ctci corporation and subsidiaries · 2020. 6. 15. · 227,985 - increase in other receivables -...

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CTCI CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

MARCH 31, 2020 AND 2019

------------------------------------------------------------------------------------------------------------------------------------

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying

financial statements have been translated into English from the original Chinese version prepared and used in

the Republic of China. In the event of any discrepancy between the English version and the original Chinese

version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and

financial statements shall prevail.

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) (The balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

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March 31, 2020 December 31, 2019 March 31, 2019 Assets Notes AMOUNT % AMOUNT % AMOUNT %

Current assets 1100 Cash and cash equivalents 6(1) $ 16,901,415 25 $ 20,767,581 30 $ 17,013,679 24 1110 Financial assets at fair value

through profit or loss - current 6(2)

36,742 - 275,845 1 410,613 1 1120 Financial assets at fair value

through other comprehensive

income - current

6(3)

392,579 1 464,943 1 517,490 1 1136 Financial assets at amortized

cost - current 6(4)

49,179 - 277,164 - 30,460 - 1140 Contract assets - current 6(24) 15,527,470 23 18,653,485 27 20,803,659 30 1150 Notes receivable, net 6(5) 30,708 - 63,360 - 14,614 - 1170 Accounts receivable, net 6(5) 6,998,445 10 4,513,304 7 5,284,252 8 1180 Accounts receivable - related

parties 7

940,007 1 760,878 1 461,030 1 1200 Other receivables 103,815 - 245,735 - 170,805 - 1210 Other receivables - related

parties 7

31,977 - - - - - 1220 Current income tax assets 205,545 - 204,024 - 144,683 - 130X Inventories 149,190 - 144,407 - 186,176 - 1410 Prepayments 6(6) 3,161,064 5 2,758,670 4 4,305,582 6 1460 Non-current assets or disposal

groups classified as held for

sale, net

- - 38,380 - - - 1470 Other current assets 6(15) 2,370,290 4 6,817 - 277,399 - 11XX Total current assets 46,898,426 69 49,174,593 71 49,620,442 71 Non-current assets 1517 Financial assets at fair value

through other comprehensive

income - non-current

6(3)

840,909 1 858,499 1 780,958 1 1535 Financial assets at amortized

cost - non-current 6(4) and 8

130,720 - 130,720 - 107,880 - 1550 Investments accounted for

using equity method 6(7)

2,175,411 3 2,173,160 3 3,538,560 5 1600 Property, plant and equipment,

net 6(8) and 8

12,216,376 18 11,788,472 17 10,602,336 15 1755 Right-of-use assets 6(9) and 8 414,038 1 443,854 1 393,422 1 1760 Investment property, net 6(10) and 8 802,798 1 803,823 1 807,052 1 1780 Intangible assets 198,959 1 191,971 - 189,587 - 1840 Deferred income tax assets 778,493 1 784,379 1 575,125 1 1900 Other non-current assets 6(11) and 8 3,386,244 5 3,145,040 5 3,263,263 5 15XX Total non-current assets 20,943,948 31 20,319,918 29 20,258,183 29 1XXX Total assets $ 67,842,374 100 $ 69,494,511 100 $ 69,878,625 100

(Continued)

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) (The balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

The accompanying notes are an integral part of these consolidated financial statements.

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March 31, 2020 December 31, 2019 March 31, 2019 Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %

Current liabilities 2100 Short-term borrowings 6(12) $ 5,898,549 9 $ 6,163,306 9 $ 10,947,586 16 2110 Short-term notes and bills

payable

215,891 - 199,921 - - - 2120 Financial liabilities at fair value

through profit or loss - current 6(2)

16,891 - 54,716 - 36 - 2130 Contract liabilities - current 6(24) 14,723,131 22 12,157,272 18 15,629,871 22 2150 Notes payable 38,249 - 48,369 - 11,319 - 2170 Accounts payable 6(13) 10,469,322 16 11,708,290 17 9,790,524 14 2180 Accounts payable - related

parties 7

537,144 1 648,957 1 717,262 1 2200 Other payables 6(14) 1,621,945 2 2,848,021 4 1,689,094 2 2230 Current income tax liabilities 282,959 - 217,180 - 494,799 1 2280 Current lease liabilities 7 114,153 - 146,499 - 147,908 - 2300 Other current liabilities 6(15)(17) 234,632 - 1,991,941 3 3,137,767 5 21XX Total current liabilities 34,152,866 50 36,184,472 52 42,566,166 61 Non-current liabilities 2530 Bonds payable 6(16) 5,989,911 9 5,989,529 9 - - 2540 Long-term borrowings 6(17) 5,570,521 8 5,390,673 8 3,407,744 5 2570 Deferred income tax liabilities 262,745 - 216,697 - 400,994 1 2580 Non-current lease liabilities 7 284,968 1 281,103 - 197,096 - 2600 Other non-current liabilities 6(18) 1,867,606 3 2,085,040 3 2,232,207 3 25XX Total non-current

liabilities

13,975,751 21 13,963,042 20 6,238,041 9 2XXX Total liabilities 48,128,617 71 50,147,514 72 48,804,207 70 Equity attributable to owners of

parent

Share capital 6(21) 3110 Common stock 7,633,213 11 7,633,182 11 7,632,738 11 Capital surplus 6(22) 3200 Capital surplus 3,954,225 6 3,730,448 5 3,587,786 5 Retained earnings 6(23) 3310 Legal reserve 3,741,648 5 3,741,648 5 3,558,894 5 3320 Special reserve 762,377 1 762,377 1 763,794 1 3350 Unappropriated retained

earnings

1,637,934 2 1,481,062 2 2,437,044 3 Other equity interest 3400 Other equity interest ( 1,145,000 ) ( 1 ) ( 1,180,439 ) ( 1 ) ( 223,456 ) - 3500 Treasury stocks 6(21) ( 11,835 ) - ( 11,835 ) - ( 11,835 ) - 31XX Equity attributable to

owners of the parent

16,572,562 24 16,156,443 23 17,744,965 25 36XX Non-controlling interest 4(3) 3,141,195 5 3,190,554 5 3,329,453 5 3XXX Total equity 19,713,757 29 19,346,997 28 21,074,418 30 Significant contingent liabilities

and unrecognized contract

commitments

9

Significant events after the

balance sheet date 11

3X2X Total liabilities and equity $ 67,842,374 100 $ 69,494,511 100 $ 69,878,625 100

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE AMOUNTS) (UNAUDITED)


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Three months ended March 31

2020 2019

Items Notes AMOUNT % AMOUNT %

4000 Operating revenue 6(24) and 7 $ 11,444,360 100 $ 13,712,458 100 5000 Operating costs 6(28)(29) and 7 ( 10,455,934 ) ( 91 ) ( 12,673,888 ) ( 92 )

5900 Gross profit 988,426 9 1,038,570 8

Operating expenses 6(28)(29) 6200 General and administrative expenses ( 381,642 ) ( 4 ) ( 409,167 ) ( 3 ) 6300 Research and development expenses ( 29,871 ) - ( 25,173 ) -

6000 Total operating expenses ( 411,513 ) ( 4 ) ( 434,340 ) ( 3 )

6900 Operating income 576,913 5 604,230 5

Non-operating income and expenses 7010 Other income 6(25) 58,638 1 75,398 1 7020 Other gains and losses 6(26) ( 174,833 ) ( 1 ) 27,864 - 7050 Finance costs 6(27) ( 65,698 ) ( 1 ) ( 82,057 ) ( 1 ) 7060 Share of profit (loss) of associates

and joint ventures accounted for

under equity method

6(7)

21,236 - ( 148,680 ) ( 1 )

7000 Total non-operating income and

expenses

( 160,657 ) ( 1 ) ( 127,475 ) ( 1 )

7900 Profit before income tax 416,256 4 476,755 4 7950 Income tax expense 6(30) ( 135,863 ) ( 1 ) ( 133,088 ) ( 1 )

8200 Profit for the period $ 280,393 3 $ 343,667 3

Components of other comprehensive

income that will not be reclassified to

profit or loss

8311 Actuarial losses on defined benefit

plans

( $ 244 ) - $ - - 8316 Unrealized (losses) gains from

investments in equity instruments

measured at fair value through other

comprehensive income

6(3)

( 89,923 ) ( 1 ) 36,894 - Components of other comprehensive

income that will be reclassified to

profit or loss

8361 Cumulative translation differences

of foreign operations

113,085 1 23,971 -

8300 Total other comprehensive income

for the period

$ 22,918 - $ 60,865 -

8500 Total comprehensive income for the

period

$ 303,311 3 $ 404,532 3

Profit attributable to: 8610 Owners of the parent $ 157,116 2 $ 221,473 2 8620 Non-controlling interest 123,277 1 122,194 1

$ 280,393 3 $ 343,667 3

Comprehensive income attributable

to:

8710 Owners of the parent $ 190,884 2 $ 243,503 2 8720 Non-controlling interest 112,427 1 161,029 1

$ 303,311 3 $ 404,532 3

9750 Basic earnings per share (in NT

dollars)

6(31)

$ 0.21 $ 0.29

9850 Diluted earnings per share (in NT

dollars)

6(31)

$ 0.21 $ 0.29


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

(UNAUDITED)

Equity attributable to owners of the parent

Retained Earnings Other Equity Interest

Notes

Common stock

Capital surplus

Legal reserve

Special reserve

Unappropriated

earnings

Cumulative

translation

differences of

foreign operations

Unrealized gains

(losses) from

financial assets

measured at fair

value through

other

comprehensive

income

Treasury

stocks

Total

Non-controlling

interests

Total equity


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For the three-month period ended March 31, 2019

Balance at January 1, 2019 $ 7,632,738 $ 3,545,053 $ 3,558,894 $ 763,794 $ 2,217,619 ( $ 290,028 ) $ 42,494 ( $ 11,835 ) $ 17,458,729 $ 3,167,430 $ 20,626,159

Profit for the period - - - - 221,473 - - - 221,473 122,194 343,667

Other comprehensive income (loss) - - - - - ( 6,186 ) 28,216 - 22,030 38,835 60,865

Total comprehensive income (loss) - - - - 221,473 ( 6,186 ) 28,216 - 243,503 161,029 404,532

Employee stock options exercised by subsidiary

6(22) - 31 - - - - - - 31 - 31

Share-based payment transactions 6(22) - 42,702 - - - - - - 42,702 994 43,696

Disposal of investments in equity instruments designated at fair value through other comprehensive income

- - - - ( 2,048 ) - 2,048 - - - -

Balance at March 31, 2019 $ 7,632,738 $ 3,587,786 $ 3,558,894 $ 763,794 $ 2,437,044 ( $ 296,214 ) $ 72,758 ( $ 11,835 ) $ 17,744,965 $ 3,329,453 $ 21,074,418

For the three-month period ended March 31, 2020

Balance at January 1, 2020 $ 7,633,182 $ 3,730,448 $ 3,741,648 $ 762,377 $ 1,481,062 ( $ 383,344 ) ( $ 797,095 ) ( $ 11,835 ) $ 16,156,443 $ 3,190,554 $ 19,346,997

Profit for the period - - - - 157,116 - - - 157,116 123,277 280,393

Other comprehensive income (loss) - - - - ( 244 ) 129,067 ( 95,055 ) - 33,768 ( 10,850 ) 22,918

Total comprehensive income (loss) - - - - 156,872 129,067 ( 95,055 ) - 190,884 112,427 303,311

Employee stock options exercised 6(22) 31 98 - - - - - - 129 - 129

Share-based payment transactions 6(22) - 50,116 - - - - - - 50,116 5,708 55,824

Reorganisation - 187,351 - - - 591 836 - 188,778 ( 188,778 ) -

Non-controlling interests - ( 13,788 ) - - - - - - ( 13,788 ) 21,284 7,496

Balance at March 31, 2020 $ 7,633,213 $ 3,954,225 $ 3,741,648 $ 762,377 $ 1,637,934 ( $ 253,686 ) ( $ 891,314 ) ( $ 11,835 ) $ 16,572,562 $ 3,141,195 $ 19,713,757

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) (UNAUDITED)

For the three-month periods ended March 31

Notes 2020 2019

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CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 416,256 $ 476,755 Adjustments Adjustments to reconcile profit (loss) Loss (gain) on valuation of financial assets 6(26) 1,428 ( 30,151 ) Gain on disposal of property, plant and

equipment 6(26)

( 27,872 ) ( 30 ) Share of (profit) loss of associates and joint

ventures accounted for under equity method 6(7)

( 21,236 ) 148,680 Depreciation 6(28) 208,652 143,153 Amortization 6(28) 37,200 38,447 Expected credit (gain) loss 12(2) ( 1,620 ) 13,666 Interest income 6(25) ( 34,193 ) ( 58,160 ) Interest expense 6(27) 65,698 82,057 Compensation costs of employee stock options 6(29) 55,824 43,549 Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or

loss

386,897 108,517 Contract assets - current 3,126,015 4,019,773 Notes receivable 32,652 60,392 Accounts receivable ( 2,483,521 ) 3,794,414 Accounts receivable - related parties ( 179,129 ) 483,041 Other receivables 144,511 159,991 Inventories ( 4,783 ) ( 18,831 ) Prepayments ( 402,394 ) ( 25,348 ) Other current assets ( 2,363,473 ) 271,359 Other non-current assets 174,265 157,462 Changes in operating liabilities Contract liabilities - current 2,565,859 1,709,673 Notes payable ( 10,120 ) ( 7,469 ) Accounts payable ( 1,238,968 ) ( 200,738 ) Accounts payable - related parties ( 111,813 ) ( 642,450 ) Other payables ( 1,222,194 ) ( 1,223,615 ) Other current liabilities ( 1,773,992 ) ( 4,585,497 ) Other non-current liabilities ( 233,595 ) ( 345,898 ) Cash (outflow) inflow generated from operations ( 2,893,646 ) 4,572,742 Interest received 31,602 65,841 Interest paid ( 69,199 ) ( 75,904 ) Income tax paid ( 32,245 ) ( 19,185 ) Net cash flows (used in) from operating

activities

( 2,963,488 ) 4,543,494

(Continued)

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) (UNAUDITED)

For the three-month periods ended March 31

Notes 2020 2019


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CASH FLOWS FROM INVESTING ACTIVITIES

Prepayments for long-term investment ( $ 504,206 ) $ -

Proceeds from disposal of financial assets at fair

value through other comprehensive income -

current

- 23,074

Proceeds from disposal of financial assets at

amortized cost

227,985 -

Increase in other receivables - related parties ( 31,977 ) -

Acquisition of property, plant and equipment 6(32) ( 331,575 ) ( 1,874,915 )

Proceeds from disposal of property, plant and

equipment

27,981 186

Increase in intangible assets ( 16,269 ) -

(Increase) decrease in refundable deposits ( 124,429 ) 8,836

Increase in other non-current assets ( 887 ) ( 7,096 )

Prepayments for engineering equipment ( 76,062 ) ( 164,347 )

Net cash flows from acquisitionn of subsidiaries ( 30,019 ) ( 38,749 )

Net cash flows used in investing activities ( 859,458 ) ( 2,053,011 )

CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in short-term borrowings ( 264,757 ) ( 2,466,873 )

Short-term notes and bills payable 15,970 -

Increase in long-term borrowings 196,532 2,056,762

Decrease in lease liabilities ( 44,770 ) ( 100,098 )

Increase (decrease) in deposits received (recognized

in other non-current liabilities)

16,161 ( 37,587 )

Proceeds from employee stock options exercised 129 -

Increase in non-controlling interests 37,515 -

Net cash flows used in financing activities ( 43,220 ) ( 547,796 )

Net (decrease) increase in cash and cash equivalents ( 3,866,166 ) 1,942,687

Cash and cash equivalents at beginning of period 20,767,581 15,070,992

Cash and cash equivalents at end of period $ 16,901,415 $ 17,013,679

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020 AND 2019

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

(UNAUDITED)

1. HISTORY AND ORGANIZATION

CTCI Corporation (the “Company”) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China on April 6, 1979 and commenced its operations

on May 1, 1979. The main business activities of the Company and its subsidiaries (collectively referred

herein as the “Group”) are the design, survey, construction and inspection of various engineering and

construction projects, plants, machinery and equipment and environmental protection projects. The

Company’s shares have been listed and traded on the Taiwan Stock Exchange since May 1993.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were reported to the Board of Directors on May 6, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as

follows:

The above standards and interpretations have no significant impact to the Group’s financial condition

and financial performance based on the Group’s assessment.

New Standards, Interpretations and Amendments

Effective date by

International

Accounting

Standards Board

Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of

Material’

January 1, 2020

Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020

Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark

reform’ January 1, 2020

~11~

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as

endorsed by the FSC are as follows:

The above standards and interpretations have no significant impact to the Group’s financial condition

and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial

statements for the year ended December 31, 2019, except for the compliance statement, basis of

preparation, basis of consolidation and additional policies as set out below. These policies have been

consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the

“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the

International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

B. These consolidated financial statements are to be read in conjunction with the consolidated

financial statements for the year ended December 31, 2019.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under

the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value through

profit or loss.

New Standards, Interpretations and Amendments

Effective date by

International

Accounting

Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets

between an investor and its associate or joint venture’

To be determined by

International

Accounting

Standards Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

Amendments to IAS 1, ‘Classification of liabilities as current or

non-current’

January 1, 2022

~12~

(b) Financial assets at fair value through other comprehensive income.

(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less

present value of defined benefit obligation.

B. The preparation of financial statements in conformity with International Financial Reporting

Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as

endorsed by the FSC (collectively referred herein as the“IFRSs”), requires the use of certain

critical accounting estimates. It also requires management to exercise its judgement in the process

of applying the Group’s accounting policies. The areas involving a higher degree of judgement or

complexity, or areas where assumptions and estimates are significant to the consolidated financial

statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

The basis for preparation of these consolidated financial statements is the same as that for the

preparation of the consolidated financial statements as of and for the year ended December 31,

2019.

B. Subsidiaries included in the consolidated financial statements:

March 31,

2020

December 31,

2019

March 31,

2019

CTCI Corp. CTCI Advanced

Systems Inc.

Design and

installation of

software

48.72 48.72 48.72 Note 1

CTCI Corp. CTCI

Development

Corp.

Real estate and

leasing business

100.00 100.00 100.00 Note 2

CTCI Corp. CTCI Investment

Corp.

Investments 100.00 100.00 100.00 Note 2

CTCI Corp.

CTCI Investment

Corp.

CTCI Smart

Engineering

Corp.

Planning and design

of construction

projects

97.09 97.09 97.09 Note 2

CTCI Corp. - 99.05 99.05

CTCI

Development

Corp.

0.01 0.01 0.01

CTCI Advanced

Systems Inc.

99.05 - -

Description

Note 6, 8

CTCI Resources

Engineering Inc.

Engineering

technology service

Ownership (%)

Name of InvestorName of

Subsidiary

Main Business

Activities

~13~

March 31,

2020

December 31,

2019

March 31,

2019

CTCI Corp. CTCI Americas,

Inc.

Business

development and

related engineering

services and planning

100.00 100.00 100.00 Note 2

CTCI Corp. CTCI Singapore

Pte. Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Investment

Corp.

CTCI

Development

Corp.

ECOVE

Environment

Services Corp.

CTCI Smart

Engineering

Corp.

CTCI Resources

Engineering Inc.

CTCI Chemical

Corp.

Manufacturing of

chemical products

75.49 75.49 75.49 Note 2

CTCI Corp.

CTCI Investment

Corp.

CTCI

Development

Corp.

ECOVE

Environment

Corp.

Investments 57.72 57.72 57.72

ECOVE

Environment

Corp.

100.00 100.00 98.00

ECOVE

Environment

Services Corp.

- - 2.00

ECOVE

Environment

Corp.

ECOVE Waste

Management

Corp.

Environmental

engineering

100.00 100.00 100.00

ECOVE

Environment

Corp.

ECOVE Waste

Management

Corp.

ECOVE

Environment

Services Corp.

Environmental

engineering

93.16 93.16 93.16

ECOVE

Environment

Corp.

ECOVE

Environment

Services Corp.

ECOVE Miaoli

Energy Corp.

Environmental

engineering

75.00 75.00 75.00


Subsidiary

Main Business

ActivitiesDescription

Note 4

Ownership (%)

ECOVE Wujih

Energy Corp.

Environmental

engineering

~14~

March 31,

2020

December 31,

2019

March 31,

2019

ECOVE

Environment

Corp.

100.00 100.00 60.00

ECOVE Waste

Management

Corp.

- - 40.00

ECOVE

Environment

Services Corp.

ECOVE

Environment

Consulting Corp.

Environmental

engineering

100.00 100.00 100.00 Note 2

CTCI Corp.

ECOVE

Environment

Services Corp.

SINOGAL-

Waste Services

Co., Ltd.

Environmental

engineering

60.00 60.00 60.00 Note 2

CTCI Corp. CTCI Overseas

(BVI) Corp.


CTCI Overseas

(BVI) Corp.

CTCI Overseas

Co., Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Overseas

Co., Ltd.

CTCI Beijing

Co., Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Overseas

Co., Ltd.

CIMAS

Engineering

Company

Planning and design

of construction

projects

100.00 83.00 83.00 Note 2, 3

CTCI Overseas

Co., Ltd.

Universal

Engineering

(BVI) Corp.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Overseas

Co., Ltd.

CIPEC

Construction

Company Inc.

Planning and design

of construction

projects

39.93 39.93 39.89 Note 1, 2

CTCI Overseas

Co., Ltd.

CINDA

Engineering &

Construction Pvt.

Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Corp.

CTCI Overseas

Co., Ltd.

CTCI Arabia

Ltd.

Design and

construction of

chemical factories

100.00 100.00 100.00 Note 2

CTCI Beijing

Co., Ltd.

CTCI Shanghai

Co., Ltd.

Consulting services

for construction

projects

100.00 100.00 100.00 Note 2

CTCI Shanghai

Co., Ltd.

CTCI Trading

Shanghai

Co., Ltd.

General trade 100.00 100.00 100.00 Note 2

CTCI Corp.

CTCI Overseas

Co., Ltd.

CTCI

Engineering

& Construction

Sdn. Bhd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

Yuan Ding

Resources

Management

Corp.

Environmental

engineering

Note 2, 4

Ownership (%)


Subsidiary

Main Business


~15~

March 31,

2020

December 31,

2019

March 31,

2019

CTCI Overseas

Co., Ltd.

Sumber Mampu

Sdn. Bhd.

Investments 10.00 10.00 10.00 Note 1, 2

Sumber Mampu

Sdn. Bhd.

CTCI

Engineering &

Construction

Sdn. Bhd.

CTCI Malaysia

Sdn. Bhd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Corp.

Superiority

(Thailand) Co.,

Ltd.

CTCI (Thailand)

Co., Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Advanced

Systems Inc.

Century Ahead

Ltd.


Century Ahead

Ltd.

CTCI Advanced

Systems

Shanghai Inc.

Computer skills

services

100.00 100.00 100.00 Note 2

Universal

Engineering

(BVI) Corp.

Superiority

(Thailand) Co.,

Ltd.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Corp. CTCI Machinery

Corp.

Planning and design

of construction

projects

100.00 100.00 100.00 Note 2

CTCI Corp. CCJV P1

Engineering &

Construction

Sdn. Bhd.

Planning of

construction projects

99.00 99.00 99.00 Note 2

CTCI

Development

Corp.

Crown Asia-2

Investment

Limited


CTCI Singapore

Pte. Ltd.

CTCI

Netherlands B.V.

Engineers and other

technical design and

consultancy

100.00 100.00 100.00 Note 2

CTCI Corp. CTCI-HDEC

(Chungli) Corp.

Waste water

treatment

sewerage system

51.00 51.00 51.00 Note 2

CTCI Corp. CTCI CMCE JV

Sdn. Bhd.

Planning and design

of construction

projects

51.00 51.00 51.00 Note 2

CTCI Corp. PT CTCI

International

Indonesia

Planning and design

of construction

projects

67.00 - - Note 2, 7

Ownership (%)


Subsidiary

Main Business


~16~

Note 1: Being the Company’s controlled entities, these subsidiaries that were under 50% owned

by the Company directly or indirectly were included in the consolidated financial

statements.

Note 2: The financial statements of the entity as of and for the three-month periods ended March

31, 2020 and 2019 were not reviewed by independent accountants as the entity did not

meet the definition of significant subsidiary.

Note 3: The equity interest of 33% and 17% was acquired by cash in March 2019 and February

2020, respectively.

Note 4: In May 2019, the Group implemented an organizational restructuring. ECOVE

Environment Services Corp. and ECOVE Waste Management Corp. sold its originally

held 2% equity interest in ECOVE Wujih Energy Corp. and 40% equity interest in Yuan

Ding Resources Management Corp. to ECOVE Environment Corp.

Note 5: On October 18, 2019, the subsidiary, ECOVE Central Corp. Ltd., was dissolved after the

merger with the subsidiary, ECOVE Solar Energy Corp.

Note 6: CTCI Corp. sold its 99.05% equity interest in CTCI Resources Engineering Inc. to CTCI

Advanced Systems Inc. due to the Group’s reorganization in January 2020.

Note 7: The Company jointly established PT CTCI International Indonesia with PT Eptco Dian

Persada and obtained 67% equity interest in January 2020.

March 31,

2020

December 31,

2019

March 31,

2019

ECOVE

Environment

Corp.

ECOVE

Environment

Services Corp.

ECOVE Solvent

Recycling Corp.

Environmental

engineering

90.00 90.00 90.00 Note 2

ECOVE

Environment

Corp.

ECOVE Solar

Energy Corp.

Electric Power

Supply

100.00 100.00 100.00

ECOVE Solar

Energy Corp.

ECOVE Solar

Power Corp.

Electric Power

Supply

100.00 100.00 100.00

ECOVE Solar

Energy Corp.

ECOVE Central

Corp. Ltd.

Electric Power

Supply

- - 100.00 Note 5

ECOVE Solar

Energy Corp.

ECOVE South

Corp. Ltd.

Electric Power

Supply

100.00 100.00 100.00 Note 2

ECOVE Solar

Energy Corp.

G.D

International,

LLC.

Electric Power

Supply

100.00 100.00 100.00 Note 2

G.D

International,

LLC.

Lumberton Solar

W2-090, LLC.

Electric Power

Supply

100.00 100.00 100.00 Note 2

Ownership (%)


Subsidiary

Main Business


~17~

Note 8: The financial statements of the entity as of and for the three-month period ended March

31, 2020 were not reviewed by independent accountants as the entity did not meet the

definition of significant subsidiary.

C. Subsidiaries not included in the consolidated financial statements: None.

D. Adjustments for subsidiaries with different balance sheet date: None.

E. Significant restrictions: None.

F. Subsidiaries that have non-controlling interests that are material to the Group:

As of March 31, 2020, December 31, 2019 and March 31, 2019, the non-controlling interest

amounted to $3,141,195, $3,190,554 and $3,329,453, respectively. The information on non-

controlling interest and respective subsidiaries is as follows:

Summarized financial information of the subsidiary:

Balance sheets

Name of

subsidiary

Principal

place

of business Amount

Ownership

(%) Amount

Ownership

(%) Amount

Ownership

(%)

ECOVE

Environment

Corp.

Taiwan 2,739,312$ 42.28% 2,638,453$ 42.28% 2,693,511$ 42.28%

December 31, 2019 March 31, 2019March 31, 2020

Non-controlling interest

March 31, 2020 December 31, 2019 March 31, 2019

Current assets 3,684,334$ 3,555,853$ 3,820,332$

Non-current assets 5,920,027 5,984,964 5,660,221

Current liabilities 1,543,711)( 1,734,603)( 1,466,318)(

Non-current liabilities 2,230,706)( 2,213,411)( 2,328,776)(

Total net assets 5,829,944$ 5,592,803$ 5,685,459$

ECOVE Environment Corp.

~18~

Statements of comprehensive income

Statements of cash flows

(4) Employee benefits

Pensions

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate

derived from the actuarial valuation 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. Also, the related information is disclosed accordingly.

(5) Income tax

A. The interim period income tax expense is recognized based on the estimated average annual

effective income tax rate expected for the full financial year applied to the pretax income of the

interim period, and the related information is disclosed accordingly.

2020 2019

Revenue 1,300,056$ 1,283,837$

Profit before income tax 297,823 301,205

Income tax expense 56,161)( 56,768)(

Profit for the period 241,662 244,437

Other comprehensive (loss) income, net of tax 9,818)( 17,010

Total comprehensive income for the period 231,844$ 261,447$

Comprehensive income attributable to

non-controlling interest 38,550$ 48,335$

Dividends paid to non-controlling interest -$ -$


March 31,

For the three-month periods ended

2020 2019

Net cash provided by operating activities 265,147$ 83,839$

Net cash provided by investing

activities 118,059 115,362

Net cash (used in) provided by financing

activities 16,167)( 81,799

Increase in cash and cash equivalents for the

period 367,039 281,000

Cash and cash equivalents, beginning of period 1,679,523 1,543,162

Cash and cash equivalents, end of period 2,046,562$ 1,824,162$



March 31,

~19~

B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group

recognizes the effect of the change immediately in the interim period in which the change occurs.

The effect of the change on items recognized outside profit or loss is recognized in other

comprehensive income or equity while the effect of the change on items recognized in profit or

loss is recognized in profit or loss.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

There have been no significant changes as of March 31, 2020. Please refer to Note 5 of the consolidated

financial statements for the year ended December 31, 2019.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse

credit risk, so it expects that the probability of counterparty default is remote.

B. Details of the Group’s cash and cash equivalents pledged to others as collateral are provided in

Note 8.


Cash on hand and

revolving funds $ 105,091 $ 92,656 $ 285,976

Checking accounts and

demand deposits 8,681,415 13,914,792 10,229,321

Time deposits 8,114,909 6,760,133 6,498,382

16,901,415$ 20,767,581$ 17,013,679$

~20~

(2) Financial assets and liabilities at fair value through profit or loss - Current

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or

loss are listed below:

B. The Group entered into contracts relating to derivative financial assets and liabilities which were

not accounted for under hedge accounting. The information is listed below:

Items March 31, 2020 December 31, 2019 March 31, 2019

Current items:

Financial assets

mandatorily measured

at fair value through

profit or loss

Beneficiary certificates 30,135$ 275,101$ 345,546$

Derivatives 7,392 - 64,569

37,527 275,101 410,115

Valuation adjustment 785)( 744 498

36,742$ 275,845$ 410,613$

Financial liabilities

mandatorily measured

at fair value through

profit or loss

Derivatives 16,891$ 54,716$ 36$

2020 2019

Financial assets mandatorily measured at

fair value through profit or loss

Beneficiary certificates 54$ 2,651$

Derivatives 1,482)( 27,500

1,428)($ 30,151$

For the three-month periods ended March 31,

Contract Period

Foreign exchange swap contract (1 item) THB 490,000 thousand 2020.03.20~2021.03.19

Foreign exchange contract-buy (12 items) USD 40,370 thousand 2019.05.02~2020.09.17

Contract Period

Foreign exchange swap contract (8 items) USD 80,000 thousand 2019.12.12~2020.01.09


March 31, 2020

Contract Amount

(notional principal)

December 31, 2019

Contract Amount


~21~

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import

or export proceeds. However, these forward foreign exchange contracts are not accounted for

under hedge accounting.

C. Information relating to credit risk of financial assets at fair value through profit or loss is provided

in Note 12(2).

(3) Financial assets at fair value through other comprehensive income

Contract Period

Foreign exchange swap contract (1 item) THB 69,250 thousand 2018.05.18~2019.05.22

Foreign exchange swap contract (11 items) USD 90,000 thousand 2019.03.05~2019.04.11


Merchandise exchange contract (1 item) USD 1,160 thousand 2019.01.03~2019.04.03

March 31, 2019

Contract Amount



Current items:

Debt instruments

Corporate bonds -$ -$ 27,572$

Valuation adjustment - - 126)(

- - 27,446

Equity instruments

Listed stocks 292,064 292,064 323,576

Valuation adjustment 100,515 172,879 166,468

392,579 464,943 490,044

392,579$ 464,943$ 517,490$

Non-current items:

Equity instruments

Unlisted shares 2,218,552$ 2,218,552$ 919,414$

Valuation adjustment 1,377,643)( 1,360,053)( 138,456)(

840,909$ 858,499$ 780,958$

~22~

A. The Group has elected to classify investments that are considered to be strategic investments or

steady dividend income as financial assets at fair value through other comprehensive income.

B. Amounts recognized in profit or loss and other comprehensive income in relation to the financial

assets at fair value through other comprehensive income are listed below:

C. As of December 31, 2019, Powtec ElectroChemical Corp. continued to incur significant losses,

and its current assets are insufficient to cover its current liabilities. In addition, in February 2020,

the company’s Board of Directors approved negotiations call for bankruptcy. Accordingly, the

Company has adjusted the book value of the financial asset to $0, and recognized loss on valuation

under changes in fair value of other comprehensive income.

D. Information relating to credit risk of financial assets at fair value through other comprehensive

income is provided in Note 12(2).

(4) Financial assets at amortized cost

As at March 31, 2020, December 31, 2019 and March 31, 2019, without taking into account any

collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the

amount that best represents the financial assets at amortized cost held by the Group was $179,899,

$407,884 and $138,340, respectively.

2020 2019

Equity instruments at fair value through

other comprehensive income

Fair value change recognized in other

comprehensive income 89,923)($ 36,855$

Cumulative loss reclassified to

retained earnings due to derecognition -$ 2,048)($

Debt instruments at fair value through

other comprehensive income

Fair value change recognized in other

comprehensive income -$ 39$

Exchange gain recognized in

profit or loss -$ 620$

Interest income recognized in profit or loss -$ 267$



Current items: Time deposits with

maturity over three

months 49,179$ 277,164$ 30,460$

Non-current items:

Pledged time deposits 130,720$ 130,720$ 107,880$

~23~

(5) Notes and accounts receivable

A. The ageing analysis of notes receivable and accounts receivable is as follows:

The above analysis is calculated based on booking date.

B. As of March 31, 2020, December 31, 2019, March 31, 2019 and January 1, 2019, the balances of

receivables (including notes receivable) from contracts with customers amounted to $6,756,357,

$4,286,050, $5,056,626 and $8,914,287, respectively.

C. As of March 31, 2020, December 31, 2019, and March 31, 2019, without taking into account any

collateral held or other credit enhancements, the maximum exposure to credit risk in respect of

the amount that best represents the receivables (including notes receivable) held by the Group was

$6,736,102, $4,264,175 and $5,017,365, respectively.

D. Information relating to long-term receivables due in one year is provided in Note 6(11).

E. Information relating to credit risk is provided in Note 12(2) C(b).

(6) Prepayments


Notes receivable 30,708$ 63,360$ 14,614$

Accounts receivable 6,725,649 4,222,690 5,042,012

Long-term receivables

due in one year 293,051 312,489 281,501

Less: Allowance for bad

debts 20,255)( 21,875)( 39,261)(

7,029,153$ 4,576,664$ 5,298,866$


Up to 30 days 6,214,003$ 3,717,118$ 3,369,773$

31 to 90 days 112,280 94,072 1,141,481

91 to 180 days 99,452 346,698 194,641

Over 181 days 623,673 440,651 592,971

7,049,408$ 4,598,539$ 5,298,866$


Prepayment for materials 1,275,214$ 855,305$ 2,861,470$ Prepayment for

construction in progress 722,739 652,900 517,938

Others 1,163,111 1,250,465 926,174

3,161,064$ 2,758,670$ 4,305,582$

~24~

(7) Investments accounted for under the equity method

Associates

A. The basic information of the associate that is material to the Group is as follows:

2020 2019

At January 1 2,173,160$ 3,680,933$

Share of profit or loss of investments accounted

for using equity method 21,236 148,680)(

Changes in other equity items 18,985)( 6,307

At March 31 2,175,411$ 3,538,560$

Associates: March 31, 2020 December 31, 2019 March 31, 2019

Pan Asia Corp. 198,450$ 197,079$ 435,571$

Powtec ElectroChemical

Corp. (formerly

Powertec Energy Corp.) - - 1,135,627

Boretech Resource

Recovery Engineering

Co., Ltd. (Cayman) 461,692 462,705 442,164

MIE Industrial Sdn.

Bhd. 583,710 599,178 570,571

Blue Whale Water

Technology Co., Ltd. 423,436 411,670 455,274

EVER ECOVE Corp. 289,984 291,685 295,957

HDEC-CTCI (Linhai)

Corporation 218,139 210,843 203,396

2,175,411$ 2,173,160$ 3,538,560$

Shareholding ratio

Company name

Principal

place

of business March 31, 2019

Nature of

relationship

Method of

measurement

Powtec ElectroChemical

Corp.

Taiwan 16.03% Associate Equity method

~25~

B. The summarized financial information of the associate that is material to the Group is as follows:

Balance sheet

Statement of comprehensive income

C. The carrying amount of the Group’s interests in all individually immaterial associates and the

Group’s share of the operating results are summarized below:

As of March 31, 2020, December 31, 2019 and March 31, 2019, the carrying amount of the

Group’s individually immaterial associates amounted to $2,175,411, $2,173,160 and $2,402,933,

respectively.

D. In May 2019, the Board of Directors during its meeting resolved to dispose 19,580,000 shares of

Pan Asia Corp. totaling $224,494, of which $5,158 was recognized as gain on disposal of

investments (shown as other gains and losses).

E. The Group resigned from Powtec ElectroChemical Corp. as a director in September 2019 due to

business consideration. As the Group lost its significant influence over this company, the Group

reclassified the equity investment in Powtec ElectroChemical Corp. as “financial assets at fair

value through other comprehensive income - non-current” and recognized the result of

remeasurement of its remaining investment at fair value in gain on disposal, shown as other gains

and losses, amounting to $510,967.

Powtec ElectroChemical Corp.

March 31, 2019

Current assets 1,436,352$

Non-current assets 21,186,451

Current liabilities 449,018)(

Non-current liabilities 11,482,981)(

Total net assets 10,690,804$

Share in associate’s net assets 1,713,736$

Carrying amount of the associate 1,135,627$

Powtec ElectroChemical Corp.

For the three-month period ended

March 31, 2019

Revenue -$

Total comprehensive loss 570,659)($

2020 2019

Total comprehensive income 18,307$ 200,453)($


~26~

F. The financial statements of above investments accounted for using the equity method as of and for

the three-month periods ended March 31, 2020 and 2019 were not reviewed by independent

accountants.

G. The investments accounted for using the equity method, Pan Asia Corp., Blue Whale Water

Technology Co. Ltd., EVER ECOVE Corp., and HDEC-CTCI (Linhai) Corporation, were

recognized based on the financial statements which were audited by other auditors as of December

31, 2019.

~27~

(8) Property, plant and equipment

Land

Buildings and

structures Machinery

Transportation

equipment

Office

equipment

Unfinished

construction

and

prepayments

for equipment Others Total

At January 1, 2020

Cost 5,494,521$ 4,502,955$ 3,863,852$ 302,719$ 248,188$ 769,306$ 871,920$ 16,053,461$

Accumulated depreciation - 1,917,972)( 1,174,844)( 234,157)( 230,385)( - 707,631)( 4,264,989)(

5,494,521$ 2,584,983$ 2,689,008$ 68,562$ 17,803$ 769,306$ 164,289$ 11,788,472$

For the three-month period

ended March 31, 2020

Opening net book amount 5,494,521$ 2,584,983$ 2,689,008$ 68,562$ 17,803$ 769,306$ 164,289$ 11,788,472$

Additions - 640 14,886 1,536 422 312,097 1,994 331,575

Disposals - - 3)( 62)( - - 44)( 109)(

Depreciation charge - 32,909)( 98,189)( 7,551)( 1,221)( - 22,258)( 162,128)(

Reclassifications - 25,426 426,012 - - 170,531)( 8,321 289,228

Net exchange differences 5,222)( 22,633)( 1,178 1,754)( 899)( - 1,332)( 30,662)(

Closing net book amount 5,489,299$ 2,555,507$ 3,032,892$ 60,731$ 16,105$ 910,872$ 150,970$ 12,216,376$

At March 31, 2020

Cost 5,489,299$ 4,499,388$ 4,235,925$ 302,439$ 247,711$ 910,872$ 880,859$ 16,566,493$

Accumulated depreciation - 1,943,881)( 1,203,033)( 241,708)( 231,606)( - 729,889)( 4,350,117)(

5,489,299$ 2,555,507$ 3,032,892$ 60,731$ 16,105$ 910,872$ 150,970$ 12,216,376$

~28~

Land

Buildings and

structures Machinery

Transportation

equipment

Office

equipment

Unfinished

construction

and

prepayments

for equipment Others Total

At January 1, 2019

Cost 5,519,050$ 4,254,061$ 2,853,926$ 262,446$ 239,739$ 290,187$ 771,729$ 14,191,138$

Accumulated depreciation - 1,777,331)( 936,086)( 206,580)( 230,037)( - 609,068)( 3,759,102)(

5,519,050$ 2,476,730$ 1,917,840$ 55,866$ 9,702$ 290,187$ 162,661$ 10,432,036$



Opening net book amount 5,519,050$ 2,476,730$ 1,917,840$ 55,866$ 9,702$ 290,187$ 162,661$ 10,432,036$

Additions 20 89 14,824 1,244 195 69,464 3,119 88,955

Disposals - - 16)( - - - 140)( 156)(

Depreciation charge - 31,550)( 52,845)( 4,854)( 1,234)( - 27,423)( 117,906)(

Reclassifications - 114,413 139,899 - - 88,614)( - 165,698

Net exchange differences 1,617 27,645 2,476 289 84 352 1,246 33,709

Closing net book amount 5,520,687$ 2,587,327$ 2,022,178$ 52,545$ 8,747$ 271,389$ 139,463$ 10,602,336$

At March 31, 2019

Cost 5,520,687$ 4,368,563$ 3,008,633$ 263,690$ 239,934$ 271,389$ 774,708$ 14,447,604$

Accumulated depreciation - 1,781,236)( 986,455)( 211,145)( 231,187)( - 635,245)( 3,845,268)(

5,520,687$ 2,587,327$ 2,022,178$ 52,545$ 8,747$ 271,389$ 139,463$ 10,602,336$

~29~

A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitaliztion are as follows:

B. Please refer to Note 8 for the details of pledged property, plant and equipment.

2020 2019

Amount capitalized 1,339$ 787$

Range of the interest rates for capitalization 1.01%~2.04% 1.09%~1.40%


March 31,

~30~

(9) Leasing arrangements-lessee

A. The Group leases various assets including land, buildings, business vehicles, multifunction

printers, etc. Rental contracts are typically made for periods of 1 to 28 years. Lease terms are

negotiated on an individual basis and contain a wide range of different terms and conditions. The

lease agreements do not impose covenants, but leased assets may not be used as security for

borrowing purposes.

B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

C. For the three-month periods ended March 31, 2020 and 2019, the additions to right-of-use assets

were $18,395 and $1,111, respectively.

D. The information on income and expense accounts relating to lease contracts is as follows:

E. For the three-month periods ended March 31, 2020 and 2019, the Group’s total cash outflow for

leases were $118,100 and $100,098, respectively.


Carrying amount Carrying amount Carrying amount

Land $ 237,836 $ 258,991 $ 217,610

Buildings 63,142 73,633 49,386

Transportation

equipment (Business

vehicles) 46,457 48,233 44,349

Office equipment

(Photocopiers) 25,832 29,338 44,459

Other equipment 40,771 33,659 37,618

414,038$ 443,854$ 393,422$

2020 2019

Depreciation charge Depreciation charge

Land $ 21,591 $ 7,709

Buildings 11,437 5,664

Transportation equipment (Business vehicles) 7,539 5,720

Office equipment (Photocopiers) 4,240 3,583

Other equipment 692 1,494

45,499$ 24,170$


2020 2019

Items affecting profit or loss

Interest expense on lease liabilities $ 674 $ 618

Expense on short-term lease contracts 63,602 73,995

Expense on leases of low-value assets 127 -

Expense on variable lease payments 9,601 5,902


~31~

F. Variable lease payments:

(a) The Group's lease contract contains a variable lease payment term that is linked to the amount

of electricity generated by solar energy. Changes in variable lease payments are recognized as

expense in the period specified in the contract.

(b) A 1% increase in the electricity generated from solar energy would increase total lease

payments by approximately 1% in accordance with the relevant variable lease contract.

(10) Investment property

Buildings and

Land structures Total

At January 1, 2020

Cost 718,428$ 126,572$ 845,000$

Accumulated depreciation - 41,177)( 41,177)(

718,428$ 85,395$ 803,823$



Opening net book amount 718,428$ 85,395$ 803,823$

Depreciation charge - 1,025)( 1,025)(

Closing net book amount 718,428$ 84,370$ 802,798$

At March 31, 2020

Cost 718,428$ 126,572$ 845,000$


718,428$ 84,370$ 802,798$

Buildings and

Land structures Total

At January 1, 2019

Cost 718,428$ 126,572$ 845,000$


718,428$ 89,701$ 808,129$



Opening net book amount 718,428$ 89,701$ 808,129$

Depreciation charge - 1,077)( 1,077)(

Closing net book amount 718,428$ 88,624$ 807,052$

At March 31, 2019

Cost 718,428$ 126,572$ 845,000$


718,428$ 88,624$ 807,052$

~32~

A. Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:

B. The fair values of the investment property held by the Group as at March 31, 2020 and 2019

were $853,588 and $923,715, respectively, which were valued based on the trading prices of

nearby assets recorded in the Actual Selling Price Property Value Reporting, Ministry of Interiors.

The fair value of the investment property held by the Group as at December 31, 2019 was

$940,000, which was valued by independent valuers. Valuations were made using the income

approach with key assumptions as follows:

C. Information about the investment property that was pledged to others as collateral is provided in

Note 8.

(11) Other non-current assets

2020 2019

Rental income from investment property 7,803$ 7,803$

Direct operating expenses arising from the

investment property that generated rental

income during the period 1,025$ 1,077$

Direct operating expenses arising from the

investment property that did not generate

rental income during the period -$ -$


March 31,

December 31, 2019

Gross margin 2.54%

Growth rate 1.00%~1.50%

Discount rate 3.40%


Long-term receivables 2,396,348$ 2,503,219$ 2,631,986$ Less: Long-term

receivables due in one

year 293,051)( 312,489)( 281,501)(

2,103,297 2,190,730 2,350,485

Restricted bank deposits 49,201 53,563 12,064

Refundable deposits 271,068 146,639 121,331

Long-term prepayments

for investments 504,206 - -

Prepayments for business

facilities 154,750 367,916 544,993

Air pollution fee - - 54,267

Costs to fulfill a contract 104,610 120,909 -

Others 199,112 265,283 180,123

3,386,244$ 3,145,040$ 3,263,263$

~33~

A. Long-term receivables:

The Group contracted with the government (grantor) a service concession arrangement. The

consideration receivable from the grantor in respect of the service concession arrangement is

recognized at its fair value. Such consideration is recognized as a financial asset based on the

way of the consideration from the grantor to the operator being made as specified in the

arrangement. The consideration receivable from the grantor is recognized as accounts receivable

if it is expected to be realized within 12 months after the balance sheet date (please refer to Note

6(5)), and is recognized as long-term receivables if it is expected to be realized more than 12

months after the balance sheet date. The major terms of the arrangement are as follows:

(a) The second-tier subsidiary, ECOVE Wujih Energy Corp., obtained the operation for the

construction of Wujih Refuse Incineration Plant by build - operate - transfer (BOT) mode

since April, 2000. In September, 2000, the “Taichung City waste incineration, commission

contract” between ECOVE Wujih Energy Corp., and Taichung Government had been signed.

The operating period is for 20 years starting from September 6, 2004. However, according to

the contract, if it is expired in advance or extended during construction or operation, duration

of the operation will be deemed to be matured or extended, but not to exceed 50 years. In

order to work the “Waste Incineration Taichung City Commission Contract”, ECOVE Wujih

Energy Corp., obtained the land-use right that has continued for 20 years since the plant began

operation.

(b) The second-tier subsidiary, ECOVE Miaoli Energy Corp., obtained the operation for the

construction of Miaoli County Refuse Incineration Plant by build - operate - transfer (BOT)

mode since August, 2002. In September, 2002, the “Waste Incineration Commission Contract”

between ECOVE Miaoli Energy Corp., and Miaoli County Government had been signed. The

operating period is for 20 years starting from February 29, 2008. However, according to the

contract, if it is expired in advance or extended during construction or operation, duration of

the operation will be deemed to be matured or extended, but not to exceed 50 years. In order

to work the “Waste Incineration Miaoli County Commission Contract”, ECOVE Miaoli

Energy Corp., obtained the land-use right of Miaoli Refuse Incineration Plant. Therefore,

duration of the land – use right is from September 13, 2002 to March 12, 2026.

(c) ECOVE Wujih Energy Corp., and ECOVE Miaoli Energy Corp. need to comply with the

guarantee tonnage of waste from government according to the contract during construction

or operation.

(d) Per service cost is calculated and adjusted based on the “Waste Incineration Commission

Contract”, “Index of average regular earnings of employees-manufacturing” and “Consumer

price index”.

B. Long-term prepaid rents were according to the “BOT Agreement” due to the land-use rights

obtained by ECOVE Wujih Energy Corp., and ECOVE Miaoli Energy Corp. and transferred to

right-of-use assets in applying IFRS 16 from January 1, 2019.

~34~

C. Information about the restricted bank deposits and refundable deposits that were pledged to

others as collateral is provided in Note 8.

D. The costs to fulfill a contract refer to the initial reconstruction cost of the Refuse Incineration

Plant for the contract that the subsidiary - ECOVE Environmental Services Corp. entered into

with the owner to operate the plant on its behalf, and it is amortized over the term of the contract.

E. In December 2018, the Board of Directors resolved to invest in Ever Victory Global Limited,

and the Group separately remitted payments depending on the capital requirement. Said

investment was recognized in long-term prepayments for investments under other non-current

assets as the registration has not yet been completed.

(12) Short-term borrowings

Note 1: ECOVE Solvent Recycling Corp. has committed that upon completion of the construction,

ECOVE Solvent Recycling Corp. will complete the registration of ownership on the

construction and pledge with the basement of construction in first priority to Chang Hwa

Bank.

Note 2: The borrowing facilities were 100% jointly guaranteed by the subsidiary - ECOVE

Environment Corp.

Note 3: Properties pledged by subsidiary-CTCI Development Corp. and was guaranteed and

endorsed by the Company.

Type of borrowing March 31, 2020 Interest rate range Collateral

Unsecured borrowings 5,648,849$ 0.7%~8.83% -

Secured borrowings 249,700 0.97%~1.5% Note 1 and 2

5,898,549$

Type of borrowing December 31, 2019 Interest rate range Collateral


Secured borrowings 305,000 0.95%~1.70% Notes 1 and 2

6,163,306$

Type of borrowing March 31, 2019 Interest rate range Collateral


Secured borrowings 1,997,150 1.09%~1.24% Notes 2 and 3

10,947,586$

~35~

(13) Accounts payable

(14) Other payables

(15) Other current assets/liabilities

Joint venture represents an accumulated cost over (under) the accumulated capital injection and bills.


Materials payable 5,864,910$ 6,250,524$ 4,318,013$ Sub-contract costs

payable 4,168,293 4,996,203 4,972,029 Maintenance costs

payable 305,630 310,079 304,718 Incinerator equipment

usage fee payable 35,493 41,517 15,141

Others 94,996 109,967 180,623

10,469,322$ 11,708,290$ 9,790,524$


Accrued payroll 672,357$ 1,464,481$ 735,508$ Accrued employees’

compensation, directors’

and supervisors’

remuneration 152,379 123,434 197,307

Accrued insurance 82,872 71,953 75,052

Accrued pension 31,753 42,010 37,181

Accrued consultant fee 251,320 250,456 -

Others 431,264 895,687 644,046

1,621,945$ 2,848,021$ 1,689,094$


Other current assets

Joint venture 2,370,290$ -$ -$

Others - 6,817 277,399

2,370,290$ 6,817$ 277,399$

Other current liabilities

Joint venture -$ 1,734,466$ 2,730,966$ Long-term borrowings -

current portion 150,833 134,149 200,872

Receipts in advance 6,035 46,992 118,954

Others 77,764 76,334 86,975

234,632$ 1,991,941$ 3,137,767$

~36~

(16) Bonds payable

The terms of the domestic unsecured bonds issued by the Company are as follows:

The Company issued $6,000,000, annual fixed interest rate of 0.9%, first domestic unsecured bonds,

as approved by the regulatory authority. The bonds mature 5 years from the issue date (December

25, 2019 ~ December 25, 2024) and will be redeemed at the maturity date. The bonds were listed

on the Taipei Exchange on December 16, 2019.

(17) Long-term borrowings

A. ECOVE Miaoli Energy Corp. committed to maintain the following financial ratios and criteria

during the period of the contract:

(a) Current ratio [(current assets + restricted assets provided as a compensation for the credit

loan)/current liabilities] : More than 100%.

(b) Liability ratio (total liabilities/ net equity): Less than 190%.

(c) Interest coverage ratio [(income before tax + interest expense) / interest expense] : At least

150%.

B. As of December 31, 2019, ECOVE Miaoli Energy Corp. had no long-term borrowings (including

current portion).

C. Information about the assets that were pledged for bank borrowings as collateral is provided in

Note 8.

D. The promissory note made by the subsidiary - ECOVE Environment Corp. as of March 31, 2020,

December 31, 2019 and March 31, 2019 were $1,658,475, $1,664,080 and $1,792,501,

respectively.

March 31, 2020 December 31, 2019

Bonds payable 6,000,000$ 6,000,000$

Less: Discount on bonds payable 10,089)( 10,471)(

5,989,911$ 5,989,529$

Type of borrowings March 31, 2020 December 31, 2019 March 31, 2019

Secured borrowings 5,721,354$ 5,524,822$ 3,608,616$

Less: Current portion 150,833)( 134,149)( 200,872)(

5,570,521$ 5,390,673$ 3,407,744$

Financing amount 8,152,647$ 7,733,525$ 6,637,861$

Interest rate range 1.20%~3.11963% 1.25%~4.38513% 1.395%~4.9%

~37~

(18) Other non-current liabilities

Deferred revenue is a cash grant received from New Jersey government in United States in 2017

since Lumberton builds and operates a solar power station in New Jersey. The construction period

of the solar power station is 15 years.

(19) Pensions

A. Defined benefit pension plan

(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance

with the Labor Standards Law, covering all regular employees’ service years prior to the

enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of

employees who chose to continue to be subject to the pension mechanism under the Law.

Under the defined benefit pension plan, two units are accrued for each year of service for the

first 15 years and one unit for each additional year thereafter, subject to a maximum of 45

units. Pension benefits are based on the number of units accrued and the average monthly

salaries and wages of the last 6 months prior to retirement. The Company contributes monthly

an amount equal to 6.5% of the employees’ monthly salaries and wages to the retirement fund

deposited with Bank of Taiwan, the trustee, under the name of the independent retirement

fund committee. Also, the Company would assess the balance in the aforementioned labor

pension reserve account by the end of December 31, every year. If the account balance is

insufficient to pay the pension calculated by the aforementioned method to the employees

expected to qualify for retirement in the following year, the Company will make contributions

to cover the deficit by next March.

(b) For the aforementioned pension plan, the Group recognized pension costs of $7,830 and

$10,839 for the three-month periods ended March 31, 2020 and 2019, respectively.

(c) Expected contributions to the defined benefit pension plans of the Group for the year ending

December 31, 2021 amount to $86,581.


Net defined benefit

liabilities

1,171,431$ 1,409,863$ 1,518,647$

Deposits received 342,168 326,007 370,062

Accrued recovery costs 110,694 109,623 97,356

Deferred revenue 154,032 157,648 166,545

Others 89,281 81,899 79,597

1,867,606$ 2,085,040$ 2,232,207$

~38~

B. Defined contribution pension plan

(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined

contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),

covering all regular employees with R.O.C. nationality. Under the New Plan, the Company

and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’

monthly salaries and wages to the employees’ individual pension accounts at the Bureau of

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of

employment.

(b) The pension costs under the defined contribution pension plans of the Group for the three-

month periods ended March 31, 2020 and 2019 were $51,336 and $51,848, respectively.

(c) Some overseas subsidiaries adopted a defined contribution pension plan, covering all regular

employees. Appropriation of pension cost for the three-month periods ended March 31, 2020

and 2019 were $20,590 and $31,954, respectively.

(20) Share-based payment - employee compensation

A. The Company

(a) For the three-month periods ended March 31, 2020 and 2019, the Company’s share-based

payment arrangements were as follows:

Type of arrangement Grant date

Quantity

granted

Contract

period

Vesting

conditions

Fifth plan of employee

stock options

2017.04.11 20,000 units 6 years Service of 2 to

4 years

Sixth plan of employee

stock options


4 years

Seventh plan of employee

stock options


4 years

Eighth plan of employee

stock options


4 years

~39~

(b) The above employee stock options are set forth below:

i. Details of the fifth plan of employee stock options outstanding are set forth below:

ii. Details of the sixth plan of employee stock options outstanding are set forth below:

No. of units

Weighted-

average No. of units

Weighted-

average

(shares in exercise price (shares in exercise price

Stock options thousands) (in dollars) thousands) (in dollars)

Options outstanding

at beginning of period 17,264.94 NT$44.10 18,328.55 NT$49.60

Options granted - - - -

Options waived 254.66)( - 154.88)( -

Options exercised 1.31)( NT$44.10 - -

Options outstanding

at end of period 17,008.97 NT$44.10 18,173.67 NT$49.60

Options exercisable

at end of period 7,336.13 NT$44.10 - -


2020 2019

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of period 18,167.07 NT$40.80 19,294.54 NT$45.90

Options waived 344.98)( - 188.34)( -

Options exercised 1.74)( NT$40.80 - -

Options outstanding

at end of period 17,820.35 NT$40.80 19,106.20 NT$45.90

Options exercisable

at end of period 7,230.37 NT$40.80 - -


2020 2019

~40~

iii. Details of the seventh plan of employee stock options outstanding are set forth below:

iv. Details of the eighth plan of employee stock options outstanding are set forth below:

(c) The weighted-average stock price of stock options at exercise dates for the three-month

periods ended March 31, 2020 and 2019 were NT$35.18 and NT$47.64, respectively.

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of period 18,886.10 NT$46.50 - -

Options g

ctci corporation and subsidiaries · 2020. 6. 15. · 227,985 - increase in other receivables -...

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