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Business Combinations
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Business Combinations
30.
BUSINESS COMBINATIONS
 
a.
Subsidiaries acquired
 
 
 
Principal Activity
 
Date of Acquisition
 
Proportion of Voting Equity Interests Acquired (%)
 
Consideration Transferred
 
 
 
 
 
 
 
 
NT$
 
US$ (Note 4)
 
 
 
 
 
 
 
 
 
 
 
SPIL
 
Engaged in the assembly, testing and turnkey services of integrated circuits
 
April 30, 2018
 
100.00
 
$
168,440,585
 
 
 
 
 
AMPI
 
Engaged in the manufacturing of integrated circuit
 
April 30, 2019
 
50.97
 
$
250,000
 
 
$
8,358
 
ASEEE
 
Engaged in the production of embedded substrate
 
April 26, 2019
 
51.00
 
$
—  
 
 
$
—  
 
UGPL
 
Engaged in designing, miniaturization, material sourcing, manufacturing, logistics, and after services of electronic devices and modules
 
October 31, 2019
 
60.00
 
$
313,057
 
 
$
10,467
 
 
As disclosed in Note 1, the Company acquired 100% shareholdings of SPIL at NT$51.2 in cash per SPIL’s ordinary share in accordance with the joint share exchange agreements between ASE and SPIL.
 
As disclosed in Note 14, the Group obtained control over AMPI and ASEEE in April 2019, respectively.
 
In October 2019, The Group’s subsidiary, Universal Global Electronics Co., Ltd., acquired 60% shareholdings of UGPL with a total consideration based on independent professional appraisal reports.
 
a.
Assets acquired and liabilities assumed at the date of acquisition
 
 
 
SPIL
 
AMPI
 
ASEEE
 
UGPL
 
 
NT$
 
NT$
 
NT$
 
NT$
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
20,088,970
 
 
$
349,496
 
 
$
23,197
 
 
$
108,718
 
Trade and other receivables
 
 
15,840,649
 
 
 
371,144
 
 
 
5,732
 
 
 
58,713
 
Inventories
 
 
5,693,644
 
 
 
403,887
 
 
 
11,033
 
 
 
229
 
Property, plant and equipment
 
 
81,985,622
 
 
 
683,207
 
 
 
1,361,572
 
 
 
525,048
 
Intangible assets
 
 
31,354,386
 
 
 
128,900
 
 
 
290,757
 
 
 
11,704
 
Others
 
 
24,945,922
 
 
 
237,766
 
 
 
317,888
 
 
 
99,112
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
 
 
(19,755,598
)
 
 
(224,295
)
 
 
(133,278
)
 
 
(217,887
)
Borrowings and bonds payables
 
 
(24,157,174
)
 
 
(951,519
)
 
 
(1,371,395
)
 
 
(190,737
)
Others
 
 
(3,963,201
)
 
 
(148,723
)
 
 
(290,273
)
 
 
(63,708
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of identifiable net assets acquired
 
$
132,033,220
 
 
$
849,863
 
 
$
215,233
 
 
$
331,192
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AMPI
 
 
 
ASEEE
 
 
 
UGPL
 
 
 
 
 
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
$
11,685
 
 
$
776
 
 
$
3,635
 
Trade and other receivables
 
 
 
 
 
 
12,409
 
 
 
192
 
 
 
1,963
 
Inventories
 
 
 
 
 
 
13,503
 
 
 
369
 
 
 
8
 
Property, plant and equipment
 
 
 
 
 
 
22,842
 
 
 
45,522
 
 
 
17,554
 
Intangible assets
 
 
 
 
 
 
4,310
 
 
 
9,721
 
 
 
391
 
Others
 
 
 
 
 
 
7,949
 
 
 
10,628
 
 
 
3,314
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
 
 
 
 
 
 
(7,499
)
 
 
(4,456
)
 
 
(7,285
)
Borrowings and bonds payables
 
 
 
 
 
 
(31,813
)
 
 
(45,851
)
 
 
(6,377
)
Others
 
 
 
 
 
 
(4,972
)
 
 
(9,705
)
 
 
(2,130
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of identifiable net assets acquired
 
 
 
 
 
$
28,414
 
 
$
7,196
 
 
$
11,073
 
 
The initial accounting for the acquisition of UGPL was tentative as of December 31, 2019. In addition, a call option on the remaining 40% non-controlling interests was also stipulated in the equity transfer agreement and recognized by the Group under the line item of financial assets at FVTPL.
 
 
b
.
Non-controlling interest
 
Non-controlling interests of SPIL were measured at fair value at the acquisition date by using market approach based on the valuation multiples of comparable companies and the discount rate for lack of marketability. The significant unobservable inputs is the discount rate for lack of marketability of 25%.
 
Non-controlling interests of AMPI and ASEEE were measured at their proportionate share of the fair value of AMPI’s and ASEEE’s identifiable net assets, respectively.
 
Non-controlling interests of UGPL were measured at fair value at the acquisition date by using market approach incorporating transaction prices of comparable companies and the discount rate for lack of control. The significant unobservable inputs is the discount rate for lack of control of 31%. As aforementioned, such non-controlling interests measurements were tentative as of December 31, 2019.
 
c.
Goodwill recognized on acquisitions
 
 
 
SPIL
 
AMPI
 
ASEEE
 
UGPL
 
 
NT$
 
NT$
 
NT$
 
NT$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration transferred
 
$
168,440,585
 
 
$
250,000
 
 
$
—  
 
 
$
313,057
 
Add: Fair value of investments previously owned
 
 
—  
 
 
 
315,925
 
 
 
117,609
 
 
 
—  
 
Add: Non-controlling interests
 
 
3,582,866
 
 
 
416,716
 
 
 
105,464
 
 
 
142,494
 
Less: Fair value of identifiable net assets acquired
 
 
(132,033,220
)
 
 
(849,863
)
 
 
(215,233
)
 
 
(331,192
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill recognized on acquisition
 
$
39,990,231
 
 
$
132,778
 
 
$
7,840
 
 
$
124,359
 
 
 
 
AMPI
 
ASEEE
 
UGPL
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration transferred
 
$
8,358
 
 
$
—  
 
 
$
10,467
 
Add: Fair value of investments previously owned
 
 
10,563
 
 
 
3,932
 
 
 
—  
 
Add: Non-controlling interests
 
 
13,932
 
 
 
3,526
 
 
 
4,764
 
Less: Fair value of identifiable net assets acquired
 
 
(28,414
)
 
 
(7,196
)
 
 
(11,073
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill recognized on acquisition
 
$
4,439
 
 
$
262
 
 
$
4,158
 
 
The goodwill form acquisitions mainly represents the control premium. In addition, the consideration paid for acquisitions effectively included amounts attributed to the benefits of expected synergies, such as revenue growth and future market expansions. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.
 
The goodwill recognized on acquisition is not expected to be deductible for tax purpose.
 
As of December 31, 2019, the Group has completed the identification of the difference between the cost of the investment and the Group’s share of the net fair value of identifiable assets and liabilities of AMPI and ASEEE. Due to the necessary valuations and calculations not yet finalized, the initial accounting for the acquisition of UGPL was tentative based on the Group’s and the independent professional’s best estimates as of December 31, 2019.
 
d.
Net cash outflow (inflow) on acquisition of
subsidiaries
 
 
 
SPIL
 
AMPI
 
ASEEE
 
UGPL
 
 
NT$
 
NT$
 
NT$
 
NT$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration paid in cash
 
$
168,440,585
 
 
$
250,000
 
 
$
—  
 
 
$
313,057
 
Less: Payable for consideration representing the ordinary shares originally held by ASE
 
 
(53,109,760
)
 
 
—  
 
 
 
—  
 
 
 
—  
 
Less: Cash and cash equivalent acquired
 
 
(20,088,970
)
 
 
(349,496
)
 
 
(23,197
)
 
 
(108,718
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash outflow (inflow) on acquisition of subsidiaries
 
$
95,241,855
 
 
$
(99,496
)
 
$
(23,197
)
 
$
204,339
 
 
 
  
 
 
 
 
AMPI
 
ASEEE
 
UGPL
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
US$ (Note 4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration paid in cash
 
$
8,358
 
 
$
—  
 
 
$
10,467
 
Less: Cash and cash equivalent acquired
 
 
(11,685
)
 
 
(775
)
 
 
(3,635
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash outflow (inflow) on acquisition of subsidiaries
 
$
(3,327
)
 
$
(775
)
 
$
6,832
 
 
e
.
Impact of acquisitions on the results of the Group
 
The results of operations since the acquisition date were included in the consolidated statements of comprehensive income and were as follows:
 
 
 
SPIL
(For the Period from April 30, 2018 through December 31, 2018)
 
AMPI
(For the Period from April 30, 2019 through December 31, 2019)
 
ASEEE
(For the Period from April 26, 2019 through December 31, 2019)
 
UGPL (For the Period from October 31, 2019 through December 31, 2019)
 
 
NT$
 
NT$
 
NT$
 
NT$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
61,247,727
 
 
$
704,243
 
 
$
(1,159
)
 
$
39,080
 
Net profit (loss)
 
$
7,629,382
 
 
$
(217,163
)
 
$
(469,598
)
 
$
(11,995
)
 
 
 
AMPI
(For the Period from April 30, 2019 through December 31, 2019)
 
ASEEE
(For the Period from April 26, 2019 through December 31, 2019)
 
UGPL (For the Period from October 31, 2019 through December 31, 2019)
 
 
US$ (Note 4)
 
US$ (Note 4)
 
US$ (Note 4)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
23,545
 
 
$
(39
)
 
$
1,307
 
Net loss
 
$
(7,261
)
 
$
(15,700
)
 
$
(401
)
 
Had these business combinations been in effect at the beginning of each annual reporting period and the investments originally accounted for using the equity method, as disclosed in Notes 14 and 26, been remeasured to their fair value as of January 1 of each respective annual reporting period, the Group’s operating revenues and profit for the year would have been NT$397,261,461 thousand and NT$25,687,447 thousand for the year ended December 31, 2018, and NT$413,782,708 thousand (US$13,834,260 thousand) and NT$18,030,506 thousand (US$602,825 thousand) for the year ended December 31, 2019, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of the operating revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed at the beginning of each annual reporting period, nor is it intended to be a projection of future results.
 
In determining the pro-forma operating revenue and profit for the year had each subsidiary been acquired at the beginning of each respective annual reporting period, the management:
 
1)
Calculated the depreciation of property, plant and equipment and the amortization of intangible assets acquired on the basis of the fair values at the initial accounting for the business combination rather than the carrying amounts recognized in the respective pre-acquisition financial statements; and
 
2)
Calculated borrowing costs based on the funding status, credit ratings and debt/equity ratios of the Group after the business combination.