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Related Party Transactions

12 Months Ended

Dec. 31, 2019

24.	RELATED PARTY TRANSACTIONS

The related parties are defined as affiliates of the Company; entities for which investments are accounted for by the equity method by the Company; the principal owners of the Company; its management; members of the immediate families of the principal owners of the Company and its management.

Moon View Venture Limited (“Moon View”), PEWC, Singapore Branch, PEWC Singapore Co. (Pte) Ltd., and PEWC (HK) are controlled by PEWC. Moon View is the immediate holding company of the Company. Italian-Thai Development Public Company Limited (“Italian-Thai”) is the non-controlling shareholder of one of the Company’s operating subsidiaries in Thailand. SPHC is one of the Company’s equity investees. Fujikura Limited is a non-controlling shareholder of one of the Company’s operating subsidiaries in Thailand.

24(a)Outstanding balance with related parties

The following table provided the total amount of outstanding balance at December 31, 2019 and 2018.

	Amounts due from related parties				Amounts due to related parties
	As of December 31,				As of December 31,
	2019		2018		2019		2018
	US$’000		US$’000		US$’000		US$’000
The ultimate parent company
PEWC		—		—		862		45
PEWC, Singapore Branch		21		15		—		—
PEWC Singapore Co. (Pte) Ltd.		—		—		1,027		1,005
PEWC (HK)		5,247		5,989		20		399

Associate
SPHC		196		181		1,362		1,362

Non-controlling shareholder of subsidiary
Italian-Thai and its affiliates		6,102		5,876		—		—
Fujikura Limited		—		—		—		136

Others		—		—		13		50
Total		11,566		12,061		3,284		2,997

As of December 31, 2019 and 2018, the interest rates on the balance due to PEWC Singapore Co., (Pte) Ltd. range from 3.09% to 3.79% and 2.70% to 3.40%, respectively, and the payables are repayable upon demand. All balances with related parties are unsecured.

24.	RELATED PARTY TRANSACTIONS (continued)

24(b)Transactions with related parties

The transactions undertaken with related parties are summarized as follows:

		For the year ended December 31,
		2019		2018		2017
		US$’000		US$’000		US$’000
The ultimate parent company
PEWC	Purchases		2,745		521		18,170
	Sales		—		14		1,457
	Fabrication income received		140		412		208
	Management fee paid		199		136		143
	Information technology service fee paid		101		115		114
PEWC, Singapore Branch	Management fee received		14		14		14
PEWC Singapore Co. (Pte) Ltd.	Interest expenses paid		22		21		15
PEWC (HK)	Purchases		—		2,479		4,180
	Sales		17,831		23,498		24,437
	Service fee paid		218		231		—

The immediate holding company
Moon View	Income from discharge of liability*		—		1,537		—

Non-controlling shareholder of subsidiary
Italian Thai and its affiliates	Sales		4,188		6,814		6,203
	Construction of factory building expenses		215		—		—
Fujikura Limited	Purchases		249		750		1,115

Moon View discharged the Company’s liabilities towards Moon View due to the financial arrangement between related parties. The company wrote off the liabilities amounted to $1,537 from “due to related parties”, and recognized other income amounted to $1,537 for the year ended December 31, 2018.

24(c)Terms and condition of transactions with related parties

The sales to and purchases from related parties are based on negotiation by the entities. Outstanding balances at the year-end are unsecured and interest free. There have been no guarantees provided or received for any related party receivables or payables. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

The Company purchases from PEWC copper rods as raw materials, low to high voltage power cable, and wire for distribution purposes. The purchase price from PEWC is determined by reference to the quoted copper prices on the LME. No sales commission was received from PEWC during the years ended December 31, 2019, 2018 and 2017.

24.	RELATED PARTY TRANSACTIONS (continued)

24(c)Terms and condition of transactions with related parties (continued)

Pursuant to the composite services agreement with PEWC:

(i)

PEWC will sell copper rod to the Company, upon the Company’s request, (1) at a price consisting of the average spot price of copper on the LME for the one month prior to purchase plus an agreed upon premium, (2) at prices and on terms at least as favorable as it provides copper rod to other purchasers of similar amounts of copper rod in the same markets as PEWC and (3) will give priority in the supply of copper rod to the Company over other purchasers of copper rod from PEWC.

(ii)

PEWC grants to the Company the right to distribute any wire or cable product manufactured by PEWC in all markets in which the Company presently distributes or develops the capability to distribute in the future, such products on such terms as have historically been in effect or on terms at least as favorable as PEWC grants to third parties that distribute such products in such markets. However, PEWC shall not be required to grant to the Company the right to distribute products manufactured by PEWC in the future in markets where the Company does not currently have the capability to distribute unless and until PEWC has no pre-existing contractual rights which would conflict with the grant of such right to the Company.

(iii)

PEWC will make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, access to certain of PEWC’s technology (and PEWC personnel necessary to use such technology) with respect to the design and manufacture of wire and cable products, including, without limitation, certain fiber optic technology. The Company benefits from research and development conducted by PEWC at little or no cost to the Company.

(iv)

PEWC will make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, certain services with respect to the design and manufacture of wire and cable products, computerization, inventory control, purchasing, internal auditing, quality control, emergency back-up services, and recruitment and training of personnel; such services may include the training of the Company’s employees and managers at PEWC facilities and the secondment of PEWC employees and managers to the Company.

(v)

Each of PEWC and the Company will offer the other party the right to participate in any negotiations with a third party concerning the establishment of any facility or similar venture to manufacture or distribute any wire or cable product outside of the markets where the Company currently manufactures or distributes, or intends to develop the capability to manufacture or distribute, any wire or cable product. Unless the Company and PEWC mutually agree otherwise, the Company shall have the right of first refusal to enter into any definitive agreement with such third party. If, however, such third party would not agree to the substitution of the Company for PEWC or such substitution would prevent the successful completion of the facility or venture, PEWC will arrange for the Company to participate to the extent possible.

24.	RELATED PARTY TRANSACTIONS (continued)

24(d)Compensation of key management personnel of the Company

	For the years ended December, 31
	2019		2018		2017
	US$’000		US$’000		US$’000
Short-term employee benefits		3,073		3,814		3,900
Post-employment benefits		179		102		103
Termination benefits		—		47		43
Total compensation paid to key management personnel		3,252		3,963		4,046

The amounts disclosed in the table were recognized as expenses during the reporting periods.