AU OPTRONICS CORP | CIK:0001172494 | 3

  • Filed: 3/29/2018
  • Entity registrant name: AU OPTRONICS CORP (CIK: 0001172494)
  • Generator: DataTracks
  • SEC filing page: http://www.sec.gov/Archives/edgar/data/1172494/000095010318003972/0000950103-18-003972-index.htm
  • XBRL Instance: http://www.sec.gov/Archives/edgar/data/1172494/000095010318003972/auo-20171231.xml
  • XBRL Cloud Viewer: Click to open XBRL Cloud Viewer
  • EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001172494
  • Open this page in separate window: Click

    • ifrs-full:DisclosureOfFinancialInstrumentsExplanatory

    35.
    Financial Instruments
     
    (1)
    Fair value and carrying amount
     
    The carrying amount of the Company’s non-derivative financial instruments – current, including cash and cash equivalents, receivables or payables (including related parties), other current financial assets, and short-term borrowings, were considered to approximate their fair value due to their short-term nature.
     
    Except for aforementioned financial instruments, the carrying amount and fair value of other financial instruments of the Company as of December 31, 2017 and 2016 were as follows:
     
     
     
    December 31, 2017
     
    December 31, 2016
     
     
     
    Carrying Amount
     
    Fair Value
     
    Carrying Amount
     
    Fair Value
     
     
     
    (in thousands)
     
    Financial assets:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Financial assets at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
    $
    70,366
     
     
    70,366
     
     
    65,669
     
     
    65,669
     
    Available-for-sale financial assets – noncurrent
     
     
    4,348,134
     
     
    4,348,134
     
     
    3,030,278
     
     
    3,030,278
     
    Loans and receivables:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Long-term receivables
     
    $
    1,790,400
     
     
    1,790,400
     
     
    1,974,271
     
     
    1,974,271
     
    Refundable deposits
     
     
    515,148
     
     
    515,148
     
     
    133,221
     
     
    133,221
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Financial liabilities:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Financial liabilities at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
     
    106,597
     
     
    106,597
     
     
    896,998
     
     
    896,998
     
    Derivative financial liabilities for hedging:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Interest rate swap contracts
     
     
    -
     
     
    -
     
     
    3,540
     
     
    3,540
     
    Financial liabilities measured at amortized cost:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Long-term borrowings (including current installments)
     
     
    110,608,010
     
     
    110,608,010
     
     
    124,262,620
     
     
    124,262,620
     
    Guarantee deposits received
     
     
    838,482
     
     
    838,482
     
     
    838,263
     
     
    838,263
     
     
    (2)
    Valuation techniques and assumptions applied in fair value measurement
     
    The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices. Except the aforementioned, the fair vales of other financial assets and financial liabilities are measured using the generally accepted pricing models based on discounted cash flow analysis.
     
    Descriptions of the valuation methodologies, including the valuation techniques and the input(s) used in the fair value measurements for assets and liabilities are discussed as follows:
     
    The fair values of financial assets which were publicly traded on active markets were determined with reference to quoted market prices.
     
    Those non-publicly traded equity securities which are included in available-for-sale financial assets, are determined using an analysis of various factors. These factors include the private company’s current operating and future expected performance, as well as changes in the industry and market prospects.
     
    For derivative financial instruments such as foreign currency forward contacts and interest rate swap contracts, fair values are estimated using industry standard valuation models. These models use market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies to project fair value.
     
    Fair value of long-term receivable is determined by discounting the expected cash flows at a market interest rate.
     
    The refundable deposits and guarantee deposits received are based on carrying amount as there is no fixed maturity.
     
    The fair value of floating-rate long-term borrowings approximates to their carrying value.
     
    (3)
    Fair value measurements recognized in the consolidated statements of financial position
     
    The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
     
    (i)
    Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets.
     
    (ii)
    Level 2 inputs: Other than quoted prices included within Level 1, inputs are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
     
    (iii)
    Level 3 inputs: Derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
     
    The fair value measurement level of an asset or a liability within their fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
     
    Financial assets and liabilities measured at fair value on a recurring basis were as follows:
     
     
     
    Level 1
     
    Level 2
     
    Level 3
     
    Total
     
     
     
    (in thousands)
     
    December 31, 2017
     
     
     
     
     
     
     
     
     
     
     
     
     
    Financial assets at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
    $
    -
     
     
    70,366
     
     
    -
     
     
    70,366
     
    Available-for-sale financial assets – noncurrent
     
     
    4,170,319
     
     
    -
     
     
    177,815
     
     
    4,348,134
     
    Loans and receivables:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Long-term receivables
     
     
    -
     
     
    1,790,400
     
     
    -
     
     
    1,790,400
     
    Financial liabilities at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
     
    -
     
     
    106,597
     
     
    -
     
     
    106,597
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    December 31, 2016
     
     
     
     
     
     
     
     
     
     
     
     
     
    Financial assets at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
    $
    -
     
     
    65,669
     
     
    -
     
     
    65,669
     
    Available-for-sale financial assets – noncurrent
     
     
    2,836,696
     
     
    -
     
     
    193,582
     
     
    3,030,278
     
    Loans and receivables:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Long-term receivables
     
     
    -
     
     
    1,974,271
     
     
    -
     
     
    1,974,271
     
    Financial liabilities at fair value through profit or loss:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Foreign currency forward contracts
     
     
    -
     
     
    896,998
     
     
    -
     
     
    896,998
     
    Derivative financial liabilities for hedging:
     
     
     
     
     
     
     
     
     
     
     
     
     
    Interest rate swap contracts
     
     
    -
     
     
    3,540
     
     
    -
     
     
    3,540
     
     
    There were no transfers between Level 1 and 2 for the years ended December 31, 2017 and 2016.
     
    (4)
    Reconciliation for recurring fair value measurements categorized within Level 3
     
    Changes in Level 3 fair value measurements for the years ended December 31, 2017, 2016 and 2015 were as follows:
     
     
     
    Available-for-sale financial assets without quoted market prices
     
     
     
    For the years ended December 31,
     
     
     
    2017
     
    2016
     
    2015
     
     
     
    (in thousands)
     
    Balance at the beginning of the year
     
    $
    193,582
     
     
    70,938
     
     
    37,345
     
    Net realized/unrealized gains (losses) included in:
     
     
     
     
     
     
     
     
     
     
    Profit or loss(i)
     
     
    (30,000)
     
     
    (686)
     
     
    99,517
     
    Other comprehensive income
     
     
    -
     
     
    -
     
     
    -
     
    Purchases
     
     
    14,233
     
     
    66,948
     
     
    33,593
     
    Transfer in
     
     
    -
     
     
    56,400
     
     
    -
     
    Disposals
     
     
    -
     
     
    -
     
     
    (99,517)
     
    Effect of change in exchange rate
     
     
    -
     
     
    (18)
     
     
    -
     
    Balance at the end of the year
     
    $
    177,815
     
     
    193,582
     
     
    70,938
     
     
    (i)
    Change in unrealized losses, which were included in profit or loss, relating to those available-for-sale assets without quoted market prices held at December 31, 2017, 2016 and 2015 were $30,000 thousand, $686 thousand and nil, respectively.
     
    (5)
    Description of valuation processes for fair value measurements categorized within Level 3
     
    Fair value measurements of assets and liabilities are determined using various valuation techniques, including the discounted cash flows and other valuation models. As deemed necessary, the Company utilizes the assistance of external experts in performing the valuation and the development of such valuation models, which include the analysis and comparison of model valuation results to market transactions and market data. The Company’s management reviews the policy and procedures of fair value measurements annually, or more frequently as deemed necessary. When a fair value measurement involves one or more significant inputs that are unobservable, the Company monitors the valuation process discreetly and examines whether the inputs are used the most relevant market data available.
     
    The Company holds certain non-publicly listed stocks which are not traded in an active market. The Company reviews the current operating and future expected performance of these private companies based on evaluation of the latest available financial statements, as well as changes in the industry and market prospects based on publicly available information. An improvement (decline) in the operating and future expected performance results in a higher (lower) fair value measurement. Generally, changes in the industry and market prospects are directionally consistent with the changes in operating and future performance of the companies.