Address: No. 24, Gangshan N. Rd., Gangshan Dist., Kaohsiung City Tel: 886-7-621-3121
The reader is advised that parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.
To: PANJIT INTERNATIONAL INC.
OpinionWe have audited the parent company only Balance Sheets of PANJIT INTERNATIONAL INC. (the "Company") as of December 31, 2024 and 2023, the parent company only Statements of Comprehensive Income, parent company only Statements of Changes in Equity, parent company only Statements of Cash Flows, and notes to parent company only financial statements (including summary of significant accounting policies) for the annual period from January 1 to December 31, 2024 and 2023.
In our opinion, based on our audits and the reports of other independent accountants (please refer to the Other Matter - Making Reference to the Audits of Other Independent Accountants section of our report), the parent company only financial statements referred to above present fairly, in all material respects, the parent company only financial position of the Company as of 31 December 2024 and 2023, and their parent company only financial performance and cash flows for the years ended 31 December 2024 and 2023, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Basis for opinionWe conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2024 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
The operating revenues of the Company amounted to NT$8,654,540 thousand for the year ended 31 December 2024. The main source of revenue is manufacturing and selling Power Discrete. As the operation spanned globally and the product combination and pricing methods were diverse, judgment of the performance obligation and when it is satisfied was required. Therefore, we considered this a key audit matter.
Our audit procedures included (but are not limited to) assessing the appropriateness of the accounting policy of revenue recognition; testing the design and operating effectiveness of internal controls around revenue recognition by management, including identifying completeness of performance obligation of client contracts and the accounting treatment of the timing of revenue recognition; performing analytical procedures on gross margin by products and departments; selecting samples to perform test of details and reviewing significant terms and conditions of contracts; testing general journal entry, performing cutoff procedures, reviewing sales transaction certificates before and after the balance sheet date to verify that revenue has been recorded in the correct accounting period. Accordingly, evaluating the appropriateness of significant sales returns and rebates. In addition, we also considered the appropriateness of the disclosures of sales. Please refer to Notes 4 and 6 to the parent company only financial statements.
Evaluation of Inventories
As of December 31, 2024, the Company's net inventories amounted to NT$1,321,711 thousand, constituting 5% of total assets which was then identified as material to financial statement. The status of inventory was difficult to manage due to various types of stocks stored across various locations including outsourced warehouses. Such inventories are stated at the lower of cost and net realizable value. Evaluation involves management's significant accounting estimation and judgement, and the carrying amount of inventories is material to parent company only financial statements. Therefore we considered this a key audit matter.
Our audit procedures included (but are not limited to) assessing the appropriateness of the accounting policy of inventories evaluation; testing the design and operating effectiveness of internal controls around inventories by management, including assessing the transfer of inventory cost, selecting major warehouse to observe physical stock taking to verify inventory quantity and status; and assessing the management's estimates of net realizable value by inventories evaluation, and selecting samples to verify related certificates to test the correctness of inventories aging interval; review whether obsolescence loss allowance was sufficient according to policy and assess the appropriateness of the provision policy. We also assessed the adequacy of disclosures of inventories. Please refer to Notes 4, 5 and 6 to the parent company only financial statements.
Other matter - Making Reference to the Audits of Component AuditorsWe did not audit the financial statements of certain investment accounted for under the equity method, which reflected the associates and joint ventures under equity method in the amount of NT$1,721,772 thousand and NT$1,567,662 thousand, constituting 7% and 6% of total assets as of 31 December 2024 and 2023, respectively. The related shares of profits from the associates and joint ventures under the equity method of NT$164,914 thousand and NT$107,503 thousand, constituting 17% and 12% of pretax income, and the related shares of other comprehensive income from the associates and joint ventures under the equity method of NT$29,392 thousand and (NT$9,948) thousand, constituting 8% and 24% of other comprehensive income for the year ended 31 December 2024 and 2023, respectively. Those financial statements were audited by other independent accountants, whose reports there on have been furnished to us, and our audit results are based solely on the reports of the other independent accountants.
Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial StatementsManagement is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of the parent company only financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of the Company.
Auditor's Responsibilities for the Audit of the Parent Company Only Financial StatementsOur objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or errors, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of 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 parent company only financial statements.
As part of an audit in accordance with Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the parent company only 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.
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 internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only 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 2024 the parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Chen, Cheng-Chu
Fuh, Wen-Fun
Ernst & Young Taiwan March 7, 2025
Notice to Readers
The accompanying parent company only financial statements are intended only to present the parent company only financial position, results of operations 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 parent company only financial statements are those generally accepted and applied in the Republic of China.
Accordingly, the accompanying parent company only financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice.
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC.
Parent Company Only Balance Sheets December 31, 2024, and 2023
(Expressed in Thousand of New Taiwan Dollars)
Assets | Notes | December 31, 2024 | December 31, 2023 | ||
Amount | % | Amount | % | ||
Current asset | |||||
Cash and cash equivalents | 6(1) | $740,838 | 3 | $692,338 | 3 |
Financial assets at fair value through profit or loss - current | 6(2) | 98,355 | - | 114,429 | - |
Notes receivable, net | 6(4).(15) | 41,691 | - | 23,349 | - |
Accounts receivable, net | 6(5).(15) | 1,888,215 | 8 | 1,694,588 | 7 |
Accounts receivable due from related parties, net | 6(5).(15),7 | 545,701 | 2 | 442,007 | 2 |
Other receivable, net | 44,087 | - | 107,068 | - | |
Other receivables due from related parties | 7 | 67,638 | - | 155,119 | 1 |
Inventories, net | 6(6) | 1,321,711 | 5 | 1,656,195 | 7 |
Other current assets | 8 | 183,229 | 1 | 154,654 | 1 |
Total current assets | 4,931,465 | 19 | 5,039,747 | 21 | |
Non-current assets | |||||
Financial assets at fair value through other comprehensive income - non-current | 6(3) | 126,049 | 1 | 119,906 | - |
Investments accounted for using the equity method | 6(7),7 | 14,384,743 | 58 | 13,160,968 | 54 |
Property, plant, and equipment | 6(8),7 | 4,872,387 | 19 | 5,216,594 | 21 |
Right-of-use assets | 6(16) | 5,493 | - | 3,381 | - |
Intangible assets | 6(9) | 46,101 | - | 70,464 | 1 |
Deferred tax asset | 6(20) | 183,057 | 1 | 239,581 | 1 |
Prepayments for business facilities | 39,052 | - | 16,447 | - | |
Other non-current assets | 379,144 | 2 | 473,220 | 2 | |
Total non-current assets | 20,036,026 | 81 | 19,300,561 | 79 | |
Total assets | $24,967,491 | 100 | $24,340,308 | 100 | |
Liabilities and Equity | Notes | December 31, 2024 | December 31, 2023 | ||
Amount | % | Amount | % | ||
Current Liabilities Current borrowings Current financial liabilities at fair value through profit or loss Contract liabilities-current Accounts payable Accounts payable to related parties Other payables Current tax liabilities Current lease liabilities Long-term borrowings, current portion Other current liabilities, others Total current liabilities Non-current Liabilities Long-term borrowings Deferred tax liabilities Non-current lease liabilities Net defined benefit liability, non-current Other non-current liabilities, others Total non-current liabilities Total liabilities Equity Capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Total retained earnings Other components of equity Treasury stock Total equity Total liabilities and equity | 6(10) | $2,547,521 | 10 | $2,334,436 | 10 |
3,411 | - | - | - | ||
6(14) | 755 | - | 575 | - | |
460,784 | 2 | 554,405 | 2 | ||
7 | 705,796 | 3 | 548,690 | 2 | |
7 | 1,196,213 | 5 | 837,582 | 3 | |
184,985 | 1 | 203,185 | 1 | ||
6(16) | 3,017 | - | 2,759 | - | |
6(11) | 767,870 | 3 | 507,000 | 2 | |
40,586 | - | 42,336 | - | ||
5,910,938 | 24 | 5,030,968 | 20 | ||
6(11) | 4,768,474 | 19 | 5,910,761 | 24 | |
6(20) | 100,618 | 1 | 72,475 | - | |
6(16) | 2,495 | - | 666 | - | |
6(12) | 49,470 | - | 61,071 | - | |
12,382 | - | 15,769 | - | ||
4,933,439 | 20 | 6,060,742 | 24 | ||
10,844,377 | 44 | 11,091,710 | 44 | ||
6(13) | 3,821,149 | 15 | 3,821,149 | 16 | |
6(13) | 6,072,159 | 24 | 6,007,138 | 25 | |
6(13) | |||||
812,657 | 3 | 729,336 | 3 | ||
717,237 | 3 | 717,237 | 3 | ||
2,938,084 | 12 | 2,579,987 | 11 | ||
4,467,978 | 18 | 4,026,560 | 17 | ||
(238,172) | (1) | (606,249) | (2) | ||
6(13) | - | - | - | - | |
14,123,114 | 56 | 13,248,598 | 56 | ||
$24,967,491 | 100 | $24,340,308 | 100 | ||
(The accompanying notes are an integral part of the parent company only financial statements.)
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC.
PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME
For the years ended 31 December, 2024 and 2023
(Expressed in Thousand of New Taiwan Dollars, Except for Earnings per Share)
Items | Notes | 2024 | 2023 | ||
Amount | % | Amount | % | ||
Operating revenues Operating costs Gross profit Unrealized profit (loss) from sales Realized profit (loss) on from sales Gross profit-net Operating expense Selling expenses Administrative expense s Research and development expenses Expected credit impairment (losses) gains Total Operating Expense Operating profit Non-operating income and expenses Interest income Other income Other gains or losses Financial costs Share of profit or loss of subsidiaries and associates under equity method Subtotal Pretax income from continuing operations Income tax expenses Profit from continuing operations Net income Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Unrealized gains or losses from equity instrument investments measured at fair value through other comprehensive income Income tax related to items that will not be reclassified Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Income tax related to items that may be reclassified Total other comprehensive income (loss), net of tax Total comprehensive income Earnings per share (NT$) Basic earnings per share: Diluted earnings per share | 6(14),7 | $8,654,540 | 100 | $7,889,882 | 100 |
6(17),7 | (6,771,715) | (78) | (6,164,778) | (78) | |
1,882,825 | 22 | 1,725,104 | 22 | ||
(28,234) | (1) | (41,671) | (1) | ||
41,671 | - | 36,583 | - | ||
1,896,262 | 21 | 1,720,016 | 21 | ||
6(15).(17) ,7 | |||||
(530,483) | (6) | (503,046) | (6) | ||
(590,200) | (7) | (447,030) | (6) | ||
(576,685) | (7) | (461,059) | (6) | ||
6(15) | (912) | - | (2,707) | - | |
(1,698,280) | (20) | (1,413,842) | (18) | ||
197,982 | 1 | 306,174 | 3 | ||
6(18) | |||||
23,355 | - | 18,483 | - | ||
42,216 | - | 76,308 | 1 | ||
50,761 | 1 | (11,374) | - | ||
(179,565) | (2) | (162,435) | (2) | ||
6(7) | 823,125 | 10 | 667,824 | 8 | |
759,892 | 9 | 588,806 | 7 | ||
957,874 | 10 | 894,980 | 10 | ||
6(20) | (39,351) | - | (74,198) | (1) | |
918,523 | 10 | 820,782 | 9 | ||
918,523 | 10 | 820,782 | 9 | ||
6(19) | |||||
(16,542) | - | (4,243) | - | ||
(43,371) | (1) | 8,854 | - | ||
(1,090) | - | 529 | - | ||
493,467 | 6 | (54,177) | (1) | ||
(82,954) | (1) | 7,839 | - | ||
349,510 | 4 | (41,198) | (1) | ||
$1,268,033 | 14 | $779,584 | 8 | ||
6(21) | |||||
$2.40 | $2.15 | ||||
$2.39 | $2.14 | ||||
(The accompanying notes are an integral part of the parent company only financial statements.)
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC.
PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY
For the years ended 31 December, 2024 and 2023 (Expressed in Thousand of New Taiwan Dollars)
Items | Capital | Capital surplus | Retained earnings | Other Components of Equity | Treasury Stock | Total Equity | ||||
Common stock | Legal Reserve | Special Reserve | Unappropriated Retained Earnings | Exchange Differences Arising on Translation of Foreign Operations | Unrealized Gains or Losses on Financial Assets Measured at Fair Value through Other Comprehensive Income | Others | ||||
Balance as of 1 January, 2023 | $3,828,149 | $6,016,861 | $505,733 | $717,237 | $3,116,721 | ($418,846) | ($133,358) | ($413) | ($16,507) | $13,615,577 |
Appropriation and distribution of 2022 retained earnings | ||||||||||
Legal reserve | - | - | 223,603 | - | (223,603) | - | - | - | - | - |
Cash dividend | - | - | - | - | (1,146,345) | - | - | - | - | (1,146,345) |
Changes in equity of associates accounted for using equity method | - | (663) | - | - | - | - | - | - | - | (663) |
Net income in 2023 | - | - | - | - | 820,782 | - | - | - | - | 820,782 |
Other comprehensive income (loss) in 2023 | - | - | - | - | (3,549) | (46,338) | 8,689 | - | - | (41,198) |
Total comprehensive income (loss) | - | - | - | - | 817,233 | (46,338) | 8,689 | - | - | 779,584 |
Retirement of treasury share | (7,000) | (9,507) | - | - | - | - | - | - | 16,507 | - |
Increase (decrease) through changes in ownership interests in subsidiaries | - | 447 | - | - | (2) | - | - | - | - | 445 |
Disposal of euqity instrument investments measured at fair value through other comprehensive income | - | - | - | - | 15,983 | - | (15,983) | - | - | - |
Balance as of 31 December, 2023 | $3,821,149 | $6,007,138 | $729,336 | $717,237 | $2,579,987 | ($465,184) | ($140,652) | ($413) | $- | $13,248,598 |
Balance as of 1 January, 2024 | $3,821,149 | $6,007,138 | $729,336 | $717,237 | $2,579,987 | ($465,184) | ($140,652) | ($413) | $- | $13,248,598 |
Appropriation and distribution of 2023 retained earnings | ||||||||||
Legal reserve | - | - | 83,321 | - | (83,321) | - | - | - | - | - |
Cash dividend | - | - | - | - | (458,538) | - | - | - | - | (458,538) |
Changes in equity of associates accounted for using equity method | - | 69,139 | - | - | - | - | - | - | - | 69,139 |
Other changes in capital surplus | - | 5 | - | - | - | - | - | - | - | 5 |
Net income in 2024 | - | - | - | - | 918,523 | - | - | - | - | 918,523 |
Other comprehensive income (loss) in 2024 | - | - | - | - | (18,999) | 410,513 | (42,004) | - | - | 349,510 |
Total comprehensive income (loss) | - | - | - | - | 899,524 | 410,513 | (42,004) | - | - | 1,268,033 |
Difference between consideration given/received and carrying amount of interests in subsidiaries acquired through of disposed | - | (22,777) | - | - | - | - | - | - | - | (22,777) |
Increase (decrease) through changes in ownership interests in subsidiaries | - | 18,654 | - | - | - | - | - | - | - | 18,654 |
Disposal of euqity instrument investments measured at fair value through other comprehensive income | - | - | - | - | 432 | - | (432) | - | - | - |
Balance as of 31 December, 2024 | $3,821,149 | $6,072,159 | $812,657 | $717,237 | $2,938,084 | ($54,671) | ($183,088) | ($413) | $- | $14,123,114 |
(The accompanying notes are an integral part of the parent company only financial statements.)
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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC.
PARENT COMPANY ONLY OF CASH FLOWS
For the years ended 31 December, 2024 and 2023 (Expressed in Thousand of New Taiwan Dollars)
Items | 2024 | 2023 |
Amount | Amount | |
Cash flow from operating activities | ||
Profit from continuing operations before tax | $957,874 | $894,980 |
Adjustment items: | ||
Revenue and expenses: | ||
Depreciation | 518,347 | 374,374 |
Amortization | 30,301 | 35,055 |
Expected credit impairment losses | 912 | 2,707 |
Net losses (gain) of financial assets or liabilities at fair value through profit or loss | 1,396 | (4,291) |
Interest expense | 179,565 | 162,435 |
Interest revenue | (23,355) | (18,483) |
Dividend revenue | (2,858) | (3,799) |
Share of (profit) of subsidiaries and associates accounted for using equity method | (823,125) | (667,824) |
Loss (gain) on disposal of property, plant and equipment | 119 | (364) |
Unrealized profit from sales | 28,234 | 41,670 |
Realized (profit) on from sales | (41,671) | (36,583) |
Others | 49,003 | 173,992 |
Subtotal | (83,132) | 58,889 |
Changes in operating assets and liabilities: | ||
Changes in operating assets | ||
Decrease (increase) in financial assets at fair value through profit or loss, mandatorily measured at fair value | 18,009 | (95,140) |
(Increase) decrease in notes receivable | (18,342) | 2,176 |
(Increase) in accounts receivable | (194,539) | (48,179) |
(Increase) in accounts receivable due from related parties | (103,694) | (119,161) |
Decrease in other receivable | 62,981 | 3,626 |
Decrease in other receivable due from related parties | 87,481 | 672,508 |
Decrease in inventories | 299,838 | 219,964 |
Adjustments for (increase) decrease in other current assets | (28,575) | 25,680 |
Changes in operating liabilities | ||
Increase in contract liabilities | 180 | 210 |
(Decrease) in accounts payable | (93,621) | (117,728) |
Increase in accounts payable to related parties | 157,106 | 275,437 |
Increase (decrease) in other payable | 394,357 | (232,067) |
Adjustments for (decrease) increase in other current liabilities | (1,750) | 28,908 |
(Decrease) in net defined benefit liability | (30,759) | (6,128) |
Total changes in operating assets and liabilities | 548,672 | 610,106 |
Cash inflow generated from operations | 1,423,414 | 1,563,975 |
Interest received | 23,355 | 18,483 |
Income tax (paid) | (50,629) | (101,341) |
Net cash flows from operating activities | 1,396,140 | 1,481,117 |
(Continued) (The accompanying notes are an integral part of the parent company only financial statements.)
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC. PARENT COMPANY ONLY OF CASH FLOWS For the years ended 31 December, 2024 and 2023 (Expressed in Thousand of New Taiwan Dollars)Items | 2024 | 2023 |
Amount | Amount | |
Cash flows from investing activities: | ||
Acquisition of financial assets at fair value through other comprehensive income | (31,473) | - |
Proceeds from disposal of financial assets at fair value through other comprehensive income | 3,817 | 15,692 |
Acquisition of investments accounted for using equity method | (108,472) | (574,066) |
Acquisition of property, plant, and equipment | (208,312) | (530,832) |
Proceeds from disposal of property, plant and equipment | 30,810 | 364 |
Decrease in refundable deposits | 194,962 | 168,954 |
Acquisition of intangible assets | (5,938) | (23,241) |
Increase in other non-current assets | (100,886) | (13,435) |
Increase in prepayments for business facilities | (64,814) | (140,373) |
Dividends received | 255,843 | 707,148 |
Net cash flows (used in) investing activities | (34,463) | (389,789) |
Cash flows from financing activities: | ||
Increase in short-term loans | 213,085 | - |
Decrease in short-term loans | - | (120,756) |
Repayments of long-term debt | (882,887) | (68,217) |
Payments of lease liabilities | (3,485) | (4,106) |
Increase in other non-current liabilities | (3,387) | (10,656) |
Cash dividends paid | (458,538) | (1,146,345) |
Interest paid | (177,965) | (160,928) |
Net cash flows (used in) financing activities | (1,313,177) | (1,511,008) |
Net (decrease) in cash and cash equivalents | 48,500 | (419,680) |
Cash and cash equivalents at beginning of period | 692,338 | 1,112,018 |
Cash and cash equivalents at end of period | $740,838 | $692,338 |
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese PANJIT INTERNATIONAL INC.
NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2024, and 2023
(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
Company History
PANJIT INTERNATIONAL INC. (the Company) was incorporated on 20 May 1986, under the Company Act of the Republic of China on Taiwan. The Company's registered address is No. 24, Gangshan N. Rd., Gangshan Dist., Kaohsiung City. The principal activities of the Company are to manufacture, process, assemble and to import and export semiconductors. The Company also assembles, trades and transfers technological advancements of machinery parts. The Company also trades resins and paints for semiconductors.
The Company's stock was officially listed for trading on the OTC market on December 22, 1999, and then listed on the Taiwan Stock Exchange on September 17, 2001.
Date and procedures of authorization of financial statements for issue
The parent company only financial statements of the Company for the years ended December 31, 2024 and 2023 were approved by the Board of Directors on 7 March 2025.
Newly issued or revised standards and interpretations
Changes in accounting policies resulting from applying for the first time certain standards and amendments
The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission ("FSC") and become effective for annual periods beginning on or after 1 January 2024. The adoption of these new standards and amendments had no material impact on the Company.
Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") which are endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.
Items
New, Revised or Amended Standards and Interpretations
Effective Date issued by IASB
a
Lack of Exchangeability -Amendments to IAS 21
January 1, 2025
Lack of Exchangeability -Amendments to IAS 21
These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide.
~12~
The amendments apply for annual reporting periods beginning on or after January 1, 2025 and have no significant impact on the Company's assessment.
Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below:
Items
New, Revised or Amended Standards and Interpretations
Effective Date issued
by IASB
a
IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or Contribution of Assets between an Investor and its Associate or
Joint Ventures
To be determined by IASB
b
IFRS 17 "Insurance Contracts"
January 1 2023
c
IFRS 18 "Presentation and Disclosure in Financial Statements"
January 1, 2027
d
IFRS 19 "Disclosure Initiative - Subsidiaries without Public Accountability: Disclosures"
January 1, 2027
e
Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" - Amendments to the Classification and Measurement of Financial Instruments
January 1, 2026
f
Annual Improvements to IFRS Accounting Standards - Volume
11
January 1, 2026
g
Contracts Referencing Nature-dependent Electricity-
Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures"
January 1, 2026
IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures
The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.
IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors' interests in the associate or joint venture.
IFRS 17 "Insurance Contracts"
IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation, and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.
Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.
IFRS 17 was issued in May 2017 and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 2021), provide additional transition reliefs, simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard -IFRS 4 Insurance Contracts - from annual reporting periods beginning on or after January 1, 2023.
IFRS 18 "Presentation and Disclosure in Financial Statements"
IFRS 18 replaces IAS 1 "Presentation of Financial Statements". The main changes in the new standard are as below:
Improved comparability in the statement of profit or loss (income statement)
IFRS 18 requires entities to classify all income and expenses within their statement of profit or loss into one of five categories: operating; investing; financing; income taxes; and discontinued operations. The first three categories are new, to improve the structure of the income statement, and requires all entities to provide new defined subtotals, including operating profit or loss. The improved structure and new subtotals will give investors a consistent starting point for analyzing entities' performance and make it easier to compare entities.
Enhanced transparency of management-defined performance measures
IFRS 18 requires entities to disclose explanations of those entity-specific measures that are related to the income statement, referred to as management-defined performance measures.
Useful grouping of information in the financial statements
IFRS 18 sets out enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes. The changes are expected to provide more detailed and useful information. IFRS 18 also requires entities to provide more transparency about operating expenses, helping investors to find and understand the information they need.
IFRS 19 "Disclosure Initiative - Subsidiaries without Public Accountability: Disclosures"
This standard permits subsidiaries without public accountability to provide reduced disclosures when applying IFRS Accounting Standards in their financial statements. IFRS 19 is optional for subsidiaries that are eligible and sets out the disclosure requirements for subsidiaries that elect to apply it. The expected effective date for annual reporting periods beginning on or after January 1, 2027.
Amendments to IFRS 9 "Financial Instruments" (IFRS 9) and IFRS 7 "Financial Instruments: Disclosures" (IFRS 7) - Amendments to the Classification and Measurement of Financial Instruments
The amendments include:
Clarify that a financial liability is derecognized on the settlement date and describe the accounting treatment for settlement of financial liabilities using an electronic payment system before the settlement date.
Clarify how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance (ESG)-linked features and other similar contingent features.
Clarify the treatment of non-recourse assets and contractually linked instruments.
Require additional disclosures in IFRS 7 for financial assets and liabilities with contractual terms that reference a contingent event (including those that are ESG-linked), and equity instruments classified at fair value through other comprehensive income.
Annual Improvements to IFRS Accounting Standards - Volume 11
Amendments to IFRS 1
Amendments to IFRS 7
Amendments to IFRS 7 of Implementation guidance
Amendments to IFRS 9
Amendments to IFRS 10
Amendments to IAS 7
Amendments to IFRS 9 "Financial Instruments" (IFRS 9) and IFRS 7 "Financial Instruments: Disclosures" (IFRS 7) - Contracts Referencing Nature-dependent Electricity
The amendments include:
Clarify the application of the "own-use" requirements.
Permit hedge accounting if these contracts are used as hedging instruments.
Add new disclosure requirements to enable investors to understand the effect of these contracts on a company's financial performance and cash flows.
The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company's financial statements were authorized for issue, and the local effective dates are to be determined by FSC. As the Company is still currently determining the potential impact of the standards and interpretations listed under (c), it is not practicable to estimate their impact on the Company at this point in time. The remaining new or amended standards and interpretations have no material impact on the Company.
Summary of significant accounting policies
Statement of Compliance
The parent company only financial statements of the Company for the years ended 31 December 2024 and 2023 have been prepared in accordance with "Regulations Governing the Preparation of Financial Reports by Securities Issuers".
Basis of Preparation
The Company has prepared these parent company only financial statements in accordance with the "Regulations Governing the Preparation of Financial Statements by Securities Issuers." As stipulated in Article 21 of "Preparation Standards of Financial Statements for Securities Issuers, the current gain or loss and other comprehensive income in the Parent Company Only Financial Statements shall be the same as the allocation of other comprehensive income attributable to the parent company owners in the combined Financial Statements, and the owners' equity in the Parent Company Only Financial Statements shall be the same as the equity attributable to the parent company's owners in the combined Financial Statements. Therefore, investments in subsidiaries are expressed in Parent Company Only Financial Statements as "investments by equity method", and necessary evaluation adjustments are made.
The parent company only financial statements are prepared on the basis of historical cost, except for financial instruments measured by fair value. The unit for all amounts expressed in the parent company only financial statements are in thousands of NTD unless otherwise stated.
Foreign currency transactions
The Company's parent company only financial statements present the NT dollars as the functional currency. Foreign currency transaction is translated into functional currency according to the exchange rate of the transaction date. At the end of each reporting period, monetary items in foreign currencies are converted at the closing exchange rate of that day; Foreign currency items measured at fair value are translated according to the exchange rate on the date of fair value, and foreign currency non-currency items measured through historical cost will be translated according to the exchange rate on the original date of transaction.
Except for the following, the exchange difference arising from the delivery or conversion of monetary items is recognized as gain or loss in the current period:
For the foreign currency borrowing in order to obtain the assets that meet the requirements, if the conversion difference incurred is regarded as an adjustment to the interest cost, it is a part of the borrowing cost and capitalized as the cost of the asset.
Foreign currency items applicable to IFRS 9, "Financial Instruments" shall be handled in accordance with the accounting policies of financial instruments.
For monetary items that form part of the reporting entity's net investment in foreign operating institutions, the resulting exchange difference was originally recognized as other comprehensive income, and when the net investment is disposed of, it is reclassified from equity to gain or loss.
When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
Translation of financial statements in foreign currency
Each foreign operation of the Company determines its own functional currency, and uses that functional currency to measure its financial statements. When preparing parent company only financial statements, the assets and liabilities of foreign operation are converted into New Taiwan dollars at the closing exchange rate on the balance sheet date, and income and expenditure items are converted at the current average exchange rate. The conversion difference arising from the conversion is recognized as other comprehensive income, and the cumulative conversion difference that has been previously recognized in other comprehensive income and accumulated in the individual components under equity when the foreign operation is disposed of, when the disposition gain or loss are recognized, shall be reclassified from equity to gain or loss. When involving the partial disposal of the loss of control of a subsidiary that includes a foreign operation, and after a partial disposal of the equity of an associate or joint agreement including the foreign operation, if the retained equity is a financial asset that includes the foreign operation, it is also deemed to be disposal.
When disposing of a subsidiary that includes a foreign operation without losing control, the cumulative conversion difference recognized in other comprehensive income is adjusted by "investment by equity method" on a pro rata basis, and not recognized as gain or loss; Under influence or joint control, when part of the disposition includes an associate or joint agreement of a foreign operation, the accumulated exchange difference will be reclassified to gain or loss on a pro rata basis.
Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.
Classification Standard for Distinguishing Current and Non-current Assets and Liabilities
An asset is classified as current when:
the Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
the Company holds the asset primarily for the purpose of trading;
the Company expects to realize the asset within twelve months after the reporting period; or
the asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current. A liability is classified as current when:
the Company expects to settle the liability in normal operating cycle;
the Company holds the liability primarily for the purpose of trading;
the liability is due to be settled within twelve months after the reporting period; or
the Company does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial instruments
Financial assets and financial liabilities are recognized when the Company became a party to the contractual provisions of the instrument.
Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.
Financial instruments: Recognition and Measurement
The Company accounts for regular way purchase or sales of financial assets on the trade date.
The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:
The Company's business model for managing the financial assets and
Contractual cash flow characteristics of the financial assets
Financial asset measured at amortized cost
A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, accounts receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.
Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
If it is not the former, but subsequently becomes credit impaired, the effective interest rate is multiplied by the amortized cost of financial assets.
Financial assets measured at fair value through other comprehensive income
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:
A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.
Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.
Financial assets measured at fair value through profit or loss
Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.
Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.
Impairment of financial assets
The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset
measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.
The Company measures expected credit losses of a financial instrument in a way that reflects:
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
The time value of money; and
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The loss allowance is measures as follows:
At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.
Derecognition of financial assets
A financial asset is derecognized when :
The rights to receive cash flows from the asset have expired;
The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred;
The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.
Financial liabilities and equity Classification between liabilities or equity
The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.
Compound instruments
The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.
For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled. For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments.
Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.
On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.
Financial liabilities
Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.
Financial liabilities measured at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. A financial liability is classified as held for trading if:
It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).
If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:
It eliminates or significantly reduces a measurement or recognition inconsistency; or
A group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.
Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.
Financial liabilities at amortized cost
Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
Derivative instrument
The Company uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as financial assets or liabilities at fair value through profit or loss (held for trading) except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.
Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The changes in fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to types of hedges used.
When the host contracts are either non-financial assets or liabilities, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are separated from the host contract and accounted for as a derivative.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Inventories
Inventories are valued at lower of cost and net realizable value item by item.
Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:
Raw materials -Purchase cost on weighted average cost basis
Finished goods and work in progress - Cost of direct materials, labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.
Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction that is highly probable within one year from the date of classification and the asset or disposal group is available for immediate sale in its present condition. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
In the parent company only statement of comprehensive income of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Company retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income.
Property, plant, and equipment and intangible assets once classified as held for sale are not depreciated or amortized.
Investments accounted for using the equity method
The Company's investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence. A joint venture refers to the Company that has rights to the net assets of the joint agreement (with joint control.)
Under the equity method, investment in an associate or joint venture is recognized in the balance sheet, which is the amount recognized by the Company based on cost plus the amount of the change in the net assets of the associate or joint venture after acquisition in shareholding ratio. After the carrying amount of the associate or joint venture investment and other related long-term equity is reduced to zero using the equity method, additional losses and liabilities are recognized within the scope of legal obligations, constructive obligations, or payments made on behalf of the associate. Unrealized gains and losses arising from transactions between the Company and associates or joint ventures shall be eliminated according to the proportion of its equity in the associates or joint ventures.
When changes in the net assets of an associate or joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company's percentage of ownership interests in the associate, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.
When the associate issues new stock, and the Company's interest in an associate or joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment in associate or joint venture. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro-rata basis when the Company disposes the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.
The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the 'share of profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:
Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.
Because goodwill that forms part of the carrying amount of an investment in an associate is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.
When it loses significant influence on the associate or joint control of the joint venture, the Company measures and recognizes the retained investment portion at fair value. In the event of loss of significant influence or joint control, the difference between the carrying amount of the investment associate or joint venture and the fair value of the retained investment plus the proceeds from the disposal is recognized as gain or loss. In addition, when an investment in an associate becomes an investment in a joint venture, or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method without re-evaluating the retained equity.
Property, Plant, and Equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:
Assets Useful life
Buildings 4 ~ 51 years
Machinery and equipment 1 ~ 15 years
Transportation equipment 5 years Utilities equipment 6 ~ 15 years
Office equipment 0 ~ 6 years
Other equipment 1 ~ 25 years
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.
The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate. These changes are treated as accounting estimates.
Leases
The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:
The right to obtain substantially all of the economic benefits from use of the identified asset; and
The right to direct the use of the identified asset.
For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.
The Company as a lessee
Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.
At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.
At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs incurred by the lessee; and
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.
If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The Company applies IAS 36 "Impairment of Assets" to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.
Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.
For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.
The Company as a lessor
At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.
For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.
The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.