantially all the risks and rewards of
ownership of the asset to another party.
On the full derecognition of a financial asset, the differences between the assets’ carrying amount,
and the sum of the consideration received, and receivable, and the cumulative gain or loss that had
been recognized in other comprehensive income are recognized in profit or loss.
b. Equity instruments
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue
costs.
Repurchase of the Company’s own equity instruments is recognized in and deducted directly from
equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the
Company’s own equity instruments.
c. Financial liabilities
1) Subsequent measurement
Financial liabilities, other than those measured at FVTPL are measured at amortized cost using the
effective interest method.
Financial liabilities are classified as at FVTPL when the financial liabilities are held for trading.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss. Fair value is determined in the manner described in
Note 31.
2) Derecognition of financial liabilities
The Group derecognizes financial liabilities only when the contractual obligation is dissolved,
canceled or expired. The difference between the carrying amount of the financial liability
derecognized, and the consideration paid is recognized in profit or loss.
d. Convertible bonds
Convertible bonds issued by the Group are classified into financial liabilities and equity separately in
accordance to the nature of the contractual arrangements, and the definitions of financial liability, and
equity instrument.
- 24 -
Upon initial recognition, the fair value of the liability component is estimated using the prevailing
market interest rate for similar nonconvertible instruments. This amount is recorded as a liability on
an amortized cost basis using the effective interest method until extinguished upon conversion or on
bond maturity. Any embedded derivative liability is measured at fair value.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. The conversion option is
recognized, and included in equity, net of income tax effects, and is not subsequently remeasured. In
addition, the conversion option classified as equity will remain in equity, and when the conversion
option is exercised, the balance recognized in equity will be transferred to capital surplus - share
premium. When the conversion option remains unexercised on bond maturity, the balance recognized
in equity will be transferred to capital surplus - share premium. No gain or loss is recognized in profit
or loss upon conversion or upon expiration of the conversion option.
Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds.
e. Derivative financial instruments
The Group manages its exposure to interest rate risks and foreign exchange rate risks through derivative
financial instruments - interest rate swaps and cross currency swaps.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into, and
are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain
or loss is recognized in profit or loss immediately, but if the derivative is designated, and effective as a
hedging instrument, the timing of the recognition in profit or loss depends on the nature of the hedge
relationship. When the fair value of a derivative financial instrument is positive, the derivative is
recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.
Hedge Accounting
The Group designates certain hedging instruments as cash flow hedges.
The effective portion of changes in the fair value of derivatives that are designated, and qualify as cash flow
hedges is recognized in other comprehensive income. The gain or loss on the ineffective portion is
recognized immediately in profit or loss.
Hedge accounting is discontinued prospectively when the Group revokes the designated hedging
relationship; when the hedging instrument expires or is sold, terminated, or exercised; or when the hedging
instrument no longer meets the criteria for hedge accounting.
The cumulative gain or loss on the hedging instrument that has been previously recognized in other
comprehensive income from the period when the hedge was effective remains separately in equity until the
forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in equity is recognized immediately in profit or loss.
Provisions
Provisions are measured at the best estimate of the consideration required to settle the present obligation at
the end of the reporting period, taking into account the risks, and uncertainties surrounding the obligation.
- 25 -
The Group’s provision is for contracts with guarantees which include (1) car loan contracts signed by the
Group’s customers with financial institutions in which the Group provides payment guarantees as well as
account management services; the Group is responsible for the collection of loan repayments and will
assume the risk of loss on uncollectable loans in the event of default; (2) assessed free service costs that the
Group may incur during the warranty period. The provision is subsequently measured under IAS 37
“Provision, Contingent Liabilities and Contingent Assets”.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable.
a. Rental income
A lease is classified as a finance lease if it transfers substantially all the risks, and rewards upon transfer
of property or asset. Otherwise, it is classified as an operating lease.
Amounts due from lessees under finance leases are recognized as receivables at the amount of the
Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to
reflect a constant periodic rate of return on the Group’s net investment outstanding on the leases.
Rental income from an operating lease is recognized on a straight-line basis over the term of the lease.
b. Sales revenue
Revenue from the sale of goods is recognized when all the following conditions are satisfied:
1) The Group has transferred the significant risks and rewards of ownership of the goods to the buyer;
2) The Group retains neither continuing managerial involvement nor effective control over the goods
sold;
3) The amount of revenue can be measured reliably;
4) It is probable that the economic benefits associated with the transaction will flow to the Group; and
5) The transaction costs incurred or to be incurred can be measured reliably.
c. Interest revenue from acquired accounts receivable.
The Company, Shinshin and Yu Rich undertake business regarding the acquisition of accounts
receivable. After transferring accounts receivable, the seller is not responsible for unpaid overdue
accounts of the debtor. The difference between acquisition payment, and account receivable principal
is recognized as unearned interest revenue, and amortized as interest revenue from acquired accounts
receivable using effective interest method throughout the contract term. In addition, the deferred gain
recognized from acquiring the service contract between third party, and financial institutions is
recognized evenly throughout the contract period as interest revenue from acquired accounts receivable.
d. Installment sales interest revenue
The main business of the Company and Shinshin is installment financing services. The difference
between installment price and sales price is recognized as unrealized interest revenue, and is recognized
as installment sales interest revenue using interest method during the installment period. Unrealized
interest revenue is deducted from notes, and accounts receivable.
- 26 -
e. Interest revenue from loan
Yulon Motor Finance (China) Co., Ltd. engages in vehicle and dealer operating equipment loans in
China. The difference between payment, and loan principal is recognized as unearned interest revenue,
and amortized as interest revenue from loan using effective interest method throughout the loan period.
f. Agency revenue
The customers of the Company and Shinshin signed car loan contracts with banks. The Company and
Shinshin act as car loan agents and provided customers with account management services. Under the
contracts, banks pay agency fees to the Company and Shinshin based on the payment terms of each
contract. The Company and Shinshin recognize this agency revenue on an accrual basis. The
Company and Shinshin are responsible for repaying any uncollectable loans arising from customer
defaults.
g. Other operating revenue
Other operating revenue is recognized when the profit earning process is complete or near complete,
and realized or realizable. Related cost is recognized under matching principle.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
Government Grants
Government grants are recognized when there is reasonable assurance that the Group will comply with the
conditions attached to them, and that the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the
Group recognizes as expenses the related costs for which the grants are intended to compensate.
Specifically, government grants whose primary condition is that the Group should buy, construct or
otherwise acquire non-current assets are recognized as deferred revenue, and transferred to profit or loss on
a systematic and rational basis over the useful lives of the related assets.
Employee Benefits
a. Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related service.
b. Retirement benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when
employees have rendered service entitling them to the contributions.
- 27 -
Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit
retirement benefit plans are determined using the projected unit credit method. Service cost (including
current service cost), and net interest on the net defined benefit liability (asset) are recognized as
employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and
losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income
in the period in which they occur. Remeasurement recognized in other comprehensive income is
reflected immediately in retained earnings and will not be reclassified to profit or loss.
Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit
plan. Any surplus resulting from this calculation is limited to the present value of any refunds from
the plans or reductions in future contributions to the plans.
c. Termination benefits
A liability for a termination benefit is recognized at the earlier of when the Group can no longer
withdraw the offer of the termination benefit and when the Group recognizes any related restructuring
costs.
Taxation
Income tax expense represents the sum of the current tax payable and deferred tax.
a. Current tax
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for
as income tax in the year the shareholders approve the retention of these earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
b. Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all future taxable temporary differences. Deferred
tax assets are generally recognized for all future deductible temporary differences and unused loss
carryforward to the extent that it is probable that taxable profits will be available for deduction.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint arrangements, except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognized to the extent that it is probable that
there will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. Previously unrecognized deferred tax assets are also
reviewed at the end of each reporting period and recognized to the extent that they have become
probable that future taxable profit will allow the deferred tax asset to be recovered.
- 28 -
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted
or substantively enacted by the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences of how the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
c. Current and deferred tax
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and deferred
tax are also recognized in other comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group’s accounting policies, management is required to make judgments,
estimates, and assumptions about the carrying amounts of assets, and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience, and
other factors that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision, and future periods if the revision affects both current and future periods.
Main source of assumptions and uncertainties are as follows. Such assumptions and uncertainties may
lead to material adjustments toward to assets, and liabilities in the following fiscal year.
Estimated Impairment of Trade Receivable
When there is objective evidence of impairment loss, the Company takes into consideration the estimation
of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the financial asset’s
original effective interest rate. Where the actual future cash flows are less than expected, a material
impairment loss may arise.
Impairment of Property, Plant and Equipment
The impairment of property, plant and equipment was based on the recoverable amount of those assets,
which is the higher of their fair value less costs to disposal or their value in use. Any changes in the
market price or future cash flows will affect the recoverable amount of those assets, and may lead to
recognition of additional loss or reversal of impairment losses.
6. CASH AND CASH EQUIVALENTS
December 31
2017 2016
Cash on hand $ 2,499 $ 1,455
Checking accounts and demand deposits 2,804,106 2,233,571
Time deposits 54,495 161,994
$ 2,861,100 $ 2,397,020
- 29 -
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT
December 31
2017 2016
Financial assets held for trading
Non-derivative financial assets
Beneficiary certificates - mutual funds $ 19,728 $ 11,155
Financial liabilities held for trading
Derivative financial liabilities
Interest rate swap contracts $ - $ 1,145
The Group entered into interest rate swap contracts to hedge against exposures due to interest rate
fluctuations of assets and liabilities. Interest rate swap contracts in the Group’s possession did not qualify
for hedge accounting; thus, the Company did not apply hedge accounting.
At the end of the reporting period, outstanding interest rate swap contracts not under hedge accounting were
as follows:
Notional Amounts
(In Thousands) Maturity Date
Interest Rates -
Payment Interest Rates - Receipt
December 31, 2016
$ 200,000 2017.03.27 0.950% Note
300,000 2017.06.01 0.975% Note
200,000 2017.06.19 0.970% Note
200,000 2017.07.31 0.950% Note
Note: The receipt interest rates are based on the three months TAIBOR - Reuters interest rate prevailing
on two operating days before the IRS contract issue date.
8. AVAILABLE-FOR-SALE FINANCIAL ASSETS
December 31
2017 2016
Current
Foreign investments
Non-guaranteed wealth management products $ - $ 19,088
The counterparties to the wealth management products of the Group are Agricultural Bank of China and
China Minsheng Bank, both renowned banks in mainland China.
- 30 -
9. HELD-TO-MATURITY FINANCIAL ASSETS - NON-CURRENT
December 31
2017 2016
Domestic investments
Central Government Development Bonds $ 16,632 $ 17,095
a. The Company and Shinshin invested in Central Government Development Bonds which are recognized
as held to maturity financial assets - non-current with yearly payment coupon rates of 3.75% and 1.42%
and with maturity dates of August 16, 2022 and February 13, 2021, respectively.
b. As of December 31, 2017 and 2016, the Company and Shinshin pledged Central Government
Development Bonds with face values of $11,000 thousand and $7,200 thousand, respectively, as
guarantee deposits for evidence of claims in the courthouse.
10. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING - CURRENT
December 31
2017 2016
Derivative financial liabilities under hedge accounting
Cash flow hedges - interest rate swaps $ 201 $ -
The Group entered into interest rate swap (IRS) contracts to mitigate the risk of adverse changes in interest
rates on the cash flow exposure related to outstanding floating-rate debts. The terms of IRS contracts are
identical to those for debts under hedging; thus, the Company’s management considered these contracts a
highly effective tool for hedging. The outstanding IRS contracts at the end of the reporting period were as
follows:
Notional Amounts
(In Thousands) Maturity Date Interest Rates - Receipt
Interest Rates -
Payment
December 31, 2017
$ 300,000 108.4.25 Note 0.745%
200,000 108.4.25 Note 0.740%
Note: The receipt interest rates are based on the three months TAIBOR - Reuters interest rate prevailing
on two operating days before the IRS contract issue date.
- 31 -
11. DEBT INVESTMENTS WITH NO ACTIVE MARKET
December 31
2017 2016
Reserve account $ 285,410 $ 275,663
Pledged time deposits 10,951 11,554
Time deposits with original maturity more than 3 months 461,068 343,234
Bank deposit for specified purpose 57,935 14,034
$ 815,364 $ 644,485
Current $ 811,813 $ 640,631
Non-current 3,551 3,854
$ 815,364 $ 644,485
Refer to Note 33 for information relating to debt investments with no active market pledged as security.
12. NOTES AND TRADE RECEIVABLES
All notes and trade receivables of the Group are from operating activities.
December 31
2017 2016
Classified according to installment and non-installment
accounts receivable
Installment accounts receivable
Less than one year $ 39,327,551 $ 35,565,729
1-2 years 28,120,811 24,108,286
2-3 years 19,886,327 14,773,022
Over 3 years 13,093,027 9,167,740
100,427,716 83,614,777
Less: Unrealized interest revenue (10,399,348) (7,760,402)
Less: Allowance for impairment loss (2,495,848) (2,073,883)
87,532,520 73,780,492
Non-installment accounts receivable 3,609,243 785,208
Accounts receivable, net $ 91,141,763 $ 74,565,700
a. Installment account receivables
Installment accounts receivable include accounts receivable from acquisitions, installment sales, and
promotions of car loans.
Principal and interest are collected monthly. For delayed payments, interest is accrued on the basis of
the number of days that payments are overdue. Based on past experience and macroeconomic factors,
the overdue receivables that are over 180 days due are considered uncollectible or default will likely
occur. Therefore, for receivables which remain unsettled after 180 days of due date, the amounts are
written off. For receivables within the above mentioned time period, uncollectable amounts are
estimated according to past experience and macroeconomic factors.
- 32 -
b. Non-installment accounts receivable
These are mainly accounts receivable for auto vehicles on display. Most of the related customers are
car dealers within Yulon Group; the accounts receivable did not exhibit signs of default or impairment.
The clients of the Group are widely dispersed and are unrelated; thus, credit risk is limited.
c. The aging of receivables was as follows:
December 31
2017 2016
Not past due $ 92,734,763 $ 75,954,665
1-180 days 842,828 635,573
More than 180 days 60,020 49,345
$ 93,637,611 $ 76,639,583
The above aging schedule was based on the past due days from end of credit term.
d. Movements in the allowance for impairment loss recognized on notes receivable, and trade receivables
were as follows:
Assessed
Impairment
Individually
Assessed
Impairment by
Group Total
Balance at January 1, 2016 $ 11,393 $ 1,627,253 $ 1,638,646
Add: Impairment losses (reversed)
recognized on receivables (1,200) 1,229,425 1,228,225
Deduct: Amounts written off as
uncollectible - (784,572) (784,572)
Foreign exchange translation gains and losses - (8,416) (8,416)
Balance at December 31, 2016 10,193 2,063,690 2,073,883
Add: Impairment losses (reversed)
recognized on receivables (1,200) 1,431,180 1,429,980
Deduct: Amounts written off as
uncollectible - (1,008,369) (1,008,369)
Foreign exchange translation gains and losses - 354 354
Balance at December 31, 2017 $ 8,993 $ 2,486,855 $ 2,495,848
As of December 31, 2017 and 2016, the allowance for impairment loss included allowances for
individually impaired trade receivables from customers that were in the process of liquidation or
experiencing severe financial difficulties and were in the amounts of $8,993 thousand and $10,193
thousand, respectively. The Group did not hold any collateral over these balances.
- 33 -
13. FINANCE LEASE RECEIVABLES
December 31
2017 2016
Gross investment in leases
Up to one year $ 9,672,348 $ 8,138,905
More than one year and up to five years 12,804,654 8,244,486
More than five year 7,447 10,339
22,484,449 16,393,730
Less: Unearned finance income (2,612,540) (1,975,414)
Less: Allowance for uncollectible lease payments (971,008) (750,943)
Present value of minimum lease payments $ 18,900,901 $ 13,667,373
Finance lease receivables
Up to one year $ 8,638,488 $ 7,183,165
More than one year and up to five years 11,226,480 7,225,562
More than five year 6,941 9,589
19,871,909 14,418,316
Less: Allowance for uncollectible lease payments (971,008) (750,943)
Finance lease receivables $ 18,900,901 $ 13,667,373
The Group’s lease agreements for cars and equipment have an average lease term of 2.45 years.
The implicit interest rates for finance leases were determined at the contract date and will not be adjusted.
The interest rates inherent in finance leases were approximately 4.14%-14.83% and 4.43%-14.57% per
annum as of December 31, 2017 and 2016, respectively.
The aging of receivables was as follows:
December 31
2017 2016
Not past due $ 18,603,940 $ 12,987,816
1-180 days 709,548 873,910
More than 180 days 558,421 556,590
$ 19,871,909 $ 14,418,316
The above aging schedule was based on the past due days from end of credit term.
Movements in the allowance for impairment loss recognized on finance lease receivables were as follows:
For the Year Ended December 31
2017 2016
Balance at January 1 $ 750,943 $ 603,356
Add: Impairment losses recognized on receivables 234,182 203,504
Foreign exchange translation gains and losses (14,117) (55,917)
Balance at December 31 $ 971,008 $ 750,943
- 34 -
14. INVENTORIES
December 31
2017 2016
Motor vehicles $ 452,006 $ 252,489
Under transaction contracts between suppliers and the Company, suppliers agree to sell automobiles to auto
dealers through the Company. In addition, display contracts were also signed between the Company and
auto dealers. Under such contracts, auto dealers are not entitled to alter the position or dispose of the auto
vehicles on display. Display fees were charged by the Company during the display period. The
Company is fully responsible in the event of any vehicle damage. However, auto dealers are responsible
to provide auto insurance for vehicles on display with the Company as the only beneficiary.
15. SUBSIDIARIES
a. Subsidiaries included in the consolidated financial statements
Entities included in the Group’s consolidated financial statements were as follows:
% of Ownership
December 31
Investor Investee Main Businesses 2017 2016
The Company Shinshin Credit Corporation (“Shinshin”) Installment financing services for car and truck purchases
100.00 100.00
Car-plus Auto Leasing Corporation
(“Car-plus Corporation”)
Car lease and trade 68.57 68.57
TAC Global Investment (Samoa) Co.,
Ltd. (“TAC Global”)
Holding company 100.00 100.00
Sin Jang Enterprises (“Sin Jang”) Sales and brokerage of secondhand vehicles
40.00 40.00
Yulon Motor Finance (China) Co., Ltd. Car loans and loans to car dealers for
purpose of purchasing automobiles
49.00
(Note 1)
49.00
(Note 1) Yu Rich Financial Services Co., Ltd.
(“Yu Rich”)
Installment financing services for
consumer goods and wholesale of
cars and parts
82.12
(Note 2)
82.12
(Note 2)
Shinshin Shinshin Global Investment (Samoa) Co.,
Ltd. (“Shinshin Global”)
Holding Company 100.00 100.00
Car-plus Corporation Diamond Leasing Service Corporation (“Diamond Leasing”)
Car loans and loans to car dealers for purpose of purchasing automobiles
100.00 100.00
Car-Plus Global Investment (Samoa) Co., Ltd. (“Car-Plus Samoa”)
Holding company 100.00 100.00
Sin Jang Sales and brokerage of secondhand
vehicles
19.99 19.99
Da-Wei Technology Co., Ltd. (“Da-Wei”) Brokerage of electric vehicles 100.00
(Note 6)
100.00
(Note 6)
Diamond Leasing H. K. Manpower Service Co., Ltd. (“H. K. Manpower”)
Temporary labor services 100.00 100.00
Sin Jang Sinjang International Investment (Samoa)
Co., Ltd. (“Sin Jang International”)
Holding company 71.34
(Note 3)
71.34
(Note 3) Da-Wei Da-Teng Transportation Co., Ltd.
(“Da-Teng”)
Taxi transportation 100.00
-
TAC Global Car-Plus China Investment (Samoa) Co., Ltd. (“Car-Plus China”)
Holding company 40.00 40.00
Car-Plus Shanghai Investment (Samoa)
Co., Ltd. (”Car-Plus Shanghai”)
Holding company 40.00 40.00
Yu Rong International Investment
(Samoa) Co., Ltd. (“Yu Rong”)
Holding company 100.00 100.00
Sinjang International Investment (Samoa) Co., Ltd. (“Sin Jang International”)
Holding company 28.66 (Note 3)
28.66 (Note 3)
Sinjang International Zhejiang ChengYi Auto Service Co., Ltd.
(“Zhejiang ChengYi”)
Advisory services and business agent
of secondhand vehicles
66.00
(Note 4)
66.00
(Note 4)
(Continued)
- 35 -
% of Ownership
December 31
Investor Investee Main Businesses 2017 2016
Zhejiang ChengYi Hangzhou Cheng Yi Jian Used-cars
Authenticate & Evaluation Service Co., Ltd.
Secondhand vehicles authentication
and evaluation service
100.00
(Note 5)
100.00
(Note 5)
Zhejiang ChengYi Auction Co., Ltd. Secondhand vehicles auction service 100.00
(Note 7)
-
Shinshin Global TAC Financial Leasing Co., Ltd. (“TAC
Financial Leasing”)
Financial lease of equipment and car 40.00 40.00
Car-Plus Samoa Car-Plus China Investment (Samoa) Co.,
Ltd.
Holding company 60.00 60.00
Car-Plus Shanghai Investment (Samoa) Co., Ltd.
Holding company 60.00 60.00
Car-Plus China Car-Plus (Suzhou) Auto Leasing Co., Ltd. Lease of cars and related services 100.00 100.00
Car-Plus Shanghai Car-Plus Leasing (Shanghai) Co., Ltd. (“Car-Plus Leasing (Shanghai)”)
Lease of cars and related services 100.00 100.00
Yu Rong TAC Leasing (Suzhou) Co., Ltd. (“TAC
Leasing (Suzhou)”)
Financial lease of equipment and car 100.00 100.00
TAC Financial Leasing Financial lease of equipment and car 40.00 40.00
TAC Financial Leasing Zhejiang ChengYi Advisory services and business agent
of secondhand vehicles
24.00
(Note 4)
24.00
(Note 4) Wuhan TAC Auto Trade Co., Ltd. Car trade 100.00
(Note 8)
-
(Concluded)
Note 1: The Company and the Company’s parent company, Yulon Company, were approved and
registered by the Investment Commission on June 29, 2015 to invest and had invested
RMB245,000 thousand (equivalent to US$40,833 thousand) and RMB255,000 thousand
(equivalent to US$42,500 thousand), respectively, in Yulon Motor Finance (China) Co., Ltd.
in China. The Company and Yulon Company respectively hold 49% and 51% of the shares.
Due to the Company’s substantive control over Yulon Motor Finance (China) Co., Ltd., it is
listed as a subsidiary of the Company. Yulon Motor Finance (China) Co., Ltd. obtained a
business license in China on February 19, 2016 and will be engaged in car loans, loans to car
dealers for purpose of purchasing automobiles, loans to facilities for operations and car
financial leasing business, etc. Also the Company and the Company’s parent company,
Yulon Company were approved and registered by the Investment Commission on August 23,
2017 and August 28, 2017 to increase share capital investment of RMB245,000 thousand
(equivalent to US$40,833 thousand) and RMB255,000 thousand (equivalent to US$42,500
thousand), respectively, in Yulon Motor Finance (China) Co., Ltd.
Note 2: The Company invested Yu Rich Financial Services Co., Ltd. on January 20, 2016 and held
82.12% of its shares (see Note 28).
Note 3: Sinjang International Investment (Samoa) Co., Ltd. increased its capital by $531 thousand on
September 1, 2016, fully subscribed by Sin Jang Enterprises. The consolidated company
holds 100% if its equity.
Note 4: Sinjang International Investment (Samoa) Co., Ltd. and TAC Financial Leasing Co., Ltd.
purchased 50% equity stakes of Zhejiang ChengYi Auto Service Co., Ltd. from Zhejiang
Kangda Automobile Industrial & Commercial Co., Ltd. Equity of the consolidated company
increased from 40% to 90% after purchase (see Note 28).
Note 5: Zhejiang ChengYi Auto Service Co., Ltd. acquired 10% equity stakes of Hangzhou Cheng Yi
Jian used-cars Authenticate & Evaluation Service Co., Ltd. in November 2016. Percentage
of shares held by the Group increased from 90% to 100% after purchase.
Note 6: Car-plus Corporation established Da-Wei Technology Co., Ltd. with $10,000 thousand on
September 2016, and held 100% of its shares.
- 36 -
Note 7: Zhejiang ChengYi Auto Service Co., Ltd. established Zhejiang ChengYi Auction Co., Ltd.
with RMB2,000 thousand on February 2017 and held 100% of its shares.
Note 8: TAC Financial Leasing established Wuhan TAC Auto Trade Co., Ltd. with RMB2,000
thousand in July 2017 and held 100% of its shares.
b. Subsidiaries excluded from the consolidated financial statements: None.
c. Details of subsidiaries that have material non-controlling interests
Proportion of Ownership and
Voting Rights Held by
Non-controlling Interests
December 31
Name of Subsidiary 2017 2016
Car-plus Corporation 31.43% 31.43%
Yulon Motor Finance (China) Co., Ltd. 51.00% 51.00%
Refer to Table 8 “Information on Investees” and Table 9 “Information on investments in Mainland
China” for the information on places of incorporation and principal places of business. The
summarized financial information below represents amounts before intragroup eliminations.
Car-plus Corporation and subsidiaries:
December 31
2017 2016
Current assets $ 3,706,338 $ 4,549,945
Non-current assets 17,545,863 15,914,624
Current liabilities 17,114,517 16,847,843
Non-current liabilities 1,920,859 1,441,495
Equity $ 2,216,825 $ 2,175,231
Equity attributable to:
Owners of Car-plus Corporation $ 1,638,821 $ 1,602,176
Non-controlling interests of Car-plus Corporation 578,004 573,055
$ 2,216,825 $ 2,175,231
For the Year Ended December 31
2017 2016
Revenue $ 10,891,417 $ 10,796,941
Profit for the year $ 443,335 $ 423,347
Other comprehensive loss for the year (17,209) (75,721)
Total comprehensive income for the year $ 426,126 $ 347,626
(Continued)
- 37 -
For the Year Ended December 31
2017 2016
Profit attributable to:
Owners of Car-plus Corporation $ 314,274 $ 292,959
Non-controlling interests of Car-plus Corporation 129,061 130,388
$ 443,335 $ 423,347
Total comprehensive income attributable to:
Owners of Car-plus Corporation $ 300,333 $ 231,506
Non-controlling interests of Car-plus Corporation 125,793 116,120
$ 426,126 $ 347,626
Net cash inflow (outflow) from:
Operating activities $ 5,612,938 $ 8,505,364
Investing activities (6,265,320) (7,892,833)
Financing activities 581,414 (836,002)
Net cash outflow $ (70,968) $ (223,471)
Dividends paid to non-controlling interests
Car-plus Corporation $ 117,988 $ 103,829
(Concluded)
Yulon Motor Finance (China) Co., Ltd.:
December 31
2017 2016
Current assets $ 10,437,269 $ 4,475,921
Non-current assets 86,506 66,066
Current liabilities 5,990,251 2,297,865
Equity $ 4,533,524 $ 2,244,122
Equity attributable to:
Owners of Yulon Motor Finance (China) Co., Ltd. $ 2,221,426 $ 1,099,620
Non-controlling interests of Yulon Motor Finance (China) Co.,
Ltd. 2,312,098 1,144,502
$ 4,533,524 $ 2,244,122
For the Year Ended December 31
2017 2016
Revenue $ 602,456 $ 66,750
Profit for the year $ 56,999 $ (83,999)
Other comprehensive income for the year - -
Total comprehensive income (loss) for the year $ 56,999 $ (83,999)
(Continued)
- 38 -
For the Year Ended December 31
2017 2016
Profit (loss) attributable to:
Owners of Yulon Motor Finance (China) Co., Ltd. $ 27,930 $ (41,160)
Non-controlling interests of Yulon Motor Finance (China) Co.,
Ltd. 29,069 (42,839)
$ 56,999 $ (83,999)
Total comprehensive income (loss) attributable to:
Owners of Car-plus Corporation $ 27,930 $ (41,160)
Non-controlling interests of Car-plus Corporation 29,069 (42,839)
$ 56,999 $ (83,999)
Cash inflow (outflow) from:
Operating activities $ (2,786,625) $ (3,993,203)
Investing activities (4,394) (76,759)
Financing activities 3,054,657 2,018,170
Net cash inflow (outflow) $ 263,638 $ (2,051,792)
(Concluded)
16. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
December 31
2017 2016
Investments in associates $ 244,706 $ 227,976
Investments in joint ventures 16,755 9,305
$ 261,461 $ 237,281
a. Investment in associates
December 31
2017 2016
Associates that are not individually material
Tokio Marine Newa Insurance Co., Ltd. $ 153,763 $ 140,922
Empower Motor Co., Ltd. 90,943 87,054
$ 244,706 $ 227,976
For the Year Ended December 31
2017 2016
The Group’s share of:
Net profit for the year $ 21,642 $ 20,981
Other comprehensive income 2,352 (3,093)
Total comprehensive income for the year $ 23,994 $ 17,888
- 39 -
Refer to Table 8 “Information on Investees” for the nature of activities, principal place of business and
country of incorporation of the associates.
The investment in Tokio Marine Newa Insurance Co., Ltd. (Tokio Marine Newa Insurance) was
accounted for using the equity method because, despite the individual investment being less than 20%,
the ultimate parent company, Yulon Company, and its subsidiaries exercised significant influence over
the investee’s operating and financial policy decisions.
b. Investments in joint ventures
December 31
2017 2016
Joint ventures that are not individually material
Shanghai TAC Auto Trade Co., Ltd. $ 3,182 $ 3,090
Hefi TAC Auto Trade Co., Ltd. 2,557 -
Suzhou TAC Auto Trade Co., Ltd. 2,477 1,907
Qingdao TAC Auto Trade Co., Ltd. 2,353 -
Dongguan TAC Auto Trade Co., Ltd. 2,211 1,352
Kunming TAC Auto Trade Co., Ltd. 2,144 -
Chengdu TAC Auto Trade Co., Ltd. 1,043 -
Xiamen TAC Auto Trade Co., Ltd. 788 2,956
$ 16,755 $ 9,305
For the Year Ended December 31
2017 2016
The Group’s share of:
Net profit for the year $ (3,256) $ (5,473)
Other comprehensive income - -
Total comprehensive income for the year $ (3,256) $ (5,473)
Refer to Table 9 “Information on Investments in Mainland China” for the nature of activities, principal
place of business and country of incorporation of the joint ventures.
17. PROPERTY, PLANT AND EQUIPMENT
Freehold Land
Buildings
Equipment
Vehicles
Leasehold
Leased Assets
Total
Cost
Balance at January 1, 2016 $ 93,401 $ 243,838 $ 155,527 $ 79,989 $ 175,180 $ 24,206,326 $ 24,954,261
Acquisitions through business
combinations - - 2,919 1,693 - - 4,612
Additions - - 36,518 26,472 49,141 7,836,485 7,948,616
Disposals - - (9,343 ) (78,446 ) (2,082 ) (7,718,290 ) (7,808,161 )
Reclassification - - - 76,867 - (76,867 ) -
Effect of foreign currency exchange
differences - (16,358 ) (4,679 ) (7,656 ) (2,847 ) (166,719 ) (198,259 )
Balance at December 31, 2016 $ 93,401 $ 227,480 $ 180,942 $ 98,919 $ 219,392 $ 24,080,935 $ 24,901,069
(Continued)
- 40 -
Freehold Land
Buildings
Equipment
Vehicles
Leasehold
Leased Assets
Total
Accumulated depreciation and
impairment
Balance at January 1, 2016 $ - $ (47,318 ) $ (107,658 ) $ (41,276 ) $ (95,173 ) $ (8,953,951 ) $ (9,245,376 )
Acquisitions through business
combinations - (1,764 ) (582 ) - - (2,346 )
Disposals - 8,445 37,512 2,082 4,443,030 4,491,069
Impairment losses recognized in profit or
loss - - - - - (30,372 ) (30,372 )
Reclassification - - - (34,775 ) - 34,775 -
Depreciation expense - (10,196 ) (21,991 ) (16,450 ) (35,750 ) (4,548,685 ) (4,633,072 )
Effect of foreign currency exchange
differences - 2,992 2,454 3,955 1,403 50,903 61,707
Balance at December 31, 2016 $ - $ (54,522 ) $ (120,514 ) $ (51,616 ) $ (127,438 ) $ (9,004,300 ) $ (9,358,390 )
Carrying amount at December 31, 2016 $ 93,401 $ 172,958 $ 60,428 $ 47,303 $ 91,954 $ 15,076,635 $ 15,542,679
Cost
Balance at January 1, 2017 $ 93,401 $ 227,480 $ 180,942 $ 98,919 $ 219,392 $ 24,080,935 $ 24,901,069
Additions 20.928 35,307 10,567 35,153 26,619 9,608,412 9,736,986
Disposals - - (36,525 ) (83,312 ) (17,130 ) (7,413,647 ) (7,550,614 )
Reclassification - - 4,280 58,802 - (58,802 ) 4,280
Effect of foreign currency exchange
differences - (3,804 ) (1,303 ) (1,887 ) (793 ) (26,107 ) (33,894 )
Balance at December 31, 2017 $ 114,329 $ 258,983 $ 157,961 $ 107,675 $ 228,088 $ 26,190,791 $ 27,057,827
Accumulated depreciation and
impairment
Balance at January 1, 2017 $ - $ (54,522 ) $ (120,514 ) $ (51,616 ) $ (127,438 ) $ (9.004,300 ) $ (9,358,390 )
Disposals - - 35,617 46,462 15,836 4,294,002 4,391,917
Impairment losses recognized in profit or
loss - - - - - (1,299 ) (1,299 )
Reclassification - - - (28,068 ) - 28,068 -
Depreciation expense - (9,910 ) (24,742 ) (18,735 ) (36,412 ) (4,806,848 ) (4,896,647 )
Effect of foreign currency exchange
differences - 688 567 1,048 416 7,080 9,799
Balance at December 31, 2017 $ - $ (63,744 ) $ (109,072 ) $ (50,909 ) $ (147,598 ) $ (9,483,297 ) $ (9,854,620 )
Carrying amount at December 31, 2017 $ 114,329 $ 195,239 $ 48,889 $ 56,766 $ 80,490 $ 16,707,494 $ 17,203,207
(Concluded)
As the result of the declining sale of car models in the market, the estimated future cash flows expected to
arise from the related model has decreased. The Group carried out a review of the recoverable amount of
that related model and determined that the carrying amount exceeded the recoverable amount. The review
led to the recognition of an impairment loss of $1,299 thousand and $30,372 thousand for the years ended
December 31, 2017 and 2016, respectively.
The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated
useful life of the assets:
Buildings 20-44 years
Equipment 3-10 years
Vehicles 5-7 years
Leasehold 2-12 years
Leased assets 3 years or according to terms of lease
- 41 -
18. INTANGIBLE ASSETS
The
Ownership
of Vehicle
Registration
Plates
Computer
Software Others Total
Cost
Balance at January 1, 2016 $ 145,049 $ 51,959 $ 6,947 $ 203,955
Acquisitions through business combinations - 8,374 64 8,438
Additions 27,493 70,254 14 97,761
Effect of foreign currency exchange
differences (12,830) (4,562) (1) (17,393)
Balance at December 31, 2016 159,712 126,025 7,024 292,761
Accumulated amortization and impairment
Balance at January 1, 2016 - (35,192) (6,168) (41,360)
Acquisitions through business combinations - (3,981) - (3,981)
Amortization expense - (14,374) (133) (14,507)
Effect of foreign currency exchange
differences - 1,335 1 1,336
Balance at December 31, 2016 - (52,212) (6,300) (58,512)
Carrying amount at December 31, 2016 $ 159,712 $ 73,813 $ 724 $ 234,249
Cost
Balance at January 1, 2017 $ 159,712 $ 126,025 $ 7,024 $ 292,761
Acquisitions through business combinations 1,235 - - 1,235
Additions 5,493 26,982 57 32,532
Disposals - (1,363) - (1,363)
Reclassification - 2,345 - 2,345
Effect of foreign currency exchange
differences (3,181) (1,761) (1) (4,943)
Balance at December 31, 2017 163,259 152,228 7,080 322,567
Accumulated amortization and impairment
Balance at January 1, 2017 - (52,212) (6,300) (58,512)
Amortization expense - (16,587) (153) (16,740)
Disposals - 1,363 - 1,363
Effect of foreign currency exchange
differences - 334 - 334
Balance at December 31, 2017 - (67,102) (6,453) (73,555)
Carrying amount at December 31, 2017 $ 163,259 $ 85,126 $ 627 $ 249,012
The ownership of vehicle registration plates was acquired by Car-Plus (Suzhou) Auto Leasing Co., Ltd. and
Car-Plus Leasing (Shanghai) for operating purposes. The ownership, which can be transacted in the
market and can also be transferred to various vehicles, was classified as an intangible asset with infinite
useful life.
- 42 -
The above intangible assets are depreciated on a straight-line basis over the following estimated useful lives
of the assets:
Computer software 3-5 years
Others 10 years
19. BORROWINGS
a. Short-term borrowings
December 31
2017 2016
Secured borrowings $ 2,681,000 $ 4,260,000
Credit borrowings 34,609,248 24,879,641
$ 37,290,248 $ 29,139,641
The ranges of interest rates on bank loans were 0.66%-6.70% and 0.70%-5.60% per annum as of
December 31, 2017 and 2016, respectively.
The Company pledged installment notes and trade receivables as collateral for short-term loans (see
Note 33).
b. Short-term bills payable
December 31
2017 2016
Commercial paper $ 64,020,000 $ 52,515,000
Less: Unamortized discount on bills payable 152,397 76,073
$ 63,867,603 $ 52,438,927
The range of interest rates 0.57%-1.47% 0.51%-1.47%
c. Long-term borrowings
December 31
2017 2016
Long-term commercial paper payable - unsecured $ 1,948,417 $ 1,946,900
Less: Current portion 749,240 1,197,964
$ 1,199,177 $ 748,936
December 31, 2017
Promissory Institutions Nominal
Amount
Discount
Amount Carrying Value
Non-guaranteed $ 1,950,000 $ (1,583) $ 1,948,417
Less: Current portion 750,000 (760) 749,240
$ 1,200,000 $ (823) $ 1,199,177
- 43 -
The range of interest rates was 0.68%-1.49% per annum.
December 31, 2016
Promissory Institutions Nominal
Amount
Discount
Amount Carrying Value
Non-guaranteed $ 1,950,000 $ (3,100) $ 1,946,900
Less: Current portion 1,200,000 (2,036) 1,197,964
$ 750,000 $ (1,064) $ 784,936
The range of interest rates was 0.68%-1.49% per annum.
20. BONDS PAYABLE
December 31
2017 2016
Unsecured domestic bonds $ 4,350,000 $ 3,000,000
Less: Discounts on bonds payable 7,081 -
$ 4,342,919 $ 3,000,000
a. Unsecured domestic bonds
The Company issued three-year maturity unsecured corporate bonds on June 20, 2014, October 17,
2014, May 12, 2017 and August 11, 2017, with issuance amounts of NT$1.5 billion, NT$1.5 billion,
NT$2 billion and $2.35 billion and simple interest rates of 1.12%, 1.25%, 1.07% and 1.02% payable
annually, respectively. The principal amounts of the bonds are repayable on the maturity date.
Among them, the principal amount of the bonds issued on June 20, 2014 and October 17, 2014 were
repaid on June 20, 2017 and October 17, 2017, respectively.
b. Unsecured domestic convertible bonds
On June 20, 2012, the Company issued its first five-year unsecured domestic convertible bonds, with a
face value of $100 thousand and a total amount of NT$2.5 billion at a conversion rate of 100.5% and
coupon rate of 0%. These bonds began to be traded on the Taipei Exchange (formerly the GreTai
Securities Market) on the issue date. During the issuance period between July 21, 2012 and June 10,
2017, except for the book closing period, bondholders are entitled to convert bonds into the Company’s
common stocks at a conversion price of NT$72.15 per stock. In their meetings in 2016 and 2015, the
Company’s shareholders approved the payment of cash dividends of NT$4.74 and NT$5.19 per stock,
respectively; thus, the bond conversion prices were adjusted to NT$55.48 and NT$59.21, respectively.
In the period between 1 month after issuance and 40 days before the maturity date, if the closing price
of the Company’s stock listed on the Taiwan Stock Exchange exceeds 30% of the conversion price for
30 consecutive days or the total amount outstanding is below 10% of the amount at initial issuance, the
Company has the right to redeem all of the bonds outstanding at face value.
Thirty days before the end of the three years from the bond issuance, bondholders have the right to
exercise their put options and can request that the Company redeem the convertible bonds at face value.
As of June 20, 2016 (the maturity date of redemption), there was no redemption right which had been
exercised by bondholders.
- 44 -
The convertible bond has two components: The liability component and the equity component
accounted for as “capital surplus - options.” This capital surplus was initially recognized at $179,204
thousand. Transaction costs are apportioned between the liability and equity component of the
convertible bonds on the basis of the allocation of proceeds to the liability and equity component when
the bonds are initially recognized. Derivative and non-derivative components recognized amounted to
NT$6,489 thousand and NT$2,322,657 thousand, respectively.
The convertible bonds issued by the Company have been converted into common stocks on October
2016.
Proceeds of the issue (less transaction costs $5,000 thousand) $ 2,507,500
Equity component (179,204)
Deferred tax assets 850
Derivative financial liability component (6,489)
Liability component at the date of issue 2,322,657
Interest charged at an effective interest rate of 1.471606585% 75,070
Convertible bonds converted into common stocks (2,397,727)
Liability component as of December 31, 2016 $ -
21. PROVISIONS - CURRENT
December 31
2017 2016
Financial guarantee provisions $ 293,579 $ 332,021
Warranty provisions 1,657 2,036
$ 295,236 $ 334,057
The customers of the Company and Shinshin signed car loan contracts with banks, with the Company and
Shinshin acting as car loan agents and providing customers with account management services. Under the
contracts, the Company and Shinshin are responsible for repaying any uncollectable loans arising from
customer defaults. The Company and Shinshin have estimated their potential financial guarantee loss on
any default on the basis of past experience.
Sin Jang recognized provisions based on the estimated amount of service costs during the terms of service
warranties of the products.
22. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed
defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and wages.
- 45 -
b. Defined benefit plans
The defined benefit plan adopted by the Group in accordance with the Labor Standards Law is operated
by the government. Pension benefits are calculated on the basis of the length of service and average
monthly salaries of the six months before retirement. The Group contributes amounts equal to 2% of
total monthly salaries and wages to a pension fund administered by the pension fund monitoring
committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.
Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the
balance in the pension fund is inadequate to pay retirement benefits for employees who conform to
retirement requirements in the next year, the Group is required to fund the difference in one
appropriation that should be made before the end of March of the next year. The pension fund is
managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Group has no right to
influence the investment policy and strategy.
The amounts included in the consolidated balance sheet in respect of the Group’s defined benefit plans
were as follows:
December 31
2017 2016
Present value of defined benefit obligation $ 202,714 $ 184,376
Fair value of plan assets (97,949) (97,873)
Net defined benefit liability $ 104,765 $ 86,503
Movements in net defined benefit liability were as follows:
Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Net Defined
Benefit
Liability (Asset)
Balance at January 1, 2016 $ 176,383 $ (62,428) $ 113,955
Service cost
Current service cost 2,425 - 2,425
Interest expense (income) 2,646 (1,011) 1,635
Recognized in profit or loss 5,071 (1,011) 4,060
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 372 372
Actuarial loss - changes in demographic
assumptions 5,713 - 5,713
Actuarial gain - changes in financial
assumptions 6,403 - 6,403
Actuarial loss - experience adjustments (2,138) - (2,138)
Recognized in other comprehensive income 9,978 372 10,350
Contributions from the employer - (41,862) (41,862)
Benefits paid (7,056) 7,056 -
Balance at December 31, 2016 $ 184,376 $ (97,873) $ 86,503
(Continued)
- 46 -
Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Net Defined
Benefit
Liability (Asset)
Balance at January 1, 2017 $ 184,376 $ (97,873) $ 86,503
Service cost
Current service cost 2,087 - 2,087
Interest expense (income) 2,169 (1,197) 972
Recognized in profit or loss 4,256 (1,197) 3,059
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 266 266
Actuarial loss - changes in demographic
assumptions 5,000 - 5,000
Actuarial gain - changes in financial
assumptions (356) - (356)
Actuarial loss - experience adjustments 14,796 - 14,796
Recognized in other comprehensive income 19,440 266 19,706
Contributions from the employer - (4,503) (4,503)
Benefits paid (5,358) 5,358 -
Balance at December 31, 2017 $ 202,714 $ (97,949) $ 104,765
(Concluded)
Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the
following risks:
1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,
bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. However, the return generated by plan assets should not be below the
interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the
defined benefit obligation; however, this will be partially offset by an increase in the return on the
plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the
future salaries of plan participants. As such, an increase in the salary of the plan participants will
increase the present value of the defined benefit obligation.
The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were
as follows:
December 31
2017 2016
Discount rate 1.13%-1.38% 0.88%-1.50%
Long-term average adjustment rate of salary 2.25%-3.00% 2.25%-3.00%
- 47 -
If possible reasonable change in each of the significant actuarial assumptions will occur and all other
assumptions will remain constant, the present value of the defined benefit obligation would increase
(decrease) as follows:
December 31
2017 2016
Discount rate
0.25% increase $ (5,597) $ (5,296)
0.25% decrease $ 5,823 $ 5,518
Long-term average adjustment rate of salary
0.25% increase $ 5,642 $ 5,348
0.25% decrease $ (5,453) $ (5,161)
The sensitivity analysis presented above may not be representative of the actual change in the present
value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in
isolation of one another as some of the assumptions may be correlated.
The average due date of the Group’s expected defined benefit plan and defined benefit obligation within
1 year is as follows:
December 31
2017 2016
The expected contributions to the plan for the next year $ 3,485 $ 2,732
The average duration of the defined benefit obligation 10.0-14.2 years 9.9-14.7 years
23. EQUITY
a. Common stock capital
December 31
2017 2016
Number of stocks authorized (in thousands) 350,000 350,000
Stocks authorized $ 3,500,000 $ 3,500,000
Number of stocks issued and fully paid (in thousands) 274,629 274,629
Stocks issued $ 2,746,292 $ 2,746,292
Fully paid common stocks, which have a par value of $10, carry one vote per stock and carry a right to
dividends.
The change of the Company’s capital is due to convertible bonds converted into common stocks.
- 48 -
b. Capital surplus
December 31
2017 2016
May be used to offset a deficit, distributed as cash dividends, or
transferred to capital stock
Recognized from issuance of common stocks (1) $ 2,539,791 $ 2,539,791
May be used to offset a deficit only
Changes in percentage of ownership interest in subsidiaries (2) 1,017 1,017
Recognized from change in capital surplus of associates or
joint venture 1,152 1,152
$ 2,541,960 $ 2,541,960
1) The capital surplus recognized from stocks issued in excess of par may be used to offset a deficit; in
addition, when the Company has no deficit, such capital surplus may be distributed as cash
dividends or transferred to capital stock (limited to a certain percentage of the Company’s capital
surplus).
2) The capital surplus arose from the effect of changes in ownership interest that resulted from equity
transactions other than actual disposal or acquisition.
c. Retained earnings and dividends policy
In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and
bonuses are limited to shareholders and do not include employees. The shareholders held their regular
meeting on June 22, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of
Incorporation (the “Articles”), particularly the amendment to the policy on dividends distribution and
the addition of the policy on the distribution of employees’ compensation.
Under the dividends policy as set forth in the amended Articles, where the Company made profit in a
fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting
aside as a legal reserve 10% of the remaining profit unless the legal reserve equals the Company’s
paid-in capital, setting aside or reversing special reserve in accordance with the laws and regulations,
and then any remaining profit together with any undistributed retained earnings shall be used by the
Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in
the shareholders’ meeting for the distribution of dividends and bonuses to shareholders.
1) The Company’s operating environment is in a mature industry. The Company shall consider
profitability, future operating plans and funding needs, industry conditions, shareholders’ rights and
a balanced dividends policy in the distribution of earnings. Dividends may be paid in cash or
stock, and should not be lower than 50% of distributable net profit. Each year’s cash dividends
should not be lower than 20% of total dividends.
2) The Company shall not pay dividends or bonuses if there is no surplus of earnings.
3) Where the legal reserve is distributed by issuing new shares or by cash, only the portion of legal
reserve in excess of 25% of the paid-in capital may be distributed.
For the policies on the distribution of employee’s compensation and remuneration of directors and
supervisors before and after amendment, refer to employees’ compensation and remuneration of
directors and supervisors in Note 25 f.
- 49 -
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s
paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the
legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be either transferred
to capital or distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Company.
The appropriations of earnings for 2016 and 2015 approved in the shareholders’ meetings on June 27,
2017 and June 22, 2016, respectively, were as follows:
Appropriation of Earnings Dividends Per Share (NT$)
For the Year Ended
December 31
For the Year Ended
December 31
2016 2015 2016 2015
Legal reserve $ 173,307 $ 142,505
Special reserve 230,459 -
Cash dividends 1,320,967 1,269,933 $4.81 $4.74
The appropriations of earnings for 2017 had been proposed by the Company’s board of directors on
March 26, 2018. The appropriations and dividends per share were as follows:
Appropriation
of Earnings
Dividends Per
Share (NT$)
Legal reserve $ 232,423
Reversal of special reserve 35,588
Special reserve 81,580
Cash dividends 1,620,312 $5.90
The appropriations of earnings for 2017 are subject to the resolution of the shareholders’ meeting to be
held on June 26, 2018.
d. Special reserve
Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and in the
directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of
IFRSs” should be appropriated to or reversed from a special reserve by the Company.
The Company’s special reserve appropriated following first-time adoption of IFRSs was $35,588
thousand.
According to the regulation of special reserve appropriation, additional special reserve should be
appropriated at the amount equal to the difference between the net debit balance of reserves and the
amount of special reserve that was appropriated on the first-time adoption of IFRSs. Any special
reserve appropriation may be reversed to the extent that the net debit balance reverses and thereafter
distributed. In 2017 and 2016, since the Company had a net debit balance, special reserve was
appropriated from the earnings following these rules.
- 50 -
e. Other equity items
Movements in the other equity items in 2017 and 2016 were as follows:
Exchange
Differences on
Translating
Foreign
Operations
Unrealized
Gains
(Losses) on
Available-for-
sale Financial
Assets
Unrealized
Gains (Losses)
on Cash Flow
Hedge Total
Balance at January 1, 2016 $ 95,083 $ (1,053) $ (721) $ 93,309
Changes in the fair value of
hedging instruments -
interest rate swaps - - 721 721
Share of subsidiaries and
associates accounted for
using the equity method (323,310) (1,179) - (324,489)
Balance at December 31, 2016 $ (228,227) $ (2,232) $ - $ (230,459)
Balance at January 1, 2017 $ (228,227) $ (2,232) $ - $ (230,459)
Changes in the fair value of
hedging instruments -
interest rate swaps - - (201) (201)
Share of subsidiaries and
associates accounted for
using the equity method (84,343) 2,963 - (81,380)
Balance at December 31, 2017 $ (312,570) $ 731 $ (201) $ (312,040)
f. Non-controlling interests
For the Year Ended December 31
2017 2016
Balance at January 1 $ 2,199,513 $ 2,242,326
Attributable to non-controlling interests:
Non-controlling interest arising from acquisition of
subsidiaries - 113,858
Non-controlling interest arising from cash capital increase of
subsidiaries 1,173,765 -
Exchange difference arising on translation of foreign entities (42,395) (148,143)
Cash dividends from subsidiaries paid to minority
shareholders (128,367) (110,668)
Share of profit for the year 205,054 104,566
Remeasurement on defined benefit plans (3,067) (1,409)
Adjustment relating to changes in capital surplus of associates
and joint ventures accounted for using the equity method - (1,017)
Balance at December 31 $ 3,404,503 $ 2,199,513
- 51 -
24. REVENUE
a. Interest revenue from acquired accounts receivable
Interest revenue from the accounts receivable acquired in the years ended December 31, 2017 and 2016
was $3,888,908 thousand and $3,355,585 thousand, respectively. As of December 31, 2017 and 2016,
the uncollected accounts receivable of the Company, Shinshin and Yu Rich collectively were
$66,619,790 thousand and $54,195,274 thousand, respectively, and were recognized as accounts
receivable.
b. Agency revenue
Agency revenue recognized for the years ended December 31, 2017 and 2016 was $613,540 thousand
and $768,211 thousand, respectively. In the event that payments were not made by the due dates, the
Company and Shinshin reimbursed the bank of the loan and assumes all collection rights against the
debtor. As of December 31, 2017 and 2016, the managerial service account balances of the loans
provided by the Company and Shinshin collectively were $7,795,491 thousand and $8,803,363
thousand, respectively. The reimbursements from the Company and Shinshin to banks as of
December 31, 2017 and 2016 were $1,495,445 thousand and $2,818,948 thousand, respectively. The
reimbursements to banks were listed as accounts receivable before recognition of interest revenue from
the acquired accounts receivable.
The amounts of financial guarantee contracts listed above were the maximum total managerial service
loans provided by the Group that require full payment by the Group in the event of a debtor’s default.
The Group had estimated the potential financial guarantee loss on any default on the basis of past
experience (see Note 21).
25. NET PROFIT AND OTHER COMPREHENSIVE INCOME (LOSS)
Net profit for the years ended December 31, 2017 and 2016 contained the following components:
a. Other operating income and expense, net
For the Year Ended December 31
2017 2016
Commission revenue $ 450,916 $ 343,265
Gain on reversal of bad debts 190,565 204,904
Impairment losses on rental assets (1,299) (30,372)
Government subsidy revenue 3,596 20,504
Others 86,906 36,469
$ 730,684 $ 574,770
b. Finance costs
For the Year Ended December 31
2017
2016
Interest on bank loans
$ 1,387,376
$ 825,132
Interest on corporate bonds 47,225 38,947
Others 54,209 59,475
$ 1,488,810 $ 923,554
- 52 -
c. Depreciation and amortization
For the Year Ended December 31
2017
2016
Property, plant and equipment $ 4,896,647 $ 4,633,072
Intangible assets 16,740 14,507
$ 4,913,387 $ 4,647,579
An analysis of depreciation by function
Operating costs $ 4,806,848 $ 4,548,685
Operating expenses 89,799 84,387
$ 4,896,647 $ 4,633,072
An analysis of amortization by function
Operating expenses $ 16,740 $ 14,507
d. Other gains and losses
For the Year Ended December 31
2017 2016
Net foreign exchange gains (losses) $ 39,546 $ (291,601) Others (32,757) (34,589)
$ 6,789 $ (326,190)
e. Employee benefits expense
For the Year Ended December 31
2017 2016
Short-term benefits
Payroll expenses $ 1,674,156 $ 1,492,894
Labor insurance and health insurance expenses 113,271 96,522
Other personnel expenses 67,926 35,956
1,855,353 1,625,372
Post-employment benefits (Note 22)
Defined contribution plans 53,258 46,312
Defined benefit plans 3,059 4,060
56,317 50,372
$ 1,911,670 $ 1,675,744
An analysis of employee benefits expense by function
Operating costs $ 54,557 $ 54,566
Operating expenses 1,857,113 1,621,178
$ 1,911,670 $ 1,675,744
- 53 -
f. Employees’ compensation and remuneration of directors and supervisors for 2017 and 2016
The Company accrued employees’ compensation and remuneration of directors and supervisors at the
rates no less than 0.1% and no higher than 0.5%, respectively, of net profit before income tax,
employees’ compensation, and remuneration of directors and supervisors. The employees’
compensation and remuneration of directors and supervisors for the years ended December 31, 2017
and 2016 which have been approved by the Company’s board of directors on March 26, 2018 and
March 20, 2017, respectively, were as follows:
For the Year Ended December 31
2017 2016
Amount
Accrual Rate
(%) Amount
Accrual Rate
(%)
Employees’ compensation $ 21,563 0.80 $ 10,942 0.55
Remuneration of directors and
supervisors 13,518 0.50 10,003 0.50
If there is a change in the amounts after the annual consolidated financial statements were authorized
for issue, the differences are recorded as a change in accounting estimate.
There was no difference between the actual amounts of employees’ compensation and remuneration of
directors and supervisors paid and the amounts recognized in the consolidated financial statements for
the year ended December 31, 2016 and 2015.
Information on the employees’ compensation and remuneration of directors and supervisors resolved by
the board of directors in their meeting in 2018 and in 2017 is available at the Market Observation Post
System website of the Taiwan Stock Exchange.
26. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
For the Year Ended December 31
2017 2016
Current tax
In respect of the current year $ 690,011 $ 498,352
In respect of prior years 1,152 3,131
691,163 501,483
Deferred tax
In respect of the current year (3,062) (33,648)
Income tax expense recognized in profit or loss $ 688,101 $ 467,835
- 54 -
A reconciliation of accounting profit and current income tax expenses is as follows:
For the Year Ended December 31
2017 2016
Profit before tax from continuing operations $ 3,217,382 $ 2,305,472
Income tax expense calculated at the statutory rate $ 771,505 $ 551,838
Add (deduct) tax effect of
Nondeductible expenses in determining taxable income 4,627 906
Tax-exempt income (157,593) (117,948)
Unrecognized temporary differences 64,803 29,894
Additional income tax on unappropriated earnings 3,607 13
Adjustments for prior years’ tax 1,152 3,132
Income tax expense recognized in profit or loss $ 688,101 $ 467,835
The applicable tax rate used above is the corporate tax rate of 17% payable by the Group in ROC.
In February 2018, it was announced by the President that the Income Tax Act in the ROC was amended
and, starting from 2018, the corporate income tax rate will be adjusted from 17% to 20%. In addition,
the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to
5%. Deferred tax assets and deferred tax liabilities recognized as at December 31, 2017 are expected
to be adjusted and would increase by $71,331 thousand and $135,155 thousand, respectively, in 2018.
As the status of the 2018 appropriation of earnings is uncertain, the potential income tax consequences
of the 2017 unappropriated earnings are not reliably determinable.
b. Income tax recognized in other comprehensive income
For the Year Ended December 31
2017 2016
Deferred tax
In respect of the current year:
Remeasurement on defined benefit plan $ 3,260 $ 1,673
c. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2017
Opening
Balance
Recognized
in Profit or
Loss
Recognized
in Other
Comprehen-
sive Income Exchange
Differences Closing
Balance
Deferred tax assets
Allowance for doubtful
accounts $ 276,891 $ 63,214 $ - $ 4,009 $ 344,114
Property, plant and
equipment 156,074 10,241 - 2,077 168,392
(Continued)
- 55 -
Opening
Balance
Recognized
in Profit or
Loss
Recognized
in Other
Comprehen-
sive Income Exchange
Differences Closing
Balance
Loss carryforward $ 7,231 $ (7,231) $ - $ - $ -
Others 17,475 8,803 3,260 - 29,538
$ 457,671 $ 75,027 $ 3,260 $ 6,086 $ 542,044
Deferred tax liabilities
Property, plant and
equipment $ 614,758 $ 12,013 $ - $ - $ 626,771
Share of profit of
associates - foreign 79,143 57,943 - - 137,086
Others 12 2,009 - - 2,021
$ 693,913 $ 71,965 $ - $ - $ 765,878
(Concluded)
For the year ended December 31, 2016
Opening
Balance
Recognized
in Profit or
Loss
Recognized
in Other
Comprehen-
sive Income Exchange
Differences Closing
Balance
Deferred tax assets
Allowance for doubtful
accounts $ 228,228 $ 55,452 $ - $ (6,789) $ 276,891
Property, plant and
equipment 160,073 799 - (4,798) 156,074
Loss carryforward 15,164 (7,933) - - 7,231
Others 17,570 (1,768) 1,673 - 17,475
$ 421,035 $ 46,550 $ 1,673 $ (11,587) $ 457,671
Deferred tax liabilities
Property, plant and
equipment $ 598,500 $ 16,258 $ - $ - $ 614,758
Share of profit of
associates - foreign 82,511 (3,368) - - 79,143
Others - 12 - - 12
$ 681,011 $ 12,902 $ - $ - $ 693,913
- 56 -
d. Integrated income tax
December 31
2017 2016
Unappropriated earnings
Generated before January 1, 1998 $ - $ 212,608
Generated on and after January 1, 1998 - 2,884,313
$ - $ 3,096,921
(Note)
Imputation credits account $ - $ 372,568
(Note)
For the Year Ended December 31
2017 2016
Creditable ratio for distribution of earnings Note 23.10%
Note: Since the amended Income Tax Act announced in February 2018 abolished the imputation tax
system, related information for 2017 is not applicable.
e. Income tax assessments
The latest year of income tax returns of the Company and its subsidiaries which had been assessed and
cleared by the tax authorities were as follows:
Company Year
The Company 2015
Shinshin 2015
Car-plus Corporation 2015
Diamond Leasing 2015
H. K. Manpower 2015
Sin Jang 2015
Yu Rich 2015
Da-Wei -
Da-Teng 2016
The tax returns of the Company through 2015 have been assessed by the tax authorities. The
Company disagreed with the tax authorities’ assessment of its 2014 and 2015 tax return and applied for
a re-examination. The Company has recorded related estimated income tax expenses accordingly.
27. EARNINGS PER SHARE
Unit: NT$ Per Share
For the Year Ended December 31
2017 2016
Basic earnings per share $ 8.46 $ 6.41
Diluted earnings per share $ 8.46 $ 6.32
- 57 -
The net profit for the year and the weighted average number of stocks outstanding used for the earnings per
share computation were as follows:
Net Profit for the Year
For the Year Ended December 31
2017 2016
Profit for the period attributable to owners of the Company $ 2,324,227 $ 1,733,071
Effect of potentially dilutive common stocks:
Interest on convertible bonds (after tax) - 3,454
Earnings used in the computation of diluted earnings per share from
continuing operations $ 2,324,227 $ 1,736,525
Stocks
Unit: Thousand Stocks
For the Year Ended December 31
2017 2016
Weighted average number of common stocks in computation of basic
earnings per share 274,629 270,460
Effect of potentially dilutive common stocks:
Conversion of convertible bonds - 4,188
Employees’ compensation or bonuses issued to employees 222 194
Weighted average number of common stocks used in the
computation of diluted earnings per share 274,851 274,842
Since the Group offered to settle compensation or bonuses paid to employees by cash or stocks, the Group
assumed the entire amount of the compensation or bonuses will be settled in stocks and the resulting
potential stocks were included in the weighted average number of stocks outstanding used in the
computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential
stocks is included in the computation of diluted earnings per share until the number of stocks to be
distributed to employees is resolved in the following year.
28. BUSINESS COMBINATIONS
a. Subsidiaries acquired
Principal Activity
Date of
Acquisition
Proportion of
Voting Equity
Interests
Acquired (%)
Consideration
Transferred
Yu Rich Installment financing
services for consumer
goods, and wholesale
of cars and parts
January 20, 2016 82.12 $ 500,001
Zhejiang Cheng Yi
Auto Service Co.,
Ltd.
Advisory services and
business agent of
secondhand vehicles
August 22, 2016 50.00 $ 32,419
(Note)
(Continued)
- 58 -
Principal Activity
Date of
Acquisition
Proportion of
Voting Equity
Interests
Acquired (%)
Consideration
Transferred
Hangzhou Cheng Yi
Jian Used-cars
Authenticate &
Evaluation Service
Co., Ltd. (Subsidiary
of Zhejiang
Cheng-Yi Auto
Service Co., Ltd.)
Secondhand vehicle
authenticate and
evaluation service
August 22, 2016 90.00 $ -
Da-Teng Taxi Transportation April 6, 2017 100.00 $ 1,235
(Concluded)
Note: The transfer price includes the price paid for acquiring Hangzhou Cheng Yi Jian Used-cars
Authenticate & Evaluation Service Co., Ltd.
The Company invested in Yu Rich Financial Services Co., Ltd., Zhejiang Cheng-Yi Auto Service Co.,
Ltd. and Hangzhou Cheng Yi Jian Used-cars Authenticate & Evaluation Service Co., Ltd. in 2016 to
expand the Group’s business in installment financing services for consumer goods, sale and brokerage
of secondhand vehicles and secondhand vehicles authentication and evaluation service, respectively.
b. Assets acquired and liabilities assumed at the date of acquisition
Yu Rich
Zhejiang
Cheng-Yi Auto
Service Co.,
Ltd. and Its
Subsidiaries
Current assets
Cash and cash equivalents $ 520,243 $ 18,789
Available-for-sale financial assets - 32,151
Financial assets at fair value through profit or loss 10,199 -
Trade receivables - 135
Other receivables 119 352
Prepayments 77,319 -
Other current assets 2,820 10,313
Property, plant and equipment - 2,266
Intangible assets - 4,457
Non-current assets
Refundable deposits 11 -
Current liabilities
Trade payables (359) (494)
Other payables (2,065) -
Other current liabilities - (3,812)
$ 608,287 $ 64,157
- 59 -
c. Net cash (inflow) outflow on acquisition of subsidiaries
Yu Rich
Zhejiang
Cheng-Yi Auto
Service Co.,
Ltd. and Its
Subsidiaries
Consideration paid in cash $ 500,001 $ 32,419
Less: Cash and cash equivalent balances acquired (520,243) (18,789)
$ (20,242) $ 13,630
d. Impact of acquisitions on the results of the Group
The results of the acquirees as of December 31, 2017 included in the consolidated statements of
comprehensive income were as follows:
Yu Rich
Zhejiang
Cheng-Yi Auto
Service Co.,
Ltd. and Its
Subsidiaries
Revenue $ 548,826 $ 17,514
Profit (Loss) $ 95,799 $ (7,509)
29. OPERATING LEASE ARRANGEMENTS
The Company and its subsidiaries lease offices with monthly rental payments and a maturity date in
September 2026. For the years ended December 31, 2017 and 2016, rental expenses were $186,394
thousand and $168,644 thousand, respectively. The future five-year minimum lease payments under
operating lease commitments were as follows:
Year Amount
Not later than 1 year $ 144,045
Later than 1 year, and not later than 5 years 329,181
Later than 5 years 46,459
$ 519,685
30. CAPITAL MANAGEMENT
The Group manages its capital to ensure it will be able to continue as going concern while maximizing the
return to shareholders through maintaining a strong credit rating and optimization of the debt and equity
balance. The Group’s management reviews the capital structure whenever necessary. As part of this
review, the management considers the cost of capital and the risks associated with each class of capital.
Based on the management’s recommendations, the Group expects to balance its capital structure by paying
dividends issuing new shares, buying treasury stocks, borrowing new loans or repaying original loans.
- 60 -
31. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments that are not measured at fair value
1) Financial instruments with carrying amounts and fair values that have significant differences were
as follows:
December 31
2017 2016
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial assets
Held-to-maturity
investments-central
government development
bonds $ 16,632 $ 17,058 $ 17,095 $ 17,327
Financial liabilities
Unsecured bonds 4,342,919 4,350,436 3,000,000 3,003,797
2) Fair value hierarchy
Financial assets and liabilities above that are not measured at fair value are measured using Level 1
inputs.
b. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy
December 31, 2017
Level 1 Level 2 Level 3 Total
Financial assets at FVTPL
Non-derivative financial
assets held for trading $ 19,728 $ - $ - $ 19,728
Financial liabilities at
FVTPL
Derivative financial
liabilities $ - $ 201 $ - $ 201
- 61 -
December 31, 2016
Level 1 Level 2 Level 3 Total
Financial assets at FVTPL
Non-derivative financial
assets held for trading $ 11,155 $ - $ - $ 11,155
Available-for-sale financial
assets
Wealth management
product $ - $ 19,088 $ - $ 19,088
Financial liabilities at
FVTPL
Derivative financial
liabilities $ - $ 1,145 $ - $ 1,145
There were no transfers between Levels 1 and 2 in the current and prior periods.
2) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value
measurement
Financial Instruments Valuation Techniques and Inputs
Derivatives - foreign exchange
forward contracts
Discounted cash flow.
Future cash flows were estimated based on observable forward
exchange rates at the end of the reporting period and contract
forward rates, discounted at a rate that reflects the credit risk
of various counterparties.
Convertible bond redemption
rights and put provisions
Binomial tree model.
Fair value of financial asset component of convertible bonds was
assessed by the following factors: Market price of stock,
risk-free interest rate, and risk discount rate.
Wealth management product Discounted cash flow.
Fair value of financial asset component of wealth management
product was assessed by the generally accepted pricing model
on the basis of a discounted cash flow analysis.
- 62 -
c. Categories of financial instruments
December 31
2017 2016
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading $ 19,728 $ 11,155
Available-for-sale financial assets - 19,088
Held-to-maturity investments 16,632 17,095
Loans and receivables (1) 114,197,605 91,740,993
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading - 1,145
Designated hedging instruments 201 -
Amortized cost (2) 119,342,601 96,755,171
1) The balances included cash and cash equivalents, notes and trade receivables, finance lease
receivables, debt investments with no active market, and other receivables.
2) The balances included financial liabilities measured at amortized cost, which comprise of short-term
borrowings, short-term bills payable, notes and trade payable, other payables, guarantee deposits
received, current portion of long-term borrowings, bonds payable and long-term borrowings.
d. The purpose and strategy of financial risk management
The objective of financial risk management policy of the Group is to identify and analyze the financial
risk the Group faces, to assess its impact and to execute financial risk avoidance policy. Financial risk
management policy is periodically reviewed and monitored, through in depth and broad risk analysis
report of the financial risk of the Group, to reflect market conditions and daily operation of the
Company and subsidiaries. Financial risks include market risk (foreign exchange rate risk, interest
rate risk, other price risk), credit risk and liquidity risk.
1) Market risk
The Group’s activities exposed it primarily to the financial risks of changes in foreign currency
exchange rates (see (a) below) and interest rates (see (b) below).
a) Foreign currency risk
The carrying amounts of the Group’s non-functional currency denominated monetary assets and
monetary liabilities (including the non-functional currency monetary items that have been
written off within the consolidated statement) and of the derivatives are exposed to foreign
currency risk at the end of the reporting period (see Note 34).
Sensitivity analysis
The Group was mainly exposed to the fluctuation of USD and RMB.
- 63 -
The following table details the Group’s sensitivity to a 5% increase and decrease in New
Taiwan dollars (the functional currency) against the relevant foreign currencies. The
sensitivity rate of 5% is used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis included only outstanding foreign
currency denominated monetary items, and adjusts their translation at the end of the reporting
period for a 5% change in foreign currency rates.
USD Impact RMB Impact
For the Year Ended
December 31
For the Year Ended
December 31
2017 2016 2017 2016
Profit or loss $ (56,457) $ (51,703) $ 5 $ 6
b) Interest rate risk
The Group issues corporate bonds, issues fixed rate commercial paper and enters into New
Taiwan dollar interest rate swap contracts according to market and capital conditions, in order to
reduce the risk of increasing interest expense due to rising interest rates.
The carrying amount of the Group’s financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows:
December 31
2017 2016
Fair value interest rate risk
Financial assets $ 81,876,480 $ 75,014,705
Financial liabilities 88,282,418 75,635,800
Cash flow interest rate risk
Financial assets 2,967,908 2,449,217
Financial liabilities 21,969,151 12,399,641
Sensitivity analysis
The sensitivity analyses below were determined based on the Group’s exposure to interest rates
for both derivatives and non-derivative instruments at the end of the reporting period.
If interest rates had been 25 basis points higher/lower and all other variables were held constant,
the Group’s pre-tax profit for the years ended December 31, 2017 and 2016 would decrease by
$47,503 thousand and $24,876 thousand, respectively.
c) Other price risk
The Group was exposed to equity price risk through its investments in securities.
Sensitivity analysis
The sensitivity analyses below were determined based on the exposure to equity price risks at
the end of the reporting period.
If equity prices had been 5% higher/lower, as of December 31, 2017 and 2016, fair values of
available-for-sale investments would have decreased/increased by $986 thousand and $1,512
thousand, respectively.
- 64 -
2) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the Group. To enhance the Group’s credit risk control mechanism, the Group
exchanges information with companies within its industry to build customer blacklists. Also, the
Group reviews customers’ credit statuses through China Credit Information Service Ltd. upon
approval of each loan. These procedures are taken as ways of preventing losses due to fraud.
The clients of the Group are widely dispersed and are unrelated; thus, credit risk is limited.
3) Liquidity risk
The Group analyzes its assets and liabilities to examine capital shortages on a monthly basis.
Adequate liquidity ratio and high quality current assets are also maintained simultaneously. The
management monitors the usage of credit limits to ensure compliance with loan contracts.
Liquidity and interest risk tables
The following table shows the remaining contractual maturity of the Group’s non-derivative
financial liabilities with agreed-upon repayment periods. The table had been drawn up on the
basis of the undiscounted cash flows of financial liabilities from the earliest date on which the
Company is required of payment.
December 31, 2017
Less than
1 Year 1-2 Years 2+ Years
Non-derivative financial liabilities
Non-interest bearing $ 1,447,592 $ - $ -
Variable interest rate liabilities 21,969,248 - -
Fixed interest rate liabilities 84,933,159 1,200,000 -
Financial guarantee contracts 7,795,491 - -
$ 116,145,490 $ 1,200,000 $ -
December 31, 2016
Less than
1 Year 1-2 Years 2+ Years
Non-derivative financial liabilities
Non-interest bearing $ 856,980 $ - $ -
Variable interest rate liabilities 12,399,641 - -
Fixed interest rate liabilities 73,452,964 750,000 -
Financial guarantee contracts 8,803,363 - -
$ 95,512,948 $ 750,000 $ -
The amount of variable interest rate liabilities included above varies as the different floating rates
estimated at the balance sheet date change.
- 65 -
The amounts included above for financial guarantee contracts were the maximum amounts the
Group could be required to settle under the arrangement for the full guaranteed amount if that
amount is claimed by the counterparty to the guarantee. The Group has estimated the probabilities
of default and recognized related provisions (see Note 21).
32. TRANSACTIONS WITH RELATED PARTIES
The Company’s parent company is Yulon Motor Company Ltd. (“Yulon Company”) which held 45.75% of
ordinary shares of the Company for the years ended December 31, 2017 and 2016. The Company’s
ultimate parent company is Yulon Company.
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and are not disclosed in this note. Details of
transactions between the Group and other related parties are disclosed below.
a. Related party name and nature of relationship
Related Party Nature of Relationship
Yulon Motor Co., Ltd. Parent entity
Qinton Motor Co., Ltd. Fellow subsidiaries related to the others
Singgual Travel Service Co., Ltd. Fellow subsidiaries related to the others
Yu Sing Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Pool Co., Ltd. Fellow subsidiaries related to the others
Yushin Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Chia Motor Co., Ltd. Fellow subsidiaries related to the others
Singan Co., Ltd. Fellow subsidiaries related to the others
Y-Teks Co., Ltd. Fellow subsidiaries related to the others
Union & NKH Auto Parts Co., Ltd. Fellow subsidiaries related to the others
Yueki Industrial Co., Ltd. Fellow subsidiaries related to the others
Yu Chang Motor Co., Ltd. Fellow subsidiaries related to the others
Tian Wang Co., Ltd. Fellow subsidiaries related to the others
Hsiang Shou Enterprise Co., Ltd. Fellow subsidiaries related to the others
Hong Shou Culture Enterprise Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Taipei Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Taoyuan Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Tainan Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Kaohsiung Co., Ltd. Fellow subsidiaries related to the others
Yulon Energy Service Co., Ltd. Fellow subsidiaries related to the others
Shen Jun Yu Peng Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Nanjing Hanhong Motor Trading Co., Ltd. Fellow subsidiaries related to the others
Wuhan Yu Hsin Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Suzhou Yueshun Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Zhuhai Yuhsin Auto Sales & Parts Co., Ltd. Fellow subsidiaries related to the others
Ning Bo Yu Cheng Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Fu Jian Yu Xin Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Guang Zhou Yuan Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Xiao Gan Yu Feng Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Shenzhen Yu Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Chang Sha Yu Lu Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Jiangmen Yuli Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
(Continued)
- 66 -
Related Party Nature of Relationship
An Hui Min Tung Co., Ltd. Fellow subsidiaries related to the others
An Ching Tsai Tung Co., Ltd. Fellow subsidiaries related to the others
Tung Ling Kuo Tung Co., Ltd. Fellow subsidiaries related to the others
Zi Bo Yu An Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Yulon Motor Investment Limited Fellow subsidiaries related to the others
Ka Shing Yu Da Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Yue Sheng Industrial Co., Ltd. Fellow subsidiaries related to the others
Chan Yun Technology Co., Ltd. Fellow subsidiaries related to the others
Yulon Tobe Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Pong Business Co., Ltd. Fellow subsidiaries related to the others
Hang Zhou Hua You Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Qingdao Yuanhuang Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Hang Zhou Hua Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Chanchen Inter Consulting Fellow subsidiaries related to the others
Yu-Jan Co., Ltd. Fellow subsidiaries related to the others
SinYi Co., Ltd. Other related parties
Yulon Nissan Motor Co., Ltd. Other related parties
China Motor Company Other related parties
Yuan Lon Motor Co., Ltd. Other related parties
Yu Tang Motor Co., Ltd. Other related parties
Cheng Long Co., Ltd. Other related parties
ROC-Spicer Ltd. Other related parties
Uni-calsonic Co., Ltd. Other related parties
China Ogihara Company Other related parties
China Engine Company Other related parties
Yuan Zhi Motor Co., Ltd. Other related parties
Lian Cheng Motor Co., Ltd. Other related parties
Ding Long Motor Co., Ltd. Other related parties
Haitec Co., Ltd. Other related parties
Yuen-jin Industrial Co., Ltd. Other related parties
Taiway Industrial Co., Ltd. Other related parties
ROC-Keeper Co., Ltd. Other related parties
Kian-shen Industrial Co., Ltd. Other related parties
Hui-Fong Motor Co., Ltd. Other related parties
Hui-Lian Motor Co., Ltd. Other related parties
Yulon Management Co., Ltd. Other related parties
Zhe Jiang Kang Da Co., Ltd. Other related parties
Shug Ye Motor Co., Ltd. Other related parties
Hua Ling Co., Ltd. Other related parties
Chi Ho Company Other related parties
Lin Wei Co., Ltd. Other related parties
Diamond Hosiery & Thread Co., Ltd. Other related parties
Hua Chiun Motor Co., Ltd. Other related parties
Xiang Wei Co., Ltd. Other related parties
ChangYu Co., Ltd. Other related parties
Dongguan HuaShun Co., Ltd. Other related parties
Tianjin HuaHong Co., Ltd. Other related parties
Guangzhou HuaYou Co Ltd. Other related parties
Empower Motor Co., Ltd. Associates
Tokio Marine Newa Insurance Co., Ltd. Associates
Shanghai Yuming Auto Sale & Service Co., Ltd. Associates
Chunmin Enterprise Co., Ltd. Associates
(Concluded)
- 67 -
b. Operating revenue
For the Year Ended December 31
Line Items Related Party Categories 2017 2016
Sales of goods Fellow subsidiaries related to the
others
Yu Chang Motor $ 4,472,038 $ 4,788,489
Others 16,541,040 18,357,279
21,013,078 23,145,768
Other related parties 14,009,842 15,224,268
Associates 3,059,283 2,955,685
$ 38,082,203 $ 41,325,721
Leasing revenue Fellow subsidiaries related to the
others
Yu Sing Motor $ 20,444 $ 16,106
Hsiang Shou 16,092 7,980
Luxgen Motor. 13,856 14,872
Others 17,726 20,796
68,118 59,754
Other related parties 53,984 52,486
Parent entity 7,525 7,615
Associates 3,910 2,851
$ 133,537 $ 122,706
Other operating revenue Fellow subsidiaries related to the
others
$ 60,113
$ 48,041
Other related parties 15,205 14,823
Associates 4,828 3,751
Parent entity 1,849 1,622
$ 81,995 $ 68,237
The Group sells cars from Yulon Company to dealers at cost or no mark-up. Therefore, the sales and
cost of goods sold resulted in zero-profit and were not included in the accompanying consolidated
statements of comprehensive income. Such sales and cost of goods sold together amounted to
$40,146,679 thousand for the year ended December 31, 2017 and $56,550,184 thousand for the year
ended December 31, 2016, respectively.
The Group’s lease contracts with and rental charged to related parties are the same as normal
transactions.
- 68 -
c. Purchases of goods
For the Year Ended December 31
Related Parties Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 29,375,994 $ 31,125,416
Others 4,630 4,748
29,380,624 31,130,164
Fellow subsidiaries related to the others
Luxgen Motor. 10,968,721 12,201,486
Others 2,795 620
10,971,516 12,202,106
$ 40,352,140 $ 43,332,170
d. Operating cost - leasing cost
For the Year Ended December 31
Related Parties Categories 2017 2016
Other related parties
Hui-Fong Motor $ 52,960 $ 52,492
Shug Ye Motor 33,704 32,134
Others 16,543 15,742
103,207 100,368
Associates
Tokio Marine Newa Insurance 77,412 74,898
Others 5,630 3,331
83,042 78,229
Fellow subsidiaries related to the others 53,323 47,889
Parent entity 938 975
$ 240,510 $ 227,461
e. Installment sales interest subsidies revenue
For the Year Ended December 31
Related Parties Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 353,997 $ 491,097
Others 8,908 10,601
362,905 501,698
Fellow subsidiaries related to the others 59,014 56,997
Associates 4,393 2,959
$ 426,312 $ 561,654
- 69 -
f. Acquisition of receivables
For the Year Ended December 31
Related Parties Categories 2017 2016
Fellow subsidiaries related to the others
Yu Chang Motor $ 1,703,773 $ 1,973,981
Others 6,487,069 5,798,956
8,190,842 7,772,937
Other related parties
Yulon Nissan Motor 2,032,306 1,963,839
Others 4,197,264 4,929,087
6,229,570 6,892,926
Associates 1,286,986 1,190,076
$ 15,707,398 $ 15,855,939
g. Acquisition of property, plant and equipment (acquisition of assets for lease)
For the Year Ended December 31
Related Parties Categories 2017 2016
Fellow subsidiaries related to the others
Yu Sing Motor $ 336,714 $ 315,095
Others 463,814 492,614
800,528 807,709
Other related parties
Hui-Fong Motor 450,257 493,494
Others 397,152 231,433
847,409 724,927
Associates 67,559 47,724
$ 1,715,496 $ 1,580,360
h. Commissions paid (recognized as prepaid commission and allocated according to lease term)
For the Year Ended December 31
Related Parties Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 137,210 $ 213,081
Others 18,090 7,665
155,300 220,746
Fellow subsidiaries related to the others 51,370 37,976
Associates 4,604 1,833
$ 211,274 $ 260,555
- 70 -
i. Receivables from related parties
December 31
Line Items Related Party Categories 2017 2016
Notes and trade receivables
from related parties
Fellow subsidiaries related to the
others
$ 572,067
$ 274,786
Other related parties
Zhe Jiang Kang Da 181,024 46,505
Others 222,262 176,336
403,286 222,841
Associates 131,604 25,504
Parent entity 947 921
$ 1,107,904 $ 524,052
j. Payables to related parties
December 31
Line Items Related Party Categories 2017 2016
Notes and trade payables to Other related parties
related parties Yulon Nissan Motor $ 397,862 $ 254,984
Others 140,475 81,886
538,337 336,870
Fellow subsidiaries related to the
others
288,760
184,112
Associates 11,139 4,574
Parent entity 85 770
$ 838,321 $ 526,326
k. At the end of the reporting period, the amounts of prepayments to related parties were as follows:
December 31
Related Parties Categories 2017 2016
Associates
Tokio Marine Newa Insurance $ 32,775 $ 33,051
Fellow subsidiaries related to the others - 891
Other related parties - 46
Parent entity 5,247 11
$ 38,022 $ 33,999
Other related parties include entities that were accounted for using the equity method by the parent
company and those entities’ subsidiaries and investments accounted for using the equity method.
- 71 -
l. Compensation of key management personnel
For the Year Ended December 31
2017 2016
Short-term employee benefits $ 153,286 $ 112,579
Post-employment benefits 837 901
$ 154,123 $ 113,480
The remuneration of directors and key executives was determined based on the performance of
individuals and market trends.
33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were provided as collateral for bank borrowings:
December 31
2017 2016
Notes and trade receivables $ 2,799,852 $ 4,686,175
Reserve account and pledged time deposits (classified as debt
investments with no active market) 296,361 287,217
$ 3,096,213 $ 4,973,392
34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The following information was aggregated by the foreign currencies other than functional currencies of the
group entities and the exchange rates between foreign currencies and respective functional currencies were
disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:
December 31, 2017
Foreign
Currencies
(In Thousands) Exchange Rate
Carrying
Amount
Financial assets
Monetary items
RMB $ 24 4.5546 (RMB:NTD) $ 107
USD $ 53 29.7600 (USD:NTD) $ 1,574
6 6.5340 (USD:RMB) 173
$ 59 $ 1,747
Non-monetary items
Investments accounted for using equity
method
RMB $ 3,679 4.5546 (RMB:NTD) $ 16,755
(Continued)
- 72 -
Foreign
Currencies
(In Thousands) Exchange Rate
Carrying
Amount
Financial liabilities
Monetary items
USD $ 38,000 6.5340 (USD:RMB) $ 1,130,880
(Concluded)
December 31, 2016
Foreign
Currencies
(In Thousands) Exchange Rate
Carrying
Amount
Financial assets
Monetary items
RMB $ 26 4.649 (RMB:NTD) $ 119
USD $ 5 32.250 (USD:NTD) $ 146
232 6.937 (USD:RMB) 7,471
$ 237 $ 7,617
Non-monetary items
Investments accounted for using equity
method
RMB $ 2,001 4.649 (RMB:NTD) $ 9,304
Financial liabilities
Monetary items
USD $ 32,300 6.937 (USD:RMB) $ 1,041,675
35. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)
3) Marketable securities held (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%
of the paid-in capital (Table 4)
5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in
capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital
(None)
- 73 -
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital (Table 5)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital
(Table 6)
9) Trading in derivative instruments (Notes 7 and 10)
10) Others: Intercompany relationships and significant intercompany transactions (Table 7)
11) Information on investees (Table 8)
b. Information on investments in mainland China are as follows: Investee company, main business and
products, paid-in capital, method of investment, outward/inward remittance of funds, ownership of
investment, investment gain (loss), carrying amount as of December 31, 2017, accumulated repatriation
of investment income and upper limit on the amount of investment (Table 9)
36. SEGMENT INFORMATION
The information reported to the chief operating decision maker for the purpose of resource allocation and
assessment of segment performance focuses on the types of goods or services delivered or provided.
Specifically, Group reportable segments under IFRS 8 “Operating Segments” were “Financing segments”,
“Leasing segments”, and “Others”.
a. Segment revenues and results
The following was an analysis of Group revenue and results from continuing operations by reportable
segment.
Segment Revenue Segment Profit (Loss)
For the Year Ended
December 31
For the Year Ended
December 31
2017 2016 2017 2016
Financing segments $ 6,490,967 $ 5,300,836 $ 2,103,696 $ 1,674,715
Leasing segments 12,682,533 12,033,052 936,455 799,664
Others 308,605 240,365 9,173 34,177
Total from continuing
operations $ 19,482,105 $ 17,574,253 3,049,324 2,508,556
Other income 137,625 105,835
Share of profits of associates
and joint ventures 18,386 15,509
Gain from financial assets at
FVTPL 1,218 1,711
Net loss on disposal of
property, plant and
equipment 4,040 51
Other gains or loss 6,789 (326,190)
Income before income tax $ 3,217,382 $ 2,305,472
Segment revenue reported above represents revenue generated from external customers.
- 74 -
Segment profit represented the profit before tax earned by each segment without other income, share of
profits of associates and jointly controlled entities accounted for using the equity method, gain or loss
from financial assets at FVTPL, other profit or loss, net gain or loss on disposal of property, plant and
equipment, and tax expenses.
This was the measure reported to the chief operating decision maker for the purpose of resource
allocation and assessment of segment performance.
b. Segment assets and liabilities
December 31
2017 2016
Segment assets
Financial segment $ 96,559,155 $ 78,866,168
Leasing segment 38,961,361 31,770,029
Others 793,016 758,678
Consolidated total assets $ 136,313,532 $ 111,394,875
Segment liabilities
Financial segment $ 87,430,755 $ 71,568,031
Leasing segment 34,594,238 27,689,715
Others 282,079 243,589
Consolidated total liabilities $ 122,307,072 $ 99,501,335
c. Geographical information
The Group operates in two principal geographical areas - Taiwan and China.
The Group’s revenue from continuing operations from external customers by location of operations and
information about its non-current assets by location of assets are detailed below.
Revenue from External
Customers Non-current Assets
For the Year Ended December 31 December 31
2017 2016 2017 2016
Taiwan $ 15,530,784 $ 14,796,354 $ 16,127,942 $ 15,192,875
China 3,951,321 2,777,899 2,631,500 1,947,781
$ 19,482,105 $ 17,574,253 $ 18,759,442 $ 17,140,656
Non-current assets do not include the assets that are classified as financial instruments and deferred tax.
d. Information about major customers
No other single customer contributed 10% or more to the Group’s revenue for the years ended
December 31, 2017 and 2016.
- 75 -
TABLE 1
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
FINANCING PROVIDED TO OTHERS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Lender Borrower
Financial
Statement
Account
Related
Parties
Highest
Balance for
the Period
Ending
Balance
Actual
Borrowing
Amount
Interest
Rate
Nature of
Financing
(Note 1)
Business
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Impairment
Loss
Collateral Financing
Limit for
Each
Borrower
Aggregate
Financing
Limits
(Note 2)
Note Item Value
The Company Yu Rich Other receivable Yes $ 800,000 $ 800,000 $ 800,000 1.15% b $ - Operating capital $ - $ - $ 1,060,196 $ 4,240,783 2
TAC Leasing (Suzhou) TAC Financial Leasing Co., Ltd. Trade receivable Yes 45,700 - - - b - Operating capital - - 533,569 533,569 3
TAC Financial Leasing Co., Ltd. Zhe Jiang Kang Da Trade receivable Yes 45,700 - - - b - Operating capital - - 379.864 379,864 3
Shinshin Yu Rich Other receivable Yes 800,000 800,000 800,000 1.16% b - Operating capital - - 1,063,180 1,063,180 4
Note 1: Explanation of nature of financing:
a. Transactions.
b. Short-term financing.
Note 2: Aggregate financing was limited to 40% of the lender’s net equity. Credit financing limit for each borrower was limited to 10% of the lender’s net equity.
Note 3: Credit financing limits for each associate and aggregate financing were limited to 40% of the lender’s net equity. While the financing was provided to non-associates, credit financing limit for each borrower was limited to 20% of the lender’s net equity.
Note 4: Aggregate financing was limited to 40% of the lender’s net equity. Credit financing limits for each borrower were limited to 40% of the lender’s net equity.
- 76 -
TABLE 2
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
ENDORSEMENTS/GUARANTEES PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Endorser/Guarantor
Guaranteed Party
Limits on
Endorsement/
Guarantee
Given to Each
Party (Note)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
Outstanding
Endorsement/
Guarantee at
the End of the
Period
Actual
Borrowing
Amount
Amount
Endorsed/
Guaranteed by
Collaterals
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest Financial
Statements (%)
Maximum
Collateral/
Guarantee
Amounts
Allowable
(Note)
Name Relationship
The Company TAC Leasing (Suzhou) Subsidiaries $ 26,504,895 $ 3,657,628 $ 3,644,000 $ 2,550,800 $ - 34.37 $ 53,009,790
Car-Plus Leasing (Shanghai) Subsidiaries 26,504,895 320,000 320,000 - - 3.02 53,009,790
TAC Financial Leasing Co., Ltd. Subsidiaries 26,504,895 10,000,000 10,000,000 8,360,640 - 94.32 53,009,790
Car-plus Corporation Diamond Leasing Subsidiaries 4,598,118 500,000 500,000 100,000 - 27.19 9,196,235
Car-Plus Leasing (Shanghai) Subsidiaries 4,598,118 480,000 480,000 - - 26.10 9,196,235
Note: The aggregate endorsement/guarantee limit is 500% of the endorser’s/guarantor’s net equity. The limit on each endorsement/guarantee given to each party is 50% of the endorser’s/guarantor’s net equity.
- 77 -
TABLE 3
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Holding Company
Name
Type of Marketable
Securities Name of Marketable Securities
Relationship
with the Holding
Company
Financial Statement Account
December 31, 2017
Note Shares or
Units
Carrying
Amount
Percentage
of
Ownership
(%)
Fair Value
`
The Company Bonds Central Government Development Bonds - Held-to-maturity financial assets - non-current - $ 5,578 - $ 5,693 -
Shinshin Bonds Central Government Development Bonds - Held-to-maturity financial assets - non-current - 11,054 - 11,354 -
H. K. Manpower Beneficiary certificates Union Money Market - Financial assets at fair value through profit or loss - current 234,676 3,082 - 3,082 -
Beneficiary certificates RSIT Enhanced Money Market - Financial assets at fair value through profit or loss - current 253,867 3,021 - 3,021 -
Beneficiary certificates Jih Sun Money Market Fund - Financial assets at fair value through profit or loss - current 205,727 3,029 - 3,029 -
Beneficiary certificates Capital Money Market - Financial assets at fair value through profit or loss - current 128,651 2,063 - 2,063 -
Da-Wei Beneficiary certificates Jih Sun Money Market Fund - Financial assets at fair value through profit or loss - current 579,351 8,533 - 8,533 -
- 78 -
TABLE 4
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Company Name Type and Name of
Marketable Securities
Financial Statement
Account Counterparty Relationship
Beginning Balance Acquisition Disposal Ending Balance
Shares/Units Amount Shares/Units Amount Shares/Units Amount Carrying Value Gain (Loss) on
Disposal Shares/Units Amount (Note)
The Company Yulon Motor Finance
(China)
Investments accounted for
using equity method
Issuance of common
stock for cash
The Company’s
subsidiary
245,000,000 $ 1,099,619 245,000,000 $ 1,128,439 - $ - $ - $ - 490,000,000 $ 2,221,426
Note: The amount is form after adjustments of investments accounted for using the equity method.
- 79 -
TABLE 5
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Purchasing or
(Selling) Company
Name
Related Party Relationship
Transaction Details Abnormal Transaction Notes/Accounts
(Payable) or Receivable Note
Purchase/
(Sale) Amount
% to
Total Payment Terms Unit Price Payment Terms
Ending
Balance
% to
Total
The Company Yulon Nissan Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Purchase $ 29,375,994 65 Within 3 days Same as normal transactions Same as normal transactions $ (397,862) (58) -
Luxgen Motor Co., Ltd. Yulon Company’s subsidiary Purchase 10,967,160 24 Within 3 days Same as normal transactions Same as normal transactions (72,177) (11) -
Sin Jang The Company’s subsidiary Purchase 5,034,276 11 Within 3 days Same as normal transactions Same as normal transactions (960) - -
Yu Chang Motor Co., Ltd. Yulon Company’s subsidiary Sales (4,472,038) (11) Receipt of payment on the day Same as normal transactions Same as normal transactions 44,336 - -
Luxgen Motor Taipei Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (3,625,814) (9) Receipt of payment on the day Same as normal transactions Same as normal transactions 23,447 - -
Yuan Lon Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (3,608,350) (9) Receipt of payment on the day Same as normal transactions Same as normal transactions 8,008 - -
Hui-Lian Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (3,345,218) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 17,813 - -
Yu Sing Motor Co., Ltd. Yulon Company’s subsidiary Sales (3,216,501) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 15,027 - -
Empower Motor Co., Ltd. An associate accounted for using equity method by the Company Sales (3,059,283) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 86,385 - -
Yu Tang Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (2,539,411) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 13,741 - -
Yushin Motor Co., Ltd. Yulon Company’s subsidiary Sales (2,483,437) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 9,791 - -
Cheng Long Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (2,391,845) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 27,723 - -
Luxgen Motor Taichung Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (2,196,992) (5) Receipt of payment on the day Same as normal transactions Same as normal transactions 7,107 - -
Luxgen Motor Taoyuan Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (2,076,170) (5) Receipt of payment on the day Same as normal transactions Same as normal transactions 13,531 - -
Luxgen Motor Kaohsiung Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (1,567,345) (4) Receipt of payment on the day Same as normal transactions Same as normal transactions 5,078 - -
Luxgen Motor Tainan Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (1,374,781) (3) Receipt of payment on the day Same as normal transactions Same as normal transactions 5,024 - -
Ding Long Motor Co., Ltd. Cheng Long Motor Co., Ltd.’s subsidiary Sales (1,211,136) (3) Receipt of payment on the day Same as normal transactions Same as normal transactions 61 - -
Lian Cheng Motor Co., Ltd. Cheng Long Motor Co., Ltd.’s subsidiary Sales (476,844) (1) Receipt of payment on the day Same as normal transactions Same as normal transactions 1,050 - -
Yuan Zhi Co., Ltd. Yuan Lon Motor Co., Ltd.’s subsidiary Sales (437,038) (1) Receipt of payment on the day Same as normal transactions Same as normal transactions 1,994 - -
Sin Jang The Company Parent company Sales (5,034,276) (94) Receipt of payment on the day Same as normal transactions Same as normal transactions 960 2 -
Car-plus Corporation Diamond Leasing Car-plus Corporation’s subsidiary Purchase 751,083 8 Within 1 day Same as normal transactions Same as normal transactions (27,200) (8) -
Hui-Fong Motor Co., Ltd. Related party in substance Purchase 445,868 6 Within 10 days Same as normal transactions Same as normal transactions (9,616) (3) -
Yu Sing Motor Co., Ltd. Yulon Company’s subsidiary Purchase 332,896 4 Within 30 days Same as normal transactions Same as normal transactions (21,648) (6) -
Luxgen Motor Taipei Co., Ltd. Luxgen Motor Co., Ltd. subsidiary Purchase 178,475 2 Within 1 day Same as normal transactions Same as normal transactions (1,552) - -
Diamond Leasing Car-plus Corporation Diamond Leasing’s parent company Sales (751,083) (100) Within 1 day Same as normal transactions Same as normal transactions 27,200 17 -
- 80 -
TABLE 6
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Company Name Related Party Relationship Ending Balance Turnover Rate
Overdue Amounts
Received in
Subsequent
Period
Allowance for
Impairment
Loss Amount Actions Taken
Car-plus Corporation Diamond Leasing Car-plus Corporation’s subsidiary $ 348,118 70% $ - Depends on status of fund $ 62,405 $ -
- 81 -
TABLE 7
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
BUSINESS RELATIONSHIP AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Company Name Counterparty Relationship
(Note)
Transaction Details % to Total
Revenue or
Assets Financial Statement Account Amount Transaction Terms
The Company Sin Jang 1 Operating expenses $ 33,874 Based on regular terms -
1 Accrued expenses 1,156 Based on regular terms -
Yu Rich 1 Operating expenses 54,440 Based on regular terms -
1 Accrued expenses 5,606 Based on regular terms -
1 Other non-operating income 7,466 Based on regular terms -
1 Other receivables 807,466 Based on regular terms -
Car-plus Corporation 1 Operating expenses 3,515 Based on regular terms -
1 Other non-operating income 3,801 Based on regular terms -
Shinshin The Company 2 Operating expenses 21,084 Based on regular terms -
Yu Rich 3 Other receivables 803,014 Based on regular terms -
Car-plus Corporation 3 Operating expenses 2,702 Based on regular terms -
Car-plus Corporation Diamond Leasing 1 Other receivables 345,191 Based on regular terms -
1 Trade receivables 2,927 Based on regular terms -
1 Trade payables 27,276 Based on regular terms -
1 Operating expenses 1,517 Based on regular terms -
1 Rental revenue-lease car (operating revenue) 7,743 Based on regular terms -
1 Other operating revenue (operating revenue) 2,826 Based on regular terms -
1 Rental cost 2,433 Based on regular terms -
H. K. Manpower 1 Other payables 1,862 Based on regular terms -
1 Trade payables 2,173 Based on regular terms
1 Rental cost 19,828 Based on regular terms -
Sin Jang 1 Rental revenue 4,322 Based on regular terms -
TAC Leasing (Suzhou) TAC Financial Leasing 3 Other operating revenue 1,057 Based on regular terms -
Note: The following numerals indicate the directional flow of the transaction based on the parties’ relationships to one another:
1. From the parent company to a subsidiary.
2. From a subsidiary to the parent company.
3. Between subsidiaries.
- 82 -
TABLE 8
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Investor Company Investee Company Location Main Businesses and Products
Investment Amount Balance as of December 31, 2017 Net Income
(Loss) of the
Investee
Share of Profits
(Loss) December 31,
2017
December 31,
2016 Shares
Percentage of
Ownership Carrying Value
The Company Car-plus Corporation Taipei, Taiwan Car lease and trade $ 757,288 $ 757,288 51,491,530 68.57 $ 1,261,245 $ 410,682 $ 281,621
Shinshin Taipei, Taiwan Installment financing services for cars and trucks 419,808 419,808 134,000,000 100.00 2,657,949 480,044 480,044
TAC Global Investment (Samoa) Co., Ltd. Samoa Holding company 1,564,612 1,564,612 50,536,903 100.00 2,082,694 263,935 263,935
Tokio Marine Newa Insurance Co., Ltd. Taipei, Taiwan Property insurance 58,070 58,070 5,807,000 1.94 153,763 888,988 17,259
Empower Motor Co., Ltd. Taichung, Taiwan Retail of cars and related parts 48,843 48,843 7,560,000 27.00 90,943 16,232 4,383
Sin Jang Taipei, Taiwan Sale and brokerage of secondhand vehicles 181,731 181,731 17,128,300 40.00 193,912 30,503 12,200
Yu Rich Taipei, Taiwan Installment financing services for consumer goods and
wholesale of cars and parts
500,001 500,001 45,454,599 82.12 578,389 100,423
82,462
Shinshin Shinshin Global Investment (Samoa) Co., Ltd. Samoa Holding company 389,077 389,077 12,000,000 100.00 400,023 34,510 Not applicable
Car-plus Corporation Diamond Leasing Taipei, Taiwan Car lease and trade 85,000 85,000 8,500,000 100.00 91,771 9,540 Not applicable
Car-Plus Global Investment (Samoa) Co., Ltd. Samoa Holding company 378,187 378,187 12,000,000 100.00 566,367 48,979 Not applicable
Sin Jang Taipei, Taiwan Sale and brokerage of secondhand vehicles 90,811 90,811 8,559,000 19.99 96,898 30,503 Not applicable
Da-Wei Technology Co., Ltd. (“Da-Wei”) Taipei, Taiwan Brokerage of electric vehicles 10,000 10,000 1,000,000 100.00 10,146 164 Not applicable
Da-Wei Technology Co., Ltd. Da-Teng Transportation Co. Taipei, Taiwan Taxi Transportation 1,235 - 500,000 100.00 1,375 140 Not applicable
Diamond Leasing H. K. Manpower Taipei, Taiwan Temporary labor services 10,000 10,000 1,000,000 100.00 15,973 996 Not applicable
Sin Jang Sinjang International Investment (Samoa) Co., Ltd. Samoa Holding company 42,790 42,790 1,336,683 71.34 28,538 (3,327) Not applicable
Car-Plus Global Investment Car-Plus China Investment (Samoa) Co., Ltd. Samoa Holding company 193,004 193,004 6,000,000 60.00 369,953 59,035 Not applicable
(Samoa) Co., Ltd. Car-Plus Shanghai Investment (Samoa) Co., Ltd. Samoa Holding company 185,183 185,183 6,000,000 60.00 196,415 22,596 Not applicable
TAC Global Investment (Samoa) Car-Plus China Investment (Samoa) Co., Ltd. Samoa Holding company 128,647 128,647 4,000,000 40.00 246,635 59,035 Not applicable
Co., Ltd. Car-Plus Shanghai Investment (Samoa) Co., Ltd. Samoa Holding company 123,455 123,455 4,000,000 40.00 130,943 22,596 Not applicable
Yu Rong International Investment (Samoa) Co., Ltd. Samoa Holding company 1,296,290 1,296,290 42,000,000 100.00 1,693,649 232,236 Not applicable
Sinjang International Investment (Samoa) Co., Ltd. Samoa Holding company 16,220 16,220 536,903 28.66 11,465 (3,327) Not applicable
- 83 -
TABLE 9
TAIWAN ACCEPTANCE CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Investee Company Main Businesses and Products Paid-in
Capital
Method of Investment
(Note 1)
Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
January 1,
2017
Remittance of Funds Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
December 31,
2017
Net Income
(Loss) of the
Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)
Carrying
Amount as of
December 31,
2017
Accumulated
Repatriation
of Investment
Income as of
December 31,
2017
Outward Inward
Car-Plus (Suzhou) Auto Leasing Co., Ltd. Lease of cars and related services $ 297,600 b.
Car-Plus China Investment (Samoa)
Co., Ltd.
$ 119,040 $ - $ - $ 119,040 $ 59,035 81.14 $ 47,901
(Note 2, b, 2)
$ 615,464 $ -
Car-Plus Leasing (Shanghai) Lease of cars and related services 297,600 b.
Car-Plus Shanghai Investment
(Samoa) Co., Ltd.
119,040 - - 119,040 22,596 81.14 18,334
(Note 2, b, 2)
327,338 -
TAC Leasing (Suzhou) Financial lease of equipment and car 892,800 b.
Yu Rong International Investment
(Samoa) Co., Ltd.
892,800 - - 892,800 197,725 100.00 197,725
(Note 2, b, 2)
1,333,924 -
TAC Financial Leasing Co., Ltd. Financial lease of equipment and car 892,800 b.
Yu Rong International Investment
(Samoa) Co., Ltd.
Shinshin Global Investment (Samoa)
Co., Ltd.
357,120 - - 357,120 86,276 80.00 69,021
(Note 2, b, 2)
379,864 -
Zhejiang ChengYi Auto Service Co., Ltd. Advisory services and business agent of
secondhand vehicles
91,093 b.
Sinjang International Investment
(Samoa) Co., Ltd.
15,981 - - 15,981 (4,987) 63.40 (3,162)
(Note 4)
45,801 -
Hangzhou Cheng Yi Jian Used-cars Authenticate
& Evaluation Service Co., Ltd.
Secondhand vehicles authenticate and
evaluation service
2,277 c.
Zhejiang ChengYi Auto Service Co.,
Ltd.
- - - - (4) 63.40 (3)
(Note 4)
2,182 -
Zhejiang ChengYi Auction Co., Ltd. Secondhand vehicles auction service 9,109 c.
Zhejiang ChengYi Auto Service Co.,
Ltd.
- - - - (2,101) 63.40 (1,332)
(Note 4)
6,982 -
Yulon Motor Finance (China) Co., Ltd. Car loans and loans to car dealers for purpose
of purchasing automobiles
4,554,637 a.
1,115,886 1,128,439 - 2,231,772 56,999 49.00 27,930
(Note 2, b, 2)
2,221,426 -
Suzhou TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 2,009 24.00 482
(Note 4)
2,477 -
Shanghai TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 509 24.00 122
(Note 4)
3,182 -
Dongguan TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 2,924 24.00 703
(Note 4)
2,211 -
Xiamen TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (6,951) 24.00 (1,667)
(Note 4)
788 -
(Continued)
- 84 -
Investee Company Main Businesses and Products Paid-in
Capital
Method of Investment
(Note 1)
Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
January 1,
2017
Remittance of Funds Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
December 31,
2017
Net Income
(Loss) of the
Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)
(Note 2)
Carrying
Amount as of
December 31,
2017
Accumulated
Repatriation
of Investment
Income as of
December 31,
2017
Outward Inward
Chengdu TAC Auto Trade Co., Ltd. Car trade $ 9,109 c.
TAC Financial Leasing Co., Ltd.
$ - $ - $ - $ - $ (5,573) 24.00 $ (1,338)
(Note 4)
$ 1,043 $ -
Hefei TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (577) 24.00 (140)
(Note 4)
2,557 -
Qingdao TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (1,252) 24.00 (302)
(Note 4)
2,353 -
Wuhan TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (135) 80.00 (108)
(Note 4)
8,973 -
Kunming TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (1,942) 24.00 (464)
(Note 4)
2,144 -
Accumulated Outward Remittance for Investment
from Taiwan as of December 31, 2017
Investment Amounts Authorized by Investment
Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA
$3,735,753 $3,793,867 $8,403,876 (Note 5)
Note 1: Methods of investment are the following:
a. Direct investment in mainland China.
b. Indirect investment in a company in mainland China through incorporating a company in a third region.
c. Other.
Note 2: a. The Company should be disclosed if it is in its incorporation stage, with no gain (loss) from investment.
b. The amount of investment gain (loss) was recognized on the following bases:
1) Based on the financial statements audited by an international CPA firm cooperating with an ROC CPA firm.
2) Based on the financial statements audited by the auditor of the parent company.
3) Other.
Note 3: Except for the share of profit recognized under the equity method, which was translated at the average exchange rate for the period, the others were translated at the rate prevailing at December 31, 2017, which was US$1=NT$29.76/RMB1=NT$4.5546.
Note 4: The investment gain (loss) was calculated on the basis of financial statements which were not audited by certified public accountants.
Note 5: The upper limit was 60% of the consolidated’s net equity.
(Concluded)