UNITED MICROELECTRONICS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
FOR THE YEARS ENDED
DECEMBER 31, 2018 AND 2017
Address: No. 3 Li-Hsin Road II, Hsinchu Science Park, Hsinchu City, Taiwan, R.O.C.
Telephone: 886-3-578-2258
The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.
1
Independent Auditors’ Report
To United Microelectronics Corporation
Opinion
We have audited the accompanying consolidated balance sheets of United Microelectronics Corporation and its subsidiaries (the “Company”) as of December 31, 2018 and 2017,and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).
In our opinion, based on our audits and the reports of other auditors (please refer to theOther Matter – Making Reference to the Audits of Component Auditorssectionof our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and their consolidated financial performance and cash flows for the years ended December 31, 2018 and 2017, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in theAuditors’ Responsibilities for the Audit of the Consolidated Financial Statementssection of our report. We are independent ofthe Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the“Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors,we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2018 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
1. Revenue Recognition
Net sales recognized by the Company amounted to NT$142,706 million for the year ended December 31, 2018. The timing of revenue recognition for the Company’s wafer fabrication sales mainly depends on the trade term, Free Carrier, which remained unchanged after adopting IFRS 15 “Revenue from Contracts with Customers” (IFRS 15). Based on IFRS 15, the Company recognizes revenue as it satisfies the performance obligation upon transfer of promised goods to carriers approved by the customers. However, there exists a risk of revenues being recorded in an inappropriate period before the Company satisfies the performance obligation where physical deliveries have not been fulfilled. Therefore, we considered this a key audit matter.
Our audit procedures included, but not limited to, assessing the appropriateness of the accounting policy of revenue recognition, including the reassessment of revenue recognition upon the adoption of IFRS 15; evaluating and testing the design and operating effectiveness of internal controls around revenue recognition under IFRS 15; selecting samples to perform tests of details and reviewing significant terms and condition of contracts to verify the occurrence of transactions and reasonableness of the timing of revenue recognition; confirming significant contractual terms; performing cut-off testing by selecting a sample of transactions from either side of year-end and vouching them to supporting evidences to ensure the reasonableness of revenue cut-off; reviewing significant subsequent sales returns and discounts to verify the occurrence of sales transactions recorded before the balance sheet date; and executing tests of journal entries prepared by management and reviewing manual sales journal entries to validate the consistency with the substance of transactions.
We also assessed the adequacy of disclosures of operating revenues, including the transitional disclosures for the adoption of IFRS 15. Please refer to Note 6 to the Company’s consolidated financial statements.
2. Valuation for slow-moving inventories
As of December 31, 2018, the Company’s net inventories amounted to NT$18,203 million. As the semiconductor industry is characterized by rapid changes in technology, management has to evaluate loss due to write-downs of slow moving inventories to their net realizable values. Considering the amount of inventories was significant and the identification of slow-moving inventories and the assessment of the amount of inventory write-downs require significant management judgement, we determined this a key audit matter.
3
Our audit procedures included, but not limited to, evaluating and testing the design and operating effectiveness of internal controls around slow-moving inventories, including the methodologies and assumptions used as well as the application controls in relation to the calculation of inventory aging; testing key assumptions relating to the valuation of write-downs from slow-moving inventories, including performing a retrospective evaluation by comparing actual results to the estimate made in the prior year to determine the reasonableness of management’s estimates of slow-moving inventories.
We also assessed the adequacy of disclosures of inventories. Please refer to Notes 5 and 6 to the Company’s consolidated financial statements.
3. Valuation of financial assets in Level 3 fair value measurement
As of December 31, 2018, the Company invested in financial assets, of which NT$11,318 million was categorized as level 3 of fair value hierarchy (as significant pricing inputs to them are unobservable), mainly comprised of common stocks and preferred stocks of unlisted companies. Valuation of these level 3 investments involves application of different valuation techniques and assumptions in relation to the use of unobservable inputs, including cash flow forecasts, the selection of comparable companies or equity transaction prices, as well as the application of assumptions such as discount rates, discounts for lack of marketability and valuation multiples. Considering the determination of aforementioned assumptions involved management judgments which could significantly affect the reported fair value of the financial assets, we considered this a key audit matter.
Our audit procedures included, but not limited to, evaluating and testing the design and operating effectiveness of internal controls around valuation of financial assets, including the classification and measurement of financial assets upon the initial application of IFRS 9 as well as management’s decision and approval of the methods and assumptions used in valuation model; reassessing the reasonableness of cash flow forecasts, the selection of comparable companies or equity transaction prices, as well as the application of assumptions such as discount rates, discounts for lack of marketability and valuation multiples for individual investments with the assistance of our internal valuation specialists on a sample basis; assessing whether the valuations performed by management were within a reasonable range compared to the valuations performed by our internal valuation specialists; and validating the accuracy of inputs of financial information of the selected comparable companies by benchmarking them with public information.
We also assessed the adequacy of disclosures of financial assets, including the transitional disclosures for the adoption of IFRS 9. Please refer to Notes 5 and 12 to the Company’s consolidated financial statements.
4
Other Matter – Making Reference to the Audits of Component Auditors
We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the reports of other auditors. These associates and joint ventures under equity method amounted to NT$8,714 million and NT$8,998 million, representing 2.39% and 2.28% of consolidated total assets as of December 31, 2018 and 2017, respectively. The related shares of profits (loss) from the associates and joint ventures under the equity method amounted to NT$(751) million and NT$308 million, representing (34.37)% and 3.94% of the consolidated income before tax for the years ended December 31, 2018 and 2017, respectively, and the related shares of other comprehensive income (loss) from the associates and joint ventures under the equity method amounted to NT$(225) million and NT$1,307 million, representing (6.27)% and 50.34% of the consolidated total comprehensive income (loss) for the years ended December 31, 2018 and 2017, respectively.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withauditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
5
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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of theCompany.
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 ability to continue as a going concern ofthe Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany 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.
6
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2018 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other
We have audited and expressed an unqualified opinion including an Other Matter Paragraph on the parent company only financial statements of the Company as of and for the years ended December 31, 2018 and 2017.
/s/Chiu, Wan-Ju
/s/Hsu, Hsin-Min
Ernst & Young, Taiwan
March 6, 2019
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.
7
English Translation of Consolidated Financial Statements Originally Issued in Chinese | ||||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
December 31, 2018 and 2017 | ||||||
(Expressed in Thousands of New Taiwan Dollars) | ||||||
As of December 31, | ||||||
Assets | Notes | 2018 | 2017 | |||
Current assets | ||||||
Cash and cash equivalents | 4, 6(1), 6(27) | $ 83,661,739 | $ 81,674,572 | |||
Financial assets at fair value through profit or loss, current | 4, 5, 6(2), 12(7) | 528,450 | 716,918 | |||
Contract assets, current | 4, 6(19) | 92,210 | - | |||
Notes receivable | 4 | 118 | 6,283 | |||
Accounts receivable, net | 4, 6(3), 6(27) | 23,735,989 | 20,876,417 | |||
Accounts receivable-related parties, net | 4, 7 | 138,912 | 91,065 | |||
Other receivables | 4 | 708,432 | 1,175,307 | |||
Current tax assets | 4 | 20,856 | 507,871 | |||
Inventories, net | 4, 5, 6(4), 6(27) | 18,203,119 | 18,257,500 | |||
Prepayments | 11,225,322 | 13,209,550 | ||||
Other current assets | 2,878,285 | 2,645,003 | ||||
Total current assets | 141,193,432 | 139,160,486 | ||||
Non-current assets | ||||||
Financial assets at fair value through profit or loss, noncurrent | 4, 5, 6(2), 12(7) | 11,555,847 | 191,005 | |||
Financial assets at fair value through other comprehensive income, noncurrent | 4, 5, 6(5), 12(7) | 11,585,477 | - | |||
Available-for-sale financial assets, noncurrent | 4, 5, 6(6), 7, 12(7) | - | 20,636,332 | |||
Financial assets measured at cost, noncurrent | 4, 6(7) | - | 2,218,472 | |||
Investments accounted for under the equity method | 4, 6(8), 7 | 10,363,977 | 10,976,940 | |||
Property, plant and equipment | 4, 5, 6(9), 6(27), 8 | 172,846,595 | 205,741,681 | |||
Intangible assets | 4, 6(10), 7 | 2,991,804 | 3,787,509 | |||
Deferred tax assets | 4, 5, 6(24) | 6,387,909 | 6,071,582 | |||
Prepayment for equipment | 661,402 | 286,090 | ||||
Refundable deposits | 8 | 2,757,399 | 1,903,041 | |||
Other noncurrent assets-others | 8 | 4,261,064 | 3,126,024 | |||
Total non-current assets | 223,411,474 | 254,938,676 | ||||
Total assets | $ 364,604,906 | $ 394,099,162 | ||||
(continued) |
8
English Translation of Consolidated Financial Statements Originally Issued in Chinese | ||||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
December 31, 2018 and 2017 | ||||||
(Expressed in Thousands of New Taiwan Dollars) | ||||||
As of December 31, | ||||||
Liabilities and Equity | Notes | 2018 | 2017 | |||
Current liabilities | ||||||
Short-term loans | 6(11), 6(26), 6(27) | $ 13,103,808 | $ 25,445,540 | |||
Contract liabilities, current | 6(19) | 932,371 | - | |||
Notes and accounts payable | 6,801,745 | 6,535,570 | ||||
Other payables | 7 | 12,455,861 | 12,962,286 | |||
Payables on equipment | 4,008,142 | 4,671,802 | ||||
Current tax liabilities | 4 | 2,059,172 | 4,097,568 | |||
Current portion of long-term liabilities | 4, 6(12), 6(13), 6(26), 6(27), 8, 12(7) | 5,121,396 | 27,363,822 | |||
Other current liabilities | 6(15), 6(16), 6(26), 7 | 5,416,842 | 6,984,482 | |||
Total current liabilities | 49,899,337 | 88,061,070 | ||||
Non-current liabilities | ||||||
Bonds payable | 4, 6(12), 6(26), 12(7) | 38,878,947 | 23,675,861 | |||
Long-term loans | 6(13), 6(26), 6(27), 8, 12(7) | 28,204,054 | 29,643,284 | |||
Deferred tax liabilities | 4, 5, 6(24) | 1,965,693 | 1,631,705 | |||
Net defined benefit liabilities, noncurrent | 4, 5, 6(14) | 4,167,174 | 4,138,519 | |||
Guarantee deposits | 6(26) | 612,903 | 469,491 | |||
Other noncurrent liabilities-others | 4, 6(15), 6(26), 9(6) | 34,340,307 | 32,441,648 | |||
Total non-current liabilities | 108,169,078 | 92,000,508 | ||||
Total liabilities | 158,068,415 | 180,061,578 | ||||
Equity attributable to the parent company | ||||||
Capital | 4, 6(17) | |||||
Common stock | 124,243,187 | 126,243,187 | ||||
Additional paid-in capital | 4, 6(12), 6(17) | |||||
Premiums | 36,278,383 | 36,862,383 | ||||
Treasury stock transactions | 1,737,113 | 1,753,028 | ||||
The differences between the fair value of the consideration paid or received from acquiring or | 573,336 | 573,336 | ||||
disposing subsidiaries and the carrying amounts of the subsidiaries | ||||||
Recognition of changes in subsidiaries’ ownership | 39 | - | ||||
Share of changes in net assets of associates and joint ventures accounted for using equity method | 108,613 | 97,482 | ||||
Employee stock options | 178,401 | - | ||||
Stock options | 1,515,297 | 1,572,121 | ||||
Other | 8,181 | - | ||||
Retained earnings | 6(17) | |||||
Legal reserve | 10,865,280 | 9,902,407 | ||||
Unappropriated earnings | 50,723,263 | 38,163,492 | ||||
Other components of equity | 4 | |||||
Exchange differences on translation of foreign operations | (5,692,326) | (5,715,585) | ||||
Unrealized gains or losses on financial assets measured at fair value through other comprehensive income | (8,819,556) | - | ||||
Unrealized gains or losses on available-for-sale financial assets | - | 8,347,962 | ||||
Gains or losses on hedging instruments | (2,058) | - | ||||
Treasury stock | 4, 6(17), 6(18) | (5,647,430) | (4,719,037) | |||
Total equity attributable to the parent company | 206,069,723 | 213,080,776 | ||||
Non-controlling interests | 6(17), 6(27) | 466,768 | 956,808 | |||
Total equity | 206,536,491 | 214,037,584 | ||||
Total liabilities and equity | $ 364,604,906 | $ 394,099,162 | ||||
The accompanying notes are an integral part of the consolidated financial statements. |
9
English Translation of Consolidated Financial Statements Originally Issued in Chinese | |||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | |||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||
For the years ended December 31, 2018 and 2017 | |||||
(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share) | |||||
| For the years ended December 31, | ||||
Notes | 2018 | 2017 | |||
Operating revenues | 4, 6(19), 7, 14 | ||||
Sales revenues | $ 143,786,087 | $ 144,454,670 | |||
Less: Sales returns and discounts | (1,080,084) | (1,497,126) | |||
Net sales | 142,706,003 | 142,957,544 | |||
Other operating revenues | 8,546,568 | 6,327,162 | |||
Net operating revenues | 151,252,571 | 149,284,706 | |||
Operating costs | 4, 6(4), 6(14), 6(18), 6(20), 7, 14 | ||||
Costs of goods sold | (123,794,988) | (118,252,107) | |||
Other operating costs | (4,617,556) | (3,974,841) | |||
Operating costs | (128,412,544) | (122,226,948) | |||
Gross profit | 22,840,027 | 27,057,758 | |||
Operating expenses | 4, 6(3), 6(14), 6(18), 6(19), 6(20), 7, 14 | ||||
Sales and marketing expenses | (3,901,912) | (4,233,830) | |||
General and administrative expenses | (4,823,391) | (4,239,713) | |||
Research and development expenses | (13,025,139) | (13,669,589) | |||
Expected credit losses | (409,237) | - | |||
Subtotal | (22,159,679) | (22,143,132) | |||
Net other operating income and expenses | 4, 6(15), 6(21), 14 | 5,116,884 | 1,653,695 | ||
Operating income | 5,797,232 | 6,568,321 | |||
Non-operating income and expenses | |||||
Other income | 4 | 1,391,376 | 875,587 | ||
Other gains and losses | 4, 6(22), 6(27), 7 | (1,128,290) | 1,001,679 | ||
Finance costs | 6(22) | (2,851,225) | (2,495,162) | ||
Share of profit or loss of associates and joint ventures | 4, 6(8), 14 | (667,701) | 276,962 | ||
Bargain purchase gain | - | 5,130 | |||
Exchange gain, net | 4,12 | - | 1,565,905 | ||
Exchange loss, net | 4,12 | (356,993) | - | ||
Subtotal | (3,612,833) | 1,230,101 | |||
Income from continuing operations before income tax | 2,184,399 | 7,798,422 | |||
Income tax benefit (expense) | 4, 5, 6(24), 14 | 458,653 | (1,167,157) | ||
Net income | 2,643,052 | 6,631,265 | |||
Other comprehensive income (loss) | 6(23) | ||||
Items that will not be reclassified subsequently to profit or loss | |||||
Remeasurements of defined benefit pension plans | 4, 5, 6(14) | (55,060) | (184,186) | ||
Unrealized gains or losses on financial assets at fair value through other comprehensive income | 1,454,018 | - | |||
Gains or losses on hedging instruments which will not be reclassified | 4 | (2,572) | - | ||
Share of other comprehensive income (loss) of associates and joint ventures | (475,139) | 1,221 | |||
Income tax related to items that will not be reclassified subsequently | 4, 5, 6(24) | 112,384 | 31,311 | ||
Items that may be reclassified subsequently to profit or loss | |||||
Exchange differences on translation of foreign operations | (47,009) | (5,975,203) | |||
Unrealized gains or losses on available-for-sale financial assets | - | 581,439 | |||
Share of other comprehensive income (loss) of associates and joint ventures which | (23,942) | 1,350,183 | |||
Income tax related to items that may be reclassified subsequently | 4, 5, 6(24) | (12,736) | 160,880 | ||
Total other comprehensive income (loss), net of tax | 949,944 | (4,034,355) | |||
Total comprehensive income | $ 3,592,996 | $ 2,596,910 | |||
Net income attributable to: | |||||
Stockholders of the parent | $ 7,072,990 | $ 9,628,734 | |||
Non-controlling interests | (4,429,938) | (2,997,469) | |||
$ 2,643,052 | $ 6,631,265 | ||||
Comprehensive income attributable to: | |||||
Stockholders of the parent | $ 8,126,828 | $ 5,705,980 | |||
Non-controlling interests | (4,533,832) | (3,109,070) | |||
$ 3,592,996 | $ 2,596,910 | ||||
Earnings per share (NTD) | 4, 6(25) | ||||
Earnings per share-basic | $ 0.58 | $ 0.79 | |||
Earnings per share-diluted | $ 0.55 | $ 0.74 | |||
The accompanying notes are an integral part of the consolidated financial statements. |
10
English Translation of Consolidated Financial Statements Originally Issued in Chinese | ||||||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||||
For the years ended December 31, 2018 and 2017 | ||||||||||||||||||||||||||
(Expressed in Thousands of New Taiwan Dollars) | ||||||||||||||||||||||||||
Equity Attributable to the Parent Company | ||||||||||||||||||||||||||
Capital | Retained Earnings | Other Components of Equity | ||||||||||||||||||||||||
Notes | Common Stock | Additional | Legal Reserve | Unappropriated | Exchange Differences on Translation of Foreign Operations | Unrealized Gains or Losses on Financial Assets Measured at Fair Value through Other Comprehensive Income | Unrealized Gains or Losses on Available-for-Sale Financial Assets | Gains or Losses on Hedging Instruments | Treasury Stock | Total | Non- | Total Equity | ||||||||||||||
Balance as of January 1, 2017 | 6(17) | $ 126,243,187 | $ 40,997,092 | $ 9,070,841 | $ 38,584,335 | $ 63,437 | $ - | $ 6,340,040 | $ - | $ (4,719,037) | $ 216,579,895 | $ 2,161,729 | $ 218,741,624 | |||||||||||||
Appropriation and distribution of 2016 retained earnings | 6(17) | |||||||||||||||||||||||||
Legal reserve | - | - | 831,566 | (831,566) | - | - | - | - | - | - | - | - | ||||||||||||||
Cash dividends | - | - | - | (6,112,159) | - | - | - | - | - | (6,112,159) | - | (6,112,159) | ||||||||||||||
Net income for the year ended December 31, 2017 | 6(17) | - | - | - | 9,628,734 | - | - | - | - | - | 9,628,734 | (2,997,469) | 6,631,265 | |||||||||||||
Other comprehensive income (loss), net of tax for the year ended December 31, 2017 | 6(17), 6(23) | - | - | - | (151,654) | (5,779,022) | - | 2,007,922 | - | - | (3,922,754) | (111,601) | (4,034,355) | |||||||||||||
Total comprehensive income (loss) | - | - | - | 9,477,080 | (5,779,022) | - | 2,007,922 | - | - | 5,705,980 | (3,109,070) | 2,596,910 | ||||||||||||||
Share of changes in net assets of associates and joint ventures accounted for | - | (12,732) | - | - | - | - | - | - | - | (12,732) | - | (12,732) | ||||||||||||||
The differences between the fair value of the consideration paid or received from acquiring | 4, 6(17) | - | (134,050) | - | - | - | - | - | - | - | (134,050) | (1,174,564) | (1,308,614) | |||||||||||||
Changes in subsidiaries' ownership | 4, 6(17) | - | - | - | (909,241) | - | - | - | - | - | (909,241) | 175,413 | (733,828) | |||||||||||||
Adjustments for dividends subsidiaries received from parent company | - | 8,040 | - | - | - | - | - | - | - | 8,040 | - | 8,040 | ||||||||||||||
Others | 6(17) | - | - | - | (2,044,957) | - | - | - | - | - | (2,044,957) | 2,903,300 | 858,343 | |||||||||||||
Balance as of December 31, 2017 | 6(17) | 126,243,187 | 40,858,350 | 9,902,407 | 38,163,492 | (5,715,585) | - | 8,347,962 | - | (4,719,037) | 213,080,776 | 956,808 | 214,037,584 | |||||||||||||
Impact of retroactive applications | 3, 6(17) | - | - | - | 17,969,706 | 3,052 | (9,867,013) | (8,347,962) | - | - | (242,217) | 1,597 | (240,620) | |||||||||||||
Adjusted balance as of January 1, 2018 | 6(17) | 126,243,187 | 40,858,350 | 9,902,407 | 56,133,198 | (5,712,533) | (9,867,013) | - | - | (4,719,037) | 212,838,559 | 958,405 | 213,796,964 | |||||||||||||
Appropriation and distribution of 2017 retained earnings | 6(17) | |||||||||||||||||||||||||
Legal reserve | - | - | 962,873 | (962,873) | - | - | - | - | - | - | - | - | ||||||||||||||
Cash dividends | - | - | - | (8,557,023) | - | - | - | - | - | (8,557,023) | - | (8,557,023) | ||||||||||||||
Net income for the year ended December 31, 2018 | 6(17) | - | - | - | 7,072,990 | - | - | - | - | - | 7,072,990 | (4,429,938) | 2,643,052 | |||||||||||||
Other comprehensive income (loss), net of tax for the year ended December 31, 2018 | 6(17), 6(23) | - | - | - | (22,341) | 20,207 | 1,058,030 | - | (2,058) | - | 1,053,838 | (103,894) | 949,944 | |||||||||||||
Total comprehensive income (loss) | - | - | - | 7,050,649 | 20,207 | 1,058,030 | - | (2,058) | - | 8,126,828 | (4,533,832) | 3,592,996 | ||||||||||||||
Share-based payment transaction | 4, 6(18) | - | 696,226 | - | - | - | - | - | - | 2,203,443 | 2,899,669 | - | 2,899,669 | |||||||||||||
Treasury stock acquired | 4, 6(17) | - | - | - | - | - | - | - | - | (6,261,018) | (6,261,018) | - | (6,261,018) | |||||||||||||
Treasury stock cancelled | 4, 6(17) | (2,000,000) | (1,129,182) | - | - | - | - | - | - | 3,129,182 | - | - | - | |||||||||||||
Share of changes in net assets of associates and joint ventures accounted for | - | 11,131 | - | 10,573 | - | (10,573) | - | - | - | 11,131 | - | 11,131 | ||||||||||||||
Disposal of subsidiaries | 6(27) | - | - | - | - | - | - | - | - | - | - | (7,074) | (7,074) | |||||||||||||
Changes in subsidiaries' ownership | 4, 6(17) | - | 39 | - | (475,311) | - | - | - | - | - | (475,272) | (278,613) | (753,885) | |||||||||||||
Adjustments for dividends subsidiaries received from parent company | - | 11,442 | - | - | - | - | - | - | - | 11,442 | - | 11,442 | ||||||||||||||
Others | 6(17) | - | (48,643) | - | (2,475,950) | - | - | - | - | - | (2,524,593) | 4,327,882 | 1,803,289 | |||||||||||||
Balance as of December 31, 2018 | 6(17) | $ 124,243,187 | $ 40,399,363 | $ 10,865,280 | $ 50,723,263 | $ (5,692,326) | $ (8,819,556) | $ - | $ (2,058) | $ (5,647,430) | $ 206,069,723 | $ 466,768 | $ 206,536,491 | |||||||||||||
The accompanying notes are an integral part of the consolidated financial statements. |
11
English Translation of Consolidated Financial Statements Originally Issued in Chinese | ||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
For the years ended December 31, 2018 and 2017 | ||||
(Expressed in Thousands of New Taiwan Dollars) | ||||
For the years ended December 31, | ||||
2018 | 2017 | |||
Cash flows from operating activities: | ||||
Net income before tax | $ 2,184,399 | $ 7,798,422 | ||
Adjustments to reconcile net income before tax to net cash provided by operating activities: | ||||
Depreciation | 49,948,589 | 50,965,120 | ||
Amortization | 2,100,130 | 2,133,726 | ||
Expected credit losses | 409,237 | - | ||
Bad debt reversal | - | (1,752) | ||
Net loss (gain) of financial assets and liabilities at fair value through profit or loss | 1,167,735 | (598,270) | ||
Interest expense | 2,768,672 | 2,406,872 | ||
Interest income | (789,001) | (353,159) | ||
Dividend income | (602,375) | (522,428) | ||
Share-based payment | 695,669 | - | ||
Share of loss (profit) of associates and joint ventures | 667,701 | (276,962) | ||
Gain on disposal of property, plant and equipment | (136,743) | (82,397) | ||
Gain on disposal of other assets | - | (6,601) | ||
Loss (gain) on disposal of investments | 19,286 | (1,276,956) | ||
Impairment loss on financial assets | - | 950,335 | ||
Impairment loss on non-financial assets | 46,225 | - | ||
Exchange loss (gain) on financial assets and liabilities | 1,217,590 | (2,432,098) | ||
Bargain purchase gain | - | (5,130) | ||
Amortization of deferred government grants | (3,885,722) | (1,469,616) | ||
Income and expense adjustments | 53,626,993 | 49,430,684 | ||
Changes in operating assets and liabilities: | ||||
Financial assets and liabilities at fair value through profit or loss | 789,666 | 520,335 | ||
Contract assets | (357,515) | - | ||
Notes receivable and accounts receivable | (1,382,668) | 1,587,562 | ||
Other receivables | 618,317 | (261,834) | ||
Inventories | (46,497) | (1,565,132) | ||
Prepayments | 409,962 | (2,014,104) | ||
Other current assets | 333,557 | (2,383,660) | ||
Contract fulfillment costs | (448,933) | - | ||
Contract liabilities | (3,020,517) | - | ||
Notes and accounts payable | 257,044 | (185,907) | ||
Other payables | (426,302) | 727,300 | ||
Other current liabilities | 191,559 | 1,803,309 | ||
Net defined benefit liabilities | (26,405) | (14,562) | ||
Other noncurrent liabilities-others | - | (209,250) | ||
Cash generated from operations | 52,702,660 | 55,233,163 | ||
Interest received | 666,774 | 329,194 | ||
Dividend received | 782,157 | 584,612 | ||
Interest paid | (2,221,301) | (1,905,718) | ||
Income tax paid | (995,314) | (1,766,856) | ||
Net cash provided by operating activities | 50,934,976 | 52,474,395 | ||
(continued) |
12
English Translation of Consolidated Financial Statements Originally Issued in Chinese | ||||
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
For the years ended December 31, 2018 and 2017 | ||||
(Expressed in Thousands of New Taiwan Dollars) | ||||
For the years ended December 31, | ||||
2018 | 2017 | |||
Cash flows from investing activities: | ||||
Acquisition of financial assets at fair value through profit or loss | $ (593,563) | $ (138,022) | ||
Proceeds from disposal of financial assets at fair value through profit or loss | 1,061 | 18,789 | ||
Acquisition of available-for-sale financial assets | - | (998,216) | ||
Proceeds from disposal of available-for-sale financial assets | - | 2,159,636 | ||
Acquisition of financial assets measured at cost | - | (14,419) | ||
Proceeds from disposal of financial assets measured at cost | - | 361 | ||
Acquisition of investments accounted for under the equity method | (840,000) | (204,280) | ||
Increase in prepayment for investments | - | (17,200) | ||
Proceeds from capital reduction and liquidation of investments | 61,800 | 2,101,791 | ||
Disposal of subsidiaries | (9,813) | - | ||
Derecognition of hedging financial assets and liabilities | (2,572) | - | ||
Acquisition of property, plant and equipment | (19,590,075) | (44,236,276) | ||
Proceeds from disposal of property, plant and equipment | 200,991 | 119,613 | ||
Increase in refundable deposits | (1,674,984) | (109,627) | ||
Decrease in refundable deposits | 691,807 | 424,706 | ||
Acquisition of intangible assets | (838,675) | (1,283,938) | ||
Government grants related to assets acquisition | 7,129,770 | 6,755,920 | ||
Increase in other noncurrent assets-others | (36,440) | (30,294) | ||
Decrease in other noncurrent assets-others | 1,090 | 35,864 | ||
Net cash used in investing activities | (15,499,603) | (35,415,592) | ||
Cash flows from financing activities: | ||||
Increase in short-term loans | 22,021,005 | 48,804,321 | ||
Decrease in short-term loans | (34,309,253) | (42,925,604) | ||
Proceeds from bonds issued | - | 13,700,000 | ||
Bonds issuance costs | - | (15,785) | ||
Redemption of bonds | (7,500,000) | (7,500,000) | ||
Proceeds from long-term loans | 758,500 | 12,000,708 | ||
Repayments of long-term loans | (2,638,697) | (7,602,596) | ||
Increase in guarantee deposits | 213,432 | 194,555 | ||
Decrease in guarantee deposits | (125,301) | (84,192) | ||
Cash dividends | (8,557,684) | (6,103,195) | ||
Treasury stock acquired | (6,148,273) | - | ||
Treasury stock sold to employees | 2,204,000 | - | ||
Acquisition of subsidiaries | - | (1,308,614) | ||
Change in non-controlling interests | 597,385 | 1,994 | ||
Net cash (used in) provided by financing activities | (33,484,886) | 9,161,592 | ||
Effect of exchange rate changes on cash and cash equivalents | 36,680 | (2,124,804) | ||
Net increase in cash and cash equivalents | 1,987,167 | 24,095,591 | ||
Cash and cash equivalents at beginning of year | 81,674,572 | 57,578,981 | ||
Cash and cash equivalents at end of year | $ 83,661,739 | $ 81,674,572 | ||
The accompanying notes are an integral part of the consolidated financial statements. |
13
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
1. HISTORY AND ORGANIZATION
United Microelectronics Corporation (UMC) was incorporated in Republic of China (R.O.C.) in May 1980 and commenced operations in April 1982. UMC is a full service semiconductor wafer foundry, and provides a variety of services to satisfy customer needs. UMC’s ordinary shares were publicly listed on the Taiwan Stock Exchange (TWSE) in July 1985 and its American Depositary Shares (ADSs) were listed on the New York Stock Exchange (NYSE) in September 2000.
2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE
The consolidated financial statements of UMC and its subsidiaries (“the Company”) were authorized for issue in accordance with a resolution of the Board of Directors’ meeting onMarch 6, 2019.
3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS
A.The Company applied International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are endorsed by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2018. Apart from the impact of the standards and interpretations which is described below, all other standards and interpretations have no material impact on the Company’s financial position and performance.
(1) | IFRS 9 “Financial Instruments”
IFRS 9 “Financial Instruments” (IFRS 9) replaced IAS 39 “Financial Instruments: Recognition and Measurement” (IAS 39) for annual periods beginning on or after January 1, 2018, which resulted in an impact on all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. |
14
(2) | IFRS 15 “Revenue from Contracts with Customers” with its Amendment “Clarifications to IFRS 15 Revenue from Contracts with Customers”
The core principle of IFRS 15 “Revenue from Contracts with Customers” (IFRS 15) is that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry.
| |
(3) | The Company elected to adopt these standards using the modified retrospective method recognizing the cumulative effect of initially applying IFRS 9 and IFRS 15 at January 1, 2018, and not to restate the consolidated financial statements for theyearended December 31, 2017. The Company’s consolidated financial statements for theyearended December 31, 2017 were prepared in accordance with IAS 39, IAS 18 and related interpretations issued, revised or amended.
The impact on assets, liabilities and equity at the date of initial application of IFRS 9 and IFRS 15are as below:
IFRS 9
| |
a. | Financial assets measured at cost
The Company elected to designate certain of these financial assets as financial assets at fair value through other comprehensive income (FVOCI) and the others as financial assets at fair value through profit or loss (FVTPL) at the date of initial application. In accordance with the requirement of IFRS 9, these financial assets must be measured at fair value.
| |
b. | Available-for-sale financial assets
In accordance with the requirement of IFRS 9, the Company elected to designate equity instruments that are not held for trading as financial assets at FVOCI and classified the remaining financial assets as financial assets at FVTPL.
| |
c. | Impairment of financial assets
Under IFRS 9, impairment assessment is not required for equity instruments. Therefore, as the Company elected to classify certain equity investments as financial assets at FVOCI, the Company reclassified the related accumulated impairment loss from retained earnings to other component of equity at the date of initial application. The expected credit losses for accounts receivable or contract assets that result from transactions within the scope of IFRS 15 are evaluated by applying the simplified approach. The aforementioned impairment evaluation requirement differs from the current incurred loss model and had no material impact on the Company. |
15
IFRS 15
Prior to adopting IFRS 15, the Company recognized revenue upon the delivery of the wafers to carriers approved by the customers, at which point in time, the title and risk of loss for the wafers were transferred to the customers. Consideration received from customers prior to the Company having transferred risks and rewards were accounted for as advance receipts as a component of other current liabilities. In accordance with the requirements of IFRS 15, the Company recognizes revenue as the Company satisfies its performance obligations to customers upon transfer of control of promised goods and services. For certain contracts that the Company recognizes revenue as it satisfies its performance obligations over time, contract assets are recognized if the Company does not have unconditional rights to the consideration. Consideration received from customers prior to the Company having satisfied its performance obligations are accounted for as contract liabilities and the associated costs incurred to fulfill the contracts are recognized on the consolidated balance sheet as contract fulfillment costs (classified under other current assets) or inventories. In accordance with the requirement of IFRS 15, allowance for sales returns and discounts are presented as refund liabilities (classified under other current liabilities), which was presented as a contra-account to accounts receivable prior to adopting IFRS 15.
The impact on assets, liabilities and equity as of January 1, 2018 were as follows:
|
|
|
|
|
|
|
|
| ||
Items |
| Carrying Amounts as of December 31, 2017 |
| Adjustments Arising from Initial Application |
| Adjusted Carrying Amounts as of January 1, 2018 |
| Descriptions | ||
| IFRS 9 |
| IFRS 15 | |||||||
Contract assets, current |
| $- |
| $- |
| $129,042 |
| $129,042 |
| a. |
Accounts receivable, net |
| 20,876,417 |
| - |
| 983,438 |
| 21,859,855 |
| a. b. |
Accounts receivable-related parties, net |
| 91,065 |
| - |
| 2,733 |
| 93,798 |
| b. |
Inventories, net |
| 18,257,500 |
| - |
| (102,800) |
| 18,154,700 |
| a. |
Other current assets |
| 2,645,003 |
| - |
| 120,799 |
| 2,765,802 |
| a. |
Financial assets at fair value through profit or loss, noncurrent |
| 191,005 |
| 12,449,226 |
| - |
| 12,640,231 |
| c. |
Financial assets at fair value through other comprehensive income, noncurrent |
| - |
| 10,131,459 |
| - |
| 10,131,459 |
| d. |
Available-for-sale financial assets, noncurrent |
| 20,636,332 |
| (20,636,332) |
| - |
| - |
| c.d. |
Financial assets measured at cost, noncurrent |
| 2,218,472 |
| (2,218,472) |
| - |
| - |
| c.d. |
Investments accounted for under the equity method |
| 10,976,940 |
| (25,997) |
| - |
| 10,950,943 |
| e. |
Deferred tax assets |
| 6,071,582 |
| 42,388 |
| (1,489) |
| 6,112,481 |
| a. c. d. |
Total effect on assets |
|
|
| $(257,728) |
| $1,131,723 |
|
|
|
|
Contract liabilities, current |
| $- |
| $- |
| $3,951,414 |
| $3,951,414 |
| a. |
Current tax liabilities |
| 4,097,568 |
| - |
| 1,611 |
| 4,099,179 |
| a. |
Other current liabilities |
| 6,984,482 |
| - |
| (2,861,466) |
| 4,123,016 |
| a. b. |
Deferred tax liabilities |
| 1,631,705 |
| 23,093 |
| (37) |
| 1,654,761 |
| a. c. |
Total effect on liabilities |
|
|
| $23,093 |
| $1,091,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
| $48,065,899 |
| $17,930,334 |
| $39,372 |
| $66,035,605 |
| a. c. d. e. |
Other components of equity |
| 2,632,377 |
| (18,211,155) |
| (768) |
| (15,579,546) |
| a. b. c. d. e. |
Non-controlling interests |
| 956,808 |
| - |
| 1,597 |
| 958,405 |
| a. |
Total effect on equity |
|
|
| $(280,821) |
| $40,201 |
|
|
|
|
16
a. Prior to adopting IFRS 15, the Company recognized revenue upon the delivery of the wafers to carriers approved by the customers, at which point in time, the title and risk of loss for the wafers are transferred to the customers. Consideration received from customers prior to the Company having satisfied its performance obligations were accounted for as advance receipts as a component of other current liabilities. After adopting IFRS 15, the Company recognizes revenue as the Company satisfies its performance obligations to customers upon transfer control of promised goods and services. For certain contracts that the Company recognizes revenue as it satisfies its performance obligations over time, contract assets are recognized if the Company does not have unconditional rights to the consideration. Consideration received from customers prior to the Company having satisfied its performance obligations are accounted for as contract liabilities and the associated costs incurred to fulfill the contracts are recognized on the consolidated balance sheet as contract fulfillment costs (classified under other current assets) or inventories. The aforementioned changes in revenue recognition resulted in an increase in current contract assets amounted to NT$129 million, a decrease in net accounts receivable amounted to NT$11 million, a decrease in net inventories amounted to NT$103 million, an increase in other current assets amounted to NT$121 million, a decrease in deferred tax assets amounted to NT$1 million, an increase in current contract liabilities amounted to NT$3,951 million, an increase in current tax liabilities amounted to NT$2 million, a decrease in other current liabilities amounted to NT$3,859 million, a decrease in deferred tax liabilities amounted to NT$37 thousand, an increase in retained earnings amounted to NT$39 million, a decrease in other components of equity amounted to NT$0.3 million and an increase in non-controlling interests amounted to NT$2 million.
17
b. After adopting IFRS 15, allowance for sales returns and discounts are presented as refund liabilities (classified under other current liabilities), which was presented as a contra-account to accounts receivable prior to adopting IFRS 15. The aforementioned change in the presentation of the Company’s allowance for sales returns and discounts led to an increase in net accounts receivable amounted to NT$994 million, an increase in net accounts receivable-related parties amounted to NT$3 million, an increase in other current liabilities amounted to NT$997 million and a decrease in other components of equity amounted to NT$0.5 million.
c. In accordance with IFRS 9, the Company reclassified certain noncurrent available-for-sale financial assets and certain noncurrent financial assets measured at cost as noncurrent financial assets at FVTPL, amounting to NT$10,738 million and NT$1,955 million, respectively. In addition, the Company remeasured the fair value of financial assets and resulted in a decrease of NT$244 million, an increase in deferred tax assets amounted to NT$37 million, an increase in deferred tax liabilities amounted to NT$23 million, a decrease in retained earnings amounted to NT$234 million and an increase in other component of equity amounted to NT$4 million. At the date of initial application, the Company reclassified other component of equity to retained earnings, resulting in a decrease in other component of equity and an increase in retained earnings amounting to NT$3,754 million. After adjustment, the carrying amounts of noncurrent financial assets at FVTPL resulted in an increase of NT$12,449 million as of January 1, 2018.
d. In accordance with IFRS 9, the Company elected to designate its investments in equity instruments previously classified as available-for-sale amounted to NT$9,898 million and noncurrent financial assets measured at cost amounted to NT$263 million reclassified as noncurrent financial assets at FVOCI, because these investments are not held for trading. In addition, the Company remeasured the fair value of financial assets and resulted in a decrease of NT$30 million, an increase in deferred tax assets amounted to NT$5 million, and a decrease in other components of equity amounted to NT$25 million. At the date of initial application, the Company reclassified retained earnings to other component of equity, resulting in an increase in retained earnings and a decrease in other component of equity amounting to NT$12,899 million. After adjustment, the carrying amounts of noncurrent financial assets at FVOCI resulted in an increase of NT$10,131 million as of January 1, 2018.
e. With the adoption of IFRS 9 by associates accounted for using equity method, the corresponding adjustments made by the Company resulting in a decrease in investments accounted for using equity method amounted to NT$26 million, an increase in retained earnings amounted to NT$1,511 million and a decrease in other components of equity amounted to NT$1,537 million.
18
The following table shows the amount affected in the current period by the application of IFRS 15 as compared to IAS 18:
|
| As of December 31, 2018 | ||||
Items |
| Amounts in accordance with IFRS 15 |
| Effect |
| Amounts in accordance with accounting policies for prior periods |
Contract assets, current |
| $92,210 |
| $(92,210) |
| $- |
Accounts receivable, net |
| 23,735,989 |
| (1,206,340) |
| 22,529,649 |
Accounts receivable-related parties, net |
| 138,912 |
| (1,358) |
| 137,554 |
Inventories, net |
| 18,203,119 |
| 91,332 |
| 18,294,451 |
Other current assets |
| 3,586,717 |
| (163,344) |
| 3,423,373 |
Deferred tax assets |
| 6,387,909 |
| (69) |
| 6,387,840 |
Total effect on assets |
|
|
| $(1,371,989) |
|
|
Contract liabilities, current |
| $932,371 |
| $(932,371) |
| $- |
Other current liabilities |
| 5,416,842 |
| (445,994) |
| 4,970,848 |
Deferred tax liabilities |
| 1,965,693 |
| 5,286 |
| 1,970,979 |
Total effect on liabilities |
|
|
| $(1,373,079) |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
| $40,399,363 |
| $188 |
| $40,399,551 |
Retained earnings |
| 61,588,543 |
| (2,490) |
| 61,586,053 |
Other components of equity |
| (14,513,940) |
| 4,022 |
| (14,509,918) |
Non-controlling interests |
| 466,768 |
| (630) |
| 466,138 |
Total effect on equity |
|
|
| $1,090 |
|
|
|
|
|
|
|
|
|
|
| For the year ended December 31, 2018 | ||||
Items |
| Amounts in accordance with IFRS 15 |
| Effect |
| Amounts in accordance with accounting policies for prior periods |
Operating revenue |
| $151,252,571 |
| $99,791 |
| $151,352,362 |
Operating costs |
| (128,412,544) |
| 45,628 |
| (128,366,916) |
Operating expenses |
| (22,159,679) |
| (99,113) |
| (22,258,792) |
Income tax benefit (expense) |
| 458,653 |
| (8,457) |
| 450,196 |
Total effect on profit and loss |
|
|
| $37,849 |
|
|
19
B. Standards issued byInternational Accounting Standards Board (IASB) which are endorsed by FSC, but not yet adopted by the Company are listed below:
No. |
| The projects of Standards or Interpretations |
| Effective for annual periods beginning on or after |
IFRS 16 |
| Leases |
| January 1, 2019 |
IFRIC 23 |
| Uncertainty Over Income Tax Treatments |
| January 1, 2019 |
IAS 28 |
| Long-term Interests in Associates and Joint Ventures |
| January 1, 2019 |
IFRS 9 |
| Financial Instruments – Prepayment Features with Negative Compensation |
| January 1, 2019 |
|
| Improvements to International Financial Reporting Standards (2015 - 2017 cycle) |
|
|
IFRS 3 |
| Business Combinations |
| January 1, 2019 |
IFRS 11 |
| Joint Arrangements |
| January 1, 2019 |
IAS 12 |
| Income Taxes |
| January 1, 2019 |
IAS 23 |
| Borrowing Costs |
| January 1, 2019 |
IAS 19 |
| Employee Benefits |
| January 1, 2019 |
The potential effects of adopting the standards or interpretations issued by IASB and endorsed by FSC on the Company’s financial statements in future periods are summarized as below:
(4) IFRS 16 “Leases” (“IFRS 16”)
The new standard requires lessees to account for all leases under one single accountingmodel (except for short-term or low-value asset lease exemptions), which is for lessees to recognize right-of-use assets and lease liabilities on the consolidated balance sheet and the depreciation expense and interest expense associated with those leases in the consolidated statements of comprehensive income. Lessors’ classificationremains unchanged as operating or finance leases, but additional disclosure informationis required.
(5) IFRIC 23 “Uncertainty Over Income Tax Treatments”
The Interpretation clarifies application of recognition and measurement requirements in IAS 12 “Income Taxes” when there is uncertainty over income tax treatments.
(6) IAS 28 “Investment in Associates and Joint Ventures” (Amendment)
The amendment clarifies that an entity applies IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture before it appliesIAS 28 “Investments in Associates and Joint Ventures” (IAS 28), and in applying IFRS 9, does not take account of any adjustments that arise from applying IAS 28.
20
(7) IFRS 9 “Financial Instruments” (Amendment)
The amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract, to be measured at amortised cost or at fair value through other comprehensive income.
(8) IAS 12 “Income Taxes”
The amendments clarify that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.
(9) IAS 19 “Employee Benefits” (Amendment)
The amendments clarify that when a change in a defined benefit plan is made (such as amendment, curtailment or settlement, etc.), the entity should use the updated assumptions to remeasure its net defined benefit liability or asset.
The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2019. Apart from item (4) explained below, the remaining standards and interpretations have no material impact on the Company’s financial position and performance.
(10)IFRS 16
The Company elects not to reassess whether a contract is, or contains, a lease at the date of initial application (January 1, 2019) in accordance with the transition provision in IFRS 16. The Company is permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17“Leases” and IFRIC 4“Determining whether an Arrangement contains a Lease”. The Company elects not to restate comparative information and applies the standard retrospectively only to contracts that are not completed at the date of initial application in accordance with the transition provision in IFRS 16. Instead, the Company will recognize the cumulative effect of initially applying IFRS 16 on January 1, 2019.
a. For leases that were classified as operating leases applying IAS 17, the Company expects to measure and recognize those leases as lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. On a lease-by-lease basis, the right-of-use asset is measured and recognized at an amount equal to the lease liability (adjusted by the amount of any prepaid lease payments). The Company assesses the cumulative effect at the date of initial application is primarily consisted of a decrease in prepayments amounting to NT$15 million; an increase in right-of-use assets amounting to NT$8,578 million; a decrease in other noncurrent assets-others amounting to NT$2,621 million; a decrease in other payables amounting to NT$40 million; an increase in lease liabilities amounting to NT$6,006 million; a decrease in additional paid-in capital-other amounting to NT$10 million; and a decrease in other components of equity amounting to NT$14 million.
b. The additional disclosures of lessee and lessor required by IFRS 16 will be disclosed in the relevant notes.
21
C. Standards issued by IASB but not yet endorsed by FSC (the effective dates are to be determined by FSC) are listed below:
No. |
| The projects of Standards or Interpretations |
| Effective for annual periods beginning on or after |
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 17 |
| Insurance Contracts |
| January 1, 2021 |
Amendments to IFRS 3 |
| Definition of a Business |
| January 1, 2020 |
Amendments to IAS 1 and 8 |
| Definition of Material |
| January 1, 2020 |
The potential effects of adopting the standards or interpretations issued by IASB but not yet endorsed by FSC on the Company’s financial statements in future periods are summarized as below:
(11)IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures (Amendment)
The amendments address the inconsistency between the requirements in IFRS 10 “Consolidated Financial Statements” (IFRS 10) and IAS 28, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint venture. IFRS 10 requires full profit or loss recognition on the loss of control of a subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 “Business Combinations” (IFRS 3) between an investor and its associate or joint venture is recognized in full. IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The effective date of this amendment has been deferred indefinitely, but early adoption is allowed.
22
(12)IFRS 3 “Business Combinations” - Definition of a Business (Amendment)
The amendments clarify the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.
IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments clarify the minimum requirements for a business; add guidance to help entities assess whether an acquired process is substantive; and narrow the definitions of a business and of outputs; etc.
(13)IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition of Material (Amendment)
The main amendment is to clarify a new definition of material. It states that “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.
The Company is currently evaluating the potential impact of the aforementioned standards and interpretations listed (11) ~(13) to the Company’s financial position and performance, and the related impact will be disclosed when the evaluation is completed.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Statement of Compliance
The Company’s consolidated financial statements were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers (Regulations), IFRSs, IASs, IFRIC and SIC, which are endorsed by FSC (TIFRSs).
(2) Basis of Preparation
The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value.
23
(3) General Description of Reporting Entity
a. Principles of consolidation
Subsidiaries are fully consolidated from the date of acquisition (the date on which the Company obtains control), and continue to be consolidated until the date that such control ceases. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.
A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Total comprehensive income of subsidiaries is attributed to the stockholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
If the Company loses control over a subsidiary, the Company derecognizes the assets and liabilities of the subsidiary, as well as any non-controlling interests previously recorded by the Company. A gain or loss is recognized in profit or loss and is calculated as the difference between: (a) the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and (b) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Any gain or loss previously recognized in the other comprehensive income would be reclassified to profit or loss or transferred directly to retained earnings if required by other TIFRSs. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment.
b. The consolidated entities are as follows:
As ofDecember 31, 2018 and 2017
|
|
|
|
|
|
| ||
|
|
|
|
|
| Percentage of ownership (%) As of December 31, | ||
Investor |
| Subsidiary |
| Business nature |
| 2018 |
| 2017 |
UMC |
| UMC GROUP (USA) |
| IC Sales |
| 100.00 |
| 100.00 |
UMC |
| UNITED MICROELECTRONICS (EUROPE) B.V. |
| Marketing support activities |
| 100.00 |
| 100.00 |
UMC |
| UMC CAPITAL CORP. |
| Investment holding |
| 100.00 |
| 100.00 |
UMC |
| GREEN EARTH LIMITED (GE) |
| Investment holding |
| 100.00 |
| 100.00 |
UMC |
| TLC CAPITAL CO., LTD. (TLC) |
| Venture capital |
| 100.00 |
| 100.00 |
UMC |
| UMC NEW BUSINESS INVESTMENT CORP. (NBI) |
| Investment holding |
| - |
| 100.00 |
UMC |
| UMC INVESTMENT (SAMOA) LIMITED |
| Investment holding |
| 100.00 |
| 100.00 |
UMC |
| FORTUNE VENTURE CAPITAL CORP. (FORTUNE) |
| Consulting and planning for venture capital |
| 100.00 |
| 100.00 |
UMC |
| UMC GROUP JAPAN |
| IC Sales |
| 100.00 |
| 100.00 |
UMC |
| UMC KOREA CO., LTD. |
| Marketing support activities |
| 100.00 |
| 100.00 |
UMC |
| OMNI GLOBAL LIMITED (OMNI) |
| Investment holding |
| 100.00 |
| 100.00 |
UMC |
| SINO PARAGON LIMITED |
| Investment holding |
| 100.00 |
| 100.00 |
UMC |
| BEST ELITE INTERNATIONAL LIMITED (BE) |
| Investment holding |
| 100.00 |
| 96.66 |
UMC, FORTUNE and TLC |
| NEXPOWER TECHNOLOGY CORP. (NEXPOWER) |
| Sales and manufacturing of solar power batteries |
| 93.36 |
| 87.06 |
UMC and FORTUNE |
| WAVETEK MICROELECTRONICS CORPORATION (WAVETEK) |
| Sales and manufacturing of integrated circuits |
| 78.47 |
| 78.47 |
UMC CAPITAL CORP. |
| UMC CAPITAL (USA) |
| Investment holding |
| 100.00 |
| 100.00 |
TLC |
| SOARING CAPITAL CORP. |
| Investment holding |
| 100.00 |
| 100.00 |
SOARING CAPITAL CORP. |
| UNITRUTH ADVISOR (SHANGHAI) CO., LTD. |
| Investment holding and advisory |
| 100.00 |
| 100.00 |
GE |
| UNITED MICROCHIP CORPORATION |
| Investment holding |
| 100.00 |
| 100.00 |
UMC INVESTMENT (SAMOA) LIMITED |
| UMC (BEIJING) LIMITED |
| Marketing support activities |
| - |
| 100.00 |
FORTUNE |
| TERA ENERGY DEVELOPMENT CO., LTD. (TERA ENERGY) |
| Energy technical services |
| 100.00 |
| - |
|
|
|
|
|
|
|
|
|
NBI |
| TERA ENERGY |
| Energy technical services |
| - |
| 100.00 |
NBI |
| UNISTARS CORP. |
| High brightness LED packages |
| - |
| 83.69 |
TERA ENERGY |
| EVERRICH ENERGY INVESTMENT (HK) LIMITED (EVERRICH-HK) |
| Investment holding |
| 100.00 |
| 100.00 |
EVERRICH-HK |
| EVERRICH (SHANDONG) ENERGY CO., LTD. |
| Solar engineering integrated design services |
| 100.00 |
| 100.00 |
OMNI |
| UNITED MICROTECHNOLOGY CORPORATION (NEW YORK) |
| Research and development |
| 100.00 |
| 100.00 |
OMNI |
| UNITED MICROTECHNOLOGY CORPORATION (CALIFORNIA) |
| Research and development |
| 100.00 |
| 100.00 |
OMNI |
| ECP VITA PTE. LTD. |
| Insurance |
| 100.00 |
| 100.00 |
OMNI |
| UMC TECHNOLOGY JAPAN CO., LTD. |
| Semiconductor manufacturing technology development and consulting services |
| 100.00 |
| 100.00 |
WAVETEK |
| WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED (WAVETEK-SAMOA) |
| Investment holding |
| 100.00 |
| 100.00 |
WAVETEK- SAMOA |
| WAVETEK MICROELECTRONICS CORPORATION (USA) |
| Sales and marketing service |
| 100.00 |
| 100.00 |
NEXPOWER |
| SOCIALNEX ITALIA 1 S.R.L. |
| Photovoltaic power plant |
| 100.00 |
| 100.00 |
BE |
| INFOSHINE TECHNOLOGY LIMITED (INFOSHINE) |
| Investment holding |
| 100.00 |
| 100.00 |
INFOSHINE |
| OAKWOOD ASSOCIATES LIMITED (OAKWOOD) |
| Investment holding |
| 100.00 |
| 100.00 |
OAKWOOD |
| HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. (HEJIAN) |
| Sales and manufacturing of integrated circuits |
| 98.14 |
| 100.00 |
HEJIAN |
| UNITEDDS SEMICONDUCTOR (SHANDONG) CO., LTD. |
| Integrated circuits design services |
| 100.00 |
| 100.00 |
UNITED MICROCHIP CORPORATION and HEJIAN |
| UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. |
| Sales and manufacturing of integrated circuits |
| 65.22 |
| 51.02 |
24
(4) Business Combinations and Goodwill
Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at the acquisition date fair value. For the components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation, the acquirer measures at either fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and are classified under administrative expenses.
25
When the Company acquires a business, it assesses the assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 (before January 1, 2018: IAS 39), either in profit or loss or other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred and non-controlling interests, the difference is recognized as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each CGU that is expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or groups of units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purposes and cannot be larger than an operating segment before aggregation.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed, the goodwill associated with the operation disposed is included in the carrying amount of the operation. Goodwill disposed in this circumstance is measured based on the relative values of the operation disposed and the portion of the CGU retained.
(5) Foreign Currency Transactions
The Company’s consolidated financial statements are presented in New Taiwan Dollars (NTD), which is also the parent company’s functional currency. Each entity in the Company determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
26
Transactions in foreign currencies are initially recorded by the Company’s entities at their respective functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency at the closing rates of exchange at the reporting date. Non-monetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.
All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:
a. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
b. Foreign currency derivatives within the scope of IFRS 9 (before January 1, 2018: IAS 39) are accounted for based on the accounting policy for financial instruments.
c. Exchange differences arising on a monetary item that is part of a reporting entity’s net investment in a foreign operation are recognized initially in other comprehensive income and reclassified from equity to profit or loss upon disposal of such investment.
When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
(6) Translation of Foreign Currency Financial Statements
The assets and liabilities of foreign operations are translated into NTD at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average exchange rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized.
27
Onpartial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests inthat foreign operation. On partial disposal of an associate or a joint venture that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.
Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.
(7) Current and Non-Current Distinction
An asset is classified as current when:
a. the Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
b. the Company holds the asset primarily for the purpose of trading;
c. the Company expects to realize the asset within twelve months after the reporting period; or
d. the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
a. the Company expects to settle the liability in normal operating cycle;
b. the Company holds the liability primarily for the purpose of trading;
c. the liability is due to be settled within twelve months after the reporting period; or
d. the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. 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 liabilities are classified as non-current.
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(8) Cash Equivalents
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and with maturity dates that do not present significant risks of changes in value resulting from changes in interest rates, including time deposits with original maturities of three months or less and repurchase agreements collateralized by government bonds and corporate bonds.
(9) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
The Company determines the classification of its financial assets at initial recognition. In accordance with IFRS 9 and the Regulations, financial assets of the Company are classified as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets measured at amortized cost.
Purchase or sale of financial assets and liabilities are recognized using trade date accounting. All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable costs. Financial assets at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the statement of comprehensive income.
Financial Assets
a. Classification and subsequent measurement
i. Financial assets at fair value through profit or loss
Financial assets that are not measured at amortized cost or at fair value through other comprehensive income are recognized initially at fair value and subsequently measured at fair value with changes in fair value recognized in profit or loss.
ii. Financial assets at fair value through other comprehensive income
At initial recognition, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading. When there is a disposal of such equity instrument, accumulated amounts presented in other comprehensive income are not subsequently transferred to profit or loss but are transferred directly to the retained earnings.
29
The debt instruments are measured at fair value through other comprehensive income if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Subsequent changes in the fair value of such financial assets at fair value through other comprehensive income are recognized in other comprehensive income. Before derecognition, impairment gains or losses, interest revenue and foreign exchange gains and losses are recognized in profit or loss. When the financial assets are derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from other comprehensive income to profit or loss as a reclassification adjustment.
iii. Financial assets measured at amortized cost
The financial assets are measured at amortized cost (including cash and cash equivalent, notes, accounts and other receivables and other financial assets) if both of the following conditions are met.
(i) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
(ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition for financial assets measured at amortized cost, interest income, measured by the effective interest (EIR) method amortization process, and impairment losses are recognized during circulation period. Gains and losses are recognized in profit or loss when the financial assets are derecognized.
b. Derecognition of financial assets
A financial asset is derecognized when:
i. the contractual rights to receive cash flows from the asset have expired;
ii. the Company has transferred assets and substantially all the risks and rewards of the asset have been transferred; or
iii. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
30
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or to be received including any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss (for debt instruments) or directly in retained earnings (for equity instruments).
If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the Company allocates the previous carrying amount of the larger financial asset between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts on the date of the transfer. Any cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated that had been recognized in other comprehensive income, is recognized in profit or loss or directly in retained earnings.
c. Impairment policy
The Company measures, at each reporting date, an allowance for expected credit losses (ECLs) for debt instrument investments measured at fair value through other comprehensive income and financial assets measured at amortized cost by assessing reasonable and supportable information including forward-looking information. Where the credit risk on a financial asset has not increased significantly since initial recognition, the loss allowance is measured at an amount equal to 12-month expected credit losses. Where the credit risk on a financial asset has increased significantly since initial recognition, the loss allowance is measured at an amount equal to the lifetime expected credit losses.
For notes, accounts receivable and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. ECLs are measured based on the Company’s historical credit loss experience and customers’ current financial condition, adjusted for forward-looking factors, such as customers’ economic environment.
Financial Liabilities
a. Classification and subsequent measurement
The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.
31
i. Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Excluding changes in own credit risk, gains or losses on the subsequent measurement including interest paid are recognized in profit or loss.
ii. Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the EIR method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR method amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.
b. Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
The summary of significant accounting policies applying in 2017 is as follows:
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
The Company determines the classification of its financial assets at initial recognition. In accordance with IAS 39 and the Regulations, financial assets of the Company are classified as financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets and notes, accounts and other receivables.
32
Purchase or sale of financial assets and liabilities are recognized using trade date accounting. All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement.
Financial Assets
a. Classification and subsequent measurement
i. Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are comprised of financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.
Financial assets acquired for the purpose of selling or repurchasing in the near term, and derivative financial instruments that are not designated as hedging instruments in hedge accounting are classified as financial assets at fair value through profit or loss. Financial assets at fair value through profit or loss are measured at fair value with changes in fair value recognized in profit or loss.
ii. Available-for-sale financial assets
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables. Available-for-sale financial investments are subsequently measured at fair value. Other than impairment losses which are recognized in profit or loss, subsequent measurement of available-for-sale equity instrument financial assets are recognized in other comprehensive income until the investment is derecognized, at which time the cumulative gain or loss is recognized in profit or loss.
If equity instrument investments do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on the balance sheet.
iii. Held-to-maturity financial assets
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Company has the positive intention and ability to hold them to maturity.
33
After initial measurement held-to-maturity financial assets are measured at amortized cost using the effective interest rate (EIR) method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs. The EIR method amortization and impairment, if any, is recognized in profit or loss.
iv. Notes, accounts and other receivables
Notes and accounts receivable are creditors’ rights as a result of sales of goods or services. Other receivables are any receivable not classified as notes and accounts receivable. Notes, accounts and other receivables are initially measured and recognized at their fair values and subsequently measured at amortized cost using the EIR method, less impairment losses. If the effect of discounting is immaterial, the short term notes, accounts and other receivables are measured at their nominal amount.
b. Derecognition of financial assets
A financial asset is derecognized when:
i. the contractual rights to receive cash flows from the asset have expired;
ii. the Company has transferred assets and substantially all the risks and rewards of the asset have been transferred; or
iii. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or to be received including any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.
If thetransferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the Company allocates the previous carrying amount of the larger financial asset between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts on the date of the transfer. Any cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated that had been recognized in other comprehensive income, is recognized in profit or loss.
34
c. Impairment policy
The carrying amount of a financial asset is reduced as a result of impairment, except for accounts receivable for which the carrying amount is reduced through use of an allowanceaccount. When an account receivable is deemed to be uncollectible, it is written off from the allowance account.
i. Notes, accounts and other receivables
The Company first assesses at each reporting date whether objective evidence of impairment exists for notes, accounts and other receivables that are individually significant. If there is objective evidence that an impairment loss has occurred, the amount of impairment loss is assessed individually. For notes, accounts and other receivables other than those mentioned above, the Company groups those assets with similar credit risk characteristics and collectively assesses them for impairment. If, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and recognized through profit or loss. The reversal shall not result in a carrying amount of notes, accounts and other receivables that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed.
ii. Other financial assets
The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred since the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the individual financial asset or a group of financial assets.
For the financial assets carried at amortized cost, the amount of the impairment loss is measured as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. For equity investments classified as available-for-sale, objective evidence of an impairment would include a significant or prolonged decline in the fair value of the investment below its cost. When there is objective evidence of an impairment for available-for-sale equity securities, the full amount of the losses previously recognized in other comprehensive income is reclassified to profit or loss. Impairment losses recognized on equity investments cannot be reversed through profit or loss. Any subsequent increases in their fair value after impairment are recognized in other comprehensive income.
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Financial Liabilities
a. Classification and subsequent measurement
The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.
i. Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on the subsequent measurement including interest paid are recognized in profit or loss.
ii. Financial liabilities carried at amortized cost
Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the EIR method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR method amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.
b. Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
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(10)Cash flow hedges
The Company manages exposures arising from foreign currency exchange risk. With the adoption of IFRS 9 on January 1, 2018, the Company designates a hedging relationship between the hedging instrument and the hedged item with the existence of an economic relationship and determines the hedge ratio to meet the hedge effectiveness. The Company designates certain hedging instruments to partially hedge the foreign currency exchange rate risks associated with certain highly probable forecast transactions. The separate component of equity associated with the hedged item is adjusted to the lower of the following (in absolute amounts):
(i) the cumulative gain or loss on the hedging instrument from inception of the hedge; and
(ii) the cumulative change in fair value (present value) of the expected future cash flows on the hedged item from inception of the hedge.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in other comprehensive income, whereas the ineffective portion of the change in the fair value of the hedging instrument is recognized directly in profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains or losses that were recognized in other comprehensive income are included in the initial cost of the asset or liability.
The Company prospectively discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance when the hedging instrument expires or is sold, terminated or exercised.
(11)Inventories
Inventories are accounted for on a perpetual basis. Raw materials are stated at actual purchase costs, while the work in process and finished goods are stated at standard costs and subsequently adjusted to weighted-average costs at the end of each month. The cost of work in progress and finished goods comprises raw materials, direct labor, other direct costs and related production overheads. Allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. Cost associated with underutilized capacity is expensed as incurred. Inventories are valued at the lower of cost and net realizable value item by item. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
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(12)Investments Accounted For Under the Equity Method
The Company’s investments in associates and joint ventures are accounted for using the equity method other than those that meet the criteria to be classified as non-current assets held for sale.
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the Company that has joint control of the arrangement has rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement where no single party controls the arrangement on its own, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Any difference between the acquisition cost and the Company’s share of the net fair value of the identifiable assets and liabilities of associates and joint ventures is accounted for as follows:
a. Any excess of the acquisition cost over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill and is included in the carrying amount of the investment. Amortization of goodwill is not permitted.
b. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture over the acquisition cost, after reassessing the fair value, is recognized as a gain in profit or loss on the acquisition date.
Under the equity method, the investments in associates and joint ventures are carried on the balance sheet at cost plus post acquisition changes in the Company’s share of profit or loss and other comprehensive income of associates and joint ventures. The Company’s share of changes in associates’ and joint ventures’ profit or loss and other comprehensive income are recognized directly in profit or loss and other comprehensive income, respectively. Distributions received from an associate or a joint venture reduce the carrying amount of the investment. Any unrealized gains and losses resulting from transactions between the Company and the associate or the joint venture are eliminated to the extent of the Company’s interest in the associate or the joint venture.
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Financial statements of associates and joint ventures are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.
Upon an associate’s issuance of new shares, if the Company takes up more shares than its original proportionate holding while maintaining its significant influence over that associate, such increase would be accounted for as an acquisition of an additional equity interest in the associate. Upon an associate’s issuance of new shares, if the Company does not take up proportionate shares and reduces its stockholding percentage while maintaining its significant influence over that associate, a proportionate share of the gain or loss previously recognized in other comprehensive income is reclassified to profit and loss. Any remaining difference will be charged to additional paid-in capital. When a change in equity of an associate does not result from its profit or loss or other comprehensive income, and such changes do not affect the Company’s ownership percentage, the Company recognizes its proportionate share of all related changes in equity. Accordingly, upon disposal of the associate, the Company reclassifies the aforementioned additional paid-in capital to profit or loss on a pro rata basis.
The Companyceases to use the equity method upon loss of significant influence over an associate. Any difference between the carrying amount of the investment in an associate upon loss of significant influence and the fair value of the retained investment plus proceeds from disposal will be recognized in profit or loss. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method and does not remeasure the retained interest.
The Company determines at each reporting date whether there is any objective evidence that the investments in associates and joint ventures are impaired. An impairment loss, being the difference between the recoverable amount of the associate or joint venture and its carrying amount, is recognized in profit or loss in the statement of comprehensive income and forms part of the carrying amount of the investments.
(13)Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any, and any borrowing costs incurred for long-term construction projects are capitalized if the recognition criteria are met. Significant renewals, improvements and major inspections meeting the recognition criteria are treated as capital expenditures, and the carrying amounts of those replaced parts are derecognized. Maintenance and repairs are recognized in expenses as incurred. Any gain or loss arising from derecognition of the assets is recognized in other operating income and expenses.
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Depreciation is calculated on a straight-line basis over the estimatedusefullives. A significant part of an item of property, plant and equipment which has a different useful life from the remainder of the item is depreciated separately.
The depreciation methods, useful lives and residual values for the assets are reviewed at each fiscal year end, and the changes from the previous estimation are recorded as changes in accounting estimates.
Except for land, which is not depreciated, the estimated usefullives of the assets are as follows:
Buildings |
| 20~56 years |
Machinery and equipment |
| 5~11 years |
Transportation equipment |
| 5~7 years |
Furniture and fixtures |
| 1~9 years |
Leasehold improvement |
| The shorter of lease terms or useful lives |
(14)Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets which fail to meet the recognition criteria are not capitalized and the expenditures are reflected in profit or loss in the period incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives are amortized over the useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the CGU level. The assessment of indefinite useful life is reviewed annually to determine whether the indefinite useful life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are recognized in other operating income and expenses.
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Accounting policies of the Company’s intangible assets are summarized as follows:
a. Goodwill arising from business combinations is not amortized, and is tested for impairment annually or more frequently if events or changes in circumstances suggest that the carrying amount may not be recoverable. If an event occurs or circumstances change which indicates that the goodwill is impaired, an impairment loss is recognized. Goodwill impairment losses cannot be reversed once recognized.
b. Software is amortized overthe contract term or estimated useful life (3~6 years) on a straight-line basis.
c. Patent and technology license fee: Upon signing of contract and obtaining the right to intellectual property, any portion attributable to non-cancellable and mutually agreed future fixed license fees for patent and technology is discounted, and recognized as an intangible asset and related liability. The cost of the intangible asset is not revalued once determined on initial recognition, and is amortized over the useful life (5~10 years) on a straight-line basis. Interest expenses from the related liability are recognized and calculated based on the EIR method. Based on the timing of payments, the liability is classified as current and non-current.
d. Others are mainly the intellectual property license fees, amortized over the shorter of the contract term or estimated useful life (3 years) of the related technology on a straight-line basis.
(15)Impairment of Non-Financial Assets
The Company assesses at each reporting date whether there is an indication that an asset in the scope of IAS 36 may be impaired. If any indication exists, the Company completes impairment testing for the CGU to which the individual assets belong. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable amount of an individual asset or a CGU is the higher of its fair value less costs of disposal and its value in use. If circumstances indicate that previously recognized impairment losses may no longer exist or may have decreased at each reporting date, the Company re-assesses the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the asset in prior years.
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A CGU, or group of CGUs, to which goodwill has been allocated is tested for impairment annually at the same time every year, irrespective of whether there is any indication of impairment. Where the carrying amount of a CGU (including the carrying amount of goodwill) exceeds its recoverable amount, the CGU is considered impaired. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the CGU (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods.
The recognition or reversal of impairment losses is classified as other operating income and expenses.
(16)Bonds
Convertible bonds
UMC evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, UMC assesses if the economic characteristics and risks of the put and call options embedded in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.
For the liability component excluding the derivatives, its fair value is determined based on the effective interest rate applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost using the EIR method before the instrument is converted or settled. For the embedded derivative that is not closely related to the host contract, it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies as an equity component. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 (before January 1, 2018: IAS 39).
If the convertible bondholders exercise their conversion right before maturity, UMC shall adjust the carrying amount of the liability component. The adjusted carrying amount of the liability component at conversion and the carrying amount of equity component are credited to common stock and additional paid-in capital-premiums. No gain or loss is recognized upon bond conversion.
42
In addition, the liability component of convertible bonds is classified as a current liability if within 12 months the bondholders may exercise the put right. After the put right expires, the liability component of the convertible bonds should be reclassified as a non-current liability if it meets the definition of a non-current liability in all other respects.
(17)Post-Employment Benefits
Under defined contribution pension plans, the contribution payable to the plan in exchange for the service rendered by an employee during a period shall be recognized as an expense. The contribution payable, after deducting any amount already paid, is recognized as a liability.
Under defined benefit pension plans, the net defined benefit liability (asset) shall be recognized as the amount of the present value of the defined benefit obligation, deducting the fair value of any plan assets and adjusting for any effect of the asset ceiling. Service cost and net interest on the net defined benefit liability (asset) are recognized as expenses in the period of service. Remeasurement of the net defined benefit liability (asset), which comprises actuarial gains and losses, the return on plan assets and any change in the effect of the asset ceiling, excluding any amounts included in net 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 shall not be reclassified to profit or loss in a subsequent period.
(18)Government Grants
In accordance with IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”, the Company recognizes the government grants when there is reasonable assurance that such grants will be received and the conditions attaching to them will be complied with.
An asset related government grant is recorded as deferred income and recognized in profit or loss on a straight-line basis over the useful lives of the assets. An expense related government grant is recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grant is intended to compensate. A government grant that compensates for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs is recognized in profit or loss when it becomes receivable.
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(19)Treasury Stock
UMC’s own equity instruments repurchased (treasury shares) are recognized at repurchase cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.
(20)Share-Based Payment Transactions
The cost of equity-settled transactions between the Company and its employees is measured at the fair value using an appropriate pricing model by reference to the market price of the equity instruments on the grant date.
The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the periods in which the performance and/or service conditions are being fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date reflects the extent to which the vesting period has passed and the Company’s best estimate of the quantity of equity instruments that will ultimately vest. The charge to profit or loss for a period represents the movement in cumulative expense recognized between the beginning and the end of that period.
No expense will be recognized for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it fully vests on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award substitutes for the cancelled award and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award.
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(21)Revenue Recognition
Revenue from Contracts with Customers
The Company recognizes revenue from contracts with customers by applying the following steps of IFRS 15:
(a) | Identify the contract with a customer; |
(b) | Identify the performance obligations in the contract; |
(c) | Determine the transaction price; |
(d) | Allocate the transaction price to the performance obligations in the contract; and |
(e) | Recognize revenue when (or as) the entity satisfies its performance obligations |
Revenues on the Company’s contracts with customers for the sales of wafers and joint technology development are recognized as the Company satisfies its performance obligations to customers upon transfer of control of promised goods and services. The Company recognizes revenue at transaction price that are determined using contractual prices reduced by sales returns and allowances which the Company estimates based on historical experience having determined that a significant reversal in the amount of cumulative revenue recognized are not probable to occur. The Company recognizes refund liabilities for estimated sales return and allowances based on the customer complaints, historical experience, and other known factors.
The Company recognizes accounts receivable when the Company transfers control of the goods or services to customers and has a right to an amount of consideration that is unconditional. Such accounts receivable are short term and do not contain a significant financing component. For certain contracts that do not provide the Company unconditional rights to the consideration, and the transfer of controls of the goods or services has been satisfied, the Company recognizes contract assets and revenues.
Consideration received from customers prior to the Company having satisfied its performance obligations are accounted for as contract liabilities which are transferred to revenue after the performance obligations are satisfied. The Company recognizes costs to fulfill a contract when the costs relate directly to the contract, generate or enhance resources to be used to satisfy performance obligations in the future, and are expected to be recovered. The costs and revenues are recognized when the Company satisfies its performance obligations to customers upon transfer of control of promised goods and services.
Interest income
For financial assets measured at amortized cost and financial assets at fair value through other comprehensive income, interest income is recorded using the EIR method and recognized in profit or loss.
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Dividends
Revenue is recognized when the Company’s right to receive the dividends is established, which is generally when stockholders approve the dividend.
The summary of significant accounting policies applying in 2017 is as follows:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The specific criteria described below must also be met before revenue is recognized.
Sales revenue
The Company manufactures semiconductors for creditworthy customers based on their design specifications, pursuant to manufacturing agreements and/or purchase orders at contractual prices. The Company ships wafers mainly under the trade term, Free Carrier (FCA), through which the title and risk of loss for the wafers are transferred to the customers upon delivery to carriers approved by the customers. Sales revenue is recognized at this point, having also fulfilled all of the following criteria pursuant to IAS 18, paragraph 14:
i. the significant risks and rewards of ownership of the goods have been transferred to the customer;
ii. neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold have been retained;
iii. the amount of revenue can be measured reliably;
iv. it is probable that the economic benefits associated with the transaction will flow to the entity; and
v. the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Sales revenue is measured at the fair value of the consideration received or receivable, net of sales returns and discounts, which are estimated based on customer complaints, historical experience and other known factors. Sales returns and discounts are recorded in the same period in which sales are made.
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Interest income
For financial assets measured at amortized cost (including held-to-maturity financial assets) and financial assets at fair value through profit or loss, interest income is recorded using the effective interest rate and recognized in profit or loss.
(22)Income Tax
Income tax expense (benefit) is the aggregate amount of current income tax and deferred income tax included in the determination of profit or loss for the period.
Current income tax
Current income tax assets and liabilities for the current period and prior periods are measured using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity rather than profit or loss.
The additional income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the stockholders’ meeting.
Deferred income tax
Deferred income tax is determined using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in financial statements at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
a. When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
b. In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
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Deferred tax assets are recognized for all deductible temporary differences, the carryforward of unused tax losses and unused tax credits, to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and the carryforward of unused tax losses and unused tax credits can be utilized, except:
a. | Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; |
b. | In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. |
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is not recognized in profit or loss but rather in other comprehensive income or directly in equity. Deferred tax assets are reassessed and recognized at each reporting date. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
Deferred tax assets and liabilities offset each other, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities, and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at the acquisition date, might be realized and recognized subsequently as follows:
a. | Acquired deferred tax benefits recognized within the measurement period that result from new information about facts and circumstances that existed at the acquisition date shall be applied to reduce the carrying amount of any goodwill related to that acquisition. If the carrying amount of that goodwill is nil, any remaining deferred tax benefits shall be recognized in profit or loss; |
b. | All other acquired deferred tax benefits realized shall be recognized in profit or loss, other comprehensive income or equity. |
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(23)Earnings per Share
Earnings per share is computed according to IAS 33, “Earningsper Share”. Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the current reporting period. Diluted earnings per share is computed by taking basic earnings per share into consideration plus additional ordinary shares that would have been outstanding if the dilutive share equivalents had been issued. Net income is also adjusted for interest and other income or expenses derived from any underlying dilutive share equivalents. The weighted-average of outstanding shares is adjusted retroactively for stock dividends and employee stock compensation issues.
5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, the accompanying disclosures and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that would have a significant risk for a material adjustment to the carrying amounts of assets or liabilities within the next fiscal year are discussed below.
The Company bases its assumptions and estimates on information available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(1) The Fair Value of Level 3 Financial Instruments
Where the fair values of the level 3 financial assets and financial liabilities recorded on the balance sheet cannot be derived from active markets, they are determined by the application of an appropriate valuation method including the income approach and market approach. The valuation of these financial assets involves significant judgment in the preparation of cash flow forecasts, a selection of comparable companies or equity transaction prices, as well as the application of assumptions such as discount rates, discounts for lack of marketability, and valuation multiples, etc. Changes in assumptions about these factors could affect the reported fair value of the financial assets. Please refer to Note 12 for more details.
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(2) Inventories
Inventories are valued at the lower of cost and net realizable value item by item. Netrealizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Please refer to Note 6(4). Costs of completion include direct labor and overhead, including depreciation and maintenance of production equipment, indirect labor costs, indirect material costs, supplies, utilities and royalties that is expected to be incurred at normal production level. The Company estimates normal production level taking into account loss of capacity resulting from planned maintenance, based on historical experience and current production capacity.
(3) Post-Employment Benefits
Defined benefit costs and the present value of the defined benefit obligation for a pension plan are determined using the projected unit credit method. An actuarial valuation involves making various assumptions, which include the determination of the discount rate, future salary increase rate, mortality rate, etc., and may differ from actual developments in the future. In determining the appropriate discount rate, management considers the interest rates of the government bonds extrapolated from maturity corresponding to the expected duration of the defined benefit obligation. As for the rate of future salary increase, management takes account of past experiences, comparisons within the industry and the geographical region, inflation and the discount rate. Due to the complexity of the actuarial valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. The assumptions used are disclosed in Note 6(14).
(4) Impairment of Property, Plant and Equipment
At each reporting date or whenever events indicate that the asset’s value has declined or significant changes in the market with an adverse effect have taken place, the Company assesses whether there is an indication that an asset in the scope of IAS 36 may be impaired. If any indication exists, the Company completes impairment testing for the CGU to which the individual assets belong. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable amount of an individual asset or CGU is the higher of fair value less costs of disposal and its value in use. The fair value less costs of disposal is based on best information available to reflect the amount that an entity could obtain from the disposal of the asset in an orderly transaction between market participants, after deducting the costs of disposal. The value in use is measured at the net present value of the future cash flows the entity expects to derive from the asset or CGU. Cash flow projection involves subjective judgments and estimates which include the estimated useful lives of property, plant and equipment, capacity that generates future cash flows, capacity of physical output, potential fluctuations of economic cycle in the industry and the Company’s operating situation.
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(5) Income Tax
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and different interpretations of tax regulations made by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Company.
Deferred tax assets are recognized for all carryforward of unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences. Please refer to Note 6(24) for more details on unrecognized deferred tax assets.
6. CONTENTS OF SIGNIFICANT ACCOUNTS
(1) Cash andCash Equivalents
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Cash on hand |
| $6,091 |
| $4,360 |
Checking and savings accounts |
| 25,021,265 |
| 21,699,357 |
Time deposits |
| 49,139,549 |
| 50,711,803 |
Repurchase agreements collateralized by government and corporate bonds |
| 9,494,834 |
| 9,259,052 |
Total |
| $83,661,739 |
| $81,674,572 |
(2) Financial Assets at Fair Value through Profit or Loss
|
|
| ||
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 (Note) |
Financial assets mandatorily measured at fair value through profit or loss |
|
|
|
|
Common stocks |
| $6,814,915 |
|
|
Preferred stocks |
| 2,998,228 |
|
|
Funds |
| 2,030,688 |
|
|
Convertible Bonds |
| 236,905 |
|
|
Forward contracts |
| 3,561 |
|
|
Total |
| $12,084,297 |
|
|
Designated financial assets at fair value through profit or loss |
|
|
|
|
Convertible bonds |
|
|
| $213,180 |
|
|
|
|
|
Financial assets held for trading |
|
|
|
|
Common stocks |
|
|
| 434,630 |
Preferred stocks |
|
|
| 228,508 |
Option |
|
|
| 31,605 |
Subtotal |
|
|
| 694,743 |
Total |
|
|
| $907,923 |
|
|
|
|
|
Current |
| $528,450 |
| $716,918 |
Noncurrent |
| 11,555,847 |
| 191,005 |
Total |
| $12,084,297 |
| $907,923 |
51
On June 29, 2018, the Board of Directors of UMC resolved to exercise the call option of ajoint venture agreement betweenFUJITSU SEMICONDUCTOR LIMITED (FSL) and UMC. The transaction was approved by the Taiwan authorities on September 26, 2018. Upon obtaining other relevant authority’s approval of the investment application, the Company anticipates to investNT$15.3 billion foracquiring remaining shares of MIE FUJITSU SEMICONDUCTOR LIMITED (MIFS),representing ownership interest of 84.1% and making MIFS a wholly-owned subsidiary of the Company. The change of the fair value for the call option is recorded in profit or loss.
Note: The Company adopted IFRS 9 on January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9. Please refer to Note 6(6) and Note 6(7) for available-for-sale financial assets, non-current and financial assets measured at cost, non-current, respectively as of December 31, 2017.
(3) Accounts Receivable, Net
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Accounts receivable |
| $23,784,141 |
| $21,910,146 |
Less: allowance for sales returns and discounts |
| - |
| (994,151) |
Less: loss allowance |
| (48,152) |
| (39,578) |
Net |
| $23,735,989 |
| $20,876,417 |
52
Aging analysis of accounts receivable, net:
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Neither past due nor impaired |
| $18,271,304 |
| $15,496,207 |
Past due but not impaired: |
|
|
|
|
≤ 30 days |
| 3,407,690 |
| 4,268,772 |
31 to 60 days |
| 739,054 |
| 444,401 |
61 to 90 days |
| 545,366 |
| 138,178 |
91 to 120 days |
| 365,007 |
| 124,332 |
≥ 121 days |
| 407,568 |
| 404,527 |
Subtotal |
| 5,464,685 |
| 5,380,210 |
Total |
| $23,735,989 |
| $20,876,417 |
Movement on individually evaluated loss allowance:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Beginning balance |
| $39,578 |
| $86,595 |
Net charge for the period |
| 8,574 |
| (47,017) |
Ending balance |
| $48,152 |
| $39,578 |
The collection periods for third party domestic sales and third party overseas sales were month-end 30~60 days and net 30~120 days, respectively.
After adopting IFRS 9, an impairment analysis is performed at each reporting date to measure ECLs of accounts receivable. For receivable past due within 60 days, including not past due, the Company estimates a provision rate to calculate ECLs. A provision rate is determined based on the Company’s historical credit loss experience and customers’ current financial condition, adjusted for forward-looking factors, such as customers’ economic environment. For the receivable past due over 60 days, the Company applies the aforementioned provision rate and also individually assesses whether to recognize additional expected credit losses by considering customer’s operating situation and debt-paying ability.
The impairment losses assessed individually as of December 31, 2017 primarily resulted from the financial difficulties of the counterparties, and the amounts recognized were the difference between the carrying amount of the accounts receivable and the present value of expected collectable amounts. The Company has no collateral with respect to those accounts receivable.
53
(4) Inventories, Net
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Raw materials |
| $3,766,056 |
| $2,354,410 |
Supplies and spare parts |
| 3,133,737 |
| 3,007,669 |
Work in process |
| 10,034,488 |
| 11,492,450 |
Finished goods |
| 1,268,838 |
| 1,402,971 |
Total |
| $18,203,119 |
| $18,257,500 |
a. For the years ended December 31, 2018 and 2017, the Company recognized NT$123,795 million and NT$118,252 million, respectively, in operating cost, of which NT$1,698million and NT$2,256 million were related to write-down of inventories.
b. None of the aforementioned inventories were pledged.
(5) Financial Assets at Fair Value through Other Comprehensive Income, Non-Current
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 (Note) |
Equity instruments |
|
|
|
|
Common stocks |
| $11,401,451 |
|
|
Preferred stocks |
| 184,026 |
|
|
Total |
| $11,585,477 |
|
|
These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as fair value through other comprehensive income. Dividends from equity instruments designated as fair value through other comprehensive income were NT$268 million for the year ended December 31, 2018. All the amounts are related to investments held at the end of the reporting period.
Note: The Company adopted IFRS 9 on January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9. Please refer to Note 6(6) and Note 6(7) for available-for-sale financial assets, non-current and financial assets measured at cost, non-current , respectively as of December 31, 2017.
(6) Available-For-Sale Financial Assets, Non-Current
|
| As of December 31, 2017 |
Common stocks |
| $17,653,513 |
Preferred stocks |
| 1,865,410 |
Funds |
| 1,117,409 |
Total |
| $20,636,332 |
54
(7) Financial Assets Measured at Cost, Non-Current
|
| As of December 31, 2017 |
Common stocks |
| $473,134 |
Preferred stocks |
| 1,657,388 |
Funds |
| 87,950 |
Total |
| $2,218,472 |
Since these financial assets mostly consisted of non-publicly traded stocks and private venture funds, for which the fair values could not be reliably measured due to lack of sufficient financial information available, the Company measured these financial assets at cost.
(8) Investments Accounted For Under the Equity Method
a. Details of investments accounted for under the equity method are as follows:
|
|
| ||||||
|
| As of December 31, | ||||||
|
| 2018 |
| 2017 | ||||
Investee companies |
| Amount |
| Percentage of ownership or voting rights |
| Amount |
| Percentage of ownership or voting rights |
Listed companies |
|
|
|
|
|
|
|
|
CLIENTRON CORP. |
| $249,762 |
| 22.39 |
| $265,327 |
| 22.39 |
FARADAY TECHNOLOGY CORP. (FARADAY) (Note A) |
| 1,477,167 |
| 13.78 |
| 1,669,693 |
| 13.78 |
|
|
|
|
|
|
|
|
|
Unlisted companies |
|
|
|
|
|
|
|
|
WINAICO SOLAR PROJEKT 1 GMBH (Note B) |
| - |
| 50.00 |
| - |
| 50.00 |
MTIC HOLDINGS PTE. LTD. |
| 3,026 |
| 45.44 |
| 50,743 |
| 45.44 |
YUNG LIINVESTMENTS, INC. |
| 2,213 |
| 45.16 |
| 42,173 |
| 45.16 |
WINAICO IMMOBILIEN GMBH (Note B) |
| - |
| 44.78 |
| - |
| 44.78 |
UNITECH CAPITAL INC. |
| 568,005 |
| 42.00 |
| 732,267 |
| 42.00 |
TRIKNIGHT CAPITAL CORPORATION |
| 1,520,575 |
| 40.00 |
| 894,809 |
| 40.00 |
HSUN CHIEH INVESTMENT CO., LTD. |
| 3,419,430 |
| 36.49 |
| 3,930,434 |
| 36.49 |
YANN YUAN INVESTMENT CO., LTD. |
| 2,642,543 |
| 30.87 |
| 2,810,625 |
| 30.87 |
HSUN CHIEH CAPITAL CORP. |
| 161,319 |
| 30.00 |
| 176,911 |
| 30.00 |
VSENSE CO., LTD. |
| 31,544 |
| 26.89 |
| 78,294 |
| 28.63 |
UNITED LED CORPORATION HONG KONG LIMITED |
| 167,953 |
| 25.14 |
| 216,707 |
| 25.14 |
TRANSLINK CAPITAL PARTNERS I, L.P. (Note C) |
| 120,440 |
| 10.38 |
| 108,925 |
| 10.38 |
SHANDONG HUAHONG ENERGY INVEST CO., INC. (SHANDONG HUAHONG)(Note B) |
| - |
| - |
| - |
| 50.00 |
CTC CAPITAL PARTNERS I, L.P. |
| - |
| - |
| 32 |
| 31.40 |
Total |
| $10,363,977 |
|
|
| $10,976,940 |
|
|
55
Note A: Beginning from June 2015, the Company accounts for its investment in FARADAY as an associate given the fact that the Company obtained the ability to exercise significant influence over FARADAY through representation on its Board of Directors.
Note B: SHANDONG HUAHONG, WINAICO SOLAR PROJEKT 1 GMBH and WINAICO IMMOBILIEN GMBH are joint ventures to the Company.
Note C: The Company follows international accounting practices in equity accounting for limited partnerships and uses the equity method to account for these investees.
The carrying amount of investments accounted for using the equity method for which there are published price quotations amounted to NT$1,727 million and NT$1,935 million, as of December 31, 2018 and 2017, respectively. The fair value of these investments were NT$1,621 million and NT$2,142million, as of December 31, 2018 and 2017, respectively.
Certain investments accounted for under the equity method were audited by other independent accountants. Shares of profit or loss of these associates and joint ventures amounted toNT$(751) million and NT$308 million for the years ended December 31, 2018 and 2017, respectively. Share of other comprehensive income (loss) of these associates and joint ventures amounted toNT$(225) million andNT$1,307 million for the years ended December 31, 2018 and 2017, respectively. The balances of investments accounted for under the equity method wereNT$8,714 million and NT$8,998 million as ofDecember 31, 2018 and 2017,respectively.
None of the aforementioned associates and joint ventures were pledged.
b. Financial information of associates and joint ventures:
There is no individually significant associate or joint venture for the Company. When an associate or a joint venture is a foreign operation, and the functional currency of the foreign entity is different from the Company, an exchange difference arising from translation of the foreign entity will be recognized in other comprehensive income (loss). Such exchange differences recognized in other comprehensive income (loss) in the financial statements for the years ended December 31, 2018 and 2017 were NT$18 million and NT$46 million, respectively,which were not included in the following table.
56
(i) The aggregate amount of the Company’s share of its associates that are accounted for using the equity method was as follows:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Income(loss)from continuing operations |
| $(667,701) |
| $196,714 |
Income(loss)from discontinued operations after income tax |
| - |
| 80,248 |
Other comprehensive income (loss) |
| (476,326) |
| 1,270,066 |
Total comprehensive income (loss) |
| $(1,144,027) |
| $1,547,028 |
(ii) The aggregate amount of the Company’s share of its joint ventures that are accounted for using the equity method were both nil for the years endedDecember 31, 2018 and 2017.
c. One of UMC’s associates, HSUN CHIEH INVESTMENT CO., LTD., held 441 million shares of UMC’s stock as of December 31, 2018 and 2017. Another associate, YANN YUAN INVESTMENT CO., LTD., held 172 million shares of UMC’s stock as ofDecember 31, 2018 and 2017.
(9) Property, Plant and Equipment
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Land |
| $1,314,402 |
| $1,314,402 |
Buildings |
| 19,841,058 |
| 21,112,807 |
Machinery and equipment |
| 139,213,317 |
| 160,497,062 |
Transportation equipment |
| 20,921 |
| 18,751 |
Furniture and fixtures |
| 1,908,214 |
| 2,038,816 |
Leasehold improvement |
| 3,869 |
| 4,353 |
Construction in progress and equipment awaiting inspection |
| 10,544,814 |
| 20,755,490 |
Net |
| $172,846,595 |
| $205,741,681 |
57
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land |
| Buildings |
| Machinery and equipment |
| Transportation equipment |
| Furniture and fixtures |
| Leasehold improvement |
| Construction in progress and equipment awaiting inspection |
| Total |
As of January 1, 2018 |
| $1,314,402 |
| $38,073,660 |
| $826,268,919 |
| $75,782 |
| $7,675,798 |
| $52,557 |
| $20,761,439 |
| $894,222,557 |
Additions |
| - |
| - |
| - |
| - |
| - |
| - |
| 17,579,689 |
| 17,579,689 |
Disposals |
| - |
| (64,878) |
| (2,330,437) |
| (18,363) |
| (40,199) |
| - |
| - |
| (2,453,877) |
Disposal of subsidiaries |
| - |
| - |
| (224,895) |
| - |
| (6,515) |
| (2,226) |
| - |
| (233,636) |
Transfers and reclassifications |
| - |
| 375,854 |
| 27,447,023 |
| 8,884 |
| 433,665 |
| 2,049 |
| (27,693,591) |
| 573,884 |
Exchange effect |
| - |
| (78,334) |
| 2,527,895 |
| 52 |
| (5,848) |
| 1,069 |
| (96,774) |
| 2,348,060 |
As of December 31, 2018 |
| $1,314,402 |
| $38,306,302 |
| $853,688,505 |
| $66,355 |
| $8,056,901 |
| $53,449 |
| $10,550,763 |
| $912,036,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land |
| Buildings |
| Machinery and equipment |
| Transportation equipment |
| Furniture and fixtures |
| Leasehold improvement |
| Construction in progress and equipment awaiting inspection |
| Total |
As of January 1, 2017 |
| $1,314,402 |
| $37,042,323 |
| $785,442,975 |
| $78,314 |
| $6,826,957 |
| $69,245 |
| $45,048,631 |
| $875,822,847 |
Additions |
| - |
| - |
| - |
| - |
| - |
| - |
| 31,140,639 |
| 31,140,639 |
Disposals |
| - |
| - |
| (3,200,814) |
| (5,774) |
| (40,115) |
| (14,785) |
| - |
| (3,261,488) |
Transfers and reclassifications |
| - |
| 1,479,439 |
| 55,836,583 |
| 4,268 |
| 924,252 |
| 1,534 |
| (54,921,519) |
| 3,324,557 |
Exchange effect |
| - |
| (448,102) |
| (11,809,825) |
| (1,026) |
| (35,296) |
| (3,437) |
| (506,312) |
| (12,803,998) |
As of December 31, 2017 |
| $1,314,402 |
| $38,073,660 |
| $826,268,919 |
| $75,782 |
| $7,675,798 |
| $52,557 |
| $20,761,439 |
| $894,222,557 |
Accumulated Depreciation and Impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land |
| Buildings |
| Machinery and equipment |
| Transportation equipment |
| Furniture and fixtures |
| Leasehold improvement |
| Construction in progress and equipment awaiting inspection |
| Total |
As of January 1, 2018 |
| $- |
| $16,960,853 |
| $665,771,857 |
| $57,031 |
| $5,636,982 |
| $48,204 |
| $5,949 |
| $688,480,876 |
Depreciation |
| - |
| 1,535,409 |
| 47,871,174 |
| 6,080 |
| 533,628 |
| 2,298 |
| - |
| 49,948,589 |
Disposals |
| - |
| (57,812) |
| (2,286,359) |
| (17,963) |
| (25,467) |
| - |
| - |
| (2,387,601) |
Disposal of subsidiaries |
| - |
| - |
| (180,843) |
| - |
| (5,264) |
| (2,014) |
| - |
| (188,121) |
Transfers and reclassifications |
| - |
| 297 |
| (3,164) |
| - |
| 2,867 |
| - |
| - |
| - |
Exchange effect |
| - |
| 26,497 |
| 3,302,523 |
| 286 |
| 5,941 |
| 1,092 |
| - |
| 3,336,339 |
As of December 31, 2018 |
| $- |
| $18,465,244 |
| $714,475,188 |
| $45,434 |
| $6,148,687 |
| $49,580 |
| $5,949 |
| $739,190,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Land |
| Buildings |
| Machinery and equipment |
| Transportation equipment |
| Furniture and fixtures |
| Leasehold improvement |
| Construction in progress and equipment awaiting inspection |
| Total |
As of January 1, 2017 |
| $- |
| $15,612,462 |
| $629,903,740 |
| $56,356 |
| $5,198,998 |
| $61,938 |
| $5,949 |
| $650,839,443 |
Depreciation |
| - |
| 1,492,606 |
| 48,961,521 |
| 5,639 |
| 502,971 |
| 2,383 |
| - |
| 50,965,120 |
Disposals |
| - |
| - |
| (3,172,320) |
| (5,774) |
| (39,914) |
| (12,742) |
| - |
| (3,230,750) |
Transfers and reclassifications |
| - |
| - |
| (7,563) |
| 1,587 |
| 5,976 |
| - |
| - |
| - |
Exchange effect |
| - |
| (144,215) |
| (9,913,521) |
| (777) |
| (31,049) |
| (3,375) |
| - |
| (10,092,937) |
As of December 31 , 2017 |
| $- |
| $16,960,853 |
| $665,771,857 |
| $57,031 |
| $5,636,982 |
| $48,204 |
| $5,949 |
| $688,480,876 |
58
Please refer to Note 8 for property, plant and equipment pledged as collateral.
(10)Intangible Assets
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Goodwill |
| $15,012 |
| $15,188 |
Software |
| 524,155 |
| 410,712 |
Patents and technology license fees |
| 1,668,218 |
| 2,102,561 |
Others |
| 784,419 |
| 1,259,048 |
Net |
| $2,991,804 |
| $3,787,509 |
Cost:
|
| Goodwill |
| Software |
| Patents and technology license fees |
| Others |
| Total |
As of January 1, 2018 |
| $15,188 |
| $1,080,726 |
| $4,687,751 |
| $3,565,705 |
| $9,349,370 |
Additions |
| - |
| - |
| 214,278 |
| 612,253 |
| 826,531 |
Disposals |
| - |
| (422,591) |
| (179,418) |
| (987,841) |
| (1,589,850) |
Disposal of subsidiaries |
| (176) |
| - |
| - |
| - |
| (176) |
Reclassifications |
| - |
| 474,127 |
| - |
| - |
| 474,127 |
Exchange effect |
| - |
| (6,458) |
| (210,982) |
| (1) |
| (217,441) |
As of December 31, 2018 |
| $15,012 |
| $1,125,804 |
| $4,511,629 |
| $3,190,116 |
| $8,842,561 |
59
|
| Goodwill |
| Software |
| Patents and technology license fees |
| Others |
| Total |
As of January 1, 2017 |
| $15,188 |
| $903,993 |
| $4,534,340 |
| $3,429,640 |
| $8,883,161 |
Additions |
| - |
| 3,566 |
| 38,928 |
| 1,145,110 |
| 1,187,604 |
Disposals |
| - |
| (95,505) |
| - |
| (1,009,051) |
| (1,104,556) |
Reclassifications |
| - |
| 278,650 |
| - |
| - |
| 278,650 |
Exchange effect |
| - |
| (9,978) |
| 114,483 |
| 6 |
| 104,511 |
As of December 31, 2017 |
| $15,188 |
| $1,080,726 |
| $4,687,751 |
| $3,565,705 |
| $9,349,370 |
Accumulated Amortization and Impairment:
|
| Goodwill |
| Software |
| Patents and technology license fees |
| Others |
| Total |
As of January 1, 2018 |
| $- |
| $670,014 |
| $2,585,190 |
| $2,306,657 |
| $5,561,861 |
Amortization |
| - |
| 357,624 |
| 468,296 |
| 1,086,882 |
| 1,912,802 |
Disposals |
| - |
| (422,591) |
| (179,418) |
| (987,841) |
| (1,589,850) |
Exchange effect |
| - |
| (3,398) |
| (30,657) |
| (1) |
| (34,056) |
As of December 31, 2018 |
| $- |
| $601,649 |
| $2,843,411 |
| $2,405,697 |
| $5,850,757 |
|
| Goodwill |
| Software |
| Patents and technology license fees |
| Others |
| Total |
As of January 1, 2017 |
| $- |
| $433,537 |
| $2,143,372 |
| $2,217,949 |
| $4,794,858 |
Amortization |
| - |
| 337,376 |
| 483,940 |
| 1,097,754 |
| 1,919,070 |
Disposals |
| - |
| (95,505) |
| - |
| (1,009,051) |
| (1,104,556) |
Exchange effect |
| - |
| (5,394) |
| (42,122) |
| 5 |
| (47,511) |
As of December 31, 2017 |
| $- |
| $670,014 |
| $2,585,190 |
| $2,306,657 |
| $5,561,861 |
The amortization amounts of intangible assets are as follows:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Operating costs |
| $758,050 |
| $799,215 |
Operating expenses |
| $1,154,752 |
| $1,119,855 |
60
(11)Short-Term Loans
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Unsecured bank loans |
| $7,780,552 |
| $19,159,298 |
Unsecured other loans |
| 5,323,256 |
| 6,286,242 |
Total |
| $13,103,808 |
| $25,445,540 |
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Interest rates applied |
| 0.00%~4.55% |
| 0.00%~4.35% |
The Company’s unused short-term lines of credit amounted toNT$77,658million and NT$62,057 million as of December 31, 2018 and 2017, respectively.
(12)Bonds Payable
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Unsecured domestic bonds payable |
| $23,700,000 |
| $31,200,000 |
Unsecured convertible bonds payable |
| 18,196,332 |
| 18,196,332 |
Less: Discounts on bonds payable |
| (518,150) |
| (878,701) |
Total |
| 41,378,182 |
| 48,517,631 |
Less: Current portion |
| (2,499,235) |
| (24,841,770) |
Net |
| $38,878,947 |
| $23,675,861 |
A. UMC issued domestic unsecured corporate bonds. The terms and conditions of the bonds were as follows:
|
|
|
|
|
|
|
|
|
Term |
| Issuance date |
| Issued amount |
| Coupon rate |
| Repayment |
Seven-year |
| In early June 2012 |
| NT$2,500 million |
| 1.63% |
| Interest will be paid annually and the principal will be repayable in June 2019 upon maturity. |
Five-year |
| In mid-March 2013 |
| NT$7,500 million |
| 1.35% |
| Interest will be paid annually and the principal has been fully repaid in March 2018. |
Seven-year |
| In mid-March 2013 |
| NT$2,500 million |
| 1.50% |
| Interest will be paid annually and the principal will be repayable in March 2020 upon maturity. |
Seven-year |
| In mid-June 2014 |
| NT$2,000 million |
| 1.70% |
| Interest will be paid annually and the principal will be repayable in June 2021 upon maturity. |
Ten-year |
| In mid-June 2014 |
| NT$3,000 million |
| 1.95% |
| Interest will be paid annually and the principal will be repayable in June 2024 upon maturity. |
Five-year |
| In late March 2017 |
| NT$6,200 million |
| 1.15% |
| Interest will be paid annually and the principal will be repayable in March 2022 upon maturity. |
Seven-year |
| In late March 2017 |
| NT$2,100 million |
| 1.43% |
| Interest will be paid annually and the principal will be repayable in March 2024 upon maturity. |
Five-year |
| In early October 2017 |
| NT$2,000 million |
| 0.94% |
| Interest will be paid annually and the principal will be repayable in October 2022 upon maturity. |
Seven-year |
| In early October 2017 |
| NT$3,400 million |
| 1.13% |
| Interest will be paid annually and the principal will be repayable in October 2024 upon maturity. |
61
B. On May 18, 2015, UMC issued SGX-ST listed currency linked zero coupon convertible bonds. The terms and conditions of the bonds were as follows:
a. Issue Amount: US$600 million
b. Period: May 18, 2015 ~ May 18, 2020 (Maturity date)
c. Redemption:
i. UMC may redeem the bonds, in whole or in part, after 3 years of the issuance and prior to the maturity date, at the principal amount of the bonds with an interest calculated at the rate of -0.25% per annum (the Early Redemption Amount) if the closing price of the ordinary shares of UMC on the TWSE, for a period of 20 out of 30 consecutive trading days, the last of which occurs not more than 5 days prior to the date upon which notice of such redemption is published, is at least 125% of the conversion price. The Early Redemption Price will be converted into NTD based on the Fixed Exchange Rate (NTD 30.708=USD 1.00), and this fixed NTD amount will be converted using the prevailing rate at the time of redemption for payment in USD.
62
ii. UMC may redeem the bonds, in whole, but not in part, at the Early Redemption Amount if at least 90% in principal amount of the bonds has already been converted, redeemed or repurchased and cancelled.
iii. UMC may redeem all, but not part, of the bonds, at the Early Redemption Amount at any time, in the event of certain changes in the R.O.C.’s tax rules which would require UMC to gross up for payments of principal, or to gross up for payments of interest or premium.
iv. All or any portion of the bonds will be redeemable at Early Redemption Amount at the option of bondholders on May 18, 2018 at 99.25% of the principal amount.
v. Bondholders have the right to require UMC to redeem all of the bonds at the Early Redemption Amount if UMC’s ordinary shares cease to be listed on the Taiwan Stock Exchange.
vi. In the event that a change of control as defined in the indenture of the bonds occurs to UMC, the bondholders shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.
d. Terms of Conversion:
i. Underlying Securities: Ordinary shares of UMC
ii. Conversion Period: The bonds are convertible at any time on or after June 28, 2015 and prior to May 8, 2020, into UMC ordinary shares; provided, however, that if the exercise date falls within 5 business days from the beginning of, and during, any closed period, the right of the converting holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.
iii. Conversion Price and Adjustment: The conversion price was originally NT$17.50 per share. The conversion price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The conversion price was NT$14.8157 per share onDecember 31, 2018.
e. Redemption on the Maturity Date: On the maturity date, UMC will redeem the bonds at 98.76% of the principal amount unless, prior to such date:
i. UMC shall have redeemed the bonds at the option of UMC, or the bonds shall have been redeemed at option of the bondholder;
ii. The bondholders shall have exercised the conversion right before maturity; or
iii. The bonds shall have been redeemed or repurchased by UMC and cancelled.
In accordance with IAS 32, the value of the conversion right of the convertible bonds was determined at issuance and recognized in additional paid-in capital-stock options amounting to NT$1,894 million, after reduction of issuance costs amounting to NT$9 million. The effective interest rate on the liability component of the convertible bonds was determined to be 2.03%.
63
(13)Long-Term Loans
a. Details of long-term loans as of December 31, 2018, and 2017 are as follows:
|
|
|
|
| ||
|
| As of December 31, |
|
| ||
Lenders |
| 2018 |
| 2017 |
| Redemption |
Secured Long-Term Loan from Mega International Commercial Bank (1) |
| $-
|
| $4,000 |
| Effective November 21, 2013 to November 21, 2018. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Mega International Commercial Bank (2) |
| 6,013 |
| 8,200 |
| Effective July 3, 2017 to July 5, 2021. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (1) |
| - |
| 16,853 |
| Effective July 10, 2013 to July 10, 2018. Interest-only payment for the first year. Principal is repaid in 17 quarterly paymentswith monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (2) |
| - |
| 10,276 |
| Effective February 13, 2015 to February 13, 2020. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (3) |
| - |
| 13,382 |
| Effective April 28, 2015 to April 28, 2020. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (4) |
| 3,006 |
| 4,724 |
| Effective August 10, 2015 to August 10, 2020. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (5) |
| 83,243 |
| 95,135 |
| Effective October 19, 2015 to October 19, 2025. Interest-only payment for the first year. Principal is repaid in 37 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (6) |
| - |
| 1,476 |
| Effective October 28, 2015 to April 28, 2020. Interest-only payment for the first half year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Secured Long-Term Loan from Taiwan Cooperative Bank (7) |
| - |
| 4,165 |
| Effective November 20, 2015 to November 20, 2020. Interest-only payment for the first year. Principal is repaid in 17 quarterly payments with monthly interest payments. |
Unsecured Long-Term Loan from Bank of Taiwan |
| 1,000,000 |
| 300,000 |
| Repayable quarterly from March 23, 2019 to December 23, 2021 with monthly interest payments. |
Unsecured Syndicated Loans from Bank of Taiwan and 7 others |
| 747,900 |
| 1,246,500 |
| Repayable semi-annually from February 6, 2017 to February 6, 2020 with monthly interest payments. |
Unsecured Long-Term Loan from Mega International Commercial Bank |
| - |
| 474,356 |
| Repayable quarterly from October 4, 2015 to October 4, 2018 with monthly interest payments. |
Secured Syndicated Loans from China Development Bank and 6 others |
| 28,987,895 |
| 29,989,811 |
| Effective October 20, 2016 to October 20, 2024. Interest-only payment for the first and the second year. Principal is repaid in 13 semi-annual payments with semi-annual interest payments. |
Subtotal |
| 30,828,057 |
| 32,168,878 |
|
|
Less: Administrative expenses from syndicated loans |
| (1,842) |
| (3,542) |
|
|
Less: Current portion |
| (2,622,161) |
| (2,522,052) |
|
|
Total |
| $28,204,054 |
| $29,643,284 |
|
|
64
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Interest rates applied |
| 0.99%~5.56% |
| 0.99%~4.66% |
b. Please refer to Note 8 for property, plant and equipment pledged as collateral for long- term loans.
(14)Post-Employment Benefits
a. Defined contribution plan
The employee pension plan under the Labor Pension Act of the R.O.C. (the Act) is a defined contribution plan. Pursuant to the plan, UMC and its domestic subsidiaries make monthly contributions of 6% based on each individual employee’s salary or wage to employees’ pension accounts. Pension benefits for employees of the Singapore branch and subsidiaries overseas are provided in accordance with the local regulations. Total pension expenses of NT$1,339 million and NT$1,256 million are contributed by the Company for the years ended December 31, 2018 and 2017, respectively.
65
b. Defined benefit plan
i. The employee pension plan mandated by the Labor Standards Act of the R.O.C. is a defined benefit plan. The pension benefits are disbursed based on the units of service years and average monthly salary prior to retirement according to the Labor Standards Act. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year and the total units will not exceed 45 units. The Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited with the Bank of Taiwan under the name of a pension fund supervisory committee. The pension fund is managed by the government’s designated authorities and therefore is not included in the Company’s consolidated financial statements. For the years ended December 31, 2018 and 2017, total pension expenses of NT$69 million and NT$80 million, respectively, were recognized by the Company.
ii. Movements in present value of defined benefit obligation and fair value of plan assets are as follows:
Movements in present value of defined benefit obligation during the year:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Defined benefit obligation at beginning of year |
| $(5,671,058) |
| $(5,482,265) |
Items recognized as profit or loss: |
|
|
|
|
Service cost |
| (24,477) |
| (24,130) |
Interest cost |
| (61,247) |
| (76,761) |
Subtotal |
| (85,724) |
| (100,891) |
Remeasurements recognized in other comprehensive income (loss): |
|
|
|
|
Arising from changes in financial assumptions |
| (91,350) |
| (183,433) |
Experience adjustments |
| (5,907) |
| 13,233 |
Subtotal |
| (97,257) |
| (170,200) |
Benefits paid |
| 233,530 |
| 81,204 |
Other |
| - |
| 1,094 |
Defined benefit obligation at end of year |
| $(5,620,509) |
| $(5,671,058) |
66
Movements in fair value of plan assets during the year:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Beginning balance of fair value of plan assets |
| $1,532,539 |
| $1,513,371 |
Items recognized as profit or loss: |
|
|
|
|
Interest income on plan assets |
| 16,552 |
| 21,187 |
Contribution by employer |
| 95,577 |
| 93,466 |
Payment of benefit obligation |
| (233,530) |
| (81,204) |
Remeasurements recognized in other comprehensive income (loss): |
|
|
|
|
Return on plan assets, excluding amounts included in interest income |
| 42,197 |
| (13,986) |
Other |
| - |
| (295) |
Fair value of plan assets at end of year |
| $1,453,335 |
| $1,532,539 |
The actual returns on plan assets of the Company for the years ended December 31, 2018 and 2017 were NT$59 million and NT$7 million, respectively.
iii. The defined benefit plan recognized on the consolidated balance sheets are as follows:
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Present value of the defined benefit obligation |
| $(5,620,509) |
| $(5,671,058) |
Fair value of plan assets |
| 1,453,335 |
| 1,532,539 |
Funded status |
| (4,167,174) |
| (4,138,519) |
Net defined benefit liabilities, noncurrent recognized on the consolidated balance sheets |
| $(4,167,174) |
| $(4,138,519) |
iv. The major categories of plan assets as a percentage of the fair value of the total plan assets are as follows:
| As of December 31, | ||
| 2018 |
| 2017 |
Cash | 17% |
| 25% |
Equity instruments | 51% |
| 43% |
Debt instruments | 24% |
| 26% |
Others | 8% |
| 6% |
67
Employee pension fund is deposited under a trust administered by the Bank of Taiwan. The overall expected rate of return on assets is determined based on historical trend andactuaries’ expectations on the assets’ returns in the market over the obligation period. Furthermore, the utilization of the fund is determined by the labor pension fund supervisory committee, which also guarantees the minimum earnings to be no less than the earnings attainable from interest rates offered by local banks for two-year time deposits.
v. The principal underlying actuarial assumptions are as follows:
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Discount rate |
| 0.91% |
| 1.08% |
Rate of future salary increase |
| 3.50% |
| 3.50% |
vi. Expected future benefit payments are as follows:
Year |
| As of December 31, 2018 |
2019 |
| $193,387 |
2020 |
| 211,679 |
2021 |
| 251,844 |
2022 |
| 304,317 |
2023 |
| 338,681 |
2024 and thereafter |
| 4,846,688 |
Total |
| $6,146,596 |
The Company expects to make pension fund contribution of NT$96 million in 2019. The weighted-average durations of the defined benefit obligation are 10 years and 11 years as of December 31, 2018 and 2017, respectively.
vii. Sensitivity analysis:
|
| As of December 31, 2018 | ||||||
|
| Discount rate |
| Rate of future salary increase | ||||
|
| 0.5% increase | 0.5% decrease |
| 0.5% increase |
| 0.5% decrease | |
Decrease (increase) indefined benefit obligation |
| $262,909 |
| $(281,037) |
| $(244,120) |
| $231,751 |
68
|
| As of December 31, 2017 | ||||||
|
| Discount rate |
| Rate of future salary increase | ||||
|
| 0.5% increase | 0.5% decrease |
| 0.5% increase |
| 0.5% decrease | |
Decrease (increase) indefined benefit obligation |
| $283,095 |
| $(303,570) |
| $(266,069) |
| $251,815 |
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
(15)Deferred Government Grants
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Beginning balance |
| $14,595,546 |
| $9,297,371 |
Arising during the period |
| 7,129,770 |
| 6,755,920 |
Recorded in profit or loss: |
|
|
|
|
Other operating income |
| (3,885,722) |
| (1,469,616) |
Exchange effect |
| (358,690) |
| 11,871 |
Ending balance |
| $17,480,904 |
| $14,595,546 |
|
|
|
|
|
Current |
| $3,832,124 |
| $2,821,467 |
Noncurrent |
| 13,648,780 |
| 11,774,079 |
Total |
| $17,480,904 |
| $14,595,546 |
The significant government grants related to equipment acquisitions received by the Company are amortized as income over the useful lives of related equipment, and recorded in the net other operating income and expenses.
(16)Refund Liabilities
|
| As of December 31, 2018 |
Refund liabilities |
| $1,213,476 |
Under IFRS 15, the Company’s allowance for sales returns and discounts are presented as refund liabilities as a component of other current liabilities, different from its prior presentation as a contra-accounts to accounts receivable.
69
(17)Equity
a. Capital stock:
i. UMC had 26,000 million common shares authorized to be issued as of December 31, 2018 and 2017, of which 12,424 million shares, and 12,624 million shares were issued as of December 31, 2018 and 2017, respectively, each at a par value of NT$10.
ii. UMC had143million and 144 million ADSs, which were traded on the NYSE as of December 31, 2018 and 2017, respectively. The total number of common shares of UMC represented by all issued ADSs were 717million shares and 721 million shares as of December 31, 2018 and 2017, respectively. One ADS represents five common shares.
iii. On August 27, 2018, UMC cancelled 200 million shares of treasury stock, which were repurchased during the period from March 12 to May 4, 2018, for the purpose of maintaining UMC’s credit and stockholders’ rights and interests.
b. Treasury stock:
i. UMC carried out treasury stock program and repurchased its shares from the centralized securities exchange market. The purpose for repurchase, and changes in treasury stock during the years ended December 31, 2018 and 2017 are as follows:
For the year ended December 31, 2018
(In thousands of shares)
Purpose |
| As of January 1, 2018 |
|
Increase |
|
Decrease |
| As of December 31, 2018 |
For transfer to employees |
| 400,000 |
| - |
| 200,000 |
| 200,000 |
To maintain UMC’s credit and stockholders’ rights and interests |
| - |
| 480,000 |
| 200,000 |
| 280,000 |
|
| 400,000 |
| 480,000 |
| 400,000 |
| 480,000 |
70
For the year ended December 31, 2017
(In thousands of shares)
Purpose |
| As of January 1, 2017 |
|
Increase |
|
Decrease |
| As of December 31, 2017 |
For transfer toemployees |
| 400,000 |
| - |
| - |
| 400,000 |
ii. According to the Securities and Exchange Law of the R.O.C., the total shares of treasury stock shall not exceed 10% of UMC’s issued stock, and the total purchase amount shall not exceed the sum of the retained earnings, additional paid-in capital-premiums and realized additional paid-in capital. As such, the number of shares of treasury stock that UMC held as of December 31, 2018 and 2017, did not exceed the limit.
iii. In compliance with Securities and Exchange Law of the R.O.C., treasury stock held by the parent company should not be pledged, nor should it be entitled to voting rights or receiving dividends. Stock held by subsidiaries is treated as treasury stock. These subsidiaries have the same rights as other stockholders except for subscription to new stock issuance and voting rights.
iv. As of December 31, 2018 and 2017, UMC’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held 16 million shares of UMC’s stock. The closing price on December 31, 2018 and 2017, were NT$11.25 and NT$14.20, respectively.
v. UMC’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held shares of UMC’s stock through acquiring shares of UNITED SILICON INC. in 1997, and these shares were converted to UMC’s stock in 2000 as a result of the Company’s 5 in 1 merger.
c. Retained earnings and dividend policies:
According to UMC’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:
i. Payment of taxes.
ii. Making up loss for preceding years.
iii. Setting aside 10% for legal reserve, except for when accumulated legal reserve has reached UMC’s paid-in capital.
iv. Appropriating or reversing special reserve by government officials or other regulations.
v. The remaining, plus the previous year’s unappropriated earnings, shall be distributed according to the distribution plan proposed by the Board of Directors according to the dividend policy and submitted to the stockholders’ meeting for approval.
71
Because UMC conducts business in a capital intensive industry and continues to operate in its growth phase, the dividend policy of UMC shall be determined pursuant to factors such as the investment environment, its funding requirements, domestic and overseas competitive landscape and its capital expenditure forecast, as well as stockholders’ interest, balancing dividends and UMC’s long-term financial planning. The Board of Directors shall propose the distribution plan and submit it to the stockholders’ meeting every year. The distribution of stockholders’ dividend shall be allocated as cash dividend in the range of 20% to 100%, and stock dividend in the range of 0% to 80%.
According to the regulations of Taiwan FSC, UMC is required to appropriate a special reserve in the amount equal to the sum of debit elements under equity, such as unrealized loss on financial instruments and debit balance of exchange differences on translation of foreign operations, at every year-end. Such special reserve is prohibited from distribution. However, if any of the debit elements is reversed, the special reserve in the amount equal to the reversal may be released for earnings distribution or offsetting accumulated deficits.
The distribution of earnings for 2017 was approved by the stockholders’ meeting held on June 20, 2018, while the distribution of earnings for 2018 was approved by the Board of Directors’ meeting on March 6, 2019. The details of distribution are as follows:
| Appropriation of earnings (in thousand NT dollars) |
| Cash dividend per share (NT dollars) | ||||
| 2018 |
| 2017 |
| 2018 |
| 2017 |
Legal reserve | $707,299 |
| $962,873 |
|
|
| |
Special reserve | 14,513,940 |
| - |
|
|
| |
Cash dividends | 6,916,105 |
| 8,557,023 | $0.58 |
| $0.70 |
The aforementioned 2017distribution approved by stockholders’ meeting was consistent with the resolutions of meeting of Board of Directors held onMarch 7, 2018.
The cash dividend per share for 2017 was adjusted to NT$0.71164307 per share according to the resolution of the Board of Directors’ meeting on June 12, 2018. The adjustment was made for the decrease in outstanding common shares due to the share repurchase program.
The appropriation of 2018 unappropriated retained earnings has not yet been approved by the stockholder’s meeting as of the reporting date. Information relevant to the Board of Directors’ meeting recommendations and stockholders’ meeting approval can be obtained from the “Market Observation Post System” on the website of the TWSE.
Please refer to Note 6(20) for information on the employees’ compensation and remuneration to directors.
72
d. Non-controlling interests:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Beginning balance |
| $956,808 |
| $2,161,729 |
Impact of retroactive applications |
| 1,597 |
| - |
Adjusted balance at January 1 |
| 958,405 |
| 2,161,729 |
Attributable to non-controlling interests: |
|
|
|
|
Net loss |
| (4,429,938) |
| (2,997,469) |
Other comprehensive income (loss) |
| (103,894) |
| (111,601) |
The differences between the fair value of the consideration paid or received from acquiring or disposing subsidiaries and the carrying amounts of the subsidiaries |
| - |
| (1,174,564) |
Changes in subsidiaries’ ownership |
| (278,613) |
| 175,413 |
Disposal of subsidiaries |
| (7,074) |
| - |
Others |
| 4,327,882 |
| 2,903,300 |
Ending balance |
| $466,768 |
| $956,808 |
(18)Share-Based Payment
In order to attract, retain talents and reward the employees for their productivity and loyalty, the Company carried out a compensation plan to offer 200 million shares of treasury stock to employees in August 2018. The compensation cost for the shared-based payment was measured at fair value, having recognized in expense the difference between the closing quoted market price of the shares at the grant date and the cash received from employees. The closing quoted market price of the Company’s shares on the grant date was NT$16.95 pershare. For the stocks vested on the date of grant, the Company recognized the entire compensation cost on the grant date, whereas for the stocks with requisite service conditions to vest at the end of one or two-years from the date of grant, the Company recognizes the compensation cost on a straight-line basis over the period in which the services conditions are fulfilled, together with a corresponding increase in equity. As such, for the year ended December 31, 2018, total compensation cost of NT$696million was recognized by the Company.
73
(19)Operating Revenues
a. Disaggregation of revenue
i. By operating segments
|
| For the year ended December 31, 2018 | ||||||||
|
| WaferFabrication |
| NewBusiness |
| Subtotal |
| AdjustmentandElimination |
| Consolidated |
Revenue from contracts with customers |
| $151,023,932 |
| $247,929 |
| $151,271,861 |
| $(19,290) |
| $151,252,571 |
|
|
|
|
|
|
|
|
|
|
|
The timing of revenue recognition: | ||||||||||
At a point in time |
| $146,247,350 |
| $247,929 |
| $146,495,279 |
| $(19,290) |
| $146,475,989 |
Over time |
| 4,776,582 |
| - |
| 4,776,582 |
| - |
| 4,776,582 |
Total |
| $151,023,932 |
| $247,929 |
| $151,271,861 |
| $(19,290) |
| $151,252,571 |
ii. Operating Revenues
|
| For the year ended December 31, 2017 |
Net sales |
|
|
Sale of goods |
| $142,957,544 |
Other operating revenues |
|
|
Royalty |
| 6,817 |
Mask tooling |
| 3,334,844 |
Others |
| 2,985,501 |
Net operating revenues |
| $149,284,706 |
74
iii. By geography
For the year ended December 31, 2018 | ||||||||||||||||
| Taiwan | Singapore | China (includes Hong Kong) | Japan | USA | Europe | Others | Total | ||||||||
Revenue from contracts with customers | $55,092,681 | $24,820,196 | $18,504,881 | $5,896,313 | $23,555,105 | $12,527,894 | $10,855,501 | $151,252,571 | ||||||||
|
|
|
|
|
|
|
|
| ||||||||
The timing of revenue recognition: | ||||||||||||||||
At a point in time | $54,963,771 | $24,791,908 | $14,889,672 | $5,889,277 | $23,536,756 | $11,551,052 | $10,853,553 | $146,475,989 | ||||||||
Over time | 128,910 | 28,288 | 3,615,209 | 7,036 | 18,349 | 976,842 | 1,948 | 4,776,582 | ||||||||
Total | $55,092,681 | $24,820,196 | $18,504,881 | $5,896,313 | $23,555,105 | $12,527,894 | $10,855,501 | $151,252,571 | ||||||||
|
| For the year ended December 31, 2017 |
Taiwan |
| $48,952,219 |
Singapore |
| 30,798,270 |
China (includes Hong Kong) |
| 18,971,866 |
Japan |
| 4,694,277 |
USA |
| 18,208,227 |
Europe |
| 14,329,730 |
Others |
| 13,330,117 |
Total |
| $149,284,706 |
Note A: The Company adopted IFRS 15 on January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 15.
Note B: The geographic breakdown of the Company’s operating revenues was based on the location of the Company’s customers.
b. Contract balances
i. Contract assets, current
|
| As of |
| |||
|
| December 31, 2018 |
| January 1, 2018 | Differences | |
Sales of goods and services |
| $486,184 |
| $129,042 | $357,142 | |
Less:Loss allowance |
| (393,974) |
| - | (393,974) | |
Net |
| $92,210 |
| $129,042 | $(36,832) | |
75
The significant increase in gross amount of contract assets in 2018 is the result of the increase in joint technology development services during the year.
The loss allowance was assessed by the company primarily at an amount equal to lifetime expected credit losses for the year ended December 31, 2018. The loss allowance is mainly resulted from the indictment filed by the United States Department of Justice (DOJ) against UMC, which is related to the joint technology development agreement. Please refer to Note 9(8).
ii. Contract liabilities, current
|
| As of |
|
| ||
|
| December 31, 2018 |
| January 1, 2018 | Differences | |
Sales of goods and services |
| $932,371 |
| $3,951,414 |
| $(3,019,043) |
Contract liabilities are prepayments from customers for wafer sales and joint technology development services. The outstanding balances of this account decreased in 2018 due to the Company continued to provide services and recognized revenue during the year.
The Company recognized NT$3,815 million in revenues from the current contract liabilities balance at the beginning of the period as performance obligations were satisfied during the year.
c. The Company’s transaction price allocated to unsatisfied performance obligations amounted to NT$3,148 million as ofDecember 31, 2018. The Company will recognize revenue as the Company satisfies its performance obligations over time that aligns with progress toward completion of a contract in the future. The estimate of the transaction price does not include any estimated amounts of variable consideration that are constrained.
d. Asset recognized from the cost to fulfill a contract with customer
As ofDecember 31, 2018, the Company recognized the cost to fulfill engineering and service contracts that are eligible for capitalization as assets which amounted to NT$567 million and accounted for as other current assets. Subsequently, the Company will expense to operating costs from the cost to fulfill a contract when the related obligations are satisfied.
76
(20)Operating Costs and Expenses
The Company’s employee benefit, depreciation and amortization expenses are summarized as follows:
|
| For the years endedDecember 31, | ||||||||||
|
| 2018 |
| 2017 | ||||||||
|
| Operating costs |
| Operating expenses |
| Total |
| Operating costs |
| Operating expenses |
| Total |
Employee benefit expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries |
| $17,694,175 |
| $7,780,063 |
| $25,474,238 |
| $16,676,560 |
| $7,045,487 |
| $23,722,047 |
Labor and healthinsurance |
| 882,671 |
| 376,556 |
| 1,259,227 |
| 878,576 |
| 376,523 |
| 1,255,099 |
Pension |
| 1,065,176 |
| 342,565 |
| 1,407,741 |
| 1,008,121 |
| 327,454 |
| 1,335,575 |
Other employee benefit expenses |
| 289,395 |
| 111,734 |
| 401,129 |
| 259,701 |
| 118,422 |
| 378,123 |
Depreciation |
| 47,086,993 |
| 2,689,314 |
| 49,776,307 |
| 47,820,812 |
| 3,003,855 |
| 50,824,667 |
Amortization |
| 880,967 |
| 1,219,163 |
| 2,100,130 |
| 911,563 |
| 1,222,163 |
| 2,133,726 |
According to UMC’s Articles of Incorporation, the employees’ compensation and remuneration to directors shall be distributed in the following order:
UMC shall allocate no less than 5% of profit as employees’ compensation and no more than 0.1% of profit as remuneration to directors for each profitable fiscal year after offsetting any cumulative losses. The aforementioned employees’ compensation will be distributed in shares or cash. The employees of UMC’s subsidiaries who fulfill specific requirements stipulated by the Board of Directors may be granted such compensation. Directors may only receive remuneration in cash. UMC may, by a resolution adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors, distribute the aforementioned employees’ compensation and remuneration to directors and report to the stockholders’ meeting for such distribution.
The Company estimates the amounts of the employees’ compensation and remuneration to directors and recognizes them in the profit or loss during the periods when earned for the years ended December 31, 2018 and 2017. The Board of Directors estimated the amount by taking into consideration the Articles of Incorporation, government regulations and industry averages. If the Board of Directors resolves to distribute employee compensation through stock, the number of stock distributed is calculated based on total employee compensation divided by the closing price of the day before the Board of Directors meeting. If the Board of Directors subsequently modifies the estimates significantly, the Company will recognize the change as an adjustment in the profit or loss in the subsequent period.
77
The distributions of employees’ compensation and remuneration to directors for 2017 were reported to the stockholders’ meeting on June 12, 2018, while the distributions of employees’ compensation and remuneration to directors for 2018 were approved through the Board of Directors’ meeting on March 6, 2019. The details of distribution are as follows:
|
| 2018 |
| 2017 |
Employees’ compensation – Cash |
| $1,400,835 |
| $1,032,324 |
Remuneration to directors |
| 7,624 |
| 11,452 |
The aforementioned 2017 employees’ compensation and remuneration to directors reported during the stockholders’ meeting were consistent with the resolutions of meeting of Board of Directorsheld onMarch 7, 2018.
Information relevant to the aforementioned employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE.
(21)Net Other Operating Income and Expenses
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Net rental loss from property |
| $(182,488) |
| $(178,192) |
Gain on disposal of property, plant and equipment |
| 136,743 |
| 82,397 |
Government grants |
| 5,220,746 |
| 1,710,176 |
Others |
| (58,117) |
| 39,314 |
Total |
| $5,116,884 |
| $1,653,695 |
(22)Non-Operating Income and Expenses
a. Other gains and losses
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Gain (loss)on valuation of financial assets and liabilities at fair value through profit or loss |
| $(1,167,735) |
| $598,270 |
Impairment loss |
|
|
|
|
Investments accounted for under the equity method |
| (46,225) |
| - |
Available-for-sale financial assets, noncurrent |
| - |
| (664,948) |
Financial assets measured at cost, noncurrent |
| - |
| (285,387) |
Gain (loss) on disposal of investments |
| (19,286) |
| 1,276,956 |
Others |
| 104,956 |
| 76,788 |
Total |
| $(1,128,290) |
| $1,001,679 |
78
b. Finance costs
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Interest expenses |
|
|
|
|
Bonds payable |
| $710,663 |
| $763,124 |
Bank loans |
| 1,782,544 |
| 1,563,590 |
Others |
| 275,465 |
| 80,158 |
Financial expenses |
| 82,553 |
| 88,290 |
Total |
| $2,851,225 |
| $2,495,162 |
(23)Components of Other Comprehensive Income (Loss)
|
|
| ||||||||
|
| For the year ended December 31, 2018 | ||||||||
|
| Arising during the period |
| Reclassification adjustments during the period |
| Other comprehensive income (loss), before tax |
| Income tax effect |
| Other comprehensive income (loss), net of tax |
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Remeasurements of defined benefit pension plans |
| $(55,060) |
| $- |
| $(55,060) |
| $32,647 |
| $(22,413) |
Unrealized gains or losses on financial assets at fair value through other comprehensive income |
| 1,454,018 |
| - |
| 1,454,018 |
| 44,526 |
| 1,498,544 |
Gains or losses on hedging instruments which will not be reclassified subsequently to profit or loss |
| (2,572)
|
| - |
| (2,572) |
| 514 |
| (2,058) |
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |
| (475,139) |
| - |
| (475,139) |
| 34,697 |
| (440,442) |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
| (47,417) |
| 408 |
| (47,009) |
| (18,884) |
| (65,893) |
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |
| (11,045) |
| (12,897) |
| (23,942) |
| 6,148 |
| (17,794) |
Total other comprehensive income (loss) |
| $862,785 |
| $(12,489) |
| $850,296 |
| $99,648 |
| $949,944 |
79
|
| For the year ended December 31, 2017 | ||||||||
|
| Arising during the period |
| Reclassification adjustments during the period |
| Other comprehensive income (loss), before tax |
| Income tax effect |
| Other comprehensive income (loss), net of tax |
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Remeasurements of defined benefit pension plans |
| $(184,186) |
| $- |
| $(184,186) |
| $31,311 |
| $(152,875) |
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |
| 1,221 |
| - |
| 1,221 |
| - |
| 1,221 |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
| (5,975,203) |
| - |
| (5,975,203) |
| 48,274 |
| (5,926,929) |
Unrealized gain (loss) on available-for-sale financial assets |
| 1,224,344 |
| (642,905) |
| 581,439 |
| 147,858 |
| 729,297 |
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |
| 1,247,881 |
| 102,302 |
| 1,350,183 |
| (35,252) |
| 1,314,931 |
Total other comprehensive income (loss) |
| $(3,685,943) |
| $(540,603) |
| $(4,226,546) |
| $192,191 |
| $(4,034,355) |
80
(24)Income Tax
a. The major components of income tax expense for the years ended December 31, 2018 and 2017 were as follows:
i. Income tax expense recorded in profit or loss
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Current income tax expense (benefit): |
|
|
|
|
Current income tax charge |
| $584,419 |
| $2,641,610 |
Adjustments in respect of current income tax of prior periods |
| (1,111,893) |
| (364,951) |
Deferred income tax expense (benefit): |
|
|
|
|
Deferred income tax related to origination and reversal of temporary differences |
| 1,228,554 |
| (1,033,072) |
Deferred income tax related to recognition and derecognition of tax losses and unused tax credits |
| (3,411,703) |
| (2,016,726) |
Deferred income tax related to changes in tax rates |
| (848,223) |
| 12,477 |
Adjustment of prior year’s deferred income tax |
| (2,744) |
| 9,233 |
Deferred income tax arising from write-down or reversal of write-down of deferred tax assets |
| 3,102,937 |
| 1,918,586 |
Income tax (benefit) expense recorded in profit or loss |
| $(458,653) |
| $1,167,157 |
ii. Income tax related to components of other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Remeasurements of defined benefit pension plans |
| $11,012 |
| $31,311 |
Unrealizedgains or losses on financial assets at fair value through other comprehensive income |
| 31,998 |
| - |
Gains or losses on hedging instruments which will not be reclassified subsequently to profit or loss |
| 514 |
| - |
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |
| 39,742 |
| - |
Deferred income tax related to changes in tax rates |
| 29,118 |
| - |
Incometax related to items that will not be reclassified subsequently to profit or loss |
| $112,384 |
| $31,311 |
81
Items that may be reclassified subsequently to profit or loss:
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Exchange differences on translation of foreign operations |
| $(21,672) |
| $48,274 |
Unrealized loss (gain) on available-for-sale financial assets |
| - |
| 147,858 |
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |
| 1,701 |
| (35,252) |
Deferred income tax related to changes in tax rates |
| 7,235 |
| - |
Income tax related to items that may be reclassified subsequently |
| $(12,736) |
| $160,880 |
iii. Deferred income tax charged directly to equity
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Adjustments of changes in net assets of associates and joint ventures accounted for using equity method |
| $- |
| $(2) |
Deferred income tax related to changes in tax rates |
| (56,759) |
| - |
Total |
| $(56,759) |
| $(2) |
b. A reconciliation between income tax expense and income before tax at UMC’s applicable tax rate was as follows:
|
|
| ||
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Income before tax |
| $2,184,399 |
| $7,798,422 |
At UMC’s statutory income tax rate |
| 436,880 |
| 1,325,732 |
Adjustments in respect of current income tax of prior periods |
| (1,111,893) |
| (364,951) |
Net changes in loss carry-forward and investment tax credits |
| 2,239,058 |
| 319,551 |
Adjustment of deferred tax assets/liabilities for write-downs/reversals and different jurisdictional tax rates |
| 26,122 |
| 330,228 |
Tax effect of non-taxable income and non-deductible expenses: |
|
|
|
|
Tax exempt income |
| (451,589) |
| (1,549,018) |
Investment gain |
| (835,669) |
| (298,786) |
Dividend income |
| (112,810) |
| (83,154) |
Others |
| 140,278 |
| 259,590 |
Basic tax |
| - |
| 33,207 |
Deferred income tax related to changes in tax rates |
| (848,223) |
| 12,477 |
Effect of different tax rates applicable to UMC and its subsidiaries |
| (118,404) |
| (21,615) |
Taxes withheld in other jurisdictions |
| 48,291 |
| 868,106 |
Others |
| 129,306 |
| 335,790 |
Income tax expense recorded in profit or loss |
| $(458,653) |
| $1,167,157 |
82
c. Significant components of deferred income tax assets and liabilities were as follows:
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Deferred income tax assets |
|
|
|
|
Depreciation |
| $1,930,388 |
| $2,064,726 |
Loss carry-forward |
| 502,331 |
| 425,247 |
Pension |
| 825,792 |
| 697,478 |
Refund liabilities |
| 232,854 |
| - |
Allowance for sales returns and discounts |
| - |
| 171,213 |
Allowance for inventory valuation losses |
| 416,270 |
| 365,658 |
Investment loss |
| 341,096 |
| 217,799 |
Unrealized profit on intercompany sales |
| 1,703,942 |
| 1,626,072 |
Investment tax credits |
| 336,869 |
| - |
Deferred revenue |
| - |
| 452,907 |
Others |
| 98,367 |
| 50,482 |
Total deferred income tax assets |
| 6,387,909 |
| 6,071,582 |
|
|
|
|
|
Deferred income tax liabilities |
|
|
|
|
Unrealized exchange gain |
| (535,595) |
| (348,198) |
Depreciation |
| (440,524) |
| (306,472) |
Investment gain |
| (499,506) |
| (444,422) |
Convertible bond option |
| (139,693) |
| (176,361) |
Amortizable assets |
| (342,607) |
| (353,477) |
Others |
| (7,768) |
| (2,775) |
Total deferred income tax liabilities |
| (1,965,693) |
| (1,631,705) |
Net deferred income tax assets |
| $4,422,216 |
| $4,439,877 |
83
d. Movement of deferred tax
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Balance at January 1 |
| $4,439,877 |
| $3,138,897 |
Impact of retroactive applications |
| 17,843 |
| - |
Adjusted balance at January 1 |
| 4,457,720 |
| 3,138,897 |
Amounts recognized in profit or loss during the period |
| (68,821) |
| 1,109,502 |
Amounts recognized in other comprehensive income |
| 99,648 |
| 192,191 |
Amounts recognized in equity |
| (56,759) |
| (2) |
Exchange adjustments |
| (9,572) |
| (711) |
Balance at December 31 |
| $4,422,216 |
| $4,439,877 |
e. The Company is subject to taxation in Taiwan and other foreign jurisdictions. As of December 31, 2018, income tax returns of UMC and its subsidiaries in Taiwan have been examined by the tax authorities through 2014, while in other foreign jurisdictions, relevant tax authorities have completed the examination through 2010.
f. UMC was granted income tax exemption for several periods with respect to income derived from the expansion of operations. The income tax exemption will expire on December 31, 2020.
g. The information of the unused tax loss carry-forward for which no deferred income tax assets have been recognized was as follows:
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Expiry period |
|
|
|
|
1~5 years |
| $27,072,604 |
| $14,881,800 |
6~10 years |
| 10,799,310 |
| 15,055,903 |
more than 10 years |
| 5,043 |
| 5,105 |
Total |
| $37,876,957 |
| $29,942,808 |
h. As of December 31, 2018 and 2017, deductible temporary differences for which no deferred income tax assets have been recognized amounted to NT$5,964 million and NT$7,252 million, respectively.
84
i. UMC’s earnings generated in and prior to the year ended December 31, 1997 have been fully appropriated.
j. As of December 31, 2018 and 2017, the taxable temporary differences of unrecognized deferred tax liabilities associated with investments in subsidiaries amounted to NT$11,036 million and NT$9,289 million, respectively.
k. According to the amendments to the R.O.C. Income Tax Act, effective from 2018, the corporate income tax rate is raised from 17% to 20%, and the 10% undistributed earnings tax is lowered to 5%.
(25)Earnings Per Share
a. Earnings per share-basic
Basic earnings per share amounts are calculated by dividing the net income for the year attributable to ordinary equity holders of the parent company by the weighted-average number of ordinary shares outstanding during the year. The reciprocal stockholdings held by subsidiaries are deducted from the computation of weighted-average number of shares outstanding.
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Net income attributable to the parent company |
| $7,072,990 |
| $9,628,734 |
Weighted-average number of ordinary shares for basic earnings per share (thousand shares) |
| 12,103,880 |
| 12,208,240 |
Earnings per share-basic (NTD) |
| $0.58 |
| $0.79 |
b. Earnings per share-diluted
Diluted earnings per share is calculated by taking basic earnings per share plus the effect of additional common shares that would have been outstanding if the dilutive share equivalents had been issued. The net income attributable to ordinary equity holders of the parent company would be also adjusted for the interest and other income or expenses derived from any underlying dilutive share equivalents, such as convertible bonds. For employees’ compensation that may be distributed in shares, the number of shares to be distributed is taken into consideration assuming the distribution will be made entirely in shares when calculating diluted earnings per share.
85
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Netincome attributable to the parent company |
| $7,072,990 |
| $9,628,734 |
Effectof dilution |
|
|
|
|
Unsecured convertible bonds |
| 283,349 |
| 288,091 |
Income attributable to stockholders of the parent |
| $7,356,339 |
| $9,916,825 |
Weighted-average number of common stocks for basic earnings per share (thousand shares) |
| 12,103,880 |
| 12,208,240 |
Effectof dilution |
|
|
|
|
Employees’ compensation |
| 137,511 |
| 83,981 |
Unsecured convertible bonds |
| 1,243,599 |
| 1,193,935 |
Weighted-average number of common stocks after dilution (thousand shares) |
| 13,484,990 |
| 13,486,156 |
|
|
|
|
|
Earnings per share-diluted (NTD) |
| $0.55 |
| $0.74 |
(26)Reconciliation of Liabilities Arising from Financing Activities
For the year ended December 31, 2018:
|
|
|
|
|
| Non-cash changes |
|
| ||
Items |
| As of January 1, 2018 |
| Cash Flows |
| Foreign exchange |
| Others (Note) |
| As of December 31, 2018 |
Short-term loans |
| $25,445,540 |
| $(12,288,248) |
| $(292,466) |
| $238,982 |
| $13,103,808 |
Long-term loans (current portion included) |
| 32,165,336 |
| (1,880,197) |
| 556,777 |
| (15,701) |
| 30,826,215 |
Bonds payable (current portion included) |
| 48,517,631 |
| (7,500,000) |
| - |
| 360,551 |
| 41,378,182 |
Guarantee deposits (current portion included) |
| 564,576 |
| 88,131 |
| 13,086 |
| - |
| 665,793 |
Other financial liabilities-noncurrent |
| 20,486,119 |
| - |
| (456,551) |
| 380,787 |
| 20,410,355 |
Note: Other non-cash changes mainly consisted of discount amortization measured by the EIR method.
For the year ended December 31, 2017: Not applicable.
86
(27)Deconsolidation of Subsidiaries
UNISTARS CORP. (UNISTARS)
As UMC’s subsidiary disposed of all of its shares of UNISTARS in December 2018, the Company lost control of UNISTARS, derecognizing the relevant assets and liabilities of UNISTARS at the date when the control is lost.
a. Derecognized assets and liabilities mainly consisted of:
Assets |
|
|
|
|
Cash and cash equivalents |
|
|
| $14,430 |
Notes and accounts receivable |
|
|
| 18,239 |
Inventories |
|
|
| 46,717 |
Property, plant and equipment |
|
|
| 45,515 |
Others |
|
|
| 2,365 |
|
|
|
| 127,266 |
Liabilities |
|
|
|
|
Short-term loans |
|
|
| (34,313) |
Payables |
|
|
| (29,309) |
Current portion of long-term liabilities |
|
|
| (11,899) |
Long-term loans |
|
|
| (5,502) |
Others |
|
|
| (2,872) |
|
|
|
| (83,895) |
Net assets of the subsidiary deconsolidated |
|
|
| $43,371 |
b. Consideration received and loss recognized from the transaction:
Cash received |
|
|
| $4,617 |
Less: Net assets of the subsidiary deconsolidated |
|
|
| (43,371) |
Add: Non-controlling interests |
|
|
| 7,074 |
Less: Goodwill |
|
|
| (176) |
Loss on disposal of subsidiary |
|
|
| $(31,856) |
Loss on disposal of subsidiary for the year ended December 31, 2018 was recognized as other gains and losses in the consolidated statement of comprehensive income.
c. Analysis of net cash outflow arising from deconsolidation of the subsidiary:
Cash received |
|
|
| $4,617 |
Net cash of subsidiary derecognized |
|
|
| (14,430) |
Net cash outflow from deconsolidation |
|
|
| $(9,813) |
87
7. RELATED PARTY TRANSACTIONS
The following is a summary of transactions between the Company and related parties during the financial reporting periods:
(1) Name and Relationship of Related Parties
Name of related parties |
| Relationship with the Company |
FARADAY TECHNOLOGY CORP. and its Subsidiaries |
| Associate |
JINING SUNRICH SOLARENERGY CORPORATION |
| Joint venture’s subsidiary |
SILICON INTEGRATED SYSTEMS CORP. |
| The Company’s director |
SUBTRON TECHNOLOGY CO., LTD. |
| Subsidiary’s supervisor |
PHOTRONICS DNP MASK CORPORATION |
| Other related parties |
TRIKNIGHT CAPITAL CORPORATION |
| Associate |
CHUAN-FANG ZHUAN |
| Subsidiary’s director |
(2) Significant related party transactions
a. Operating transactions
Operating revenues
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Associates |
| $1,291,398 |
| $1,357,720 |
Joint ventures |
| 4,277 |
| 12,465 |
Others |
| 27,881 |
| 30,417 |
Total |
| $1,323,556 |
| $1,400,602 |
Accounts receivable, net
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Associates |
| $134,646 |
| $84,839 |
Joint ventures |
| - |
| 1,051 |
Others |
| 4,266 |
| 7,908 |
Total |
| 138,912 |
| 93,798 |
Less: Allowance for sales returns and discounts |
| - |
| (2,733) |
Net |
| $138,912 |
| $91,065 |
88
The sales price to the above related parties was determined through mutual agreement in reference to market conditions. The collection period for domestic sales to related parties were month-end 30~60 days, while the collection period for overseas sales was net 30~60 days.
Refund liabilities (classified under other current liabilities)
|
| As of December 31, 2018 |
Associates |
| $1,287 |
Others |
| 71 |
Total |
| $1,358 |
b. Significant asset transactions
Acquisition of intangible assets
|
| Purchase price | ||
|
| For theyears ended December 31, | ||
|
| 2018 |
| 2017 |
Associates |
| $200,610 |
| $322,808 |
Acquisition of investments accounted for under the equity method
|
| Trading Volume (In thousands of shares) |
| Transaction underlying |
| Purchase price |
|
|
|
| For theyear ended December 31, 2018 | ||
Associates |
| 84,000 |
| Stock |
| $840,000 |
For the year ended December 31, 2017: None.
Disposal of subsidiary
|
|
|
|
|
| For the year ended December 31, 2018 | ||
|
| Trading Volume (In thousands of shares) |
| Transaction underlying |
| Proceeds |
| Disposal (loss) gain |
Others |
| 46,168 |
| UNISTARS |
| $4,617 |
| $(31,856) |
For the year ended December 31, 2017: None.
89
Disposal of financial assets
For the year ended December 31, 2018: None.
|
|
|
|
|
| For the year ended December 31, 2017 | ||
|
| Trading Volume (In thousands of shares) |
| Transaction underlying |
| Proceeds |
| Disposal (loss) gain |
Others |
| 6,489 |
| ASIA PACIFICMICROSYSTEMS, INC. |
| $50,745 |
| $(13,753) |
c. Others
Mask expenditure
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Others |
| $1,750,088 |
| $944,710 |
Other payables of mask expenditure
|
| As ofDecember 31, | ||
|
| 2018 |
| 2017 |
Others |
| $571,036 |
| $580,789 |
d. Key management personnel compensation
|
| For the years ended December 31, | ||
|
| 2018 |
| 2017 |
Short-term employee benefits |
| $387,294 |
| $271,554 |
Post-employment benefits |
| 4,660 |
| 3,478 |
Termination benefits |
| - |
| 6,957 |
Share-based payment |
| 293,857 |
| 68 |
Others |
| 435 |
| 294 |
Total |
| $686,246 |
| $282,351 |
90
8. ASSETS PLEDGED AS COLLATERAL
As of December 31, 2018 and 2017
|
|
|
|
| ||||
| Amount |
|
|
| ||||
| As of December 31, |
|
|
| ||||
| 2018 | 2017 |
| Party to which asset(s) was pledged | Purpose of pledge | |||
Refundable Deposits (Bank deposit and Time deposit) | $961,198 | $972,827 |
| Customs | Customs duty guarantee | |||
Refundable Deposits (Time deposit) | 237,358 | 246,008 |
| Science Park Administration | Collateral for land lease | |||
Refundable Deposits (Time deposit) | 19,579 | 20,991 |
| Science Park Administration | Collateral for dormitory lease | |||
Refundable Deposits (Time deposit) | - | 800 |
| Science Park Administration | Industry-university cooperative research project performance guarantees | |||
Refundable Deposits (Time deposit) | 37,084 | 37,084 |
| Liquefied Natural Gas Business Division, CPC Corporation, Taiwan | Energy resources guarantee | |||
Refundable Deposits (Time deposit) | 1,000,000 | - |
| Bank of China | Bank performance guarantee | |||
Buildings | 5,823,938 | 6,083,976 |
| Taiwan Cooperative Bank and Secured Syndicated Loans from China Development Bank and 6 others | Collateral for long-term loans | |||
Machinery and equipment | 25,762,086 | 32,428,768 |
| Taiwan Cooperative Bank, Mega International Commercial Bank andSecured Syndicated Loans from China Development Bank and 6 others | Collateral for long-term loans | |||
Other noncurrent assets | 309,108 | 323,001 |
| Secured Syndicated Loans from China Development Bank and 6 others | Collateral for long-term loans | |||
Total | $34,150,351 | $40,113,455 |
|
|
|
9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS
(1) As of December 31, 2018, amounts available under unused letters of credit for importing machinery and equipment was NT$0.4billion.
91
(2) As of December 31, 2018,the Company entrust financial institutes to open performance guarantee, mainly related to the litigations and customs tax guarantee,amounted toNT$1.6 billion.
(3) The Company entered into several patent license agreements and development contracts of intellectual property for a total contract amount of approximately NT$12.1 billion. As ofDecember 31, 2018, the portion of royalties and development fees not yet recognized was NT$1.2 billion.
(4) The Company entered into several construction contracts for the expansion of itsoperations. As of December 31, 2018, these construction contracts amounted to approximately NT$3.1 billion and the portion of the contracts not yet recognized was approximately NT$0.9 billion.
(5) The Company entered into several operating lease contracts for land and office. These renewable operating leases will expire in various years through 2038. Future minimum lease payments under those leases are as follows:
Year |
|
| As of December 31, 2018 |
2019 |
|
| $600,876 |
2020 |
|
| 618,194 |
2021 |
|
| 608,434 |
2022 |
|
| 609,325 |
2023 |
|
| 578,203 |
2024 and thereafter |
|
| 4,393,337 |
Total |
|
| $7,408,369 |
(6) The Board of Directors of UMC resolved in October 2014 to participate in a 3-way agreement with Xiamen Municipal People’s Government and FUJIAN ELECTRONIC & INFORMATION GROUP to form a company which will focus on 12’’ wafer foundry services. As of December 31, 2018, the Company obtained R.O.C. government authority’s approval for the investment and invested RMB 8.3 billion in USC, representing ownership interest of 65.22%. Furthermore, based on the agreement,UMC recognized a financial liability in other noncurrent liabilities-othersfor the purchase from the other investors of their investments in USC at their original investment cost plus interest, beginning from the seventh year following the last instalment payment made by the other investors. Accordingly, theCompany recognizes non-controlling interests as required by IFRS 10 during the reporting period. At the end of each reporting period, the Company recognizes a financial liability for its commitment to the other investors in accordance with IFRS 9, at the same time derecognizing the non-controlling interests. Any difference between the financial liability and the non-controlling interests balance is recognized in equity.
92
(7) On July 1, 2016, INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) filed a complaint in the United States District Court for the Southern District of New York accusing that UMC did not pay the technology license fees in accordance with the technology license agreement and claimed US$10 million with interest of 12% per annum. UMC is appealing an unfavorable judgment issued on September 15, 2017 by the United States District Court of Southern District of New York for the subject matter. The appeal is still on trial. Since the final judgement has not been issued, UMC cannot make reliable estimate of the financial effect of the litigation.
(8) In 2017, the Taichung District Prosecutors Office requested the local court to impose a fine to UMC based on the allegation of misappropriation of trade secret of MICRON TECHNOLOGY INC. (“MICRON”). In addition, MICRON filed a civil lawsuit against UMC with the District Court of Northern District of California for the similar cause. UMC has appointed the attorneys to prepare answers against these charges. On January 12, 2018, UMC filed counterclaims against MICRON with the Fuzhou Intermediate People’s Court against, among others, MICRON (XI’AN) CO., LTD. and MICRON (SHANGHAI) TRADING CO., LTD. for patent infringement. On July 3, 2018, the Fuzhou Intermediate People’s Court issued a ruling against the aforementioned two defendant companies, ruling that the two defendants must immediately cease to manufacture, sell, and import products that infringe the patent rights of UMC. The lawsuit filed by UMC is still on trial. On November 1, 2018, the United States Department of Justice (DOJ) indicted UMC, FUJIAN JINHUA INTEGRATED CIRCUIT CO., LTD. (JINHUA), and three individuals, including one current employee and two former employees of UMC, alleging that UMC and others conspired to steal trade secrets of MICRON, and used that information to develop technology that was subsequently transferred to JINHUA. On the same day, DOJ filed a civil complaint enjoining the aforementioned defendants from exporting to the United States any products containing DRAM manufactured by UMC or JINHUA and preventing the defendants from transferring the trade secrets to anyone else. The indictment and civil complaint are still on trial. UMC has appointed attorneys to prepare answers against these charges. Given both litigations are still in the preliminary stages, UMC cannot assess the legal proceeding and probable outcome or impact.
10. SIGNIFICANT DISASTER LOSS
None.
11. SIGNIFICANT SUBSEQUENT EVENTS
None.
93
12. OTHERS
(1) Categories of financial instruments
|
| As of December 31, | ||
Financial Assets |
| 2018 |
| 2017 |
Non-derivative financial instruments |
|
|
|
|
Financial assets at fair value through profit or loss |
| $12,080,736 |
| $876,318 |
Financial assets at fair value through other comprehensive income |
| 11,585,477 |
| - |
Available-for-sale financial assets |
| - |
| 20,636,332 |
Financialassets measured at cost |
| - |
| 2,218,472 |
Financial assets measured at amortized cost |
|
|
|
|
Cash and cash equivalents (excludes cash on hand) |
| 83,655,648 |
| 81,670,212 |
Receivables |
| 24,583,451 |
| 22,149,072 |
Refundable deposits |
| 2,757,399 |
| 1,903,041 |
Other financial assets |
| 2,320,037 |
| 2,645,003 |
Subtotal |
| 113,316,535 |
| 108,367,328 |
Derivative financial instruments |
|
|
|
|
Financial assets at fair value through profit or loss |
| 3,561 |
| 31,605 |
Total |
| $136,986,309 |
| $132,130,055 |
|
| As of December 31, | ||
FinancialLiabilities |
| 2018 |
| 2017 |
Non-derivative financial instruments |
|
|
|
|
Financial liabilities measured at amortized cost |
|
|
|
|
Short-term loans |
| $13,103,808 |
| $25,445,540 |
Payables |
| 23,465,536 |
| 24,274,413 |
Guarantee deposits (current portion included) |
| 665,793 |
| 564,576 |
Bonds payable (current portion included) |
| 41,378,182 |
| 48,517,631 |
Long-term loans(current portion included) |
| 30,826,215 |
| 32,165,336 |
Other financial liabilities |
| 20,523,099 |
| 20,486,119 |
Total |
| $129,962,633 |
| $151,453,615 |
(2) Financial risk management objectives and policies
The Company’s risk management objectives are to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks based on policy and risk preference.
The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant financial activities, approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.
94
(3) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks comprise currency risk, interest rate risk and other price risk (such as equity price risk).
Foreign currency risk
The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.
The Company applies natural hedges on the foreign currency risk arising from purchases or sales, and utilizes spot or forward exchange contracts to manage foreign currency risk and the net effect of the risks related to monetary financial assets and liabilities is minor. The notional amounts of the foreign currency contracts are the same as the amount of the hedged items. In principle, the Company does not carry out any forward exchange contracts for uncertain commitments. The Company designates certain forward currency contracts as cash flow hedges to hedge its exposure to foreign currency exchange risk associated with certain highly probable forecast transactions. On the basis of assessment, the Company expects that the value of forward currency exchange contracts and the value of the hedged transactions will change systematically in opposite directions for given changes in foreign exchange rates. Hedge ineffectiveness in these hedging relationships mainly arises from the counterparties’ credit risk, impacting the fair value movements of the hedging instruments and hedged items. No other sources of ineffectiveness emerged from these hedging relationships. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.
The company designated certain forward exchange contracts, amounting to JPY 23 billion, to partially hedge foreign currency exchange rate risks associated with the highly probable purchase of the remaining outstanding shares of MIFS in JPY. The Company discontinued hedge accounting when the hedging instrument expired prior to December 31, 2018. The cash flow hedge reserve in other components of equity amounted to NT$(2) million as of December 31, 2018.
The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. When NTD strengthens/weakens against USD by 10%, the profit for the years ended December 31, 2018 and 2017 decreases/increases by NT$1,367 million and NT$1,330 million, respectively. When RMB strengthens/weakens against USD by 10%, the profit for the years ended December 31, 2018 and 2017 increases/decreases by NT$2,624 million and NT$4,011 million, respectively.
95
Interest rate risk
The Company is exposed to interest rate risk arising from borrowing at floating interest rates. All of the Company’s bonds have fixed interest rates and are measured at amortized cost. As such, changes in interest rates would not affect the future cash flows. On the other hand, as the interest rates of the Company’s short-term and long-term bank loans are floating, changes in interest rates would affect the future cash flows but not the fair value. Please refer to Note 6(11), 6(12) and 6(13) for the range of interest rates of the Company’s bonds and bank loans.
At the reporting dates, a change of 10 basis points of interest rate in a reporting period could cause the profitfor the years ended December 31, 2018 and 2017 to decrease/increase by NT$44 million and NT$58 million, respectively.
Equity price risk
The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future performance of equity markets. The Company’s equity investments are classified as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.
The sensitivity analysis for the equity instruments is based on the change in fair value as of the reporting date. A change of 5% in the price of the aforementioned financial assets at fair value through profit or loss of listed companies could increase/decrease the Company’s profit for the years ended December 31, 2018 and 2017 byNT$171 million and NT$33 million, respectively. A change of 5% in the price of the aforementioned financial assets at fair value through other comprehensive income of listed companies could increase/decrease the Company’s other comprehensive income for the year ended December 31, 2018 byNT$408 million. A change of 5% in the price of the aforementioned available-for-sale financial instruments of listed companies could increase/decrease the Company’s other comprehensive income for the year ended December 31, 2017 byNT$525million.
(4) Credit risk management
The Company only trades with approved and creditworthy third parties. Where the Company trades with third parties which have less credit, it will request collateral from them. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, notes and accounts receivable balances are monitored on an ongoing basis, which consequently minimizes the Company’s exposure to bad debts.
The Company mitigates the credit risks from financial institutions by limiting its counter parties to only reputable domestic or international financial institutions with good credit standing and spreading its holdings among various financial institutions. The Company’s exposure to credit risk arising from the default of counter-parties is limited to the carrying amount of these instruments.
96
As of December 31, 2018 and 2017, accounts receivable from the top ten customers represent 54% and 54% of the total accounts receivable of the Company, respectively. The credit concentration risk of other accounts receivable is insignificant.
(5) Liquidity risk management
The Company’s objectives are to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, bank loans and bonds.
The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity:
|
|
| ||||||||
|
| As of December 31, 2018 | ||||||||
|
| Less than 1 year |
| 2 to 3 years |
| 4 to 5 years |
| > 5 years |
| Total |
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
Short-term loans |
| $13,171,811 |
| $- |
| $- |
| $- |
| $13,171,811 |
Payables |
| 22,994,059 |
| 199,788 |
| - |
| - |
| 23,193,847 |
Guarantee deposits |
| 52,890 |
| 154,787 |
| 15,385 |
| 442,731 |
| 665,793 |
Bonds payable |
| 3,000,855 |
| 23,187,913 |
| 8,484,393 |
| 8,563,021 |
| 43,236,182 |
Long-term loans |
| 4,036,260 |
| 10,997,829 |
| 17,209,849 |
| 4,765,719 |
| 37,009,657 |
Other financial liabilities |
| 112,744 |
| - |
| 17,477,984 |
| 4,369,730 |
| 21,960,458 |
Total |
| $43,368,619 |
| $34,540,317 |
| $43,187,611 |
| $18,141,201 |
| $139,237,748 |
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2017 | ||||||||
|
| Less than 1 year |
| 2 to 3 years |
| 4 to 5 years |
| > 5 years |
| Total |
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
Short-term loans |
| $25,622,430 |
| $- |
| $- |
| $- |
| $25,622,430 |
Payables |
| 23,807,378 |
| - |
| - |
| 104,755 |
| 23,912,133 |
Guarantee deposits |
| 95,085 |
| 14,071 |
| 29,876 |
| 425,544 |
| 564,576 |
Bonds payable |
| 26,321,530 |
| 5,564,967 |
| 10,590,265 |
| 8,689,971 |
| 51,166,733 |
Long-term loans |
| 3,855,962 |
| 8,728,249 |
| 13,397,515 |
| 13,450,444 |
| 39,432,170 |
Other financial liabilities |
| - |
| - |
| 13,402,849 |
| 8,935,552 |
| 22,338,401 |
Total |
| $79,702,385 |
| $14,307,287 |
| $37,420,505 |
| $31,606,266 |
| $163,036,443 |
97
(6) Foreign currency risk management
UMC entered into forward exchange contracts for hedging the exchange rate risk arising from the net monetary assets or liabilities denominated in foreign currency. The details of forward exchange contracts entered into by UMC are summarized as follows:
As of December 31, 2018
Type |
| Notional Amount |
| Contract Period |
Forward exchange contracts |
| Sell USD 28 million |
| December 10, 2018~January 7, 2019 |
As of December 31, 2017: None.
(7) Fair value of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
98
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
a. Assets and liabilities measured and recorded at fair value on a recurring basis:
|
| As of December 31, 2018 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Financial assets: |
|
|
|
|
|
|
|
|
Financial assets at fair valuethrough profit or loss, current |
| $493,481 |
| $34,969 |
| $- |
| $528,450 |
Financial assets at fair valuethrough profit or loss, noncurrent |
| 3,612,243 |
| 44,597 |
| 7,899,007 |
| 11,555,847 |
Financial assets at fair value through other comprehensive income, noncurrent |
| 8,166,277 |
| - |
| 3,419,200 |
| 11,585,477 |
|
| As of December 31, 2017 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Financial assets: |
|
|
|
|
|
|
|
|
Financial assets at fair valuethrough profit or loss, current |
| $663,138 |
| $22,175 |
| $31,605 |
| $716,918 |
Financial assets at fair valuethrough profit or loss, noncurrent |
| 174,760 |
| 16,245 |
| - |
| 191,005 |
Available-for-sale financial assets, noncurrent |
| 10,959,194 |
| - |
| 9,677,138 |
| 20,636,332 |
Fair values of financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets that are categorized into level 1 are based on the quoted market prices in active markets. If there is no active market, the Company estimates the fair value by using the valuation techniques (income approach and market approach) in consideration of cash flow forecast, recent fund raising activities, valuation of similar companies, individual company’s development, market conditions and other economic indicators. If there are restrictions on the sale or transfer of a financial asset, which are a characteristic of the asset, the fair value of the asset will be determined based on similar but unrestricted financial assets’ quoted market price with appropriate discounts for the restrictions.To measure fair values, if the lowest level input that is significant to the fair value measurement is directly or indirectly observable, then the financial assets are classified as Level 2 of the fair value hierarchy, otherwise as Level 3.
99
During the years ended December 31, 2018 and 2017, there were no significant transfers between Level 1 and Level 2 fair value measurements.
Reconciliations for fair value measurement in Level 3 fair value hierarchy were as follows:
|
| Financial assets at fair value through profit or loss |
| Financial assets at fair value through other comprehensive income (loss) | ||||||||||||
|
| Option |
| Common stock |
| Preferred stock |
| Funds |
| Total |
| Common stock |
| Preferred stock |
| Total |
As of January 1, 2018 |
| $31,605 |
| $3,832,537 |
| $2,994,294 |
| $1,183,940 |
| $8,042,376 |
| $3,350,694 |
| $233,326 |
| $3,584,020 |
Recognized in profit (loss) |
| (31,605) |
| (3,356) |
| (394,931) |
| 69,827 |
| (360,065) |
| - |
| - |
| - |
Recognized in other comprehensive loss |
| - |
| - |
| - |
| - |
| - |
| (115,520) |
| (49,300) |
| (164,820) |
Acquisition |
| - |
| 140,338 |
| 630,626 |
| 577,347 |
| 1,348,311 |
| - |
| - |
| - |
Disposal |
| - |
| (468,337) |
| (310,025) |
| - |
| (778,362) |
| - |
| - |
| - |
Return of capital |
| - |
| (22,954) |
| - |
| - |
| (22,954) |
| - |
| - |
| - |
Transfer to Level 3 |
| - |
| 22,050 |
| - |
| - |
| 22,050 |
| - |
| - |
| - |
Transfer out of Level 3 |
| - |
| (442,138) |
| - |
| - |
| (442,138) |
| - |
| - |
| - |
Exchange effect |
| - |
| 19,551 |
| 51,564 |
| 18,674 |
| 89,789 |
| - |
| - |
| - |
As of December 31, 2018 |
| $- |
| $3,077,691 |
| $2,971,528 |
| $1,849,788 |
| $7,899,007 |
| $3,235,174 |
| $184,026 |
| $3,419,200 |
|
| Financial assets at fair value through profit or loss |
| Available-for-sale financial assets | ||||||
|
| Option |
| Common stock |
| Funds |
| Preferred stock |
| Total |
As of January 1, 2017 |
| $- |
| $7,687,752 |
| $942,296 |
| $1,203,589 |
| $9,833,637 |
Recognized in profit (loss) |
| 31,605 |
| (240,037) |
| (64,515) |
| (14,364) |
| (318,916) |
Recognized in other comprehensive (loss) income |
| - |
| (551,004) |
| 26,269 |
| (32,081) |
| (556,816) |
Acquisition |
| - |
| 170,457 |
| 266,992 |
| 429,627 |
| 867,076 |
Disposal |
| - |
| (244,970) |
| - |
| - |
| (244,970) |
Return of Capital |
| - |
| - |
| (6,369) |
| - |
| (6,369) |
Transfer to Level 3 |
| - |
| 87,830 |
| - |
| 342,832 |
| 430,662 |
Transfer out of Level 3 |
| - |
| (181,637) |
| - |
| - |
| (181,637) |
Exchange effect |
| - |
| (34,072) |
| (47,264) |
| (64,193) |
| (145,529) |
As of December 31, 2017 |
| $31,605 |
| $6,694,319 |
| $1,117,409 |
| $1,865,410 |
| $9,677,138 |
100
Recognized as part of profit (loss) above, the profit (loss) from financial assets still held by the Company as of December 31, 2018 and 2017 wasNT$(203) million and NT$(286) million, respectively.
Recognized as part of other comprehensive income (loss) above, the income (loss) from financial assets still held by the Company as of December 31, 2018 and 2017 wasNT$(165)million and NT$(530) million, respectively.
The Company’s policy to recognize the transfer into and out of fair value hierarchy levels is based on the event or changes in circumstances that caused the transfer.
Significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy were as follow:
As of December 31, 2018 | ||||||||||
Category of equity securities |
| Valuation technique |
| Significant unobservable inputs |
| Quantitative information |
| Interrelationship between inputs and fair value |
| Sensitivity analysis of interrelationship between inputs and fair value |
Unlisted stock |
| Market Approach |
| Discount for lack ofmarketability |
| 15%~50% |
| The greater degree of lack ofmarketability, the lower the estimated fair value is determined. |
| A change of 5% in the discount for lack of marketability of the aforementioned fair values of unlisted stocks could decrease/increase the Company’s profit or loss and other comprehensive income (loss) for the year ended December 31, 2018 by NT$309 million and by NT$241 million, respectively. |
101
As of December 31, 2017 | ||||||||||
Category of equity securities |
| Valuation technique |
| Significant unobservable inputs |
| Quantitative information |
| Interrelationship between inputs and fair value |
| Sensitivity analysis of interrelationship between inputs and fair value |
Unlisted stock |
| Market Approach |
| Discount for lack ofmarketability |
| 20%~50% |
| The greater degree of lack of marketability, the lower the estimated fair value is determined. |
| A change of 5% in the discount for lack of marketability of the aforementioned fair values of unlisted stocks could decrease/increase the Company’s other comprehensive income (loss) for the year ended December 31, 2017 by NT$401 million. |
b. Assets and liabilities not recorded at fair value but for which fair value is disclosed:
The fair value of bonds payable is estimated by the market price or using a valuation model. The model uses market-based observable inputs including share price, volatility, credit spread and risk-free interest rates. The fair value of long-term loans is determined using discounted cash flow model, based on the Company’s current incremental borrowing rates of similar loans.
The fair values of the Company’s short-term financial instruments including cash and cash equivalents, receivables, refundable deposits, other financial assets-current, short-term loans, payables and guarantee deposits approximate their carrying amount due to their maturities within one year.
As of December 31, 2018
|
|
| Fair value measurements during reporting period using |
|
| |||||
Items |
| Fair value | Level 1 |
| Level 2 |
| Level 3 |
| Carrying amount | |
Bonds payables (current portion included) |
| $41,714,368 | $23,929,019 |
| $17,785,349 |
| $- |
| $41,378,182 | |
Long-term loans (current portion included) |
| 30,826,215 | - |
| 30,826,215 |
| - |
| 30,826,215 |
102
As of December 31, 2017
|
|
|
| Fair value measurements during reporting period using |
|
| ||||
Items |
| Fair value |
| Level 1 |
| Level 2 |
| Level 3 |
| Carrying amount |
Bonds payables (current portion included) |
| $49,342,714 |
| $31,422,772 |
| $17,919,942 |
| $- |
| $48,517,631 |
Long-term loans (current portion included) |
| 32,165,336 |
| - |
| 32,165,336 |
| - |
| 32,165,336 |
(8) Significantfinancial assets and liabilities denominated in foreign currencies
|
| ||||||||||
| As of December 31, | ||||||||||
| 2018 |
| 2017 | ||||||||
| Foreign Currency (thousand) |
| Exchange Rate |
| NTD (thousand) |
| Foreign Currency (thousand) |
| Exchange Rate |
| NTD (thousand) |
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
Monetary items |
|
|
|
|
|
|
|
|
|
|
|
USD | $1,536,283 |
| 30.67 |
| $47,117,775 |
| $1,703,079 |
| 29.72 |
| $50,609,425 |
JPY | 19,954,240 |
| 0.2764 |
| 5,515,352 |
| 5,914,143 |
| 0.2627 |
| 1,553,244 |
EUR | 2,669 |
| 35.01 |
| 93,450 |
| 2,818 |
| 35.27 |
| 99,394 |
SGD | 34,325 |
| 22.41 |
| 769,217 |
| 29,696 |
| 22.22 |
| 659,865 |
RMB | 4,089,229 |
| 4.45 |
| 18,184,800 |
| 2,499,747 |
| 4.55 |
| 11,368,839 |
Non-Monetary items |
|
|
|
|
|
|
|
|
|
|
|
USD | 215,146 |
| 30.67 |
| 6,598,528 |
| 154,761 |
| 29.73 |
| 4,601,061 |
JPY | 8,466,263 |
| 0.2764 |
| 2,340,075 |
| 9,150,629 |
| 0.2627 |
| 2,403,870 |
SGD | 8,212 |
| 22.41 |
| 184,025 |
| - |
| - |
| - |
RMB | 49,506 |
| 4.45 |
| 220,152 |
| - |
| - |
| - |
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Monetary items |
|
|
|
|
|
|
|
|
|
|
|
USD | 322,705 |
| 30.77 |
| 9,929,626 |
| 576,458 |
| 29.83 |
| 17,195,765 |
JPY | 3,875,144 |
| 0.2805 |
| 1,086,978 |
| 3,252,323 |
| 0.2668 |
| 867,720 |
EUR | 13,721 |
| 35.41 |
| 485,880 |
| 3,696 |
| 35.84 |
| 132,475 |
SGD | 39,650 |
| 22.59 |
| 895,677 |
| 32,498 |
| 22.40 |
| 727,952 |
RMB | 14,332,554 |
| 4.50 |
| 64,453,497 |
| 15,618,686 |
| 4.60 |
| 71,814,722 |
The exchange gain or loss from monetary financial assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
USD |
|
|
|
| 635,992 |
|
|
|
|
| (751,616) |
JPY |
|
|
|
| 39,116 |
|
|
|
|
| 44,587 |
EUR |
|
|
|
| 8,133 |
|
|
|
|
| 1,816 |
SGD |
|
|
|
| 4,473 |
|
|
|
|
| 15,703 |
RMB |
|
|
|
| (1,044,912) |
|
|
|
|
| 2,255,067 |
Other |
|
|
|
| 205 |
|
|
|
|
| 348 |
103
(9) Significant intercompany transactions among consolidated entities foryears ended December 31, 2018 and 2017 are disclosed in Attachment 1.
(10) Capital management
The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximize the stockholders’ value. The Company also ensures its ability to operate continuously to provide returns to stockholders and the interests of other related parties, while maintaining the optimal capital structure to reduce costs of capital.
To maintain or adjust the capital structure, the Company may adjust the dividend payment to stockholders, return capital to stockholders, issue new shares or dispose assets to redeem liabilities.
Similar to its peers, the Company monitors its capital based on debt to capital ratio. The ratio is calculated as the Company’s net debt divided by its total capital. The net debt is derived by taking the total liabilities on the consolidated balance sheets minus cash and cash equivalents. The total capital consists of total equity (including capital, additional paid-in capital, retained earnings, other components of equity and non-controlling interests) plus net debt.
The Company’s strategy, which is unchanged for the reporting periods, is to maintain a reasonable ratio in order to raise capital with reasonable cost. The debt to capital ratios as ofDecember 31, 2018 and 2017 were as follows:
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Total liabilities |
| $158,068,415 |
| $180,061,578 |
Less: Cash and cash equivalents |
| (83,661,739) |
| (81,674,572) |
Net debt |
| 74,406,676 |
| 98,387,006 |
Total equity |
| 206,536,491 |
| 214,037,584 |
Total capital |
| $280,943,167 |
| $312,424,590 |
Debt to capital ratios |
| 26.48% |
| 31.49% |
104
13. ADDITIONAL DISCLOSURES
(1) The following are additional disclosures for the Company and its affiliates as required by the R.O.C. Securities and Futures Bureau:
a. Financing provided to others for the year endedDecember 31, 2018: Please refer to Attachment 2.
b. Endorsement/Guarantee provided to others for the year endedDecember 31, 2018: Please refer to Attachment 3.
c. Securities held as ofDecember 31, 2018 (excluding subsidiaries, associates and joint venture): Please refer to Attachment 4.
d. Individual securities acquired or disposed of with accumulated amount exceeding the lower ofNT$300 million or 20 percent of the capital stock for the year endedDecember 31, 2018:Please refer to Attachment 5.
e. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock forthe year endedDecember 31, 2018: Please refer to Attachment 6.
f. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock forthe year endedDecember 31, 2018: Please refer to Attachment 7.
g. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock forthe year endedDecember 31, 2018: Please refer to Attachment 8.
h. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as ofDecember 31, 2018: Please refer to Attachment 9.
i. Names, locations and related information of investees as ofDecember 31, 2018 (excluding investment in Mainland China): Please refer to Attachment 10.
j. Financial instruments and derivative transactions: Please refer to Note 12.
(2) Investment in Mainland China
a. Investee company name, main businesses and products, total amount of capital, method of investment, accumulated inflow and outflow of investments from Taiwan, net income (loss) of investee company, percentage of ownership, investment income (loss),carrying amount of investments, cumulated inward remittance of earnings and limits on investment in Mainland China: Please refer to Attachment 11.
105
b. Directly or indirectly significant transactions through third regions with the investees in Mainland China, including price, payment terms, unrealized gain or loss, and other events with significant effects on the operating results and financial condition: Please refer to Attachment 1, Attachment 2, Attachment 3, Attachment 5 and Attachment 8.
14. OPERATING SEGMENT INFORMATION
(1) The Company determined its operating segments based on business activities with discrete financial information regularly reported through the Company’s internal reporting protocols to the Company’s chief operating decision maker. The Company is organized into business units based on its products and services. As of December 31, 2018, the Company had the following segments: wafer fabrication and new business. The operating segment information was prepared according to the accounting policies described in Note 4. The primary operating activity of the wafer fabrication segment is the manufacture of chips to the design specifications of our customers by using our own proprietary processes and techniques. The Company maintains a diversified customer base across industries, including communication, consumer electronics, computer, memory and others, while continuing to focus on manufacturing for high growth, large volume applications, including networking, telecommunications, internet, multimedia, PCs and graphics. New business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED).
Reportable segment information for theyears ended December 31, 2018 and 2017 were as follows:
|
| For the year ended December 31, 2018 | ||||||||
|
| Wafer Fabrication |
| New Business |
| Subtotal |
| Adjustment and Elimination |
| Consolidated |
Net revenue from external customers |
| $151,023,932 |
| $228,639 |
| $151,252,571 |
| $- |
| $151,252,571 |
Net revenue from sales among intersegments |
| - |
| 19,290 |
| 19,290 |
| (19,290) |
| - |
Segment net income (loss), net of tax |
| 2,688,331 |
| (602,809) |
| 2,085,522 |
| 557,530 |
| 2,643,052 |
Capital expenditure |
| 19,589,770 |
| 305 |
| 19,590,075 |
| - |
| 19,590,075 |
Depreciation |
| 49,777,242 |
| 171,347 |
| 49,948,589 |
| - |
| 49,948,589 |
Share of profit or loss of associates and joint ventures |
| (1,201,986) |
| (23,245) |
| (1,225,231) |
| 557,530 |
| (667,701) |
Income tax expense (benefit) |
| (456,058) |
| (2,595) |
| (458,653) |
| - |
| (458,653) |
106
|
| For the year ended December 31, 2017 | ||||||||
|
| Wafer Fabrication |
| New Business |
| Subtotal |
| Adjustment and Elimination |
| Consolidated |
Net revenue from external customers |
| $148,939,836 |
| $344,870 |
| $149,284,706 |
| $- |
| $149,284,706 |
Net revenue from sales among intersegments |
| - |
| 13,600 |
| 13,600 |
| (13,600) |
| - |
Segment net income (loss), net of tax |
| 6,728,620 |
| (665,895) |
| 6,062,725 |
| 568,540 |
| 6,631,265 |
Capital expenditure |
| 44,229,488 |
| 6,788 |
| 44,236,276 |
| - |
| 44,236,276 |
Depreciation |
| 50,737,240 |
| 227,880 |
| 50,965,120 |
| - |
| 50,965,120 |
Share of profit or loss of associates and joint ventures |
| (258,959) |
| (32,619) |
| (291,578) |
| 568,540 |
| 276,962 |
Income tax expense (benefit) |
| 1,167,154 |
| 3 |
| 1,167,157 |
| - |
| 1,167,157 |
|
| As of December 31, 2018 | ||||||||
|
| Wafer Fabrication |
| New Business |
| Subtotal |
| Adjustment and Elimination (Note) |
| Consolidated |
Segment assets |
| $363,529,040 |
| $1,263,368 |
| $364,792,408 |
| $(187,502) |
| $364,604,906 |
Segment liabilities |
| $157,000,054 |
| $1,068,722 |
| $158,068,776 |
| $(361) |
| $158,068,415 |
|
| As of December 31, 2017 | ||||||||
|
| Wafer Fabrication |
| New Business |
| Subtotal |
| Adjustment and Elimination (Note) |
| Consolidated |
Segment assets |
| $392,370,323 |
| $3,030,057 |
| $395,400,380 |
| $(1,301,218) |
| $394,099,162 |
Segment liabilities |
| $178,362,985 |
| $1,700,045 |
| $180,063,030 |
| $(1,452) |
| $180,061,578 |
Note: The adjustment primarily consisted of elimination entries for wafer fabrication segment’s investments in new business segment that was accounted for under the equity method.
107
(2) Geographic non-current assets information
|
| As of December 31, | ||
|
| 2018 |
| 2017 |
Taiwan |
| $90,046,190 |
| $114,047,141 |
Singapore |
| 16,881,746 |
| 18,501,088 |
China (includes Hong Kong) |
| 73,627,957 |
| 80,180,759 |
USA |
| 31,919 |
| 29,866 |
Europe |
| 155,489 |
| 165,590 |
Others |
| 232 |
| 60 |
Total |
| $180,743,533 |
| $212,924,504 |
Non-current assets include property, plant and equipment, intangible assets, prepayment for equipment and other noncurrent assets.
(3) Major customers
Individual customers accounting for at least 10% of net sales for the years ended December 31, 2018 and 2017 were as follows:
|
| For the years ended December 31, | ||
|
| 2018 | 2017 | |
Customer A from wafer fabrication segment |
| $15,357,470 | $15,632,722 |
108
ATTACHMENT 1 (Significant intercompany transactions between consolidated entities) | ||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||
For the year ended December 31, 2018 | ||||||||||||||
Related party | Counterparty | Relationship with | Transactions | |||||||||||
No. | Account | Amount | Collection periods | Percentage of consolidated operating | ||||||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP (USA) | 1 | Sales | $57,107,585 | Net 60 days | 38% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP (USA) | 1 | Accounts receivable | 7,312,272 | - | 2% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP JAPAN | 1 | Sales | 4,159,637 | Net 60 days | 3% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP JAPAN | 1 | Accounts receivable | 905,048 | - | 0% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 1 | Sales | 1,356,567 | Net 30 days | 1% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 1 | Accounts receivable | 48,163 | - | 0% | |||||||
1 | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | UMC GROUP (USA) | 3 | Sales | 698,988 | Net 60 days | 0% | |||||||
1 | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | UMC GROUP (USA) | 3 | Accounts receivable | 120,678 | - | 0% | |||||||
2 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP (USA) | 3 | Sales | 307,471 | Net 60 days | 0% | |||||||
2 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP (USA) | 3 | Accounts receivable | 35,161 | - | 0% | |||||||
2 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP JAPAN | 3 | Sales | 272,218 | Net 60 days | 0% | |||||||
2 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP JAPAN | 3 | Accounts receivable | 61,971 | - | 0% |
For the year ended December 31, 2017 | ||||||||||||||
Related party | Counterparty | Relationship with the Company | Transactions | |||||||||||
No. | Account | Amount | Collection periods | Percentage of consolidated operating | ||||||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP (USA) | 1 | Sales | $59,968,172 | Net 60 days | 40% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP (USA) | 1 | Accounts receivable | 6,737,723 | - | 2% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP JAPAN | 1 | Sales | 4,212,523 | Net 60 days | 3% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UMC GROUP JAPAN | 1 | Accounts receivable | 659,488 | - | 0% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 1 | Sales | 998,899 | Net 30 days | 1% | |||||||
0 | UNITED MICROELECTRONICS CORPORATION | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 1 | Accounts receivable | 4,790,930 | - | 1% | |||||||
1 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP (USA) | 3 | Sales | 214,147 | Net 60 days | 0% | |||||||
1 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP (USA) | 3 | Accounts receivable | 35,498 | - | 0% | |||||||
1 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP JAPAN | 3 | Sales | 223,740 | Net 60 days | 0% | |||||||
1 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UMC GROUP JAPAN | 3 | Accounts receivable | 43,332 | - | 0% | |||||||
2 | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | UMC GROUP (USA) | 3 | Sales | 241,220 | Net 60 days | 0% | |||||||
2 | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | UMC GROUP (USA) | 3 | Accounts receivable | 141,272 | - | 0% |
Note 1: UMC and its subsidiaries are coded as follows: | ||||||||||||||
1. UMC is coded "0". | ||||||||||||||
2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above. | ||||||||||||||
Note 2: Transactions are categorized as follows: | ||||||||||||||
1. The holding company to subsidiary. | ||||||||||||||
2. Subsidiary to holding company. | ||||||||||||||
3. Subsidiary to subsidiary. | ||||||||||||||
Note 3: The sales price to the above related parties was determined through mutual agreement in reference to market conditions. | ||||||||||||||
Note 4: The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item's balance at period-end. | ||||||||||||||
For profit or loss items, cumulative balances are used as basis. | ||||||||||||||
Note 5: UMC authorized technology licenses to its subsidiary, UNITED SEMICONDUCTOR (XIAMEN) CO., LTD., in the amount of US$0.35 billion which was recognized as deferred revenue. | ||||||||||||||
Since it was a downstream transaction, the deferred revenue would be realized over time. |
109
ATTACHMENT 2 (Financing provided to others for the year ended December 31, 2018) | ||||||||||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | ||||||||||||||||||||||||||||||||
Collateral | ||||||||||||||||||||||||||||||||
No. | Lender | Counter-party | Financial statement account | Related Party | Maximum balance for the period | Ending balance | Actual amount provided | Interest rate | Nature of financing | Amount of sales to (purchases from) counter-party | Reason for financing | Loss allowance |
| Limit of financing amount for individual counter-party (Note2) | Limit of total financing amount (Note2) | |||||||||||||||||
Item | Value | |||||||||||||||||||||||||||||||
0 | UNITED MICROELECTRONICS CORPORATION | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | Other receivables - related parties | Yes | $10,182,440 | $6,134,000 | $- | 2.05%~2.61% | The need for short-term financing | $- | Business turnover | $- | None | $- | $20,606,972 | $82,427,889 | ||||||||||||||||
TERA ENERGY DEVELOPMENT CO., LTD. | ||||||||||||||||||||||||||||||||
Collateral | ||||||||||||||||||||||||||||||||
No. | Lender | Counter-party | Financial statement account | Related Party | Maximum balance for the period | Ending balance | Actual amount provided | Interest rate | Nature of financing | Amount of sales to (purchases from) counter-party | Reason for financing | Loss allowance |
| Limit of financing amount for individual counter-party (Note3) | Limit of total financing amount (Note3) | |||||||||||||||||
Item | Value | |||||||||||||||||||||||||||||||
1 | TERA ENERGY DEVELOPMENT CO., LTD. | TIPPING POINT ENERGY COC PPA SPE-1,LLC | Other receivables | No | $2,399 | $2,399 | $2,399 | 9.00% | Needs for operation | $2,399 | - | $2,399 | None | $- | $2,399 | $32,659 | ||||||||||||||||
Note 1: | The parent company and its subsidiaries are coded as follows: |
(i) The parent company is coded "0". | |
(ii) The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above. | |
Note 2: | Limit of financing amount for individual counter-party shall not exceed 10% of the lender's net assets value as of the period. |
Limit of total financing amount shall not exceed 40% of the Company’s net asset value. | |
Note 3: | Limit of financing amount for individual counter-party shall not exceed 10% of the lender's net assets value as of the period or the needed amount for operation, which is lower. |
Limit of total financing amount shall not exceed 40% of latest financial statements of lender. |
110
ATTACHMENT 3 (Endorsement/Guarantee provided to others for the year ended December 31, 2018) | ||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | ||||||||||||||||||||
No. | Endorsor/Guarantor | Receiving party | Limit of guarantee/endorsement amount for receiving party (Note 3) | Maximum balance for the period | Percentage of accumulated guarantee amount to net assets value from the latest financial statement | Limit of total guarantee/endorsement amount (Note 4) | ||||||||||||||
Company name |
| Releationship | Ending balance | Actual amount | Amount of collateral guarantee/endorsement | |||||||||||||||
0 | UNITED MICROELECTRONICS | NEXPOWER TECHNOLOGY CORP. | 3 | $92,731,375 | $2,448,000 | $2,448,000 | $747,900 | $- | 1.19% | $92,731,375 | ||||||||||
0 | UNITED MICROELECTRONICS | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 3 | 92,731,375 | 15,427,010 | 15,427,010 | 14,766,115 | - | 7.49% | 92,731,375 | ||||||||||
0 | UNITED MICROELECTRONICS | SOCIALNEX ITALIA 1 S.R.L. | 3 | 92,731,375 | 19,917 | - | - | - | - | 92,731,375 | ||||||||||
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | ||||||||||||||||||||
No. | Endorsor/Guarantor | Receiving party | Limit of guarantee/endorsement amount for receiving party (Note 8) | Maximum balance for the period | Percentage of accumulated guarantee amount to net assets value from the latest financial statement | Limit of total guarantee/endorsement amount (Note 8) | ||||||||||||||
Company name |
| Releationship | Ending balance | Actual amount | Amount of collateral guarantee/endorsement | |||||||||||||||
1 | HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | 6 | $10,202,022 | $9,020,588 | $9,020,588 | $4,219,276 | $- | 39.79% | $10,202,022 | ||||||||||
Note 1: | The parent company and its subsidiaries are coded as follows: |
1. The parent company is coded "0". | |
2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above. | |
Note 2: | According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following: |
1. A company with which it does business. | |
2. A company in which the public company directly and indirectly holds more than 50% of the voting shares. | |
3. A company that directly and indirectly holds more than 50 % of the voting shares in the public company. | |
4. A company in which the public company holds, directly or indirectly, 90% or more of the voting shares. | |
5. A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project. | |
6. A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages. | |
7. Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other. | |
Note 3: | The amount of endorsements/guarantees shall not exceed 45% of the net worth of endorsor/guarantor; and the ceilings on the amount of endorsements/guarantees for any single entity are as follows: |
1. The amount of endorsements/guarantees for any single entity shall not exceed 45% of net worth of endorsor/guarantor. | |
2. The amount of endorsements/guarantees for a company which endorsor/guarantor does business with, except the ceiling rules abovementioned shall not exceed the needed amounts arising from business dealings which is the higher amount of total sales or purchase transactions between endorsor/guarantor and the receiving party. | |
The aggregate amount of endorsements/guarantees that the Company as a whole is permitted to make shall not exceed 45% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single entity shall not exceed 45% of the Company's net worth. | |
Note 4: | Limit of total guarantee/endorsement amount shall not exceed 45% of UMC's net assets value as of December 31, 2018. |
Note 5: | On December 24, 2014, the board of directors resolved to provide endorsement to NEXPOWER TECHNOLOGY CORP.'s syndicated loan from banks including Bank of Taiwan for the amount up to NT$1,700 million. |
On December 12, 2018, the board of directors resolved to increase the endorsement amounted to NT$748 million.Total endorsement amount is up to NT$2,448 million. | |
As of December 31, 2018, actual amount provided was NT$748 million. | |
Note 6: | On Feburary 22, 2017, the board of directors resolved to guarantee UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.'s syndicated loan from banks including China Development Bank in the amount up to USD 310 million. |
On March 7, 2018, the board of directors resolved to increase the endorsement amounted to USD 152 million, on October 24, 2018, the board of directors resolved to increase the endorsement amounted to USD 41 million.Total endorsement amount is up to USD 503 million. | |
As of December 31, 2018, actual amount provided was NT$14,766 million. | |
Note 7: | On April 26, 2017, the board of directors resolved that UMC directly provided guarantee to SOCIALNEX ITALIA 1 S.R.L., NEXPOWER TECHNOLOGY CORP.'s subsidiary, in the amount up to EUR 558 thousand on June 20, 2017. |
The guarantee to SOCIALNEX ITALIA 1 S.R.L. ended in August , 2018. | |
Note 8: | Limit of total endorsed/guaranteed amount shall not exceed 45% of HEJIAN TECHNOLOGY (SUZHOU) CO., LTD.'s net assets value as of December 31, 2018. |
The amount of endorsements/guarantees for any single entity shall not exceed 45% of net worth of HEJIAN TECHNOLOGY (SUZHOU) CO., LTD.'s net assets value as of December 31, 2018. | |
The aggregate amount of endorsements/guarantees that the Company as a whole is permitted to make shall not exceed 45% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single entity shall not exceed 45% of the Company's net worth. |
111
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | ||||||||||||||||
December 31, 2018 | ||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||
Stock | ACTION ELECTRONICS CO., LTD. | - | Financial assets at fair value through profit or loss, current | 18,182 | $110,547 | 6.56 | $110,547 | None | ||||||||
Fund | MILLERFUL NO.1 REAL ESTATE INVESTMENT TRUST | - | Financial assets at fair value through profit or loss, current | 18,000 | 180,900 | 1.70 | 180,900 | None | ||||||||
Stock | PIXART IMAGING, INC. | - | Financial assets at fair value through profit or loss, current | 1,600 | 139,840 | 1.18 | 139,840 | None | ||||||||
Stock | KING YUAN ELECTRONICS CO., LTD. | - | Financial assets at fair value through profit or loss, current | 2,675 | 62,194 | 0.22 | 62,194 | None | ||||||||
Stock | PIXTECH, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 9,883 | - | 17.63 | - | None | ||||||||
Stock | UNITED FU SHEN CHEN TECHNOLOGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 17,511 | - | 15.75 | - | None | ||||||||
Stock | HOLTEK SEMICONDUCTOR INC. | - | Financial assets at fair value through profit or loss, noncurrent | 24,644 | 1,436,760 | 10.90 | 1,436,760 | None | ||||||||
Stock | OCTTASIA INVESTMENT HOLDING INC. | - | Financial assets at fair value through profit or loss, noncurrent | 6,692 | 238,077 | 9.29 | 238,077 | None | ||||||||
Stock | UNITED INDUSTRIAL GASES CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 16,680 | 1,206,192 | 7.66 | 1,206,192 | None | ||||||||
Stock | AMIC TECHNOLOGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 5,627 | - | 4.71 | - | None | ||||||||
Stock | SUBTRON TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 12,521 | 124,581 | 4.38 | 124,581 | None | ||||||||
Stock | KING YUAN ELECTRONICS CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 20,483 | 476,222 | 1.68 | 476,222 | None | ||||||||
Stock | EPISTAR CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 10,715 | 274,304 | 0.98 | 274,304 | None | ||||||||
Stock | TOPOINT TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,184 | 21,188 | 0.82 | 21,188 | None | ||||||||
Stock | PROMOS TECHNOLOGIES INC. | - | Financial assets at fair value through profit or loss, noncurrent | 324 | - | 0.72 | - | None | ||||||||
Stock-Preferred stock | TONBU, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 938 | - | - | - | None | ||||||||
Stock-Preferred stock | AETAS TECHNOLOGY INC. | - | Financial assets at fair value through profit or loss, noncurrent | 1,166 | - | - | - | None | ||||||||
Stock-Preferred stock | TA SHEE GOLF & COUNTRY CLUB | - | Financial assets at fair value through profit or loss, noncurrent | 0 | 26,700 | - | 26,700 | None | ||||||||
Stock | SILICON INTEGRATED SYSTEMS CORP. | The Company's director | Financial assets at fair value through other comprehensive income, noncurrent | 110,356 | 1,032,930 | 20.54 | 1,032,930 | None | ||||||||
Stock | UNIMICRON HOLDING LIMITED | - | Financial assets at fair value through other comprehensive income, noncurrent | 20,000 | 561,261 | 17.00 | 561,261 | None | ||||||||
Stock | MIE FUJITSU SEMICONDUCTOR LIMITED | - | Financial assets at fair value through other comprehensive income, noncurrent | 18,447 | 2,220,103 | 15.87 | 2,220,103 | None | ||||||||
Stock | UNIMICRON TECHNOLOGY CORP. | - | Financial assets at fair value through other comprehensive income, noncurrent | 196,136 | 4,373,833 | 13.03 | 4,373,833 | None | ||||||||
Stock | ITE TECH. INC. | - | Financial assets at fair value through other comprehensive income, noncurrent | 13,960 | 424,383 | 8.66 | 424,383 | None | ||||||||
Stock | NOVATEK MICROELECTRONICS CORP. | - | Financial assets at fair value through other comprehensive income, noncurrent | 16,445 | 2,335,131 | 2.70 | 2,335,131 | None | ||||||||
Stock-Preferred stock | MTIC HOLDINGS PTE. LTD. | - | Financial assets at fair value through other comprehensive income, noncurrent | 12,000 | 184,026 | - | 184,026 | None | ||||||||
Stock | WAVETEK MICROELECTRONICS CORPORATION | Subsidiary | Prepayment of investment | 13,294 | 132,937 | - | N/A | None |
112
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||
FORTUNE VENTURE CAPITAL CORP. | ||||||||||||||||
December 31, 2018 | ||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||
Stock | DARCHUN VENTURE CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 1,782 | $6,146 | 19.65 | $6,146 | None | ||||||||
Stock | SOLARGATE TECHNOLOGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 957 | - | 15.94 | - | None | ||||||||
Stock | TRONC-E CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,800 | 2,952 | 15.93 | 2,952 | None | ||||||||
Stock | CENTERA PHOTONICS INC. | - | Financial assets at fair value through profit or loss, noncurrent | 2,500 | 7,025 | 11.11 | 7,025 | None | ||||||||
Stock | EVERGLORY RESOURCE TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,500 | 18,250 | 10.23 | 18,250 | None | ||||||||
Stock | ADVANCE MATERIALS CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 10,719 | 55,523 | 8.67 | 55,523 | None | ||||||||
Stock | MONTJADE ENGINEERING CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,800 | 27,000 | 8.18 | 27,000 | None | ||||||||
Stock | WIN WIN PRECISION TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3,150 | 42,052 | 6.93 | 42,052 | None | ||||||||
Stock | RISELINK VENTURE CAPITAL CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 1,754 | 13,668 | 6.67 | 13,668 | None | ||||||||
Stock | ACT GENOMICS HOLDINGS CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 4,600 | 122,741 | 5.50 | 122,741 | None | ||||||||
Stock | LICO TECHNOLOGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 6,609 | - | 5.32 | - | None | ||||||||
Stock | ACTI CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 1,968 | 15,939 | 5.31 | 15,939 | None | ||||||||
Stock | TAIWAN AULISA MEDICAL DEVICES TECHNOLOGIES, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 800 | 9,552 | 4.97 | 9,552 | None | ||||||||
Stock | WALTOP INTERNATIONAL CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 654 | 1,432 | 4.43 | 1,432 | None | ||||||||
Stock | MERIDIGEN BIOTECH CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3,838 | 115,133 | 4.22 | 115,133 | None | ||||||||
Stock | EXCELLENCE OPTOELECTRONICS INC. | - | Financial assets at fair value through profit or loss, noncurrent | 6,374 | 111,862 | 3.72 | 111,862 | None | ||||||||
Stock | SOLID STATE SYSTEM CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3,000 | 59,250 | 3.71 | 59,250 | None | ||||||||
Stock | SUBTRON TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 10,059 | 100,085 | 3.52 | 100,085 | None | ||||||||
Stock | ANIMATION TECHNOLOGIES INC. | - | Financial assets at fair value through profit or loss, noncurrent | 265 | - | 3.16 | - | None | ||||||||
Stock | TOPOINT TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 4,416 | 79,049 | 3.08 | 79,049 | None | ||||||||
Stock | MOBILE DEVICES INC. | - | Financial assets at fair value through profit or loss, noncurrent | 261 | - | 1.96 | - | None | ||||||||
Stock | WIESON TECHNOLOGIES CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,141 | 4,564 | 1.71 | 4,564 | None | ||||||||
Stock | ALL-STARS XMI LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3 | 117,111 | 1.37 | 117,111 | None | ||||||||
Stock | CRYSTALWISE TECHNOLOGY INC. | - | Financial assets at fair value through profit or loss, noncurrent | 2,114 | 25,362 | 1.29 | 25,362 | None | ||||||||
Stock | NORATECH PHARMACEUTICALS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 1,000 | 15,970 | 0.95 | 15,970 | None |
113
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||
FORTUNE VENTURE CAPITAL CORP. | ||||||||||||||||
December 31, 2018 | ||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||
Stock | TAIWANJ PHARMACEUTICALS CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 582 | $3,917 | 0.85 | $3,917 | None | ||||||||
Stock | POWERTEC ENERGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 9,930 | 58,089 | 0.75 | 58,089 | None | ||||||||
Stock | PRIMESENSOR TECHNOLOGY INC. | - | Financial assets at fair value through profit or loss, noncurrent | 434 | 430 | 0.71 | 430 | None | ||||||||
Stock | FUSHENG PRECISION CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 700 | 111,650 | 0.59 | 111,650 | None | ||||||||
Stock | QUASER MACHINE TOOLS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 200 | 9,980 | 0.50 | 9,980 | None | ||||||||
Stock | FORTEMEDIA, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 21 | 1 | 0.02 | 1 | None | ||||||||
Fund | TRANSLINK CAPITAL PARTNERS IV, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | 41,936 | 3.90 | 41,936 | None | ||||||||
Fund | VERTEX V (C.I.) FUND L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | 23,002 | 1.89 | 23,002 | None | ||||||||
Stock-Preferred Stock | EJOULE INTERNATIONAL LIMITED | - | Financial assets at fair value through profit or loss, noncurrent | 23,909 | 184,020 | - | 184,020 | None | ||||||||
Stock-Preferred Stock | FLOADIA CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 2 | 83,180 | - | 83,180 | None | ||||||||
Stock-Preferred Stock | CEREBREX, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 1 | 36,793 | - | 36,793 | None | ||||||||
Stock-Preferred Stock | FORTEMEDIA, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 311 | 266 | - | 266 | None | ||||||||
Convertible bonds | JIH LIN TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 100 | 9,950 | - | 9,950 | None | ||||||||
Stock | SHIN-ETSU HANDOTAI TAIWAN CO., LTD. | - | Financial assets at fair value through other comprehensive income, noncurrent | 10,500 | 453,810 | 7.00 | 453,810 | None | ||||||||
Stock | UNITED MICROELECTRONICS CORP. | Parent company | Financial assets at fair value through other comprehensive income, noncurrent | 16,079 | 180,886 | 0.13 | 180,886 | None | ||||||||
TLC CAPITAL CO., LTD. | ||||||||||||||||
December 31, 2018 | ||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||
Fund | EVERYI CAPITAL ASIA FUND, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | $122,882 | 18.18 | $122,882 | None | ||||||||
Stock | WINKING ENTERTAINMENT LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 6,433 | 197,286 | 17.53 | 197,286 | None | ||||||||
Stock | BEAUTY ESSENTIALS INTERNATIONAL LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 150,500 | 107,701 | 13.99 | 107,701 | None | ||||||||
Fund | OAK HILL OPPORTUNITIES FUND, SEGREGATED PORTFOLIO | - | Financial assets at fair value through profit or loss, noncurrent | 9 | 263,173 | 9.00 | 263,173 | None | ||||||||
Stock | ACTI CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 2,252 | 18,238 | 6.08 | 18,238 | None | ||||||||
Stock | EXCELLENCE OPTOELECTRONICS INC. | - | Financial assets at fair value through profit or loss, noncurrent | 8,529 | 149,686 | 4.98 | 149,686 | None | ||||||||
Stock | EVERGLORY RESOURCE TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,200 | 8,760 | 4.91 | 8,760 | None | ||||||||
Stock | ADVANCE MATERIALS CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 5,435 | 28,152 | 4.39 | 28,152 | None |
114
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||
TLC CAPITAL CO., LTD. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Fund | TRANSLINK CAPITAL PARTNERS III, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | $167,417 | 4.24 | $167,417 | None | ||||||||||
Stock | SUNDIA MEDITECH GROUP | - | Financial assets at fair value through profit or loss, noncurrent | 779 | 12,703 | 3.23 | 12,703 | None | ||||||||||
Stock | WIESON TECHNOLOGIES CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,829 | 7,314 | 2.74 | 7,314 | None | ||||||||||
Fund | H&QAP GREATER CHINA GROWTH FUND, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | 8,889 | 2.67 | 8,889 | None | ||||||||||
Stock | ALL-STARS XMI LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2 | 100,381 | 1.17 | 100,381 | None | ||||||||||
Stock | SIMPLO TECHNOLOGY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,422 | 295,876 | 0.77 | 295,876 | None | ||||||||||
Stock | TXC CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 1,978 | 64,087 | 0.64 | 64,087 | None | ||||||||||
Stock | POWERTEC ENERGY CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 6,470 | 37,849 | 0.49 | 37,849 | None | ||||||||||
Convertible bonds | DAFENG TV LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 1,700 | 177,650 | - | 177,650 | None | ||||||||||
Stock-Preferred stock | YOUJIA GROUP LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,685 | 44,483 | - | 44,483 | None | ||||||||||
Stock-Preferred stock | ALO7 LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,377 | 225,953 | - | 225,953 | None | ||||||||||
Stock-Preferred stock | ADWO MEDIA HOLDINGS LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 5,332 | - | - | - | None | ||||||||||
Stock-Preferred stock | IMO, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 8,519 | - | - | - | None | ||||||||||
Stock-Preferred stock | HIGHLANDER FINANCIAL GROUP CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 26,499 | 184,522 | - | 184,522 | None | ||||||||||
Stock-Preferred stock | X2 POWER TECHNOLOGIES LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 35,819 | 109,754 | - | 109,754 | None | ||||||||||
Stock-Preferred stock | GAME VIDEO LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 279 | 93,930 | - | 93,930 | None | ||||||||||
Stock-Preferred stock | CLOUD MOMENT (CAYMAN) INC. | - | Financial assets at fair value through profit or loss, noncurrent | 359 | 17,109 | - | 17,109 | None | ||||||||||
Stock-Preferred stock | PLAYNITRIDE INC. | - | Financial assets at fair value through profit or loss, noncurrent | 1,739 | 124,754 | - | 124,754 | None | ||||||||||
Stock-Preferred stock | EJOULE INTERNATIONAL LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 35,863 | 276,030 | - | 276,030 | None | ||||||||||
Stock-Preferred stock | TURNING POINT LASERS LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,000 | 61,340 | - | 61,340 | None | ||||||||||
UMC CAPITAL CORP. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Convertible bonds | SWIFTSTACK, INC. | - | Financial assets at fair value through profit or loss, current | - | USD | 834 | - | USD | 834 | None | ||||||||
Convertible bonds | CLOUDWORDS, INC. | - | Financial assets at fair value through profit or loss, current | - | USD | 190 | - | USD | 190 | None | ||||||||
Convertible bonds | GLYMPSE, INC. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 584 | - | USD | 584 | None |
115
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||
UMC CAPITAL CORP. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Capital | TRANSLINK MANAGEMENT III, L.L.C. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 615 | 14.33 | USD | 615 | None | ||||||||
Fund | TRANSLINK CAPITAL PARTNERS IV, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 4,102 | 11.70 | USD | 4,102 | None | ||||||||
Fund | TRANSLINK CAPITAL PARTNERS III, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 14,759 | 11.47 | USD | 14,759 | None | ||||||||
Stock | OCTTASIA INVESTMENT HOLDING INC. | - | Financial assets at fair value through profit or loss, noncurrent | 7,035 | USD | 8,161 | 9.76 | USD | 8,161 | None | ||||||||
Stock | ALL-STARS SP IV LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 7 | USD | 7,261 | 5.03 | USD | 7,261 | None | ||||||||
Fund | TRANSLINK CAPITAL PARTNERS II, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 1,903 | 4.53 | USD | 1,903 | None | ||||||||
Fund | OAK HILL OPPORTUNITIES FUND, SEGREGATED PORTFOLIO | - | Financial assets at fair value through profit or loss, noncurrent | 4 | USD | 3,814 | 4.00 | USD | 3,814 | None | ||||||||
Fund | SIERRA VENTURES XI, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 1,997 | 1.76 | USD | 1,997 | None | ||||||||
Fund | STORM VENTURES FUND V, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | USD | 2,708 | 1.69 | USD | 2,708 | None | ||||||||
Stock | ALL-STARS XMI LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3 | USD | 3,818 | 1.37 | USD | 3,818 | None | ||||||||
Stock | ACHIEVE MADE INTERNATIONAL LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 80 | USD | 27 | 0.57 | USD | 27 | None | ||||||||
Stock | CIPHERMAX, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 95 | - | - | - | None | ||||||||||
Stock-Preferred stock | ACHIEVE MADE INTERNATIONAL LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,644 | USD | 3,169 | - | USD | 3,169 | None | ||||||||
Stock-Preferred stock | CNEX LABS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 3,052 | USD | 10,154 | - | USD | 10,154 | None | ||||||||
Stock-Preferred stock | GLYMPSE, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 1,349 | USD | 1,570 | - | USD | 1,570 | None | ||||||||
Stock-Preferred stock | ATSCALE, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 7,683 | USD | 7,559 | - | USD | 7,559 | None | ||||||||
Stock-Preferred stock | SENSIFREE LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 276 | USD | 149 | - | USD | 149 | None | ||||||||
Stock-Preferred stock | APPIER HOLDINGS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 52 | USD | 1,808 | - | USD | 1,808 | None | ||||||||
Stock-Preferred stock | DCARD HOLDINGS LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 27,819 | USD | 3,857 | - | USD | 3,857 | None | ||||||||
Stock-Preferred stock | NEXTINPUT, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 3,866 | USD | 1,164 | - | USD | 1,164 | None | ||||||||
Stock-Preferred stock | SHOCARD, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 517 | USD | 453 | - | USD | 453 | None | ||||||||
Stock-Preferred stock | GCT SEMICONDUCTOR, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 175 | USD | 23 | - | USD | 23 | None | ||||||||
Stock-Preferred stock | FORTEMEDIA, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 12,241 | USD | 2,740 | - | USD | 2,740 | None | ||||||||
Stock-Preferred stock | SIFOTONICS TECHNOLOGIES CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 3,500 | USD | 6,053 | - | USD | 6,053 | None | ||||||||
Stock-Preferred stock | NEVO ENERGY, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 4,980 | - | - | - | None |
116
ATTACHMENT 4 (Securities held as of December 31, 2018) (Excluding subsidiaries, associates and joint ventures) | ||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||
UMC CAPITAL CORP. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Stock-Preferred stock | TRILLIANT HOLDINGS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 4,000 | USD | 5,633 | - | USD | 5,633 | None | ||||||||
Stock-Preferred stock | SWIFTSTACK, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 2,855 | USD | 1,033 | - | USD | 1,033 | None | ||||||||
Stock-Preferred stock | NEXENTA SYSTEMS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 6,555 | USD | 159 | - | USD | 159 | None | ||||||||
Stock-Preferred stock | CLOUDWORDS, INC. | - | Financial assets at fair value through profit or loss, noncurrent | 9,461 | USD | 4,342 | - | USD | 4,342 | None | ||||||||
Stock-Preferred stock | ZYLOGIC SEMICONDUCTOR CORP. | - | Financial assets at fair value through profit or loss, noncurrent | 750 | - | - | - | None | ||||||||||
Stock-Preferred stock | EAST VISION TECHNOLOGY LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 2,770 | - | - | - | None | ||||||||||
Stock-Preferred stock | SENSIFREE LTD. | - | Prepayments for investments | - | USD | 565 | - | N/A | None | |||||||||
TERA ENERGY DEVELOPMENT CO., LTD. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Stock | TIAN TAI PHOTOELECTRICITY CO., LTD. | - | Financial assets at fair value through profit or loss, noncurrent | 375 | $5,985 | 1.18 | $5,985 | None | ||||||||||
NEXPOWER TECHNOLOGY CORP. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Stock | PACIFIC-GREEN INTEGRATED TECHNOLOGY INC. | - | Financial assets at fair value through profit or loss, noncurrent | 54 | $- | 18.00 | $- | None | ||||||||||
SINO PARAGON LIMITED | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Fund | SPARKLABS GLOBAL VENTURES FUND I, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | $82,182 | 11.13 | $82,182 | None | ||||||||||
Fund | SPARKLABS KOREA FUND II, L.P. | - | Financial assets at fair value through profit or loss, noncurrent | - | 35,738 | 8.09 | 35,738 | None | ||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Type of securities | Name of securities | Relationship | Financial statement account | Units (thousand)/ bonds/ shares (thousand) | Carrying amount | Percentage of ownership (%) | Fair value/ | Shares as collateral | ||||||||||
Fund | LANHOR FUND | - | Financial assets at fair value through profit or loss, noncurrent | - | RMB | 49,506 | 9.71 | RMB | 49,506 | None |
117
ATTACHMENT 5 (Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2018) | ||||||||||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | ||||||||||||||||||||||||||||||||
Type of securities | Name of the securities | Financial statement account | Counter-party | Relationship | Beginning balance | Addition | Disposal | Ending balance | ||||||||||||||||||||||||
Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Cost | Gain (Loss) | Units (thousand)/ bonds/ | Amount | |||||||||||||||||||||||
Stock | GREEN EARTH LIMITED | Investments accounted for under the equity method | Purchase of newly issued shares | Subsidaries | 420,000 | $9,243,073 | 557,000 | $16,689,894 |
| - | $- | $- | $- | 977,000 | $17,150,726 | |||||||||||||||||
Stock | TRIKNIGHT CAPITAL CORPORATION | Investments accounted for under the equity method | Purchase of newly issued shares | Associate | 84,000 | 894,809 | 84,000 | 840,000 | - | - | - | - | 168,000 | 1,520,575 | ||||||||||||||||||
Note 1 : The amounts of beginning and ending balances of investments accounted for under the equity method include adjustments under the equity method. | ||||||||||||||||||||||||||||||||
Note 2 : The ending balance includes share of loss of associates and joint ventures of $(5,570,897) thousand, retained earnings adjustment under equity method of $(2,155,223) thousand and exchange differences on translation offoreign operations adjustment under equity method of $(1,056,121) thousand. | ||||||||||||||||||||||||||||||||
Note 3 : The ending balance includes share of loss of associates and joint ventures of $(200,234) thousand,and cash dividends $(14,000) thousand. | ||||||||||||||||||||||||||||||||
FORTUNE VENTURE CAPITAL CORP. | ||||||||||||||||||||||||||||||||
Type of securities | Name of the securities | Financial statement account | Counter-party | Relationship | Beginning balance | Addition(Note 3) | Disposal | Ending balance | ||||||||||||||||||||||||
Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Cost | Gain (Loss) | Units (thousand)/ bonds/ | Amount | |||||||||||||||||||||||
Stock | MOTECH INDUSTRIES, INC. | Financial assets at fair value through profit or loss, noncurrent | Open market | - | - | $- | 21,998 | $338,776 | 21,998 | $300,414 | $338,776 | $(38,362) | - | $- | ||||||||||||||||||
Note 1 : The amounts of beginning and ending balances of financial assets at fair value through profit or loss, noncurrent are recorded at the prevailing market prices. | ||||||||||||||||||||||||||||||||
Note 2 : The disposal cost represents historical cost. | ||||||||||||||||||||||||||||||||
Note 3 : As of July 1, 2018, UMC NEW BUSINESS INVESTMENT CORP. was merged with FORTUNE VENTURE CAPITAL CORP. (FORTUNE) and FORTUNE is the surviving company. FORTUNE get the stock of MOTECH INDUSTRIES, INC. from merging. | ||||||||||||||||||||||||||||||||
GREEN EARTH LIMITED | ||||||||||||||||||||||||||||||||
Type of securities | Name of the securities | Financial statement account | Counter-party | Relationship | Beginning balance | Addition | Disposal | Ending balance | ||||||||||||||||||||||||
Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Units (thousand)/ bonds/ | Amount | Cost | Gain (Loss) | Units (thousand)/ bonds/ | Amount | |||||||||||||||||||||||
Capital | UNITED MICROCHIP CORPORATION | Investments accounted for under the equity method | Purchase of newly issued shares | Subsidaries | 410,050 | $9,008,924 | 564,000 | $16,896,828 | - | $- | $- | $- | 974,050 | $17,123,928 | ||||||||||||||||||
Note 1 : The amounts of beginning and ending balances of investments accounted for under the equity method include adjustment under the equity method. | ||||||||||||||||||||||||||||||||
Note 2 : The ending balance includes share of loss of associates and joint ventures of $(5,570,480) thousand, retained earnings adjustment under equity method of $(2,155,223) thousand and exchange differences on translation of foreign operations adjustment under equity method of $(1,056,121) thousand. | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
UNITED MICROCHIP CORPORATION | ||||||||||||||||||||||||||||||||
Type of securities | Name of the securities | Financial statement account | Counter-party | Relationship | Beginning balance | Addition | Disposal | Ending balance | ||||||||||||||||||||||||
Units (thousand)/ bonds/ shares (thousand) | Amount (Note 1) | Units (thousand)/ bonds/ shares (thousand) | Amount | Units (thousand)/ bonds/ shares (thousand) | Amount | Cost | Gain (Loss) from disposal | Units (thousand)/ bonds/ shares (thousand) | Amount (Note 1) | |||||||||||||||||||||||
Capital | UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | Investments accounted for under the equity method | Purchase of newly issued shares | Associate | - | $8,807,847 | - | $16,825,071 | - | $- | $- | $- | - | $16,843,287 | ||||||||||||||||||
Note 1 : The amounts of beginning and ending balances of investments accounted for under the equity method include adjustment under the equity method. | ||||||||||||||||||||||||||||||||
Note 2 : The ending balance includes share of loss of associates and joint ventures of $(5,578,287) thousand, retained earnings adjustment under equity method of $(2,155,223) thousand and exchange differences on translation of foreign operations adjustment under equity method of $(1,056,121) thousand. | ||||||||||||||||||||||||||||||||
|
118
ATTACHMENT 6 (Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2018) | ||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||||
Where counter-party is a related party, details of prior transactions | ||||||||||||||||||||||||
Name of properties | Transaction date | Transaction amount | Payment status | Counter-party | Relationship | Former holder of property | Relationship between former holder and acquirer of property | Date of transaction | Transaction amount | Price reference | Date of acquisition and status of utilization | Other commitments | ||||||||||||
None | ||||||||||||||||||||||||
119
ATTACHMENT 7 (Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2018) | ||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||
Names of properties | Transaction date | Date of original acquisition | Carrying amount | Transaction amount | Status of proceeds collection | Gain (Loss) from disposal | Counter-party | Relationship | Reason of disposal | Price reference | Other commitments | |||||||||||
None | ||||||||||||||||||||||
120
ATTACHMENT 8 ( Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of capital stock for the year ended December 31, 2018) | |||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | |||||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | |||||||||||||||||||||||||
Transactions | Details of non-arm's length transaction | Notes and accounts receivable (payable) | Note | ||||||||||||||||||||||
Counter-party | Relationship | Purchases (Sales) |
| Amount |
| Percentage of total purchases (sales) |
| Term | Unit price |
| Term | Balance | Percentage of total receivables (payable) | ||||||||||||
UMC GROUP (USA) | Subsidiary | Sales | $57,107,585 | 43 | % | Net 60 days | N/A | N/A | $7,312,272 | 33 | % | ||||||||||||||
UMC GROUP JAPAN | Subsidiary | Sales | 4,159,637 | 3 | % | Net 60 days | N/A | N/A | 905,048 | 4 | % | ||||||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | Subsidiary | Sales | 1,356,567 | 1 | % | Net 30 days | N/A | N/A | 48,163 | 0 | % | ||||||||||||||
FARADAY TECHNOLOGY CORPORATION | Associate | Sales | 861,160 | 1 | % | Month-end 60 days | N/A | N/A | 85,878 | 0 | % | ||||||||||||||
UMC GROUP (USA) | |||||||||||||||||||||||||
Transactions | Details of non-arm's length transaction | Notes and accounts receivable (payable) | Note | ||||||||||||||||||||||
Counter-party | Relationship | Purchases (Sales) |
| Amount |
| Percentage of total purchases (sales) |
| Term | Unit price |
| Term | Balance | Percentage of total receivables (payable) | ||||||||||||
UNITED MICROELECTRONICS CORPORATION | Parent company | Purchases | USD | 1,847,007 | 98 | % | Net 60 days | N/A | N/A | USD | 238,452 | 98 | % | ||||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | Associate | Purchases | USD | 21,006 | 1 | % | Net 60 days | N/A | N/A | USD | 3,954 | 2 | % | ||||||||||||
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | Associate | Purchases | USD | 10,180 | 1 | % | Net 60 days | N/A | N/A | USD | 1,152 | 0 | % | ||||||||||||
UMC GROUP JAPAN | |||||||||||||||||||||||||
Transactions | Details of non-arm's length transaction | Notes and accounts receivable (payable) | Note | ||||||||||||||||||||||
Counter-party | Relationship | Purchases (Sales) |
| Amount |
| Percentage of total purchases (sales) |
| Term | Unit price |
| Term | Balance | Percentage of total receivables (payable) | ||||||||||||
UNITED MICROELECTRONICS CORPORATION | Parent company | Purchases | JPY | 14,439,961 | 94 | % | Net 60 days | N/A | N/A | JPY | 3,272,967 | 94 | % | ||||||||||||
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | Associate | Purchases | JPY | 956,518 | 6 | % | Net 60 days | N/A | N/A | JPY | 225,199 | 6 | % | ||||||||||||
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | |||||||||||||||||||||||||
Transactions | Details of non-arm's length transaction | Notes and accounts receivable (payable) | Note | ||||||||||||||||||||||
Counter-party | Relationship | Purchases (Sales) |
| Amount |
| Percentage of total purchases (sales) |
| Term | Unit price |
| Term | Balance | Percentage of total receivables (payable) | ||||||||||||
UMC GROUP (USA) | Associate | Sales | RMB | 66,759 | 3 | % | Net 60 days | N/A | N/A | RMB | 7,907 | 2 | % | ||||||||||||
FARADAY TECHNOLOGY CORPORATION | Associate | Sales | RMB | 64,948 | 3 | % | Net 45 days | N/A | N/A | RMB | 9,171 | 3 | % | ||||||||||||
UMC GROUP JAPAN | Associate | Sales | RMB | 59,269 | 3 | % | Net 60 days | N/A | N/A | RMB | 13,935 | 4 | % | ||||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | |||||||||||||||||||||||||
Transactions | Details of non-arm's length transaction | Notes and accounts receivable (payable) | Note | ||||||||||||||||||||||
Counter-party | Relationship | Purchases (Sales) |
| Amount |
| Percentage of total purchases (sales) |
| Term | Unit price |
| Term | Balance | Percentage of total receivables (payable) | ||||||||||||
UMC GROUP (USA) | Associate | Sales | RMB | 153,304 | 11 | % | Net 60 days | N/A | N/A | RMB | 27,137 | 13 | % |
121
ATTACHMENT 9 (Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of December 31, 2018) | |||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | |||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | |||||||||||||||||||||||
Ending balance | Turnover rate (times) | Overdue receivables | Amount received in subsequent period | Loss allowance | |||||||||||||||||||
Counter-party | Relationship | Notes receivable |
| Accounts |
| Other receivables |
| Total | Amount |
| Collection status | ||||||||||||
UMC GROUP (USA) | Subsidiary | $- | $7,312,272 | $1,069 | $7,313,341 | 8.13 | $- | Collection in | $7,313,341 | $- | |||||||||||||
UMC GROUP JAPAN | Subsidiary | - | 905,048 | 3 | 905,051 | 5.32 | 193,111 | Collection in | 793,239 | - | |||||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | |||||||||||||||||||||||
Ending balance | Turnover rate (times) | Overdue receivables | Amount received in subsequent period | Loss allowance | |||||||||||||||||||
Counter-party | Relationship | Notes receivable |
| Accounts |
| Other receivables |
| Total | Amount |
| Collection status | ||||||||||||
UMC GROUP (USA) | Associate | $- | RMB | 27,137 | $- | RMB | 27,137 | 5.27 | $- | Collection in | RMB | 7,868 | $- |
122
ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2018) (Not including investment in Mainland China) | ||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||
UNITED MICROELECTRONICS CORPORATION | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
UMC GROUP (USA) | USA | IC Sales | USD | 16,438 | USD | 16,438 | 16,438 | 100.00 | $1,712,388 | $51,023 | $51,023 | |||||||||||
UNITED MICROELECTRONICS (EUROPE) B.V. | The Netherlands | Marketing support activities | USD | 5,421 | USD | 5,421 | 9 | 100.00 | 142,532 | 2,749 | 2,749 | |||||||||||
UMC CAPITAL CORP. | Cayman Islands | Investment holding | USD | 81,500 | USD | 81,500 | 71,663 | 100.00 | 3,496,187 | (114,609) | (120,668) | |||||||||||
GREEN EARTH LIMITED | Samoa | Investment holding | USD | 977,000 | USD | 420,000 | 977,000 | 100.00 | 17,150,726 | (5,570,897) | (5,570,897) | |||||||||||
TLC CAPITAL CO., LTD. | Taipei City, Taiwan | Venture capital | 4,610,000 | 5,450,000 | 387,600 | 100.00 | 4,246,675 | (28,853) | (28,853) | |||||||||||||
UMC INVESTMENT (SAMOA) LIMITED | Samoa | Investment holding | USD | 1,520 | USD | 1,520 | 1,520 | 100.00 | 42,908 | 532 | 532 | |||||||||||
FORTUNE VENTURE CAPITAL CORP. | Taipei City, Taiwan | Consulting and planning for venture capital | 4,160,053 | 4,160,053 | 462,000 | 100.00 | 5,358,068 | (196,483) | (207,925) | |||||||||||||
UMC GROUP JAPAN | Japan | IC Sales | JPY | 60,000 | JPY | 60,000 | 1 | 100.00 | 45,187 | 43,056 | 43,056 | |||||||||||
UMC KOREA CO., LTD. | Korea | Marketing support activities | KRW | 550,000 | KRW | 550,000 | 110 | 100.00 | 20,688 | 1,148 | 1,148 | |||||||||||
OMNI GLOBAL LIMITED | Samoa | Investment holding | USD | 4,300 | USD | 4,300 | 4,300 | 100.00 | 572,512 | 42,683 | 42,683 | |||||||||||
SINO PARAGON LIMITED | Samoa | Investment holding | USD | 2,600 | USD | 2,600 | 2,600 | 100.00 | 120,901 | 14,442 | 14,442 | |||||||||||
BEST ELITE INTERNATIONAL LIMITED | British Virgin Islands | Investment holding | USD | 309,102 | USD | 309,102 | 664,966 | 100.00 | 23,090,363 | 376,114 | 366,937 | |||||||||||
WAVETEK MICROELECTRONICS CORPORATION | Hsinchu County, Taiwan | Sales and manufacturing of integrated circuits | 1,707,482 | 1,707,482 | 126,230 | 77.74 | 275,854 | (308,322) | (239,687) | |||||||||||||
NEXPOWER TECHNOLOGY CORP. | Taichung City, Taiwan | Sales and manufacturing of solar power batteries | 5,956,791 | 5,777,225 | 33,998 | 47.75 | 53,958 | (351,503) | (160,342) | |||||||||||||
MTIC HOLDINGS PTE. LTD. | Singapore | Investment holding | SGD | 12,000 | SGD | 12,000 | 12,000 | 45.44 | 3,026 | (66,071) | 189,070 | |||||||||||
UNITECH CAPITAL INC. | British Virgin Islands | Investment holding | USD | 21,000 | USD | 21,000 | 21,000 | 42.00 | 568,005 | (287,977) | (120,950) | |||||||||||
TRIKNIGHT CAPITAL CORPORATION | Taipei City, Taiwan | Investment holding | 1,680,000 | 840,000 | 168,000 | 40.00 | 1,520,575 | (500,583) | (200,234) | |||||||||||||
HSUN CHIEH INVESTMENT CO., LTD. | Taipei City, Taiwan | Investment holding | 336,241 | 336,241 | 168,973 | 36.49 | 3,419,430 | (1,397,996) | (513,464) | |||||||||||||
YANN YUAN INVESTMENT CO., LTD. | Taipei City, Taiwan | Investment holding | 2,300,000 | 2,300,000 | 46,000 | 30.87 | 2,642,543 | 278,496 | 85,978 | |||||||||||||
FARADAY TECHNOLOGY CORPORATION | Hsinchu City, Taiwan | Design of application-specific integrated circuit | 38,918 | 38,918 | 34,240 | 13.78 | 1,477,167 | (417,599) | (57,528) | |||||||||||||
UMC NEW BUSINESS INVESTMENT CORP. | Taipei City, Taiwan | Investment holding | - | 5,900,000 | - | - | - | (218,697) | (218,697) | Note | ||||||||||||
| ||||||||||||||||||||||
Note:As of July 1, 2018, UMC NEW BUSINESS INVESTMENT CORP. was merged with FORTUNE VENTURE CAPITAL CORP.(FORTUNE) and FORTUNE is the surviving company. |
123
ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2018) (Not including investment in Mainland China) | |||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | |||||||||||||||||||||||||
FORTUNE VENTURE CAPITAL CORP. | |||||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | ||||||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | ||||||||||||||||||
TERA ENERGY DEVELOPMENT CO., LTD. | Hsinchu City, Taiwan | Energy Technical Services | $100,752 | $- | 18,655 | 100.00 | $81,648 | $1,786 | $(1,451) | Note 1 | |||||||||||||||
NEXPOWER TECHNOLOGY CORP. | Taichung City, Taiwan | Sales and manufacturing of solar power batteries | 1,688,630 | 1,578,630 | 23,827 | 33.46 | 37,815 | (351,503) | (121,932) | ||||||||||||||||
WINAICO IMMOBILIEN GMBH | Germany | Solar project | EUR | 5,900 | - | 5,900 | 32.78 | - | (385,242) | - | Note 1 | ||||||||||||||
UNITED LED CORPORATION HONG KONG LIMITED | Hongkong | Investment holding | USD | 22,500 | - | 22,500 | 25.14 | 167,953 | (180,315) | (22,086) | Note 1 | ||||||||||||||
CLIENTRON CORP. | Xinbei City, Taiwan | Thin client | 283,439 | 308,580 | 14,247 | 22.39 | 249,762 | 88,246 | 17,718 | ||||||||||||||||
WAVETEK MICROELECTRONICS CORPORATION | Hsinchu County, Taiwan | Sales and manufacturing of integrated circuits | 8,856 | 8,856 | 1,194 | 0.73 | 4,468 | (308,322) | (2,267) | ||||||||||||||||
UNISTARS CORPORATION | Hsinchu County, Taiwan | High brightness LED packages | - | - | - | - | - | (49,879) | (22,990) | Note 1, 2 | |||||||||||||||
| |||||||||||||||||||||||||
Note 1 : As of July 1, 2018, UMC NEW BUSINESS INVESTMENT CORP. was merged with FORTUNE VENTURE CAPITAL CORP.(FORTUNE) and FORTUNE is the surviving company. | |||||||||||||||||||||||||
Note 2 : UNISTARS CORPORATION was disposed in December 2018. | |||||||||||||||||||||||||
TLC CAPITAL CO., LTD. | |||||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | ||||||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | ||||||||||||||||||
SOARING CAPITAL CORP. | Samoa | Investment holding | USD | 900 | USD | 900 | 900 | 100.00 | $14,199 | $(1,904) | $(1,904) | ||||||||||||||
YUNG LI INVESTMENTS, INC. | Taipei City, Taiwan | Investment holding | 22,581 | 59,125 | 2,258 | 45.16 | 2,213 | (6,784) | (3,064) | ||||||||||||||||
HSUN CHIEH CAPITAL CORP. | Samoa | Investment holding | USD | 6,000 | USD | 6,000 | 6,000 | 30.00 | 161,319 | (69,437) | (20,831) | ||||||||||||||
VSENSE CO., LTD. | Taipei City, Taiwan | Medical devices, measuring equipment, reagents and consumables | 95,916 | 95,916 | 4,251 | 26.89 | 31,544 | (24,693) | (7,000) | ||||||||||||||||
NEXPOWER TECHNOLOGY CORP. | Taichung City, Taiwan | Sales and manufacturing of solar power batteries | 888,019 | 828,019 | 8,645 | 12.14 | 13,721 | (351,503) | (32,118) | ||||||||||||||||
UMC CAPITAL CORP. | |||||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | ||||||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | ||||||||||||||||||
UMC CAPITAL (USA) | USA | Investment holding | USD | 200 | USD | 200 | 200 | 100.00 | USD | 546 | USD | 11 | USD | 11 | |||||||||||
TRANSLINK CAPITAL PARTNERS I, L.P. | Cayman Islands | Investment holding | USD | 4,036 | USD | 4,036 | - | 10.38 | USD | 3,927 | USD | 3,168 | USD | 263 |
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ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2018) (Not including investment in Mainland China) | ||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||
UMC NEW BUSINESS INVESTMENT CORP.(Note) | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
TERA ENERGY DEVELOPMENT CO., LTD. | Hsinchu City, Taiwan | Energy Technical Services | $- | $190,752 | - | - | $- | $1,786 | $3,237 | |||||||||||||
UNISTARS CORPORATION | Hsinchu County, Taiwan | High brightness LED packages | - | 606,980 | - | - | - | (49,879) | (18,916) | |||||||||||||
WINAICO IMMOBILIEN GMBH | Germany | Solar project | - | EUR | 5,900 | - | - | - | (385,242) | - | ||||||||||||
UNITED LED CORPORATION HONG KONG LIMITED | Hongkong | Investment holding | - | USD | 22,500 | - | - | - | (180,315) | (23,244) | ||||||||||||
| ||||||||||||||||||||||
Note:As of July 1, 2018, UMC NEW BUSINESS INVESTMENT CORP. was merged with FORTUNE VENTURE CAPITAL CORP.(FORTUNE) and FORTUNE is the surviving company. | ||||||||||||||||||||||
TERA ENERGY DEVELOPMENT CO., LTD. | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
EVERRICH ENERGY INVESTMENT (HK) LIMITED | Hongkong | Investment holding | USD | 750 | USD | 1,092 | 750 | 100.00 | $32,358 | $2,987 | $2,987 | |||||||||||
WINAICO SOLAR PROJEKT 1 GMBH | Germany | Solar project | EUR | 1,120 | EUR | 1,120 | 1,120 | 50.00 | - | (47,087) | - | |||||||||||
WINAICO IMMOBILIEN GMBH | Germany | Solar project | EUR | 2,160 | EUR | 2,160 | 2,160 | 12.00 | - | (385,242) | - | |||||||||||
WAVETEK MICROELECTRONICS CORPORATION | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED | Samoa | Investment holding | USD | 1,500 | USD | 1,200 | 1,500 | 100.00 | $9,106 | $(7,277) | $(7,277) | |||||||||||
WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
WAVETEK MICROELECTRONICS CORPORATION (USA) | USA | Sales and marketing service | USD | 60 | USD | 60 | 60 | 100.00 | $2,601 | $194 | $194 | |||||||||||
NEXPOWER TECHNOLOGY CORP. | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
SOCIALNEX ITALIA 1 S.R.L. | Italy | Photovoltaic power plant | EUR | 3,637 | EUR | 3,637 | - | 100.00 | $125,356 | $1,342 | $1,342 |
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ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2018) (Not including investment in Mainland China) | ||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | ||||||||||||||||||||||
BEST ELITE INTERNATIONAL LIMITED | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
INFOSHINE TECHNOLOGY LIMITED | British Virgin Islands | Investment holding | USD | 354,000 | USD | 354,000 | - | 100.00 | $23,013,970 | $381,162 | $381,162 | |||||||||||
INFOSHINE TECHNOLOGY LIMITED | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
OAKWOOD ASSOCIATES LIMITED | British Virgin Islands | Investment holding | USD | 354,000 | USD | 354,000 | - | 100.00 | $23,013,970 | $381,162 | $381,162 | |||||||||||
OMNI GLOBAL LIMITED | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
UNITED MICROTECHNOLOGY CORPORATION (NEW YORK) | USA | Research & Development | USD | 950 | USD | 950 | 0 | 100.00 | $30,881 | $(29) | $(29) | |||||||||||
UNITED MICROTECHNOLOGY CORPORATION (CALIFORNIA) | USA | Research & Development | USD | 1,000 | USD | 1,000 | 0 | 100.00 | 34,343 | 2,328 | 2,328 | |||||||||||
ECP VITA PTE. LTD. | Singapore | Insurance | USD | 9,000 | USD | 9,000 | 9,000 | 100.00 | 518,747 | 41,130 | 41,130 | |||||||||||
UMC TECHNOLOGY JAPAN CO., LTD. | Japan | Semiconductor manufacturing technology development and consulting services | JPY | 35,000 | JPY | 35,000 | 4 | 100.00 | 9,111 | (246) | (246) | |||||||||||
GREEN EARTH LIMITED | ||||||||||||||||||||||
Investee company | Address | Main businesses and products | Initial Investment | Investment as of December 31, 2018 | Net income (loss) of investee company | Investment income (loss) recognized | Note | |||||||||||||||
Ending balance |
| Beginning balance | Number of shares (thousand) |
| Percentage of ownership |
| Carrying amount | |||||||||||||||
UNITED MICROCHIP CORPORATION | Cayman | Investment holding | USD | 974,050 | USD | 410,050 | 974,050 | 100.00 | $17,123,928 | $(5,570,480) | $(5,570,480) |
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ATTACHMENT 11 (Investment in Mainland China as of December 31, 2018) | |||||||||||||||||||||||||||||||||||
(Amount in thousand; Currency denomination in NTD or in foreign currencies) | |||||||||||||||||||||||||||||||||||
Investee company | Main businesses and products | Total amount of | Method of investment | Accumulated | Investment flows | Accumulated outflow of investment from Taiwan as of | Percentage of ownership | Investment income (loss) recognized | Carrying amount | Accumulated inward remittance of earnings as of | |||||||||||||||||||||||||
Outflow |
| Inflow | Net income (loss) of investee company | ||||||||||||||||||||||||||||||||
UNITRUTH ADVISOR (SHANGHAI) CO., LTD. | Investment Holding and advisory |
| $24,536 | (ii)SOARING CAPITAL CORP. |
| $24,536 | $- | $- |
| $24,536 | $(1,812) | 100.00% | $(1,812) | $13,962 | $- | ||||||||||||||||||||
SHANDONG HUAHONG ENERGY INVEST CO., INC. | Invest new energy business |
| 1,334,100 | (i) |
| 41,711 | - | - |
| 41,711 | (5,549) | - | - | - | - | ||||||||||||||||||||
JINING SUNRICH SOLAR ENERGY CORP. | To construct, operate, and maintain solar power plant |
| 1,245,160 | (iii)SHANDONG HUAHONG ENERGY INVEST CO., INC. |
| 641,923 | - | - |
| 641,923 | (5,296) | - | - | - | - | ||||||||||||||||||||
EVERRICH (SHANDONG) ENERGY CO., LTD. | Solar engineering integrated design services |
| 23,003 | (ii)EVERRICH ENERGY INVESTMENT (HK) LIMITED |
| 23,003 | - | - |
| 23,003 | 3,108 | 100.00% | 3,108 | 31,805 |
| 134,703 | |||||||||||||||||||
UNITED LED CORPORATION | Research, manufacturing and sales in LED epitaxial wafers |
| 2,576,280 | (ii)UNITED LED CORPORATION HONG KONG LIMITED |
| 621,068 | - | - |
| 621,068 |
| (176,097) | 25.14% |
| (44,270) |
| 159,785 | - | |||||||||||||||||
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | Sales and manufacturing of integrated circuits |
| 14,252,697 | (ii)OAKWOOD ASSOCIATES LIMITED |
| 9,480,158 | - | - |
| 9,480,158 |
| 351,073 | 98.14% |
| 341,739 |
| 22,248,377 | - | |||||||||||||||||
UMC (BEIJING) LIMITED | Marketing support activities | - | (ii)UMC INVESTMENT |
| 15,335 | - | - |
| 15,335 | (424) | - | (424) | - | - | |||||||||||||||||||||
UNITEDDS SEMICONDUCTOR (SHANDONG) CO., LTD. | Design support of integrated circuits |
| 133,410 | (iii)HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. | - | - | - | - |
| 14,355 | 98.14% |
| 14,359 |
| 190,865 | - | |||||||||||||||||||
UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. | Sales and manufacturing of integrated circuits |
| 56,467,090 | (ii)UNITED MICROCHIP CORPORATION and (iii)HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. |
| 12,368,230 |
| 17,227,277 | - |
| 29,595,507 |
| (11,435,314) | 64.95% |
| (7,178,312) |
| 21,990,833 | - | ||||||||||||||||
Accumulated investment in Mainland China as of | Investment amounts authorized by Investment Commission, MOEA | Upper limit on investment | |||||||||||||||||||||||||||||||||
$40,443,241 | $50,621,295 | $123,641,834 | |||||||||||||||||||||||||||||||||
Note 1: | The methods for engaging in investment in Mainland China include the following: |
| (i) Direct investment in Mainland China. |
| (ii) Indirectly investment in Mainland China through companies registered in a third region (Please specify the name of the company in third region). |
| (iii) Other methods. |
Note 2: | The investment income (loss) recognized in current period, the investment income (loss) were determined based on the following basis: |
| (i) The financial report was audited by an international certified public accounting firm in cooperation with an R.O.C. accounting firm. |
| (ii) The financial statements were audited by the auditors of the parent company. |
| (iii) Others. |
Note 3: | Initial investment amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rates at the financial report date. |
Note 4: | The Company indirectly invested in HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. via investment in BEST ELITE INTERNATIONAL LIMITED, an equity investee. The investment has been approved by the Investment Commission, MOEA in the total amount of US$383,569 thousand. As of December 31, 2018, the amount of investment has been all remitted. |
Note 5: | The investment to UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. (USCXM) from HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. and indirectly invested in USCXM via investment in GREEN EARTH LIMITED. |
| The consent to invest in USCXM's investment has been approved by the Investment Commission, MOEA in the total amount of US$1,222,356 thousand. As of December 31, 2018, the amount of investment has been all remitted. |
Note 6: | The liquidation of UMC (BEIJING) LIMITED was completed as of June 20, 2018. |
127