WAN HAI LINES LTD. AND ITS SUBSIDIARIES

Transcription

1 Stock Code:2615 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) CONSOLIDATED INTERIM FINANCIAL STATEMENTS MARCH 31, 2017 AND 2016 (With Independent Auditors Report Thereon) Address: 10TH FLOOR, 136, SUNG CHIANG ROAD, TAIPEI, TAIWAN Telephone: (02) The auditor s report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditor s report and consolidated financial statements, the Chinese version shall prevail. 1

2 Table of contents Contents Page 1. Cover Page 1 2. Table of Contents 2 3. Independent Auditors Review Report 3 4. Consolidated Balance Sheets 4 5. Consolidated Statements of Comprehensive Income 5 6. Consolidated Statements of Changes in Equity 6 7. Consolidated Statements of Cash Flows 7 8. Notes to the Consolidated Financial Statements (1)Company history 8 (2)Approval date and procedures of the consolidated financial statements 8 (3)New Accounting Standards and Interpretations (4)Summary of significant accounting policies (5)Significant Accounting Judgments, Estimations, Assumptions, and Sources of Estimation Uncertainty (6)Explanation to Significant Accounts (7)Related Party Transactions 8~11 11~ ~33 33~36 (8)Pledged Assets 36 (9)Commitments and Contingencies 36~37 (10)Losses Due to Major Disasters 37 (11)Subsequent Events 37 (12)Other 37 (13)Other disclosures i) Information on significant transactions 37~41 ii) Information on investees 41~42 iii)information on investment in mainland China 43 (14)Segment Information 43 2

3 Independent Accountants Review Report To the Board of Directors of Wan Hai Lines Ltd.: We have reviewed the accompanying consolidated balance sheets of Wan Hai Lines Ltd. and its subsidiaries as of March 31, 2017 and 2016, the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2017 and These consolidated interim financial statements are the responsibility of the Company s management. Our responsibility is to issue a report on these consolidated interim financial statements based on our review. Except as described in paragraphs 3, we conducted our reviews in accordance with Statement on Auditing Standard 36, "Engagements to Review Financial Statements". A review consists principally of inquiries of the Company's personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with the generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated interim financial statements taken as a whole. Accordingly, we do not express such an opinion. Wan Hai Lines Ltd. and its subsidiaries long term investments under equity method of $437,566 thousand as of March 31, 2017, and related investment income (loss) thereof amounting to $14,415 thousand for the three months ended March 31, 2017, were recognized based upon financial statements prepared by investee companies. 3

4 Based on our reviews, except for the effects of the adjustments, if any, as might have been determined to be necessary had the financial statements of some consolidated subsidiaries and some equity method investees as described in paragraphs 3 above been reviewed by independent accountants, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to in the first paragraph in order for them to be in confom1ity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 Interim Financial Reporting endorsed by the Financial Supervisory Commission of the Republic of China. KPMG Taipei, Taiwan (Republic of China) May 11, 2017 Notes to Readers The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China. The auditor s report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditor s report and consolidated financial statements, the Chinese version shall prevail. 3-1

5 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) AS OF MARCH 31, 2017 AND 2016 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS CONSOLIDATED BALANCE SHEETS March 31, 2017, December 31, 2016, and March 31, 2016 (Expressed in Thousands of New Taiwan Dollars) Assets Amount % Amount % Amount % Current assets: 1100 Cash and cash equivalents (notes (6)(a)) $ 17,242, ,327, ,979, Available-for-sale financial assets current (notes (6)(b)) 4,180, ,984, ,712, Notes receivable, net (notes (6)(c)) 24,119-26,123-24, Accounts receivable (notes (6)(c) and (7)) 2,204, ,387, ,093, Other receivables (notes (6)(c) and (7)) 1,343, ,067, , Inventories, net (note) 1,065, ,251, , Receivables from agents (note) 641, , , Other current assets (notes (6)(C) and (7)) 530, , ,989 1 Non-current assets: 1523 Available-for-sale financial assets non-current 27,232, ,398, ,463, (notes (6)(b)) 192, , , Financial assets measured at cost non-current (notes (6)(b)) 708, , , Bond potfolios with inactive market non-current (notes (6)(b)) 1,215, ,288, ,287, Long-term equity investments under equity method (notes (6)(e)) 551, , , Property, plant and equipment (notes (6)(f) and (8) and (9)) 42,051, ,602, ,784, Intangible assets (notes (6)(g)) 24,553-28,386-36, Other non-current assets (notes (6)(r) and (8) and (9)) 607, , , ,351, ,921, ,997, Total assets $ 72,583, ,320, ,461, Liabilities and Equity Amount % Amount % Amount % Current liabilities: 2100 Short-term loans (notes (h)) $ 58,000-63,000-50, Accounts payable (notes (7)) 6,066, ,402, ,034, Other payables (notes (6)(r) and (7)) 1,700, ,466, , Current tax liabilities(notes (6)(l)) 82,437-84, , Current portion of long-term loans (notes (6)(h) and (i) and (9)) 6,177, ,202, ,648, Payable to agents (notes (7)) 9,452-21,048-12, Other current liabilities 1,069, ,287, ,305,617 2 Non-Current liabilities: 15,164, ,526, ,404, Bonds payable (note (6)(i)) 9,300, ,300, ,200, Long-term loans (notes (6)(h) and (8)) 13,162, ,962, ,642, Deferred income tax liabilities (note (6)(l)) 939, , ,053, Accrued pension liabilities (note (6)(k)) 794, , , Guarantee deposits received 466, , , ,662, ,488, ,283, Total liabilities 39,826, ,014, ,688, Equity attributable to owners of parent (notes (6)(m) and (n)): 3100 Common stock 22,182, ,182, ,182, Capital surplus 1,261, ,261, ,261,681 2 Retained earnings: 3310 Legal reserve 6,389, ,389, ,995, Special reserve 1,053, ,053, ,117, Accumulated profit and loss 2,433, ,635, ,650,053 6 Other equity interest: 3411 Exchange differences on translation of foreign financial 9,875, ,078, ,762, statements, parent (943,806) (1) 572, , Unrealized gains (losses) on available-for-sale financial assets, parent 182,579-12,120-4,473 - (761,227) (1) 584, ,443 - Total equity attributable to owners of parent: 32,559, ,107, ,618, XX Non-controlling interests(note) 198, , ,018 - Total equity 32,757, ,305, ,773, Total liabilities and equity $ 72,583, ,320, ,461, See accompanying notes to financial statements. 4

6 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Three Months Ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars) For the Three Months Ended March 31, Amount % Amount % 4000 Operating revenue (notes (6)(o) and (7)) $ 13,876, ,053, Operating costs (notes (6)(d) and (7)) 12,917, ,819, Gross profit 959, ,233, Operating expenses 945, ,029,064 8 Income from operations 13, ,660 1 Non-operating income and expenses (notes (6)(e) and (q)): 7010 Other income 51,246-71, Other gains and losses (196,315) (1) (125,330) (1) 7050 Finance costs (126,709) - (130,957) (1) 7060 Share of profit of associates and joint ventures accounted for using equity method 22,723-6,075 - Total non-operating income and expenses (249,055) (1) (178,428) (1) Profit before tax (235,346) (1) 26, Less: Income tax expense(notes (6)(l)) (35,033) - 11,014 - Net profit (200,313) (1) 15, Other comprehensive income: 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations (1,518,391) (11) (384,206) (3) 8362 Gains (loss) on valuation of available-for-sale financial assets 170, , Income tax related to componests of other comprehensive income Total items that will be reclassified subsequently to profit or loss (1,347,932) (10) (156,923) (1) 8300 Other comprehensive income (loss), net of tax (1,347,932) (10) (156,923) (1) Total comprehensive income $ (1,548,245) (11) (141,705) (1) Profit attributable to: Owners of the parent company $ (202,864) (1) 42,998 Non-controlling interest 2,551 - (27,780) - $ (200,313) (1) 15,218 Comprehensive income attributable to: Owners of the parent company $ (1,548,811) (11) (114,931) (1) Non-controlling interest (26,774) - $ (1,548,245) (11) (141,705) (1) Basic earnings per share (New Taiwan Dollars) (note (6)(n)) $ (0.09) 0.02 Diluted earnings per share (New Taiwan Dollars) (note (6)(n)) $ (0.09) 0.02 See accompanying notes to financial statements. 5

7 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Three Months Ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars) Owners' Equity Attributable to Equity Holders of the Parent Company Other Equity Foreign Stock Retained Earnings Currency Translation Differences Unrealized Gains (losses) Total Owners' Equity Attributable Common Stock Capital Surplus Legal Reserve Special Reserve Retained Earnings - Unappropriat ed Arising from Foreign Operations, Net of Tax on Availablefor-sale Financial Assets to Equity Holders of the Parent Company Noncontrolling Interest Total Balance as of January 1, 2016 $ 22,182,975 1,261,681 5,995,044 1,117,003 4,607, ,182 (222,810) 35,733, ,792 35,914,922 Net profit , ,998 (27,780) 15,218 Other comprehensive income (385,212) 227,283 (157,929) 1,006 (156,923) Total comprehensive income ,998 (385,212) 227,283 (114,931) (26,774) (141,705) Balance as of March 31, 2016 $ 22,182,975 1,261,681 5,995,044 1,117,003 4,650, ,970 4,473 35,618, ,018 35,773,217 Balance as of January 1, 2017 $ 22,182,975 1,261,681 6,389,335 1,053,282 2,635, ,600 12,120 34,107, ,534 34,305,484 Net profit (202,864) - - (202,864) 2,551 (200,313) Other comprehensive income (1,516,406) 170,459 (1,345,947) (1,985) (1,347,932) Total comprehensive income (202,864) (1,516,406) 170,459 (1,548,811) 566 (1,548,245) Balance as of March 31, 2017 $ 22,182,975 1,261,681 6,389,335 1,053,282 2,433,093 (943,806) 182,579 32,559, ,100 32,757,239 See accompanying notes to financial statements. 6

8 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars) Cash flows from operating activities: For the three months ended March 31, Profit before income tax $ (235,346) 26,232 Adjustments: Adjustments to reconcile net income to net cash provided by operating activities Depreciation 1,005,884 1,088,634 Amortization 4,241 5,794 Interest expenses 126, ,957 Interest revenue (51,246) (71,784) Investment income under the equity method (22,723) (6,075) Gain disposal of property, plant and equipment, net (33,065) (75,005) Gain on disposal of available-for-sale assets-current (5,892) - Unrealized foreign exchange loss (257,608) (148,763) Total adjustments to reconcile net income to net cash provided by operating activities 766, ,758 Changes in operating assets and liabilities: Changes in operating assets, net: Notes receivable 2,004 3,244 Accounts receivable (including related parties) 182,522 41,030 Other receivables (255,612) 469,087 Inventories 186,330 88,484 Receivables from agents 71, ,941 Other current assets 111,019 (39,216) Total changes in operating assets, net 298, ,570 Changes in operating liabilities, net: Accounts payable (including related parties) (336,366) (237,592) Other payables 19,137 (311,917) Payables to agents (11,596) (2,559) Other current liabilities (217,631) (55,968) Accrued pension liabilities (14,263) (12,565) Total changes in operating liabilities, net (560,719) (620,601) Total changes in operating assets and liabilities, net (262,631) 81,969 Total adjustments 503,669 1,005,727 Cash inflow generated from operations 268,323 1,031,959 Income taxes paid (29,071) (43,516) Net cash operating by operating activities 239, ,443 See accompanying notes to financial statements. 7

9 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars) Cash flows from investing activities: For the three months ended March 31, Acquisition of available-for-sale financial assets (70,241) (53,185) Proceeds from sale of available-for-sale financial assets 35,453 - Long-term equity investment under equity method (202,896) (25,074) Acquisition of property, plant and equipment (1,050,345) (1,689,249) Disposal of property, plant and equipment 38, ,415 Acquisition of intangible assets (87) (2,603) Other non-current assets 16,365 3,277 Interest received 55,082 66,491 Dividends received 32,842 4,293 Net cash used in investing activities (1,145,565) (1,565,635) Cash flows from financing activities: Increase in short-term debt (5,000) - Repayment of long-term loans (924,246) (1,480,428) Guarantee deposits (10,575) 64,700 Interest paid (81,297) (70,731) Net cash (used in) provided by financing activities (1,021,118) (1,486,459) Foreign exchange rate effects (157,143) 166,027 Net (decrease) increase in cash and cash equivalents (2,084,574) (1,897,624) Cash and cash equivalents, beginning of period 19,327,191 21,877,453 Cash and cash equivalents, end of period $ 17,242,617 19,979,829 See accompanying notes to financial statements. 7-1

10 (English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) AS OF MARCH 31, 2017 AND 2016 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified) (1) Company history Wan Hai Lines Ltd. (the Company) was incorporated as a company limited by shares on February 24, 1965, under the approval of the Ministry of Economic Affairs, ROC. The address of the Company s registered office is 10F, No. 136 Songjiang Rd., Taipei City. The Company and its subsidiaries (the Group) are primarily involved in the business of international marine transportation, shipping agencies, container storage service, and the sale and rental of vessels and containers. (2) Approval date and procedures of the consolidated financial statements The consolidated interim financial statements for the three months ended March 31, 2017 and 2016 were authorized for issuance by the board of directors on May 11, (3) New Accounting Standards and Interpretations (a) Impact of the International Financial Reporting Standards ( IFRSs ) endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already taken effect. According to Ruling No issued on July 18, 2016, by the FSC, public entities are required to conform to the IFRSs which were issued by the International Accounting Standards Board (IASB) before January 1, 2016, and were endorsed by the FSC on January 1, 2017 in preparing their financial statements. The related new standards, interpretations and amendments are as follows: New, Revised or Amended Standards and Interpretations Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying the Consolidation Exception" Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations" Effective date per IASB January 1, 2016 January 1, 2016 IFRS 14 "Regulatory Deferral Accounts" January 1, 2016 Amendment to IAS 1 " Presentation of Financial Statements-Disclosure Initiative" Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization" January 1, 2016 January 1, 2016 Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants" January 1, 2016 Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions" July 1, 2014 Amendment to IAS 27 "Equity Method in Separate Financial Statements" January 1, 2016 Amendments to IAS 36 " Impairment of Non-Financial assets- Recoverable Amount Disclosures for Non Financial Assets" January 1,

11 New, Revised or Amended Standards and Interpretations Amendments to IAS 39 " Financial Instruments-Novation of Derivatives and Continuation of Hedge Accounting" Effective date per IASB January 1, 2014 Annual Improvements to IFRSs Cycle and Cycle July 1, 2014 Annual Improvements to IFRSs Cycle January 1, 2016 IFRIC 21 "Levies" January 1, 2014 The Group assessed that the initial application of the above IFRSs would not have any material impact on the consolidated financial statements. (b) Newly released or amended standards and interpretations not yet endorsed by the FSC A summary of the new standards and amendments issued by the IASB but not yet endorsed by the FSC. The FSC announced that the Group should apply IFRS 9 and IFRS 15 starting January 1, As of the date the Group s financial statements were issued, the FSC has yet to announce the effective dates of the other IFRSs. As of the end of reporting date is as follows: Effective date New, Revised or Amended Standards and Interpretations per IASB IFRS 9 "Financial Instruments" January 1, 2018 Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture" Effective date to be determined by IASB IFRS 15 "Revenue from Contracts with Customers" January 1, 2018 IFRS 16 "Leases" January 1, 2019 Amendment to IFRS 2 "Clarifications of Classification and Measurement of Share based Payment Transactions" Amendment to IFRS 15 "Revenue from Contracts with Customers- Clarifications of IFRS 15" January 1, 2018 January 1, 2018 Amendment to IAS 7 "Statement of Cash Flows-Disclosure Initiative" January 1, 2017 Amendment to IAS 12 "Income Taxes-Recognition of Deferred Tax Assets for Unrealized Losses" Amendments to IFRS 4 " Insurance Contracts"( Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts ) Annual Improvements to IFRS Standards Cycle: January 1, 2017 January 1, 2018 IFRS 12 "Disclosure of Interests in Other Entities" January 1, 2017 IFRS 1 "First-time Adoption of International Financial Reporting Standards" and IAS 28 "Investments in Associates and Joint Ventures" January 1, 2018 IFRIC 22 "Foreign Currency Transactions and Advance Consideration" January 1, 2018 Amendments to IAS 40 Investment Property January 1,

12 The Group is still currently determining the potential impact of the standards listed below: Issuance / Release Dates Standards or Interpretations Content of amendment May 28, 2014 April 12, 2016 IFRS 15 "Revenue from Contracts with Customers" IFRS 15 establishes a five-step model for recognizing revenue that applies to all contracts with customers, and will supersede IAS 18 "Revenue," IAS 11 "Construction Contracts," and a number of revenue-related interpretations. November 19, 2013 July 24, 2014 Final amendments issued on April 12, 2016, clarify how to (i) identify performance obligations in a contract; (ii) determine whether a company is a principal or an agent; (iii) account for a license for intellectual property (IP); and (iv) apply transition requirements. IFRS 9 "Financial Instruments" The new standard will replace IAS 39 "Financial Instruments: Recognition and Measurement", and the main amendments are as follows: Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity's business model for managing the financial assets and the financial assets' contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore, there is a requirement that "own credit risk" adjustments be measured at fair value through other comprehensive income. Impairment: The expected credit loss model is used to evaluate impairment. Hedge accounting: Hedge accounting is more closely aligned with risk management activities, and hedge effectiveness is measured based on the hedge ratio. 10

13 Issuance / Release Dates Standards or Interpretations Content of amendment January 13, 2016 IFRS 16 "Leases" The new standard of accounting for lease is amended as follows: For a contract that is, or contains, a lease, the lessee shall recognize a right-of-use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present interest expense on the lease liability separately from the depreciation charge for the right-of-use asset during the lease term. A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17. The Group is evaluating the impact on its financial position and financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation. (4) Summary of significant accounting policies (a) Statement of compliance The consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language consolidated interim financial statements, the Chinese version shall prevail. These interim consolidated financial statements have been prepared in accordance with the guidelines of IAS 34 Interim Financial Reporting endorsed by the FSC and do not include all of the information required for full annual financial statements. Except as described in the following paragraph, the significant accounting policies applied in the preparation of the interim consolidated financial statements are applied consistently with the consolidated financial statements for the year ended December 31, For the other related information, please refer to Note (4) of the consolidated financial statements for the year ended December 31, (b) Business combination The principles applied in the preparation of the interim consolidated financial statements are consistent with the consolidated financial statements for the year ended December 31, For information about the principles, please refer to Note (4)(c) of the consolidated financial statements for the year ended December 31,

14 1. List of subsidiaries in the consolidated financial statements: Name of Name of Principal Shareholding % investor subsidiary activity Note The Company The Company The Company The Company The Company The Company WHL- Singapore WHL- Singapore WHL- Singapore WHL- Singapore WHL- Singapore WHL- Singapore Wan Hai Lines (Singapore) Pte Ltd. (WHL- Singapore) Wan Hai Lines (America) Ltd. (WHL-America) T.K. Logistics International Co., Ltd. (TK) k.k. WH Corporation (WH Corporation) Wan Hai Lines (Germany) GmbH (WHL-Germany) Bao Sheng Shipping Agency Co., Ltd. (BS) Wan Hai Line (M) Sdn. Bhd. (WHL-Malaysia) Wan Hai Lines (HK) Ltd. (WHL-Hongkong) Wan Hai Lines (Phils.), Inc. (WHL-Phils.) Wan Hai Lines (Korea) Inc. (WHL-Korea) Wan Hai International Pte Ltd. (WHL-INTL.) Yi Chun Shipping Agencies Sdn. Bhd. (Yi Chun) International freight transportation, agency services for transport affairs, vessel leasing International freight transportation and agency services for transport affairs Managing container terminals and storage facilities Operating and managing container yard and vessel leasing International freight transportation and agency services for transport affairs Agency services for transportation affair and contracting ocean shipping and related services International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % ODD operation % % % 12

15 Name of Name of Principal Shareholding % investor subsidiary activity Note WHL- Singapore WHL- Singapore WHL- Singapore WHL- INTL. WHL INTL. WHL INTL. Bravely WHL- Hongkong WHL- Hongkong Dawin Dawin Wan Hai (Vietnam) Ltd. (WHL Vietnam) Wan Hai Lines (Thailand) Ltd. (WHL-Thailand) Wan Hai Lines (Ecuador) S.A. Wan Hai Lines (India) PVT Ltd. (WHL-India) Bravely International Pte. Ltd. Infinite Marine Investment Co., Ltd. Bravely (Myanmar) Transport and Logistics Company Limited Guangzhou Wan Hai Information Tachnology Ltd. (GWHIT) Dawin Logistics (International) Ltd. (DL) Shenzhen Uniwin International Logistics Ltd. (SUIL) Blue Ocean Logistics (Shanghai) Ltd. (BOL) International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and agency services for transport affairs International freight transportation and investment % % % % % % The Company did not directly or indirectly hold over one half of the voting rights of WHL-Thailand; however, the subsidiary WHL Singapore occupies three of the five seats on the board of WHL-Thailand. As a result, WHL Singapore has a direct control over WHL- Thailand % % - % % % % % % % Investment % % - % Managing container storage and logistics services Information software service Transportation, storage and investment services Freight transportation and agency services for transport affairs Containers, storage and international transportation services % % % % % % % % % % % % % % % 13

16 Name of Name of Principal Shareholding % investor subsidiary activity Note Shenzhen Uniwin Shenzhen Uniwin Shanghai Clipper International Shipping Agency Ltd. (CISA) Shenzhen Yong Chun International Shipping Management Co., Ltd. International shipping agency services International shipping management % % % The Company did not directly or indirectly hold over one half of the voting rights of CISA; however, the subsidiary, Shenzhen Uniwin, occupies four of the five seats on the board of CISA. As a result, the Company has a direct control over CISA % % % 2. List of subsidiaries which are not included in the interim consolidated financial statements: None. (c) Income taxes Tax expense in the interim financial statements is measured and disclosed according to paragraph B12 of IAS 34 Interim Financial Reporting. Income tax expense for the period is best estimated by multiplying the pretax income for the interim reporting period using the effective annual tax rate as forecasted by the management. This is fully recognized as current tax expense. Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the effective tax rate at the time of realization or liquidation and recognized directly in equity or other comprehensive income as tax expense. (d) Employee benefits Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. (5) Significant Accounting Judgments, Estimations, Assumptions, and Sources of Estimation Uncertainty The accompanying condensed interim consolidated financial statements were prepared in accordance with IAS 34 Interim Financial Reporting as endorsed by FSC, which requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31,

17 (6) Explanation to Significant Accounts Except as described in the following paragraphs, there were no significant differences with those disclosed in the 2016 annual consolidated financial statements. Please refer to Note (6) of the 2016 annual consolidated financial statements. (a) Cash and cash equivalents Cash on hand $ 52,580 49,118 57,125 Savings accounts 1,845,473 2,208,466 2,867,476 Time deposits 15,344,564 17,069,607 17,055,228 Cash and cash equivalents in consolidated statement of cash flows (b) Financial assets 1. Details of financial assets: $ 17,242,617 19,327,191 19,979, Available-for-sale financial assets $ 4,372,667 4,161,528 3,889,718 Financial assets measured at cost 708, , ,967 Bond portfolios with inactive market 1,215,200 1,288,800 1,287,000 Total $ 6,296,834 6,159,295 5,912,685 Current $ 4,180,289 3,984,324 3,712,243 Non-current 2,116,545 2,174,971 2,200,442 Total $ 6,296,834 6,159,295 5,912,685 As of March 31, 2017, December 31, 2016, and March 31, 2016, the Group s financial assets were not pledged as collateral. 2. Sensitivity analysis-equity price risk: If the equity price changes, the sensitivity analysis was based on the same variables except for the price index for both period, the impact to other comprehensive income will be as follows: For the three months ended March 31, Equity price at reporting date After-tax other comprehensive income After-tax profit (loss) After-tax other comprehensive income Increase1% $ 43,727-38,897 - After-tax profit (loss) Decrease1% $ (43,727) - (38,897) - 15

18 (c) Notes receivable, accounts receivable, other receivable, and receivables from agents Notes receivable $ 24,119 26,123 24,202 Accounts receivable 2,204,906 2,387,428 2,093,567 Other receivables 1,343,746 1,067, ,896 Receivable from agents 641, , ,237 Less: Allowance for doubtful receivables (358) (358) (364) $ 4,213,671 4,193,581 3,635,538 The Group's aging analysis of past due but not impaired notes receivables, accounts receivables, other receivables, and receivables from agents: Past due 0-30 days $ 396, , ,144 Past due days 100,884 90,807 99,516 Past due days 5,078 6,551 55,030 Past due more than 365 days 2,292 3,347 6,058 $ 504, , ,748 Movements of allowance for doubtful receivables for the three months ended March 31, 2017 and 2016 were as follows: Individually assessed impairment Collectively assessed impairment Total Balance as of January 1, 2017 $ Balance as of March 31, 2017 $ Balance as of January 1, 2016 $ Balance as of March 31, 2016 $ (d) Inventories Marine gas oil $ 111, ,260 87,802 Marine residual fuel oil 876, , ,194 Fresh lubricating oil 118, , ,512 Sub total 1,106,195 1,251, ,508 Less: Allowance for inventory valuation and obsolescence losses (40,959) (39) (16,300) Total $ 1,065,236 1,251, ,208 16

19 For the three months ended March 31, 2016, the reversal of write-downs amounted to $87,809 thousand due to the elimination of the write-down factor. For the three months ended March 31, 2017, the write-down of inventories to net realizable value amounted to $41,292 thousand, which were included in the cost of sales. As of March 31, 2017 and 2016, and December 31, 2016, the Group's inventories were not pledged as collateral. (e) Investments accounted for using equity method A summary of equity-accounted investees is as follows: Associates $ 457, , ,632 Joint Venture 93, ,283 94, Associates $ 551, , ,786 For the first quarter of 2017, the Group acquired 16.5% of the shares of Hai Phong International Container Terminal Company Limited (HICT) for USD6,459 thousand in cash; therefore, it has significant influence on it. The financial information of individually non-significant equity method affiliates included in the consolidated financial statements were as follows: The carrying amount of individually non-significant associates equity Comprehensive income attributable to owners of parent: $ 457, , ,632 For the three months ended March 31, Profit after tax from continuing operations $ 17,839 4,907 Total comprehensive income $ 17,839 4, Joint venture The financial information of individually non-significant equity method joint venture included in the consolidated financial statements were as follows: The carrying amount of individually non-significant joint ventures' equity Comprehensive income attributable to owners of parent: $ 93, ,283 94,154 For the three months ended March 31, Profit or loss after tax from continuing operations $ 4,884 1,168 Total comprehensive income $ 4,884 1,168 17

20 3. Guarantees The Group's equity-accounted investees were not pledged as collateral. (f) Property, plant and equipment The movements of the property, plant and equipment of the Group were as follows: Cost: Land Buildings Vessels Containers Other equipment Privileged wharf equipment Balance at January 1, 2017 $ 662,241 1,693,085 71,690,832 18,729,935 1,945,368 1,733,663 96,455,124 Additions , ,956 18,752 26,162 1,218,252 Reclassification , , ,085 Disposals (134,572) (24,544) - (159,116) Effect of movements in exchange rates (2,385) (77,118) (3,825,853) (2) (21,414) (850) (3,927,622) Balance at March 31, 2017 $ 659,856 1,615,967 68,226,286 19,466,317 1,918,162 1,838,135 93,724,723 Balance at January 1, 2016 $ 663,096 1,726,710 73,589,436 18,543,050 1,842,388 1,502,634 97,867,314 Additions ,201 1,290,449 16,617 3,156 1,449,423 Reclassification ,420 12,227 14,647 Disposals (300,186) (6,055) - (306,241) Effect of movements in exchange rates (914) (33,357) (1,493,766) (1) (6,342) 1,688 (1,532,692) Balance at March 31, 2016 $ 662,182 1,693,353 72,234,871 19,533,312 1,849,028 1,519,705 97,492,451 Depreciation and impairment loss: Balance at January 1, 2017 $ - 384,086 38,764,414 11,700,516 1,173, ,438 52,852,305 Depreciation for the year - 10, , ,769 35,237 25,185 1,005,884 Reclassification Disposals (123,268) (24,378) - (147,646) Effect of movements in exchange rates - (16,300) (2,006,115) (2) (14,590) (95) (2,037,102) Balance at March 31, 2017 $ - 378,649 37,542,129 11,728,015 1,170, ,528 51,673,441 Balance at January 1, 2016 $ - 347,873 37,169,317 12,292,979 1,095, ,573 51,652,730 Depreciation for the year - 11, , ,440 34,416 17,205 1,088,634 Reclassification Disposals (279,857) (5,736) - (285,593) Effect of movements in exchange rates - (2,994) (741,402) (1) (3,750) 61 (748,086) Balance at March 31, 2016 $ - 356,216 37,263,151 12,203,561 1,120, ,839 51,707,685 Total Carrying amounts: Balance at January 1, 2017 $ 662,241 1,308,999 32,926,418 7,029, , ,225 43,602,819 Balance at March 31, 2017 $ 659,856 1,237,318 30,684,157 7,738, , ,607 42,051,282 Balance at January 1, 2016 $ 663,096 1,378,837 36,420,119 6,250, , ,061 46,214,584 Balance at March 31, 2016 $ 662,182 1,337,137 34,971,720 7,329, , ,866 45,784,766 Please refer to Note (8) for details of the property, plant and equipment pledged as collateral. 18

21 (g) Intangible assets Book Value: Computer Software Trademark Total Balance at January 1, 2017 $ 25,692 2,694 28,386 Balance at March 31, 2017 $ 21,682 2,871 24,553 Balance at January 1, 2016 $ 37,409 1,173 38,582 Balance at March 31, 2016 $ 34,086 1,960 36,046 (h) Term loans The details of borrowings were as follows: Unsecured bank loans $ 124, , ,184 Secured bank loans 14,778,707 16,601,409 18,206,229 Commercial paper 1,600,000 1,600,000 - Less: current portion (3,335,877) (3,365,208) (4,698,842) Discount on commercial paper (5,046) (2,863) - Total $ 13,162,038 14,962,592 13,642,571 Unused short-term credit $ 7,611,309 7,791,889 7,025,111 Interest rate collars 0.59%~2.24% 0.86%~2.10% 0.98%~3.89% 1. For details of fixed assets provided as collateral please refer to Note (8). 2. A subsidiary, Wan Hai Lines (Singapore) Pte Ltd., entered into syndicated credit agreements with financial institutions, under which, this subsidiary and the Group shall maintain certain financial ratios (i.e. equity ratio, security ratio, etc.) on balance sheet date. Otherwise, the loan will be considered due and payable immediately. 19

22 (i) Bonds payable Unsecured bank-2011 first domestic bond issue Unsecured bank-2011 second domestic bond issue Unsecured bank-2014 first domestic bond issue Unsecured bank-2016 first domestic bond issue Interest rate Currency collars Expiration Amount TWD 1.85% 2018 $ 4,500,000 TWD 1.75% ,900,000 TWD 1.65%~1.95% ,800,000 TWD 1.18% ,000,000 Total $ 12,200,000 Current $ 2,900,000 Non-current 9,300,000 Total $ 12,200,000 Unsecured bank-2011 first domestic bond issue Unsecured bank-2011 second domestic bond issue Unsecured bank-2014 first domestic bond issue Unsecured bank-2016 first domestic bond issue Interest rate Currency collars Expiration Amount TWD 1.85% 2018 $ 4,500,000 TWD 1.75% ,900,000 TWD 1.65%~1.95% ,800,000 TWD 1.18% ,000,000 Total $ 12,200,000 Current $ 2,900,000 Non-current 9,300,000 Total $ 12,200,000 20

23 Unsecured bank-2011 first domestic bond issue Unsecured bank-2011 second domestic bond issue Unsecured bank-2014 first domestic bond issue Interest rate Currency collars Expiration Amount TWD 1.65%~1.85% $ 7,500,000 TWD 1.75% ,900,000 TWD 1.65%~1.95% ,800,000 Total $ 12,200,000 Current $ 3,000,000 Non-current 9,200,000 Total $ 12,200, Unsecured bank-2011 first domestic bond issue The Company issued an unsecured corporate bond in June It was the Company s first domestic bond issue in 2011 and was effective upon submission to the regulatory authority on June 9, The issuance terms were as follows: 1) Issue amount TWD7,500,000 thousand. There are two series of bonds categorized by the terms, with series A amounting to TWD3,000,000 thousand and series B amounting to TWD4,500,000 thousand. 2) Nominal amount Par value TWD1,000 thousand per unit. 3) Issuance period The issuance dates are June 22~24, 2011; the maturity periods for series A and B are five and seven years, respectively. 4) Issued price: at par value 5) Nominal interest rate 1) Series A: 1.65% 2) Series B: 1.85% 6) Payment of interest: The interest is paid once a year by simple interest and is rounded to the closest digit. Interest payment is postponed to the following business day if the repayment date is on a non-business day, excluding additional interest. There is no additional interest for the period after the maturity date if the bondholders apply for repayment after that date. 21

24 7) Redemption on the maturity date The ordinary bonds will be redeemed at par on the maturity date. 8) Bond form: No physical bonds were released; the bonds were registered with Taiwan Depository & Clearing Corp. (TDCC). 9) Trustee The trustee is Hua Nan Commercial Bank Ltd., which represents the bondholders interest and executes the responsibility of monitoring the duties of the Company under the contractual agreement. Holders of the bonds agree with the rights and responsibilities represented by the trustee, regardless of the date of acquiring the Company s bonds. Bondholders can review the content of the representation agreement during the office hours of the trustee. 10) Agency for payment of principal and interest Hua Nan Commercial Bank Ltd., Cheng Tung Branch is assigned for handling payments of the principal and interest according to the bondholder list provided by TDCC. 11) Underwriter: None 12) Announcement The related information can be acquired from the Market Observation Post System. 2. Unsecured bank-2011 second domestic bond issue The Company issued an unsecured corporate bond in July It was the Company s second domestic bond issue in 2011 and was effective upon submission to the regulatory authority on July 19, The issuance terms were as follows: 1) Issue amount TWD2,900,000 thousand. 2) Nominal amount Par value TWD1,000 thousand per unit. 3) Issuance period The issuance date is July 28, 2011; the maturity period is six years. 4) Issued price: at par value 5) Nominal interest rate: 1.75%. 6) Payment of interest: The interest is paid once a year by simple interest and is rounded to the closest digit. Interest payment is postponed to the following business day if the repayment date is on a non-business day, excluding additional interest. There is no additional interest for the period after the maturity date if the bond holders apply for repayment after that date. 7) Redemption on the maturity date The ordinary bonds will be redeemed at par on the maturity date. 22

25 8) Bond form: No physical bonds were released; the bonds were registered with Taiwan Depository & Clearing Corp. (TDCC). 9) Trustee The trustee is Hua Nan Commercial Bank Ltd., which represents the bondholders interest and executes the responsibility of monitoring the duties of the Company under the contractual agreement. Holders of the bonds agree with the rights and responsibilities represented by the trustee, regardless of the date of acquiring the Company s bonds. Bondholders can review the content of the representation agreement during the office hours of the trustee. 10) Agency for payment of principal and interest Land Bank of Taiwan Co., Ltd., Changan Branch is assigned for handling payments of the principal and interest according to the bondholder list provided by TDCC. 11) Underwriter: None 12) Announcement The related information can be acquired from the Market Observation Post System. 3. Unsecured bank-2014 first domestic bond issue The Company issued an unsecured corporate bond in August It was the Company s first domestic bond issue in 2014 and was effective upon submission to the regulatory authority on June 17, The issuance terms were as follows: 1) Issue amount TWD1,800,000 thousand. There are two series of bonds categorized by the terms, with series A amounting to TWD1,000,000 thousand and series B amounting to TWD800,000 thousand. 2) Nominal amount Par value TWD 1,000 thousand per unit. 3) Issuance period The issuance dates are August 14, 2014; the maturity periods for series A and B are five and seven years, respectively. 4) Issued price: at par value 5) Nominal interest rate 1) Series A: 1.65% 2) Series B: 1.95% 6) Payment of interest: The interest is paid once a year by simple interest and is rounded to the closest digit. Interest payment is postponed to the following business day if the repayment date is on a non-business day, excluding additional interest. There is no additional interest for the period after the maturity date if the bondholders apply for repayment after that date. 23

26 7) Redemption on the maturity date The ordinary bonds will be redeemed at par on the maturity date. 8) Bond form: No physical bonds were released; the bonds were registered with Taiwan Depository & Clearing Corp. (TDCC). 9) Trustee The trustee is Hua Nan Commercial Bank Ltd., which represents the bondholders interest and executes the responsibility of monitoring the duties of the Company under the contractual agreement. Holders of the bonds agree with the rights and responsibilities represented by the trustee, regardless of the date of acquiring the Company s bonds. Bondholders can review the content of the representation agreement during the office hours of the trustee. 10) Agency for payment of principal and interest Hua Nan Commercial Bank Ltd., Cheng Tung Branch is assigned for handling payments of the principal and interest according to the bondholder list provided by TDCC. 11) Underwriter: None. 12) Announcement The related information can be acquired from the Market Observation Post System. 4. Unsecured bank-2016 first domestic bond issue The Company issued an unsecured corporate bond in June It was the Company s first domestic bond issue in 2016 and was effective upon submission to the regulatory authority on June 14, The issuance terms were as follows: 1) Issue amount TWD3,000,000 thousand. 2) Nominal amount Par value TWD1,000 thousand per unit. 3) Issuance period The issuance date is June 21, 2016; the maturity period is five years. 4) Issued price: at par value 5) Nominal interest rate: 1.18% 6) Payment of interest: The interest is paid once a year by simple interest and is rounded to the closest digit. Interest payment is postponed to the following business day if the repayment date is on a non-business day, excluding additional interest. There is no additional interest for the period after the maturity date if the bond holders apply for repayment after that date. 24

27 7) Redemption on the maturity date The ordinary bonds will be redeemed at par on the maturity date. 8) Bond form: No physical bonds were released; the bonds were registered with Taiwan Depository & Clearing Corp. (TDCC). 9) Trustee The trustee is Hua Nan Commercial Bank Ltd., which represents the bondholders interest and executes the responsibility of monitoring the duties of the Company under the contractual agreement. Holders of the bonds agree with the rights and responsibilities represented by the trustee, regardless of the date of acquiring the Company s bonds. Bondholders can review the content of the representation agreement during the office hours of the trustee. 10) Agency for payment of principal and interest Hua Nan Commercial Bank Ltd., Cheng Tung Branch is assigned for handling payments of the principal and interest according to the bondholder list provided by TDCC. 11) Underwriter: MasterLink Securities Corporation. 12) Announcement The related information can be acquired from the Market Observation Post System. (j) Operating leases Lease payables from non-cancellable operating lease agreement were as follows: Less than one year $ 1,804,510 1,261,583 1,700,395 Between one and five years 1,991,933 1,417,985 1,521,806 Over five years 2,446,103 2,409,073 2,726,671 $ 6,242,546 5,088,641 5,948,872 (k) Employee benefits 1. Defined benefit plans In the prior fiscal year, there was no material volatility of the market, no material reimbursement and settlement, and no other material one-time events. As a result, pension cost in the interim financial statements was measured and disclosed according to the actuarial report as of December 31, 2016 and The Group s pension expenses recognized in profit or loss for the three months ended March 31, 2017 and 2016, were $16,528 thousand and $26,312 thousand, respectively. The pension expenses are included in operating expenses and operating costs. 25