RNS Number:4091O
GVC Corporation
10 December 2001
Re: Interim Results of GVC Corporation for 2000 and 2001
REPORT OF INDEPENDENT ACCOUNTANTS
August 17, 2001
To the Board of Directors and Stockholders of GVC Corporation
We have audited the accompanying balance sheets of GVC Corporation (the Company)
as of June 30, 2001 and 2000, and the related statements of income, of changes
in stockholders' equity and of cash flows for the six-month periods then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
Except as explained in the third paragraph, we conducted our audits in
accordance with the "Rules Governing Examination of Financial Statements by
Certified Public Accountants" and generally accepted auditing standards in the
Republic of China. These standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, in a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As explained in Note 4(6), the financial statements included long-term
investments in certain investee companies amounting to NT$1,017,741 thousand and
NT$934,990 thousand as of June 30, 2001 and 2000, representing 6 percent of the
Company's total assets, respectively, and related investment income amounting to
NT$20,889 thousand and investment loss amounted to NT$111,363 thousand for the
six-month periods then ended, representing 4 percent and 32 percent of income
before income tax (including the loss and income from continuing and
discontinued operations), respectively, which were accounted for under the
equity method based on the financial statements of the investee companies as of
such dates, which were not audited by independent auditors. The information
disclosed in Note 11 relating to these investee companies was based on their
unaudited financial statements.
In our opinion, based on our audits, except for the effect on the financial
statements of such adjustments, if any, as might have been determined to be
necessary had the financial statements of certain investee companies been
audited as described in the third paragraph, the financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of GVC Corporation as of June 30, 2001 and 2000, and the
results of its operations and its cash flows for the six-month periods then
ended in conformity with "The Rules Governing the Preparation of Financial
Statements of Securities Issuers" and the accounting principles generally
accepted in the Republic of China.
PricewaterhouseCoopers
The accompanying financial statements are not intended to present the financial
position and results of operations and cash flows of the Company in accordance
with accounting principles and practices generally accepted in countries and
jurisdictions other than the Republic of China. The standards, procedures and
practices in the Republic of China governing the audit of such financial
statements may differ from those generally accepted in countries and
jurisdictions other then the Republic of China.
GVC CORPORATION
BALANCE SHEETS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
June 30
2001 2000
Amount % Amount %
ASSETS
Current Assets
Cash (Note4(1)) $1,404,902 8 $ 1,124,386 7
Short-term investments(Note4(2)) 1,646,394 10 39,580 -
Notes receivable-net(Notes4(3) and 5 90,811 - 54,950 -
Accounts receivable-net-third parties
(Note 4(4)) 1,526,133 9 1,355,667 8
Accounts receivable-net-related parties
(Note 5) 509,416 3 752,402 4
Other receivables-third parties
(Note4(10)) 98,911 1 98,993 1
Other receivables-related parties(Note5) 554,471 3 430,316 3
Inventories - net (Note 4(5)) 1,358,377 8 2,553,414 15
Other current assets
(Notes 4(10), 4(11) and 6) 4,281,393 26 287,687 2
11,470,808 68 6,697,395 40
Long-term Investments
Long-term investments(Notes4(6) and5) 2,090,227 13 3,652,264 22
Cash surrender value of life insurance 31 - 31 -
2,090,258 13 3,652,295 22
Property, Plant & Equipment
(Notes 4(7),5 and 6)
Cost
Land 531,481 3 723,638 4
Buildings 493,945 3 558,081 3
Machinery 886,796 6 941,430 6
Transportation equipment 3,990 - 5,209 -
Miscellaneous equipment 517,723 3 503,191 3
2,433,935 15 2,731,549 16
Less:accumulated depreciation (642,713) (4) (704,918) (4)
Prepayments on equipment 33,783 - 324,954 2
1,825,005 11 2,351,585 14
Other Assets
Rental assets 279,606 2 - -
Idle assets 15,674 - 199,187 1
Refundable deposits 4,247 - 5,904 -
Deferred charges 94,957 - 169,425 1
Deferred income tax assets-non-current
(Note 4(10)) 962,326 6 1,163,576 7
Other assets - others
(Notes 4(4), 4(11) and 6) 17,065 - 2,609,546 15
1,373,875 8 4,147,638 24
TOTAL ASSETS $ 16,759,946 100 $ 16,848,913 100
GVC CORPORATION
BALANCE SHEETS CONTINUED
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
June 30
2001 2000
Amount % Amount %
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
Short-term bank loans(Notes 4(8)& 6) $ 2,505,333 15 2,473,064 15
Commercial paper (Note 4(9)) - - 189,010 1
Notes payable -third parties 897,828 5 480,090 3
Accounts payable - third parties 1,101,302 6 1,103,029 6
Accounts payable - related parties
(Note 5) 180,289 1 490,364 3
Accrued expenses 309,693 2 457,496 3
Current portion of long-term liabilities
(Notes 4(11), 4(12) and 6) 4,621,370 28 419,750 2
Other current liabilities
(Notes 4(6) and 5) 714,810 4 439,268 3
10,330,625 61 6,052,071 36
Long-term Liabilities
Bonds payable (Note 4(11)) - - 4,406,647 26
Long-term bank loans (Notes 4(12) and 6) 617,500 4 682,000 4
617,500 4 5,088,647 30
Other Liabilities
Accrued pension expense 107,582 1 94,587 1
Deposits-in 68 - 904 -
Other liabilities - others 8,388 - 17,321 -
116,038 1 112,812 1
Total Liabilities 11,064,163 66 11,253,530 67
Stockholders'Equity
Capital stock (Note 4(14))
Common stock 4,886,683 29 7,517,974 44
Capital reserve (Note 4(15))
Gain on disposal of property, plant &
equipment - net of tax 60,119 - 51,506 -
Adjustment from change of stockholders'
equity of investee company 20,205 - 114,671 1
Retained earnings
Legal reserve (Note 4(16)) 6,891 - - -
Unappropriated earnings (accumulated deficit)
(Note 4(17)) 597,817 4 (2,214,833) (13)
Unrealized loss on long-term investments
(Note 4(6)) 90,564 - - -
Cumulative translation adjustment 230,255 1 126,065 1
Treasury stock (Note 4(18)) (15,623) - - -
Total Stockholders'Equity 5,695,783 34 5,595,383 33
Commitments and Contingent Liabilities
(Notes 5 & 7)
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $16,759,946 100 $16,848,913 100
The accompanying notes are an integral part of these financial statements.
See PricewaterhouseCoopers' audit report dated August 17, 2001.
GVC CORPORATION
INCOME STATEMENTS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT FOR EARNINGS PER SHARE)
For the Six-Month Periods Ended June 30,
2001 2000
Amount % Amount %
Operating revenue (Note 5) $5,684,255 101 $3,476,548 100
Less: sales returns and allowances (49,708) (1) (14,777) -
Operating revenue - net 5,634,547 100 3,461,771 100
Operating costs (Note 5) (5,136,864) (91) (3,250,367) (94)
Gross profit 497,683 9 211,404 6
Operating expenses (Note 5)
Selling expenses (175,150) (3) (101,964) (3)
Management and general expenses (189,820) (4) (120,392) (4)
Research and development expenses (228,142) (4) (221,952) (6)
(593,112) (11) (444,308) (13)
Operating Loss (95,429) (2) (232,904) (7)
Non-operating income
Interest income 96,190 2 113,624 3
Investment income under equity method
- net (Note 4(6)) 67,388 1 459,524 13
Gain on disposal of investments 1,014,020 18 141,828 4
Exchange gain - net 22,737 1 55,054 2
Recovery in market value of
short-term investments 2,429 - 86,875 3
Reversal of provision for decline in
market value and inventory obsolencence 6,652 - 36,738 1
Other income (Notes 4(11) and 5) 113,263 2 94,695 3
1,322,679 24 988,338 29
Non-operating expenses
Interest expense (291,481) (5) (294,642) (9)
Investment loss (95,400) (2) - -
Other expenses and losses (Note 4(19)) (206,181) (4) (17,177) -
(593,062) (11) (311,819) (9)
Income from continuing operations
before income tax 634,188 11 443,615 13
Income tax benefit (Note 4(10) 34,074 1 70,130 2
Net income from continuing operations 668,262 12 513,745 15
Loss from discontinued operations of
Division Desktop PC. less applicable
income tax benefit of $44,131 and
$24,543 in 2001 and 2000, respectively (132,654) (2) (73,628) (2)
Gain on disposal of Division Desktop PC 8,183 - - -
(124,471) (2) (73,628) (2)
Net Income $ 543,791 10 $ 440,117 13
Earning per share(in dollars)(Note 4(21))
From continuing operations $1.37 $ 1.05
From discontinued operations (0.26) (0.15)
Net $ 1.11 $ 0.90
The accompanying notes are an integral part of these financial statements.
See PricewaterhouseCoopers' audit report dated August 17,2001.
GVC CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
Retained Earnings
Unappropriated
Earnings
Capital Legal (Accumulated
Common Stock Reserve Reserve Deficit)
2000
Balance at January 1, 2000 $ 7,517,974 $ 3,335,802 $ - ($5,820,475)
Accumulated deficit covered
by capital reserve - (3,189,185) - 3,189,185
Transfer of gain on disposal
of property, plant and
equipment to capital reserve - 23,660 - ( 23,660)
Adjustment due to change in
ownership of investee companies - (4,100) - -
Cumulative translation adjustment - - - -
Net income for the period ended
June 30, 2000 - - - 440,117
Balance at June 30, 2000 $ 7,517,974 166,177 - ($2,214,833)
2001
Balance at January 1, 2001 $ 4,886,683 $ 225,339 $ - $ 68,910
Appropriations of earnings
Legal reserve - - 6,891 (6,891)
Transfer of gain on disposal
of property, plant and
equipment to capital reserve - 7,993 - (7,993)
Adjustment due to change in
ownership of investee companies - (153,008) - -
Unrealized decline in market
value of long-term investments - - - -
Cumulative translation adjustment - - - -
Acquisition of treasury stock - - - -
Net income for the period ended
June 30, 2001 - - - 543,791
Balance at June 30, 2001 $4,886,683 $ 80,324 $ 6,891 $ 597,817
Unrealized Cumulative
Loss of Long-term Translation Treasury
Investments Adjustment Stock Total
2000
Balance at January 1, 2000 $ - $ 141,598 $ - $5,174,899
Accumulated deficit covered
by capital reserve - - - -
Transfer of gain on disposal
of property, plant and
equipment to capital reserve - - - -
Adjustment due to change in
ownership of investee companies - - - (4,100)
Cumulative translation adjustment - (15,533) - (15,533)
Net income for the period ended
June 30, 2000 - - - 440,117
Balance at June 30, 2000 $ - $ 126,065 $ - $5,595,383
2001
Balance at January 1, 2001 ($ 102,190) 187,342 - $5,266,084
Appropriations of earnings
Legal reserve - - - -
Transfer of gain on disposal
of property, plant and
equipment to capital reserve - - - -
Adjustment due to change in
ownership of investee companies - - - (153,008)
Unrealized decline in market
value of long-term investments 11,626 - - 11,626
Cumulative translation adjustment - 42,913 - 42,913
Acquisition of treasury stock - - (15,623) (15,623)
Net income for the period ended
June 30, 2001 - - - 543,791
Balance at June 30, 2001 ($ 90,564) $ 230,255 ($ 15,623) $5,695,783
The accompanying notes are an integral part of these financial statements.
See PricewaterhouseCoopers' audit report dated August 17, 2001
STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
For the Six Month Periods Ended June 30
2001 2000
Cash flows from operating activities
Net income $ 543,791 $ 440,117
Adjustments to reconcile net income
to net cash provided by (used in) operating
activities:
Recovery in market value of short-term
investments ( 2,429) ( 86,875)
Bad debts expense 34,402 3,028
Reversal of provision for decline in market
value and inventory obsolescence ( 6,652) ( 36,738)
Loss on scrapped inventory 51,273 -
Long-term investment income accounted for
under the equity method - net ( 50,862) ( 427,115)
Gains on disposal of investments ( 1,014,020) ( 141,828)
Realized long-term investment loss
accounted for under the cost method 95,400 -
Loss on scrapped property, plant and
equipment 5,299 -
Gains on
disposal of property, plant and equipment -
net (including disposal of Division
Desktop PC) ( 11,420) ( 23,359)
Depreciation 119,349 107,274
Amortization 54,933 81,144
Unrealized exchange loss (gain) on bonds
payable 172,546 ( 112,853)
Interest payable on redemption 146,221 165,615
Gain on early liquidation of bonds payable ( 5,106) ( 15,789)
Changes in assets and liabilities:
(Increase) decrease in assets:
Notes and accounts receivable - third
parties ( 88,749) ( 194,697)
Notes and accounts receivable - related
parties 99,522 ( 174,614)
Other receivables - third parties ( 10,963) ( 21,232)
Other receivables - related parties 22,307 198,662
Inventories 1,479,416 ( 223,353)
Other current assets ( 250,733) 4,359
Deferred income tax - non-current 243,099 ( 194,714)
Decrease (increase) in liabilities:
Notes and accounts payable - third parties( 283,826) 151,235
Notes and accounts payable - related
parties ( 220,799) 39,164
Income tax payable - ( 35,692)
Accrued expenses ( 214,013) ( 211,084)
Advanced collection from disposal of
inventory of Division Desktop PC ( 457,211) -
Other current liabilities 297,499 159,510
Accrued pension expense 6,763 8,730
Net cash provided by (used in)
operating activities 755,037 ( 541,105)
Cash flows from investing activities
(Increase) decrease in short-term
investments - net ( 1,637,242) 450,412
Additions to investment in subsidiaries ( 99,473) ( 127,455)
Additions to investment in non-subsidiaries( 12,064) ( 57,000)
Proceeds from disposal of long-term
investments 2,360,934 361,409
Additions to property, plant and
equipment ( 60,387) ( 349,553)
Proceeds from disposal of property,
plant and equipment and idle assets 100,303 143,567
Decrease in refundable deposits 1,368 3,224
Increase in deferred charges ( 1,194) ( 7,512)
(Increase) decrease in certificates of
deposit - net ( 533,793) 229,319
Net cash provided by investing activities 118,452 646,411
Cash flows from financing activities
(Decrease) increase in short-term bank
loans - net ($ 658,553) $ 743,728
Decrease in commercial paper - net ( 49,867) ( 30,275)
Repayment of long-term bank loans ( 35,000) ( 65,985)
Repayment of bonds payable ( 647,968) ( 1,534,124)
(Decrease) increase in deposits - in ( 1,463) 836
Acquisition of treasury stock ( 15,623) -
Net cash used in financing activities ( 1,408,474) ( 885,820)
Net decrease in cash ( 534,985) ( 780,514)
Cash at beginning of period 1,939,887 1,904,900
Cash at end of period $ 1,404,902 $ 1,124,386
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (excluding amount capitalized) $ 251,728 $ 397,751
Income taxes $ 10,666 $ 31,977
Investing activities which have no
influence in cash flows:
Long-term investments transferred to
short-term investments $ - $ 12,930
Cash (paid for acquisition) collected from
disposal of short-term investments:
(Increase) decrease of short-term
investments - net ($ 1,637,242) $ 460,581
Receivable on the disposal of short-term
investments - end of period - ( 10,169)
Net cash (paid) received ($ 1,637,242) $ 450,412
Cash collected from the disposal of
long-term investments:
Proceeds from disposal of long-term
investments $ 2,361,274 $ 361,409
Receivable on the disposal of long-term
investments - end of period ( 340) -
Cash received $ 2,360,934 $ 361,409
Cash paid for the acquisition of property,
plant and equipment:
Total cost of property, plant and
equipment acquired $ 59,396 $ 355,859
Payable - beginning of period 9,096 17,915
Payable - end of period ( 8,105) ( 24,221)
Cash paid $ 60,387 $ 349,553
The accompanying notes are an integral part of these financial statements.
See PricewaterhouseCoopers' audit report dated August 17, 2001
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