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Taiwan Acceptance Corporation
Financial Statements for the Years Ended December 31, 2017 and 2016 and Independent Auditors’ Report
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The key audit matters of 2017 financial statements are described as follows:
Estimated Impairment of Trade Receivable
As described in Note 5 to the accompanying financial statements, the determination of estimated
impairment of trade receivable takes into consideration the present value of estimated future cash
flows forecast by management based on foreseeable economic status. This is determined to be
material to the financial statements as a whole and involves significant management judgment; thus,
this is determined as a key audit matter. As of December 31, 2017, allowance for impairment loss
of trade receivables was NT$1,662,135 thousand, representing 3.10% of total trade receivables;
impairment loss of trade receivables recognized in the statements of comprehensive income for the
year ended December 31, 2017 was NT$1,041,899 thousand, representing 32.23% of operating
expenses.
Our audit procedures included:
1. We understood the policies on impairment of trade receivable and assessed the reasonableness
of impairment of receivables by performing inquiry, inspection and re-performance of related
internal controls.
2. We involved our IT specialists in testing the system that generated trade-receivable related
documents used by management in performing controls.
3. We performed analytical procedures on current and prior years’ receivable balances and
write-offs of allowances for impairment to assess the reasonableness of the recognized
impairment loss.
4. We assessed the data and model used in the estimation of receivable impairment, including
collection of impaired receivables and discount rates.
5. We calculated the impairment based on the impairment policy of the Company.
Calculation of Interest Revenue from Acquired Accounts Receivable
As described in Note 4 to the accompanying financial statements, interest revenue from acquired
accounts receivable consists of small amounts from a large number of debtors; interest revenue is
recognized throughout the periods of individual receivable acquisition contracts using effective
interest rates. Contracts involve various contract periods, principal amounts and interest rates,
resulting in large data processing and complex calculation. Thus, we determined calculation of
interest revenue from acquired accounts receivable as a key audit matter. For the year ended
December 31, 2017, interest revenue recognized from acquired accounts receivable was
NT$3,478,465 thousand, representing 76.73% of operating revenue.
Our audit procedures included:
1. We involved our IT specialists in the evaluation of IT general control environment and logic of
accounts receivable interest revenue calculation system used by management.
2. We calculated interest revenue from acquired accounts receivable using effective interest rate
to assess the reasonableness of recognized revenue.
3. We performed analytical procedures using the ratio of the balances of receivables acquired to
the recognized interest revenue of current and prior years to assess the reasonableness of
recognized revenue.
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Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with 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 financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including the audit committee, are responsible for overseeing the
Company’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with auditing standards generally accepted in the
Republic of China will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with auditing standards generally accepted in the Republic of
China, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditors’ report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
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5. Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision, and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements for the year ended December
31, 2017 and are therefore the key audit matters. We describe these matters in our auditors’ report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The engagement partners on the audit resulting in this independent auditors’ report are Hsin-Wei
Tai and Yu-Wei Fan.
Deloitte & Touche
Taipei, Taiwan
Republic of China
March 26, 2018
Notice to Readers
The accompanying financial statements are intended only to present the financial position,
financial performance and cash flows in accordance with accounting principles and practices
generally accepted in the Republic of China and not those of any other jurisdictions. The
standards, procedures and practices to audit such financial statements are those generally applied
in the Republic of China.
For the convenience of readers, the independent 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. If there is any conflict between the English version and the original
Chinese version or any difference in the interpretation of the two versions, the Chinese-language
independent auditors’ report and financial statements shall prevail.
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TAIWAN ACCEPTANCE CORPORATION
BALANCE SHEETS
DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
ASSETS Amount % Amount %
CURRENT ASSETS
Cash (Note 6) $ 757,674 1 $ 366,082 1
Debt investments with no active market - current (Notes 4, 10 and 28) 195,248 - 182,808 -
Notes and trade receivables from unrelated parties (Notes 4, 11 and 28) 51,576,809 79 46,523,491 82
Notes and trade receivables from related parties (Notes 4, 11 and 27) 320,187 - 194,979 -
Other receivables (Note 27) 1,124,617 2 307,448 1
Inventories (Notes 4 and 12) 449,278 1 239,290 -
Prepayments (Note 27) 1,260,126 2 1,254,254 2
Total current assets 55,683,939 85 49,068,352 86
NON-CURRENT ASSETS
Held-to-maturity financial assets - non-current (Notes 4 and 8) 5,578 - 5,703 -
Investments accounted for using equity method (Notes 4 and 13) 9,240,321 14 7,306,008 13
Property, plant and equipment (Note 4) 194,203 - 132,765 -
Intangible assets (Note 4) 17,948 - 2,350 -
Deferred tax assets (Notes 4 and 21) 244,673 1 219,340 1
Other non-current assets 10,915 - 9,025 -
Total non-current assets 9,713,638 15 7,675,191 14
TOTAL $ 65,397,577 100 $ 56,743,543 100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 14) $ 9,450,000 14 $ 8,800,000 15
Short-term bills payable (Note 14) 38,995,120 60 33,542,269 59
Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) - - 1,145 -
Derivative financial liabilities for hedging - current (Notes 4 and 9) 201 - - -
Notes and trade payables to unrelated parties 72,933 - 102,556 -
Notes and trade payables to related parties (Notes 4 and 27) 607,505 1 431,877 1
Other payables 388,078 1 304,081 1
Current tax liabilities (Notes 4 and 21) 176,089 - 169,168 -
Provisions - current (Notes 4 and 16) 292,184 - 329,679 1
Bonds payable (Notes 4 and 15) 4,342,919 7 3,000,000 5
Other current liabilities (Note 27) 344,579 1 301,402 1
Total current liabilities 54,669,608 84 46,982,177 83
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 21) 106,289 - 54,611 -
Net defined benefit liabilities (Notes 4 and 17) 19,723 - 12,728 -
Total non-current liabilities 126,012 - 67,339 -
Total liabilities 54,795,620 84 47,049,516 83
EQUITY (Note 18)
Capital stock 2,746,292 4 2,746,292 5
Capital surplus 2,541,960 4 2,541,960 4
Retained earnings
Legal reserve 1,677,032 3 1,503,725 3
Special reserve 266,047 - 35,588 -
Unappropriated earnings 3,682,666 6 3,096,921 5
Total retained earnings 5,625,745 9 4,636,234 8
Other equity (312,040) (1) (230,459) -
Total equity 10,601,957 16 9,694,027 17
TOTAL $ 65,397,577 100 $ 56,743,543 100
The accompanying notes are an integral part of the financial statements.
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TAIWAN ACCEPTANCE CORPORATION
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2017 2016
Amount % Amount %
OPERATING REVENUE (Notes 4, 19 and 27)
Interest revenue from acquired accounts receivable $ 3,478,465 77 $ 3,263,783 78
Interest revenue from installment sales 417,170 9 154,260 4
Agency revenue 609,765 13 762,732 18
Other operating revenue 27,699 1 23,697 -
Total operating revenue 4,533,099 100 4,204,472 100
OPERATING COSTS (Note 20)
Financing cost 373,157 8 341,605 8
GROSS PROFIT 4,159,942 92 3,862,867 92
OPERATING EXPENSES (Notes 20 and 27) 3,232,762 71 3,073,352 73
OTHER OPERATING INCOME AND EXPENSES,
NET (Notes 20 and 27) 560,988 12 498,987 12
PROFIT FROM OPERATIONS 1,488,168 33 1,288,502 31
NON-OPERATING INCOME AND EXPENSES
Share of profit or loss of subsidiaries, associates and
joint ventures (Notes 4 and 13) 1,169,834 26 675,779 16
Gain (loss) from financial assets and liabilities at fair
value through profit (Notes 4 and 7) 1,145 - 1,667 -
Other income 9,428 - 13,406 -
Total non-operating income and expenses 1,180,407 26 690,852 16
PROFIT BEFORE INCOME TAX 2,668,575 59 1,979,354 47
INCOME TAX EXPENSE (Notes 4 and 21) 344,348 8 246,283 6
NET PROFIT FOR THE YEAR 2,324,227 51 1,733,071 41
(Continued)
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TAIWAN ACCEPTANCE CORPORATION
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2017 2016
Amount % Amount %
OTHER COMPREHENSIVE INCOME (Note 18)
Items that will not be reclassified subsequently to
profit or loss:
Share of other comprehensive income of
subsidiaries associates and joint ventures
accounted for using the equity method $ (7,484) - $ (7,287) -
Remeasurement of defined benefit plans (7,548) - (1,118) -
Income tax relating to items that will not be
reclassified subsequently to profit or loss
(Notes 4 and 21) 1,283 - 190 -
Items that may be reclassified subsequently to profit
or loss:
Share of other comprehensive income of
subsidiaries associates and joint ventures
accounted for using the equity method (81,380) (2) (324,489) (8)
Cash flow hedges (201) - 721 -
Other comprehensive income for the year, net
of income tax (95,330) (2) (331,983) (8)
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR $ 2,228,897 49 $ 1,401,088 33
EARNINGS PER SHARE (Note 22)
Basic $ 8.46 $ 6.41
Diluted $ 8.46 $ 6.32
The accompanying notes are an integral part of the financial statements. (Concluded)
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TAIWAN ACCEPTANCE CORPORATION
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
Other Equity
Capital Stock Issued and Outstanding Exchange Unrealized
Unregistered Differences on Gain (Loss) on Unrealized
Capital from Retained Earnings Translating Available-for- (Losses) Gains
Shares Bond Unappropriated Foreign sale Financial of Cash Flow
(In Thousand) Amount Conversion Capital Surplus Legal Reserve Special Reserve Earnings Operations Assets Hedges Total Total Equity
BALANCE, JANUARY 1, 2016 267,288 $ 2,672,883 $ 6,299 $ 2,236,636 $ 1,361,220 $ 35,588 $ 2,784,503 $ 95,083 $ (1,053) $ (721) $ 93,309 $ 9,190,438
Appropriation of 2015 earnings:
Legal reserve - - - - 142,505 - (142,505) - - - - -
Cash dividends distributed by the Company - - - - - - (1,269,933) - - - - (1,269,933)
Change of other capital surplus
Change in capital surplus from investments in associates and
joint ventures accounted for by using equity method - - - 1,017 - - - - - - - 1,017
Net profit for the year ended December 31, 2016 - - - - - - 1,733,071 - - - - 1,733,071
Other comprehensive income (loss) for the year ended
December 31, 2016, net of income tax - - - - - - (8,215) (323,310) (1,179) 721 (323,768) (331,983)
Total comprehensive income (loss) for the year ended
December 31, 2016 - - - - - - 1,724,856 (323,310) (1,179) 721 (323,768) 1,401,088
Unregistered capital converted to capital stock 630 6,299 (6,299) - - - - - - - - -
Convertible bonds converted to capital stock 6,711 67,110 - 304,307 - - - - - - - 371,417
BALANCE, DECEMBER 31, 2016 274,629 2,746,292 - 2,541,960 1,503,725 35,588 3,096,921 (228,227) (2,232) - (230,459) 9,694,027
Appropriation of 2016 earnings:
Legal reserve - - - - 173,307 - (173,307) - - - - -
Special reserve - - - - - 230,459 (230,459) - - - - -
Cash dividends distributed by the Company - - - - - - (1,320,967) - - - - (1,320,967)
Net profit for the year ended December 31, 2017 - - - - - - 2,324,227 - - - - 2,324,227
Other comprehensive income (loss) for the year ended
December 31, 2017, net of income tax - - - - - - (13,749) (84,343) 2,963 (201) (81,581) (95,330)
Total comprehensive income (loss) for the year ended
December 31, 2017 - - - - - - 2,310,478 (84,343) 2,963 (201) (81,581) 2,228,897
BALANCE, DECEMBER 31, 2017 274,629 $ 2,746,292 $ - $ 2,541,960 $ 1,677,032 $ 266,047 $ 3,682,666 $ (312,570) $ 731 $ (201) $ (312,040) $ 10,601,957
The accompanying notes are an integral part of the financial statements.
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TAIWAN ACCEPTANCE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax $ 2,668,575 $ 1,979,354
Adjustments for:
Interest income (4,540,902) (4,204,878)
Share of profit of subsidiaries, associates and joint ventures (1,169,834) (675,779)
Impairment loss recognized on trade receivables 1,041,899 996,863
Financing cost 378,440 341,605
Reversal of provisions (37,495) (91,512)
Depreciation expenses 7,174 5,890
Amortization expenses 3,103 2,370
Changes in operating assets and liabilities
Financial assets held for sale - 94
Notes and trade receivables from unrelated parties (6,048,203) (6,631,021)
Notes and trade receivables from related parties (125,208) 35,805
Other receivables (817,169) (7,012)
Inventories (209,988) 159,626
Prepayments (5,872) 84,603
Financial liabilities held for sale (1,145) (1,759)
Notes and trade payables to unrelated parties (29,623) 2,228
Notes and trade payables to related parties 175,628 37,750
Other payables 71,665 (40,611)
Other current liabilities 43,177 34,667
Net defined benefit liabilities (553) (584)
Cash used in operations (8,596,331) (7,972,301)
Interest received 4,494,013 4,177,732
Interest paid (411,813) (324,098)
Income tax paid (309,799) (238,144)
Net cash used in operating activities (4,823,930) (4,356,811)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of associates investment accounted for using equity
method (1,128,439) (500,001)
Dividend received from subsidiaries and associate 275,096 570,243
Acquisition of property, plant and equipment (68,612) (6,261)
Acquisition of intangible assets (18,701) (984)
Increase in debt investments with no active market (12,440) (692)
Increase in refundable deposits (1,890) (44)
Net cash (used in) generated from investing activities (954,986) 62,261
(Continued)
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TAIWAN ACCEPTANCE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars)
2017 2016
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term bills payable $ 5,500,000 $ 4,200,000
Proceeds from issue of bonds payable 4,341,475 -
Repayments of bond payables (3,000,000) -
Dividends paid (1,320,967) (1,269,933)
Proceeds from short-term borrowings 650,000 1,379,000
Net cash generated from financing activities 6,170,508 4,309,067
NET INCREASE IN CASH 391,592 14,517
CASH AT THE BEGINNING OF THE YEAR 366,082 351,565
CASH AT THE END OF THE YEAR $ 757,674 $ 366,082
The accompanying notes are an integral part of the financial statements. (Concluded)
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TAIWAN ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. GENERAL INFORMATION
Taiwan Acceptance Corporation (the “Company”) was incorporated in Taipei, Taiwan, Republic of China
(ROC) on April 12, 1990. It mainly focuses on purchasing accounts receivable of related products such as
new cars and used cars.
The Company’s shares were listed on the Taipei Exchange (formerly called the Taiwan GreTai Securities
Market) on December 4, 1999, and have been listed on the Taiwan Stock Exchange since September 19,
2001.
The Company’s parent company is Yulon Motor Company Ltd. (“Yulon Company”) which held 45.75% of
ordinary shares of the Company as of December 31, 2017 and 2016. The Company’s ultimate parent
company is Yulon Company.
The financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.
2. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the board of directors and authorized for issue on March 26,
2018.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports
by Securities Issuers and the International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC)
(collectively, the “IFRSs”) endorsed and issued into effect by the FSC
Except for the following, whenever applied, the initial application of the amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs
endorsed and issued into effect by the FSC would not have any material impact on the Group’s
accounting policies:
Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers
The amendments include additions of several accounting items and requirements for disclosures of
impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the
FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments
also include an emphasis on certain recognition and measurement considerations and add requirements
for disclosures of related party transactions and goodwill.
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The amendments stipulate that other companies or institutions of which the chairman of the board of
directors or president serves as the chairman of the board of directors or the president, or is the spouse
or second immediate family of the chairman of the board of directors or president of the Company are
deemed to have a substantive related party relationship, unless it can be demonstrated that no control,
joint control, or significant influence exists. Furthermore, the amendments require the disclosure of
the names of the related parties and the relationship with whom the Company has significant
transaction. If the transaction or balance with a specific related party is 10% or more of the
Company’s respective total transaction or balance, such transaction should be separately disclosed by
the name of each related party.
When the amendments are applied retrospectively from January 1, 2017, the disclosures of related party
transactions are enhanced. Refer to Note 27 for related disclosures.
Except for the above impacts, as of the date the financial statements were authorized for issue, the
Company continues assessing other possible impacts that application of the aforementioned
amendments and the related amendments to the Regulations Governing the Preparation of Financial
Reports by Securities Issuers will have on the Company’s financial position and financial performance,
and will disclose these other impacts when the assessment is completed.
b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and the
International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed
by the FSC for application starting from 2018
New, Amended or Revised Standards and Interpretations
(the “New IFRSs”)
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2014-2016 Cycle Note 2
Amendments to IFRS 2 “Classification and Measurement of
Share-based Payment Transactions”
January 1, 2018
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts”
January 1, 2018
IFRS 9 “Financial Instruments” January 1, 2018
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
January 1, 2018
IFRS 15 “Revenue from Contracts with Customers” January 1, 2018
Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from
Contracts with Customers”
January 1, 2018
Amendment to IAS 7 “Disclosure Initiative” January 1, 2017
Amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealized Losses”
January 1, 2017
Amendments to IAS 40 “Transfers of Investment Property” January 1, 2018
IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”
January 1, 2018
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after
January 1, 2017; the amendments to IAS 28 are retrospectively applied for annual periods
beginning on or after January 1, 2018.
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IFRS 9 “Financial Instruments” and related amendments
Classification, measurement and impairment of financial assets
With regard to financial assets, all recognized financial assets that are within the scope of IAS 39
“Financial Instruments: Recognition and Measurement” are subsequently measured at amortized
cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated
below.
For the Company’s debt instruments that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, their classification and measurement are
as follows:
1) For debt instruments, if they are held within a business model whose objective is to collect
contractual cash flows, the financial assets are measured at amortized cost and are assessed for
impairment continuously with any impairment loss recognized in profit or loss. Interest
revenue is recognized in profit or loss by using the effective interest method;
2) For debt instruments, if they are held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets, the financial assets are
measured at fair value through other comprehensive income (FVTOCI) and are assessed for
impairment. Interest revenue is recognized in profit or loss by using the effective interest
method, and other gains or losses shall be recognized in other comprehensive income, except for
impairment gains or losses and foreign exchange gains and losses. When the debt instruments
are derecognized or reclassified, the cumulative gain or loss previously recognized in other
comprehensive income is reclassified from equity to profit or loss.
Except for the above, all other financial assets are measured at fair value through profit or loss.
However, the Company may make an irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in other comprehensive income, with
only dividend income generally recognized in profit or loss. No subsequent impairment
assessment is required, and the cumulative gain or loss previously recognized in other
comprehensive income cannot be reclassified from equity to profit or loss.
Based on an analysis of the Company’s financial assets as at December 31, 2017 on the basis of the
facts and circumstances that exist at that date, the Company has performed an assessment of the
impact of IFRS 9 to the classification and measurement of financial assets as follows:
Debt investments classified as held-to-maturity financial assets and measured at amortized cost will
be classified as measured at amortized cost under IFRS 9 because on initial recognition, the
contractual cash flows that are solely payments of principal and interest on the principal outstanding
and these investments are held within a business model whose objective is to collect the contractual
cash flows.
IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit
Losses Model”. The credit loss allowance is required for financial assets measured at amortized
cost, financial assets measured at FVTOCI, lease receivables, contract assets arising from IFRS 15
“Revenue from Contracts with Customers”, certain written loan commitments and financial
guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a
financial asset if its credit risk has not increased significantly since initial recognition. A loss
allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has
increased significantly since initial recognition and is not low. However, a loss allowance for full
lifetime expected credit losses is required for trade receivables that do not constitute a financing
transaction.
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For purchased or originated credit-impaired financial assets, the Company takes into account the
expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate.
Subsequently, any changes in expected losses are recognized as a loss allowance with a
corresponding gain or loss recognized in profit or loss.
The Company has performed an assessment that the Company will apply the simplified approach to
recognize lifetime expected credit losses for trade receivables and contract assets. In relation to
the debt instrument investments and the financial guarantee contracts, the Company will assess
whether there has been a significant increase in the credit risk to determine whether to recognize
12-month or lifetime expected credit losses.
The Company has assessed that retrospectively applying the requirements for the classification,
measurement and impairment of financial assets under IFRS 9 will have no material impact on
assets, liabilities and equity as of January 1, 2018.
Hedge accounting
The main changes in hedge accounting amended the application requirements for hedge accounting
to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes
include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening
the risks eligible for hedge accounting of non-financial items; (2) changing the way the hedging cost
of derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing
retrospective effectiveness assessment with the principle of economic relationship between the
hedging instrument and the hedged item.
An assessment of the Company’s current hedging relationships indicates that they will qualify as
continuing hedging relationships upon application of IFRS 9.
Except for the above impacts, as of the date the consolidated financial statements were authorized for
issue, the Company continues assessing other possible impacts that application of the aforementioned
amendments and the related amendments to the Regulations Governing the Preparation of Financial
Reports by Securities Issuers will have on the Company’s financial position and financial performance,
and will disclose these other impacts when the assessment is completed.
c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
New IFRSs
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2015-2017 Cycle January 1, 2019
Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”
January 1, 2019 (Note 2)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
To be determined by IASB
IFRS 16 “Leases” January 1, 2019 (Note 3)
IFRS 17 “Insurance Contracts” January 1, 2021
Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”
January 1, 2019 (Note 4)
Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”
January 1, 2019
IFRIC 23 “Uncertainty Over Income Tax Treatments” January 1, 2019
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
- 15 -
Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.
Note 3: On December 19, 2017, the FSC announced that IFRS 16 will take effect starting from
January 1, 2019.
Note 4: The Company shall apply these amendments to plan amendments, curtailments or settlements
occurring on or after January 1, 2019.
1) IFRS 16 “Leases”
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of
related interpretations.
Under IFRS 16, if the Company is a lessee, it shall recognize right-of-use assets and lease liabilities
for all leases on the balance sheets except for low-value and short-term leases. The Company may
elect to apply the accounting method similar to the accounting for operating leases under IAS 17 to
low-value and short-term leases. On the statements of comprehensive income, the Company
should present the depreciation expense charged on right-of-use assets separately from the interest
expense accrued on lease liabilities; interest is computed by using the effective interest method.
On the statements of cash flows, cash payments for the principal portion of lease liabilities are
classified within financing activities; cash payments for the interest portion are classified within
operating activities.
The application of IFRS 16 is not expected to have a material impact on the accounting of the
Company as lessor.
When IFRS 16 becomes effective, the Company may elect to apply this standard either
retrospectively to each prior reporting period presented or retrospectively with the cumulative effect
of the initial application of this standard recognized at the date of initial application.
2) IFRIC 23 “Uncertainty Over Income Tax Treatments”
IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Company should
assume that the taxation authority will have full knowledge of all related information when making
related examinations. If the Company concludes that it is probable that the taxation authority will
accept an uncertain tax treatment, the Company should determine the taxable profit, tax bases,
unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or
planned to be used in its income tax filings. If it is not probable that the taxation authority will
accept an uncertain tax treatment, the Company should make estimates using either the most likely
amount or the expected value of the tax treatment, depending on which method the entity expects to
better predict the resolution of the uncertainty. The Company has to reassess its judgments and
estimates if facts and circumstances change.
On initial application, the Company shall apply IFRIC 23 either retrospectively to each prior
reporting period presented, if this is possible without the use of hindsight, or retrospectively with
the cumulative effect of the initial application of IFRIC 23 recognized at the date of initial
application.
Except for the above impact, as of the date the financial statements were authorized for issue, the
Company is continuously assessing the possible impact that the application of other standards and
interpretations will have on the Company’s financial position and financial performance, and will
disclose the relevant impact when the assessment is completed.
- 16 -
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance
The parent company only financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”).
Basis of Preparation
The financial statements have been prepared on the historical cost basis, except for financial instruments
that are measured at fair value, as explained in the accounting policies below.
The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value
measurement inputs are observable and the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c. Level 3 inputs are unobservable inputs for the asset or liability.
When preparing its parent company only financial statements, the Company used equity method to account
for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit
for the year, other comprehensive income for the year and total equity in the parent company only financial
statements to be the same with the amounts attributable to the owner of the Company in its consolidated
financial statements, adjustments arising from the differences in accounting treatment between parent
company only basis and consolidated basis were made to investments accounted for by equity method,
share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of
subsidiaries, associates and joint ventures and related equity items, as appropriate, in the parent company
only financial statements.
Classification of Current and Non-current Assets and Liabilities
Current assets include:
a. Assets held primarily for the purpose of trading;
b. Assets expected to be realized within an operating cycle after the reporting period; and
c. Cash and cash equivalents.
Current liabilities include:
a. Liabilities held primarily for the purpose of trading;
b. Liabilities due to be settled within an operating cycle after the reporting period; and
c. Liabilities for which the Company does not have an unconditional right to defer settlement for at least
an operating cycle after the reporting period. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other assets and liabilities are classified as noncurrent.
- 17 -
The operating cycle of the Company, which is more than one year, is used as the basis for determining
liquidity for the classification of balance sheet accounts.
Foreign Currencies
In preparing the financial statements of the Company, transactions in currencies other than the Company’s
functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of
the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Exchange differences on monetary items arising from settlement or
translation are recognized in profit or loss in the year in which they arise except for exchange differences on
transactions entered into in order to hedge certain foreign currency risks.
Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
For the purposes of presenting financial statements, the assets and liabilities of the Company’s foreign
operations (including of the subsidiaries and associates operations in other countries or currencies used are
different with the Company) are translated into New Taiwan dollars using exchange rates prevailing at the
end of each reporting period. Income and expense items are translated at the average exchange rates for
the year. Exchange differences arising are recognized in other comprehensive income.
Inventories
Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by
item. The Company provides dealers with display areas and cars for display and for sale, and charges
display fees till the cars are sold. Before the ownership of cars is transferred to dealers, the cars are treated
as the Company’s inventories.
Investments in Subsidiaries
The Company uses the equity method to account for its investments in subsidiaries.
Subsidiary is an entity that is controlled by the Company.
Under the equity method, investment in a subsidiary is initially recognized at cost and adjusted thereafter to
recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary.
The Company also recognizes the changes in the Company’s share of equity of subsidiaries attributable to
the Company.
Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing
control of the subsidiary are equity transactions. The Company recognizes directly in equity any
difference between the carrying amount of the investment and the fair value of the consideration paid or
received.
Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable
assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included
within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of
the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized
immediately in profit or loss.
Investments in Associates
An associate is an entity over which the Company has significant influence and that is neither a subsidiary
nor an interest in a joint venture.
- 18 -
The Company uses the equity method to account for its investments in associates.
Under the equity method, investments in associates are initially recognized at cost and adjusted thereafter to
recognize the Company’s share of the profit or loss and other comprehensive income of the associates.
The Company also recognizes the changes in the Company’s share of equity of associates attributable to the
Company.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset
by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is
deducted from the carrying amount of the investment. Any reversal of that impairment loss is recognized
to the extent that the recoverable amount of the investment subsequently increases.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, less recognized accumulated depreciation and recognized
accumulated impairment loss.
Depreciation of property, plant and equipment is recognized using the straight-line method. Each
significant part is depreciated separately. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.
Intangible Assets
a. Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are initially measured at cost and
subsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and
amortization method are reviewed at the end of each reporting period, with the effect of any changes in
estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are
acquired separately are measured at cost less accumulated impairment loss.
b. Derecognition of intangible assets
On derecognition of an intangible asset, the difference between the net disposal proceeds and the
carrying amount of the asset is recognized in profit or loss.
Impairment of Tangible and Intangible Assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
intangible assets for any indication of impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not
possible to estimate the amount of an individual asset, the Company estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
- 19 -
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting
impairment loss recognized in profit or loss.
When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount
(amortization or depreciation subtracted) that would have been determined had no impairment loss been
recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognized in profit or loss.
Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets, and financial liabilities (other than
financial assets, and financial liabilities at FVTPL) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.
a. Financial assets
All regular way purchases or sales of financial assets are recognized, and derecognized on a settlement
date basis. A transaction is defined as a regular way purchase or sale when the dealing period is
within the period defined under relevant laws or when the transaction is part of the normal course of
business.
1) Measurement category
Financial assets held by the Company belong to the following categories: Financial assets at
held-to-maturity investments, and loans and receivables.
a) Held-to-maturity financial assets
The central government bond which the Company has the positive intent and ability to hold
until maturity is classified as held-to maturity financial assets.
After initial recognition, held-to-maturity investments are measured at amortized cost using the
effective interest method less any impairment.
b) Loans and receivables
Loans and receivables (including cash and cash equivalents, notes and trade receivables, debt
investments with no active market and other receivables) are measured at amortized cost using
the effective interest method less any impairment, except for short-term receivables when the
effect of discounting is immaterial.
2) Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period.
Financial assets are considered when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash
flows of the investment have been affected.
- 20 -
For financial assets carried at amortized cost, such as notes and trade receivables and other
receivables, assets are assessed for objective evidence of impairment collectively even if they have
been assessed as not impaired individually. Objective evidence of impairment for a portfolio of
receivables could include the Company’s past experience of collecting payments, and an increase in
the number of delayed payments, as well as observable changes in national or local economic
conditions that correlate with default on trade receivables.
For financial assets carried at amortized cost, the impairment loss recognized is the difference
between the asset’s carrying, and the present value of estimated future cash flows, discounted at the
financial asset’s original effective interest rate.
If the impairment losses decrease, and the decreases can be related objectively to events occurring
after the recognition of impairment, the previously recognized impairment losses are reversed
through profit or loss to the extent that the carrying amounts of the investments at the date the
impairments are reversed do not exceed what the amortized costs would have been had the
impairments not been recognized.
The carrying amounts of the financial assets are reduced by the impairment loss directly for all
financial assets, but for trade receivables, the carrying amount is reduced through the use of an
allowance account. When accounts receivable are considered uncollectible, they are written off
against the allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the allowance account
are recognized in profit or loss, except for changes due to the write-off uncollectible accounts
receivable against the allowance account.
3) Derecognition of financial assets
The Company derecognizes financial assets only when the contractual rights to the cash flows from
the assets expire or when it transfers the financial assets, and substantially all the risks, and rewards
of ownership of the asset to another party.
On the full derecognition of a financial asset, the differences between the assets’ carrying amount,
and the sum of the consideration received, and receivable, and the cumulative gain or loss that had
been recognized in other comprehensive income are recognized in profit or loss.
b. Equity instruments
Debt and equity instruments issued by the Company are classified either as financial liabilities or as
equity in accordance with the substance of the contractual arrangements, and the definitions of a
financial liability, and an equity instrument.
Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue
costs.
Repurchase of the Company’s own equity instruments is recognized, and deducted directly from equity.
No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the
Company’s own equity instruments.
c. Financial liabilities
1) Subsequent measurement
Financial liabilities, other than those measured at FVTPL are measured at amortized cost using the
effective interest method.
- 21 -
Financial liabilities are classified as at FVTPL when the financial liabilities are held for trading.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss. Fair value is determined in the manner described in
Note 26.
2) Derecognition of financial liabilities
The Company derecognizes financial liabilities only when the contractual obligation is dissolved,
canceled or expired. The difference between the carrying amount of the financial liability
derecognized, and the consideration paid is recognized in profit or loss.
d. Convertible bonds
Convertible bonds issued by the Company are classified into financial liabilities and equity separately
in accordance to the nature of the contractual arrangements, and the definitions of financial liability, and
equity instrument.
Upon initial recognition, the fair value of the liability component is estimated using the prevailing
market interest rate for similar nonconvertible instruments. This amount is recorded as a liability on
an amortized cost basis using the effective interest method until extinguished upon conversion or on
bond maturity. Any embedded derivative liability is measured at fair value.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. The conversion option is
recognized, and included in equity, net of income tax effects, and is not subsequently remeasured. In
addition, the conversion option classified as equity will remain in equity, and when the conversion
option is exercised, the balance recognized in equity will be transferred to capital surplus - share
premium. When the conversion option remains unexercised on bond maturity, the balance recognized
in equity will be transferred to capital surplus - share premium. No gain or loss is recognized in profit
or loss upon conversion or upon expiration of the conversion option.
Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds.
e. Derivative financial instruments
The Company manages its exposures to interest rate risks and foreign exchange rate risks through
derivative financial instruments - interest rate swaps and cross currency swaps.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into, and
are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain
or loss is recognized in profit or loss immediately, but if the derivative is designated, and effective as a
hedging instrument, the timing of the recognition in profit or loss depends on the nature of the hedge
relationship. When the fair value of a derivative financial instrument is positive, the derivative is
recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.
Hedge Accounting
The Company designates certain hedging instruments as cash flow hedges.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in other comprehensive income. The gain or loss on the ineffective portion is
recognized immediately in profit or loss.
- 22 -
Hedge accounting is discontinued prospectively when the Company revokes the designated hedging
relationship; when the hedging instrument expires or is sold, terminated, or exercised; or when the hedging
instrument no longer meets the criteria for hedge accounting. The amounts that previously recognized in
other comprehensive income during the effective hedging period is still recognize in equity before the
hedging instrument expires or is sold, terminated, or exercised, or when the hedging instrument no longer
meets the criteria for hedge accounting. When the hedge accounting is discontinued, the amounts that
previously recognized in other comprehensive income will be recognized in profit or loss immediately.
Provisions
Provisions are measured at the best estimate of the consideration required to settle the present obligation at
the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
The Company’s provision is for contracts with guarantees which include car loan contracts signed by the
Company’s customers with financial institutions in which the Company provides payment guarantees as
well as account management services. Under the contracts, the Company is responsible for the collection
of loan repayments and will assume the risk of loss on uncollectable loans in the event of default. The
provision is subsequently measured under IAS 37 “Provision, Contingent Liabilities and Contingent
Assets”.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable.
a. Interest revenue from acquired accounts receivable
The Company undertakes business regarding the acquisition of accounts receivable. After transferring
accounts receivable, the seller is not responsible for unpaid overdue accounts of the debtor. The
difference between acquisition payment and account receivable principal is recognized as unearned
interest revenue and amortized as interest revenue from acquired accounts receivable using effective
interest method throughout the contract term. In addition, the deferred gain recognized from acquiring
the service contract between third party and financial institutions is recognized evenly throughout the
contract period as interest revenue from acquired accounts receivable.
b. Installment sales interest revenue
The main business of the Company and Shinshin is installment financing services. The difference
between installment price and sales price is recognized as unrealized interest revenue, and is recognized
as installment sales interest revenue using interest method during the installment period. Unrealized
interest revenue is deducted from notes, and accounts receivable.
c. Agency revenue
The customers of the Company signed car loan contracts with banks, with the Company acting as car
loan agents and providing customers with account management services. Under the contracts, banks
pay agency fees to the Company based on each payment term of the contract. The Company
recognizes these agency revenues on accrual basis. The Company is responsible for repaying any
uncollectable loans arising from customer default.
d. Other operating revenue
Other operating revenue is recognized when the profit earning process is complete or near complete and
realized or realizable. Related cost is recognized under matching principle.
- 23 -
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
Employee Benefits
a. Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related service.
b. Retirement benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when
employees have rendered service entitling them to the contributions.
Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit
retirement benefit plans are determined using the projected unit credit method. Service cost (including
current service cost) and net interest on the net defined benefit liability (asset) are recognized as
employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and
losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income
in the period in which they occur. Remeasurement recognized in other comprehensive income is
reflected immediately in retained earnings and will not be reclassified to profit or loss.
Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined
benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds
from the plans or reductions in future contributions to the plans.
c. Termination benefits
A liability for a termination benefit is recognized at the earlier of when the Company can no longer
withdraw the offer of the termination benefit and when the Company recognizes any related
restructuring costs.
Taxation
Income tax expense represents the sum of the current tax payable and deferred tax.
a. Current tax
Based on the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as
income tax in the year the shareholders approve the retention of these earnings.
Adjustments of prior years’ tax liabilities are included in the current year’s tax provision.
b. Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities and the corresponding tax bases used in the computation of taxable profit.
- 24 -
Deferred tax liabilities are generally recognized for all future taxable temporary differences. Deferred
tax assets are generally recognized for all future deductible temporary differences and unused loss
carryforward to the extent that it is probable that taxable profits will be available for deduction.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, except where the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and
interests are only recognized to the extent that it is probable that there will be sufficient taxable profits
against which to utilize the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. Previously unrecognized deferred tax assets are also
reviewed at the end of each reporting period and recognized to the extent that they have become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted
or substantively enacted by the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences of how the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
c. Current and deferred taxes
Current and deferred taxes are recognized in profit or loss, but when these taxes relate to items that are
recognized in other comprehensive income, the current and deferred taxes are also recognized in other
comprehensive income.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Company’s accounting policies, management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the year in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Main sources of assumptions and uncertainties are as follows. Such assumptions and uncertainties may
lead to material adjustments to assets and liabilities in the following fiscal year.
Estimated Impairment of Trade Receivable
When there is objective evidence of impairment loss, the Company takes into consideration the estimation
of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the financial asset’s
original effective interest rate. Material impairment loss may arise if the actual future cash flows are less
than expected.
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6. CASH
December 31
2017 2016
Cash on hand $ 270 $ 330
Checking accounts and demand deposits 757,404 365,752
$ 757,674 $ 366,082
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT
December 31
2017 2016
Financial liabilities held for trading
Derivative financial liabilities
Interest rate swap contracts $ - $ 1,145
The Company entered into interest rate swap (IRS) contracts to hedge against exposures due to interest rate
fluctuations of assets and liabilities. Interest rate swap contracts in the Company’s possession did not
qualify for hedge accounting; thus, the Company did not apply hedge accounting.
At the end of the reporting period, outstanding interest rate swap contracts not under hedge accounting were
as follows:
Notional Amounts
(In Thousands) Maturity Date
Interest Rates -
Payment Interest Rates - Receipt
December 31, 2016
$ 200,000 2017.03.27 0.950% Note
300,000 2017.06.01 0.975% Note
200,000 2017.06.19 0.970% Note
200,000 2017.07.31 0.950% Note
Note: The receipt interest rates are based on the three months TAIBOR - Reuters interest rate prevailing
on two operating days before the IRS contract issue date.
8. HELD-TO-MATURITY FINANCIAL ASSETS - NON-CURRENT
December 31
2017 2016
Domestic investments
Central Government Development Bonds $ 5,578 $ 5,703
a. The Company invested in Central Government Development Bonds which are recognized as held to
maturity financial assets - non-current with yearly payment coupon rates of 3.75% and a maturity date
of August 16, 2022.
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b. As of December 31, 2017 and 2016, the Company pledged Central Government Development Bonds
with face values of $1,000 thousand and $0, respectively, as guarantee deposits for evidence of claims
in the courthouse.
9. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING - CURRENT
December 31
2017 2016
Derivative financial liabilities under hedge accounting
Cash flow hedges - interest rate swaps $ 201 $ -
The Company entered into interest rate swap (IRS) contracts to mitigate the risk of adverse changes in
interest rates on the cash flow exposure related to outstanding floating-rate debts. The terms of the IRS
contracts are identical to those for debts under hedging; thus, the Company’s management considered these
contracts a highly effective tool for hedging. The outstanding IRS contracts at the end of the reporting
period were as follows:
Notional Amount
(In Thousands) Maturity Date Interest Rates - Receipt
Interest Rates -
Payment
December 31, 2017
$ 300,000 2019.04.25 Note 0.745%
200,000 2019.04.25 Note 0.740%
Note: The receipt interest rates are based on the three months TAIBOR - Reuters interest rate prevailing
on two operating days before the IRS contract issue date.
10. DEBT INVESTMENTS WITH NO ACTIVE MARKET - CURRENT
December 31
2017 2016
Reserve account $ 194,348 $ 181,908
Pledged time deposits 900 900
$ 195,248 $ 182,808
Refer to Note 28 for information relating to debt investments with no active market pledged as security.
- 27 -
11. NOTES AND TRADE RECEIVABLES
All notes and trade receivables of the Company are from operating activities.
December 31
2017 2016
Classified according to installment and non-installment
accounts receivable
Installment accounts receivable
Less than one year $ 24,210,450 $ 23,123,284
1-2 years 16,187,613 15,337,281
2-3 years 10,395,986 8,402,187
Over 3 years 9,314,083 6,932,356
60,108,132 53,795,108
Less: Unrealized interest revenue (6,947,858) (5,880,165)
Less: Allowance for impairment loss (1,662,135) (1,429,307)
51,498,139 46,485,636
Non-installment accounts receivable 398,857 232,834
Accounts receivable, net $ 51,896,996 $ 46,718,470
a. Installment accounts receivable
Installment accounts receivable include accounts receivable from acquisitions, installment sales, and
promotions of car loans.
Principal and interest are collected monthly. For delayed payments, interest is accrued on the basis of
the number of days that payments are overdue. Based on past experience and macroeconomic factors,
the overdue receivables that are over 180 days due are considered uncollectible or default will likely
occur. Therefore, for receivables which remain unsettled after 180 days of the due date, the amounts
are written off. For receivables within the above mentioned time period, uncollectable amounts are
estimated according to past experience and macroeconomic factors.
b. Non-installment accounts receivable
These are mainly accounts receivable for auto vehicles on display. Most of the related customers are
car dealers within Yulon Group; the accounts receivable did not exhibit signs of default or impairment.
The clients of the Company are widely dispersed and are unrelated; thus, credit risk is limited.
c. The aging of receivables was as follows:
December 31
2017 2016
Not past due $ 53,196,937 $ 47,785,464
1-180 days 362,194 362,313
$ 53,559,131 $ 48,147,777
- 28 -
d. Movements in the allowance for impairment loss recognized on notes receivable and trade receivables
were as follows:
Assessed
Impairment
Individually
Assessed
Impairment by
Group Total
Balance at January 1, 2016 $ 11,393 $ 1,092,933 $ 1,104,326
Add: Impairment losses (reversed)
recognized on receivables (1,200) 998,063 996,863
Deduct: Amounts Written off as
uncollectible - (671,882) (671,882)
Balance at December 31, 2016 10,193 1,419,114 1,429,307
Add: Impairment losses (reversed)
recognized on receivables (1,200) 1,043,099 1,041,899
Deduct: Amounts Written off as
uncollectible - (809,071) (809,071)
Balance at December 31, 2017 $ 8,993 $ 1,653,142 $ 1,662,135
As of December 31, 2017 and 2016, the allowance for impairment loss included allowances for
individually impaired trade receivables from customers that were in the process of liquidation or
experiencing severe financial difficulties and were in the amounts of $8,993 thousand and $10,193
thousand, respectively. The Company did not hold any collateral over these balances.
12. INVENTORIES
December 31
2017 2016
Motor vehicles $ 449,278 $ 239,290
Under transaction contracts between suppliers and the Company, suppliers agree to sell automobiles to auto
dealers through the Company. In addition, display contracts were also signed between the Company and
auto dealers. Under such contracts, auto dealers are not entitled to alter the position or dispose of the auto
vehicles on display. Display fees were charged by the Company during the display period. The
Company is fully responsible in the event of any vehicle damage. However, auto dealers are responsible
to provide auto insurance for vehicles on display with the Company as the only beneficiary.
13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
December 31
2017 2016
Investments in subsidiaries $ 8,995,615 $ 7,078,032
Investments in associates 244,706 227,976
$ 9,240,321 $ 7,306,008
- 29 -
a. Investments in subsidiaries
December 31
2017 2016
Shinshin Credit Corporation $ 2,657,949 $ 2,187,014
TAC Global Investment (Samoa) Co., Ltd. 2,082,694 1,852,349
Car-plus Auto Leasing Corporation 1,261,245 1,250,445
Yulon Motor Finance (China) Co., Ltd. 2,221,426 1,099,619
Yu Rich Financial Services Co., Ltd. 578,389 495,926
Sin Jang Enterprises 193,912 192,679
$ 8,995,615 $ 7,078,032
December 31
Name of Subsidiary 2017 2016
Shinshin Credit Corporation 100.00% 100.00%
TAC Global Investment (Samoa) Co., Ltd. 100.00% 100.00%
Yu Rich Financial Services Co., Ltd. 82.12% 82.12%
Car-plus Auto Leasing Corporation 68.57% 68.57%
Yulon Motor Finance (China) Co., Ltd. 49.00% 49.00%
Sin Jang Enterprises 40.00% 40.00%
On June 29, 2015, the Investment Commission approved and registered the Company and the
Company’s parent company, Yulon Company, to directly invest RMB245,000 thousand (equivalent to
US$40,833 thousand) and RMB255,000 thousand (equivalent to US$42,500 thousand), respectively, in
Yulon Motor Finance (China) Co., Ltd. in China. The Company and Yulon Company respectively
hold 49% and 51% of the shares. Due to the Company’s substantive control over Yulon Motor
Finance (China) Co., Ltd., it is listed as a subsidiary of the Company. Yulon Motor Finance (China)
Co., Ltd. obtained a business license in China on February 19, 2016 and will be engaged in car loans,
loans to car dealers for purpose of purchasing automobiles, loans to facilities for operations and car
financial leasing business, etc. On August 23, 2017, the Investment Commission approved and
registered the Company and the Company’s parent company, Yulon Company, to directly invest
RMB245,000 thousand (equivalent to US$40,833 thousand) and RMB255,000 thousand (equivalent to
US$42,500 thousand), respectively, in Yulon Motor Finance (China) Co., Ltd. in China.
The Company invested in Yu Rich Financial Services Co., Ltd. in 2016 to expand the Company’s
business in installment financing services for consumer goods.
Sin Jang Enterprises (Sin Jang) was considered as a subsidiary because the Company and subsidiaries
jointly hold 59.99% of the shares of Sin Jang.
The calculation of the investments in subsidiaries accounted for by the equity method and the share of
profit or loss and other comprehensive income of those investments for the years ended December 31,
2017 and 2016 was based on the subsidiaries’ audited financial statements for the same reporting years
as those of the Company.
- 30 -
b. Investments in associates
December 31
2017 2016
Associates that are not individually material
Tokio Marine Newa Insurance Co., Ltd. $ 153,763 $ 140,922
Empower Motor Co., Ltd. 90,943 87,054
$ 244,706 $ 227,976
For the Year Ended December 31
2017 2016
The Company’s share of:
Profit from continuing operations $ 21,642 $ 20,981
Other comprehensive income 2,352 (3,094)
Total comprehensive income for the year $ 23,994 $ 17,887
The investment in Tokio Marine Newa Insurance Co., Ltd. (“Tokio Marine Newa Insurance”) was
accounted for using the equity method because, despite the individual investment being less than 20%,
the ultimate parent company Yulon Company and its subsidiaries exercised significant influence over
the investee’s operating and financial policy decisions.
The calculation of the investments in associates accounted for using the equity method and the share of
profit or loss and other comprehensive income of those investments for the years ended December 31,
2017 and 2016 was based on the associates’ audited financial statements for the same reporting years as
those of the Company.
14. BORROWINGS
a. Short-term borrowings
December 31
2017 2016
Partially secured borrowings $ 750,000 $ 930,000
Credit borrowings 8,700,000 7,870,000
$ 9,450,000 $ 8,800,000
The ranges of interest rates on bank loans were 0.66%-1.29% and 0.70%-1.29% per annum as of
December 31, 2017 and 2016, respectively.
The Company pledged installment notes and trade receivables as collateral for short-term loans (see
Note 28).
- 31 -
b. Short-term bills payable
December 31
2017 2016
Commercial paper $ 39,100,000 $ 33,600,000
Less: Unamortized discount on bills payable (104,880) (57,731)
$ 38,995,120 $ 33,542,269
Interest rate 0.57%-1.04% 0.51%-1.04%
15. BONDS PAYABLE
December 31
2017 2016
Unsecured domestic bonds $ 4,350,000 $ 3,000,000
Less: Discounts on bonds payable 7,081 -
$ 4,342,919 $ 3,000,000
a. Unsecured domestic bonds
The Company issued three-year maturity unsecured corporate bonds on June 20, 2014, October 17,
2014, May 12, 2017 and August 11, 2017 with issuance amounts of NT$1.5 billion, NT$1.5 billion,
NT$2 billion and NT$2.35 billion and simple interest rates of 1.12%, 1.25%, 1.07% and 1.02% payable
annually, respectively. The principal amounts of the bonds are repayable on the maturity date.
Among them, the principal amount of the bonds issued on June 20, 2014 and October 17, 2014 were
repaid on June 20, 2017 and October 17, 2017, respectively.
b. Unsecured domestic convertible bonds
On June 20, 2012, the Company issued its first five-year unsecured domestic convertible bonds, with a
face value of $100 thousand and a total amount of NT$2.5 billion at a conversion rate of 100.5% and
coupon rate of 0%. These bonds began to be traded on the Taipei Exchange (formerly the GreTai
Securities Market) on the issue date. During the issuance period between July 21, 2012 and June 10,
2017, except for the book closing period, bondholders are entitled to convert bonds into the Company’s
common stocks at a conversion price of NT$72.15 per stock. In their meetings in 2017 and 2016, the
Company’s shareholders approved the payment of cash dividends of NT$4.74 and NT$5.19 per stock,
respectively; thus, the bond conversion prices were adjusted to NT$55.48 and NT$59.21, respectively.
In the period between 1 month after issuance and 40 days before the maturity date, if the closing price
of the Company’s stock listed on the Taiwan Stock Exchange exceeds 30% of the conversion price for
30 consecutive days or the total amount outstanding is below 10% of the amount at initial issuance, the
Company has the right to redeem all of the bonds outstanding at face value.
Thirty days before the end of the three years from the bond issuance, bondholders have the right to
exercise their put options and can request that the Company redeem the convertible bonds at face value.
As of June 20, 2016 (the maturity date of redemption), there was no redemption right which had been
exercised by bondholders.
- 32 -
The convertible bond has two components: The liability component and the equity component
accounted for as “capital surplus - options.” This capital surplus was initially recognized at
NT$179,204 thousand. Transaction costs are apportioned between the liability and equity component
of the convertible bonds on the basis of the allocation of proceeds to the liability and equity component
when the bonds are initially recognized. Derivative and non-derivative components recognized
amounted to NT$6,489 thousand and NT$2,322,657 thousand, respectively.
The convertible bonds issued by the Company have been converted into common stocks on October
2016.
Proceeds of the issue (less transaction costs $5,000 thousand) $ 2,507,500
Equity component (179,204)
Deferred tax assets 850
Derivative financial liability component (6,489)
Liability component at the date of issue 2,322,657
Interest charged at an effective interest rate of 1.471606585% 75,070
Convertible bonds converted into common stocks (2,397,727)
Liability component as of December 31, 2016 $ -
16. PROVISIONS - CURRENT
December 31
2017 2016
Financial guarantee provisions $ 292,184 $ 329,679
The customers of the Company signed car loan contracts with banks, with the Company acting as car loan
agents and providing customers with account management services. Under the contracts, the Company is
responsible for repaying any uncollectable loans arising from customer defaults. The Company estimated
its potential financial guarantee loss on any default on the basis of past experience.
17. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a
state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to
employees’ individual pension accounts at 6% of monthly salaries and wages.
b. Defined benefit plans
The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is
operated by the government. Pension benefits are calculated on the basis of the length of service and
average monthly salaries of the six months before retirement. The Company contributes amounts
equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund
monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s
name. Before the end of each year, the Company assesses the balance in the pension fund. If the
amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who
conform to retirement requirements in the next year, the Company is required to fund the difference in
one appropriation that should be made before the end of March of the next year. The pension fund is
managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to
influence the investment policy and strategy.
- 33 -
The amounts included in the balance sheet in respect of the Company’s defined benefit plans were as
follows:
December 31
2017 2016
Present value of defined benefit obligation $ 53,043 $ 45,008
Fair value of plan assets (33,320) (32,280)
Net defined benefit liability $ 19,723 $ 12,728
Movements in net defined benefit liability were as follows:
Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Net Defined
Benefit
Liability (Asset)
Balance at January 1, 2016 $ 43,474 $ (31,280) $ 12,194
Interest expense (income) 706 (515) 191
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 290 290
Actuarial loss - changes in demographic
assumptions 1,257 - 1,257
Actuarial loss - changes in financial
assumptions 1,441 - 1,441
Actuarial gain - experience adjustments (1,870) - (1,870)
Recognized in other comprehensive income 828 290 1,118
Contributions from the employer - (775) (775)
Balance at December 31, 2016 $ 45,008 $ (32,280) $ 12,728
Balance at January 1, 2017 $ 45,008 $ (32,280) $ 12,728
Interest expense (income) 619 (449) 170
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 132 132
Actuarial loss - changes in demographic
assumptions 236 - 236
Actuarial loss - changes in financial
assumptions 811 - 811
Actuarial gain - experience adjustments 6,369 - 6,369
Recognized in other comprehensive income 7,416 132 7,548
Contributions from the employer - (723) (723)
Balance at December 31, 2017 $ 53,043 $ (33,320) $ 19,723
- 34 -
Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the
following risks:
1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,
bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. However, in accordance with relevant regulations, the return generated by
plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the
defined benefit obligation; however, this will be partially offset by an increase in the return on the
plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the
future salaries of plan participants. As such, an increase in the salary of the plan participants will
increase the present value of the defined benefit obligation.
The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were
as follows:
December 31
2017 2016
Discount rate 1.250% 1.375%
Long-term average adjustment rate of salary 2.750% 2.750%
If possible reasonable change in each of the significant actuarial assumptions will occur and all other
assumptions will remain constant, the present value of the defined benefit obligation would increase
(decrease) as follows:
December 31
2017 2016
Discount rate
0.25% increase $ (1,608) $ (1,464)
0.25% decrease $ 1,672 $ 1,526
Long-term average adjustment rate of salary
0.25% increase $ 1,620 $ 1,481
0.25% decrease $ (1,566) $ (1,428)
The sensitivity analysis presented above may not be representative of the actual change in the present
value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in
isolation of one another as some of the assumptions may be correlated.
December 31
2017 2016
The expected contributions to the plan for the next year $ 757 $ 709
The average duration of the defined benefit obligation 12.3 years 13.3 years
- 35 -
18. EQUITY
a. Common stock capital
December 31
2017 2016
Number of stocks authorized (in thousands) 350,000 350,000
Stocks authorized $ 3,500,000 $ 3,500,000
Number of stocks issued and fully paid (in thousands) 274,629 274,629
Stocks issued $ 2,746,292 $ 2,746,292
Fully paid common stocks, which have a par value of $10, carry one vote per stock and carry a right to
dividends.
The change of the Company’s capital is due to convertible bonds converted into common stocks.
b. Capital surplus
December 31
2017 2016
May be used to offset a deficit, distributed as cash dividends, or
transferred to capital stock
Recognized from issuance of common stocks $ 2,539,791 $ 2,539,791
May be used only to offset a deficit
Recognized from share of change in capital surplus of
associates or joint venture 2,169 2,169
$ 2,541,960 $ 2,541,960
The capital surplus recognized from stocks issued in excess of par may be used to offset a deficit; in
addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or
transferred to capital stock (limited to a certain percentage of the Company’s capital surplus).
c. Retained earnings and dividends policy
In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and
bonuses are limited to shareholders and do not include employees. The shareholders held their regular
meeting on June 22, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of
Incorporation (the “Articles”), particularly the amendment to the policy on dividend distribution and the
addition of the policy on the distribution of employees’ compensation.
Under the dividends policy as set forth in the amended Articles, where the Company made profit in a
fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting
aside as a legal reserve 10% of the remaining profit unless the legal reserve equals the Company’s
paid-in capital, setting aside or reversing special reserve in accordance with the laws and regulations,
and then any remaining profit together with any undistributed retained earnings shall be used by the
Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in
the shareholders’ meeting for the distribution of dividends and bonuses to shareholders.
1) The Company’s operating environment is in a mature industry. The Company shall consider
profitability, future operating plans and funding needs, industry conditions, shareholders’ rights and
a balanced dividends policy in the distribution of earnings. Dividends may be paid in cash or
stock, and should not be lower than 50% of distributable net profit. Each year’s cash dividends
should not be lower than 20% of the total dividends.
- 36 -
2) The Company shall not pay dividends or bonuses, if there is no surplus of earnings.
3) Where the legal reserve is distributed by issuing new shares or by cash, only the portion of legal
reserve in excess of 25% of the paid-in capital may be distributed.
For the policies on the distribution of employee’s compensation and remuneration of directors and
supervisors before and after amendment, refer to employees’ compensation and remuneration of
directors and supervisors in Note 20 e.
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s
paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the
legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to
capital or distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Company.
The appropriations of earnings for 2016 and 2015 approved in the shareholders’ meetings on June 27,
2017 and June 22, 2016, respectively, were as follows:
Appropriation of Earnings Dividends Per Share (NT$)
For the Year Ended
December 31
For the Year Ended
December 31
2016 2015 2016 2015
Legal reserve $ 173,307 $ 142,505
Special reserve 230,459
Cash dividends 1,320,967 1,269,933 $4.81 $4.74
The appropriations of earnings for 2016 had been proposed by the Company’s board of directors on
March 26, 2018. The appropriations and dividends per share were as follows:
Appropriation
of Earnings
Dividends Per
Share (NT$)
Legal reserve $ 232,423
Reversal of special reserve 35,588
Special reserve 81,580
Cash dividends 1,620,312 $5.90
The appropriations of earnings for 2017 are subject to the resolution of the shareholders’ meeting to be
held on June 26, 2018.
d. Special reserve
Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and in the
directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of
IFRSs” and Article 41 of Securities and Exchange Act should be appropriated to or reversed from a
special reserve by the Company.
The Company’s special reserve appropriated following first-time adoption of IFRSs was $35,588
thousand.
- 37 -
According to the regulation of special reserve appropriation, additional special reserve should be
appropriated at the amount equal to the difference between the net debit balance of reserves and the
amount of special reserve that was appropriated on the first-time adoption of IFRSs. Any special
reserve appropriation may be reversed to the extent that the net debit balance reverses and thereafter
distributed. In 2017 and 2016, since the Company had a net debit balance, special reserve was
appropriated from the earnings following these rules.
e. Other equity items
Movements in the other equity items in 2017 and 2016 were as follows:
Exchange
Differences on
Translating
Foreign
Operations
Unrealized
Gains (Losses)
on Available-
for-sale
Financial
Assets
Unrealized
Gains (Losses)
on Cash Flow
Hedge Total
Balance at January 1, 2016 $ 95,083 $ (1,053) $ (721) $ 93,309
Changes in the fair value of
hedging instruments -
interest rate swaps - - 721 721
Share of subsidiaries and
associates accounted for
using the equity method (323,310) (1,179) - (324,489)
Balance at December 31, 2016 $ (228,227) $ (2,232) $ - $ (230,459)
Balance at January 1, 2017 $ (228,227) $ (2,232) $ - $ (230,459)
Changes in the fair value of
hedging instruments -
interest rate swaps - - (201) (201)
Share of subsidiaries and
associates accounted for
using the equity method (84,343) 2,963 - (81,380)
Balance at December 31, 2017 $ (312,570) $ 731 $ (201) $ (312,040)
19. REVENUE
a. Interest revenue from acquired accounts receivable
Interest revenue from the accounts receivable during in the years ended December 31, 2017 and 2016
are $3,478,465 thousand and $3,263,783 thousand, respectively. As of December 31, 2017 and 2016,
the uncollected accounts receivable were $58,628,533 thousand and $50,771,476 thousand,
respectively, and were recognized as accounts receivable.
- 38 -
b. Agency revenue
Agency revenue recognized for the years ended December 31, 2017 and 2016 was $609,765 thousand
and $762,732 thousand, respectively. In the event that payments were not made by the due dates, the
Company reimbursed the banks for the loans and assumes all collection rights against the debtor. As
of December 31, 2017 and 2016, the managerial service account balances of the loans provided by the
Company were $7,720,623 thousand and $8,695,920 thousand, respectively. The reimbursements
from the Company to banks as of December 31, 2017 and 2016 were $1,491,879 thousand and
$2,799,144 thousand, respectively. The reimbursements to banks were listed as accounts receivable
before recognition of interest revenue from the acquired accounts receivable.
The amounts of financial guarantee contracts listed above were the maximum total managerial service
loans provided by the Company that require full payment by the Company in the event of a debtor’s
default. The Company had estimated the potential financial guarantee loss on any default on the basis
of past experience. (See Note 16)
20. NET PROFIT AND OTHER COMPREHENSIVE INCOME (LOSS)
Net profit for the years ended December 31, 2017 and 2016 contained the following components:
a. Other operating income and expense, net
For the Year Ended December 31
2017 2016
Commission revenue $ 355,032 $ 279,909
Gain on reversal of bad debts 177,178 183,704
Others 28,778 35,374
$ 560,988 $ 498,987
b. Finance costs
For the Year Ended December 31
2017
2016
Interest on bank loans
$ 329,770
$ 293,416
Interest on corporate bonds 47,225 38,948
Others 1,445 9,241
$ 378,440 $ 341,605
c. Depreciation and amortization
For the Year Ended December 31
2017
2016
Property, plant and equipment $ 7,174 $ 5,890
Intangible assets 3,103 2,370
$ 10,277 $ 8,260
- 39 -
d. Employee benefits expense
For the Year Ended December 31
2017 2016
Employee benefits expense
Short-term benefits
Payroll expenses $ 521,274 $ 482,997
Labor insurance and health insurance expenses 37,768 32,723
Other personnel expenses 6,758 6,260
565,800 521,980
Post-employment benefits (Note 17)
Defined contribution plans 21,387 17,562
Defined benefit plans 170 191
21,557 17,753
$ 587,357 $ 539,733
As of December 31, 2017 and 2016, the numbers of employees were 509 and 395, respectively.
e. Employees’ compensation and remuneration of directors and supervisors for 2017 and 2016
The Company accrued employees’ compensation and remuneration of directors and supervisors at the
rates no less than 0.1% and no higher than 0.5%, respectively, of net profit before income tax,
employees’ compensation, and remuneration of directors and supervisors. The employees’
compensation and remuneration of directors and supervisors for the years ended December 31, 2017
and 2016 which have been approved by the Company’s board of directors on March 26, 2018 and
March 20, 2017, respectively, were as follows:
For the Year Ended December 31
2017 2016
Amount
Accrual Rate
(%) Amount
Accrual Rate
(%)
Employees’ compensation $ 21,563 0.80 $ 10,942 0.55
Remuneration of directors and
supervisors 13,518 0.50 10,003 0.50
If there is a change in the amounts after the annual financial statements were authorized for issue, the
differences are recorded as a change in the accounting estimate.
There was no difference between the actual amounts of employees’ compensation and remuneration of
directors and supervisors paid and the amounts recognized in the consolidated financial statements for
the year ended December 31, 2015 and December 31, 2016.
Information on the employees’ compensation and remuneration of directors and supervisors resolved by
the board of directors in their meeting in 2018 and in 2017 is available at the Market Observation Post
System website of the Taiwan Stock Exchange.
- 40 -
21. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
For the Year Ended December 31
2017 2016
Current tax
In respect of the current year $ 316,695 $ 280,967
In respect of prior years 25 (7)
316,720 280,960
Deferred tax
In respect of the current year 27,628 (34,677)
Income tax expense recognized in profit or loss $ 344,348 $ 246,283
A reconciliation of accounting profit and current income tax expense is as follows:
For the Year Ended December 31
2017 2016
Profit before tax from continuing operations $ 2,668,575 $ 1,979,354
Income tax expense calculated at the statutory rate $ 453,658 $ 336,490
Add (deduct) tax effect of
Nondeductible expenses in determining taxable income - 587
Additional income tax on unappropriated earnings 3,571 13
Tax-exempt income (149,255) (120,404)
Unrecognized temporary differences 36,349 29,604
Adjustments for prior years’ tax 25 (7)
Income tax expense recognized in profit or loss $ 344,348 $ 246,283
The applicable tax rate used above is 17%.
In February 2018, it was announced by the President that the Income Tax Act in the ROC was amended
and, starting from 2018, the corporate income tax rate will be adjusted from 17% to 20%. In addition,
the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to
5%. Deferred tax assets and deferred tax liabilities recognized as at December 31, 2017 are expected
to be adjusted and would increase by $43,178 thousand and $18,757 thousand, respectively, in 2018.
As the status of the 2018 appropriation of earnings is uncertain, the potential income tax consequences
of the 2017 unappropriated earnings are not reliably determinable.
b. Income tax recognized in other comprehensive income
For the Year Ended December 31
2017 2016
Deferred tax
In respect of the current year:
Remeasurement on defined benefit plan $ 1,283 $ 190
- 41 -
c. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2017
Opening
Balance Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income Closing Balance
Deferred tax assets
Allowance for doubtful accounts $ 217,176 $ 24,144 $ - $ 241,320
Defined benefit obligation 2,164 (94) 1,283 3,353
$ 219,340 $ 24,050 $ 1,283 $ 244,673
Deferred tax liabilities
Share of profit of subsidiaries and
associates - foreign $ 52,006 $ 49,617 $ - $ 101,623
Property, plant and equipment 2,605 63 - 2,668
Others - 1,998 - 1,998
$ 54,611 $ 51,678 $ - $ 106,289
For the year ended December 31, 2016
Opening
Balance Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income Closing Balance
Deferred tax assets
Allowance for doubtful accounts $ 187,603 $ 29,573 $ - $ 217,176
Defined benefit obligation 2,073 (99) 190 2,164
Unrealized loss on financial
liabilities 493 (493) - -
$ 190,169 $ 28,981 $ 190 $ 219,340
Deferred tax liabilities
Share of profit of subsidiaries and
associates - foreign $ 57,527 $ (5,521) $ - $ 52,006
Property, plant and equipment 2,780 (175) - 2,605
$ 60,307 $ (5,696) $ - $ 54,611
- 42 -
d. Integrated income tax
December 31
2017 2016
Unappropriated earnings
Generated before January 1, 1998 $ - $ 212,608
Generated on and after January 1, 1998 - 2,884,313
$ - $ 3,096,921
(Note)
Imputation credits account $ - $ 372,568
(Note)
For the Year Ended December 31
2017 2016
Creditable ratio for distribution of earnings Note 23.10%
Note: Since the amended Income Tax Act announced in February 2018 abolished the imputation tax
system, related information for 2017 is not applicable.
e. Income tax assessments
The tax returns through 2014 have been assessed by the tax authorities. The Company and
subsidiaries disagreed with the tax authorities’ assessment of its 2014 and 2015 tax return and applied
for a re-examination. The Company has recorded related estimated income tax expenses accordingly.
22. EARNINGS PER SHARE
Unit: NT$ Per Share
For the Year Ended December 31
2017 2016
Basic earnings per share $ 8.46 $ 6.41
Diluted earnings per share $ 8.46 $ 6.32
The weighted average number of stocks outstanding used for the earnings per share computation was as
follows:
Net Profit for the Year
For the Year Ended December 31
2017 2016
Profit for the year attributable to owners of the Company $ 2,324,227 $ 1,733,071
Effect of potentially dilutive common stocks:
Interest on convertible bonds (after tax) - 3,454
Earnings used in the computation of diluted earnings per share from
continuing operations $ 2,324,227 $ 1,736,525
- 43 -
Stocks
Unit: Thousand Stocks
For the Year Ended December 31
2017 2016
Weighted average number of common stocks in computation of basic
earnings per share 274,629 270,460
Effect of potentially dilutive common stocks:
Conversion of convertible bonds - 4,188
Employees’ compensation or bonus issue to employees 222 194
Weighted average number of common shares used in the
computation of diluted earnings per share 274,851 274,842
Since the Company offered to settle compensation or bonuses paid to employees in cash or stocks, the
Company assumed the entire amount of the compensation or bonuses will be settled in stocks and the
resulting potential stocks were included in the weighted average number of stocks outstanding used in the
computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential
stocks is included in the computation of diluted earnings per share until the number of stocks to be
distributed to employees is resolved in the following year.
23. ACQUISITION OF SUBSIDIARIES WITH OBTAINED CONTROL
The Company acquired Yu Rich Financial Services Co., Ltd. in order to expand the Company’s business in
installment financing services. For details about the acquisition of Yu Rich Financial Services Co., Ltd.,
refer to Note 28 to the Company’s consolidated financial statements for the year ended December 31, 2017.
24. OPERATING LEASE ARRANGEMENTS
The Company leases offices with monthly rental payments and a maturity date in December 2022. For the
years ended December 31, 2017 and 2016, rental expenses were $20,038 thousand and $12,906 thousand,
respectively. The future minimum lease payments under operating lease commitments were as follows:
Year Amount
Not later than 1 year $ 32,410
Later than 1 year, and not later than 5 years 74,863
$ 107,273
25. CAPITAL MANAGEMENT
The Company manages its capital to ensure it will be able to continue as going concern while maximizing
the return to shareholders through maintaining a strong credit rating and optimization of the debt and equity
balance. The Company’s management reviews the capital structure whenever necessary. As part of this
review, the management considers the cost of capital and the risks associated with each class of capital.
Based on the management’s recommendations, the Company expects to balance its capital structure by
paying dividends, issuing new shares, buying treasury stocks, borrowing new loans or repaying original
loans.
- 44 -
26. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments that are not measured at fair value
1) Financial instruments whose carrying amounts and fair values have significant differences were as
follows:
December 31
2017 2016
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial assets
Held-to-maturity
investments - central
government development
bonds $ 5,578 $ 5,693 $ 5,703 $ 5,703
Financial liabilities
Unsecured bonds 4,342,919 4,350,436 3,000,000 3,003,797
2) Fair value hierarchy
Financial assets and liabilities above that are not measured at fair value are measured using Level 1
inputs.
b. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy
December 31, 2017
Level 1 Level 2 Level 3 Total
Financial liabilities at
FVTPL
Derivative financial
liabilities $ - $ 201 $ - $ 201
December 31, 2016
Level 1 Level 2 Level 3 Total
Financial liabilities at
FVTPL
Derivative financial
liabilities $ - $ 1,145 $ - $ 1,145
There were no transfers between Levels 1 and 2 in the current and prior periods.
- 45 -
2) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value
measurement
Financial Instruments Valuation Techniques and Inputs
Convertible bond redemption
rights and put provisions
Binomial tree model.
Fair value of financial asset component of convertible bonds was
assessed by the following factors: Market price of stock,
risk-free interest rate, and risk discount rate.
c. Categories of financial instruments
December 31
2017 2016
Financial assets
Held-to-maturity investments $ 5,578 $ 5,703
Loans and receivables (1) 53,974,535 47,574,808
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading - 1,145
Derivative instruments in designated hedge accounting
relationships 201 -
Amortized cost (2) 53,856,555 46,180,783
1) The balances included cash, notes and trade receivables, debt investments with no active market,
and other receivables.
2) The balances included financial liabilities measured at amortized cost, which comprise of short-term
borrowings, short-term bills payable, notes and trade payables, other payables and bonds payable.
d. The purpose and strategy of financial risk management
The objective of financial risk management policy of the Company is to identify and analyze the
financial risk the Company faces, to assess its impact and to execute financial risk avoidance policy.
Financial risk management policy is periodically reviewed and monitored, through in depth and broad
risk analysis report of the financial risk of the Company, to reflect market conditions and daily
operation of the Company. Financial risks include market risk (foreign exchange rate risk, interest rate
risk and other pricing risk), credit risk and liquidity risk. The Company’s operating activities are
primarily exposed to interest rate risk and liquidity risk.
1) Interest rate risk
The Company issues corporate bonds and fixed rate commercial paper and enters into New Taiwan
dollars interest rate swap contracts according to market and capital conditions, in order to reduce the
risk of increasing interest expense due to rising interest rates.
- 46 -
The carrying amount of the Company’s financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows:
December 31
2017 2016
Fair value interest rate risk
Financial assets $ 51,903,474 $ 46,725,073
Financial liabilities 51,788,135 45,342,269
Cash flow interest rate risk
Financial assets 745,101 374,329
Financial liabilities 999,904 -
Sensitivity analysis
The sensitivity analyses were determined based on the Company’s exposure to interest rates for
both derivative and non-derivative instruments at the end of the reporting period.
If interest rates had been 25 basis points higher/lower and all other variables were held constant, the
Company’s pre-tax profit for the years ended December 31, 2017 and 2016 would increase/decrease
by $637 thousand and decrease/increase by $936 thousand, respectively.
2) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in a financial loss to the Company. To enhance the Company’s credit risk control mechanism, the
Company exchanges information with companies within its industry to build customer blacklists.
Also, the Company reviews customers’ credit statuses through China Credit Information Service
Ltd. upon approval of each loan. These procedures are taken as ways of preventing losses due to
fraud.
The clients of the Company are widely dispersed and are unrelated; thus, credit risk is limited.
3) Liquidity risk
The Company analyzes its assets and liabilities to examine capital shortages on a monthly basis.
Adequate liquidity ratio and high quality current assets are also maintained simultaneously. The
management monitors the usage of credit limits to ensure compliance with loan contracts.
Liquidity and interest risk tables
The following table shows the remaining contractual maturity of the Company’s non-derivative
financial liabilities with agreed-upon repayment periods. The table had been drawn up on the
basis of the undiscounted cash flows of financial liabilities from the earliest date on which the
Company can be required to pay.
December 31, 2017
Less than
1 Year 1-2 Years 2+ Years
Non-derivative financial liabilities
Non-interest bearing $ 680,438 $ - $ -
Variable interest rate liabilities 499,904 - -
Fixed interest rate liabilities 47,445,216 - 4,342,919
Financial guarantee contracts 7,720,623 - -
$ 56,346,181 $ - $ 4,342,919
- 47 -
December 31, 2016
Less than
1 Year 1-2 Years 2+ Years
Non-derivative financial liabilities
Non-interest bearing $ 534,433 $ - $ -
Fixed interest rate liabilities 44,342,269 1,000,000 -
Financial guarantee contracts 8,695,920 - -
$ 53,572,622 $ 1,000,000 $ -
As of December 31, 2017 and 2016, the amounts included above for financial guarantee contracts
were the maximum amounts the Company could be required to settle under the arrangement for the
full guaranteed amount if that amount is claimed by the counterparty to the guarantee. The
Company has estimated the probabilities of default and recognized related provisions based on past
experience (see Note 16).
27. TRANSACTIONS WITH RELATED PARTIES
The Company’s parent company is Yulon Motor Company Ltd. (“Yulon Company”) which held 45.75% of
ordinary shares of the Company for the years ended December 31, 2017 and 2016. The Company’s
ultimate parent company is Yulon Company.
Except for other information disclosed in the tables, transactions between the Company and its related
parties were as follows:
a. Related parties
Related Party Nature of Relationship
Yulon Motor Co., Ltd. Parent entity
Shinshin Co., Ltd. Subsidiary
Car-plus Corporation Subsidiary
TAC Global Investment (Samoa) Co., Ltd. Subsidiary
Sin Jang Co., Ltd. Subsidiary
Yulon Motor Finance (China) Co., Ltd. Subsidiary
Yu Rich Financial Services Co., Ltd. Subsidiary
Shinshin Global Investment (Samoa) Co., Ltd. Subsidiary
Diamond Leasing Co., Ltd. Subsidiary
Car-Plus Global Investment (Samoa) Co., Ltd. Subsidiary
Da-Wei Technology Co., Ltd. Subsidiary
H. K. Manpower Service Co., Ltd. Subsidiary
Sinjang International Investment (Samoa) Co., Ltd. Subsidiary
Da-Teng Transportation Co., Ltd. Subsidiary
Car-Plus China Investment (Samoa) Co., Ltd. Subsidiary
Car-Plus Shanghai Investment (Samoa) Co., Ltd. Subsidiary
Yu Rong International Investment (Samoa) Co., Ltd. Subsidiary
Sinjang International Investment (Samoa) Co., Ltd. Subsidiary
Zhejiang ChengYi Auto Service Co., Ltd. Subsidiary
(Continued)
- 48 -
Related Party Nature of Relationship
Hangzhou Cheng Yi Jian Used-cars Authenticate &
Evaluation Service Co., Ltd.
Subsidiary
Zhejiang ChengYi Auction Co., Ltd. Subsidiary
TAC Financial Leasing Co., Ltd. Subsidiary
Car-Plus (Suzhou) Auto Leasing Co., Ltd. Subsidiary
Car-Plus Leasing (Shanghai) Co., Ltd. Subsidiary
TAC Leasing (Suzhou) Co., Ltd. Subsidiary
Wuhan TAC Auto Trade Co., Ltd. Subsidiary
Qinton Motor Co., Ltd. Fellow subsidiaries related to the others
Singgual Travel Service Co., Ltd. Fellow subsidiaries related to the others
Yu Sing Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Pool Co., Ltd. Fellow subsidiaries related to the others
Yushin Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Chia Motor Co., Ltd. Fellow subsidiaries related to the others
Singan Co., Ltd. Fellow subsidiaries related to the others
Y-Teks Co., Ltd. Fellow subsidiaries related to the others
Union & NKH Auto Parts Co., Ltd. Fellow subsidiaries related to the others
Yueki Industrial Co., Ltd. Fellow subsidiaries related to the others
Yu Chang Motor Co., Ltd. Fellow subsidiaries related to the others
Tian Wang Co., Ltd. Fellow subsidiaries related to the others
Hsiang Shou Enterprise Co., Ltd. Fellow subsidiaries related to the others
Hong Shou Culture Enterprise Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Taipei Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Taoyuan Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Taichung Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Tainan Co., Ltd. Fellow subsidiaries related to the others
Luxgen Motor Kaohsiung Co., Ltd. Fellow subsidiaries related to the others
Yulon Energy Service Co., Ltd. Fellow subsidiaries related to the others
Shen Jun Yu Peng Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Nanjing Hanhong Motor Trading Co., Ltd. Fellow subsidiaries related to the others
Wuhan Yu Hsin Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Suzhou Yueshun Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Zhuhai Yuhsin Auto Sales & Parts Co., Ltd. Fellow subsidiaries related to the others
Ning Bo Yu Cheng Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Fu Jian Yu Xin Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Guang Zhou Yuan Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Xiao Gan Yu Feng Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Shenzhen Yu Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Chang Sha Yu Lu Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Jiangmen Yuli Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
An Hui Min Tung Co., Ltd. Fellow subsidiaries related to the others
An Ching Tsai Tung Co., Ltd. Fellow subsidiaries related to the others
Tung Ling Kuo Tung Co., Ltd. Fellow subsidiaries related to the others
Zi Bo Yu An Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Yulon Motor Investment Limited Fellow subsidiaries related to the others
Ka Shing Yu Da Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Yue Sheng Industrial Co., Ltd. Fellow subsidiaries related to the others
Chan Yun Technology Co., Ltd. Fellow subsidiaries related to the others
(Continued)
- 49 -
Related Party Nature of Relationship
Yulon Tobe Motor Co., Ltd. Fellow subsidiaries related to the others
Yu Pong Business Co., Ltd. Fellow subsidiaries related to the others
Hang Zhou Hua You Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Qingdao Yuanhuang Auto Sale & Service Co., Ltd. Fellow subsidiaries related to the others
Hang Zhou Hua Zhi Auto Sales & Services Co., Ltd. Fellow subsidiaries related to the others
Chanchen Inter Consulting Fellow subsidiaries related to the others
Yu-Jan Co., Ltd. Fellow subsidiaries related to the others
SinYi Co., Ltd. Other related parties
Yulon Nissan Motor Co., Ltd. Other related parties
China Motor Company Other related parties
Yuan Lon Motor Co., Ltd. Other related parties
Yu Tang Motor Co., Ltd. Other related parties
Cheng Long Co., Ltd. Other related parties
ROC-Spicer Ltd. Other related parties
Uni-calsonic Co., Ltd. Other related parties
China Ogihara Company Other related parties
China Engine Company Other related parties
Yuan Zhi Motor Co., Ltd. Other related parties
Lian Cheng Motor Co., Ltd. Other related parties
Ding Long Motor Co., Ltd. Other related parties
Haitec Co., Ltd. Other related parties
Yuen-jin Industrial Co., Ltd. Other related parties
Taiway Industrial Co., Ltd. Other related parties
ROC-Keeper Co., Ltd. Other related parties
Kian-shen Industrial Co., Ltd. Other related parties
Hui-Fong Motor Co., Ltd. Other related parties
Hui-Lian Motor Co., Ltd. Other related parties
Yulon Management Co., Ltd. Other related parties
Zhe Jiang Kang Da Co., Ltd. Other related parties
Shug Ye Motor Co., Ltd. Other related parties
Hua Ling Co., Ltd. Other related parties
Chi Ho Company Other related parties
Lin Wei Co., Ltd. Other related parties
Diamond Hosiery & Thread Co., Ltd. Other related parties
Hua Chiun Motor Co., Ltd. Other related parties
Xiang Wei Co., Ltd. Other related parties
ChangYu Co., Ltd. Other related parties
Dongguan HuaShun Co., Ltd. Other related parties
Tianjin HuaHong Co., Ltd. Other related parties
Guangzhou HuaYou Co Ltd. Other related parties
Empower Motor Co., Ltd. Associates
Tokio Marine Newa Insurance Co., Ltd. Associates
Shanghai Yuming Auto Sale & Service Co., Ltd. Associates
Chunmin Enterprise Co., Ltd. Associates
(Concluded)
- 50 -
b. Operating revenue
For the Year Ended December 31
Line Items Related Party Categories 2017 2016
Sales of goods Fellow subsidiaries related to the
others
Yu Chang Motor $ 4,472,038 $ 4,788,489
Others 16,541,040 18,357,279
21,013,078 23,145,768
Other related parties 14,009,842 15,224,268
Associates 3,059,283 2,955,685
$ 38,082,203 $ 41,325,721
Other operating revenue Fellow subsidiaries related to the
others
Luxgen Motor Taipei $ 4,827 $ 3,703
Yu Chang Motor 2,768 1,117
Others 8,296 8,295
15,891 13,115
Other related parties
Cheng Long 3,850 3,253
Others 1,971 2,914
5,821 6,167
Associates 3,381 2,861
$ 25,093 $ 22,143
The Company sells cars from Yulon Company to dealers at cost or no mark-up. Therefore, the sales
and cost of goods sold resulted in zero-profit and were not included in the accompanying statements of
comprehensive income. Such sales and cost of goods sold together amounted to $40,133,166 thousand
for the year ended December 31, 2017 and $46,939,243 thousand for the year ended December 31,
2016, respectively.
c. Purchases of goods
For the Year Ended December 31
Related Party Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 29,375,994 $ 31,125,416
Fellow subsidiaries related to the others
Luxgen Motor 10,967,160 12,196,487
Subsidiaries
Sin Jang 5,034,276 3,457,714
$ 45,377,430 $ 46,779,617
- 51 -
d. Operating expenses
For the Year Ended December 31
Related Party Categories 2017 2016
Other related parties
Yulon Management $ 34,793 $ 24,888
Others 5,153 5,023
39,946 29,911
Subsidiaries
Sin Jang 8,216 9,202
Others 5,358 4,726
13,574 13,928
Fellow subsidiaries related to the others 548 12,218
Parent entity 7,627 5,754
Associates 180 59
$ 61,875 $ 61,870
The Company received shared management fee of 43,855 thousand for the year ended December 31,
2017, which was accounted as the reduction of management expenses.
e. Installment sales interest subsidies revenue
For the Year Ended December 31
Related Party Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 353,997 $ 491,097
Others 8,908 10,601
362,905 501,698
Fellow subsidiaries related to the others 59,014 56,997
Associates 4,393 2,959
$ 426,312 $ 561,654
f. Other operating income and expenses
For the Year Ended December 31
Related Party Categories 2017 2016
Fellow subsidiaries related to the others
Yu Chang Motor $ 4,988 $ 6,549
Others 14,210 14,344
19,198 20,893
Other related parties
Hui-Lian Motor 3,835 4,550
Others 9,042 10,514
12,877 15,064
Associates 3,313 3,492
$ 35,388 $ 39,449
- 52 -
g. Acquisition of receivables
For the Year Ended December 31
Related Party Categories 2017 2016
Fellow subsidiaries related to the others
Yu Chang Motor $ 1,703,773 $ 1,973,981
Others 6,487,069 6,820,214
8,190,842 8,794,195
Other related parties
Yulon Nissan Motor 2,032,306 1,963,839
Others 4,197,264 4,929,087
6,229,570 6,892,926
Associates 1,286,986 1,190,076
$ 15,707,398 $ 16,877,197
h. Commissions paid (recognized as prepaid commission and allocated according to lease term)
For the Year Ended December 31
Related Party Categories 2017 2016
Other related parties
Yulon Nissan Motor $ 137,210 $ 213,081
Others 18,090 7,665
155,300 220,746
Subsidiaries
Yu Rich 41,639 27,458
Others 27,033 21,336
68,672 48,794
Fellow subsidiaries related to the others 51,370 37,976
Associates 4,604 1,833
$ 279,946 $ 309,349
i. Receivables from related parties
December 31
Line Items Related Party Categories 2017 2016
Notes and trade receivables Other related parties
from related parties Yulon Nissan Motor $ 35,899 $ 42,860
Others 70,390 69,914
106,289 112,774
Fellow subsidiaries related to the
others
Yu Chang Motor 44,336 8,121
Others 83,177 67,664
127,513 75,785
Associates
Empower Motor 86,385 6,420
$ 320,187 $ 194,979
- 53 -
j. Payables to related parties
December 31
Line Items Related Party Categories 2017 2016
Notes and trade payables to Other related parties
related parties Yulon Nissan Motor $ 397,862 $ 254,984
Others 60,419 13,554
458,281 268,538
Fellow subsidiaries related to the
others
Luxgen Motor 72,177 47,382
Others 66,037 113,989
138,214 161,371
Associates 10,050 974
Subsidiaries 960 994
$ 607,505 $ 431,877
k. Other current liabilities payable to related parties
December 31
Related Party Categories 2017 2016
Fellow subsidiaries related to the others
Luxgen Motor Taichung $ 24,838 $ 1,606
Luxgen Motor Taipei 13,232 -
Yushin Motor 11,602 3,341
Others 12,186 36,266
61,858 41,213
Associates 1,847 6,739
Other related parties
Hui-Lian 12,838 997
Others - 1,817
12,838 2,814
$ 76,543 $ 50,766
Other related parties include entities that were accounted for using the equity method by the parent
company and those entities’ subsidiaries and investments accounted for using the equity method.
l. Loans to related parties
December 31
Related Party Categories 2017 2016
Other receivables
Yu Rich $ 800,000 $ -
Interest revenue
Yu Rich 74,766 -
- 54 -
m. Guarantees
December 31
Related Party Categories 2017 2016
Subsidiaries
Outstanding guarantee $ 13,964,000 $ 10,320,000
Actual borrowing amount 10,911,440 6,228,211
n. Compensation of key management personnel
As of December 31, 2017 and 2016, amounts of the compensation of the board members and the
Company’s management were as follows:
For the Year Ended December 31
Related Party Categories 2017 2016
Short-term employee benefits $ 52,170 $ 36,613
Post-employment benefits 5 12
$ 52,175 $ 36,625
The remuneration of directors and key executives was determined based on the performance of
individuals and market trends.
28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were provided as collateral for bank borrowings:
December 31
2017 2016
Notes and trade receivables $ 600,000 $ 844,000
Pledged time deposits (classified as debt investments with no active
market) 900 900
$ 600,900 $ 844,900
As of December 31, 2017 and 2016, bank deposits amounting to $194,348 thousand and $181,908
thousand, respectively, were treated as reserve accounts for the purpose of acquiring bank loans. Since the
use is limited, the reserve accounts were recognized as debt investments with no active market.
- 55 -
29. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The following information was aggregated by the foreign currencies other than the functional currency of
the Company and the exchange rates between foreign currencies and the functional currency were
disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:
December 31, 2017
Foreign
Currencies
(In Thousands) Exchange Rate
Carrying
Amount
Financial assets
Non-monetary items
Investments accounted for using equity
method
USD $ 69,983 29.7600 (USD:NTD) $ 2,082,694
RMB $ 487,729 4.5546 (RMB:NTD) $ 2,221,426
December 31, 2016
Foreign
Currencies
(In Thousands) Exchange Rate
Carrying
Amount
Financial assets
Non-monetary items
Investments accounted for using equity
method
USD $ 57,437 32.2500 (USD:NTD) $ 1,852,340
RMB $ 236,529 4.6490 (RMB:NTD) $ 1,099,619
30. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)
3) Marketable securities held (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%
of the paid-in capital (Table 4)
5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in
capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital
(None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital (Table 5)
- 56 -
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital
(Table 6)
9) Trading in derivative instruments (Notes 7 and 9)
10) Information on investees (Table 7)
b. Information on investments in mainland China are as follows: Investee company, main business and
products, paid-in capital, method of investment, outward/inward remittance of funds, ownership of
investment, investment gain (loss), carrying amount as of December 31, 2017, accumulated repatriation
of investment income and upper limit on the amount of investment (Table 8)
- 57 -
TABLE 1
TAIWAN ACCEPTANCE CORPORATION
FINANCING PROVIDED TO OTHERS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Lender Borrower
Financial
Statement
Account
Related
Parties
Highest
Balance for
the Period
Ending
Balance
Actual
Borrowing
Amount
Interest
Rate
Nature of
Financing
(Note 1)
Business
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Impairment
Loss
Collateral Financing
Limit for
Each
Borrower
Aggregate
Financing
Limits
(Note 2)
Note Item Value
The Company Yu Rich Other receivable Yes $ 800,000 $ 800,000 $ 800,000 1.15% b $ - Operating capital $ - $ - $ 1,060,196 $ 4,240,783 2
TAC Leasing (Suzhou) TAC Financial Leasing Co., Ltd. Trade receivable Yes 45,700 - - - b - Operating capital - - 533,569 533,569 3
TAC Financial Leasing Co., Ltd. Zhe Jiang Kang Da Trade receivable Yes 45,700 - - - b - Operating capital - - 379.864 379,864 3
Shinshin Yu Rich Other receivable Yes 800,000 800,000 800,000 1.16% b - Operating capital - - 1,063,180 1,063,180 4
Note 1: Explanation of nature of financing:
a. Transactions.
b. Short-term financing.
Note 2: Aggregate financing was limited to 40% of the lender’s net equity. Credit financing limit for each borrower was limited to 10% of the lender’s net equity.
Note 3: Credit financing limits for each associate and aggregate financing were limited to 40% of the lender’s net equity. While the financing was provided to non-associates, credit financing limits for each borrower were limited to 20% of the lender’s net equity.
Note 4: Aggregate financing was limited to 40% of the lender’s net equity. Credit financing limits for each borrower were limited to 40% of the lender’s net equity.
- 58 -
TABLE 2
TAIWAN ACCEPTANCE CORPORATION
ENDORSEMENTS/GUARANTEES PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Endorser/Guarantor
Guaranteed Party
Limits on
Endorsement/
Guarantee
Given to Each
Party (Note)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
Outstanding
Endorsement/
Guarantee at
the End of the
Period
Actual
Borrowing
Amount
Amount
Endorsed/
Guaranteed by
Collaterals
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest Financial
Statements (%)
Maximum
Collateral/
Guarantee
Amounts
Allowable
(Note)
Name Relationship
The Company TAC Leasing (Suzhou) Subsidiaries $ 26,504,895 $ 3,657,628 $ 3,644,000 $ 2,550,800 $ - 34.37 $ 53,009,790
Car-Plus Leasing (Shanghai) Subsidiaries 26,504,895 320,000 320,000 - - 3.02 53,009,790
TAC Financial Leasing Co., Ltd. Subsidiaries 26,504,895 10,000,000 10,000,000 8,360,640 - 94.32 53,009,790
Car-plus Corporation Diamond Leasing Subsidiaries 4,598,118 500,000 500,000 100,000 - 27.19 9,196,235
Car-Plus Leasing (Shanghai) Subsidiaries 4,598,118 480,000 480,000 - - 26.10 9,196,235
Note: The aggregate endorsement/guarantee limit is 500% of the endorser’s/guarantor’s net equity. The limit on each endorsement/guarantee given to each party is 50% of the endorser’s/guarantor’s net equity.
- 59 -
TABLE 3
TAIWAN ACCEPTANCE CORPORATION
MARKETABLE SECURITIES HELD
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Holding Company
Name
Type of Marketable
Securities Name of Marketable Securities
Relationship
with the Holding
Company
Financial Statement Account
December 31, 2017
Note Shares or
Units
Carrying
Amount
Percentage
of
Ownership
(%)
Fair Value
`
The Company Bonds Central Government Development Bonds - Held-to-maturity financial assets - non-current - $ 5,578 - $ 5,693 -
Shinshin Bonds Central Government Development Bonds - Held-to-maturity financial assets - non-current - 11,054 - 11,354 -
H. K. Manpower Beneficiary certificates Union Money Market - Financial assets at fair value through profit or loss - current 234,676 3,082 - 3,082 -
Beneficiary certificates RSIT Enhanced Money Market - Financial assets at fair value through profit or loss - current 253,867 3,021 - 3,021 -
Beneficiary certificates Jih Sun Money Market Fund - Financial assets at fair value through profit or loss - current 205,727 3,029 - 3,029 -
Beneficiary certificates Capital Money Market - Financial assets at fair value through profit or loss - current 128,651 2,063 - 2,063 -
Da-Wei Beneficiary certificates Jih Sun Money Market Fund - Financial assets at fair value through profit or loss - current 579,351 8,533 - 8,533 -
- 60 -
TABLE 4
TAIWAN ACCEPTANCE CORPORATION
MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Company Name Type and Name of
Marketable Securities
Financial Statement
Account Counterparty Relationship
Beginning Balance Acquisition Disposal Ending Balance
Shares/Units Amount Shares/Units Amount Shares/Units Amount Carrying Value Gain (Loss) on
Disposal Shares/Units Amount (Note)
The Company Yulon Motor Finance
(China)
Investments accounted for
using equity method
Issuance of common
stock for cash
The Company’s
subsidiary
245,000,000 $ 1,099,619 245,000,000 $ 1,128,439 - $ - $ - $ - 490,000,000 $ 2,221,426
Note: The amount is from after adjustments of investments accounted for using the equity method.
- 61 -
TABLE 5
TAIWAN ACCEPTANCE CORPORATION
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Purchasing or
(Selling) Company
Name
Related Party Relationship
Transaction Details Abnormal Transaction Notes/Accounts
(Payable) or Receivable Note
Purchase/
(Sale) Amount
% to
Total Payment Terms Unit Price Payment Terms
Ending
Balance
% to
Total
The Company Yulon Nissan Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Purchase $ 29,375,994 65 Within 3 days Same as normal transactions Same as normal transactions $ (397,862) (58) -
Luxgen Motor Co., Ltd. Yulon Company’s subsidiary Purchase 10,967,160 24 Within 3 days Same as normal transactions Same as normal transactions (72,177) (11) -
Sin Jang The Company’s subsidiary Purchase 5,034,276 11 Within 3 days Same as normal transactions Same as normal transactions (960) - -
Yu Chang Motor Co., Ltd. Yulon Company’s subsidiary Sales (4,472,038) (11) Receipt of payment on the day Same as normal transactions Same as normal transactions 44,336 - -
Luxgen Motor Taipei Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (3,625,814) (9) Receipt of payment on the day Same as normal transactions Same as normal transactions 23,447 - -
Yuan Lon Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (3,608,350) (9) Receipt of payment on the day Same as normal transactions Same as normal transactions 8,008 - -
Hui-Lian Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (3,345,218) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 17,813 - -
Yu Sing Motor Co., Ltd. Yulon Company’s subsidiary Sales (3,216,501) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 15,027 - -
Empower Motor Co., Ltd. An associate accounted for using equity method by the Company Sales (3,059,283) (8) Receipt of payment on the day Same as normal transactions Same as normal transactions 86,385 - -
Yu Tang Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (2,539,411) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 13,741 - -
Yushin Motor Co., Ltd. Yulon Company’s subsidiary Sales (2,483,437) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 9,791 - -
Cheng Long Motor Co., Ltd. Yulon Company’s associate accounted for using equity method Sales (2,391,845) (6) Receipt of payment on the day Same as normal transactions Same as normal transactions 27,723 - -
Luxgen Motor Taichung Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (2,196,992) (5) Receipt of payment on the day Same as normal transactions Same as normal transactions 7,107 - -
Luxgen Motor Taoyuan Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (2,076,170) (5) Receipt of payment on the day Same as normal transactions Same as normal transactions 13,531 - -
Luxgen Motor Kaohsiung Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (1,567,345) (4) Receipt of payment on the day Same as normal transactions Same as normal transactions 5,078 - -
Luxgen Motor Tainan Co., Ltd. Luxgen Motor Co., Ltd.’s subsidiary Sales (1,374,781) (3) Receipt of payment on the day Same as normal transactions Same as normal transactions 5,024 - -
Ding Long Motor Co., Ltd. Cheng Long Motor Co., Ltd.’s subsidiary Sales (1,211,136) (3) Receipt of payment on the day Same as normal transactions Same as normal transactions 61 - -
Lian Cheng Motor Co., Ltd. Cheng Long Motor Co., Ltd.’s subsidiary Sales (476,844) (1) Receipt of payment on the day Same as normal transactions Same as normal transactions 1,050 - -
Yuan Zhi Co., Ltd. Yuan Lon Motor Co., Ltd.’s subsidiary Sales (437,038) (1) Receipt of payment on the day Same as normal transactions Same as normal transactions 1,994 - -
Sin Jang The Company Parent company Sales (5,034,276) (94) Receipt of payment on the day Same as normal transactions Same as normal transactions 960 2 -
Car-plus Corporation Diamond Leasing Car-plus Corporation’s subsidiary Purchase 751,083 8 Within 1 day Same as normal transactions Same as normal transactions (27,200) (8) -
Hui-Fong Motor Co., Ltd. Related party in substance Purchase 445,868 6 Within 10 days Same as normal transactions Same as normal transactions (9,616) (3) -
Yu Sing Motor Co., Ltd. Yulon Company’s subsidiary Purchase 332,896 4 Within 30 days Same as normal transactions Same as normal transactions (21,648) (6) -
Luxgen Motor Taipei Co., Ltd. Luxgen Motor Co., Ltd. subsidiary Purchase 178,475 2 Within 1 day Same as normal transactions Same as normal transactions (1,552) - -
Diamond Leasing Car-plus Corporation Diamond Leasing’s parent company Sales (751,083) (100) Within 1 day Same as normal transactions Same as normal transactions 27,200 17 -
- 62 -
TABLE 6
TAIWAN ACCEPTANCE CORPORATION
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Company Name Related Party Relationship Ending Balance Turnover Rate
Overdue Amounts
Received in
Subsequent
Period
Allowance for
Impairment
Loss Amount Actions Taken
Car-plus Corporation Diamond Leasing Car-plus Corporation’s subsidiary $ 348,118 70% $ - Depends on status of fund $ 62,405 $ -
- 63 -
TABLE 7
TAIWAN ACCEPTANCE CORPORATION
NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Investor Company Investee Company Location Main Businesses and Products
Investment Amount Balance as of December 31, 2017 Net Income
(Loss) of the
Investee
Share of Profits
(Loss) December 31,
2017
December 31,
2016 Shares
Percentage of
Ownership Carrying Value
The Company Car-plus Corporation Taipei, Taiwan Car lease and trade $ 757,288 $ 757,288 51,491,530 68.57 $ 1,261,245 $ 410,682 $ 281,621
Shinshin Taipei, Taiwan Installment financing services for cars and trucks 419,808 419,808 134,000,000 100.00 2,657,949 480,044 480,044
TAC Global Investment (Samoa) Co., Ltd. Samoa Holding company 1,564,612 1,564,612 50,536,903 100.00 2,082,694 263,935 263,935
Tokio Marine Newa Insurance Co., Ltd. Taipei, Taiwan Property insurance 58,070 58,070 5,807,000 1.94 153,763 888,988 17,259
Empower Motor Co., Ltd. Taichung, Taiwan Retail of cars and related parts 48,843 48,843 7,560,000 27.00 90,943 16,232 4,383
Sin Jang Taipei, Taiwan Sale and brokerage of secondhand vehicles 181,731 181,731 17,128,300 40.00 193,912 30,503 12,200
Yu Rich Taipei, Taiwan Installment financing services for consumer goods and
wholesale of cars and parts
500,001 500,001 45,454,599 82.12 578,389 100,423
82,462
Shinshin Shinshin Global Investment (Samoa) Co., Ltd. Samoa Holding company 389,077 389,077 12,000,000 100.00 400,023 34,510 Not applicable
Car-plus Corporation Diamond Leasing Taipei, Taiwan Car lease and trade 85,000 85,000 8,500,000 100.00 91,771 9,540 Not applicable
Car-Plus Global Investment (Samoa) Co., Ltd. Samoa Holding company 378,187 378,187 12,000,000 100.00 566,367 48,979 Not applicable
Sin Jang Taipei, Taiwan Sale and brokerage of secondhand vehicles 90,811 90,811 8,559,000 19.99 96,898 30,503 Not applicable
Da-Wei Technology Co., Ltd. (“Da-Wei”) Taipei, Taiwan Brokerage of electric vehicles 10,000 10,000 1,000,000 100.00 10,146 164 Not applicable
Da-Wei Technology Co., Ltd. Da-Teng Transportation Co. Taipei, Taiwan Taxi Transportation 1,235 - 500,000 100.00 1,375 140 Not applicable
Diamond Leasing H. K. Manpower Taipei, Taiwan Temporary labor services 10,000 10,000 1,000,000 100.00 15,973 996 Not applicable
Sin Jang Sinjang International Investment (Samoa) Co., Ltd. Samoa Holding company 42,790 42,790 1,336,683 71.34 28,538 (3,327) Not applicable
Car-Plus Global Investment Car-Plus China Investment (Samoa) Co., Ltd. Samoa Holding company 193,004 193,004 6,000,000 60.00 369,953 59,035 Not applicable
(Samoa) Co., Ltd. Car-Plus Shanghai Investment (Samoa) Co., Ltd. Samoa Holding company 185,183 185,183 6,000,000 60.00 196,415 22,596 Not applicable
TAC Global Investment (Samoa) Car-Plus China Investment (Samoa) Co., Ltd. Samoa Holding company 128,647 128,647 4,000,000 40.00 246,635 59,035 Not applicable
Co., Ltd. Car-Plus Shanghai Investment (Samoa) Co., Ltd. Samoa Holding company 123,455 123,455 4,000,000 40.00 130,943 22,596 Not applicable
Yu Rong International Investment (Samoa) Co., Ltd. Samoa Holding company 1,296,290 1,296,290 42,000,000 100.00 1,693,649 232,236 Not applicable
Sinjang International Investment (Samoa) Co., Ltd. Samoa Holding company 16,220 16,220 536,903 28.66 11,465 (3,327) Not applicable
- 64 -
TABLE 8
TAIWAN ACCEPTANCE CORPORATION
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Investee Company Main Businesses and Products Paid-in
Capital
Method of Investment
(Note 1)
Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
January 1,
2017
Remittance of Funds Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
December 31,
2017
Net Income
(Loss) of the
Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)
Carrying
Amount as of
December 31,
2017
Accumulated
Repatriation
of Investment
Income as of
December 31,
2017
Outward Inward
Car-Plus (Suzhou) Auto Leasing Co., Ltd. Lease of cars and related services $ 297,600 b.
Car-Plus China Investment (Samoa)
Co., Ltd.
$ 119,040 $ - $ - $ 119,040 $ 59,035 81.14 $ 47,901
(Note 2, b, 2)
$ 615,464 $ -
Car-Plus Leasing (Shanghai) Lease of cars and related services 297,600 b.
Car-Plus Shanghai Investment
(Samoa) Co., Ltd.
119,040 - - 119,040 22,596 81.14 18,334
(Note 2, b, 2)
327,338 -
TAC Leasing (Suzhou) Financial lease of equipment and car 892,800 b.
Yu Rong International Investment
(Samoa) Co., Ltd.
892,800 - - 892,800 197,725 100.00 197,725
(Note 2, b, 2)
1,333,924 -
TAC Financial Leasing Co., Ltd. Financial lease of equipment and car 892,800 b.
Yu Rong International Investment
(Samoa) Co., Ltd.
Shinshin Global Investment (Samoa)
Co., Ltd.
357,120 - - 357,120 86,276 80.00 69,021
(Note 2, b, 2)
379,864 -
Zhejiang ChengYi Auto Service Co., Ltd. Advisory services and business agent of
secondhand vehicles
91,093 b.
Sinjang International Investment
(Samoa) Co., Ltd.
15,981 - - 15,981 (4,987) 63.40 (3,162)
(Note 4)
45,801 -
Hangzhou Cheng Yi Jian Used-cars Authenticate
& Evaluation Service Co., Ltd.
Secondhand vehicles authenticate and
evaluation service
2,277 c.
Zhejiang ChengYi Auto Service Co.,
Ltd.
- - - - (4) 63.40 (3)
(Note 4)
2,182 -
Zhejiang ChengYi Auction Co., Ltd. Secondhand vehicles auction service 9,109 c.
Zhejiang ChengYi Auto Service Co.,
Ltd.
- - - - (2,101) 63.40 (1,332)
(Note 4)
6,982 -
Yulon Motor Finance (China) Co., Ltd. Car loans and loans to car dealers for purpose
of purchasing automobiles
4,554,637 a.
1,115,886 1,128,439 - 2,231,772 56,999 49.00 27,930
(Note 2, b, 2)
2,221,426 -
Suzhou TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 2,009 24.00 482
(Note 4)
2,477 -
Shanghai TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 509 24.00 122
(Note 4)
3,182 -
Dongguan TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - 2,924 24.00 703
(Note 4)
2,211 -
Xiamen TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (6,951) 24.00 (1,667)
(Note 4)
788 -
(Continued)
- 65 -
Investee Company Main Businesses and Products Paid-in
Capital
Method of Investment
(Note 1)
Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
January 1,
2017
Remittance of Funds Accumulated
Outward
Remittance
for Investment
from Taiwan
as of
December 31,
2017
Net Income
(Loss) of the
Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)
(Note 2)
Carrying
Amount as of
December 31,
2017
Accumulated
Repatriation
of Investment
Income as of
December 31,
2017
Outward Inward
Chengdu TAC Auto Trade Co., Ltd. Car trade $ 9,109 c.
TAC Financial Leasing Co., Ltd.
$ - $ - $ - $ - $ (5,573) 24.00 $ (1,338)
(Note 4)
$ 1,043 $ -
Hefei TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (577) 24.00 (140)
(Note 4)
2,557 -
Qingdao TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (1,252) 24.00 (302)
(Note 4)
2,353 -
Wuhan TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (135) 80.00 (108)
(Note 4)
8,973 -
Kunming TAC Auto Trade Co., Ltd. Car trade 9,109 c.
TAC Financial Leasing Co., Ltd.
- - - - (1,942) 24.00 (464)
(Note 4)
2,144 -
Accumulated Outward Remittance for Investment
from Taiwan as of December 31, 2017
Investment Amounts Authorized by Investment
Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA
$3,735,753 $3,793,867 $8,403,876 (Note 5)
Note 1: Methods of investment are the following:
a. Direct investment in mainland China.
b. Indirect investment in a company in mainland China through incorporating a company in a third region.
c. Other.
Note 2: a. The Company should be disclosed if it is in its incorporation stage, with no gain (loss) from investment.
b. The amount of investment gain (loss) was recognized on the following bases:
1) Based on the financial statements audited by an international CPA firm cooperating with an ROC CPA firm.
2) Based on the financial statements audited by the auditor of the parent company.
3) Other.
Note 3: Except for the share of profit recognized under the equity method, which was translated at the average exchange rate for the period, the others were translated at the rate prevailing at December 31, 2017, which was US$1=NT$29.76/RMB1=NT$4.5546.
Note 4: The investment gain (loss) was calculated on the basis of financial statements which were not audited by certified public accountants.
Note 5: The upper limit was 60% of the Company’s net equity.
(Concluded)
- 66 -
TAIWAN ACCEPTANCE CORPORATION
THE CONTENTS OF SCHEDULE OF MAJOR ACCOUNTING ITEMS
Item Schedule Index
Major accounting items in assets, liabilities and equity
Schedule of notes and trade receivables 1
Schedule of inventories 2
Schedule of prepayments 3
Schedule of changes in investments accounted for using equity method 4
Schedule of short-term borrowings 5
Schedule of short-term bills payable 6
Schedule of notes and trade payables 7
Schedule of other payables 8
Schedule of other current liabilities 9
Schedule of bonds payable 10
Major accounting items in profit or loss
Schedule of operating costs Note 20
Schedule of operating expenses 11
Schedule of other operating income and expense, net Note 20
Schedule of employee benefits expense, depreciation and amortization Note 20
- 67 -
SCHEDULE 1
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF NOTES AND TRADE RECEIVABLES
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Amount
Installment accounts receivable
Notes and trade receivables (Note) $ 60,108,132
Less: Unrealized interests revenue (6,947,858)
53,160,274
Non-installment accounts receivable
Empower Motor Co., Ltd. 86,385
Yu Chang Motor Co., Ltd. 44,336
Yulon Nissan Motor Co., Ltd. 35,899
Cheng Long Motor Co., Ltd. 27,723
Luxgen Motor Taipei Co., Ltd. 23,447
Other (Note) 181,067
398,857
Total 53,559,131
Less: Allowance for impairment loss (1,662,135)
Notes and trade receivables, net $ 51,896,996
Note: The account balance of each customer does not exceed 5% of total account balance.
- 68 -
SCHEDULE 2
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF INVENTORIES
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Amount
Item Cost Market Price
Acquired automobiles (Note) $ 449,278 $ 516,436
Note: The inventories of the Company are not pledged.
- 69 -
SCHEDULE 3
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF PREPAYMENTS
DECEMBER 31, 2017
(In thousands of New Taiwan Dollars)
Item Amount
Prepaid commission $ 1,248,813
Others 11,313
$ 1,260,126
- 70 -
SCHEDULE 4
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Balance, January 1, 2017 Additions Decrease
Increase in
Using the
Equity
Method Balance, December 31, 2017 Market
Shares Shares Shares (Note 2) Shares Value or Net Collateral or
Investees (In Thousands) Amount (In Thousands) Amount (In Thousands) Amount Amount (In Thousands) % Amount Assets Value Pledged Note
Stocks
Shinshin Credit Corporation 98,969 $ 2,187,014 35,031 $ - - $ - $ 470,935 134,000 100.00 $ 2,657,949 $ 2,657,949 - Note 1
Car-plus Auto Leasing Corporation 51,492 1,250,445 - - - - 10,800 51,492 68.57 1,261,245 1,261,245 - Note 1
Tokio Marine Newa Insurance Co. 5,807 140,922 - - - - 12,841 5,807 1.94 153,763 153,763 - Note 1
Empower Motor Co., Ltd. 7,290 87,054 270 - - - 3,889 7,560 27.00 90,943 90,943 - Note 1
Sin Jang Enterprises 17,128 192,679 - - - - 1,233 17,128 40.00 193,912 193,988 - Note 1
TAC Global Investment (Samoa) Co., Ltd. 50,537 1,852,349 - - - - 230,345 50,537 100.00 2,082,694 2,082,694 - Note 1
Yu Rich Financial Services Co., Ltd. 45,455 495,926 - - - - 82,463 45,455 82.12 578,389 578,389 Note 1
Yulon Motor Finance (China) Co., Ltd. 245,000 1,099,619 245,000 1,128,439 - - (6,632) 490,000 49.00 2,221,426 2,221,426 - Note 1
$ 7,306,008 $ 1,128,439 $ - $ 805,874 $ 9,240,321 $ 9,240,397
Note 1: Calculated by the net equity of audited financial statements as of December 31, 2017.
Note 2: Including
a. Share of profit or loss of subsidiaries and associates $ 1,169,834
b. Dividends received from subsidiaries and associates (275,096)
c. Exchange differences on translating foreign operations (84,343)
d. Shareholders’ equity of investees (4,521)
$ 805,874
- 71 -
SCHEDULE 5
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF SHORT-TERM BORROWINGS
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Categories and Creditors Period Balance Collateral or Guarantee
Mizuho Bank
Credit borrowings 2017.12.6-2018.1.15 $ 3,000,000 None
Bank of Tokyo-Mitsubishi UFJ
Credit borrowings 2015.3.26-2018.11.27 2,350,000 None
Bank SinoPac
Credit borrowings 2017.12.8-2018.1.8 400,000 None
Sumitomo Mitsui Banking
Credit borrowings 2017.10.5-2018.2.8 1,000,000 None
Bank of China
Credit borrowings 2017.10.5-2018.4.3 600,000 None
Bank of Communications
Credit borrowings 2017.11.17-2018.2.2 800,000 None
Taipei Fubon Bank
Credit borrowings 2017.12.11-2018.1.8 500,000 None
Hua Nan Bank
Partially secured borrowings 2017.12.22-2018.1.26 750,000 Notes and trade receivables
Credit borrowings 2017.12.21-2018.1.19 50,000 None
$ 9,450,000
Note: The range of interest rates was 0.66% to 1.29% per annum.
- 72 -
SCHEDULE 6
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF SHORT-TERM BILLS PAYABLE
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Promissory Institutions Period Amount
Non-guaranteed 2017.2.24-2018.12.5 $ 39,100,000
Less: Unamortized bond discount (104,880)
$ 38,995,120
Note: The range of interest rates was 0.57% to 1.04% per annum.
- 73 -
SCHEDULE 7
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF NOTES AND TRADE PAYABLES
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Amount
Related parties
Yulon Nissan Motor Co., Ltd. $ 397,862
Luxgen Motor Co., Ltd. 72,177
Others (Note) 137,466
607,505
Unrelated parties
Others (Note) 72,933
$ 680,438
Note: The amount of each item in others does not exceed 5% of the account balance.
- 74 -
SCHEDULE 8
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF OTHER PAYABLES
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Amount
Bonus payable $ 105,420
Sales tax payable 103,497
Accrued payroll 61,127
Accrued interest payable 29,000
Others (Note) 89,034
$ 388,078
Note: The amount of each item in others does not exceed 5% of the account balance.
- 75 -
SCHEDULE 9
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF OTHER CURRENT LIABILITIES
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Amount
Over-collection of accounts receivable $ 162,207
Premium from auto auction 76,544
Payables to car dealers for vehicles on display 67,546
Others 38,282
$ 344,579
Note: The amount of each item in others does not exceed 5% of the account balance.
- 76 -
SCHEDULE 10
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF BONDS PAYABLE
DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Period and Reimbursement Options
Annual Interest
Rate (%)
Amount
Outstanding
Converted
Amount Redemption
Unamortized
Bond Discount Ending Balance
Collateral or
Guarantee
The first unsecured corporate
bonds of year 2017
2017.05.12-2020.05.12, the principal amounts are repayable on the
maturity date, with simple interest rate.
1.07 $ 2,000,000 $ - $ - $ (3,146) $ 1,996,854 None
The second unsecured
corporate bonds of year 2017
2017.08.11-2020.08.11, the principal amounts are repayable on the
maturity date, with simple interest rate.
1.02 2,350,000
-
-
(3,935)
2,346,065
None
$ 4,350,000 $ - $ - $ (7,081) $ 4,342,919
- 77 -
SCHEDULE 11
TAIWAN ACCEPTANCE CORPORATION
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2017
(In Thousands of New Taiwan Dollars)
Item Amount
Commission $ 1,386,035
Impairment loss recognized on trade receivables 1,041,899
Salary and bonuses 521,274
Others (Note) 283,554
$ 3,232,762
Note: The amount of each item in others does not exceed 5% of the account balance.
