Transcend Information, Inc. and Subsidiaries Consolidated Financial Statements And
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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT JUNE 30, 2020 AND 2019 ------------------------------------------------------------------------------------------------------------------------------------ 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. ~1~ TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Expressed in thousands of New Taiwan Dollars) (The consolidated balance sheets as of June 30, 2020 and 2019 are reviewed, not audited) June 30, 2020 December 31, 2019 June 30, 2019 Assets Notes AMOUNT % AMOUNT % AMOUNT % Current assets Cash and cash equivalents 6(1) $ 1,987,626 9 $ 1,233,407 6 $ 1,246,352 5 Financial assets at fair value through 6(2) profit or loss - current 2,225,342 10 2,581,509 12 1,164,332 5 Current financial assets at amortised 6(3) cost, net 7,051,329 32 7,910,482 37 10,805,014 48 Notes receivable, net 6(4) 524 - 3,054 - 3,246 - Accounts receivable, net 6(4) 1,315,397 6 1,478,531 7 1,739,440 8 Accounts receivable due from 7 related parties, net 6 - 8 - - - Other receivables 103,600 1 124,077 1 106,004 - Inventories, net 6(5) 3,068,658 14 2,062,659 10 1,784,775 8 Other current assets 12,228 - 17,973 - 13,526 - Total Current Assets 15,764,710 72 15,411,700 73 16,862,689 74 Non-current assets Non-current financial assets at fair 6(2) value through profit or loss 535,000 2 - - - - Non-current financial assets at fair 6(6) value through other comprehensive income 115,043 1 114,164 1 168,290 1 Non-current financial assets at 6(3) amortised cost 145,781 1 148,527 1 - - Investments accounted for using 6(7) equity method 92,091 - 97,434 - 97,110 1 Property, plant and equipment, net 6(8) and 8 2,341,969 11 2,438,154 12 2,542,209 11 Right-of-use assets 6(9) and 7 209,358 1 241,050 1 263,102 1 Investment property, net 6(11) 2,616,481 12 2,610,292 12 2,618,498 12 Deferred tax assets 65,167 - 75,859 - 62,358 - Other non-current assets 6(12) 46,407 - 63,610 - 80,172 - Total Non-current Assets 6,167,297 28 5,789,090 27 5,831,739 26 Total Assets $ 21,932,007 100 $ 21,200,790 100 $ 22,694,428 100 (Continued) ~4~ TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Expressed in thousands of New Taiwan Dollars) (The consolidated balance sheets as of June 30, 2020 and 2019 are reviewed, not audited) June 30, 2020 December 31, 2019 June 30, 2019 Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT % Current liabilities Financial liabilities at fair value 6(2) through profit or loss - current $ 68 - $ - - $ 3,711 - Accounts payable 1,049,870 5 1,005,350 5 1,074,952 5 Accounts payable - related parties 7 40,396 - 52,828 - 52,474 - Other payables 6(16) 2,145,191 10 267,116 1 2,370,039 10 Current tax liabilities 177,033 1 83,705 1 151,229 1 Current lease liabilities 7 52,267 - 53,945 - 52,343 - Other current liabilities 64,297 - 38,635 - 17,154 - Total Current Liabilities 3,529,122 16 1,501,579 7 3,721,902 16 Non-current liabilities Deferred tax liabilities 150,530 1 155,482 1 182,369 1 Non-current lease liabilities 7 39,284 - 83,697 - 82,444 1 Other non-current liabilities 56,140 - 53,184 - 55,478 - Total Non-current Liabilities 245,954 1 292,363 1 320,291 2 Total Liabilities 3,775,076 17 1,793,942 8 4,042,193 18 Equity attributable to owners of parent Share capital 6(14) Common stock 4,290,617 20 4,307,617 21 4,307,617 19 Capital surplus 6(15) Capital surplus 3,945,276 18 4,346,854 20 4,346,775 19 Retained earnings 6(16) Legal reserve 4,683,878 21 4,510,981 21 4,510,981 20 Special reserve 130,902 1 61,572 - 61,572 - Unappropriated retained earnings 5,270,568 24 6,427,300 30 5,459,144 24 Other equity interest 6(17) Other equity interest ( 164,310 ) ( 1 ) ( 130,902 ) - ( 33,854 ) - Treasury shares 6(14) - - ( 116,574 ) - - - Total Equity 18,156,931 83 19,406,848 92 18,652,235 82 Significant contingent liabilities and 9 unrecognized contract commitments Total Liabilities and Equity $ 21,932,007 100 $ 21,200,790 100 $ 22,694,428 100 The accompanying notes are an integral part of these consolidated financial statements. ~5~ TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed in thousands of New Taiwan Dollars, except for earnings per share) (UNAUDITED) Three months ended June 30 Six months ended June 30 2020 2019 2020 2019 Items Notes AMOUNT % AMOUNT % AMOUNT % AMOUNT % Operating Revenue 6(18) and 7 $ 2,485,718 100 $ 3,163,909 100 $ 5,706,128 100 $ 6,843,828 100 Operating Costs 6(5)(22) and 7 ( 1,897,993 ) ( 77 ) ( 2,470,677 ) ( 78 ) ( 4,295,037 ) ( 75 ) ( 5,448,146 ) ( 79 ) Gross Profit 587,725 23 693,232 22 1,411,091 25 1,395,682 21 Operating Expenses 6(22) Sales and marketing expenses ( 174,681 ) ( 7 ) ( 224,704 ) ( 7 ) ( 384,742 ) ( 7 ) ( 438,119 ) ( 7 ) Administrative expenses ( 70,082 ) ( 3 ) ( 68,376 ) ( 2 ) ( 224,864 ) ( 4 ) ( 151,412 ) ( 2 ) Research and development expenses ( 33,042 ) ( 1 ) ( 32,822 ) ( 1 ) ( 74,108 ) ( 1 ) ( 74,016 ) ( 1 ) Reversal of impairment loss determined 6(4) in accordance with IFRS 9 88 - 758 - 139 - 833 - Total operating expenses ( 277,717 ) ( 11 ) ( 325,144 ) ( 10 ) ( 683,575 ) ( 12 ) ( 662,714 ) ( 10 ) Operating Profit 310,008 12 368,088 12 727,516 13 732,968 11 Non-operating Income and Expenses Interest income 6(19) 21,243 1 59,885 2 45,468 1 116,909 2 Other income 6(20) 9,866 - 10,487 - 19,364 - 21,477 - Other gains and losses 6(21) ( 14,089 ) - 92,419 3 110,338 2 123,454 2 Net gain from derecognizing financial 6(3) assets measured at amortised cost 3,196 - 4,277 - 8,995 - 8,388 - Finance costs 6(9) ( 505 ) - ( 362 ) - ( 1,022 ) - ( 653 ) - Share of loss of associates and joint 6(7) ventures accounted for using the equity method ( 3,850 ) - ( 3,681 ) - ( 4,932 ) - ( 8,691 ) - Total non-operating income and expenses 15,861 1 163,025 5 178,211 3 260,884 4 Profit before Income Tax 325,869 13 531,113 17 905,727 16 993,852 15 Income tax expense 6(23) ( 61,262 ) ( 2 ) ( 101,237 ) ( 3 ) ( 177,000 ) ( 3 ) ( 196,307 ) ( 3 ) Profit for the Period $ 264,607 11 $ 429,876 14 $ 728,727 13 $ 797,545 12 Other Comprehensive Income (Loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss Unrealized gain (loss) on financial 6(6)(17) assets at fair value through other comprehensive income $ 7,032 - ( $ 2,976 ) - $ 879 - $ 5,135 - Share of other comprehensive (loss) income of associates and joint ventures accounted for using the equity method - - - - ( 411 ) - 479 - Components of other comprehensive income (loss) that will be reclassified to profit or loss Exchange differences on translation of 6(17) foreign financial statements ( 27,664 ) ( 1 ) 878 - ( 42,859 ) ( 1 ) 28,227 - Income tax related to components of 6(17)(23) other comprehensive income that will be reclassified to profit or loss 5,533 - ( 174 ) - 8,572 - ( 5,644 ) - Other Comprehensive (Loss) Income for the Period ( $ 15,099 ) ( 1 ) ( $ 2,272 ) - ( $ 33,819 ) ( 1 ) $ 28,197 - Total Comprehensive Income $ 249,508 10 $ 427,604 14 $ 694,908 12 $ 825,742 12 Net profit attributable to: Owners of parent $ 264,607 11 $ 429,876 14 $ 728,727 13 $ 797,545 12 Comprehensive income attributable to: Owners of parent $ 249,508 10 $ 427,604 14 $ 694,908 12 $ 825,742 12 Earnings Per Share (in dollars) 6(24) Basic earnings per share $ 0.62 $ 1.00 $ 1.70 $ 1.85 Diluted earnings per share $ 0.62 $ 1.00 $ 1.70 $ 1.85 The accompanying notes are an integral part of these consolidated financial statements. ~6~ TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of New Taiwan Dollars) (UNAUDITED) Equity attributable to owners of the parent Capital Surplus Retained Earnings Other Equity Interest Unrealized gain or Exchange loss on financial differences on assets at fair value translation of through other Additional paid-in Donated assets Net assets from Unappropriated foreign financial comprehensive Notes Common stock capital received merger Legal reserve Special reserve retained earnings statements income Treasury shares Total equity Six months ended June 30, 2019 Balance at January 1, 2019 $ 4,307,617 $ 4,565,999 $ 4,106 $ 35,128 $ 4,302,782 $ 47,247 $ 6,778,995 ( $ 77,165 ) $ 15,593 $ - $ 19,980,302 Net income for the period - - - - - - 797,545 - - - 797,545 Other comprehensive income 6(6)(17) - - - - - - 479 22,583 5,135 - 28,197 Total comprehensive income - - - - - - 798,024 22,583 5,135 - 825,742 Appropriation and distribution of 2018 6(16) earnings Legal reserve - - - - 208,199 - ( 208,199 ) - - - - Cash dividends - - - - - - ( 1,895,351 ) - - - ( 1,895,351 ) Special reserve - - - - - 14,325 ( 14,325 ) - - - - Cash payment from capital surplus 6(16) - ( 258,458 ) - - - - - - - - ( 258,458 ) Balance at June 30, 2019 $ 4,307,617 $ 4,307,541 $ 4,106 $ 35,128 $ 4,510,981 $ 61,572 $ 5,459,144 ( $ 54,582 ) $ 20,728 $ - $ 18,652,235 Six months ended June 30, 2020 Balance at January 1, 2020 $ 4,307,617 $ 4,307,541 $ 4,185 $ 35,128 $ 4,510,981 $ 61,572 $ 6,427,300 ( $ 138,461 ) $ 7,559 ( $ 116,574 ) $ 19,406,848 Net income for the period - - - - - - 728,727 - - - 728,727 Other comprehensive