Hon Hai Precision Industry Co., Ltd. and Subsidiaries Consolidated Financial Statements and Review Report of Independent Accountants June 30, 2018 and 2017
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HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT ACCOUNTANTS JUNE 30, 2018 AND 2017 ------------------------------------------------------------------------------------------------------------------------------------ For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail. WorldReginfo - d55d5d71-6dfc-4575-9071-bbf3698f9c93 REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE To the Board of Directors and Stockholders of Hon Hai Precision Industry Co., Ltd. Introduction We have reviewed the accompanying consolidated balance sheets of Hon Hai Precision Industry Co., Ltd. and its subsidiaries (the “Group”) as of June 30, 2018 and 2017, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews. Scope of Review Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Basis for Qualified Conclusion As explained in Notes 4(3) and 6(8), the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under equity method were not reviewed by independent accountants. Those statements reflect total assets (including investments accounted for under equity ~1~ WorldReginfo - d55d5d71-6dfc-4575-9071-bbf3698f9c93 method) of $309,742,746,000 and $465,684,820,000, constituting 10.25% and 18.95% of the consolidated total assets, and total liabilities of $98,016,915,000 and $159,132,089,000, constituting 5.72% and 12.01% of the consolidated total liabilities as of June 30, 2018 and 2017, respectively, and total comprehensive income (loss) (including share of profit (loss) and other comprehensive income of associates and joint ventures accounted for under equity method) of ($1,334,210,000), $4,759,824,000, $2,798,339,000 and $2,134,786,000, constituting 8.22%, 18.75%, 5.95% and 3.62% of the consolidated total comprehensive income for the three-month and six-month periods then ended, respectively. These amounts and the information disclosed in Note 13 were based solely on the unreviewed financial statements of these companies as of June 30, 2018 and 2017. Qualified Conclusion Based on our reviews and the review reports of other independent accountants, except for the adjustment to consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and investments accounted for under equity method been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements does not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2018 and 2017, and of its consolidated financial performance for the three-month and six-month periods then ended and its consolidated cash flows for the six-month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34,“Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Other Matter–Review Reports By Other Independent Accountants We did not review the financial statements of a certain consolidated subsidiary, which statements reflect total assets of $257,398,926,000 and $222,267,145,000, constituting 8.51% and 9.04% of the consolidated total assets as of June 30, 2018 and 2017, and total revenues $103,750,274,000, $79,440,799,000, $199,862,121,000 and $138,567,115,000, constituting 9.61%, 8.61%, 9.48% and 7.30% of total revenues for the three-month and six-month periods then ended, respectively. Those ~2~ WorldReginfo - d55d5d71-6dfc-4575-9071-bbf3698f9c93 financial statements were reviewed by other independent accountants, whose reports thereon have been furnished to us, and our conclusion expressed herein, insofar as it relates to the amounts included in the financial statements was based solely on the review reports of other independent accountants. Hsu, Yung-Chien Chou, Chien-Hung for and on behalf of PricewaterhouseCoopers, Taiwan August 13, 2018 ------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation. ~3~ WorldReginfo - d55d5d71-6dfc-4575-9071-bbf3698f9c93 HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2018, DECEMBER 31, 2017 AND JUNE 30, 2017 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) (THE BALANCE SHEETS AS OF JUNE 30, 2018 AND 2017 ARE UNAUDITED) June 30, 2018 December 31, 2017 June 30, 2017 Assets Notes AMOUNT % AMOUNT % AMOUNT % Current assets 1100 Cash and cash 6(1) equivalents $ 728,813,888 24 $ 642,496,059 19 $ 595,905,894 24 1110 Financial assets at fair 6(2) and value through profit or 12(4) loss - current 16,153,809 1 7,009,541 - 8,829,844 - 1125 Available-for-sale 12(4) financial assets - current - - 290 - 556,260 - 1136 Financial assets at 6(4) and 8 amortised cost - current 112,593,662 4 - - - - 1170 Accounts receivable, 6(5) net 690,456,031 23 1,150,428,069 34 502,291,087 21 1180 Accounts receivable - 7 related parties 36,681,278 1 80,066,388 2 52,063,448 2 1200 Other receivables 6(6) 66,821,440 2 67,700,725 2 41,262,731 2 1210 Other receivables - 7 related parties 75,239,325 2 82,627,493 2 5,598,997 - 130X Inventory 6(7) 610,758,468 20 560,954,855 17 375,334,239 15 1410 Prepayments 7 18,055,495 1 20,328,111 1 14,843,385 1 1470 Other current assets 8 and 12(4) - - 134,524,586 4 137,827,046 6 11XX Total current assets 2,355,573,396 78 2,746,136,117 81 1,734,512,931 71 Non-current assets 1510 Financial assets at fair 6(2) and value through profit or 12(4) loss - non-current 66,740,284 2 3,040,601 - 3,883,019 - 1517 Financial assets at fair 6(3) value through other comprehensive income - non-current 70,192,815 2 - - - - 1523 Available-for-sale 12(4) financial assets - non- current - - 70,868,132 2 186,889,881 8 1535 Financial assets at 6(4) and 8 amortised cost - non- current 16,182,308 1 - - - - 1543 Financial assets carried 12(4) at cost - non-current - - 49,861,639 2 33,954,586 1 1546 Investments in debt 12(4) instrument without active market - non- current - - 4,571,100 - - - 1550 Investments accounted 6(8) for under equity method 153,272,976 5 151,000,283 4 143,730,503 6 1600 Property, plant and 6(9) and 8 equipment 274,173,928 9 278,204,005 8 294,006,017 12 1760 Investment property - 6(10) net 2,339,888 - 2,422,523 - 2,430,118 - 1780 Intangible assets 6(11) 9,445,955 - 9,552,444 - 10,067,842 - 1840 Deferred income tax 6(34) assets 19,486,113 1 15,048,377 1 16,463,460 1 1900 Other non-current 6(12) and 7