HANA: Hana Microelectronics Public Company Limited ... · PDF fileHana Microelectronics Public Company Limited ANNUAL REPORT 2013 1. Dear Shareholder, The year 2013 has been a challenging

ContentsThe Group Financial Highlights 1Chairman’s Statement 2Operation Review 4Board of Directors 8Management Team 9Profile of Directors & Management 11Hana Overview and Nature of Business 15Management Structure 24Corporate Governance 35Internal Control and Risk Management 47Related Party Transaction 48Corporate Social Responsibility 50Audit Committee Report 57Nomination Committee Report 58Management’s Discussion and Analysis 59Risk Factors 62Report of the Board of Directors’ Responsibilities for Financial Statements 64Independent Auditor’s Report 65Financial Statements 66

The Group Financial Highlights(Baht millions)

20132012

(Restated)2011

(Before Restated)2013/2012% change

Total Revenue 19,152 18,388 16,998 4%

Sales Revenue 17,667 17,233 16,315 3%

Gross Profit 2,002 1,683 2,054 19%

Operating Profit 1,377 1,076 1,426 28%

EBITDA 2,560 2,305 2,614 11%

Net Profit before Exceptional Items 1,506 1,373 1,717 10%

Net Profit (Loss) for the year 2,337 1,610 1,618 45%

Total Assets 20,157 17,930 17,912 12%

Net Fixed Assets 6,845 6,622 6,373 3%

Total Liabilities 3,563 3,035 3,347 17%

Shareholders Equity 16,594 14,895 14,565 11%

Net (Cash) Debt / Equity (0.19) (0.17) (0.17)

Net Profit (after tax) % Sales 13% 9% 10% 41%

EBITDA Margin 14% 13% 16% 8%

Return on Equity 14% 11% 11% 30%

Dividend per share (from the profits of) 1.50 1.50 1.00 0%

Payout ratio (excl. exceptional items) 80% 88% 47% -9%

EPS before Exceptional Item 1.95 1.50 1.98 30%

EPS after Exceptional Item 2.90 2.00 2.01 45%

Book Value per share (net of treasury shares) 20.62 18.51 18.10 11%

Shares balance repurchased (m) 25.60

Net Number of shares outstanding (year end) 804.88 804.88 804.88 0%

Sales Revenue

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16,000

14,000

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8,000

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IC AssemblyLEDPCBAWatch Movement

MicrodisplayIC Hana Tech. (HK)

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2013

ANNUAL REPORT 2013 1Hana Microelectronics Public Company Limited

Dear Shareholder, Theyear2013hasbeenachallengingonebothfortheglobalelectronicsindustryingeneralandHanainparticular.Thecompanyfocusedontwoprimarygoals.Firstlytoreturnoursemiconductoroperationsbacktoprofitabilityandsecondlytomanagetheweaknessincertainindustriesthatwasbeingexperiencedbysomeofourkeycustomers. ForourICdivision,inadditiontoanoverallweaknessfromthePCandconsumermarkets,thelossofanumberofcustomersin2011duetothefloodcontinuedtoweighonourperformance.Assuch,2013wasayearfocusingonrebuildingourreputationandourcustomer’strust.BythemidyearIampleasedtosaysignificantprogresshadbeenachievedwhichwasrewardedbyanincreaseinbusinessfromourkeycustomers.Coupledwithanimprovementinoveralldemand,ourICdivisionfinallyreturnedtoprofitabilityinthethirdquarterof2013–eighteenmonthsafterweresumedoperationsinJanuary2012.Whilstfurtherimprovementremainstobedone,HanaAyutthayacannowbuilduponthisimprovedplatformandisexpectedtoplayanimportantpartinthegroup’sgrowthin2014. ForourICdivisioninJiaxing,theyearwasalsoweakastheytoosufferedfromthelackofindustrydemandandalthoughthedivisioncontinuedtooperateataconsistentlyprofitablelevelwewereunabletomeetourinternalgrowthtargets.Nonetheless,webelieve2014willbeabetteryearaswehaveanumberofprojectsinthepipelinethatcouldsubstantiallyimproveourutilizationandincreaseoperatingperformance. ForourmicroelectronicsbusinessesbothinLamphunandJiaxing,thestartof2013sawasubstantialreductioninourPCandlaptopbusiness.WhilstthereweresomebrightspotsincertainPCtechnologiessuchastouchscreens,theindustrysawasteepdropindemandastabletsandmobilesmartphonescontinuedtoeatintotheirmarketshare.Assuchdemandfortouchpadsandcomponentsforthecomputermousesawasteepcorrectionastheindustrybegantoaddresstheexcesscapacity.Thiscoupledwithanoverallweaknessforanumberofotherindustrieswiththeexceptionofourautomotivebusiness,playedheavilyonouroperatingperformance.WiththeICdivisionstillinrecoverymodetheHanagroupslippedmarginallyintotheredinthefirstquarterof2013-ourfirsteveroperatinglossasapubliccompanysince1992. However,Iamhappytoreportthatthereboundinthesecondquarterwasimmediateandbythethirdquarterthegroupwasbacktostrongoperatingprofitabilitywiththemicrobusinessenjoyinggooddemandformobilephonecomponents,automotivesensorsandeventhePCindustrywhichhadcutbackaggressivelyneededtore-stockagain.Thishascarriedonuntiltheyearendandevencontinuesstronglyatthestartof2014. Ourkeyfinancialresultsfor2013wereasfollows:

• Revenuesup 3% fromTHB17,232 milliontoTHB 17,667 million• Operatingincomeup 28%fromTHB1,076 milliontoTHB 1,377 million• EBITDAincomeup 11%fromTHB2,305 milliontoTHB 2,560 million• NPATup 45%fromTHB1,610 milliontoTHB 2,337 million• Cashreservesandshortterminvestmentup22%fromTHB 5.5billiontoTHB 6.7 billion

Chairman’s Statement

ANNUAL REPORT 20132 Hana Microelectronics Public Company Limited

Despitethesignificantchallengesthathavefacedthegroupoverthepastfewyearsincludingthegreatflood,asignificantlyhighercostbasefromtheriseindirectlabourcosts(closeto50%inthepasttwoyears)andarisingcurrency,westillbelievethatmanufacturingwillcontinuetohaveastrongdemand.Thekeyistotimeonesexpansionandridethecyclicalityofourindustryasbestpossible.ThusthedecisiontoexpandourcapacityinLamphuntakenin2012isnowlookingthecorrectonewiththeglobaleconomylookingmorepositiveespeciallyfromtheUSA.Withcompletionexpectedbythemiddleof2014,wearealreadyindiscussionwithsomemajorcustomersandareconfidentourexpansionhasbeentimely. OurentryintoCambodiahasfacedanumberofexpecteddifficultiesrelatingtoourcorporateregistrationandthefinalizationofourlandlease.HoweverIampleasedtoreportthatasattheendof2013HanaMicroelectronics(Cambodia)Co.,Ltd.wasestablishedandwehaveregisteredourlandleasesbothforthefactoryanddormitorylandplots.Startingin2014weshallbefinalizingthebuildingdesignsandselectionofcontractorswithananticipatedcompletionbytheearlypartof2015. OurinsuranceclaimsrelatedtothefloodshavemadeprogressduringtheyearwithboththepropertyandinventorydamageclaimstotalingTHB1,242mnowfullysettled.Howeverourbusinessinterruptionclaimisstillundergoingreview.AninterimpaymentofTHB400mwasreceivedin2012withthefinalpaymentexpectedtobesettledbeforetheendofthesecondquarter. FinallywithsadnesstemperedwithalittleexcitementIhavetoinformyouthatafter28yearsourheadofficeleaseisupandwearefinallyrelocatingtoanewsiteashortdistanceawayandonalandplotthatthistimeisownedbythecompany.Withacontemporaryaspectthebuildingisdesignedtoaccommodateallourcorporateofficerequirementsandwillallowforadditionalexpansioninthefuture. Weenter2014againstabackdropofpoliticaluncertaintyforThailand.Thecountryisnowin“unchartedwaters”andtheoutcomeofwhichremainsveryunclear.Nobodyexpectsaquickresolutiontodeeprooteddivisionswhichhavefinallyboiledover.Howeverwealsodonotanticipatethattheenginesofindustrywillbefundamentallyimpededandallofourcustomersfullyunderstandandexpectthatitwillbe“businessasusual”.Assuchwithananticipatedimprovementforglobaleconomicgrowth,especiallyfortheUSA,additionalmanufacturingcapacitycomingon-streamandabalancesheetofrecordstrength,weentertheNewYearwithoptimismthatwecandelivergrowthin2014. Iextendmyheartfeltthankstoallourstaffandmanagementfortheireffortsanddedicationduringtheyear.Throughdifficulttimestheyhaveallrespondedmagnificently.Toallourcustomers,suppliersandbankerswhocontinuetosupportourcompany,Iexpressmygratitude. Tomyfellowboardmembers,currentandthosewhorecentlyretiredtowardstheendof2013,yoursupportandguidanceisdeeplyappreciated.OnbehalfoftheboardmayIsaythatweshallcontinuetostriveforgreatershareholdervalueandweappreciateyourcontinuedsupportforourcompany.

Mr.BanchaTarnprakorn ChairmanoftheBoardofDirectors

Chairman’s Statement


Operation Review

The2013wasagoodyearforHanaLamphundespitetheworldwideeconomicslow-downandlabourwageincreases.Weagainbrokeoursalesrecordwith8%growthyear-on-year.Oursecondhalfwasparticularlystrongasseveralbigprojectsinthesmart-phonesegmentweresuccessfullylaunched.Qualitydemandsfromourcustomerswillcontinuetoincreaseandourteamwillprepareandcontinuallyimproveourprocessesforthetrendtowardsachieving“zerodefect”. Atthestartof2014,ourteamwillbebusypreparingforthenewplantwhichhasover20,000sqm.offloorspacecurrentlyunderconstructionattheSahaGroupIndustrialPark–Lamphun,anearbyindustrialzonelocated10kmfromourexistingplant.Thenewplantisbeingdesignedforhighlyautomatedsemiconductortypemoduleproductionandwillmeetworldclassstandards.Tosupportthisnewplantwewillrestructurethefactoryorganizationandmakefurtherequipmentupgrades. Thenewplantisscheduledforcompletionbythemiddleof2014.ThisincreasedcapacitywillnearlydoubleourexistingfloorspaceandwillallowfurtherexpansionforHanaLamphun,drivingourgrowthforthenextfewyears. Oneofourbiggestchallengesoperationallyhasbeentheincreaseisdirectlabourturnover.Assuch,wehavebeenfocusingheavilytoimprovethisareaandourfocusedactivitieshaveyieldedexcellentresults.In2013wehitthehistoricallowestdirectturnoverrate.Thisisveryimportantbecausehavinganexperiencedworkforcehelpstoincreaseourmanufacturingquality,reducewastageandoverallcost. IwouldliketothankallHanaLamphunstafffortheirdedicationtoenableustoachieveyetagainarecordhistoricalsalesperformancein2013andforalltheirhardworkinpreparationforournewplantexpansion.

Mr.WingKeungChowVicePresidentandGeneralManager

Hana Microelectronics Public Co., Ltd. (Lamphun)


Operation Review

2013continuedtobeayearofrecoveryandrebuildingfortheHanaSemiconductorCo.,Ltd(Ayutthaya)“Hana-AYT”operationsafterthegreatfloodofThailandinQ4-2011.Duringtheyear,theBangkokoperationwasclosedandproductionmovedtoHana-AYTinaseamlessmanner. ItwasalsoayearofseveralmilestonesfortheHana-AYTteam.Asaresultofthesinglemindedfocusofthemanagementteamandwiththesupportfromourcustomers,therevenuesincreasedby11%your–on-yearin2013.Productshipmentvolumealsoincreasedby16%.DespitethefactthatthefactorywasnotasfullyutilizedwhencomparedtoprefloodlevelsplusthesubstantialwagesincreasesHana-AYTwasabletoreportoperationprofitabilitybyJuneof2013. Ourteamfocusedonqualityandachievedsuccesswithnumerouscustomerauditsallowingustogaingreatercustomerconfidenceandincreaseourtoplinerevenues.Thisfocusondeepdivequalitymetricswillcontinueduring2014.Attentionandfocuson5SandQualityAwarenessprogramswillalsobeverymuchenhanced. During2013,Hana-AYTcontinuedtoinvestinnewcapabilitiesandtechnologiestoprovideourcustomersenhancedmanufacturingprocesses.Lookingforwardto2014,HanaAYTwillremainfocusedontechnologyandcapabilityenhancements,cost,qualityandoperationalexcellencetoenableustobeaworldclassserviceprovidertoourcustomers.Focusoncustompackagingandtechnicallychallengingpackageswillbeourareaoffocuswhichwillsupplementourstandardleadedandleadlesspackagesportfolio.Wewillalsobeexpandingourpresenceintheautomotivesegmentofthebusiness. WeonceagainextendoursincerethankstoourcustomersforbelievingintheHanaAYTteamandwelooktothemforsupportaswecontinuewiththebusinessrecoveryprocessin2014. Finally,IwouldliketoextendmysincerethanksandgratitudetotheemployeesofHana-AYT.Itisonlyduetotheirdedication,loyalty,trustandteamworkthatwehavebeenabletoachievesomuchin2013.Weareconfidentofcontinuedgrowthin2014.

Mr.SanjayMitraVicePresidentandGeneralManager

Hana Semiconductor (Ayutthaya) Co., Ltd.


Hana Microelectronics (Jiaxing) Co., Ltd.

Operation Review

Theyearof2013wasbyallaccountsachallengingoneforHanaJiaxing.Overallourdivisionsuffereda9%dropinrevenueover2012.Ouroperationswerehardhitbythesubstantialreductioninglobaldemandforlaptopcomputers,whichledtoareductionofourcustomer’sdemandforassemblyoflaptoptouchpads.AtthesametimethecostofoperationscontinuedtoincreaseduetheinexorableriseindirectlabourcostsandthestrengtheningoftheRMB.That,coupledwithcontinuingpricepressuresmeantourmarginscontinuedtosuffer. Tocopewiththesituation,werestructuredourmanufacturingteamsbyseparatingthemintothreeoperationstoallowgreaterfocuswiththeaimofachievinghigherefficiencyandproductivity.WeworkedonmanyValueAnalysisandValueEngineeringPrograms“VA/VE”toimprovetheoverallmanufacturingcostandwehaveachievedgoodsuccessinmitigatingourcostincreases. Duringtheyearwehavecontinuedoureffortsinautomatingourassemblyandtestprocessesformorelaborintensiveassembliestoreducelabourdependency.Thedrivingfactorwasnotonlythelabourcost,butthelaborsupplybecausedifficultiesinhiringsufficientlabourhaveaffectedourcapacitytosupportloadingupsideswhentheyoccurred.Inordertomakefuturebusinessexpansionpossible,continuousreductionofthedependenceonlaborthroughincreasedprocessautomation,isexpectedtobeoneofthemostimportantstrategiesforusin2014andinfutureyears. Wealsocontinuedoureffortstoenhancetheproductqualityandimprovethecustomerservicewhichwasthecornerstoneofourpastsuccess.WereceivedawardsoftheSupplieroftheYearfromafewcustomersincludingtwomajorcustomersin2013. Withanumberofnewproductsfrombothnewandexistingcustomersgoingintomassproductionlatein2013,webelievethatwewillseethegrowthagainin2014.IamconfidentourteamatHanaJiaxingiswellpreparedtosupportthegrowingdemandsfromallourcustomersandthat2014willbeabetteryear.

Mr.StevenLeeVicePresidentandGeneralManager


Hana Microdisplay Technologies, Inc.

Operation Review

Year2013wasarebuildingyearforHanaMicrodisplayTechnologies“HMT”.Afterlargecutbacksin2012,HMTworkedtostabilizeditslargestcustomersinpreparationforgrowthanddevelopmentofnewcustomersinnewmarkets. Themicrodisplay-relatedbusinesshadastrongfinishtotheyearafteradisappointingsecondquarter.Themajorityofthegrowthinthesecondhalfoftheyearcamefromtelecomdeviceassembliesforbothlong-termandnewcustomersinthatmarket.HMTalsoexperiencedgrowthinopticaldeviceassembliesforcameramodules.Expectedgrowthinminiatureprojectionsystemsremainsapositivepotential,butthesignificantamountofthatbusinesswillbedelayeduntil2014. TheinternalRFIDmanufacturingcapacitywasmoreheavilyutilizedin2013,buttheproductmixmovedalmostexclusivelytolower-pricedunits,usingmostlyconsignedmaterials.Thus,theoverallrevenuefromthiscapabilitywasreducedslightly.HMTexpectstobefullyutilizedin2014onitsinternalRFIDmanufacturing.ProductionofRFIDtiretagswasverystronginthefirsthalfoftheyear.Thetwolargestcustomersfortheseproductshadplansforgrowthinthesecondhalfoftheyear,butbothdelayedthestartofthoseprojectsuntil2014.HMTexpectssignificantgrowthinthisbusinessin2014. HMTaimsforgrowthin2014throughbothofitsmainbusinesssectionsandweexpecttoincreaseourutilizationoftheAyutthayamicrodisplayfactorybytransferringtwonewprojectstherein2014.HMTwillalsogrowitsrelationshipwiththeLamphunfactorythroughanincreaseintire-tagproductionandthestartofanewjointprojectindisplayassemblies.

Dr.JohnErdmannPresidentandChiefExecutiveOfficer


Board of Directors

4

1

5

2

6

3

1. Mr. Terrence Philip Weir Executive Director and Chief Financial Officer

2. Mr. Richard David Han Executive Vice Chairman and Chief Executive Officer

3. Mr. Winson Moong Chu Hui President and Chief Operating Officer

4. Mrs. Salachitt Preedaporn Independent Director

5. Mr. Bancha Tarnprakorn Chairman of the Board and Independent Director

6. Mr. Yingsak Jenratha Independent Director


1. Mrs. Napassawan Namwongsa Senior Manager of Quality Management System2. Mr. Reynaldo San Agustin Director of Quality Management3. Mr. Steven G. Spittal Director of Business Development4. Mr. Wing Keung Chow Vice President & General Manager5. Mr. Sathit Umpai Director of Operations6. Mr. Christian Cron Director of Supply Chain Management7. Mr. Wichai Sukprasertkul Director of Operations8. Ms. Juthamard Trerattanawongse Senior Manager of Finance

9. Mr. Wong Wan Wah Vincent Senior Manager of Supply Chain Management10. Mr. Seree Nuanim Senior Manager of Operations11. Mr. Tosaporn Musikcharoen Senior Manager of Industrial Engineering and Facility12. Mr. Thawatchai Kumprasert Senior Manager of Management Information System (MIS)13. Mr. Chalermpon Narksang Senior Manager of Traffic and Logistics14. Mr. Somjai Namwongsa Senior Manager of Human Resources Department15. Mr. Anawat Aroonsawat Senior Manager of Production and Material Control

Management Team

1. Ms. Areenee Kittisupornpong Senior Manager of Management Information System (MIS)2. Ms. Samantha Kulasinghe Director of Manufacturing Support, Production and Material Control, Industrial Engineering3. Mrs. Saowanee Rachatakarn Senior Manager Financial Controller4. Mrs. Thawanvaree Pichitnorakarn Senior Manager of Purchasing5. Mrs. Tappawong Na Tarlang Senior Manager of Marketing and Account Management6. Ms. Suparin Kengradomkij Senior Manager of Logistics and Inventory Control7. Ms. Praphaphun Naradilok Senior Manager of Human Resources and Training8. Ms. Nataporn Charusabha Senior Manager of Research and Development (R&D)9. Mr. Vincente T. Lau Director of Quality and Reliability Assurance (QRA)

10. Mr. Wanakorn Nonkhunthod Director of Supply Chain Management and Facility11. Mr. Punsak Eammongkolchai Director of Assembly Operations 12. Mr. Pongsakorn Jangsatian Senior Manager of Quality and Reliability Assurance (QRA)13. Mr. Supakit Tantara Director of Assembly Engineering and New Product Introduction (NPI)14. Mr. Sanjay Mitra Vice President & General Manager15. Mr. Worawit Sriburanasorn Senior Manager of Marketing and Account Management16. Mr. Pongsak Klongjai Senior Manager of Assembly Production17. Mr. Chanarong Disyamal Senior Director of Customer Specific Operations (CSO)18. Mr. Chaweng Tantiyaphorn Director of IC-Test Operations

Ayutthaya Management

Lamphun Management

1 89 10 11 12 1713 1814 15 16

2 3 4 5 6 7

1 89 10 11 12 13 14 152 3 4 5 6 7


1. Mr. Paul R. Brown, Jr. Vice President of Business Development2. Mr. Michael R. Davis Controller3. Mr. Edward M. Stiles III Vice President of Product Development4. Dr. John H. Erdmann President and CEO5. Mr. D. Scott Worthington Vice President of Manufacturing

1. Ms. Lucy Guo Senior Manager of Human Resourses2. Mr. Steven Chua Director of Micro Engineering3. Mr. Andy Shen Director of Micro Manufacturing 4. Mr. Steven Lee Vice President and General Manager 5. Mr. Felix Zheng Director of IC Operations6. Mr. Martin Chen Director of New Project Introduction and Technology7. Ms. Jane Li Senior Manager of Finance, Inventory Control and Logistics8. Mr. SW Lum Senior Manager of Purchasing

9. Mr. KY Chew Senior Manager of Marketing & Business Development10. Mr. Steven Quah Quality and Reliablility Assurance (QRA) Manager11. Mr. Gordon Gu Senior Manager of Facility12. Mr. TC Cheah Senior Manager of IC Engineering, Test and Technical Support 13. Mr. Peter Xu Senior Manager of Production and Material Control, Management Information System (MIS) and Industrial Engineer14. Mr. York Li Senior Manager of Manufacturing Support

1. Mrs. LeAna Bui Account Manager 2. Mr. BK Ng Senior Manager of Strategic Projects and Technical Support 3. Mr. Barry Maynard Senior Manager of Business Development and Customer Support4. Mr. Sanjay Mitra President – Hana (USA) Business Development & Customer Support 5. Mr. Thang Bui Director of Business Development and Customer Support 6. Mr. Steve Hanway Director of Business Development and Customer Support 7. Mrs. Malee Lowchareonkul Senior Manager of Business Development and Customer Support

Hana Microdisplay Management

18 9 10 11 12 13 14

2 3 4 5 6 7

1 2 3 4 5 6 7

1 23 4 5

Jiaxing Management

Hana Microelectronics Inc. Management

Management Team


Profile of Directors & Management

Mr. Bancha Tarnprakorn

Position: IndependentDirector ChairmanoftheBoardofDirectors ChairmanoftheAuditCommitteeWorkingExperience: 2002-present,IndependentDirector 2007-present,ChairmanoftheBoardofDirectorsEducationalBackground: DiplomaofInstituteofBanker,London,UKIODTrainingBackground: DirectorsAccreditationProgram(DAP)40/2005Takethepositionasthedirectorormanagementinothercompanies:None

ShareholdingofMr.BanchaTarnprakorn Spouse

Numberofsharesasof1January2013

Tradingduringtheyear Numberofsharesasof31December2013

Numberofshares

45,000shares 55,000shares 100,000shares(0.012%) None

Mr. Richard David Han

Position: ExecutiveDirector ExecutiveViceChairmanandChiefExecutiveOfficer DirectortotheNominationCommitteeWorkingExperience: 1993-present,ExecutiveDirectorandChiefExecutiveOfficerEducationalBackground: B.A.BusinessStudies,Westminster,London,UK M.B.A.(Marketing),CityUniversity,London,UKIODTrainingBackground: DirectorsAccreditationProgram(DAP)57/2006 UnderstandingtheFundamentalofFinancialStatements (UFS)4/2006Takethepositionasthedirectorormanagementinothercompanies:YesSubsidiariesofHana:1.HanaSemiconductor(BKK)Co.,Ltd. 9.HanaTechnologiesGroupLtd.2.HanaSemiconductor(Ayutthaya)Co.,Ltd. 10.HanaTechnologiesInvestmentLtd.3.HanaMicrodisplayTechnologies,Inc. 11.HanaSemiconductorHoldingCo.,Ltd.4.HanaMicroelectronics,Inc. 12.HanaSemiconductorInternationalCo.,Ltd.5.HanaMicroelectronics(Jiaxing)Co.,Ltd. 13.HanaMacauCommercialOffshoreLtd.6.HanaMicroelectronicsInvestmentCo.,Ltd. 14.OmacSalesLtd.7.HanaMicroelectronicsInternationalCo.,Ltd. 15.HanaMicroelectronics(Cambodia)Co.,Ltd.8.HanaMicroelectronicsEnterpriseCo.,Ltd.Non-listedCompany: 1.Omac(HK)Limited2.OmacLimitedListedCompany: ThaiBritishSecurityPrintingPublicCo.,Ltd.

ShareholdingofMr.RichardDavidHan Spouse



Numberofshares

1,040,000shares - 1,040,000shares(0.125%) None



Mr. Winson Moong Chu Hui

Position: ExecutiveDirector PresidentandChiefOperatingOfficerWorkingExperience: 1993-present,ExecutiveDirectorandChiefOperatingOfficerEducationalBackground: BachelorofEngineering,ChengKongUniversity,TaiwanIODTrainingBackground: NoneTakethepositionasthedirectorormanagementinothercompanies:YesSubsidiariesofHana:1.HanaSemiconductor(BKK)Co.,Ltd. 6.HanaTechnologiesGroupLtd.2.HanaSemiconductor(Ayutthaya)Co.,Ltd. 7.HanaTechnologiesInvestmentLtd.3.HanaMicrodisplayTechnologies,Inc. 8.HanaMacauCommercialOffshoreLtd.4.HanaMicroelectronics,Inc. 9.HanaMicroelectronics(Cambodia)Co.,Ltd.5.HanaMicroelectronics(Jiaxing)Co.,Ltd.Non-listedCompany:JowinCo.,Ltd.ListedCompany:None

ShareholdingofMr.WinsonMoongChuHui Spouse



Numberofshares

8,320,000shares 180,000shares 8,140,000shares(1.011%) None

Mr. Terrence Philip Weir

Position: ExecutiveDirector VicePresidentandChiefFinancialOfficer ChairmanoftheCorporateGovernanceCommittee ChairmanoftheRiskManagementCommitteeWorkingExperience: 1993-present,ExecutiveDirectorandChiefFinancialOfficerEducationalBackground: BachelorofEconomics,MacquarieUniversity,CPA,AustraliaIODTrainingBackground: DirectorCertificationProgram(DCP)6/2001,DiplomaNo.ofShareheldasof31December2013: 225,000Shares(0.028%)ShareholdingofSpouse: NoneTakethepositionasthedirectorormanagementinothercompanies:YesSubsidiariesofHana:1.HanaSemiconductor(BKK)Co.,Ltd. 9.HanaTechnologiesGroupLtd.2.HanaSemiconductor(Ayutthaya)Co.,Ltd. 10.HanaTechnologiesInvestmentLtd.3.HanaMicrodisplayTechnologies,Inc. 11.HanaSemiconductorHoldingCo.,Ltd.4.HanaMicroelectronics,Inc. 12.HanaSemiconductorInternationalCo.,Ltd.5.HanaMicroelectronics(Jiaxing)Co.,Ltd. 13.HanaMacauCommercialOffshoreLtd.6.HanaMicroelectronicsInvestmentCo.,Ltd. 14.OmacSalesLtd.7.HanaMicroelectronicsInternationalCo.,Ltd. 15.HanaMicroelectronics(Cambodia)Co.,Ltd.8.HanaMicroelectronicsEnterpriseCo.,Ltd.ListedCompany:None

ShareholdingofMr.TerrencePhilipWeir Spouse



Numberofshares




Mrs. Salakchitt Preedaporn

Position: IndependentDirector DirectortotheAuditCommittee DirectortotheNominationCommittee DirectortotheCorporateGovernanceCommitteeWorkingExperience: 2013–Present,IndependentDirectorof HanaMicroelectronicPublicCo.,Ltd. 2009‐ Present,FinancialandAccountingConsultant 1992‐ 2009,AccountingManager,S.Napa(Thailand)Co.,Ltd.EducationalBackground: BachelorofAccounting,ThammasatUniversity,ThailandIODTrainingBackground: RiskManagementforCommitteeProgram(RMP)2/2013 DirectorAccreditatioProgram(DAP)107/2014Takethepositionasthedirectorormanagementinothercompanies:None

ShareholdingofMrs.SalakchittPreedaporn Spouse

Numberofsharesasof1December2013(AppointmentDate)


Numberofshares

177,800shares - 177,800shares(0.022%) None

Mr. Yingsak Jenratha

Position: IndependentDirector DirectoroftheAuditCommittee ChairmanoftheNominationCommittee ChairmanoftheCorporateGovernanceCommitteeWorkingExperience: 2013–Present,IndependentDirectorof HanaMicroelectronicsPublicCo.,Ltd. 2010–2011,ManagementAdvisor, InternationalPrecisionProductCo.,Ltd. 2008-2009,VicePresidentandGeneralManager, HanaMicroelectronicsCo.,Ltd.(Jiaxing),ChinaEducationalBackground: BachelorofArtinPoliticalSciences,ChaingmaiUniversity, Thailand MiniMBA,KasetsartUniversity,Thailand OperationManagementCertificatefromGIBA(Graduated InstituteofBusinessAdministration),Chulalongkorn University,ThailandIODTrainingBackground: Anti-CorruptionforExecutiveProgram(ACEP)9/2014Takethepositionasthedirectorormanagementinothercompanies:None

ShareholdingofMr.YingsakJenratha Spouse

Numberofsharesasof1December2013(AppointmentDate)


Numberofshares



Ms. Achara Chaicharncheep

Position: SeniorAccountingManagerWorkingExperience: 1996–present,SeniorAccountingManager, HanaMicroelectronicsPublicCo.,Ltd.(Headquarter)EducationalBackground: BachelorofAccounting,KasetsartUniversity,ThailandIODTrainingBackground NoneTakethepositionasthedirectorormanagementinothercompanies:None

ShareholdingofMs.AcharaChaicharncheep Spouse

Numberofsharesasof14October2013(AppointmentDate)


Numberofshares


Mr. Wing Keung Chow

Position: VicePresidentandGeneralManagerHana-LamphunWorkingExperience: 2008-Present,VicePresidentandGeneralManagerof HanaMicroelectronicsPublicCo.,Ltd.(Lamphun) 2001-2007,VicePresidentMarketing&Customer ServicesHana-LamphunEducationalBackground: MasterDegreeofManagement,SASIN,Chulalongkorn University,ThailandIODTrainingBackground: NoneTakethepositionasthedirectorormanagementinothercompanies:None

ShareholdingofMr.WingKeungChow Spouse



Numberofshares




Hana Overview and Nature of Business

HANA OVERVIEW

HanaGroupisoneofSouthEastAsia’sleadingindependent“ElectronicsManufacturingService”(EMS)producers.Thecompany’sheadquarterislocatedinBangkokandthereare4manufacturingbasesarelocatedinLamphunandAyutthayaprovincesinThailand,JiaxinginChinaandOhioinU.S.A.Thecompanyisgoingtoexpandanother2manufacturingbasesinLamphunprovinceatSahaphatGroupIndustrialParkandinKohKong,Cambodiawhichcouldbeoperatedin2014and2015respectively.

HanaMicroelectronicsPublicCo.,Ltd.istheparentcompany.Initially,thecompanywasestablishedunderthenameofHanaMicroelectronicsCo.,Ltd.on28February1978andthenhasregisteredtobeapubliccompanylimitedon26July1993.

Vision, Mission and Corporate ObjectivesVision

Tobecometheelectronicmanufacturingservices’companyofchoice,byprovidingworldclassqualitymanufacturingthroughadiversefieldorrelateddisciplines.

Mission

Tocreatelong-termshareholdervalueinamannerwhichminimizesfluctuationsinearnings;todevelopandpromoteouremployees’wellbeing;tocreatestrongcustomer-satisfactionandtobeagoodcorporatecitizenmaintaininghighcorporate,environmentalandsocialpracticesforthebenefitofallstakeholders.

Corporate objectives/Long term goals1. Developandfosterourhumanresourcesbaseforcontinuousexpansionandinordertomeettheeverchangingdemandsof

themarketandfortheirownpersonalcareerpaths2. Buildstrongandlongrelationshipswithourcorecustomerstofostercontinuousgrowth3. Understandourcustomers’demandsandendevourtomeetthem4. Continuoustodiversityourcustomerbase,geographicandindustryexposureinordertocopewithfluctuationsineconomic

cycles5. Createandgrowshareholdervaluethroughthedistributionofprofitsandincreasingreturns6. Maintainintegritythroughbusinessethicsindealingswithallstakeholders

Major changes and development of the company

Majorchangesanddevelopmentofthecompanyandsubsidiariesinthepast3yearsareasfollows.

2011 HanaSemiconductor(Ayutthaya)Co.,Ltd.,a100%ownedsubsidiaryofthecompany,wasinundatedinearlyOctober2011asaresultoftheextensivefloodinginThailand.Thesubsidiarysufferedmajordamagestoitspropertyandbusinessinterruptionlosses.Thesubsidiaryhasprocessedtoclaimtotheinsurancecompanies.

2012 HanaSemiconductor(Ayutthaya)Co.,Ltd.receivedtheinitialcompensationpaymentsonitspropertydamagesofBaht300millionandthebusinessinterruptionlossesofBaht400millionduetofloodingin2011.



2013 TheBoardResolutionNo.2/2013approvedtheincorporationofanewsubsidiarycompanyunderthelawsoftheKingdomofCambodiawith100%ownedbythecompanyandtheinitialregisteredcapitalofUSD5million.AnewsubsidiarynamelyHanaMicroelectronics(Cambodia)Co.,Ltd.wascompletelyregisteredon2September2013.

TheinsuranceclaimsrelatedtothefloodsofHanaSemiconductor(Ayutthaya)Co.,Ltd.hadbeensettledforthepropertyandinventorydamageclaimstotalingBaht1,242million.Thebusinessinterruptionclaimwasstillnotyetfinalized.

Duetothelandleaseexpiredinearlyof2014,thenewbuildingoftheheadquarterofthecompanywasalmostcompletedtheconstructiononitsownlandandreadytomove-ininearlyof2014.

Hana Group Structure

Hana MicroelectronicsInternational Co., Ltd.

HKD100%

BVIHolding

Hana SemiconductorHolding Co., Ltd.

HKD100%

BVIHolding

Hana MicroelectronicsInvestments Co., Ltd.

USD100%

BVIHolding

Hana Microelectronics(Cambodia) Co., Ltd.

USD100%

CAMManufacture & Trading

Hana Semiconductor(BKK) Co., Ltd.

THB100%

ThailandHolding

Hana MicrodisplayTechnologies INC.

USD100%

USAManufacture & Trading

Hana Semiconductor(Ayutthaya) Co., Ltd.

THB100%

ThailandManufacture & Trading

Omac Sales Ltd.

HKD100%

HKPurchasing

Hana MicroelectronicsEnterprise Co., Ltd.

USD100%

BVIHolding

Hana Microelectronics(Jiaxing) Co., Ltd.

USD100%

ChinaManufacture & Trading

Hana Macao CommercialOffshore Limited

MOP100%

Macau Customer Services

Hana TechnologiesGroup Co., Ltd.

HKD100%

BVIHolding

Hana TechnologiesInvestment Co., Ltd.

HKD100%

BVIHolding

Hana MicroelectronicsPublic Co., Ltd.

THB100%

58%

42%

Hana SemiconductorInternational Co., Ltd.

HKD100%

BVITrading

Hana MicroelectronicsINC.

USD100%

USAAgent & Customer Services


Business operating policy

Hanahasthepolicytodiversifyitsbusinesstomultiplemanufacturinglocationsstrategicallybasedinlow-costcountrywhereverpossibleandsettingupthenecessarycompaniesforcustomerservice,purchasingcenter,tradingandholdingcompaniestoservethegrouprequirement.

Manufacturing HoldingHanaMicroelectronicsPublicCo.,Ltd. HanaSemiconductor(BKK)Co.,Ltd.HanaSemiconductor(Ayutthaya)Co.,Ltd. HanaMicroelectronicsInternationalCo.,Ltd.HanaMicroelectronics(Jiaxing)Co.,Ltd. HanaMicroelectronicsInvestmentCo.,Ltd.HanaMicrodisplayTechnologies,Inc. HanaTechnologiesGroupLtd.HanaMicroelectronics(Cambodia)Co.,Ltd. HanaSemiconductorHoldingLtd.

HanaTechnologiesInvestmentLtd.HanaMicroelectronicsEnterprisesCo.,Ltd.

Purchasing CustomerservicesOmacSalesLtd. HanaMacaoCommercialOffshoreLtd.Trading AgentandcustomerservicesHanaSemiconductorInternationalLtd. HanaMicroelectronics,Inc.

Shareholdinginsubsidiarieswhichthecompanyholdssharesofthemdirectlyandindirectlyfrom10%up

HoldingsharesbytheCompanydirectly

Typeofbusiness No.ofshares/Registeredofshares(Typeofstock-Commonstock)

HanaSemiconductor(BKK)Co.,Ltd.65/98SoiVibhavadi-Rangsit64Junction2,KwangTaladBangkhen,KhetLaksi,Bangkok10210Tel.:02-551-1297-8Fax:02-551-1299

Holding 99,999,994/100,000,000Baht

OmacSalesLtd.16E,OnFookIndustrialBuilding,41-45KwaiFungCrescent,KwaiChung,N.T.,HongKong

Purchasingofelectroniccomponentsandequipment

99,999/100,000HKD

HanaMicroelectronicsInternationalCo.,Ltd.P.O.Box71,CraigmuirChambers,RoadTown,Tortola,BritishVirginIslands

Holding 2/2USD

HanaMicroelectronicsInvestmentCo.,Ltd.P.O.Box71,CraigmuirChambers,RoadTown,Tortola,BritishVirginIslands

Holding 2/2USD

HanaTechnologiesGroupLtd.P.O.Box309,UglandHouse,SouthChurchSt.,GeorgeGrandCayman,CaymanIslands

Holding 2/2USD

HanaSemiconductor(Ayutthaya)Co.,Ltd.100Moo1,T.BaanLane,A.BangPa-in,AyutthayaProvince13160Tel.:(035)350170-7Fax:(035)350805-6

Manufacturingandtradingofelectroniccomponents

69,999,993/120,000,000Baht

HanaMicroelectronics(Cambodia)Co.,Ltd.KohKongSpecialEconomicZone,KohKong,Cambodia


5,000,000/5,000,000USD



HoldingsharesbytheCompany’ssubsidiaries

Typeofbusiness No.ofsharesholdingbysubsidiaries/Registeredofshares

(Typeofstock-Commonstock)

HanaSemiconductorInternationalLtd.P.O.Box957,OffshoreIncorporationsCenter,RoadTown,Tortola,BritishVirginIslands

Tradingofelectroniccomponents

1,851,283/10,000,000USDHoldingsharesby

HanaMicroelectronicsInternationalCo.,Ltd.

HanaSemiconductorHoldingCo.,Ltd.P.O.Box957,OffshoreIncorporationsCenter,RoadTown,Tortola,BritishVirginIslands

Holding 709,118/10,000,000USDHoldingsharesbyHanaMicroelectronicsInternationalCo.,Ltd.

HanaTechnologiesInvestmentsLtd.P.O.Box309,UglandHouse,SouthChurchSt.,GeorgeGrandCayman,CaymanIslands

Holding 100/100USDHoldingsharesby

HanaTechnologiesGroupLtd.

HanaMicrodisplayTechnologies,Inc.2061CaseParkwaySouth,Unit#6,Twinsburg,Cleveland,Ohio44087,U.S.A.


437,752/437,752USDHoldingsharesby

HanaMicroelectronicsInvestmentCo.,Ltd.

HanaMicroelectronics,Inc.3130DeLaCruzBoulevardUnit#10,SantaClara,California95054U.S.A.

Agentandcustomerservices

1,000/1,000USDHoldingsharesby


HanaMicroelectronicsEnterpriseCo.,Ltd.P.O.Box957,OffshoreIncorporationsCenter,RoadTown,Tortola,BritishVirginIslands

Holding 2/2USDHoldingsharesby


HanaMacaoCommercialOffshoreLtd.RuaDePequimNo.126EDF.CommercialITAKC18Macao

Customerservices 1/1MOP(MacauPataca)Holdingsharesby


HanaMicroelectronics(Jiaxing)Co.,Ltd.No#18,HengnuoRoad,XingchengIndustriesZone,Ziuzhoudistrict,Jiaxingcity,ZhejiangProvince,314000P.R.China


35,000,000/35,000,000USDHoldingsharesby

HanaMicroelectronicsEnterpriseCo.,Ltd.

HanaSemiconductor(Ayutthaya)Co.,Ltd.100Moo1,T.BaanLane,A.BangPa-in,AyutthayaProvince13160Tel.:(035)350170-7Fax:(035)350805-6


50,000,001/120,000,000BahtHoldingsharesby

HanaSemiconductor(BKK)Co.,Ltd.




NATURE OF BUSINESSHanaGroup’sbusinessoperationsareprimarilytheassemblyofcomponents,sub-assembliesandsmallelectronicfinishedproducts.Themajorproductgroupsareprintedcircuitboardassembly“PCBA”,integratedcircuit“IC”assemblyandtestandMicrodisplayassemblywithfactoriescurrentlylocatedinThailand,ChinaandUSAprovidingawidescopeofassemblyprocessesservingadiverserangeofelectronicindustrieswhichincludes:-

ManufacturingService Location UltimateHolding

PrintedCircuitBoardassembly,ChiponBoardassembly&test,Lamination

HanaMicroelectronicsPublicCo.,Ltd.Lamphun,Thailand

100%

IntegratedCircuitassembly&Test,MEMS,SENSORS,SIP,LED,OPTOCOUPLERS

HanaSemiconductor(Ayutthaya)Co.,Ltd.,Ayutthaya,Thailand

100%

SMT,PrintedCircuitBoardassembly,ChiponBoardandChiponFlexassembly&test,Coilwinding,IntegratedCircuitassembly&test,LEDpackagingandtest

HanaMicroelectronics(Jiaxing)Co.,Ltd.,Jiaxing,China 100%

LiquidCrystalMicrodisplaysandRadioFrequencyIdentification(RFID)Devices

HanaMicrodisplayTechnologies,Inc.,Ohio,U.S.A.

100%

Revenue structure by product group (Unit:MillionBaht)

Product Company%ofshareholdingbythe

Compan

2011 2012 2013Revenue % Revenue % Revenue %

ICASSEMBLY HS–AYT&HM–JX

100% 5,963 37 5,537 32 5,921 33

CAPTIVELINES HS–BKK 100% 252 1.5 74 0 0 0PCBA HM–LPN

HM–JX100% 9,849 60 11,461 67 11,605 66

MICRODISPLAY HMT 100% 251 1.5 160 1 141 1Total 16,315 100 17,232 100 17,667 100

HS-BKK=HanaSemiconductor(BKK)Co.,Ltd. HS-AYT=HanaSemiconductor(Ayutthaya)Co.,Ltd.HM-LPN=HanaMicroelectronicsPublicCo.,Ltd.(Lamphun) HM-JX=HanaMicroelectronics(Jiaxing)Co.,Ltd.HMT=HanaMicrodisplayTechnologiesInc.

Hana Product Group1. Printed Circuit Board Assembly (PCBA)

PrintedCircuitBoardAssemblyisICandotherelectronicspartassemblingonprintedcircuitboardwhichholdingelectronicspartonboardbySMD(SurfaceMountDevice)technology.PCBAproductsaremanufacturinginLamphunandJiaxingplants.ThecompanyalsoprovidesmanufacturingservicesforotherproductssuchasCOB(Chip-on-Board)Assembly,WirelessRadioFrequencyProductandotherelectronicsdevice(AirPressureandTemperatureControlProduct,FiberOpticDevice,WirelessSensorProduct,SmartCardProduct,etc.)



2. IC Assembly and Test

HanaprovidesICassemblyandtestoperationswiththeproductionbasesinAyutthayaplantinThailandandJiaxingplantinChina.ThecompanyoffersvarietyofICassemblyandtestservicessuchasStandardICproducts(QFN/DFNpackage,LGA,MSOPpackage,SC,SOT,TSOTandTO263Tpackage,etc.),LEDsforAutomotiveLighting,OpticalMouse,DC-DCConverterAssembly,FiberOpticAssembly,ProductsforHighConcentratedPhotovoltaic,etc.

3. Microdisplay

HanaMicrodisplayTechnologyInc.producesLiquidCrystalonSilicon“LCOS”deviceswhicharebeusedformicrodis-playsandopticaltelecommunicationscomponents.TheplantalsoproducesRFID(RadioFrequencyIdentification(RFID)passivetags.TheproductsaredevelopedandinitiallymanufacturedbytheplantinTwinsburg,Ohio,USA.ManufacturingofthesedevicesisalsoperformedinAyutthayaplant,whereaduplicateproductionlinewasestablishedin2004.

Product distribution and raw material

Hanamanufacturestheproductsaccordingtothecustomers’specificationandrequirementandsellstheproductsdirectlytothecustomers.Themajorrawmaterialsarefromdirectpurchasefromsuppliersandconsignmentfromcustomers.Thecompanyimportsthemajorrawmaterialsusedinproductionbyimportdirectly,throughdistributorsoverseasorthroughtheirtradingcompanyforlocalpurchase.Thecompanyhasnoindividualpurchasedrawmaterialsfromonesuppliervaluedatmorethan30percentofthetotalpurchaseofrawmaterials.Thecompanyhastheplanningsystemtopurchasematerialsinadvanceoftheplannedproductiontomatchcustomerorders.

Somematerialsarebasedonworldpricesmarketsuchasgold,copper,steelpriceswhichmayfluctuate.Thecompanyhasmanagedvariouswaystocopewiththepricefluctuationsuchasfindthesecondsourceofsubstituterawmaterial,advancedplanningformaterialorderingordiscussingwiththesuppliersandcustomers.

Production capacity

Theproductioncapacityin2013isasfollows.

OperationPlants2013

ProductionCapacity(Unit:1,000mpieces/day)

ActualProduction(Unit:1,000mpieces/day)

(A)IC-Ayutthayaplant-Jiaxingplant

9,2011,680

6,4761,427

B)PCBA-Lamphunplant-Jiaxingplant

1,093184

492160

C)MICRODISPLAY-U.S.A.plant 586

192



Industry Competitive Condition

In2013themarketswereweakerinthefirsthalfoftheyearandstrongerinsecondhalfoftheyearduetothestrengtheningphaseofthesemiconductorcycle,(whichwasoppositetothetrendin2012).Hanafocusesonthemanufacturingofmicroelectronicscomponentandsub-assembly,whilemostcompetitorsfocusonboxbuildassembly.Inthecontractmanufacturingindustry,Hanaisnowclassifiedasoneofthetop50worldEMScompanies.

Tocompetewithourcompetitors:1. Hana(Thailand)positionistowardshighertechnologyandbetterinfrastructurethanthoseinthemorelabourintensive

countries,suchasChina,India,andVietnam.Evenwiththerecentwageincrease,Thailandstillcompetitivewithourneighboringcountriesformorecomplexassemblies.

2. Hana(China)alsoprovidesacompetitivegeographiclocationbutalsomorecorporatetechnicalandadministrativesupporttodistinguishthemfromlocalcompetitors.

3. Furthermore,Hanaisalsolookingforwardtocopewiththelaborcostincrease.WeareworkingintensivelytosetupmanufacturingplantinCambodia,totakeadvantageofthelowerlaborcostthere.

4. Hanaprovidesawiderangeofproductsandprocessesinvariouslocationstodistinguishitselffromothercompetitorswhoalsohavemultiplefactorysitesbutasmallerproductrange.

5. Evenwiththerecentdowntrendoftheworldwideeconomy,Hanahasstrongcashflow.6. Hanahasmultiplesiteswhichprovidealternativeproductionfacilitiesincaseanyonesitehasdifficulty.

Future Projects in Plan

ThecompanyhasinvestedUSD3.5mina50yearleaseoflandinKohKhongprovinceofCambodiaforfuturefactoryexpansion.Thecompanyplanstoconstructa13,000sq.mfacilityonthelandatacostofapproximatelyUSD9mtobecompletedin2015.

Thecompanyisalsointheprocessofconstructinga26,000sq.mfacilityonthelandpurchasedintheSahaPathanaIndustrialestateinLamphunprovinceatacostofapproximatelyTHB710mwhichwillbecompletedbymid2014.



Company General Information

Name:Companyregistrationnumber:Contactaddress:

Website:Natureofbusiness:Registeredsharecapital:Paid-upcapital:References:

HanaMicroelectronicsPublicCo.,Ltd.010753600077365/98SoiVibhavadi-Rangsit64Junction2,KwangTaladBangkhen,KhetLaksi,Bangkok10210,ThailandTel.66(0)2-551-1297,66(0)2-521-4935-9Fax:66(0)2-551-1299,66(0)2-552-4906www.hanagroup.comElectronicsManufacturingService“EMS”Producer974,403,900ordinaryshareatparvalueofBaht1804,878,860ordinaryshareatparvalueofBaht1Auditor:EYOfficeLimited(formallyknownasErnst&YoungOfficeLimited)33rdFl.,LakeRajadaOfficeComplex,193/136-137NewRajadapisekRoad,Bangkok10110ThailandTel.:66(0)2-264-0777Fax:66(0)2-264-0790

Solicitors:DamrongthamLawOffice63Soi8(SoiPreeda),SukhumvitRoad,Bangkok10110ThailandTel.:66(0)2-255-2550-2,66(0)2-653-1133-4Fax:66(0)2-653-1135,66(0)2-253-3427

ShareRegistrar:ThailandSecuritiesDepository4th,7th–8thFloor,TheStockExchangeofThailandBuilding,62RachadapisekRoad,Klongtoey,Bangkok10110ThailandTel.:66(0)2-229-2800Fax:66(0)2-359-1259

Investorscangetmoreinformationofthecompanyfrom56-1reportthatispostedatwww.sec.or.thandwww.hanagroup.com



Major shareholders

MajorShareholdersasofthelatestclosingregistrationbookon14March2013

TypeofShares:Ordinaryshares

No. Name No.ofShare (%)

1. OMAC(HK)LIMITED,OMACLIMITED,RAINBOWJOYLIMITED 253,419,360 31.49

2. BNPPARIBASSECURITIESSERVICESLUXEMBOURG 98,393,900 12.22

3. THEHONGKONGANDSHANGHAIBANKINGCORPORATIONLIMITED,SINGAPOREBRANCH

86,102,500 10.7

4. STATESTREETBANKEUROPELIMITED 45,698,480 5.68

5. HSBC(SINGAPORE)NOMINEESPTELTD 37,667,610 4.68

6. BNPPARIBASSECURITIESSERVICES,LONDONBRANCH 22,337,200 2.78

7. STATESTREETBANKANDTRUSTCOMPANY 22,207,114 2.76

8. THAINVDRCOMPANYLIMITED 16,380,427 2.04

9. NORTRUSTNOMINEESLTD. 13,334,300 1.66

10. RBCINVESTORSERVICESBANKS.A. 9,287,700 1.15

Remark:No.(1)istherelatedcompaniesunderSection258oftheSecuritiesandExchangeAct(No.4)B.E.2551

Dividend Policy

TheCompany’sdividendpolicytopayshareholdersisapproximately30-100%ofitsconsolidatednetincomeafterdeductionofallspecifiedreserves,subjecttotheCompanyanditssubsidiaries’cashflowandinvestmentplans,includingjustificationsandotherconsiderationsasdeemedappropriate.ThedividendpolicythesubsidiariestopaytheCompanyis0–100%ofappropriatedearnings.

Dividendpaymentdetail 2011 2012 2013

Interimdividend(Baht/share)AnnualDividend(Baht/share)

-1.00

0.501.00

0.501.00

Totaldividendpayment(Baht/share) 1.00 1.50 1.50

Totalamountpaid(Baht) 804,878,860 1,207,318,290 1,207,318,290

Percentageoftotaldividendpaymentagainstthenetprofit 49.74% 74.98% 51.66%


Management Structure

Board of DirectorsTheBoardofDirectorsconsistsofsixdirectorsofwhomthreeareexecutivedirectorsandthreeareindependentdirectors.

TheBoardofDirectorsasof31December2013isasfollows.

Name Position AppointmentDate1.Mr.BanchaTarnprakorn IndependentDirector

ChairmanoftheBoardofDirectorsChairmanoftheAuditCommittee

7November2002

2.Mr.RichardDavidHan ExecutiveDirectorDirectortotheNominationCommittee

26July1993

3.Mr.WinsonMoongChuHui ExecutiveDirector 26July1993

4.Mr.TerrencePhilipWeir ExecutiveDirectorChairmanoftheCorporateGovernanceCommitteeChairmanoftheRiskManagementCommittee

26July1993

5.Mrs.SalakchittPreedaporn IndependentDirectorDirectortotheAuditCommitteeDirectortotheNominationCommitteeDirectortotheCorporateGovernanceCommittee

1December2013

6.Mr.YingsakJenratha IndependentDirectorDirectortotheAuditCommitteeChairmanoftheNominationCommitteeDirectortotheCorporateGovernanceCommittee

1December2013

Directorsresignedin2013areshownbelow.

Name Position ResignedDate

1.Mr.VoraphojThepvanaprasiddhi IndependentDirectorDirectortotheAuditCommitteeChairmanoftheNominationCommittee

30November2013

2.Mr.MartinEnnoHorn IndependentDirectorDirectortotheAuditCommitteeDirectortotheNominationCommittee

30November2013

Term of service of independent directors:Thetermofserviceofindependentdirectorsshallbenineyears.Ifitisnecessarytore-appointanindependentdirectorwhoservesmorethannineyears,theboardshalljustifyandseekshareholders’approvalintheeventthatneedtoretainthatindependentdirector.

Authorized Directors:ThedirectorsauthorizedtobindtheCompanyshallbethejointsignaturesofanytwodirectorsandaffixedwiththecompany’sseal.


Board duties and responsibilities:Theboardhasafiduciarydutytoactinthebestinterestofthecompanyanditsshareholders.Theboardresponsibilitiesareasfollows:1. Relatedtothecompanybusiness-Todirectthebusinessinaccordancewiththerelevantlawsandobjectivesenumerated

inthecompany’sMemorandumofAssociationandhavetheauthoritytoperformdutiesprovidedorrelatedtheretoundertheresolutionoftheshareholdermeetings

2. Relatedtothecompanystrategyandfinance-Toapprovethecompany’svision,missionandbusinessobjectives/goalswhichshallbereviewedatleastevery5years,themattersimpactedtofinancial,debt,futurebusinessstrategicandperformanceofthecompany,projectwithcapitalinvestmentoverthanBaht100,000,000,thechangeofcapitalstructureandaccountingpolicy

3. Relatedtoshareholders-Toapprovethedividendpayment,financialstatementanditsnotes,theauditoropinion,annualreport,callingshareholdermeeting,thechangeofthecompany’sMemorandumofAssociation,appointmentofauditorsandtheirremunerationandtheordinaryshareissuanceandtorecommendtotheshareholdersGeneralMeeting.

4. Relatedtotheboardandexecutivemanagement-Toapprovetheappointmentandremovalofdirectorandsecretaryofthecompanyanditssubsidiaries,delegationorempowertherolesandresponsibilitiestoCEO,sub-committee,thecharterofboardofdirectorsandsub-committee,theotherboardseatsheldbydirector,CEOandexecutivemanagementaswellasrelatedpartytransactionsandconflictofinterest

5. Related toorganizationprinciple–Toapprove thecorporategovernancepolicy, thecodeofconduct,socialresponsibility,riskmanagementandinternalcontrol

Inconductingthebusinessofthecompany,adirectorandanexecutiveshallperformhisdutywithresponsibility,duecareandloyalty,andshallcomplywithalllaws,theobjectives,theArticlesofAssociationoftheCompany,theresolutionsoftheboardofdirectorsandtheresolutionsoftheshareholders’meetings.

Duties and Responsibilities of the Chairman of the Board of Directors:TheChairmanoftheboardhasadditionalresponsibilitiesmorethanotherdirectorsasfollows.1. TogetherwithCEO,tocalltheboardandshareholdermeetingsandsettheagendasofthemeetings2. ToactasChairatmeetingsoftheboardandshareholdersincludingreviewandsignminutesofmeetings3. Tocaseavotetobreakatiefortheboardandshareholdermeetings

Management TeamAsof31December2013,theexecutiveofthecompanyconsistsof5membersasfollows.

Name Position

1.Mr.RichardDavidHan2.Mr.WinsonMoongChuHui3.Mr.TerrencePhilipWeir4.Mr.WingKeungChow5.Ms.AcharaChaichanchep(newsince14October2013)

ExecutiveViceChairmanandChiefExecutiveOfficerPresidentandChiefOperatingOfficerVicePresidentandChiefFinancialOfficerVicePresidentandGeneralManagerSeniorAccountingManager



1

2 3

4 5

Board of DirectorsChairman of the Board

Corporate Governance Committee

Risk ManagementCommittee

President andChief Operating Officer

Vice President andChief Financial Officer

Executive Committee

Executive Vice Chairman and Chief Executive Officer

Nomination Committee

Audit Committee

Internal Audit and Compliance Unit

Vice President & General Manager

Hana LamphunOperation


Hana AyutthayaOperation

SeniorManager of

Financial and Accounting


Hana JiaxingOperation

Director of Management Information

System


HanaMicrodisplay

Operation

CorporateAffairs

Department

1 5 istheCompany’sExecutivesaccordingtoSECRegulation



Management Structure:Duties and Responsibilities of Chief Executive Officer:

Theboarddelegateauthorityandresponsibilityfortheconductofthecompany’sbusinesstoCEOwhohasfollowingresponsibilities:-1. Tomanageandmonitorthecompany’sdailyoperationsandperformanceconsistentwiththecompany’sobjectives,strategies

andrelevantpolicies2. Torecommendtotheboardanysignificantoperationalchangesandmajorcapitalexpendituresbeyonddelegatedauthority3. Toconsiderthecompanyprofit/lossandproposetotheboardofinterimand/orannualdividendpayment4. Toassignresponsibilitiestotheseniormanagementandsupervisingtheworkofexecutivedirectors5. Toempowertheengagementandcommitmentforthecompanyinaccordancewithallapplicablelawsandthecompany’s

standardsandpolicies6. Toconductotherdutiesinaccordancewiththeresolutionsoftheboardmeetingsand/orshareholdermeetings

Sub-Committees of the Board of DirectorsTheboardcurrentlyhasfivecommittees–ExecutiveCommittee,AuditCommittee,NominationCommittee,CorporateGovernanceCommitteeandRiskManagementCommitteeinfulfillingitsresponsibilities.

Executive Committee:Structure: TheCommitteecurrentlycomprisesofthreemembers.

Term: Thereisnotermlimit.

Name Position

1.Mr.RichardDavidHan2.Mr.WinsonMoongChuHui3.Mr.TerrencePhilipWeir

ExecutiveViceChairmanandChiefExecutiveOfficerPresidentandChiefOperatingOfficerVicePresidentandChiefFinancialOfficer

Duties and responsibilities of the Executive Committee:1. Toperformandmanagethecompany’sbusinesstocomplywiththepolicies,missionandbusinessplansasdeterminedby

theboardofdirectors2. Todeterminebudgetandthemanagement’sauthoritiesofthecompany3. Tomonitorandfollowuptheoperationofthecompany’spoliciestoensureitsefficiency4. Tomonitorandfollowuptheperformanceofthecompanytoensureitscompliancewiththebusinessplan5. Tohavetheauthorizationforapprovallimitsofday-to-dayoperationalexpensesinaccordancewiththeapprovalauthorization

policyofthecompanyandtoconsiderthelargeinvestmentprojectsofthecompanysuchasajointventure,aconstructionofnewplantetc.andanysignificanttransactionoverthanBaht100,000,000shallbeproposedtotheboardforapproval

6. Toperformotherdutiesasassignedbytheboardofdirectors



TheboardhasapprovedtheseparationofdutiesandauthorizationofExecutiveCommitteeandmanagementsuchasapprovallimitsofday-to-dayoperationalexpenses.However,suchauthorizationshallnotincludethatwherethegranteecanapprovethetransactionofwhichheorsheisapersonwhomighthaveanyconflictofinterestwiththecompanyoritssubsidiariesregardingsuchtransaction.

Audit Committee:Structure: TheAuditCommitteewasformallyestablishedsinceSeptember10,1999.TheCommitteeconsistsentirelyof

independentdirectors,whoareindependentfromHanaoperationsandfreefromanyrelationshipthatmightintheopinionoftheboardofdirectorstobeconstruedasaconflictofinterest.

Term: TheChairmanandmembersareappointedforaninitialtermofthreeyears.

Name Position

1. Mr.BanchaTarnprakorn2. Mrs.SalakchittPreedaporn3. Mr.YingsakJenratha

ChairmanMemberMember

Mr.BanchaandMrs.SalakchitthavetheexpertiseandexperiencetoreviewthefinancialstatementswhileMr.Yingsakhasthefullexperiencewiththeelectroniccompany.

Duties and responsibilities of the Audit Committee:

1. Toreviewthecompany’sfinancialreportingprocesstoensurethatitisaccurateandadequate

2. Toreviewthecompany’sinternalcontrolsystemandinternalauditsystemtoensurethattheyaresuitableandefficient,todetermineaninternalauditunit’sindependence,aswellastoapprovetheappointment,transferanddismissaloftheheadofaninternalauditdepartment

3. Toreviewthecompany’scompliancewiththelawsonsecuritiesandexchange,theregulationsoftheSETandotherlawsrelatingtothecompany’sbusiness

4. Toconsider,selectandnominateanindependentauditorincludingproposetheirremuneration,aswellastoattendanon-managementmeetingwithauditorsatleastonceayear

5. ToreviewtheConnectedTransactions,orthetransactionsthatmayleadtoconflictsofinterests,toensurethattheyareincompliancewiththeSETregulationsandapplicablelaws,andarereasonableandforthehighestbenefitofthecompany

6. Toprepareanddiscloseinthecompany’sannualreport,anAuditCommittee’sreportwhichshallbesignedbytheChairmanofAuditCommitteeandconsistofatleastthefollowinginformation:6.1 anopinionontheaccuracy,completenessandcreditabilityofthecompany’sfinancialreport,6.2 anopinionontheadequacyofthecompany’sinternalcontrolsystem,6.3 anopiniononthecompliancewithrelatedlawsi.e.theSecuritiesandExchangeAct,theSETregulations,orthe

lawsrelatingtothecompany’sbusiness,6.4 anopiniononthesuitabilityofanauditor,6.5 anopiniononthetransactionsthatmayleadtoconflictsofinterests,6.6 thenumberoftheAuditCommitteemeetings,andtheattendanceofsuchmeetingsbyeachcommitteemember,6.7 anopinionoroverviewcommentreceivedbytheAuditCommitteefromitsperformanceofdutiesinaccordancewith

thecharter,and



6.8 othertransactionswhich,accordingtotheAuditCommittee’sopinion,shouldbeknowntotheshareholdersandgeneral investors,subjecttothescopeofdutiesandresponsibilitiesassignedbythecompany’sboardofdirectors

7. Toperformanyotheractasassignedbytheboardofdirectors8. Initsperformanceofduties,ifitisfoundorsuspectedthatthereisatransactionoranyofthefollowingactswhichmay

materiallyaffectthecompany’sfinancialconditionandoperatingresults,theAuditCommitteeshallreportittotheboardofdirectorsforrectificationwithintheperiodoftimethattheAuditCommitteethinksfit:8.1 atransactionwhichcausesaconflictofinterest;8.2 anyfraud,irregularity,ormaterialdefectinaninternalcontrolsystem;or8.3 aninfringementoftheSETregulationsoranylawrelatingtothecompany’sbusiness

Ifthecompany’sboardofdirectorsormanagementfailstomakearectificationwithintheperiodoftimeunderthefirstparagraph,anyAuditCommitteemayreportonthetransactionoractunderthefirstparagraphtotheSECandtheSET.

9. Tosupportandmonitortheriskmanagementsystemsandensurethemeasuresofthecompanyareappropriate

Nomination Committee:Structure: TheNominationCommitteewasestablishedinNovember2004.Itconsistsoftwoindependentdirectorsandone

executivedirector.TheCommitteewillatalltimeconsistofamajorityofindependentdirectors.

Term: TheChairmanandmembersareappointedforthetermofthreeyears.

Name Position

1. Mr.YingsakJenratha2. Mr.RichardDavidHan3. Mrs.SalakchittPreedaporn


Duties and responsibilities of the Nomination Committee:1. Toensureaformalandtransparentprocedurefortheappointmentsofnewdirectorsandkeyexecutivemanagementtothe

board2. Toselectthepotentialcandidateswhosequalificationsbestmeetthecriteriaandproposetotheboard3. Toproposeandreviewtheexecutivemanagementsuccessionplan4. Toreviewannuallythesizeandcompositionoftheboardandtorecommendanyproposedchangestotheboard

Corporate Governance Committee:Structure: In2013,theboardestablishedtheCorporateGovernanceCommitteethatcomposedofthemajorityofindependent

directors.

Term: TheChairmanandmembersareappointedforaninitialtermofthreeyears.



Name Position

1. Mr.TerrencePhilipWeir2. Mrs.SalakchittPreedaporn3. Mr.YingsakJenratha


Duties and responsibilities of the Corporate Governance Committee:1. Toconsider,reviewandrevisethecorporategovernancepolicycontinuallyatleastonceayeartokeepthecompany’s

corporategovernancepolicyupdateandinlinewiththeinternationalstandards,laws,criteria,rulesandregulations

2. Tomonitorandevaluateattheendofeachyear,theperformanceofthedirectorsandexecutivesincompliancewithbestpracticesasspecifiedinthecorporategovernancepolicy

3. Toperformanyotherdutiesassignedbytheboard

Risk Management Committee:Structure: TheRiskManagementCommitteewasestablishedin2008.TheCommitteecanappointtheirmanagementteamof

eachHanalocationresponsibleforensuringanappropriateriskmanagementprocessisinplace.

Term: Notermlimit

Name Position

1. Mr.TerrencePhilipWeir2. Mr.WingKeungChow3. Mr.SanjayMitra4. Mr.StevenLee

ChairmanMemberMemberMember

Duties and responsibilities of Risk Management Committee:

TheRiskManagementCommitteehas thedutiesand responsibil i ty that hasbeenapprovedby theboard inimplementingtheriskmanagementpolicy,reviewingtheeffectivenessofriskmanagementprofile,presentingthecompany’soverallrisksandsolutionstoeffectivelypreventandlimitHana’soverallrisksatanacceptablelevel,andreportingtheresultstotheboardperiodically.



Meeting Attendance:

Meetings BoardofDirectors

AuditCommittee

NominationCommittee

AnnualGeneralMeeting

CorporateGovernanceMeeting

Non-executivemeeting

Totalnumberofmeetingsin2013 6 4 2 1 1 1

Numberofmeetingattended/participatedin2013ExecutiveDirectors:Mr.RichardDavidHanMr.WinsonMoongChuHuiMr.TerrencePhilipWeir

6/66/65/6

4/4N/A4/4

2/2N/AN/A

1/11/11/1

N/AN/A1/1

N/AN/AN/A

IndependentDirectors:Mr.BanchaTarnprakorn

Newdirectorsjoinedon1Dec.2013:-Mrs.SalakchittPreedapornMr.YingsakJenratha

Directorsresignedon30Nov.2013:-Mr.VoraphojThepvanaprasiddhiMr.MartinEnnoHorn*

6/6

1/11/1

5/55/5

4/4

N/AN/A

4/44/4

N/A

1/11/1

1/11/1

1/1

N/AN/A

1/11/1

N/A

1/11/1

N/AN/A

1/1

N/AN/A

1/11/1

*Mr.MartinEnnoHornheldthemeeting1timethroughconferencecallfromoverseas.

Corporate Secretary to the Board of the Directors:TheboardhasformallyappointedMs.JirapaKongmanee,whograduatedinAccountingBachelorDegreeandMasterofBusinessAdministration,tobethecorporatesecretarysince11August2008tocarryoutthedutiesandresponsibilitiesaccordingtoSection89/15and89/16ofSecuritiesandExchangeActNo.4B.E.2551effectivefrom31August2008.Thecorporatesecretaryshallperformdutieswithcareandresponsibilityandingoodfaithaswellasincompliancewithallapplicablelaws,theobjectives,theArticlesofAssociationofthecompany,andtheresolutionsoftheboardofdirectorsandtheshareholders’meetings.

Duties and responsibilities of the corporate secretary are as follows.1. Toprepareandmaintainfollowingdocuments.

1.1 Directorregistration

1.2 Notificationandminutesoftheboardofdirectorsmeetingsincludingannualreports

1.3 Notificationandminutesofshareholdermeetings

2. TomaintainReportonInterestofDirectors,ExecutivesandRelatedPersonsandsendacopyofthereportunderSection89/14ofSECregulationtotheChairmanoftheboardandAuditCommitteewithin7daysfromthedatethatthereportisreceived.

3. OtherdutiesregulatedbytheSecuritiesandExchangeCommission

4. Otherdutiesassignedbytheboardofdirectorssuchas



• adviseonthelawsandregulationsinvolvedandoverseetheactivitiesoftheboardtobeinaccordancewiththelaw

• Conducttheboardofdirectorsandshareholdersmeetings

• LiaisewithregulatoryagenciessuchastheSETandensuredisclosureandpressreleaseaccordingtotheapplicablelaws

Remuneration of the Board of Directors and ExecutivesRemuneration for Directors:

Thecompanyprovides the remuneration to the independentdirectorswhile the executivedirectors receivethe remunerationas the roleofemployeesof thecompany. Therefore, thecompanyhasnotestablished theRemunerationCommitteeas theboardconsidersandreviews theremunerationof the independentdirectorsbythewholeboard.Thecompanyprovidestheremunerationtotheindependentdirectorsinformsofmeetingallowancesandbonusofwhichtheratesareuptotheresponsibilitiesofthemembers.Theremunerationfordirectorshasbeencomparedwiththerateofthesameindustryandthestructureoftheremunerationofthecompany.Alltypesoftheremunerationofdirectorshavealwaysbeenapprovedbyshareholderseveryyear.

Individualdisclosureofremunerationfortheboardofdirectorsin2013isasfollows.

Name PositionMeetingAllowance(Baht)

Bonus(Baht)

1.Mr.BanchaTarnprakorn IndependentDirectorChairmanofBoardofDirectorsChairmanoftheAuditCommittee

714,000 89,250

2.Mrs.SalakchittPreedaporn(newlyappointedon1December2013)

IndependentDirectorDirectortotheAuditCommitteeDirectortotheCorporateGovernanceCommitteeDirectortotheNominationCommittee

52,500 -

3.Mr.YingsakJenratha(newlyappointedon1December2013)

IndependentDirectorDirectortotheAuditCommitteeChairmanoftheNominationCommitteeDirectortotheCorporateGovernanceCommittee

52,500 -

4.Mr.VoraphojThepvanaprasiddhi(resignedon30November2013)

IndependentDirectorDirectortotheAuditCommitteeChairmanofNominationCommittee

341,250 52,500

5.Mr.MartinEnnoHorn(resignedon30November2013)

IndependentDirectorDirectortotheAuditCommitteeDirectortotheNominationCommittee

341,250 52,500

6.Mr.RichardDavidHan ExecutiveDirectorDirectortotheNominationCommittee

- -

7.Mr.WinsonMoongChuHui ExecutiveDirector - -

8.Mr.TerrencePhilipWeir ExecutiveDirectorChairmanofCorporateGovernanceCommitteeChairmanofRiskManagementCommittee

- -



Remuneration for Executives: Basisofkeyexecutiveremuneration–Thecompanyistoensurethatkeyexecutiveremunerationenhanceitsabilitytoattract,

retainandmotivatecompetentandexperiencestaff.RemunerationofexecutivesandCEOcomprisesofbasesalary,cashbonuses(AnnualandPersonalPerformanceBonuses)andemployees’welfaresuchasprovidentfunds,medicalbenefits,lifeinsurance,etc.Theprovidentfundisapartoftheincentiveprogramstoofferexecutives,managementandemployeesasecureincomeinthecaseofdeath,disability,resignationorretirement.Thecompanycontributesattherateof3-7.5percentoftheirsalariesdependingonthelengthofyearservicewiththecompany.Otherlongtermincentiveprogramistheretirementbenefitwhichiseligibletoreceivewhenretiresfromthecompany.

Measurementcriteria-Theperformance-basedhasbeenrecognizedforthelegitimatedifferenceinroles,individualcontribution,complexityandresponsibilityofthepositiontheyhold.ThedeterminationofremunerationalsotakesintoaccountthecurrentmarketrateandannualsalaryincreaseofthestaffwithconsiderationofthemarketsurveyperformedbyHumanResourcesDepartment.TheboarddelegatestheCEOcompensationtoECM(ExecutiveCommitteeMember)toapprovethebasesalaryincreaseandtheawardofperformance-basedcompensation.

In2013,thetotalremunerationof5executivemanagementsisasfollows.

Typeofremuneration Amount(Baht)

Salary 13,824,989

Bonus 3,644,470

Providentfund 632,025

Boardremuneration -

Total 18,101,484

Human ResourcesAsof31December2013,thecompanyanditssubsidiarieshadatotalnumberofemployeesof10,682headcounts.For2013,thetotalremunerationincludingsalary,overtimes,bonus,providentfunds,etc.wasBaht3,164million.InThailand,therewere8,126employeeswithBaht2,265millionpaidforremuneration.

NumberofemployeesandremunerationinThailand:

Y2013 HanaMicroelectronicsPublicCo.,Ltd. HanaSemiconductor(Ayutthaya)Co.,Ltd.

Production 4,236employees 2,936employees

Administrationandothers 532employees 422employees

Totalemployees 4,768employees 3,358employees

Totalremuneration Baht1,173million Baht1,092million




Human Resource Development:Hanabelievesinthevalueandpotentialofallemployees.Toattractandretaintheemployees,thecompanyisdedicatedtodevelopingemployeesthroughcontinuoustraininganddevelopmentprograms.Thecompanyoffersawiderangeoftraininganddevelopmentprogramstoenhancetheknowledge,skillsandcareerpathdevelopmentforalllevelsofemployees.TheprogramsincludeOrientationandNewHireTrainingProgram,OperationsTraining,TechnicalTraining,ManagementTraining,Multi-skillsProgram,JobsRotationProgramandCareerPathDevelopmentProgram.


Corporate Governance

Thelong-termsuccessofacompanyis largelydeterminedbythesupportweearnfromourcustomers, investors,employees,businesspartners,andlocalcommunity.Tostrengthenstakeholders’confidence,Hanaiscommittedtogoodcorporategovernancebycompliancewiththebestpracticesofcorporategovernancewhereverpossibleandpracticalforthecompany.Thecorporategovernancepolicy,whichispublishedonthecompany'swebsite,providestheguidelinesunderwhichtheboardofdirectorsoperates.Wewillcontinuetoseekimprovementstooursolidfoundationingoodcorporategovernance.

Acomplianceprogramisanimportantelementinthecorporategovernance.In2013,Hanacompliedwithgoodcorporategov-ernanceprinciplesasfollows.

1. Rights of Shareholders Hanarecognizestheimportanceofshareholders’rightsandtreatsallshareholderseitherindividualinvestorsorinstitutional

investorsequitably,fairlyandinlinewithrelevantlaws.Allshareholdershavetheequalrightsforeachclassofsharestoreceivethedividendpayment,tobuy,sellandtransfersharesincludingtherighttoaccessorobtainthecompany’sinformationdisclosedtoshareholdersandthepublic.Allshareholdershavetherighttoattendtheshareholders’meetingsandareeligibletovoteinaccordancewiththevotingrightsoftherespectiveshareclassoftheirshareholdings.Therearenoactionsthatviolatetherightofshareholders,suchasnotchangingoraddingagendaitemswithoutnotifyingshareholdersinadvanceorwhichlimittheaccesstothecompany’sinformationthatisreleasedtopublic.Thecompanyalsoassistsshareholdersbeyondwhatisrequiredbylawscoveringtheirrights,suchasarrangingcompanyvisitssothatshareholdersorinterestedpersonscanhavetheopportunitytounderstandmoreaboutthecompanyandouroperations.

Toencourageshareholderstoexercisetheirrightsinshareholders’meeting,thecompanytakesactionsasfollows.

Before the meeting day:

Thecompanyholdstheannualgeneralmeetingofshareholderswithin4monthsafterfinancialyearends.In2013,thecompanyheldtheMeetingon30April2013at14:00hrs.ThecompanyarrangedwiththeThailandSecuritiesDepositoryCo.,Ltd.or“TSD”whichisthecompany’ssecuritiesdepositregistrarsendthenoticeofshareholders’meeting21dayspriortothemeetingdateinordertoprovidesufficienttimeforshareholderstoreviewtheagenda.Thenoticeofmeetingexpresslyindicatedthematterstobetabledatthemeeting,whetherforacknowledgement,approvalorconsideration,includingtheboard'sopiniononeachagenda.Othersupportinginformationanddocumentswerealsoattachedtothenotice.Inadditiontothedirectdelivery,thenoticeofmeetingwasmadeavailabletotheshareholdersthroughthecompany'swebsite(http://www.hanagroup.com)30daysinadvanceandthenoticeofmeetingwaspublishedthroughSET’sinformationsystemor“ELCID”inbothThaiandEnglishversions,whichwerethesameastheoriginalnoticemailedtoshareholders.

On the meeting day:

Thequorum,votingproceduresandvotingcountmethodareclearlyadvisedtothemeetingpriortothediscussionoftheagendaitems.Inregardstotheannualgeneralmeetingconductedin2013,6outof6directors(100%)attendedthemeetingwhichincludetheChairmanoftheBoardandAuditCommittee,ChiefExecutiveOffice,ChiefFinancialOfficerandChairmanofNominationCommittee.Theexternalauditoralsoattendedthemeetingwiththedirectorssothattheycouldlistentoshareholders'opinionsorsuggestionsandalsoansweranyquestions.

Theboardofdirectorsallowsshareholderstoelecteachdirectoreligibleforelectiononindividualbasis.Theballotisusedandkeptforevidenceandverification.Shareholdersaregiventheopportunitytoraisequestions,recommendationsaswellasprovidetheiropinionsonthecompany’sperformanceorotherconcernsonanequitablebasis.



After the meeting day:

Themeetingminutesrecordingthecourseofthemeeting,votingproceduresandallissuesdiscussedatthemeeting,theresultsofshareholdervotingcountsoneachagendaandthedecisionsmadebythemeetingaremadeavailablewithintheappropriatetimetotheshareholders.Theminutesoftheannualgeneralmeetingin2013werepostedtothecompany’swebsitewithinthefollowingbusinessdayafterthemeetingandatthesametimesenttotheStockExchangeofThailand.Ifshareholdershaveanyinquiriesorcommentsontheminutes,theycancontacttothecorporatesecretary.TheminutesaremaintainedattheCompany’sheadoffice.

2. Equitable Treatment of Shareholders HanapaysspecialattentiontotheinterestoftheCompany'sowners-theshareholders.Equitabletreatmentisgivenwith

fairnesstoallcategoriesofshareholdersasfollows.

Treat all class equally:

Thecompanyensuresfairtreatmentofshareholdersirrespectiveofthesizeofeachoftheirshareholdings.Foreignshareholdersandownersofsmallstakes(minorityshareholders)aswellasindividualinvestorsorinstitutionalinvestorsaretreatedequally.Allofshareholders,inrespectofeachclassofshares,areentitledtothesamedividendpayments,andhaveequalrightsintheeventofsharecapitalincreases.Thecompany’sshareholdermeetingsareopentoallshareholders,andallsharesofthesameclasshavethesamevotingrights.Votingattheannualshareholders’meetingisdonebytheprincipleofoneshare,onevote.Shareholders,whocannotattendtheshareholders’meeting,canauthorizeourindependentdirectorsontheirbehalftoattendthemeetingandvotebyusingtheproxyforms.Shareholdersareallowedtoproposecandidatesforelectiontotheboardandproposeitemsfortheagendaofannualgeneralmeetinginadvance.Thecompany’sannualgeneralmeetingofshareholdersconductedin2013offeredtheopportunityforshareholderstoadditemstotheagendaandresolutionsforthemeetingincludingtoproposecandidatestobeelectedasdirectors.Shareholderscould,(duringtheperiodfromOctober–December2012),submitproposalsforagendaitemsfortheannualshareholdersmeetingtotheboardofdirectors.Theproceduresandcriteriatonominatethedirectortotheboardandproposeitemsfortheagendafortheannualgeneralmeetinghavebeenpostedtothecompany’swebsite.However,in2013therewerenoshareholderproposalssenttotheboardofdirectorsforconsideration.Themattersdiscussedinthegeneralmeetingofshareholderswereinsequenceasgivenintheinvitationletter.

Prevent insider trading

Thecompanyhasthepolicytopreventdirectorsandexecutivesfromtakingadvantageofinsideinformation,fromdishonestdealingforthemselvesandtheirrelatedparties.Insidertradingisprohibited.Hanahasestablishedasystemtopreventtheuseofinsideinformationforpersonalbenefitsasfollows.

• CommunicatethecomplianceofthepolicyofBusinessCodeofConductoftheboardofdirectors,executivesandemployees.Thedirectorsandexecutivesarerequiredtosignonacknowledgementofthepolicyonanannualbasis.

• InformtheboardofdirectorsandexecutivebyacircularletterthatthosewhomaygaininsideinformationshouldavoidtradingtheCompany’ssecuritiesfortheperiodofonemonthbeforetheCompanyannouncesitsfinancialstatementstothepublicandatleast24hoursaftertheinformationiswidelyspreadouttothepublic.

• Requirethedirectorsandexecutivestonotifytheboardatleastonedaybeforetheydealinthecompanyshares.


• TheshareholdingstatushasbeenconfirmedwithindividualdirectorandexecutiveandreporttotheBoardonamonthlybasis.

Thedirectorsandexecutivesofthecompanyhavecompliedwiththispolicystrictly.Therewasnoviolationofthetradingsharesduringtheprohibitedperiodin2013.

3. Roles of Stakeholders Hanarecognizestherightsofstakeholdersastheboardbelievethattherespectofthelegitimateexpectationsofallthe

stakeholdersshouldbenefitallpartiesinthelongrun.Wehavetheguidelinestoencourageactiveparticipationbetweencorporationandstakeholdersasfollows.

Shareholders

Thecompanyattemptstoachievegrowthinearningsforshareholdersoverthelongterm.Boardmembersandexecutivemanagementshallbequalifiedfortheirpositionsandhaveaclearunderstandingoftheirrolesincorporategovernanceandexercisesoundbusinessjudgmentinthebestinterestofthecompanyandshareholdersincludingthepreparationanddisclosureoffinancialandnon-financialinformationaccurately,completelyandtimelyanddevotethetimeandabilitytoperformtheirduties.Ourtreatmenttowardshareholdersshallcomplywiththegoodcorporategovernanceprinciplesfortherightandequitabletreatmentofallshareholders.Thedisclosuresshallbemadeonaconsistentbasis,completelyandtruthfullyinregardstothestatusofthecompany,itsoperatingresults,financialstanding,accountsandotherreports.Thereshallbenodisclosureofinsideinformationtoindividualsassociatedwiththemanagementordirectors,whichcauseddamagetotheshareholdersasawhole.Thecompanyhasfollowedthebestpracticesinconductingtheannualordinarygeneralmeetingofshareholders.In2013,thecompanywasrated“excellent”intheassessmentoftheannualgeneralmeetingsofshareholdersbytheOfficeoftheSECandtheThaiInvestorsAssociation.

Customers

Hanaplacesthehighestvalueonourcustomers.Thecompanyaimstomeetorexceedourcustomers’expectationforproductquality,delivery,reliability,andcompetitiveprices.TheCompanysafeguardsthetangibleandintellectualpropertyofthosewithwhomwedobusiness,whichmaybeusedinfulfillingworkassignments,andwewillcomplywithallregulationsorcontractualrequirementsgoverningtheuseofsuchproperty.ThereisaCustomerServiceDepartmentavailablefordealingwithcustomersandtomonitorprogressofourcommitments.

Business Partners

Hanapromotesfairandopencompetitionandaimsatdevelopingandsecuringlongtermrelationshipwithsuppliersandcontractors.Material,productandservicepurchaseswillbeconsideredforthequalityofmaterials,productsandservicesinaccordancewiththerespectiveproductrequirements.Theboardofdirectors,managementandemployeesareexpectedtoexercisediligenceintheirdutieswithallbusinesspartners.

Procurementofgoodsandservicesshallbeconductedinamannerofthehighestethicalstandards,whichassureaqualityendproduct,aswellasthecontinuedconfidenceofcustomers,suppliers,andthepublic.Thehireofservicesorthepurchaseofgoodswillbebasedsolelyuponprice,quality,service,anddelivery.Procurementactionswillbebasedonthefollowingprinciples:



• Impartialselectionofcapableandresponsiblesuppliersandcontractors

• Maximumuseofcompetition

• Compliancewithlaws,relevantregulationsandcontractualobligations

• Adoptingofaneffectivemonitoringsystemandmanagementcontrolstodetectandpreventbribery,fraudorothermal-practicesintheprocessesofprocurementandtendering

Alldirectorsandemployeeswillnotbe influencedbygiftsor favorsofanykindfromoursuppliersorotherbusinesspartners.Theyshallnotacceptorgiveanygratuityorgiftofferedorrenderedtobusinesspartnersasakickbackforbusinessinfluence.AllemployeesmustconformtoexistingpolicyregardingGift&GratuityPoliciesandProcedures.

Business Competitors

Theboardfocusesonrunningitsbusinesswithopenandfairnessandhaveapracticalguidanceforthecompetitorssuchasfaircompetition,notinvolvedinthecompetitionbythedumping,persecutionordeprivationinfluenceinordertoavoidcompetition,nottakeanyactionthatviolatestheintellectualpropertyorcopyrightofcompetitors,notusedishonestmethodstodiscreditacompetitorornotradesecretviolations.

Creditors

Thecompanytreatscreditorsresponsiblywithhonestyandfairnesstoobtainafairreturntobothpartiesandcomplywiththeagreementincludingthetermsofguaranteeandmanagingcashflowtobeabletopaytothecreditorsaccordingtothetermsandconditions.ThecompanywillnotifythecreditorstatusintheeventofpaymentdefaultandtocomplywiththeConsumerProtectionLawandotherrelatedlaws.

Employees

Thecompanyhasthepolicytonotengagewithanyhumanrightsviolationandprovideequalofopportunityforallofitsemployeesinrelationtoallpersonnelmattersincludingrecruitment,training,promotion,transfer,benefits,dismissal,andetc.Thecompany’sdisciplinarypoliciesandproceduresisdefinedandcommunicatedtoemployees.Thereistobenoharshorinhumanetreatment.Compensationpaidtoemployeesiscompliedwithallapplicablewagelaws,includingthoserelatingtominimumwages,overtimehours,andlegallymandatedbenefits.Thecompanyhasprovidedvariouswelfareprogramsforemployeessuchashealthbenefits,childreneducationalassistanceforlower-payemployees,mealallowance,grouplifeinsurance,employeelongserviceawardprogram,etc.Providentfundisoneofthekeylongtermbenefitprogramstoemployeesthatthecompanyprovidestohelpemployeestosaveaportionoftheirsalaryintheeventofretirement,disability,sicknessorunemployment.Inaddition,thecompanyprovidesthecompensationtoemployeesinlinewiththeirperformanceinboththeshorttermsuchasbonusesandthelongtermsuchasaCareerPathDevelopmentProgramwhichhasbeencontinuouslyprovidedtoemployeesinordertodefinethedevelopmentofskillsetsandidentifyhowindividualsmovethroughtheorganization.TheCareerPath/DevelopmentProcesshasconsiderablebenefitsfrombothanindividualemployeeandanoverallorganizationalperspective.Thecompanyhassetthepolicyandthecommitteestoassesspotentialcandidates,identifythecorecompetenciesandperformassessmenttoverifycandidates’abilitiesanddeterminestrengthsandweaknessestomatchwithcurrentlyholdingpositionandthereadinessforadvancementofeachcandidate,andplanfortrainingandotherdevelopmenttools.

Trainingiscrucialfororganizationaldevelopmentandsuccess.In2013,thecompanyhasanaveragetrainingperemployeeat20hoursperyearwiththemastertrainingplanprovidedtodailypaidandmonthlypaidemployeesasfollows.



1. Operationallevel:Toensureemployeeshavingabetterunderstandingandenablingenhanceproducingproductswithhighqualityandfurthercompeteinworldmarkets.

2. Skilledtechnician:Toincreasetheirknowledgeandkeeppacewithrapidlychangingtechnologyaswellasdeveloptechnicalknow-howtooperationalstafffortheircareerpathdevelopment.

3. Supervisorlevel:Todevelopleadership,strategicmanagementskill,excellentqualityinitiatesandEnglishskillsforcommunication

ItisHanapolicytoestablishandmanageasafeandhealthyworkenvironmentandtomanageitsbusinessinwaysthataresensitivetotheenvironment.TheCompanyprovidesaworkplacethatisfreefromsafetyorhealthhazardsorcontrolssuchhazardstoacceptablelevels.Varioussafetymanagementprogramswerealsoimplementedsuchasairenvironmentanalysisatworkingareaimprovement,riskcontrolmanagementprogram,chemicalusingareaandchemicalstorageimprovement.Thecompanyalsoprovidessafetyatworktrainingsfornewhireandexistingemployeestoensurefullawarenessandhowtomanageandminimizesuchriskssuchaschemicalspilt,firefighting,earthquakeevacuation,etc.

Communities, Society and Environment

HanahastheSafety,OccupationHealth,EnvironmentalandSocial&LabourAccountabilityPolicytocomplywiththesafetyandenvironmentallawsprescribedbytheLabourandSocialWelfareMinistry,theIndustrialMinistry,andtheannouncementoftheIndustrialEstateAuthorityofThailandandotherrelatedlaws.

Thecompanyencouragestheuseofresourcesefficientlybyarrangingvariousenergysavingprojects(refertoCorporateSocialResponsibilitySection).Theboardsupportsthetrainingofemployeestoachieveabetterunderstandingoftheenvironment.ThetrainingdepartmenthasorganizedvarioustrainingcoursesontheenvironmentsuchasOccupationalHealthandSafetybybothinternalandexternalinstructors.Thepasttrainingcoursesareanassessmentofenvironmentalissues,energysavingprogram,wastemanagementandsafechemicalusage,radiationsafety,etc.



Fortheaccidentstatisticdisclosure,thecompanyreportstoemployeesthroughthebulletinboardbydetailingthetargetandaccidentstatisticsandbeingupdatedeveryday.Thegoalistoreduceaccidentsyearbyyearwithinthecompanywhereastheaccidentrateforeachdepartmentineachquarterandthenumberofaccidentslatelyhappenedisalsopresented.

Government Authorities and Associated Organizations

Hanarequires itsexecutive,directorsandemployeestounderstandandabidebythose laws,regulations,policies,andproceduresthatapplicabletothemintheperformanceoftheirjobdutiesincludingthedutiestopaytaxtothegovernmentproperly.

Channel of Complaints Hanaprovideschannelsforstakeholderstocommunicateanyconcernsaboutillegaloranycomplaintsregardingto

activitiesorconductofthecompanyoranyofitsstafforbusinesspartnersrelatingtothecompany.StakeholderscanreportsuchcomplaintorconcerningoodfaithdirectlytotheAuditCommitteeoftheboardofdirectors.Theprocedureforhandlingcomplaints(WhistleblowerPolicy)hasbeenestablishedandpublishedinthecompany’swebsite.Inaddition,thesuggestion/compliantboxisavailableateachHanalocationtoreceiveanonymousandconfidentialcomplaintsfromemployeestoreportanysuspectedfraud,illegalconductoranysuggestiontotheindependentdirector.In2013,therewasnocomplaintreportedtotheindependentdirector.

4. Disclosure and Transparency ThecompanyensurestimelydisclosureofallmaterialmattersandallrelevantinformationisreportedtotheStockExchange

ofThailandinaccordancewiththedisclosurerequirements.Itiscriticaltohaveasmuchinformationascanbeavailablesothatcontinuousevaluationofinvestmentperformancemaybeconducted.Thecompanywillmaketheefforttodiscloseinformationbroadlyandproactivelythroughchannelsofcommunicationthatallowequalaccesstomarketparticipants.Newinformationthatislikelytomateriallyinfluencethevaluationofthecompany’ssharesshallbedisclosedtothemarketimmediatelythroughtheSET’ssystemandthecompany’swebsite.In2013,therewasnoviolationthatHanabreachedthedisclosurerulesandregulations.Thefinancialreportshavebeendisclosedinatimelymannerduringthepastyears.



ThecompanyhasnotsetuptheInvestorRelationsDepartment,butthecompany’sexecutivedirectorsareactivelyinvolvedintheroleofinvestorrelationsonacontinuousbasisasthecompanybelievesthattheirabilitytodeliverconfidentandclearpresentationisasimportantaskillastechnicalandmanagerialcapabilities.TheCorporateAffairsDepartmentisalsoavailabletoprovidebasicinformationuponrequest.ThecompanyusuallyarrangesananalystmeetingeachquartertoinformtheinvestorcommunityofthefinancialresultandalsoclarifyallinquiriesfromInstitutionalInvestors,FundManagersandanalystswhoattendthemeeting.In2013,thecompanyconductedanalystmeetingsfourtimestoprovideinformationaboutthepastquarters’performancetotheinterestedpersons.Additionally,companyvisitsbyinterestedanalystsarealsowelcomeandcanbearrangedbyappointment.Allinvestorscanaccessthecompany’sfinancialinformationthroughtheSET’sPublicdisclosuresystemandatcompany'swebsite:http://www.hanagroup.com,orcontacttofollowingperson.

Name Department E-mailaddress Phonenumber Faxnumber

Mr.TerrencePhilipWeir Finance [email protected] 02-5511297 02-5511299

Ms.JirapaKongmanee CorporateAffairs [email protected] 02-5511297ext.117 02-5511299

Ms.PenpimolKotchabhakdi CorporateAffairs [email protected] 02-5511297ext.226 02-5511299

Enforce material interest (Conflict of Interest)

Theboardofdirectorshasestablishedthepolicyandprocedurefordirectorsandexecutivestoreportonconflictofinteresttoensurethattheyareabidedbytheirfiduciarydutiesinthewaythattheymustnothaveinterest,whetherdirectlyorindirectly,inthematterundertheirdecision.Directorsandexecutivesarerequiredtodiscloseanymaterialinterestintransactionsormattersaffectingthecorporationthroughtheestablishedformapprovedbytheboardofdirectors,wherethosedirectorsandexecutivesshallbeexcludedfromdecisionmakinginvolvingtransactionsinwhichtheyhaveinterestsorareconnected.ThecorporatesecretaryisresponsibleforreceivingreportsfromdirectorsandexecutiveswhodisclosetheirinterestsandthoseoftheirrelatedpartiestothechairmanandthechairmanofAuditCommittee.In2013,therewasnoconflictofinterestfromdirectorsandexecutivesreportedtotheboard.

5. Responsibilities of the Board of Directors Theboardofdirectorsconsistsof6directorswhichare3executivedirectorsand3independentdirectorswhoseis

accountedfor50%oftheboard.Theboardplanstoincreasethenumberoftheindependentdirectorfornextyearorwheneverthatwillbesuitableforthesizeandstructureofthebusiness.ThechairmanoftheboardisnotthesamepersonwhoholdstheChiefExecutiveOfficerpositionandthechairmanisanindependentdirector.Therolesanddutiesbetweentheboardandtheexecutivehavebeenclearlyseparated.

Board diversify

ThecompanyisopenwidetothediversityofthestructureoftheBoardofDirectors.Thepersonwhowillserveasadirectorshouldprovidecomplementaryqualificationtotheexistingdirectorssuchasexpertiseinspecificfield,gender,etc.In2013,theboardhadnominatedaladytobeourindependentdirectoraspartofourdiversitypolicy.

Nomination of director and independent director

Theboardofdirectorsgivesemphasisonthetransparencyofdirectornomination.Thecompanyhasthepolicytogivetherighttoshareholderstoproposeappropriatecandidatesforelectiontotheboard.TheNominationCommitteeisresponsibleforreviewofthequalificationandperformanceofthecandidatesorthosedirectorswhoretiredbyrotation.In2013,therewas



noproposalforcandidatessentbyshareholderstotheNominationCommitteetoreview.Therefore,theboardconsideredthosedirectorswhoretiredbyrotationandwhichtheboardconsidersbasedontheirqualification,workingexperiences,previousyearperformances,willingnessandtimedevotedtotheboardaresuitabletobeconsideredforre-election.

Qualification of director

Apersonwhoservesasadirectorofthecompanyshallpossesstheknowledge,ability,personalcontributionandshallhaveatleastthefollowingqualification.

1) TohavequalificationandhavenoprohibitedcharacteristicsasspecifiedbythelawsonpubliccompanylimitedincludinghavenomannerindicatingalackoftrustworthinesstomanagethecompanyfromtheviewofshareholdersaccordingtotheSecuritiesandExchangeCommissionregulation.

2) Tohaveknowledge,skillorexperience in theelectronic industryoraccounting,financeorbusinessadministrationoranyotherfieldastheboarddeemsappropriate;however,atleast1executivedirectorshallhaveworkingexperiencerelatedtothecompanybusiness.

3) Todevotetimeespeciallyformakingkeydecisionandhandledutiesforthebestinterestofthecompanyandabletoparticipateinalltheboardandshareholdermeetingsunlessnecessaryoremergency.

4) Tohaveamoral,ethical,andanyotherfeaturesthatmayberequiredbylawordeemedappropriatebytheboard.

Qualification of independent director Apersonwhoservesasanindependentdirectorofthecompanyshallpossesstheknowledge,abilityandpersonal

contribution.AtleastonememberoftheAuditCommitteemusthavefinancialknowledgeandotherqualificationnotcontrarytoanyregulationoftheSecuritiesExchangeofCommission(SEC)orthecompanypolicy.

Toensurethattheboardincludessuchdirectorswhocanexercisetheirbestjudgment,allindependentdirectorsshallbeaffirmativelydeterminedthatsuchdirectormeetstherequirementsetbytheSecuritiesExchangeofCommission(SEC).Inparticular,anindependentdirectorisadirectorwho:

1) Holdsshareslessthan0.5%ofthetotalshareseligibletovoteofthecompany,subsidiaries,associates,orcontrollingparties,includingthesharesheldbytherelatedpartiesofanindependentdirector

2) Whoisnotanexecutivedirector,employee,orconsultantwhoreceivesremunerationfromthecompanyoranyofitssubsidiaries,whoisalsoneitheracontrollingpersonofthecompanyorsubsidiariesnorarelatedpersonatleastforthepasttwoyears

3) Isnotthepersonwhohasrelationshipbymeansofdescentorlegalregistrationasfather,mother,spouse,brothersandsisters,andchildren,norbeingspouseofdaughtersandsonsofmanagement,majorshareholders,controllingparty/personwhoisintheprocessofnominationtobethemanagementorcontrollingpersonofthecompanyoritssubsidiary.Thisalsoincludesnormalbusinesstransactions,rentorleaseoffixedassets,financialassistance,loangrantingorreceiving,guarantee,orotherrelatedtransactionsobligedthecompanyoritscontractualpartyfortheliabilitytopaytheotherpartythatisaccountingfrom3%ofnettangibleassetsofthecompanyortwentymillionbahtwhicheverislower.

4) Havenoorneverhavebusinessrelationshipwiththecompany,subsidiaries,associates,orrelatedpersonthatdeprivessuchindependencenorbeingamajorshareholder,executivedirector,managementofrelatedpersonwhohasbusinesswiththecompany,associateandsubsidiaryunlesstheforegoingstatusendedatleasttwoyears

5) Isnotorhasneverbeentheauditorofthecompany,subsidiaries,associates,majorshareholders,orcontrollingperson,norbeingamajorshareholder,controllingperson,orpartneroftheauditingfirmunlesstheforegoingstatusendedatleasttwoyears



6) Isnotorhasneverbeentheprofessionalserviceprovider,norlegalorfinancialadvisorwithreceiveservicefeemorethantwomillionbahtperyearfromthecompany,subsidiaries,associates,majorshareholders,orcontrollingperson,andisnotamajorshareholder,controllingperson,orpartneroftheabovementionedservicefirmsunlesstheforegoingstatusendedatleasttwoyears

7) Isnotthedirectorwhoisnominatedtobetherepresentativeofdirectorsofthecompany,majorshareholder,oranyothershareholderrelatedtothemajorshareholders

8) Doesnotconductthesamebusinessandcompetebusinesswiththecompanyorsubsidiary,norbeingabusinesspartnerorexecutivedirector,paidemployeeorholdmorethan1%ofvotingsharesfromothercompanieswhichhavethesamebusinessandcompetewiththecompany

9) Hasnootherconditionsthatunabletoexerciseindependentopinionregardingthebusinessoperationofthecompany

Appointment of directors

Theappointmentofdirectorsshallcomplywiththecompany’sArticleofAssociationthatisfromthemajorityvoteofshareholdermeeting.Eachshareholdershallhaveonevoteoneachshare.Electionofdirectorsmaybecarriedoutoneitheranindividualbasisorenblocbasisasthemeetingdeemappropriate.Invoting,eitheronanindividualorenblocbasis,ashareholdershallsovoteinaccordancewiththenumberofvoteseachshareholderhasunderandthesaidshareholdermaynotallotanynumberofhisvotestoanysuchperson.Thepersonobtainingthehighestvotesandthepersonsobtaininglesservotes,respectively,(inthecaseofenblocelection)whosetotalnumberdoesnotexceedthepositionsundertheelectionshallbeelectedasdirectors.Inthecaseoftiedvotes,thelastpersonshallbedecidedbythecastingvoteofthechairmanofthemeeting.

Incaseadirectorshipbecomesvacantotherthanonretirementbyrotation,theboardshallelectapersonwhohasqualificationsandwhoisnotdisqualifiedunderthePublicCompaniesLimitedActasreplacementatsubsequentmeetingoftheboardofdirectors.Unlesstheremainingdurationofthedirector’stermofofficeislessthantwomonth,thereplacingdirectorshallholdofficefortheremainingtermofofficeofthedirectorwhomhereplaces.Theresolutionoftheboardofdirectorsshallbesupportedbyavoteofnotlessthanthree-forth(3/4)ofthenumberofremainingdirectors.

Nomination of top executive

ThenominationofaManagingDirectororChiefExecutiveOfficershallberesponsiblebytheExecutiveCommittee(ECM)asaprimaryconsiderationtoscreencandidateswithappropriatequalifications.TheCEOshouldhaveexperienceorskillthatwillbebeneficialtothecompany,understandthebusinessofthecompany,abletomanagetoachievethecompany’sobjectivesandtargetssetbytheboard.Then,theExecutiveCommitteeshallproposetotheNominationCommitteeandtheBoardofDirectorsforconsiderationandapproval.

Supervision of subsidiary and associated companies

Theboardhasitsmechanismstomanageandoversightthesubsidiaryandassociatedcompanies.TheboardhasdelegatedtotheExecutiveCommitteetooverseeandresponsiblefortheoperationsofitssubsidiariesandassociatesincludeappointingtherepresentativetobeadirectororacontrollingpersonandshallreporttotheboardaccordingly.Theboardhasresolvedthattheappointedpersonmustbeapprovedbytheboardpriortovoteonimportantmattersinthesameapprovallevelsofthecompanythathastoapprovebytheboard.Thisincludestheconnectedtransactionandtheacquisitionordispositionofassetsbytherulesrelatingtothedisclosureofinformationandthetransactionisinlinewiththerulesofthecompany.Inaddition,themaintenanceofinformationandaccountingrecordsofthesubsidiariescanbeverifiedandfinancialstatementscanbeconsolidatedwithintimelines.



Board of directors’ meetings

Thetotalnumberofdirectorsattendingthemeetingmustbenolessthanonehalfofthetotalnumberofdirectorstoconstituteaquorum.In2013,thecompanyhad6meetings.ThechairmanoftheboardandCEOsettheagendaofmeetingsoftheboard.Anydirectormaysuggestagendaitemsandmayraiseatmeetingsothermattersthattheyconsiderimportanceofdiscussion.Informationanddatafortheboard’sunderstandingofthebusinesstobediscussedatmeetingsaredistributed5daysinadvanceofmeetings,totheextentpracticable.Toprepareformeetings,directorsareresponsibleforreviewingthematerialsthataresenttotheminadvance.Ifthereareadditionalinquiries,thedirectorscancontactthecompanysecretary.Attheboardmeeting,ampletimeisscheduledtoallowfulldiscussionofimportantmatters.Managementpresentationsarescheduledtopermitanappropriateportionofboardmeetingtimetobeavailablefordiscussionandcomments.Theboard’spolicyistovoteontheagendaitembyhavingatleast2outof3oftotaldirectorspresentinthemeetingforeachagendaitem.Theminutesofboardofdirectorsmeetingareproperlymadeandcontainkeyfactssuchasthetimingofstartandfinish,nameofdirectorspresentandabsent,summaryofitemsofmajordiscussionandresolutions,theminutetakerandcertifier.Theminutesaremaintainedatthecompany’sheadofficeandcannotbeeditedwithoutpriorconsentoftheboardapproval.

The meeting without attendance of management

Theboardencouragesthenon-executivedirectorstohaveaseparatemeetinginabsenceofmanagementtoencouragemoreopendiscussionwithoutmanagementpresent.In2013,theindependentdirectorsconductedameetingwithoutattendanceofmanagement1time.Themeetingwasconductedwiththeparticipationofinternalandexternalauditors.

Orientation for new directors

Thenewlyappointeddirectorshall receiveanorientation regarding thecompany'sbusiness,dutiesandresponsibilitiesofdirectors.Thebriefreviewshallbeledbythechiefexecutiveofficer,chieffinancialofficerorhisappointee.Allothernecessaryinformationshallbegivenbythecompany’ssecretary.

Director development

Theboard’spolicyistoencouragethedevelopmentofdirectorsforcontinuoustrainingsorganizedbyvariousinstitutionssuchasSET,SEC,IODortheauditfirm,etc.

Inaddition,thecommitteealsoencouragesthecompanysecretarytodevelopherknowledgeforproperexecutionofdutiesandresponsibilities.Thus,thecompanysecretary,Ms.JirapaKongmanee,hadattendedfollowingtrainingcourses.

1) CorporateSecretaryProgram19/2006organizedbyThaiInstituteofDirectorsAssociation(IOD)

2) EffectiveMinuteTaking–EMT4/2006organizedbyThaiInstituteofDirectorsAssociation(IOD)

3) CSSeminarforkeydocumentationkeeping2/2009organizedbySEC

Service on Other Boards

Inordertogiveproperattentionandcontributiontotheassignedresponsibilities,theboardbelievesthatdirectorsincludingtheCEOshouldlimittheirservicestonotmorethan3boardsofpubliclytradedcompanies.

Performance assessment of the board, sub-committee and CEO

Theboardhasconductedannualperformanceevaluationastheboardgroupusingself-assessmentmethodtoassessperformanceinthecurrentyear.Theevaluationcriteriatodetermineperformancecoverthecompany'spolicy,thedutiesofdirectors,theavailabilityofinformationtomakedecisions,etc.Thedirectorcanprovidefeedbackinthe



assessmentformandaddressintheboardmeetingtoimprovetheboardperformance.Inaddition,theboardhasconductedtheperformanceevaluationofeachdirectorindividuallyusingtheself-assessmentmethodwithevaluationcriteriainvariousfields.In2013,theboardwassatisfiedwithitsperformancebothasagroupandindividualdirectorwithspecificsuggestionstofurtherconsiderationforimprovement.

Theboardhasalsoconductedtheperformanceevaluationofthesub-committees.Thecommitteeevaluatestheirownassessmentandresultshallreporttotheboard.In2013,eachsub-committeegottheaveragescoreofgoodperformance.

Onanannualbasis,theperformanceofCEOisevaluatedbytheindependentdirectors,wheretheevaluationcriteriahavebeenappliedfromtheguidanceoftheStockExchangeofThailand.In2013,theboardhassatisfiedwiththeperformanceofCEOwithsomerecommendationsforfurtherimprovement.

Succession Plan

Theboardshallensureasystematicnominationforthepropercandidatetoreplaceasignificantdirectororexecutivepositionsuitablyinlinewiththesuccessionplanningpolicy.TheNominationCommitteeisappointedtoproposetheappointmentsofnewdirectorsandkeyexecutives(ChiefExecutiveOfficer,ChiefOperatingOfficerandChiefFinancialOfficer)totheboardbyconsideringthepropercandidatebothfrominternalandexternalcandidates.In2013,theboardreviewedthequalificationsofthosekeyexecutivesandapprovedthejobdescriptionsforfurtherrecruitingprocesswhenhavingthepositionvacant.

Corruption prevention

Thecompanyestablishedtheanti-corruptionpolicywhichapprovedbytheboardasfollows.

Anti-corruptionpolicy:Hanahasazerotoleranceofbriberyandcorruption.Thecompanyprohibitsbriberyandcorruptionconductedinanyforminallbusinesstransactionsandshallcomplywiththelawsandregulationsinallthecountriesinwhichweoperatethroughtheimplementationofaprogramtocounterbribery.Thispolicyshallbereviewedregularlyinordertocapturethechangeinlaw,regulation,standardandchangesinthebusiness.

Thecompanyestablishedacodeofconductasaguidanceforouremployees,providestrainingtonewemployeesandprovideschannelstoreportcomplaintswiththeassuranceofstrictconfidentialityforthepersonreportinginformation.ThecompanyhasassessedthepotentialcorruptionrisksbytheRiskManagementCommittee,however,theriskassessmentprocessshallbecontinuouslyimprovedtobemoreeffectiveinordertomeettheobjectivesoftheriskmanagementpolicy.Anindependentdirectorattendedthetrainingcourse“Anti-CorruptionforExecutiveProgram”organizedbytheThailandInstituteofDirectors(IOD).Thecompanyplanstoprovidethetrainingtoemployeesorinitiatetheprojectstopromoteethical/moralofemployeesinordertopreventanyabuseactions.

Business Ethics

Theboardofdirectorsattemptstooperateitsworldwidebusinessinaccordancewiththehighestethicalstandardsandrelevantlaws.Thecompanyexpectsandrequiresthatitsdirectors,officersandemployeesperformtheirdutieswiththehigheststandardsofintegrityintheconductofbusiness.Therefore,corporatecodeofconducthasbeenwrittenasthecompanypolicyandprocedureinordertoprovidethegeneralguidanceforthoseinrecognizingandresolvingethicalandlegalissueswhileconductingthecompany’sbusiness.Thecompany’sextractofthewrittencodeofconductisavailableonthecompanywebsite.Alldirectorsandemployeesarenotifiedandencouragedtocomplywiththesetcodes.Thecompliancetothecodeofconductisregularlymonitoredbyseniormanagement.Thecompanyshallnottolerateanyillegalorunethicalacts.Anyoneviolatingthecodeofconductwillbedisciplined,whichmayincludeterminationofemployment.Channelsofcomplaintarealsoopenedtoallemployees.



Audit fee of external auditors

1. Auditfee

Thecompanypaidtheauditfeetotheauditfirmin2013amountingtoBaht2,060,000.Inaddition,3subsidiarycompaniespaidtothesameauditfirmamountingtoBaht1,640,000.

2. Non-auditfee

Thecompanyanditssubsidiariespaidthenon-auditfeeforBOIauditandinventorydestructionfeestothesameauditfirmamountingtoBaht495,000andwillpayin2014amountingtoBaht20,000foraworkcompletedin2013.



Internal Control and Risk Management

Theboardofdirectorsisresponsibleforestablishingandmaintainingtheinternalcontrolsystem.In2013,theboardhasperformedself-assessmenttoevaluatetheinternalcontrolsystembyapplyingthecontrolassessmentcriteriafromtheStockExchangeofThailand.ThereisanInternalAuditDepartmentandComplianceUnittomonitorandoverseetheoverallcompanyactivitiesinlinewithestablishedsystemandapplicablelawsandregulations.TheRiskManagementCommitteehasbeenappointedtoensureimplementationoftheriskmanagementpolicytobemonitoredandlimitedoverallrisksatanacceptablelevel.

FromtheBoardofDirectors’MeetingNo.6heldon12December2013withthethreeindependentdirectorsattendedthemeeting,theboardhasassessedthecompany’sinternalcontrolsystembyaskinginformationfrommanagementastoassesstheinternalcontrolin5principles;organizationalcontrol,riskmanagement,managementcontrolactivities,informationandcommunicationandmonitoringmeasurement.Theboardconcludesthattheexistinginternalcontrolsystemsareachievingtheirobjectivesandthecompanyprovidedadequatestafftocomplywiththeestablishedsystemeffectivelyincludingthesafeguardofassetsagainstlossorunauthorizedusebythedirectorandexecutive,andtheassuranceoftransactionsthatmayhavetheconflictofinterests.

Internal Audit TheAuditCommitteehasappointedMs.JirapaKongmaneetothepositionofheadofinternalauditunitfrom10September1999duetohavingadequateexperiencesininternalauditfieldandhavebeentrainedinthetrainingcoursesrelatedtothescopeofinternalauditsuchasInternalAuditRoleinGovernance,RiskandControl,BusinessManagementSkills,BusinessAnalysisandInformationTechnology,COSOInternalControlFramework,includingtrainingcourserelatedtothenewlawsandnewaccountingstandards,andsheunderstandstheactivitiesandoperationsofthecompanysosheisappropriatetoperformsuchdutiesproperlyandadequately.

TheinternalauditunithasareportinglinetotheAuditCommitteewhoconsidersandapprovestheappointment,transferanddismissaloftheheadofinternalaudit.

Compliance UnitTheBoardofDirectors’MeetingNo.5heldon13November2013hasappointedMs.JirapaKongmaneetothepositionoftheheadofComplianceUnittoberesponsibleforoverseeingthebusinessoperationsofHanagroupinaccordancewiththelaws,rulesandregulationsoftherelevantauthorities.


Related Party Transaction

AccordingtothenoteonRelatedPartyTransactionsoftheconsolidatedfinancialstatementsfortheyearended31December2013and2012disclosedrelevantdetailsofrelatedpartytransactionsenteredintobythecompanyanditssubsidiaries,themajorityoftherelatedpartytransactionswereenteredintointhenormalcourseofbusinessbythecompanyandwillnotgiverisetoaconflictofinterest.

In2013,thecompanyhasarelatedtransactionofleasingthepropertybetweenthecompanyandacompanyofamajorshareholderamountingtoBaht1,574,244.

Relatedcompany/person

Typeofrelationship Summaryoftransaction Sizeoftransaction Reasonableandneces-saryconditions

OmacLimited OmacLimitedisashareholderholdingtheCompanysharesamountingto40,939,360sharesequivalentto5.09%ofpaid-upcapital(1)andHanFamilyisthemajorshareholderofOmacLimited(2)andadirectoroftheCompanyisadirectorofOmacLimited(3)

TheCompanyisthesub-lesseeofland5Rai,93SquareWahlocatedonVibhavadi-RangsitRoadfromOmacLimitedwhichisthelesseethislandfromMrs.AphiradeeHabananande,Mrs.PiyadaAngsananontandMr.PrempreeWatcharapai,thelandlord.ThelandlordagreedtoleasethelandtoOmacfrom1986–2014.

RentalrateisBaht1,574,244peryear.ThelandleasewillexpireinFebruary2014.

TheCompanyhassubleasedthelandfromOmacLimitedsince1991tobetheCompany’sheadquarterandthemanufacturingofitssubsidiary.TherentalrateisreasonablebecauseitisthesamerateasOmacLimitedagreedwiththelandlord.

(1) Theinformationasofclosingregistereddateon14March2013(2) ThemajorshareholdersofOmacLimitedare: Mr.RichardDavidHanholdssharesequivalentto15.28%, Ms.JanineMargaretHanholdssharesequivalentto33.33%,thesisterofMr.RichardDavidHan Ms.AlinaSylvieHanholdssharesequivalentto18.05%,thedaughterofMr.RichardDavidHan(3) Mr.RichardDavidHanisthedirectorofHanaMicroelectronicsPublicCo.,Ltd.andOmacLimited

Comment on related party transactions by independent directors:AccordingtothetransactionwithrelatedpartyforthepropertyleaseagreementbetweenthecompanyandOmacLimited,theindependentdirectorshavetheopinionthatthetransactionisreasonableandnecessaryforthebestinterestofthecompany.ThetermsoftheleaseappearstobeunderthearmlengthnormalcommercialtermsinviewofbeingthesameleasetermsthatOmacLimitedagreedwiththeLessorwhoisathirdpartythathasnoconnectionwhatsoeverwiththecompany.Thisisatransactionthatneitheraffectsthepersonwhohasaninterestotherthanthefinancialbenefitthatnormallyreceivesnorcausestobedamagedoractsinamannerinconsistentwiththeinterestsofthecompanysignificantly.


Procedures to approve of entering to connected transactions:IncaseofnormalbusinesstransactionsmadewithrelatedpartiesunderSection89/12(1)asrequiredbytheSecuritiesandExchangeCommissionsuchasthenormaltradetransactionsortransactionsthatsupportthegeneralbusiness,suchtransactionsmustbeapprovedbytheBoardofDirectorsortheprinciplesmustbeapprovedbytheBoardofDirectorspriortoexecutethetransaction.

Thecompanyanditssubsidiarieshavedeterminedthemeasuresandprocedurestoapproveofenteringtoconnectedtransactions.TheBoardandAuditCommitteeshalldetermineonacase-by-casebasiswhetheraconflictofinterestactuallyexistsandtakesappropriatestepstoidentifysuchpotentialconflicts.InthecasethroughtotheBoardofDirectorsmeeting,directorswhohaveinterestonaparticularissueinvolvingthecompanywillnothavevotingrightinthemeeting.

Inaddition,thecompanyanditssubsidiariesshallcomplywiththeregulationsoftheSecuritiesandExchangeCommissionandtheStockExchangeofThailandandtheAuditCommitteewhoreviewofsignificantrelatedtransactionsforeveryquartertopreventconflictofinterestalso.

Policy of related transactions in future:ThepoliciesofthecompanyanditssubsidiariesregardingrelatedtransactionsinfutureshallcomplytotheSecuritiesandExchangesAct,theregulationsofStockExchangeofThailandandcompliancetotherequirementsregardingtodisclosureoftheconnectedtransactionsandacquisitionordisposalofthecompany’sassets.

Related Party Transaction


Corporate Social Responsibility

Hanarecognizesthatourlong-termsuccessdependsonourabilitytomanageouroperationssoundly,efficientlyinanincreasinglycomplexenvironment,tocreatevalueforourstakeholdersandtofurthercontributetosociety.

CSR Policy, Vision and Strategy

Policy: Theboardofdirectorshascommitteditselftosupportthecorporatesocialresponsibility,forstakeholdersbyconductingthebusinessinanopen,honest,andethicalmanner.Hanaanditssubsidiariesrecognizetheimportanceofprotectinghumanrights,consumerrights,environmentalmanagement,compliancewithapplicable laws, regulationsandcontribution tocommunitydevelopment for long termsuccessof thecompany,societyandstakeholders.

Vision: Tooperateourbusinessinharmonywithsocietyforthemutualbenefitofourstakeholdersandcommunity.

Strategy: Hana’sbusinessenvironmentishighlycompetitive.Thecompanyseekstoexpanditssalesandproducteachyearandtocontinuallyimprovethecapabilitiesandproductivityofitproductionprocesses.WhilstdoingsothemanagementandstaffaremindfuloftheCSRpoliciesandrevieweachchangetoensurecompliancewiththeCSRPolicies.InadditionthecompanyanditssubsidiarieshaveestablishedCSRcommitteesateachplantwithrepresentativesfromdifferentdepartmentswhichfocusonthecompany’srelationshipandcontributiontothecommunity.

CSR-In-Process (Connected with the Company’s Operations)In2013,HanaanditssubsidiarieshavecompliedwiththeCSRprinciplesoftheStockExchangeofThailandasfollows.



1. Fair business conduct Fairandopencompetition:Hanaconductitsbusinessincompliancewithcompetitionlawsandregulations,advising

employeestorealizetheimportantoffaircompetitionpolicy,avoidingandanti-monopolytrading,notaskingforandnotreceivingorpayinganybenefitsthatarenothonestwithtradingpartnersincludingthegovernmentofficers.

Safeguardthepropertyrightofothers:Hanarespectstherightsoftangibleandintellectualpropertyofothersbynotengaginginanyactivitythatviolatessuchrightse.g.usingasuperiormarketpowertomakeabuse,makingfakeproductsorviolatingintellectualpropertyright,etc.

Promotevaluesupplychain:Thecompanyistakingitseffortstobuildopenbusinessrelationshipsandensurefairandeven-handeddealingswithitssuppliers,cooperativeandsupportCSRactivitiesinaimingatbuildingasustainablesocietyinfullpartnershipwithitssupplierssuchasensuretocomplywithestablishedpurchasingprocedure.

2. Anti-corruption Incompliancewiththebestpracticeofgoodcorporategovernanceandinlinewiththeinternationalstandard,theboard

ofdirectorshasestablishedananti-corruptionpolicyanddeclaredourintenttoenteraprocessofCollectiveActionbytheprivatesectorwiththeobjectivetosupportaCoalitionagainstCorruption,tocountercorruptioninanyform.

3. Respect Human Right Hanarespectsthebasichumanrightsofindividuals.Thecompanyhaspoliciestoensurethatthereshallbeno

humanrightsviolation,shalltreatallemployeesequallyandcreateaworkplacethatisfreefromdiscrimination.Thecompanyhasthecareerpathdevelopmentprogramforemployeestoenhancetheirknowledgeandskillsandopenopportunitiesforfuturegrowth.Employees’remunerationshallbethesamestandardforemployeeswhoaremenandwomen.Employeesatisfactionsurveyshavebeenregularlyconductedtoprovidemanagementwiththeknowledgeandtoolstobuildpositiveemployeerelationsandapositiveworkenvironment.Channelsofcomplaintarealsoopenedtoallemployeeswhileprotectingemployeeswhoreportviolationsorwrongdoinginthecompany.

4. Fair Labor Treatment Non-discriminationinemployment:Hanasupportstheprincipleofequalopportunitiesinemployment,promotionor

terminationandisopposedtoallformsofdiscrimination,includingthoseonthegroundsofnationality,color,race,religion,gender,age,ordisability.Allemployeeswillbetreatedasindividualssolelyaccordingtotheirabilitiestomeetjobrequirements.Thecompanyhasimplementedtheprocedurestartingwiththerecruitmentprocessbynothavingontheemploymentapplicationformanyrequirementforcandidatestocompletethespecificinformationofage,religion,gender,nationality,anddisabilityinordertoavoiddiscriminationinhiring.

Inaddition,Hanasupportsprojectsofthegovernmenttoprotectingtherightsofdisabledpersonstoprovidethemwithemploymentopportunities.Thecompanyemployspersonswhoaredisabledandarrangestheappropriatejobtotheircapability.Thecompanyalsoimprovedworkplaceenvironmenttoenableemployeeswithdisabilitieseasieraccesstothecompany’sfacilities.Furthermore,Hanaalsoarrangesaplacefordisabledpersonstoopentheshopsinthefactoryatnocost,whichgainthegoodsupportfromemployees.In2013,HanaSemiconductor(Ayutthaya)Co.,Ltd.,asubsidiaryofthecompanyreceivedaprizeforthe"bestcorporatesectorwhosupportedthedisabledpersons"bytheOfficeoftheNationalDevelopmentandDisabilities,theMinistryofSocialDevelopmentandHumanSecurity.



Notusingforcedlabororchildlabor:Thecompanyhasnotraffickingforcedlaborandchildlaborillegal.Thecompanyshallcomplywithapplicablelawswhetherlawsprohibitingcomplaintstosupportslaveryortrafficking,andshallnotuseorenterintotheagreementforforcedlaborincludingslaverysuchasassignemployeestoworkbutnowillingnesstodooraspunishment.Employeeisfreetoresignfromtheemploymentbygivinganadvancednoticeandthecompanyshallnotkeeptheiridentificationcards,passportorworkpermitwiththecompanyaspartofemploymentobligation.

Socialprotection:Ourcompensationpolicyisfairandreasonableaccordingtoemployees’capabilitybyconsideringthepackageswiththesameindustryandinaccordancewiththeposition,experienceandtheperformanceofthecompanyaswellastheeconomicandsocialsituation.Moreover,thecompanyprovidesvariousemployees’welfareforexampleannualvacation,overtimewiththeconsentofemployee,medicaltreatment,educationalfundgrantedforchildrenoflowincomeemployees,employees’cooperativesandotherwelfaressuchasannualhealthcheck,FitnessCenter,library,etc.Thereisalsoalongserviceawardtoemployeeswhoworkwiththecompanyforalongperiod.



Thecompanyfocusesontheworkenvironmentthatissafeforbothphysicalandmentalhealth.ThecompanyhasbeencertifiedforOHSAS18000andTIS18001whichisaninternationalandThai’soccupationalhealthandsafetymanagementsystemsince2005todate.Thecompanyiscommittedtodevelopingenvironmentalandsafety,healthofemployeesandthoseinvolved,aswellasupholdsocialresponsibilityandlabor,alongwithoperatingthebusinessandmakingcontinuousimprovementasfollows.

1. Resourceconservationanduseenergyefficientlyinordertopreventpollutionandcontrolthedischargeofwastetominimizeenvironmentalimpact.In2013,thecompanyinvestigatedtheleakofrawmaterialsandchemicalinthehighriskareasregularly.Preparationofsafetydataforchemicalshandlingandpostforawarenessonthebulletinboard,includingtrainingtoemployeestobetterunderstandtheprinciplesofsafetyandenvironment.

2. ProvidetheworkplacewithproperequipmenttoensuresafetyandpreventaccidentsorincidenceaccordingtoNFPAstandardsorinternationalstandards.Thecompanyalsoprovidesafirstaidandnursingcareinthefactory24hoursadayandensuresemergencyplanningandfiredrillsatleastonceayear.In2013,thecompanyhasrecordedaccidents15times,whichwereinvestigatedforthecauseandmadeimprovementcontinuously.

3. Compliancewithapplicable labor-related lawsaswellas tosupport thespecific requirementsof thecustomersregardingtohealth,safety,environmentandsocialresponsibilityandlabor(suchasEICCCodeofConduct,etc.)

Employeesatalllevelsoftheorganizationhavebeentrainedwiththepolicyofsafety,health,environment,socialresponsibilityandlabor.Thepolicyalsohasbeenreleasedtothepublicthroughthefactorybulletinboardandtobusinesspartners.

5. Customer Responsiveness Theproductsandservicesthatwemakearesafeandnotharmfultoconsumers.ThecompanyisaccreditedISO9001:2008

foraqualitymanagementsystemwherethecompanycandemonstrateitsabilitytoconsistentlyprovideproductsthatmeetscustomer,applicablestatutoryandregulatoryrequirements.Furthermore,thecompanyhasbeencertifiedtoISO/TS16949:2009standardwhichisaqualitysystemforautomotiveproductionwhichfocusesonthetechnicalproductionofhighqualityautomotivepartsandISO13485qualitysystemthatisusedinthemedicaldeviceindustrywhichisaqualitysystemthatmostlyfocusesonthesafetyofproducts.

Inaddition,thecompanypromotesfairtradingandhasthepolicytoassesscustomersatisfactionbothbeforeandaftersaletoimprovecustomersatisfactionandcontinuousimprovement.TheperformanceofthecompanyisdeterminednotonlyfinancialKPIbuteachfactoryoperationhasmanyoperationalKPIbothcontinuousandweeklyandmonthly,forcustomersatisfactionandproductionqualitycriteriawhichareusedforcontinuousimprovementandhighlightingasearlyaspossibleanyqualityissuesthatneedattention.

ItisthepolicyofHanatoencourageallemployeestoparticipateinimprovingtheirownworkprocessesthroughmultipleformssuchasQualityControlCircles(QCC),improvementproject,specialprojectsassignedbythechairmanforemployeeslevelsupervisorsorengineersandtechnicians,Kaizensuggestion,andsmallgroupactivitiesfordailypaidemployeeswhoareaccountedfor90%ofoverallstaffs.Overthepast10years,thecompanycontinuouslymadedevelopmentandwereceivedgoodsupportbybothinternalandexternalorganizations.FromparticipatingingroupactivityofThailandQualityPrizeorganizedbyTechnologyPromotionAssociation(Thailand-Japan),HanaLamphunreceivedanexcellentawardofJuniorQCCPrizeandManufacturingQCCPrizecontinuouslyfor5yearsinarowwhichisanothermanagementtoolthatallowsHanatodevelopitsorganizationsteadily.



6. Environmental care AsHanahasitsmanufacturingsiteslocatedinindustrialestates,thereareanumberofcontrolandmanagementsystems

andstandardstopreventpollutionandimpacttotheenvironmentandcommunity.ThecompanyalsohasbeencertifiedforenvironmentalmanagementsystemISO14001continuouslysince1999.In2013,thecompanyimplementedtheuseofresources,reduceandpreventpollutiontotheenvironmentandthecommunityasfollows:

Electricity:Hanainvestedinvariousprojectstoreduceenergyconsumptioni.e.,replacing15,500fluorescenttubesof36watteachwithLED20watttubes,coveringbothinLamphunandAyutthayafactories.Weinstalledequipmenttoreducespeed(VariableSpeedDrive)andmakeimprovementofmotorandaircooling(AHU)accordingtoenergyconservationmethods.Further,Hanaalsoimprovedenergyefficiencyinairconditioningsystemsandcompressedairsystemsandthecontrolelectricalenergyduringtheholidaysandatshiftchange.Intotal,thecompanyanditssubsidiarieshavereducedelectricityconsumptionin2013bymorethan16millionunits,representingapproximately10%ofelectricityconsumed,andsavingupto55millionbahtperyear.

Waterquality:Thecompanyhascontinuedtoreducetheuseofwater.Thewastewaterfromtheproductionprocessshallbetreatedandfilteredtorecycleenablingtheincreasetherecyclingwaterby42%.Hence,Hanamadethesuccessinreducingthewatersupplyto200,000cubicmeterssavingwaterusagebyabout5millionbahtperyear.

Airquality:Thecontrolofairemissionsareinlinewiththestandardsandrelatedlaws.Thecompanyhastheplansformonitoringandpreventivemaintenanceofequipmentrelatedtovariousairpollutioncontrolandperformsmeasurementofairqualityintheworkplace.Fromtheimplementation,theairqualityoutofourfactoryisbetterthanthestandardrequiredinallindicators.

Noiselevel:Thecompanymaintainsmachineryandequipmentingoodconditionandprovidespersonalprotectiveequipment(suchasearplugs,earmuffs,etc.)toemployeeswhoworkinanoisyenvironment.Inworkingareaswherenoiselevelsexceed85decibels,thehearinghealthcheck-upforthoseemployeeshavebeenprovidedperiodically.

Wastemanagement:Hanahasimplementedtheseparationofwasteintothreecategories:generalwaste,recyclewasteandhazardouswaste.ThewastedispositionismanagedaccordingtolegalstandardsoftheDepartmentofIndustrialWorksproperly.

Chemicalsandhazardoussubstances:InadditiontoISO14001certification,ourmanufacturingplantinChinahasbeencertifiedforIECQQC080000:2005HazardousSubstanceProcessManagement“HSPM”since2008.IECQaccreditationassuresaccesstoglobalmarketplaceandcreatescompetitiveadvantageandcompliancewithlawsandhighestindustrystandardsaswehavetheprocessesinplacetoproperlymanageourproductsthatarefreefromhazardoussubstances.



Inaddition,ourAyutthayaandChinaplantshavebeencertifiedfortothestandardsofourcustomersintheprojectofGreenPartnerProgramregardingenvironmentalmanagementsystemsbycontrollingtheuseofchemicalsintheproduction,prohibitingtheuseofdangeroussubstances,discontinuingandreductionintheusagesuchsubstancesthatimpacttotheenvironmentsuchastheuseofleadsolderinsidetheproduct.Further,itisnotallowedtousematerialtomaketheproductorpackagingthatisharmfulsuchaslead,mercury,etc.

ComplaintProcedures:Thecompanyassignedenvironmentalsupervisorsandoperators,whoreceivedtrainingandreg-istrationasrequiredbylaw,tocommunicateinformationwiththecommunityandresidentslivingaround.Thecompanyalsohastheprocedureforcomplaintsandresolvingcomplaintsarisingfromtheoperationofthecompany.In2013,thecompanyhasnomajorenvironmentalcomplaintsfromtheemployeesorthecommunity.

7. Social and community development Thecompanyrecognizestheparticipationwiththecommunitytosupportthelocaleconomy,tohelpsocialstabilityand

tobeagoodcorporatecitizenofsocietysuchaspayingtaxaccordingtothelaw,supportingemploymentoflocalstaff,purchasinggoodsandservicesfromlocalsuppliers.In2013,HanaLamphunhasthebusinesswithlocalsuppliersthataccountedfor30%ofalldomesticsuppliers.Additionally,oncertaindaysweprovidetheopportunityforpeoplewholiveinneighborhoodstosellgoodstoemployeesatthecompany.Moreover,wesupportthecampaignofmotorcycleridingsafetybysellinggoodqualityhelmetstoemployeesatdiscountedprices,ofwhichwesoldmorethan1,000pcs.

CSR-After-Process (Charity and Community Support)

Hanahasthecorporatesocialactivitiesthatgobeyondnormalbusinessoperations.Thecompanyhasprovidedsuchactivitiesforalongtime.In2013,ourCSR-after-processisasfollows:

Activitiestoraisefundsforadvancedmedicalmachines:In2013,HanaMicroelectronicsPublicCo.,Ltd.andHanaSemiconductor(Ayutthaya)Co.,Ltd.donatedBaht2milliontotheThaiRedCrossSocietyforfundraisingprojecttopurchaseNextGenerationDNASequencing(NGS)analysismachine.

Activitiestohelpchildren:HanaJiaxingprovidedscholarshipstopoorstudentswholiveinthecommunities.Wehaveselected14studentsfrompoorfamiliessince2007with2studentsthatnowhavegraduatedfromhighschoolandsomestudentswhoarestudyingintheuniversitieshavereceivedtheeducationsupportsinceeightyearsago.



Tohelpsocietyagainstthreatsandpromotethegoodhealth,HanajoinedLamphunWarriorfootballclinictoteachchildrennearbyinordertopromotetheirhealthandpreventdrugproblems.ThechildrencanmeettheplayersandexperienceamatchbetweentheLamphunWarriorTeamandplayersfromHana.

Activitiestohelpthepoor:HanaJiaxingmadethedonationstolocalcharitiesinJiaxingapproximatelyBaht1million.CSRteamalsovisitedanorphanageinJiaxingforgiftgivingwhereasCSRteamofHanaLamphundonatedclothing,blanket,medicine,learningmaterialandotherstopoorpeopleinChiangmai.

Activitiestohelpvictimsofnaturaldisaster:HanaLamphunmadethedonationstofellowemployeeswhowerethevictimsofhailandfire.Moreover,HanaJiaxingmadedonationstoassistfamiliesaffectedbytheearthquakeinthecityofXianyuaninApril2013.

Activitiesforheritageandreligioustraditions:HanacontinuouslysupportsandparticipatesinlocaltraditionsandreligiousactivitiessuchasYiPengWriststiedintheMother'sDay,offeringrobestoBuddhistpriestsatmonastery,etc.

Social activities by employees

Blooddonation:HanajoinedwiththeRedCrossandLamphunhospitalforblooddonation.In2013,employeesdonatedbloodseveraltimesgiving360,000millilitersofblood.

Helpingunderprivilegedchildren:Hanamanagementandstaff jointlydonatedtoSisterJoanEvanstohelpunderprivilegedchildreninSlumKlongtoey,Bangkok.

Activitiesfundraisingforcolleagues:Employeemadedonationstocolleaguesforcontinuoustreatmentofcancerpatients.


Audit Committee Report

TheAuditCommitteeofHanaMicroelectronicsPublicCompanyLimitediscomposedofthreeindependentdirectors.MembersoftheCommitteemeetthequalificationandthescopeofworkisinaccordancewiththerulesandregulationsoftheStockExchangeofThailand.Inperformingitsoversightresponsibilities,theCommitteeheld4meetingsduring2013.Themeetingattendanceofeachcommitteeisasfollows.

Committee MeetingAttendance

1.Mr.BanchaTarnprakorn,Chairman

2.Mr.VoraphojThepvanaprasiddhi,Committee

3.Mr.MartinEnnoHorn,Committee*

4of4

4of4

4of4

*Mr.Martinheldthemeeting1timethroughconferencecallfromoverseas.

TheCommitteereviewedanddiscussedwiththeindependentandinternalauditorsofthescopeandresultsoftheirexaminationsincludinginternalcontrol,auditandfinancialreportingmatters.TheAuditCommitteealsoheldregulardiscussionswiththeBoardofDirectorsregardingthepreparationofinterimandannualfinancialstatementsandthereviewofmanagementandoperationalsystemsforinternalcontrol,theriskmanagementandcompliancewithapplicablerulesandregulations.TherelatedpartytransactionhasbeenreviewedinadditiontotherequirementthatthedirectorsandmanagementoftheCompanydisclosedonanannualbasisforanyrelatedpartytransactionsthatmayleadtopotentialconflictofinterestsituations.

TheexternalandinternalauditorshavefullandfreeaccesstotheAuditCommittee.TheCommitteehasrecommendedtotheBoardofDirectorsthesuitablere-appointmentoftheindependentauditorsofErnstandYoungOfficeLimited(latelychangethenametoEYOfficeLimited)forthefinancialyearending31December2013.

TheAuditCommitteeconcludesitssatisfactionwiththeaccuracy,completenessandcreditabilityof2013financialstatements’preparationandreporting,theadequacyofinternalcontrolsystemsandriskmanagement,thecompliancewithapplicablelawsandregulations,andotherdutiesasstatedintheCharter.Asaresult,theAuditCommitteehasnoparticularmattertodrawtotheattentionofshareholders.

………………………..

Mr.BanchaTarnprakorn

ChairmanofAuditCommittee


Nomination Committee Report

TheNominationCommitteeconsistsofthreedirectors,ofwhichtwoaretheindependentdirectors.TheCommitteeisresponsibleforselectionandscreeningofcandidate’squalificationsandproposingthesuitablecandidatestotheboard.Theboardsubsequentlyproposestotheshareholders'meetingforapprovalaccordingtothenominationprocesses.

In2013,thecompanyhad2meetingsandallCommitteemembersattendedthemeeting.TheCommitteereviewedthecandidateswhohavethequalificationstomatchwiththecompany’srequirement.Inrespectofthecandidatenominationsfornewdirectorappointmentsin2013,thecompanyinvitedtotheshareholderstoproposecandidatesforelectiontotheboard.Thepoliciesandprocedurestoallowshareholderstoproposecandidatesfortheelectionoftheboardarepostedonthecompany’swebsite.However,therewerenoproposedcandidatestotheCommitteefromtheshareholdersinpreviousyear.Therefore,theNominationCommitteereviewedthosedirectorswhosetermexpiredbyrotationinaccordancewiththecompany’sArticlesofAssociation.TheCommitteehasconsideredthatthosedirectorscancontinuetomakefurthercontributiontotheboardandthecompany.

TheNominationCommitteebelievesthecandidatenominationfordirectorappointmentprocessisproperandtransparentandincomplianceofitscharter.

………………………..

Mr.YingsakJenratha ChairmanofNominationCommittee


Management’s Discussion and Analysis

Overall Group PerformanceHanaMicroelectronicsGroup‘Hana’SalesRevenueincreased3%yearonyear,toTHB17.7billioninyear2013fromTHB17.2billioninyear2012.SalesRevenueinUSDtermsincreasedby3%toUSD574min2013fromUSD555min2012.Operatingprofitsincreased28%toTHB1,377mBahtin2013fromTHB1,076mBahtin2012.Operatingprofitsincreased29%inUSDtermstoUSD45min2013fromUSD35min2012.

NetProfitincreasedby45%toTHB2,337min2013fromTHB1,610min2012.ThesubsidiaryHanaSemiconductor(Ayutthaya),continuedtorecoverfromtheimpactofthefloodin2011andhasbeenoperationallyprofitablefrommid2013.ExceptionalitemswereTHB594mhigherin2013than2012.Theincreasewasprimarilyduetohigherinsuranceclaimproceedsreceivedin2013relatedtopropertydamagedfromtheflood.

Past Performance AnalysisRevenue Analysis

GroupSaleswerehigherby3%in2013atTHB17,667mfromTHB17,233min2012withmarketsbeingweakerinthefirsthalfof2013andstrongerinthesecondhalfoftheyearwhichwastheoppositetotheelectronicsdemandcyclein2012.USDsaleswere3%higherin2013atUSD574mfromUSD555min2012astheaverageTHB/USDexchangeratein2013strengthened1%toTHB/USD30.80in2013fromTHB/USD31.03in2012.

TheMicroelectronicsdivisions’salesrevenue increased2%[+1%THB] in2013over2012.ThemicroelectronicsoperationinLamphunsalesincreased10%[9%inTHBterms]andJXGdecreasedby10%[-11%inTHBterms]in2013.In2013ICassemblysalesincreasedby8%inUSDterms[+7%inTHBterms].For2013,theICdivisioninAYTsalesincreased11%[+10%inTHBterms],butdecreased4%[-5%inTHBterms]fortheICdivisioninJXG.

HanaMicrodisplayTechnologies“HMT”,salesdecreased11%[-12%THB]fortheyear.

Theannualsalessplitwas:

2013 2012 2011PCBA(Thailand) 44% 42% 38%PCBA(China) 22% 25% 22%CPG-(Bangkok) 0% 0% 1.5%IC(AYT) 27% 25% 31%IC(China) 6% 7% 6%HMT(USA) 1% 1% 1.5%

100% 100% 100%

Gross Profit / Cost of Sales Analysis and Sales and Administration AnalysisTheGrossProfitwasupTHB319mwiththegrossmarginbeing11%in2013up1%from10%in2012.ThiswasduetotheincreaseinsalesintheThaioperationsoffsettinglowersalesintheChinaoperations,higheroperatingleverageenabledtheAyutthayatobeprofitablefromJune2013andamorefavourableproductmixinLamphunalsocontributedtohighermargins.

Operating Profit AnalysisTheOperatingprofitmarginincreased2%in2013to8%from6%in2012duetothehigherGrossProfitmarginandlowerSG&Aexpenses.SGAexpenses(excludingnonrecurringitems.)decreasedby3%[THB30m]duetoretirementprovisionrevaluationandwere5%ofsalesrevenuein2013,andin2012.



Payout Analysis

THB402mdividendofTHB0.50persharewaspaidduringthequarterasaninterimdividendfromtheprofitsof2013.InQ213THB805mfinaldividendofTHB1.00persharewaspaidduringthequarterfromtheprofitsof2012.InQ412,THB402mdividendofTHB0.50persharewaspaidduringthequarterasaninterimdividendfromtheprofitsof2012.InQ212THB805mdividendofTHB1.00persharewaspaidduringthequarterasfinaldividendfromtheprofitsof2011.InQ211THB1,248mdividendofTHB1.55persharewaspaidduringthequarterasthefirstandfinaldividendfromtheprofitsof2010.

ThefinaldividendisnormallyannouncedintheboardmeetinginFebruaryofthefollowingyearforapprovalintheannualgeneralmeetinginAprilpaidoutinMay.

Financial Status

Thegroupcurrentlyhasnointerestbearingdebt.Cash(andfinancialinvestments)reservesatthe31stDecember,2013wereTHB6.7billionupfrom31stDecember,2012ofTHB5.5billion.

Asset Quality

Accounts Receivable

MostofcustomersarewellknownandhavegoodreputationintheIC,andelectronicsindustry.Provisionismadeofamountsoutstandingover90daysandamountswhichthemanagementbelievemaybedoubtful.

Accounts receivable 2013 2012 2011Lessthan3months 3,132,604 2,653,880 2,445,1693-6months 13,813 23,758 20,6706-12months 1,222 16,349 7,236Morethan12months 3,150 3,173 5,380Totalaccountsreceivable-othercompanies 3,150,789 2,697,160 2,478,455Less:Allowancefordoubtfulaccounts (4,269) (6,904) (11,189)

3,146,520 2,690,256 2,467,266

Inventory

Ingeneral,Hana’sproductionisbasedonclients’order,consequently,themajorityofinventoryarerawmaterials,expendabletoolsandworkinprocesswithlittlefinishedgoodspendingforcustomerdelivery.Thegroupcompaniesnormallywrite-offout-of-dateinventory,andmakeprovisionforagedinventoryanddepletioninthevalueoffixedassets,ifmaterial,eachquarter.Inventorydayswere69daysin2013,64daysin2012and66daysin2011.

Liquidity

ThegrouphasTHB6.7billionincashandshortterminvestmentswithnointerestbearingdebt.Liquidityratiosarehighatapproximately3timescurrentliabilities.OperatingCashflow(EBITDA)was11%higherin2013duetothehighersalesattheThaioperationsandoperatingprofitatAyutthayaplantin2013asopposedtoitsoperatinglossin2012.EBITDAatTHB2.6billionin2013andTHB2.3billionin2012andTHB2.6billionin2011.Cashandshortterminvestmentsin2013increasedbyTHB1.2billiontoTHB6.7billion,duetoEBITDA2.6billionlessfinaldividendTHB0.8b,interimdividendQ412THB0.4b,capitalexpenditureTHB1.0b,increaseinworkingcapitalofTHB0.2bandinsuranceproceedsofTHB1.2b.

Cashandshortterminvestmentsin2012decreasedbyTHB0.3billiontoTHB5.5billion,duetoEBITDA2.3billionlessfinaldividendTHB0.8b,interimdividendQ412THB0.4b,capitalexpenditureTHB1.4billion.Thecashin2011increasedfrom2010byTHB0.8billiontoTHB5.8billion,duetoEBITDA2.6billionlessdividendTHB1.2billion,capitalexpenditureTHB1.4billionandaTHB0.8billiondecreaseinworkingcapital.



Capital Expenditure

NetCapitalExpenditurewasTHB1,221min2013,THB1,372min2012andTHB1,360min2011.CapitalExpenditurewaslowerin2013duetothelowersalesfromAyutthyaplantcomparedtobeforethefloodin2011.Generally,capitalexpenditureforproductionequipmentwillfollowtheincreaseinsales,particularlyintheICdivision.However,thereisa3to6monthtimelagduetotheorderingleadtime.Plantexpansionwilldependonthecurrentbuildingutilisationandleadtimetoconstructnewplantorexpandinanexistingplant.SourceofFinancialCapitalAsthegroupasnointerestbearingdebtandoperatingworkingcapitalispositivethegroupsfundingisfromtheshareholdersequity.MajorFactorswhichcouldhaveanImpactontheCompany’sPerformanceThecompanybusinessisthatofanelectronicsmanufacturingservicecompany.Thecompanymanufacturesproductsonbehalfofitscustomersforshipmenttothemortheircustomers.Therefore,thecompany’sperformanceismostlyaffectedbyitsabilitytowinandretainbusinessfromtheexistingandnewcustomers.Inturn,customerdemandisaffectedbyworldeconomicgrowthandthecustomer’ssalesgrowth.Thegroupssalesrevenueareinforeigncurrency(primarilyUSD)andUSDcurrencycostsareapproximately60%percentofsalesrevenues.TheGroupoperatingprofitsensitivitytochangeintheThaiBaht/USDandChineseCNY/USDexchangeratesiscurrentlyaboutBaht170mperquarterforevery10%changeintheaverageBaht/USDandCNY/USDrates(i.e.(1-0.60)xSalesRevenuex10%).Outofthegroupsforeignexchangeexposure,USD110mishedged,ForeignexchangecontractsareusedtobuyTHBandSellUSDonarolling3or6monthsbasis.Whilstthebookvalueoftheoffshorecompaniesarerepresentedinforeigncurrency,theeffectofthechangeintheexchangerateisshownbythemovementoftheforeigncurrency‘TranslationAdjustment’intheshareholdersfundssectionofthebalancesheet.Thereisnocashaffectconcerningitsmovement.ForHanabeinganexportgroupofcompaniesthecurrencymovementscausevolatilityinearningsduetoeffectsontheoperatingmarginsandalsoinventoryvaluations(whichthemanagementreporteachquarterwhenthereisamaterialeffectontheprofits)andmargins.

Foreign Exchange Rates

TheTHB/USDcurrencymovementsreflectedtheeconomictrendsinemergingmarketsandcommoditiesduringperiod.Theaverageratefor2013ofTHB/USD30.80was1%strongerthantheTHB/USD31.03in2012whichwas2%weakerthantheTHB/USD30.53in2011.

Exceptional Items

TheplantofHanaSemiconductor(Ayutthaya)Co.,LTD,a100%ownedsubsidiaryofthecompany,whichislocatedinHitechIndustrialEstateinAyutthayaprovince,wasinundatedinearlyOctober2011asaresultoftheextensivefloodinginThailandduringthefourthquarterof2011.Theplant,equipmentandbusinessofthesubsidiarysufferedmajordamagewithapproximatelyUSD40mofpropertydamageandsignificantbusinessinterruptionlosses.Inthe2011FinancialStatementsthesubsidiarymadefullprovisionforthebookvalueofthedamagedpropertywhichistobereplaced.Thesubsidiaryhasalsoexpensedrepairsincurredduringthefourthquarterinthe2011accountswithfurtherrepairsofTHB84maccountedforinQ12012andTHB72minQ22012forrepairsandmaterialsdamage.ThesubsidiaryisintheprocessofmakingclaimsonitspropertyandbusinessinterruptioninsurancepoliciesforthedamageresultingfromthefloodatitsAyutthayafacility.InQ22012THB204mwasreceivedasthepartpaymentforthefirstinterimpaymentforthebusinessinterruptioninsuranceclaim.InQ32012THB196mwasreceivedastheremainingpaymentforthefirstinterimpaymentforthebusinessinterruptioninsuranceclaim.THB30mwasreceivedasafurtherpartpaymentforthepropertyclaimsettlementinQ113.THB712mrecordedinQ213asexceptionalincometocompletetheTHB1,042msettlementofthebuildingandmachinerypropertyinsuranceclaiminregardstothe2011flood.THB110mforincometaxandfinerelatedtothe1997incometaxcaseasdetailedinNote18.5ofthefinancialstatementsforQ313.InQ413THB199mwasreceivedasfirstandfinalpaymentforstockdamagepropertyclaimsettlement.Insuranceclaimforbusinessinterruptionisstillinprogress.

Subsequent Event

None


Risk Factors

Thecompanymanagementhasidentifiedthemajorrisksassociatedwiththebusinessandtheriskmanagementactivitiestocontrolthoserisks.

a) Business Risk Thelargestriskmanagementperceivearesignificantchangeswithinourmajorclientbasewhichmaybebroughtabout

duetoanynumberofexternalfactorssuchasachangeintheirownership,orachangeintheirproductprogram.Significantchangesfromanyoneofourmajorclientscaneffectthegroup'sperformance.Marketconditionsresultingfromchangesineconomicgrowthratesofeconomieswillalsoaffectpricesanddemandforthecompany'sservices.

Hana'skeystrategytominimizebusinessriskistomaintainadiversebaseofcustomerswithdifferentindustryexposures,

endproductsandgeographicallocationoftheendcustomers.

b) Production Risk Theproductionrisksare-

• Changesinmanufacturingtechnologymakingexistingequipmentobsolete.

Thecompanyiscontinuallyinvestinginnewequipmenttoincreaseeachoperationscapabilitiesandproductivity.

• Afactorypartialorwholedestructionbyfire,floodorearthquake.

Thecompanyhasmultiplefactoriestominimizetherisktothegroup.Nonethelesstherecouldbealossofcustomersandaperiodofmonthstoyearstoinstallnewequipmentandrecovercustomerorders.

• Thecompany’sabilitytosourcesuitablyskilledstaffsufficientdirectlabour.

ThecompanyhasHRdepartmentwhichcontinuallyreviewsthestaffandlabourresourcerequirements.Thecompanyalsohasinhousetrainingandcareerdevelopmentprograms.

• MaterialSupplyChainrisksduetoinabilityofoursupplierstodelivermaterialsontimeandinaccordancewithspeci-fication.

Thecompanysourcesfrommultiplesupplierswherepossibleandusesqualifiedandreliablesuppliers.

c) Management Risk Thecompanyemploysanumberofexpatriatemanagementinkeypositions.Thecompanydoesnothaveanyindividual

stafformanagementwhoarekeytothesurvivalofthebusiness.

Thecompanycouldreplaceeitherinternallyorexternallyandindividualmanager.

d) Financial Risk OtherriskfactorswhichmayaffectthecompanyareexchangeratesmovementsoftheThaiBaht,politicalriskandchanges

ininterestratesandcollectionofreceivables

Thecompany'ssalesrevenuesandmaterialcostsarealmostwhollyinUSDwhichprovidesanaturalhedge.CapitalexpenditureisalsoinUSDasthemachinesaremostlyimportedfromtheregion.


Risk Factors

Asallthegroupssalesrevenueareinforeigncurrency(primarilyUSD)andUSDcurrencycostsare60%percentofsalesrevenues,theGroupoperatingprofitsensitivitytochangeintheThaiBaht/USDandChineseCNY/USDexchangeratesiscurrentlyaboutBaht170mperquarterforevery10%changeintheaverageBaht/USDandCNY/USDrates(i.e.(1-0.60)xSalesRevenuex10%).

Outofthegroupsforeignexchangeexposure,USD110mishedged,ForeignexchangecontractsareusedtobuyTHBandSellUSDonarolling3or6monthsbasis.

Thecompanycurrentlyhasnonetinterestbearingborrowingsandthereforeisnotnegativelyaffectedbypotentialinterestrateincreases.


Report of the Board of Directors’ Responsibilities for Financial Statements

TheBoardofDirectorsisresponsibleforthepreparationandintegrityoffinancialstatementsandtomakethetimelydisclosuretoinvestors.Thefinancialstatementshavebeenpreparedinaccordancewithgenerallyacceptedaccountingprinciples.Suchimportantinformationisadequatelydisclosedinthenotestofinancialstatement.

ThemaintenanceoftheinternalcontrolsystemistheresponsibilityoftheBoardtoreasonablyassurethatassetsaresafeguardedfromunauthorizeduseordispositionandthattheaccountingrecordsaresufficientlyreliabletopermitthepreparationoffinancialstatementsthatconforminallmaterialrespectswithgenerallyacceptedaccountingprinciples.

TheBoardofDirectorshasappointedanAuditCommittee.TheCommitteemeetsduringtheyeartoreviewwithmanagementandtheauditorsanysignificantaccounting,internalcontrol,andauditingmatters.

TheBoardisoftheopinionthatthefinancialstatementsofHanaMicroelectronicsPublicCompanyLimitedanditssubsidiariesfortheyearendedDecember2013aremateriallyaccurate,complete,andreliable.

……………………………………….Mr.RichardDavidHan

ExecutiveViceChairmanandChiefExecutiveOfficer

…………………………………………Mr.BanchaTarnprakorn

ChairmanoftheBoardofDirectors


Independent Auditor’s Report

To the Shareholders of Hana Microelectronics Public Company Limited

IhaveauditedtheaccompanyingconsolidatedfinancialstatementsofHanaMicroelectronicsPublicCompanyLimitedanditssubsidiaries,whichcomprisetheconsolidatedstatementoffinancialpositionasat31December2013,andtherelatedconsoli-datedstatementsofincome,comprehensiveincome,changesinshareholders’equityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,andhavealsoauditedtheseparatefinancialstatementsofHanaMicroelectronicsPublicCompanyLimitedforthesameperiod.

Management's Responsibility for the Financial Statements

ManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithThaiFinancialReportingStandards,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor's Responsibility

Myresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonmyaudit.IconductedmyauditinaccordancewithThaiStandardsonAuditing.ThosestandardsrequirethatIcomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor'sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity'spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity'sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion.

Opinion

Inmyopinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofHanaMicroelectronicsPublicCompanyLimitedanditssubsidiariesandofHanaMicroelectronicsPublicCompanyLimitedasat31December2013,andtheirfinancialperformanceandcashflowsfortheyearthenended,inaccordancewithThaiFinancialReportingStandards.

Emphasis of matter

IdrawattentiontoNote4tothefinancialstatementsregardingthechangeinaccountingpolicyduetotheadoptionofThaiAccountingStandard12IncomeTaxes.TheCompanyhasrestatedtheconsolidatedandseparatefinancialstatementsfortheyearended31December2012,presentedhereinascomparativeinformation,toreflecttheadjustmentsresultingfromsuchchange.TheCompanyhasalsopresentedtheconsolidatedandseparatestatementsoffinancialpositionasat1January2012ascomparativeinformation,usingthenewlyadoptedaccountingpolicyforincometaxes.Myopinionisnotqualifiedinrespectofthismatter.

SaifonInkaew CertifiedPublicAccountant(Thailand)No.4434 Ernst&YoungOfficeLimited Bangkok:20February2014


Statements of Financial PositionHana Microelectronics Public Company Limited and its subsidiariesAs at 31 December 2013

Theaccompanyingnotesareanintegralpartofthefinancialstatements.

(Unit:Baht)

Note

Consolidated financial statements Separate financial statementsAs at

31 December2013

As at31 December

2012

As at1 January

2012

As at31 December

2013

As at31 December

2012

As at1 January

2012(Restated) (Restated)

Assets

Currentassets

Cashandcashequivalents 7 4,185,699,240 3,111,180,904 3,824,147,266 320,031,555 94,145,566 520,425,225

Short-terminvestments 9 2,524,310,445 2,370,090,185 2,014,320,054 - - -

Tradeandotherreceivables 8,10 3,241,169,331 2,764,216,396 2,568,516,148 1,447,222,745 1,261,696,621 1,275,014,508

Insuranceclaimreceivable 24 11,963,350 - 300,000,000 - - -

Inventories 11 3,171,981,346 2,847,768,315 2,646,579,217 1,268,860,532 915,061,716 993,410,322

Othercurrentassets 142,622,842 162,930,372 154,070,581 53,082,799 49,327,491 58,845,676

Totalcurrentassets 13,277,746,554 11,256,186,172 11,507,633,266 3,089,197,631 2,320,231,394 2,847,695,731

Non-currentassets

Investmentsinsubsidiarycompanies 12 - - - 3,583,449,338 3,427,501,838 3,427,501,838

Property,plantandequipment 13 6,691,459,482 6,621,700,623 6,372,590,324 2,363,294,921 1,701,265,171 1,630,983,810

Landleaseholdrights 14 153,418,018 - - - - -

Otherintangibleassets 15 12,162,954 15,957,384 14,541,422 4,583,679 4,088,220 4,756,328

Deferredtaxassets 4 18,923,900 14,966,683 15,800,957 8,070,241 4,681,697 3,762,494

Othernon-currentassets 3,426,330 20,820,857 16,947,458 2,456,678 1,425,750 1,425,750

Totalnon-currentassets 6,879,390,684 6,673,445,547 6,419,880,161 5,961,854,857 5,138,962,676 5,068,430,220

Totalassets 20,157,137,238 17,929,631,719 17,927,513,427 9,051,052,488 7,459,194,070 7,916,125,951



Statements of Financial Position (continued)Hana Microelectronics Public Company Limited and its subsidiariesAs at 31 December 2013

(Unit:Baht)

Note


31 December2013

As at31 December

2012

As at1 January

2012

As at31 December

2013

As at31 December

2012

As at1 January

2012(Restated) (Restated)

Liabilitiesandshareholders'equityCurrentliabilitiesShort-termloansfromfinancialinstitution 16 15,946,294 24,435,471 38,820,547 - - -

Tradeandotherpayables 8,17 2,484,859,386 2,087,839,938 2,506,443,445 1,439,190,834 775,389,590 1,004,751,416Short-termprovisions 18 419,335,350 448,350,166 368,474,353 147,521,727 214,575,498 150,465,664Incometaxpayable 23 17,606,250 60,052,122 15,154,576 11,488,200 7,870,413 5,449,676Othercurrentliabilities 239,513,726 38,071,477 65,340,606 92,291,075 23,147,956 23,277,607Totalcurrentliabilities 3,177,261,006 2,658,749,174 2,994,233,527 1,690,491,836 1,020,983,457 1,183,944,363Non-currentliabilitiesProvisionforlong-termemployeebenefits 19 385,798,676 376,360,511 352,899,533 190,303,427 167,074,141 154,850,654Totalnon-currentliabilities 385,798,676 376,360,511 352,899,533 190,303,427 167,074,141 154,850,654Totalliabilities 3,563,059,682 3,035,109,685 3,347,133,060 1,880,795,263 1,188,057,598 1,338,795,017Shareholders'equitySharecapitalRegistered

974,403,900ordinarysharesofBaht1each(31December2012:974,403,900ordinarysharesofBaht1each)(1January2012:1,000,000,000ordinarysharesofBaht1each) 21 974,403,900 974,403,900 1,000,000,000 974,403,900 974,403,900 1,000,000,000

Issuedandfullypaid-up804,878,860ordinarysharesofBaht1each(31December2012:

804,878,860ordinarysharesofBaht1each)(1January2012:830,474,960ordinarysharesofBaht1each) 21 804,878,860 804,878,860 830,474,960 804,878,860 804,878,860 830,474,960

Sharepremium 1,723,218,982 1,723,218,982 1,723,218,982 1,723,218,982 1,723,218,982 1,723,218,982RetainedearningsAppropriated-statutoryreserve 20 375,919,402 352,497,188 320,218,399 100,000,000 100,000,000 100,000,000Appropriated-reservefortreasuryshares 21 - - 262,987,260 - - 262,987,260Unappropriated 13,301,101,567 12,194,643,511 11,798,451,824 4,542,159,383 3,643,038,630 3,923,636,992Othercomponentsofshareholders'equity 388,958,745 (180,716,507) (91,983,798) - - -EquityattributabletoowneroftheCompany 16,594,077,556 14,894,522,034 14,843,367,627 7,170,257,225 6,271,136,472 6,840,318,194Treasuryshares 21 - - (262,987,260) - - (262,987,260)Totalshareholders'equity 16,594,077,556 14,894,522,034 14,580,380,367 7,170,257,225 6,271,136,472 6,577,330,934Totalliabilitiesandshareholders'equity 20,157,137,238 17,929,631,719 17,927,513,427 9,051,052,488 7,459,194,070 7,916,125,951



Income StatementsHana Microelectronics Public Company Limited and its subsidiariesFor the year ended 31 December 2013

(Unit:Baht)

Note

Consolidated financial statements Separate financial statements2013 2012 2013 2012

(Restated) (Restated)Revenues

Sales 17,667,000,224 17,232,768,681 7,820,471,366 7,192,856,771

Interestincome 165,169,401 170,695,739 4,985,319 7,595,981

Dividendincome 12,29 42,750 28,125 1,190,042,750 126,028,125

Gainonexchange - 168,399,691 70,263,313 24,892,845

Insurancecompensationincome 24 941,604,182 400,000,000 - -

Otherincome 30.5 377,836,118 415,999,559 87,440,852 78,276,093

Totalrevenues 19,151,652,675 18,387,891,795 9,173,203,600 7,429,649,815

Expenses 22

Costofsales 15,665,334,545 15,550,124,185 6,695,423,229 6,236,613,230

Sellingexpenses 126,550,120 133,162,104 27,794,315 26,207,931

Administrativeexpenses 759,596,443 879,433,405 205,066,350 180,790,462

Lossonexchange 60,328,888 - - -

Otherexpenses 30.5 132,002,485 88,285,560 110,401,571 65,595,050

Totalexpenses 16,743,812,481 16,651,005,254 7,038,685,465 6,509,206,673

Profitbeforefinancecostandincometaxexpenses 2,407,840,194 1,736,886,541 2,134,518,135 920,443,142

Financecost (8,642,769) (7,478,309) (3,251,308) (2,408,463)

Profitbeforeincometaxexpenses 2,399,197,425 1,729,408,232 2,131,266,827 918,034,679

Incometaxexpenses 23 (61,998,865) (119,215,566) (24,827,784) (16,910,851)

Profitfortheyear 2,337,198,560 1,610,192,666 2,106,439,043 901,123,828

Profitattributableto:

EquityholdersoftheCompany 2,337,198,560 1,610,192,666 2,106,439,043 901,123,828

Earningspershare 25

Basicearningspershare

ProfitattributabletoequityholdersoftheCompany 2.90 2.00 2.62 1.12

Numberofweightedaverageordinaryshares(shares) 804,878,860 804,878,860 804,878,860 804,878,860



Statements of Comprehensive IncomeHana Microelectronics Public Company Limited and its subsidiariesFor the year ended 31 December 2013

(Unit:Baht)


Note (Restated) (Restated)Profitfortheyear 2,337,198,560 1,610,192,666 2,106,439,043 901,123,828

Othercomprehensiveincome:

Gain(loss)onchangeinvalueofavailable-for-sale

investments 9.2 (91,864,993) 142,342,193 - -

Exchangedifferencesontranslationof

financialstatementsinforeigncurrency,netof

incometax 23 661,540,245 (231,074,902) - -

Othercomprehensiveincomefortheyear 569,675,252 (88,732,709) - -

Totalcomprehensiveincomefortheyear 2,906,873,812 1,521,459,957 2,106,439,043 901,123,828

Totalcomprehensiveincomeattributableto:

EquityholdersoftheCompany 2,906,873,812 1,521,459,957 2,106,439,043 901,123,828


Stat

emen

ts o

f cha

nges

in sh

areh

olde

rs’ e

quity

Hana

Micr

oelec

troni

cs P

ublic

Com

pany

Lim

ited

and

its su

bsid

iaries

For t

he ye

ar en

ded

31 D

ecem

ber 2

013

(Unit:Baht)

Note

Cons

olid

ated

fina

ncial

stat

emen

ts

Issu

ed an

d pa

id u

psh

are c

apita

l

Shar

epr

emiu

m

Reta

ined

earn

ings

Othe

r com

pone

nts o

f sha

reho

lder

s' eq

uity

Tot

al eq

uity

at

tribu

tabl

e to

own

ers o

f th

e Com

pany

Trea

sury

shar

es

Tota

l sh

areh

olde

rs'

equi

ty

Othe

r com

preh

ensiv

e inc

ome

Tot

al ot

her

com

pone

nts o

f sh

areh

olde

rs'

equi

ty

Surp

lus (

defic

it) o

n ch

ange

s in

valu

e of

avail

able-

for-s

ale i

nves

tmen

ts

Exch

ange

di

ffere

nces

on tr

ansla

tion

of f

inan

cial

stat

emen

tsin

fore

ign

curre

ncy

Appr

opria

ted

Unap

prop

riate

dSt

atut

ory

rese

rve

Rese

rve f

ortre

asur

y sh

ares

Balanceasat1

January2012

-a

spreviouslyre

ported

830,474,9601,723,218,982

320,218,399262,987,26011,783,074,320

67,740,225

(160,147,476)

(92,407,251)

14,827,566,670(262,987,260)14,564,579,410

Cum

ulativeeffectofchangeinaccountingpolicy

fordeferredtax

4-

--

-15,377,504

-423,453

423,453

15,800,957

-15,800,957

Balanceasat1

January2012-asre

stated

830,474,9601,723,218,982

320,218,399262,987,26011,798,451,824

67,740,225

(159,724,023)

(91,983,798)

14,843,367,627(262,987,260)14,580,380,367

Totalcom

prehensiveincomefortheyear

(restated)

--

--

1,610,192,666

142,342,193(231,074,902)

(88,732,709)

1,521,459,957

-1,521,459,957

Dividendpaid

29-

--

-(1,207,318,290)

--

-(1,207,318,290)

-(1,207,318,290)

Unappropriatedretainedearningstransferredto

statutoryreserve

--

32,278,789

-(32,278,789)

--

--

--

Write-offtreasuryshares

21(25,596,100)

--

(262,987,260)

25,596,100

--

-(262,987,260)

262,987,260

-

Balanceasat3

1Decem

ber2

012-a

srestated

804,878,8601,723,218,982

352,497,188

-12,194,643,511

210,082,418(390,798,925)

(180,716,507)14,894,522,034

-14,894,522,034

Balanceasat3

1Decem

ber2

012

-aspreviouslyreported

804,878,8601,723,218,982

352,497,188

-12,229,598,986

210,082,418(390,523,796)

(180,441,378)14,929,752,638

-14,929,752,638

Cum


fordeferredtax

4-

--

-15,241,812

-(275,129)

(275,129)

14,966,683

-14,966,683

Cum

ulativeeffectfrom

prioryear'sadjustment

33-

--

-(50,197,287)

--

-(50,197,287)

-(50,197,287)

Balanceasat3

1Decem

ber2

012-asre

stated

804,878,8601,723,218,982

352,497,188

-12,194,643,511

210,082,418(390,798,925)

(180,716,507)14,894,522,034

-14,894,522,034

Totalcom


--

--

2,337,198,560

(91,864,993)

661,540,245

569,675,2522,906,873,812

-2,906,873,812

Dividendpaid

29-

--

-(1,207,318,290)

--

-(1,207,318,290)

-(1,207,318,290)

Unappropriatedretainedearningstransferredto

statutoryreserve

--

23,422,214

-(23,422,214)

--

--

--

Balanceasat3

1Decem

ber2

013

804,878,8601,723,218,982

375,919,402

-13,301,101,567

118,217,425

270,741,320

388,958,74516,594,077,556

-16,594,077,556




Stat

emen

ts o

f cha

nges

in sh

areh

olde

rs’ e

quity

(con

tinue

)Ha

na M

icroe

lectro

nics

Pub

lic C

ompa

ny L

imite

d an

d its

subs

idiar

iesFo

r the

year

ende

d 31

Dec

embe

r 201

3

(Unit:Baht)

Note

Sepa

rate

fina

ncial

stat

emen

ts

Issu

ed an

d pa

id u

psh

are c

apita

l

Shar

epr

emiu

m

Reta

ined

earn

ings

Tot

al eq

uity

at

tribu

tabl

e to

own

ers o

f th

e Com

pany

Trea

sury

shar

esTo

tal

Appr

opria

ted

Unap

prop

riate

dSt

atut

ory r

eser

veRe

serv

e for

tre

asur

y sha

res

Balanceasat1

January2012

-a

spreviouslyre

ported

830,474,960

1,723,218,982

100,000,000

262,987,260

3,919,874,498

6,836,555,700

(262,987,260)

6,573,568,440

Cum


fordeferredtax

4-

--

-3,762,494

3,762,494

-3,762,494

Balanceasat1

January2012-asre

stated

830,474,960

1,723,218,982

100,000,000

262,987,260

3,923,636,992

6,840,318,194

(262,987,260)

6,577,330,934

Totalcom

prehensiveincomefortheyear(restated)

--

--

901,123,828

901,123,828

-901,123,828

Dividendpaid

29-

--

-(1,207,318,290)

(1,207,318,290)

-(1,207,318,290)

Write-offtreasuryshares

21(25,596,100)

--

(262,987,260)

25,596,100

(262,987,260)

262,987,260

-

Balanceasat3

1Decem

ber2

012

804,878,860

1,723,218,982

100,000,000

-3,643,038,630

6,271,136,472

-6,271,136,472

Balanceasat3

1Decem

ber2

012

-a

spreviouslyre

ported

804,878,860

1,723,218,982

100,000,000

-3,638,356,933

6,266,454,775

-6,266,454,775

Cum


fordeferredtax

4-

--

-4,681,697

4,681,697

-4,681,697

Balanceasat3

1Decem

ber2

012-asre

stated

804,878,860

1,723,218,982

100,000,000

-3,643,038,630

6,271,136,472

-6,271,136,472

Totalcom


--

--

2,106,439,043

2,106,439,043

-2,106,439,043

Dividendpaid

29-

--

-(1,207,318,290)

(1,207,318,290)

-(1,207,318,290)

Balanceasat3

1Decem

ber2

013

804,878,860

1,723,218,982

100,000,000

-4,542,159,383

7,170,257,225

-7,170,257,225



Statements of Cash FlowsHana Microelectronics Public Company Limited and its subsidiariesFor the year ended 31 December 2013

(Unit:Baht)


Note (Restated) (Restated)Cashflowsfromoperatingactivities

Profitbeforetax 2,399,197,425 1,729,408,232 2,131,266,827 918,034,679

Adjustmentstoreconcileprofitbeforetaxtonetcash

providedby(paidfrom)operatingactivities:

Depreciation 1,184,471,801 1,225,593,097 280,818,892 291,415,476

Amortisationexpenses 3,918,024 3,392,862 706,542 668,107

Reversalofallowancefordoubtfulaccounts (2,634,228) (4,285,162) - -

Reductionofinventoriestonetrealisablevalue(reversal) (97,411,894) 49,888,174 (17,089,759) 108,128,525

Dividendincomefromsubsidiarycompanies - - (1,190,000,000) (126,000,000)

Dividendincomefromothercompany (42,750) (28,125) (42,750) (28,125)

Loss(gain)ondisposals/write-offequipment (3,487,767) 97,343,834 1,175,963 (1,434,312)

Allowanceforimpairmentlossonassets(reversal) 6,919,622 (182,627,681) - -

Provisionforproductwarranty 17,926,398 22,690,510 - -

Provisionforvacation 571,140 4,351,813 465,083 1,999,076

Provisionforlong-termemployeebenefits 17,275,016 32,092,630 25,101,694 14,645,446

Provisionforlossontaxassessments 85,323,961 64,109,834 85,323,961 64,109,834

Wrote-offwithholdingtaxdeductedatsource - 1,485,216 - 1,485,216

Gainonsales/redemptionofshort-terminvestments (33,802,404) (9,455,551) - -

Revaluationgainoninvestmentsinsecurities

heldfortrading (4,557,544) (9,506,897) - -

Unrealisedloss(gain)onexchange (3,030,141) 1,509,829 (4,252,457) 12,038,531

Unrealisedloss(gain)onforwardcontracts 117,452,036 (30,874,662) - -

Unrealisedloss(gain)onswapcontract - 752,397 - -

Interestincomefromshort-terminvestments (111,925,264) (114,664,461) - -

Interestexpenses 1,420,630 87,293 755,890 -

Profitfromoperatingactivitiesbeforechangesin

operatingassetsandliabilities 3,577,584,061 2,881,263,182 1,314,229,886 1,285,062,453



Statements of cash flows (continued)Hana Microelectronics Public Company Limited and its subsidiariesFor the year ended 31 December 2013

(Unit:Baht)


Note (Restated) (Restated)Operatingassets(increase)decreaseTradeandotherreceivables (369,691,411) (205,039,266) (115,539,100) (14,822,098)Insurancecliamreceivable (11,963,350) 300,000,000 - -Inventories (226,801,137) (251,077,272) (336,709,057) (29,779,919)Othercurrentassets 20,898,043 20,188,068 (3,716,563) 7,792,478Othernon-currentassets (53,679) 26,067 - -Operatingliabilitiesincrease(decrease)Tradeandotherpayables 431,383,386 (429,800,169) 588,557,085 (197,448,253)Othercurrentliabilities 83,614,150 (31,620,942) 68,678,035 (2,128,727)Cashfromoperatingactivities 3,504,970,063 2,283,939,668 1,515,500,286 1,048,675,934Cashpaidforlong-termemployeebenefits (7,836,852) (8,631,652) (1,872,408) (2,421,959)Cashpaidforredemptionofswapcontract (195,077) - - -Cashpaidfortaxassessments (152,377,732) - (152,377,732) -Cashpaidforcorporateincometax (107,566,688) (74,304,605) (24,598,541) (15,409,317)Interestpaid (756,266) - (755,890) -Netcashfromoperatingactivities 3,236,237,448 2,201,003,411 1,335,895,715 1,030,844,658CashflowsfrominvestingactivitiesIncreaseinshort-terminvestments (607,875,913) (531,399,770) - -Interestincomefromshort-terminvestments 104,919,131 113,532,434 - -Proceedsfromsales/redemptionofshort-terminvestments 400,150,608 336,934,280 - -Increaseininvestmentinsubsidiarycompany - - (155,947,500) -Dividendincomefromsubsidiarycompanies - - 1,190,000,000 126,000,000Dividendincomefromothercompany 42,750 28,125 42,750 28,125Acquisitionsofproperty,plantandequipment (1,427,139,019) (1,480,504,872) (934,852,164) (378,629,104)Proceedsfromdisposalsofequipment 60,086,649 108,315,299 298,407 2,794,952Cashpaidforlandleaseholdrights (153,418,018) - - -Increaseinintangibleassets (123,594) (4,808,824) (1,202,001) -Decrease(increase)inothernon-currentassets 17,448,206 (3,899,466) (1,030,928) -Netcashfrom(usedin)investingactivities (1,605,909,200) (1,461,802,794) 97,308,564 (249,806,027)CashflowsfromfinancingactivitiesDecreaseinshort-termloansfromfinancialinstitution (8,489,177) (14,385,076) - -Cashpaidforinterestexpenses (664,364) (87,293) - -Dividendpaid (1,207,318,290) (1,207,318,290) (1,207,318,290) (1,207,318,290)Netcashusedinfinancingactivities (1,216,471,831) (1,221,790,659) (1,207,318,290) (1,207,318,290)Increase(decrease)incashandcashequivalents 413,856,417 (482,590,042) 225,885,989 (426,279,659)Translationadjustment 660,661,919 (230,376,320) - -Netincrease(decrease)incashandcashequivalents 1,074,518,336 (712,966,362) 225,885,989 (426,279,659)Cashandcashequivalentsatbeginningofyear 3,111,180,904 3,824,147,266 94,145,566 520,425,225Cashandcashequivalentsatendofyear(Note7) 4,185,699,240 3,111,180,904 320,031,555 94,145,566

SupplementalcashflowinformationNon-cashrelatedtransactionsfrominvestingactivitiesNetincrease(decrease)inaccountspayableforpurchaseofplantandequipment (109,389,855) 17,229,977 9,470,848 (15,571,628)Revaluationgainfromchangesinfairvalueofinvestmentsinavailable-for-salesecurities (91,864,993) (142,342,193) - -Translationadjustmentfordeferredtaxassets (878,326) 698,582 - -


Notes to Consolidated Financial StatementsHana Microelectronics Public Company Limited and its subsidiariesFor the year ended 31 December 2013

1. General information HanaMicroelectronicsPublicCompanyLimited(“theCompany”)wasincorporatedasalimitedcompanyunderThailawand

transformedtobeapubliclimitedcompanyunderthePublicLimitedCompaniesActon27January1993.TheCompanyoperatesitsbusinessinThailandandisprincipallyengagedinthemanufactureandtradingofelectroniccomponents.TheregisteredofficeoftheCompanyisat10/4Moo3,Vibhavadi-RangsitRoad,KwangTaladBangkhen,KhetLaksi,Bangkok.

2. Basis of preparation2.1 ThefinancialstatementshavebeenpreparedinaccordancewithThaiFinancialReportingStandardsenunciated

undertheAccountingProfessionsActB.E.2547andtheirpresentationhasbeenmadeincompliancewiththestipulationsoftheNotificationoftheDepartmentofBusinessDevelopmentdated28September2011,issuedundertheAccountingActB.E.2543.

ThefinancialstatementsinThailanguagearetheofficialstatutoryfinancialstatementsoftheCompany.ThefinancialstatementsinEnglishlanguagehavebeentranslatedfromtheThailanguagefinancialstatements.

Thefinancialstatementshavebeenpreparedonahistoricalcostbasisexceptwhereotherwisedisclosedintheaccountingpolicies.

2.2 Basisofconsolidationa) TheconsolidatedfinancialstatementsincludethefinancialstatementsofHanaMicroelectronicsPublic

CompanyLimited(“theCompany”)andthefollowingsubsidiarycompanies(“thesubsidiaries”):

Company’s name Nature of business Country ofincorporation

Percentage of shareholding2013 2012

Percent PercentHeld by the CompanyHanaSemiconductor(BKK)CompanyLimited Holdingcompany Thailand 100 100

OmacSalesLimited Purchasingofelectroniccomponentsandequipment

HongKong 100 100

HanaMicroelectronicsInternationalCompanyLimited

Holdingcompany BritishVirginIslands 100 100

HanaMicroelectronicsInvestmentsCompanyLimited Holdingcompany BritishVirginIslands 100 100

HanaTechnologiesGroupLimited Holdingcompany CaymanIslands 100 100

HanaMicroelectronics(Cambodia)CompanyLimited

Manufactureandtradingofelectroniccomponents

Cambodia 100 -

HanaSemiconductor(Ayutthaya)CompanyLimited

Manufactureandtradingofelectroniccomponents

Thailand 58 58

Held through the subsidiary companiesHanaSemiconductorInternationalLimited Tradingofelectroniccomponents BritishVirginIslands 100 100

HanaSemiconductorHoldingsLimited Holdingcompany BritishVirginIslands 100 100

HanaTechnologiesInvestmentsLimited Holdingcompany CaymanIslands 100 100

HanaMicrodisplayTechnologies,Inc. Manufactureandtradingofelectroniccomponents

USA 100 100

HanaMicroelectronics,Inc. Agentandcustomerservices USA 100 100

HanaMicroelectronicsEnterprisesCompanyLimited Holdingcompany BritishVirginIslands 100 100

HanaMacaoCommercialOffshoreLimited Customerservices Macao 100 100

HanaMicroelectronics(Jiaxing)CompanyLimited Manufactureandtradingofelectroniccomponents

China 100 100

HanaSemiconductor(Ayutthaya)CompanyLimited Manufactureandtradingofelectroniccomponents

Thailand 42 42


Notes to Consolidated Financial StatementsHana Microelectronics Public Company Limited and its subsidiaries

For the year ended 31 December 2013

b) Subsidiariesarefullyconsolidated,beingthedateonwhichtheCompanyobtainscontrol,andcontinuetobeconsolidateduntilthedatewhensuchcontrolceases.

c) ThefinancialstatementsofthesubsidiariesarepreparedusingthesamesignificantaccountingpoliciesastheCompany.

d) TheassetsandliabilitiesinthefinancialstatementsofoverseassubsidiarycompaniesaretranslatedintoThaiBahtusingtheexchangerateprevailingontheendofreportingperiod,andrevenuesandexpensestranslatedusingmonthlyaverageexchangerates.Theresultingdifferencesareshownunderthecaptionof“Exchangedifferencesontranslationoffinancialstatementsinforeigncurrency”inthestatementsofchangesinshareholders’equity.

e) MaterialbalancesandtransactionsbetweentheCompanyanditssubsidiarycompanieshavebeeneliminatedfromtheconsolidatedfinancialstatements.

2.3 Theseparatefinancialstatements,whichpresentinvestmentsinsubsidiariesunderthecostmethod,havebeenpreparedsolelyforthebenefitofthepublic.

3. New accounting standards

Belowisasummaryofaccountingstandardsthatbecameeffectiveinthecurrentaccountingyearandthosethatwillbecomeeffectiveinthefuture.

(a) Accountingstandardsthatbecameeffectiveinthecurrentaccountingyear

Accountingstandards:TAS12 IncomeTaxesTAS20(revised2009) AccountingforGovernmentGrantsandDisclosureofGovernmentAssistanceTAS21(revised2009) TheEffectsofChangesinForeignExchangeRates

FinancialReportingStandard:TFRS8 OperatingSegments

AccountingStandardInterpretations:TSIC10 GovernmentAssistance-NoSpecificRelationtoOperatingActivitiesTSIC21 IncomeTaxes-RecoveryofRevaluedNon-DepreciableAssetsTSIC25 IncomeTaxes-ChangesintheTaxStatusofanEntityoritsShareholders

AccountingTreatmentGuidanceforTransfersofFinancialAssets

Theseaccountingstandards,financialreportingstandard,accountingstandardinterpretationsandaccountingtreatmentguidancedonothaveanysignificantimpactonthefinancialstatements,exceptforthefollowingaccountingstandard.

TAS12IncomeTaxes

Thisaccountingstandardrequiresanentitytoidentifytemporarydifferencesbetweenthecarryingamountofanassetorliabilityinthestatementoffinancialpositionanditstaxbaseandrecognisethetaxeffectsasdeferredtaxassetsorliabilitiessubjectingtocertainrecognitioncriteria.TheCompanyanditssubsidiarieshavechangedthisaccountingpolicyinthiscurrentperiodandrestatedtheprioryear’sfinancialstatements,presentedascomparativeinformation,asthoughtheCompanyanditssubsidiarieshadinitiallyrecognisedthetaxeffectsasdeferredtaxassetsorliabilities.ThecumulativeeffectofthischangeinaccountingpolicyhasbeenpresentedinNote4tothefinancialstatements.



(b) Accountingstandardsthatwillbecomeeffectiveinthefuture

EffectivedateAccountingStandards:

TAS1(revised2012) PresentationofFinancialStatements 1January2014TAS7(revised2012) StatementofCashFlows 1January2014TAS12(revised2012) IncomeTaxes 1January2014TAS17(revised2012) Leases 1January2014TAS18(revised2012) Revenue 1January2014TAS19(revised2012) EmployeeBenefits 1January2014TAS21(revised2012) TheEffectsofChangesinForeignExchangeRates 1January2014TAS24(revised2012) RelatedPartyDisclosures 1January2014TAS28(revised2012) InvestmentsinAssociates 1January2014TAS31(revised2012) InterestsinJointVentures 1January2014TAS34(revised2012) InterimFinancialReporting 1January2014TAS36(revised2012) ImpairmentofAssets 1January2014TAS38(revised2012) IntangibleAssets 1January2014

FinancialReportingStandards:TFRS2(revised2012) Share-basedPayment 1January2014TFRS3(revised2012) BusinessCombinations 1January2014TFRS4 InsuranceContracts 1January2016TFRS5(revised2012) Non-currentAssetsHeldforSaleandDiscontinued

Operations1January2014

TFRS8(revised2012) OperatingSegments 1January2014AccountingStandardInterpretations:

TSIC15 OperatingLeases-Incentives 1January2014TSIC27 EvaluatingtheSubstanceofTransactionsInvolving

theLegalFormofaLease1January2014

TSIC29 ServiceConcessionArrangements:Disclosures 1January2014TSIC32 IntangibleAssets–WebSiteCosts 1January2014

FinancialReportingStandardInterpretations:TFRIC1 ChangesinExistingDecommissioning,Restoration

andSimilarLiabilities1January2014

TFRIC4 DeterminingwhetheranArrangementcontainsaLease

1January2014

TFRIC5 RightstoInterestsarisingfromDecommissioning,RestorationandEnvironmentalRehabilitationFunds

1January2014

TFRIC7 ApplyingtheRestatementApproachunderTAS29FinancialReportinginHyperinflationaryEconomies

1January2014

TFRIC10 InterimFinancialReportingandImpairment 1January2014TFRIC12 ServiceConcessionArrangements 1January2014TFRIC13 CustomerLoyaltyProgrammes 1January2014TFRIC17 DistributionsofNon-cashAssetstoOwners 1January2014TFRIC18 TransfersofAssetsfromCustomers 1January2014




TheCompanyanditssubsidiaries’managementbelievesthattheseaccountingstandards,financialreportingstandards,accountingstandardinterpretationsandfinancialreportingstandardsinterpretationswillnothaveanysignificantimpactonthefinancialstatementsfortheyearwhentheyareinitiallyapplied.

4. Cumulative effect of changes in accounting policies due to the adoption of new accounting standard

Duringthecurrentyear,theCompanyanditssubsidiariesmadethechangesdescribedinNote3tothefinancialstatementstoitssignificantaccountingpolicies,asaresultoftheadoptionofThaiAccountingStandard12IncomeTaxes.Thecumulativeeffectofthechangesintheaccountingpolicieshasbeenseparatelypresentedinthestatementsofchangesinshareholders’equity.

Theamountsofadjustmentsaffectingthestatementsoffinancialpositionandthestatementsofcomprehensiveincomearesummarisedbelow.

(Unit:ThousandBaht)

As at 31 December 2013 As at 31 December 2012 As at 1 January 2012Consolidated

financial statements

Separate financial

statements

Consolidated financial

statements

Separate financial

statements


statements

Separate financial

statements

Statements of financial position

Increaseindeferredtaxassets 18,924 8,070 14,967 4,682 15,801 3,762

Increaseinunappropriatedretainedearnings 18,321 8,070 15,242 4,682 15,378 3,762

Increase(decrease)inothercomponentsofshareholders’equity 603 - (275) - 423 -

(Unit:ThousandBaht)




statements

Separate financial

statements


statements

Separate financial

statements

Income statements

Increase(decrease)inincometaxexpenses (3,079) (3,389) 136 (919)

Increase(decrease)inprofitattributabletoequityholdersoftheCompany 3,079 3,389 (136) 919

Increase(decrease)inbasicearningspershare(Baht) 0.0038 0.0042 (0.0002) 0.0011

Other comprehensive income:

Increase(decrease)inexchangedifferencesontranslationoffinancialstatementsinforeigncurrency 878 - (698) -



5. Significant accounting policies

5.1 Revenuerecognition

Salesofgoods

Salesofgoodsarerecognisedwhenthesignificantrisksandrewardsofownershipofthegoodshavepassedtothebuyer.Salesaretheinvoicedvalue,excludingvalueaddedtax,ofgoodssuppliedafterdeductingdiscountsandallowances.

Interestincome

Interestincomeisrecognisedonanaccrualbasisbasedontheeffectiveinterestrate.

Dividends

Dividendsarerecognisedwhentherighttoreceivethedividendsisestablished.

Rentalincome

Rentalincomeisrecognisedonanaccrualbasis.

5.2 Cashandcashequivalents

Cashandcashequivalentsconsistofcashinhandandatbanks,andallhighlyliquidinvestmentswithanoriginalmaturityofthreemonthsorlessandnotsubjecttowithdrawalrestrictions.

5.3 Tradeaccountsreceivable

Tradeaccountsreceivablearestatedatthenetrealisablevalue.Allowancefordoubtfulaccountsisprovidedfortheestimatedlossesthatmaybeincurredincollectionofreceivables.Theallowanceisgenerallybasedoncollectionexperiencesandanalysisofdebtaging.

5.4 Inventories

Rawmaterials,workinprocessandfinishedgoodsarevaluedatthelowerofstandardcost(whichapproximatesactualcostbyweightedaveragemethod)andnetrealisablevalue.Costofworkinprocessandfinishedgoodsincludesdirectmaterials,directlabourandfactoryoverheads.

Allowancefordiminutionininventoryvalueissetupforobsolete,slow-movingordeterioratedinventories.

5.5 Investments

a) Investmentsinsecuritiesheldfortradingofasubsidiaryarestatedatfairvalue.Changesinfairvalueofthesesecuritiesarerecordedinprofitorloss.

b) Investmentsinavailable-for-salesecuritiesofasubsidiaryarestatedatfairvalue.Changesinthefairvalueofthesesecuritiesarerecordedinothercomprehensiveincome,andwillberecordedinprofitorlosswhensecuritiesaresold.

c) Investmentsinsubsidiariesareaccountedforintheseparatefinancialstatementsusingthecostmethod.

ThefairvalueofmarketablesecuritiesisbasedonthelatestbidpriceofthelastworkingdayoftheyearasquotedontheStockExchangesinwhichthesecuritiesareissued.Thefairvalueofdebtinstrumentsisdeterminedbasedonyieldratequotedbytheoverseabanks.

Theweightedaveragemethodisusedforcomputationofthecostofinvestments.




IntheeventtheCompanyanditssubsidiaryreclassifyinvestmentsfromonetypetoanother,suchinvestmentswillbereadjustedtotheirfairvalueasatthereclassificationdate.Thedifferencesbetweenthecarryingamountoftheinvestmentsandthefairvalueonthedateofreclassificationarerecordedinprofitorlossorrecordedasothercomponentsofshareholders’equity,dependingonthetypeofinvestmentwhichisreclassified.

Ondisposalofaninvestment,thedifferencebetweennetdisposalproceedsandthecarryingamountoftheinvestmentisrecognisedasincomeorexpensesinprofitorloss.

5.6 Property,plantandequipmentanddepreciation

Landisstatedatcost.Buildingsandequipmentarestatedatcostlessaccumulateddepreciationandallowanceforlossonimpairmentofassets(ifany).

Depreciationofplantandequipmentiscalculatedbyreferencetotheircostsonastraight-linebasisoverthefollowingestimatedusefullives:

Leaseholdimprovements - periodoflease

Buildings - 20years

Installation - 10years

Otherassets - 3-15years

Depreciationisincludedindeterminingincome.

Nodepreciationisprovidedonland,constructioninprogressandmachineryunderinstallation.

Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossarisingondisposalofanassetisincludedinprofitorlosswhentheassetisderecognised.

5.7 Intangibleassets

Intangibleassetsarecarriedatcostlessanyaccumulatedamortisationandanyaccumulatedimpairmentlosses(ifany).

Intangibleassetswithfinitelivesareamortisedonasystematicbasisovertheeconomicusefullifeandtestedforimpairmentwheneverthereisanindicationthattheintangibleassetmaybeimpaired.Theamortisationperiodandtheamortisationmethodofsuchintangibleassetsarereviewedatleastateachfinancialyearend.Theamortisationexpenseischargedtoprofitorloss.

Theusefullivesoftheintangibleassetsis5-10years.

5.8 Relatedpartytransactions

Relatedpartiescompriseenterprisesandindividualsthatcontrol,orarecontrolledby,theCompany,whetherdirectlyorindirectly,orwhichareundercommoncontrolwiththeCompany.

TheyalsoincludeassociatedcompaniesandindividualswhichdirectlyorindirectlyownavotinginterestintheCompanythatgivesthemsignificantinfluenceovertheCompany,keymanagementpersonnel,directorsandofficerswithauthorityintheplanninganddirectionoftheCompany’soperations.

5.9 Foreigncurrencies

TheconsolidatedandseparatefinancialstatementsarepresentedinBaht,whichisalsotheCompany’sfunctionalcurrency.Itemsofeachentityincludedintheconsolidatedfinancialstatementsaremeasuredusingthefunctionalcurrencyofthatentity.



TransactionsinforeigncurrenciesaretranslatedintoBahtattheexchangeraterulingatthedateofthetransaction.MonetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintoBahtattheexchangeraterulingattheendofreportingperiod.

Gainsandlossesonexchangeareincludedindeterminingincome.

5.10 Impairmentofassets

Attheendofeachreportingperiod,theCompanyanditssubsidiariesperformimpairmentreviewsinrespectoftheproperty,plantandequipmentandotherintangibleassetswhenevereventsorchangesincircumstancesindicatethatanassetmaybeimpaired.Animpairmentlossisrecognisedwhentherecoverableamountofanasset,whichisthehigheroftheasset’sfairvaluelesscoststosellanditsvalueinuse,islessthanthecarryingamount.

Animpairmentlossisrecognisedinprofitorloss.

Intheassessmentofassetimpairmentifthereisanyindicationthatpreviouslyrecognisedimpairmentlossesmaynolongerexistormayhavedecreased,theCompanyanditssubsidiariesestimatetheasset’srecoverableamount.Apreviouslyrecognisedimpairmentlossisreversedonlyiftherehasbeenachangeintheassumptionsusedtodeterminetheasset’srecoverableamountsincethelastimpairmentlosswasrecognised.Theincreasedcarryingamountoftheassetattributabletoareversalofanimpairmentlossshallnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheassetinprioryears.Suchreversalisrecognisedinprofitorloss.

5.11 Employeebenefits

Short-termemployeebenefits

Salaries,wages,bonusesandcontributionstothesocialsecurityfundarerecognisedasexpenseswhenincurred.

Post-employmentbenefits

Definedcontributionplans

TheCompany,thesubsidiariesandtheiremployeeshavejointlyestablishedaprovidentfund.Thefundismonthlycontributedtobytheemployees,theCompanyandthesubsidiaries.Thefund'sassetsareheldinaseparatetrustfundandtheCompanyandthesubsidiaries’contributionsarerecognisedasexpenseswhenincurred.

Definedbenefitplans

TheCompanyanditssubsidiarieshaveobligationsinrespectoftheseverancepaymentstheymustmaketoemployeesuponretirementunderlaborlaw.TheCompanyanditssubsidiariestreattheseseverancepaymentobligationsasadefinedbenefitplan.

Theobligationunderthedefinedbenefitplanisdeterminedbasedonactuarialtechniques,usingtheprojectedunitcreditmethod.

Actuarialgainsandlossesarisingfrompost-employmentbenefitsarerecognisedimmediatelyinprofitorloss.

Forthefirst-timeadoptionofTAS19EmployeeBenefitsin2011,theCompanyanditssubsidiarieselectedtorecognisethetransitionalliability,whichexceedstheliabilitythatwouldhavebeenrecognisedatthesamedateunderthepreviousaccountingpolicy,throughanadjustmenttothebeginningbalanceofretainedearningsin2011.




Provisionforvacation

TheCompanyanditssubsidiarieshavesetupprovisionforvacationwhichiscalculatedinaccordancewiththeCompany'spolicyandformula,takingintoconsiderationtheemployee'ssalary,thenumberofserviceyearsandtheunusedvacationdays.

5.12 Treasuryshare

Treasuryshareisstatedatcostandispresentedasareductionfromshareholders’equity.Gainsondisposaloftreasuryshareisdeterminedbyreferencetoitscarryingamountandaretakentopremiumontreasuryshare,lossesondisposaloftreasurysharearedeterminedbyreferencetoitscarryingamountandaretakentopremiumontreasuryshareandretainedearnings,consecutively.

5.13 Provisions

ProvisionsarerecognisedwhentheCompanyandthesubsidiarieshaveapresentobligationasaresultofapastevent,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation,andareliableestimatecanbemadeoftheamountoftheobligation.

Inaddition,itssubsidiariesalsorecordprovisionforproductwarranty,whichisestimatedbyreferencetoobligationforproductwarrantyundermanufacturingcontract.

5.14 Incometax

Incometaxexpenserepresentsthesumofcorporateincometaxcurrentlypayableanddeferredtax.

Currenttax

Currentincometaxisprovidedintheaccountsattheamountexpectedtobepaidtothetaxationauthorities,basedontaxableprofitsdeterminedinaccordancewithtaxlegislation.

Deferredtax

Deferredincometaxisprovidedontemporarydifferencesbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsattheendofeachreportingperiod,usingthetaxratesenactedattheendofthereportingperiod.

TheCompanyanditssubsidiariesrecognisedeferredtaxliabilitiesforalltaxabletemporarydifferenceswhiletheyrecognisedeferredtaxassetsforalldeductibletemporarydifferencesandtaxlossescarriedforwardtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichsuchdeductibletemporarydifferencesandtaxlossescarriedforwardcanbeutilised.

Ateachreportingdate,theCompanyanditssubsidiariesreviewandreducethecarryingamountofdeferredtaxassetstotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilised.

TheCompanyanditssubsidiariesrecorddeferredtaxdirectlytoshareholders'equityifthetaxrelatestoitemsthatarerecordeddirectlytoshareholders'equity.

5.15 Derivatives

TheCompanyanditssubsidiarieshavenopolicytospeculateinorengageinthetradingofanyfinancialderivativeinstruments,otherthanformanagingtheforeigncurrencyrisk.Thesubsidiarieshaveenteredintoforwardexchangecontractstomitigatesuchexposure.



Suchderivativefinancialinstrumentsareinitiallyrecognisedatfairvalueonthedateonwhichaderivativecontractisenteredintoandsubsequentlyremeasuredatfairvalue,whichisdeterminedbyreliablefinancialinstitutions.Gainsonlossesarisingfromchangesinthefairvalueofthecontractsarerecognisedinprofitorloss.

6. Significant accounting judgments and estimates

Thepreparationoffinancialstatementsinconformitywithfinancialreportingstandardsattimesrequiresmanagementtomakesubjectivejudgmentsandestimatesregardingmattersthatareinherentlyuncertain.Thesejudgmentsandestimatesaffectreportedamountsanddisclosures;andactualresultscoulddifferfromtheseestimates.Significantjudgmentsandestimatesareasfollows:

6.1 Allowancefordoubtfulaccounts

Indetermininganallowancefordoubtfulaccounts,themanagementneedstomakejudgmentandestimatesbasedupon,amongotherthings,pastcollectionhistory,agingprofileofoutstandingdebtsandtheprevailingeconomiccondition.

6.2 Allowancefordiminutionininventoryvalue

Indetermininganallowancefordiminutionininventoryvalue,themanagementneedstomakejudgmentinestimatinglossfromobsolescenceandslowmoving,andthereductionofnetrealisablevalueofinventories.

6.3 Fairvalueoffinancialinstruments

Indeterminingthefairvalueoffinancialinstrumentsthatarenotactivelytradedandforwhichquotedmarketpricesarenotreadilyavailable,themanagementexercisesjudgment,usingavarietyofvaluationtechniquesandmodels.Theinputtothesemodelsistakenfromobservablemarkets,andincludesconsiderationofliquidity,correlationandlonger-termvolatilityoffinancialinstruments.

6.4 Impairmentofequityinvestments

TheCompanyanditssubsidiariestreatavailable-for-saleequityinvestmentsandotherinvestmentsasimpairedwhenthemanagementjudgesthattherehasbeenasignificantorprolongeddeclineinthefairvaluebelowtheircostorwhereotherobjectiveevidenceofimpairmentexists.Thedeterminationofwhatis“significant”or“prolonged”requiresjudgmentofthemanagement.

6.5 Propertyplantandequipmentanddepreciation

Indeterminingdepreciationofplantandequipment,themanagementisrequiredtomakeestimatesoftheusefullivesandresidualvaluesoftheplantandequipmentandtoreviewestimateusefullivesandresidualvalueswhenthereareanychanges.

Inaddition,themanagementisrequiredtoreviewproperty,plantandequipmentforimpairmentonaperiodicalbasisandrecordimpairmentlossesintheperiodwhenitisdeterminedthattheirrecoverableamountislowerthanthecarryingcost.Thisrequiresjudgmentsregardingforecastoffuturerevenuesandexpensesrelatingtotheassetssubjecttothereview.

6.6 Deferredtaxassets

Deferredtaxassetsarerecognisedfordeductibletemporarydifferencesandunusedtaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthetemporarydifferencesandlossescanbeutilised.Significantmanagementjudgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognised,baseduponthelikelytimingandlevelofestimatefuturetaxableprofits.




6.7 Post-employmentbenefitsunderdefinedbenefitplans

Theobligationunderthedefinedbenefitplanisdeterminedbasedonactuarialtechniques.Suchdeterminationismadebasedonvariousassumptions,includingdiscountrate,futuresalaryincreaserate,mortalityrateandstaffturnoverrate.

6.8 Litigation

TheCompanyhascontingentliabilitiesasaresultoflitigation.TheCompany’smanagementhasusedjudgementtoassessoftheresultsofthelitigationandrecordedsuchcontingentliabilitiesasattheendofreportingperiod.

7. Cash and cash equivalents Cashandcashequivalentsasat31December2013and2012asreflectedinthestatementsoffinancialpositionandcash

flowsconsistofthefollowing:

(Unit:ThousandBaht)


Cash 697 926 160 141Bankdeposits 2,820,647 1,841,953 319,872 94,005Billsofexchange - 180,000 - -Fixeddepositswithmaturitynotover3months 1,364,355 1,088,302 - -

Cashandcashequivalents 4,185,699 3,111,181 320,032 94,146

Asat31December2013,bankdepositsinsavingsaccountsandfixeddepositscarriedinterestsbetween0.001and2.860percentperannum(2012:0.001and2.850percentperannum).

8. Related party transactions Duringtheyears,theCompanyhadsignificantbusinesstransactionswithrelatedparties.Suchtransactions,whichare

summarisedbelow,aroseintheordinarycourseofbusinessandwereconcludedoncommercialtermsandbasesagreeduponbetweentheCompanyandthoserelatedparties.

(Unit:MillionBaht)

Separatefinancial statements

Transfer pricing policy

2013 2012Transactionswithsubsidiarycompanies(eliminatedfromtheconsolidatedfinancialstatements)Salesofgoods 7 12 Pricesagreedbetweenthepartiesduetothe

uniquenessofproductssoldtoeachcustomerDividendincome 1,190 126 DeclaredrateRentalincome 3 10 ContractpricePurchaseofmaterials 209 259 CostplusmarkupPurchaseoffixedassets 24 66 CostplusmarkupServicefeeexpenses 3 2 Ratesstipulatedintheagreement



Asat31December2013and2012,thebalancesoftheaccountsbetweentheCompanyandthoserelatedpartiesareasfollows:

(Unit:ThousandBaht)Consolidated

financial statementsSeparate

financial statements2013 2012 2013 2012

Tradeandotherreceivables(Note10)Tradereceivables-relatedpartiesSubsidiarycompanies - - 5,695 26,824

Totaltradereceivables-relatedparties - - 5,695 26,824

Otherreceivables-relatedpartiesSubsidiarycompanies - - 91 3,780

Relatedcompany(bywayofcommondirectors) 32 32 - -

Totalotherreceivables-relatedparties 32 32 91 3,780

Totaltradeandotherreceivables 32 32 5,786 30,604

Tradeandotherpayables(Note17)Tradepayables-relatedpartiesSubsidiarycompanies - - 387,092 224,226

Totaltradepayables-relatedparties - - 387,092 224,226

Otherpayables-relatedpartySubsidiarycompany - - 601 -

Totalotherpayables-relatedparty - - 601 -

Totaltradeandotherpayables - - 387,693 224,226

Directorsandmanagement’sbenefits

Duringtheyearsended31December2013and2012,theCompanyanditssubsidiarieshademployeebenefitexpensespayabletotheirdirectorsandmanagementasbelow.

(Unit:MillionBaht)Consolidated financial statements Separate financial statements

2013 2012 2013 2012Short-termemployeebenefits 75 69 14 11Post-employmentbenefits 2 10 1 10

Total 77 79 15 21




9. Short-term Investments

(Unit:ThousandBaht)

Consolidated financial statements31 December 2013 31 December 2012

Cost/Carrying value Fair value

Cost/Carrying value Fair value

SecuritiesheldfortradingOverseasmarketableequitysecurities 98,441 110,899 91,896 100,091Unsecuredsubordinatednotes 27,710 29,317 30,154 31,465

Total 126,151 140,216 122,050 131,556Add:Gainonchangesinfairvalueofinvestments 14,065 - 9,506 -

Investmentsinsecuritiesheldfortrading 140,216 140,216 131,556 131,556

Available-for-salesecuritiesOverseasmarketablecorporatebonds 1,452,805 1,527,480 1,080,730 1,213,375Localquotedbonds 32,817 30,833 30,634 31,661Overseasquotedbonds 780,256 825,782 910,962 987,372

Total 2,265,878 2,384,095 2,022,326 2,232,408Add:Revaluationsurplusonchangesinfairvalueofinvestments 118,217 - 210,082 -

Investmentsinavailable-for-salesecurities 2,384,095 2,384,095 2,232,408 2,232,408

FixeddepositwithfinancialinstitutionFixeddepositwithin1year - - 6,126 6,126

Investmentinfixeddepositwithfinancialinstitution - - 6,126 6,126

Totalshort-terminvestments 2,524,311 2,524,311 2,370,090 2,370,090

9.1 Securitiesheldfortrading

Sincethethirdquarterof2008,HanaMicroelectronicsInternationalCompanyLimited,anoverseassubsidiarycompany,hasinvestedinmutualfundofacompanylistedontheStockExchangeofCaymanIsland,bondinvestmenttrustofanoverseasbank,andduring2012additionallyinvestedininterestbearingunsecuredsubordinatednotesofacompanylistedontheStockExchangeofAustralia.Thesubsidiaryclassifiedtheseinvestmentsasheldfortradingpurpose.

Asat31December2013,thesubsidiaryhadassessedthefairvalueoftheequitysecuritiesformutualfund,thebondinvestmenttrustfromanoverseasbankandtheinterestbearingunsecuredsubordinatednotesbyreferringtothelatestbidpriceasquotedontheStockExchanges,inwhichthefairvaluehadincreasedbyUSD0.1millionorequivalenttoapproximatelyBaht5million(2012:increasedbyUSD0.3millionorequivalenttoapproximatelyBaht9million).Thechangesinthefairvalueoftheseinvestmentswererecognisedintheincomestatement.

9.2 Available-for-salesecurities

Inaddition,thissubsidiaryhasinvestedinprivatecorporatebondsissuedbyvariouscompanieslistedontheoverseasStockExchangesandquotedbondsthroughthethreeoverseasbanks.Theseinvestmentsareclassifiedasavailable-for-saleinvestments.Duringthecurrentyear,thesubsidiaryadditionallyinvestedinanoverseaslistedcorporatebondsandbothoflocalandoverseasquotedbondsanddisposedsomeofthecorporatebondsand



overseasquotedbonds,resultinginnetgainofUSD1.1millionorequivalenttoapproximatelyBaht33.8million(2012:netgainofUSD0.3millionorequivalenttoapproximatelyBaht9.4million).

Asat31December2013,thesubsidiaryhadassessedthefairvalueofthebondsbyreferringtothevaluequotedbythebanksinwhichtherewasarevaluationsurplusonthefairvalueofUSD3.6millionorequivalenttoapproxi-matelyBaht118.2million(2012:USD5.9millionorequivalenttoapproximatelyBaht210.1million).ThesubsidiaryrecognisedlossonchangeinfairvalueofsuchbondsapproximatelyBaht91.9millionasshownasaseparateiteminthestatementofcomprehensiveincome(2012:recognisedgainonchangeinfairvalueofsuchbondsBaht142.3million).

Asat31December2013,partofshort-terminvestmentswereusedassecurityforshort-termloansfromfinancialinstitutionasdiscussedinNote16.

10. Trade and other receivables

(Unit:ThousandBaht)Consolidated financial statements Separate financial statements

2013 2012 2013 2012AgeofreceivableTradereceivables-subsidiarycompaniesNotyetdue - - - 997PastdueUpto3months - - 1,029 3,1143-6months - - 1,934 12,9166-12months - - 29 8,175Over12months - - 2,703 1,622

Totaltradereceivables-subsidiarycompanies(Note8) - - 5,695 26,824

Tradereceivables-unrelatedpartiesNotyetdue 2,410,361 2,057,526 1,140,571 1,003,769PastdueUpto3months 722,243 596,354 296,123 217,7523-6months 13,813 23,758 247 3,4186-12months 1,222 16,349 - 286Over12months 3,150 3,173 4 3

Totaltradereceivables-unrelatedparties 3,150,789 2,697,160 1,436,945 1,225,228Less:Allowancefordoubtfulaccounts (4,269) (6,904) - -

Totaltradereceivables-unrelatedparties-net 3,146,520 2,690,256 1,436,945 1,225,228

Totaltradereceivables-net 3,146,520 2,690,256 1,442,640 1,252,052

Otherreceivables-relatedparties(Note8) 32 32 91 3,780Otherreceivables-unrelatedparties 94,617 73,928 4,492 5,865

Totalotherreceivables 94,649 73,960 4,583 9,645

Tradeandotherreceivables-net 3,241,169 2,764,216 1,447,223 1,261,697




11. Inventories

(Unit:ThousandBaht)Consolidated financial statements

Cost Reduce cost to net realisable value Inventories - net

2013 2012 2013 2012 2013 2012Finishedgoods 1,068,092 939,399 (185,006) (186,597) 883,086 752,802Workinprocess 248,267 221,428 - - 248,267 221,428Rawmaterials 2,115,495 2,024,119 (116,867) (212,688) 1,998,628 1,811,431Goodsintransit 42,000 62,107 - - 42,000 62,107

Total 3,473,854 3,247,053 (301,873) (399,285) 3,171,981 2,847,768

(Unit:ThousandBaht)Separate financial statements

Cost Reduce cost to net realisable value Inventories - net

2013 2012 2013 2012 2013 2012Finishedgoods 551,050 368,658 (184,995) (186,585) 366,055 182,073Workinprocess 123,399 107,070 - - 123,399 107,070Rawmaterials 847,654 697,982 (82,065) (97,564) 765,589 600,418Goodsintransit 13,817 25,501 - - 13,817 25,501

Total 1,535,920 1,199,211 (267,060) (284,149) 1,268,860 915,062

12. Investments in subsidiary companies

(Unit:ThousandBaht)

Separate financial statements

Company’s name Paid up capital Shareholding percentage Cost

Dividend received for the years ended 31

December2013 2012 2013 2012 2013 2012 2013 2012

Percent PercentHanaSemiconductor(Ayutthaya)CompanyLimited 1,200,000 1,200,000 58 58 2,142,910 2,142,910 665,000 126,000

HanaSemiconductor(BKK)CompanyLimited 1,000,000 1,000,000 100 100 1,011,100 1,011,100 525,000 -

OmacSalesLimited 325 325 100 100 273,492 273,492 - -

HanaMicroelectronics(Cambodia)CompanyLimited 155,947 - 100 - 155,947 - - -

HanaMicroelectronicsInternationalCompanyLimited - - 100 100 - - - -

HanaMicroelectronicsInvestmentCompanyLimited - - 100 100 - - - -

HanaTechnologiesGroupLimited - - 100 100 - - - -

Totalinvestmentsinsubsidiarycompanies 3,583,449 3,427,502 1,190,000 126,000

On14May2013,theBoardofDirectorsoftheCompanyNo.2/2013passedaresolutionapprovingtheincorporationofasubsidiarycompanyunderthelawsoftheKingdomofCambodia,HanaMicroelectronics(Cambodia)CompanyLimitedwithregisteredcapitalofUSD5million.HanaMicroelectronics(Cambodia)CompanyLimitedwasregisteredasacompanyon2September2013.

Duringthecurrentyear,theCompanypaidin100percentofHanaMicroelectronics(Cambodia)CompanyLimited’sregisteredsharecapital,amountingtoUSD5millionorequivalenttoapproximatelyBaht156million.



13.

Pr

oper

ty, p

lant a

nd eq

uipm

ent

(Unit:ThousandBaht)

Cons

olid

ated

fina

ncial

stat

emen

ts

Land

Build

ings

Leas

ehol

d im

prov

emen

tIn

stall

atio

nM

achi

nery

and

equi

pmen

tOf

fice f

urni

ture

an

d eq

uipm

ent

Vehi

cles

Cons

truct

ion

in

prog

ress

and

mac

hine

ry u

nder

in

stall

atio

nTo

tal

Cost

Asat1January2012

279,008

2,209,663

137,417

657,855

10,949,804

503,759

47,179

295,031

15,079,716

Additions

75,226

3,171

33,416

24,752

271,292

35,366

3,587

1,096,519

1,543,329

Disposals

-(587)

-(626)

(978,486)

(15,029)

(9,279)

(82)

(1,004,089)

Transferin(out)

-26,808

-65,183

1,033,613

48,343

2,645

(1,176,592)

-Translationadjustment

-(14,374)

(1,047)

-(58,642)

(1,564)

(418)

(912)

(76,957)

Asat3

1Decem

ber2

012

354,234

2,224,681

169,786

747,164

11,217,581

570,875

43,714

213,964

15,541,999

Additions

-132

-13,066

177,675

12,236

6,233

923,803

1,133,145

Disposals

-(22)

-(1,519)

(296,646)

(19,553)

(2,519)

-(320,259)

Transferin(out)

-100

-12,194

226,892

6,321

3,600

(249,107)

-Translationadjustment

-61,108

7,179

-253,334

5,965

1,830

2,690

332,106

Asat3

1Decem

ber2

013

354,234

2,285,999

176,965

770,905

11,578,836

575,844

52,858

891,350

16,686,991

Accumulateddepreciation

Asat1January2012

-719,032

118,895

440,622

6,726,318

395,440

30,827

-8,431,134

Depreciationfortheyear

-110,569

5,362

51,101

1,005,363

48,018

5,180

-1,225,593

Accumulateddepreciationfor

disposedassets

-(587)

-(417)

(777,722)

(12,527)

(7,177)

-(798,430)

Translationadjustment

-(4,005)

(947)

-(23,501)

(1,132)

(275)

-(29,860)

Asat3

1Decem

ber2

012

-825,009

123,310

491,306

6,930,458

429,799

28,555

-8,828,437


-112,249

11,973

51,221

954,729

48,631

5,669

-1,184,472


disposedassets

--

-(1,519)

(242,384)

(18,074)

(1,664)

-(263,641)


-21,359

3,463

-116,974

4,418

1,270

-147,484

Asat3

1Decem

ber2

013

-958,617

138,746

541,008

7,759,777

464,774

33,830

-9,896,752

Allowancefo

rimpairm

entloss

Asat1January2012

--

-613

275,379

--

-275,992

Increaseduringtheyear

--

-3,397

2,187

2,763

--

8,347

Decreaseduringtheyear

--

--

(190,974)

--

-(190,974)


--

--

(1,504)

--

-(1,504)

Asat3

1Decem

ber2

012

--

-4,010

85,088

2,763

--

91,861

Increaseduringtheyear

--

125

4,977

-582

--

5,684

Decreaseduringtheyear

--

--

(1,862)

--

-(1,862)


--

--

3,097

--

-3,097

Asat3

1Decem

ber2

013

--

125

8,987

86,323

3,345

--

98,780

Netbookvalue

Asat3

1Decem

ber2

012

354,234

1,399,672

46,476

251,848

4,202,035

138,313

15,159

213,964

6,621,701

Asat3

1Decem

ber2

013

354,234

1,327,382

38,094

220,910

3,732,736

107,725

19,028

891,350

6,691,459


2012(Baht984millionincludedinmanufacturingcost,andthebalanceinadm

inistrativeexpenses)

1,225,593

2013(Baht1,091millionincludedinmanufacturingcost,andthebalanceinadm


1,184,472




(Unit:ThousandBaht)

Sepa

rate

fina

ncial

stat

emen

ts

Land

Build

ings

Leas

ehol

dim

prov

emen

tIn

stall

atio

nM

achi

nery

and

equi

pmen

t

Offic

efu

rnitu

re an

deq

uipm

ent

Vehi

cles

Cons

truct

ion

in p

rogr

ess a

ndm

achi

nery

und

erin

stall

atio

n

Tota

l

Cost

Asat1January2012

172,625

895,568

85,641

197,846

2,161,951

122,026

14,677

43,404

3,693,738

Additions

75,226

3,171

-9,084

59,304

7,902

466

207,903

363,056

Disposals

--

--

(54,370)

(897)

(1,368)

-(56,635)

Transferin(out)

-10,775

-12,883

144,976

5,147

-(173,781)

-

Asat3

1Decem

ber2

012

247,851

909,514

85,641

219,813

2,311,861

134,178

13,775

77,526

4,000,159

Additions

-132

-8,484

30,791

7,149

-897,610

944,166

Disposals

--

--

(14,335)

(1,013)

(1,093)

-(16,441)

Transferin(out)

-100

-8,873

138,931

953

3,600

(152,457)

-

Asat3

1Decem

ber2

013

247,851

909,746

85,641

237,170

2,467,248

141,267

16,282

822,679

4,927,884


Asat1January2012

-314,389

85,641

88,296

1,459,130

96,145

11,305

-2,054,906


-44,840

-17,872

216,858

10,331

1,514

-291,415


disposedassets

--

--

(53,431)

(678)

(1,166)

-(55,275)

Asat3

1Decem

ber2

012

-359,229

85,641

106,168

1,622,557

105,798

11,653

-2,291,046


-45,486

-18,789

204,985

10,164

1,395

-280,819


fordisposedassets

--

--

(13,548)

(483)

(1,093)

-(15,124)

Asat3

1Decem

ber2

013

-404,715

85,641

124,957

1,813,994

115,479

11,955

-2,556,741

Allowancefo

rimpairm

entloss

Asat1January2012

--

-613

7,235

--

-7,848

Asat31Decem

ber2012

--

-613

7,235

--

-7,848

Asat3

1Decem

ber2

013

--

-613

7,235

--

-7,848

Netbookvalue

Asat3

1Decem

ber2

012

247,851

550,285

-113,032

682,069

28,380

2,122

77,526

1,701,265

Asat3

1Decem

ber2

013

247,851

505,031

-111,600

646,019

25,788

4,327

822,679

2,363,295




291,415



280,819





Asat31December2013,certainpropertyandequipmentitemshavebeenfullydepreciatedbutarestillinuse.Thegrosscarryingamount,beforedeductingaccumulateddepreciationandallowanceforimpairmentloss,ofthoseassetsamountedtoapproximatelyBaht5,625million(2012:Baht4,619million)andfortheCompanyamountedtoapproximatelyBaht1,391million(2012:Baht1,052million).

14. Land leasehold rights

Duringtheyear2013,anoverseassubsidiaryenteredintolandleaseholdagreementsforbuildingoffactoryanddormitoryforitsemployeesfortheperiodof50years.Asat31December2013,thelandleaseholdrightsareamountedtoUSD4.7millionorequivalentapproximatelytoBaht153.4million.

15. Intangible assets

Detailsofintangibleassetswhicharecomputersoftwareareasfollows:

(Unit:ThousandBaht)

Consolidated financial statements

Separate financial statements

CostAsat1January2012 43,762 7,418Additions 2,592 -Translationadjustment 1,970 -

Asat31December2012 48,324 7,418Additions 3,948 1,202Translationadjustment 1,351 -

Asat31December2013 53,623 8,620

AccumulatedamortisationAsat1January2012 29,221 2,662Amortisationfortheyear 3,393 668Translationadjustment (247) -

Asat31December2012 32,367 3,330Amortisationfortheyear 3,918 706Translationadjustment 1,109 -

Asat31December2013 37,394 4,036

AllowanceforimpairmentAsat1January2012 - -

Asat31December2012 - -Increaseduringtheyear 4,066 -

Asat31December2013 4,066 -

NetbookvalueAsat31December2012 15,957 4,088

Asat31December2013 12,163 4,584

Amortisationfortheyear2012 3,393 668

2013 3,918 706

ANNUAL REPORT 201390 Hana Microelectronics Public Company Limited ANNUAL REPORT 2013 91Hana Microelectronics Public Company Limited




16. Short-term loans from financial institution

Thebalancesofshort-termloansfromfinancialinstitutionofanoverseassubsidiaryasat31December2013and2012aresummarisedbelow. 2013 2012

Million AUD Million USDPrincipalloanbalance 0.55 0.80Interestrate(percentperannum) 3.03-3.64 1.00-1.35

Theseloansaresecuredbythepledgeoftheshort-terminvestmentsheldundertheaccountsofthelenderbythesubsidiarycompany.

17. Trade and other payables


2013 2012 2013 2012Tradepayables-subsidiarycompanies(Note8) - - 387,092 224,226Tradepayables-unrelatedparties 2,015,112 1,552,396 958,523 475,785Advancereceivedfromcustomers 154,542 120,315 24,654 26,524Otherpayablesforpurchaseofmachineries 82,312 191,702 32,294 22,823Otherpayable-relatedparty(Note8) - - 601 -Accruedexpenses 232,893 223,427 36,027 26,032

Totaltradeandotherpayables 2,484,859 2,087,840 1,439,191 775,390

18. Short-term provisions(Unit:ThousandBaht)

Consolidated financial statementsLoss on tax assessments Product warranty Total

Asat1January2012 150,466 218,008 368,474Increaseduringtheyear 64,110 15,766 79,876

Asat31December2012 214,576 233,774 448,350Increaseduringtheyear 83,412 38,039 121,451Decreasefromactualpaid (125,388) - (125,388)Reversalofprovision (25,078) - (25,078)

Asat31December2013 147,522 271,813 419,335

(Unit:ThousandBaht)Separate financial statements

Loss on tax assessments TotalAsat1January2012 150,466 150,466Increaseduringtheyear 64,110 64,110

Asat31December2012 214,576 214,576Increaseduringtheyear 83,412 83,412Decreasefromactualpaid (125,388) (125,388)Reversalofprovision (25,078) (25,078)

Asat31December2013 147,522 147,522



Provisionforlossontaxassessment

TheCompanyhasrecordedprovisionforlossontaxassessment,asdescribedinNote30.5.

Provisionforproductwarranty

Thesubsidiariesrecordprovisionforproductwarranty,whichisestimatedbyreferencetoobligationforproductwarrantyundermanufacturingcontract.

19. Provision for long-term employee benefits

Provisionforlong-termemployeebenefits,whicharecompensationsonemployees’retirement,wasasfollows:


2013 2012 2013 2012Definedbenefitobligationatbeginningofyear 376,361 352,900 167,074 154,851Currentservicecost 40,049 41,162 21,215 19,911Interestcost 13,549 10,960 6,489 5,168Benefitspaidduringtheyear (7,837) (8,632) (1,872) (2,422)Actuarialgain (36,323) (20,029) (2,603) (10,434)

Definedbenefitobligationatendofyear 385,799 376,361 190,303 167,074

Long-termemployeebenefitexpensesincludedintheprofitorlosswasasfollows:


2013 2012 2013 2012Currentservicecost 40,049 41,162 21,215 19,911Interestcost 13,549 10,960 6,489 5,168Actuarialgainrecognisedduringtheyear (36,323) (20,029) (2,603) (10,434)

Totalexpenserecognisedinprofitorloss 17,275 32,093 25,101 14,645LineitemsunderwhichsuchexpensesareincludedinprofitorlossCostofsales (309) 24,575 3,314 8,690

Sellingandadministrativeexpenses 17,584 7,518 21,787 5,955

Principalactuarialassumptionsatthevaluationdatewereasfollows:


(% per annum) (% per annum) (% per annum) (% per annum)Discountrate 4.3% 4.2% 4.3% 4.2%Futuresalaryincreaserate(dependingonage) 4.0%-5.3% 4.0%-5.3% 4.0%-5.3% 4.0%-5.3%Staffturnoverrate 4.9%-26.3% 4.9%-26.3% 4.9%-26.3% 4.9%-26.3%




Amountsofdefinedbenefitobligationforthecurrentandpreviousthreeperiodsareasfollows:

(Unit:ThousandBaht)

Defined benefit obligation Experience adjustments on the obligationConsolidated


financial statementsConsolidated


financial statementsYear2013 385,799 190,303 (51,992) (11,731)Year2012 376,361 167,074 (32,439) (14,656)Year2011 352,900 154,851 (41,632) (8,498)Year2010 271,128 109,944 - -

20. Statutory reserve

PursuanttoSection116ofthePublicLimitedCompaniesActB.E.2535,theCompanyisrequiredtosetasidetoastatutoryreserveatleast5percentofitsnetincomeafterdeductingaccumulateddeficitbroughtforward(ifany),untilthereservereaches10percentoftheregisteredcapital.Thestatutoryreserveisnotavailablefordividenddistribution.

21. Treasury shares

AresolutionofameetingoftheCompany’sBoardofDirectorsNo.4/2551heldon7October2008approvedtherepurchaseofsharesoftheCompanyinordertomanageitsexcesscash,increaseearningspershareandtomaximiseshareholderbenefits,withabudgetofnotmorethanBaht1,600million.Therepurchaseshallnotmorethan83millionshares,equivalentto9.99%oftotalissuedandpaid-upsharesoftheCompany.Theperiodofrepurchaseofsharesisfrom22October2008to22April2009andthesesharesaretobesoldafter6monthsfromthedateofcompletingtherepurchaseofshares,butnotmorethan3years.

UndertheNotificationoftheOfficeoftheSecuritiesandExchangeCommissionNo.GorLorTor.Chor.Sor.(Wor)2/2548andtheNotificationoftheFederationofAccountingProfessionsNo.Sor.SorWorBorChor.016/2548,publiclimitedcom-panyisrequiredtosetasideretainedearningsinanamountequaltotheamountpaidfortreasurysharesuntileitherthesharesaresoldorpaid-upcapitalisreducedbycancellationofanyremainingunsoldshares.Asat31December2011,theCompanysetasideapproximatelyBaht262.99millionasreservefortreasuryshares.

AresolutionofthemeetingoftheCompany’sBoardofDirectorsNo.3/2554heldon10August2011approvedtheresaleof25,596,100treasuryshares,orequivalentto3.08percentoftotalissuedandpaid-upsharesoftheCompany.ThetreasuryshareswillbesoldthroughtheStockExchangeofThailand.Theperiodoftheresaleofthesesharesisfrom25August2011to2September2011,andtheresalepriceshallnotlessthan85percentoftheaverageclosingpriceofthelast5tradingdays.However,notreasurysharesweresolduntiltheendingresaleperiodon2September2011.

On28February2012,themeetingoftheBoardofDirectorsoftheCompanyNo.1/2555passedresolutionsapprovingtowriteoffall25,596,100treasuryshareswithaparvalueofBaht1eachwhichremainunsold,andapprovingtodecreasetheCompany’sregistered,issuedandpaid-upsharecapital,resultingfromtreasuryshareswrittenoff.Asaresult,theCompany’sregisteredsharecapitalwasreducedfromBaht1,000,000,000(1,000,000,000ordinarysharesofBaht1each)toBaht974,403,900(974,403,900millionordinarysharesofBaht1each),anditsissuedandpaid-upsharecapitalwasreducedfromBaht830,474,960(830,474,960ordinarysharesofBaht1each)toBaht804,878,860(804,878,860ordinarysharesofBaht1each).TheCompanyregisteredthesharecapitaldecreasewiththeMinistryofCommerceon5March2012.



22. Expenses by nature

Significantexpensesbynatureareasfollows:

(Unit:ThousandBaht)

Consolidated financial statements Separate financial statements

2013 2012 2013 2012Rawmaterialsandconsumablesused 11,077,074 10,926,437 5,274,999 4,764,964Changesininventoriesoffinishedgoodsandworkinprocess (157,123) (249,396) (200,311) (91,119)Salaryandwagesandotheremployeebenefits 2,998,548 2,756,767 1,172,970 992,252Managementbenefitexpenses 76,834 79,594 14,544 20,814Depreciationandamortisationexpenses 1,188,390 1,228,986 281,526 292,083Lossfromtaxassessments 110,402 64,110 110,402 64,110Lossonexchange 60,329 - - -Productwarrantyexpenses 21,601 22,691 - -

23. Income tax

Incometaxexpensesfortheyearsended31December2013and2012aremadeupasfollows:


2013 2012 2013 2012(Restated) (Restated)

Currentincometax:Currentincometaxcharge 64,728 117,430 27,867 16,418Adjustmentinrespectofcurrentincometaxofpreviousyear 350 1,650 350 1,412Deferredtax:Relatingtooriginationandreversaloftemporarydifferences (3,079) 136 (3,389) (919)Incometaxexpensereportedinthestatementofincome 61,999 119,216 24,828 16,911

Theamountsofincometaxrelatingtoeachcomponentofothercomprehensiveincomefortheyearsended31December2013and2012areasfollows:



Deferredtaxrelatingtoexchangedifferencesontranslationoffinancialstatementsinforeigncurrency 878 (698) - -

878 (698) - -




Reconciliationbetweenincometaxexpensesandtheproductofaccountingprofitmultipliedbytheapplicabletaxratesfortheyearsended31December2013and2012areasfollows.



Accountingprofitbeforetax 2,399,197 1,729,408 2,131,267 918,035

Applicabletaxrate 0-25% 0-23% 20% 23%Accountingprofitbeforetaxmultipliedbyapplicabletaxrate 785,109 294,522 426,253 211,148Adjustmentinrespectofcurrentincometaxofpreviousyear 350 2,081 350 1,412Effectsof:Promotionalprivileges(Note26) (218,360) (191,353) (187,170) (187,263)Dividendincomenotsubjecttotax (333,009) (49,686) (238,008) (28,986)Incomenotsubjecttotax (190,114) (11,366) - -Non-deductibleexpenses 19,869 78,231 17,083 15,237Additionalexpensedeductionsallowed (7,708) (6,433) - -Others 5,862 3,220 6,320 5,363Total (723,460) (177,387) (401,775) (195,649)Incometaxexpensesreportedinthestatementofincome 61,999 119,216 24,828 16,911

Thecomponentsofdeferredtaxassetsanddeferredtaxliabilitiesareasfollows:

(Unit:ThousandBaht)Statements of financial position


31December

2013

As at 31

December 2012

As at 1

January 2012

As at 31

December 2013

As at 31

December 2012

As at 1

January 2012

(Restated) (Restated)DeferredtaxassetsAllowancefordiminutioninvalueofinventories 4,359 2,830 2,022 4,359 2,830 2,022Allowanceforassetimpairment 128 78 90 128 78 90Provisionforlong-termemployeebenefits 3,292 1,774 1,650 3,292 1,774 1,650Accruedexpenses 10,854 10,285 12,039 - - -Consignmentinventory 291 - - 291 - -

Total 18,924 14,967 15,801 8,070 4,682 3,762



InOctober2011,thecabinetpassedaresolutiontoreducethecorporateincometaxratefrom30percentto23percentin2012,andthento20percentfrom2013.Inaddition,inordertocomplywiththeresolutionofthecabinet,inDecember2011,thedecreasesintaxratesfor2012-2014wereenactedthrougharoyaldecree.TheCompanyhasreflectedthechangesintheincometaxratesinitsdeferredtaxcalculation,aspresentedabove.

24. Insurance claim from flood event

TheplantofHanaSemiconductor(Ayutthaya)Co.,Ltd.,asubsidiaryoftheCompany,whichislocatedinHi-techIndus-trialEstateinAyutthayaprovince,wasinundatedinearlyOctober2011asaresultoftheextensivefloodinginThailandduringthefourthquarterof2011.Thesubsidiarysufferedmajordamagestoitspropertyandbusinessinterruptionlosses.ThesubsidiaryinvestigatedthedamagesandrecordedlossesfromfloodeventofBaht399millioninprofitorlossfortheyear2011whichconsistedofthedamagestofixedassetsofBaht191million,damagestoinventoriesofBaht153millionandotherdamagesofBaht55million,includingfullprovisionfornetbookvalueofthedamagedpropertywhichistobereplaced.

Thesubsidiaryclaimedinsurancecompensationforitspropertydamageslossesanditsbusinessinterruptionlossesresultingfromtheflood.ThesubsidiaryreceivedaninitialcompensationpaymentonitspropertydamagesofBaht300millioninFebruary2012,andasat31December2011,ithadthereforerecognisedthisinsuranceclaimreceivableascurrentassetinthestatementoffinancialposition,andnetsuchamountagainstlossfromfloodeventinprofitorlossintheincomestatement.Therecognisedcompensationdidnotexceedtheabovelossfromthedamagestofixedassetsandinventories.

Duringthesecondquarterandthirdquarterof2012,thesubsidiaryreceivedthecompensationpaymentsonitsbusinessinterruptionlossesofBaht204millionandBaht196million,respectively,andrecognisedthesecompensationsasotherincomeintheincomestatementsfortheyearended31December2012.

Subsequently,duringthefirstquarter,secondquarterandfourthquarterof2013,thesubsidiaryreceivedtheremainingcompensationpaymentsonitspropertydamagesamountingtoBaht30million,Baht712millionandBaht188million,respectively,andrecordedareimbursementfrominsuranceclaimreceivableofBaht12millionasacurrentassetinthestatementoffinancialpositionasat31December2013.ThesubsidiaryrecognisedtheinsurancecompensationincometotalingBaht942millionintheincomestatementfortheyearended31December2013.

Thesubsidiaryisintheprocessofclaiminginsurancecompensationforitsbusinessinterruptionlossesresultingfromtheflood.

25. Earnings per share

BasicearningspershareiscalculatedbydividingprofitfortheyearattributabletoequityholdersoftheCompany(excludingothercomprehensiveincome)bytheweightedaveragenumberofordinarysharesinissueduringtheyear.




26.

Prom

otio

nal p

rivile

ges

TheCom

panyanditssubsidiarieshavereceivedpromotionalprivilegesundertheInvestmentPromotionActB.E.2520asapprovedbytheBoardofInvestment.

Subjecttocertainim

posedconditions,significantprivilegesareasfollows:

Parti

cular

sTh

e Com

pany

1.

CertificateNo.

1842/2539

1341/Or/2544

1455(1)/2544

1597(1)/2544

1642(2)/2546

1977(2)/2547

1328(2)/2548

2138(2)/2550

1887(1)/2552

2.

Prom

otionalprivilegesfor

Productionof

PCBA

Productionof

FiberO

ptic

Device,Air

Pressureand

Temperature

Controland

WirelessRadio

Frequency

Productionof

Wireless

Sensor

Productionof

smartcard

andmodule

forsmartcard

Productionof

Wireless

Sensor

Productionof

FlexibleCircuit

Board

Assemblyand

electronic

components

forInterface

Device

Productionof

PCBA

,RFID,

TAGreader

Productionof

PCBA

Productionof

Semi-

Conductori.e.

Wireless

Sensor

3.

Thesignificantprivilegeare

3.1

Exem

ptionfromcorporateincometax

onnetincomederivedfrom

the

prom

otedoperationandexem

ption

fromincometaxondividendspaid

fromtheprom

otedoperationswhich

aretaxexem

ptedthroughoutthe

periodinwhichthecorporateincome

taxisexempted.

8years

(expired)

8years

(expired)

8years

(expired)

8years

(expired)

8years

(expired)

(taxexem

pted

accordingwith

investment)

8years

(taxexem

pted

accordingwith

investment)

8years

(taxexem

pted

accordingwith

investment)

8years

(taxexem

pted

accordingwith

investment)

8years

3.2

5%allowanceoftheincrem

entin

exportincomeoverthepreceding

years.

10years

(expired)

10years

(expired)

--

--

--

-

3.3

50%reductionofthenormalcorporate

incometaxratefornetincomederived

aftertheexpirydatein3.1

5years

(expired)

5years

5years

5years

5years

(expired)

(taxexem

pted

accordingwith

investment)

5years

(taxexem

pted

accordingwith

investment)

5years

(taxexem

pted

accordingwith

investment)

5years

(taxexem

pted

accordingwith

investment)

5years

3.4

Exem

ptionfromim

portdutyon

machineryasapprovedbytheBoard.

Granted

Granted

Granted

Granted

Granted

Granted

Granted

Granted

Granted

3.5

2tim

esdeductionoftransportation,,

electricityandwaterexpensesfromthe

firstearningoperatingincome

10years

(expired)

10years

10years

10years

10years

10years

10years

10years

10years

4.

Dateoffirstearningoperatingincome

10January

1997

17January

2002

(Transferred

fromHana

Microelectron-

ics(NRIE)Co.,

Ltd.in2002)

27March

2002

17Novem

ber

2001

30June

2004

2Decem

ber

2004

24March

2006

3Decem

ber

2007

2Decem

ber

2009





Su

bsid

iary

Parti

cular

sHa

na S

emico

nduc

tor (

Ayut

thay

a) C

ompa

ny L

imite

d1.

CertificateNo.

1133(4)/2548

2176(4)/2548

1458(1)/2553

1817(2)/2550

1034(2)/2550

2.

Prom

otionalprivilegesfor

Productionof

IntegratedCircuit(IC)

and

IntegratedModule

Productionof


andIntegratedCircuit

Tested(ICTested)

Productionof


Productionof


Productionof


andIntegratedCircuit

Tested(ICTested)

3.

Thesignificantprivilegeare

3.1

Exem

ptionfromcorporateincometaxonnetincome

derivedfrom

theprom

otedoperationandexem

ption

fromincometaxondividendspaidfromtheprom

oted

operationswhicharetaxexem

ptedthroughoutthe

periodinwhichthecorporateincometaxisexempted.

8years

8years

8years

7years

8years

3.2

Exem

ptionfromim

portdutyonmachineryasapproved

bytheBoard.

Granted

Granted

Granted

Granted

Granted

4.

Dateoffirstearningoperatingincome

3January2005

10January2006

10May2010

1Septem

ber2010

Hasnotyetstarted

utilisingtheprivileges.





Duringtheyear2012,thesubsidiarieswereapprovedbytheBoardofinvestmenttoterminatethepromotionalcertificatesno.112/2541,1594(2)/2545,and2093(6)/2548.

TheCompany’soperatingrevenuesfortheyears2013and2012couldbedividedaccordingtopromotedandnon-promotedoperationsasfollows:

(Unit:ThousandBaht)

Promoted operations Non-promoted operations Total2013 2012 2013 2012 2013 2012

SalesDomesticsales - 2,307 11,771 9,461 11,771 11,768Exportsales 7,807,506 7,172,670 1,194 8,419 7,808,700 7,181,089

Totalsales 7,807,506 7,174,977 12,965 17,880 7,820,471 7,192,857

27. Segment information

Operatingsegmentinformationisreportedinamannerconsistentwiththeinternalreportsthatareregularlyreviewedbythechiefoperatingdecisionmakerinordertomakedecisionsabouttheallocationofresourcestothesegmentandassessitsperformance.

Formanagementpurposes,theCompanyanditssubsidiariesareorganisedintobusinessunitsbasedontheirproductsandservicesandhavetworeportablesegmentsasfollows:

1. ThePrintedCircuitBoardAssembly(PCBA)Segment,whichproducesandsellsPrintedCircuitBoardAssembly(PCBA).

2. TheIntegratedCircuit(IC)Segment,whichproducesandsellsIntegratedCircuit(IC).

Nooperatingsegmentshavebeenaggregatedtofromtheabovereportableoperatingsegments.

Thechiefoperatingdecisionmakermonitorstheoperatingresultsofthebusinessunitsseparatelyforthepurposeofmakingdecisionsaboutresourceallocationandassessingperformance.Segmentperformanceismeasuredbasedonoperatingprofitorlossandtotalassetsandonabasisconsistentwiththatusedtomeasureoperatingprofitorlossandtotalassetsinthefinancialstatements.

Thebasisofaccountingforanytransactionsbetweenreportablesegmentsisconsistentwiththatforthirdpartytransactions.

Thefollowingtablespresentrevenue,profitandtotalassetsinformationregardingtheCompanyanditssubsidiaries’operatingsegmentsfortheyearended31December2013and2012,respectively.



(Unit:MillionBaht)

Yearended31December2013

Printed Circuit Board

Assembly (PCBA)

Integrated Circuit (IC) Other Total reportable

segments Eliminations Total

Revenuefromexternalcustomers 11,604 5,922 141 17,667 - 17,667Inter-segmentrevenue 3,701 1,056 1,268 6,025 (6,025) -

Totalrevenue 15,305 6,978 1,409 23,692 (6,025) 17,667

Segmentprofit 1,587 382 33 2,002 - 2,002Interestrevenue 165Insurancecompensationincome 942Otherincome 378Sellingexpenses (126)Administrativeexpenses (760)Lossonexchange (60)Lossontaxassessments (110)Otherexpenses (31)Interestexpenses (1)Incometaxexpenses (62)

Profitfortheyear 2,337

SegmenttotalassetsAdditionstoproperty,plantandequipment,andlandleaseholdrights 1,148 135 4 1,287 - 1,287

(Unit:MillionBaht)

Yearended31December2012

Printed Circuit Board

Assembly (PCBA)

Integrated Circuit (IC) Other Total reportable

segments Eliminations Total

Revenuefromexternalcustomers 11,456 5,543 234 17,233 - 17,233Inter-segmentrevenue 4,150 1,071 1,858 7,079 (7,079) -

Totalrevenue 15,606 6,614 2,092 24,312 (7,079) 17,233

Segmentprofit 800 846 37 1,683 - 1,683Interestrevenue 171Insurancecompensationincome 400Gainonexchange 168Otherincome 416Sellingexpenses (133)Administrativeexpenses (880)Lossontaxassessments (64)Otherexpenses (32)Incometaxexpenses (119)

Profitfortheyear 1,610

SegmenttotalassetsAdditionstoproperty,plantandequipment 534 1,008 1 1,543 - 1,543




Geographicinformation

Revenuefromexternalcustomersisbasedonlocationsofthecustomers.

(Unit:ThousandBaht)

2013 2012RevenuefromexternalcustomersMalaysia 5,336,104 5,300,848HongKong 2,732,427 3,615,907UnitedStatesofAmerica 2,180,201 3,065,203China 1,704,177 1,301,534Singapore 1,705,270 931,186Others 4,008,821 3,018,091

Total 17,667,000 17,232,769

Non-currentassets(otherthandeferredtaxassets)Thailand 4,761,491 4,638,306China 1,901,950 1,972,769Cambodia 153,418 -UnitedStatesofAmerica 32,336 36,152Others 11,272 11,252

Total 6,860,467 6,658,479

Majorcustomers

Fortheyear2013,theCompanyanditssubsidiarieshaverevenuefrom5majorcustomersinamountofBaht8,800million,arisingfromsalesbythePrintedCircuitBoardAssembly(PCBA)segmentandtheIntegratedCircuit(IC)segment,(2012:Baht9,762millionderivedfrom5majorcustomers,arisingfromsalesbythePrintedCircuitBoardAssembly(PCBA)segmentandtheIntegratedCircuit(IC)segment).

28. Provident fund

TheCompany,thesubsidiariesandtheiremployeeshavejointlyestablishedaprovidentfundinaccordancewiththeProvidentFundActB.E.2530.BothemployeesandtheCompanyorthesubsidiariescontributetothefundmonthlyattheratesof3.0-7.5percentofbasicsalary.Thefund,whichismanagedbySCBAssetManagementCompanyLimited,willbepaidtoemployeesuponterminatinginaccordancewiththefundrules.Duringtheyear2013,totalamountofapproximatelyofBaht61million(2012:Baht53million)hadbeencontributedtothefundbytheCompanyanditssubsidiaries,andBaht31millionhadbeencontributedbytheCompany(2012:Baht24million).



29. Dividend paid

Duringtheyears2013and2012,theCompanyanditssubsidiarieshaddividendpaymentsasfollows:

Approved byTotal dividends Dividend per share(Million Baht) (Baht)

TheCompanyFinaldividendsfor2011 AnnualGeneralMeetingofthe

shareholderson30April2012805 1.00

Interimdividendsfor2012 BoardofDirectors’Meetingon8November2012

402 0.50

Totalfortheyear2012 1,207 1.50

Finaldividendsfor2012 AnnualGeneralMeetingoftheshareholderson30April2013

805 1.00

Interimdividendsfor2013 BoardofDirectors’Meetingon13November2013

402 0.50


SubsidiarycompaniesHanaSemiconductor(Ayutthaya)CompanyLimitedFinaldividendsfor2011 AnnualGeneralMeetingofthe

shareholderson17April2012216 1.80

Totalfortheyear2012 216 1.80


720 6.00

Interimdividendinrespectoftheincomefortheperiodfrom1January2013to30June2013

BoardofDirectors’meetingon16August2013

420 3.50


HanaSemiconductor(BKK)CompanyLimited


50 0.5

Interimdividendinrespectoftheincomefortheperiodfrom1January2013to30April2013

BoardofDirectors’meetingon3May2013

300 3.00

Interimdividendinrespectoftheincomefortheperiodfrom1January2013to31August2013

BoardofDirectors’meetingon26August2013

175 1.75

Totalfortheyear2013 525 5.25




30. Commitments and contingent liabilities

30.1 Capitalcommitments

Asat31December2013,theCompanyanditssubsidiarieshadcapitalcommitmentsrelatingtoacquisitionsofmachineryofapproximatelyUSD2.0millionorequivalenttoatotalofBaht66.2million.(2012:USD3.1millionorequivalenttoBaht96.4million)andtheCompanyonlyofapproximatelyBaht62.6million(2012:Baht19.8million).Inaddition,theCompanyhadcapitalcommitmentsrelatingtobuildingofofficebuildingofapproximatelyBaht5million.

Inaddition,theCompanyenteredintoaconstructionagreementwithanunrelatedcompanytobuildanewmanufacturingplantlocatedinSahaPathanaIndustrialEstateinLumphunProvinceduringtheperiod.Theagreementisfortheperiodfrom2January2013to31March2014whichtheCompanyistomakepaymentsofapproximatelyBaht47millioneachmonth.Asat31December2013,theCompanyhadcommitmentsofBaht170million.

30.2 Operatingleasecommitments

TheCompanyoperatesitsbusinessinBangkokonaleasedpremise,theleaseagreementofwhichismadebetweenthelandlordandarelatedcompany.Theleaseisforaperiodfromtheyear1986uptotheyear2014withtheannualleasepaymentofapproximatelyBaht0.2millionintheyear1992andsubjecttoanincreaseattherateof10%perannum.TheleasepaymentratehasbeenchangedtoBaht0.1millionpermonthsinceMarch2011.

Inaddition,anoverseassubsidiaryenteredintothefactoryleaseagreementwithanunrelatedcompany.Theleaseisforaperiodfromtheyear2013uptotheyear2015withtheannualleasepaymentofapproximatelyRMB0.8million.

30.3 Marketingsupportiveserviceagreement

Sincetheyear2001,theCompanyandthreesubsidiarycompaniesenteredintomarketingsupportiveserviceagreementwithanoverseassubsidiarycompany.Underthatagreement,theCompanyandthethreesubsidiarycompanieshavetopayservicefeestothatsubsidiarycompanyattheratesstipulatedintheagreement.

30.4 Guarantees

Asat31December2013,therewereoutstandingbankguaranteesofapproximatelyBaht132million(2012:Baht256million)andtheCompanyonly:Baht92million(2012:Baht223million)issuedbybanksonbehalfoftheCompanyanditssubsidiariesinrespectofcertainperformancebondsasrequiredinthenormalcourseofbusinessoftheCompanyandthesubsidiaries.TheseincludedlettersofguaranteeamountingtoBaht77million(2012:Baht208million)tobesecurityforthetaxassessmentsoftheCompanymadebytheRevenueDepartment(asdiscussedinNote29.5)andBaht55milliontoguaranteeelectricityuses,amongothers(2012:Baht48million).

30.5 Taxassessments

Duringtheyear2003,theCompanyreceivedanotificationofacorporateincometaxassessmentfortheyear1997fromtheRevenueDepartmentfornotallocatinginterestexpensesandlossonexchangerateofloanstothepromotedoperations,causingtheunderrecordingofcorporateincometaxfortheyear1997,whichtogetherwithrelatedpenaltyandsurchargeamountedtoBaht150million.TheCompanydidnotagreewiththeassessmentandappealedittotheTaxTribunal.InNovember2007,theTaxTribunalrejectedtheappeal.TheCompanydidnotagreewiththeTaxTribunalandthereforeappealedtotheSupremeCourt.InSeptember2013,theSupremeCourt



orderedtheCompanytopaythetaxassessmentfortheyear1997inaccordancewiththerulingoftheCentralTaxCourt,excepttodeduct50percentofthepenalty.Thus,thetaxliabilitiestogetherwithrelatedpenaltyandsurchargeareapproximatelyBaht125million.TheCompanyhaspreviouslyrecordedfullprovisionforlossontaxassessmentofBaht150millionandthereforerecordedthereversalofpenaltyofBaht25millionasotherincomeintheincomestatementfortheyearended31December2013.TheCompanypaidthetaxassessmenttotheRevenueDepartmentinOctober2013.

Duringthesecondquarterandthethirdquarterof2012,theCompanyreceivednotificationsofcorporateincometaxassessmentsfortheyears2001and2002fromtheRevenueDepartmentforoverallocationofadministrativeexpenses,interestexpensesandlossonexchangeratetothepromotedoperations,andoverutilisationoflossescarriedforward,causingtheunderrecordingofcorporateincometaxfortheyears2001and2002,whichtogetherwithrelatedpenaltyandsurchargeamountedtoapproximatelyBaht20millionandBaht44million,respectively.TheCompanyrecordedthelossontaxassessmentstotalingBaht64millionintheincomestatementfortheyearended31December2012.TheCompanydidnotagreewiththeassessmentsandappealedthemtotheBoardofAppealson28June2012and28September2012.Currently,theCompanyisintheprocessofappealingtotheBoardofAppeals.TheCompanyexpectstheBoardofAppealstoreversetheassessmentsmadebytheRevenueDepartment,withtheresultthattheCompanywillnotneedtomakeanytaxpayment.

Inaddition,duringthethirdquarterof2013,theCompanyreceivedanotificationofcorporateincometaxassessmentfortheyear2003fromtheRevenueDepartmentforoverallocationofadministrativeexpenses,interestexpensesandlossonexchangeratetothepromotedoperations,andoverutilisationoflossescarriedforward,causingtheunderrecordingofcorporateincometaxfortheyear2003,whichtogetherwithrelatedpenaltyandsurchargeamountedtoapproximatelyBaht40million.TheCompanyrecordedsuchlossontaxassessmentintheincomestatementfortheyearended31December2013.TheCompanypaidtheassessedtaxandrelatedsurchargetotalingBaht27millionon24September2013,andappealedtheremainingpenaltyofBaht13milliontotheBoardofAppeals,inordertoreducethepenalty.

AsaresultoftheSupremeCourt’sdecisionregardingtheabovetaxassessmentfortheyear1997,forprudentreasontheCompanyassesseditstaxliabilitiesasaresultofoverutilisationoflossescarriedforwardinitstaxcomputationfortheyear2004,andrecordedprovisionsfortaxassessmentfortheyear2004amountingtoBaht70millionincludedinotherexpensesintheincomestatementfortheyearended31December2013.

Asat31December2013,theCompanyhasrecordedprovisionforlossontaxassessmentstotalingapproximatelyBaht148million(31December2012:Baht215million)andhasplacebankguaranteesassecurityagainsttheassessments.

31. Financial instruments

31.1 Financialriskmanagement

TheCompany’sanditssubsidiaries’financialinstruments,asdefinedunderThaiAccountingStandardNo.107“FinancialInstruments:DisclosureandPresentations”,principallycomprisecashandcashequivalents,tradeandotherreceivables,investments,tradeandotherpayablesandshort-termloans.Thefinancialrisksassociatedwiththesefinancialinstrumentsandhowtheyaremanagedisdescribedbelow.




Creditrisk

TheCompanyanditssubsidiariesareexposedtocreditriskprimarilywithrespecttotradeandotherreceivables.TheCompanyanditssubsidiariesmanagetheriskbyadoptingappropriatecreditcontrolpoliciesandproceduresandthereforedonotexpecttoincurmaterialfinanciallosses.Inaddition,theCompanyanditssubsidiariesdonothavehighconcentrationsofcreditrisksincetheyhavealargecustomerbase.Themaximumexposuretocreditriskislimitedtothecarryingamountsofreceivablesasstatedinthestatementoffinancialposition.

Interestraterisk

TheCompany’sanditssubsidiaries’exposuretointerestrateriskrelatesprimarilytotheircashatfinancialinstitu-tions,short-terminvestmentsandshort-termborrowings.Mostoftheirfinancialassetsandliabilitiesbearfloatinginterestrates,orfixedinterestrateswhichareclosetothemarketrate.

Significantfinancialassetsandliabilitiesclassifiedbytypeofinterestratesaresummarisedinthetablebelow,withthosefinancialassetsandliabilitiesthatcarryfixedinterestratesfurtherclassifiedbasedonthematuritydates,orthere-pricingdateifthisoccursbeforethematuritydate.

Consolidated financial statements as at 31 December 2013Fixed interest

rate within one year

Floating interest rate

Non-interest bearing Total Effective

interest rate

(Million Baht) (% p.a.)FinancialassetsCashandcashequivalents 1,371 2,464 351 4,186 0.001-2.86Short-terminvestments 2,366 47 111 2,524 2.95-9.75Tradeandotherreceivables - - 3,241 3,241 -Insuranceclaimreceivable - - 12 12 -

3,737 2,511 3,715 9,963

FinancialliabilitiesShort-termloansfromfinancialinstitution - 16 - 16 3.03-3.64Tradeandotherpayables - - 2,485 2,485 -

- 16 2,485 2,501

Consolidated financial statements as at 31 December 2012Fixed interest



Non-interest bearing Total Effective

interest rate

(Million Baht) (% p.a.)FinancialassetsCashandcashequivalents 1,268 1,503 341 3,112 0.001-2.85Short-terminvestments 2,219 19 132 2,370 0.15-9.38Tradeandotherreceivables - - 2,764 2,764 -

3,487 1,522 3,237 8,246

FinancialliabilitiesShort-termloansfromfinancialinstitution - 24 - 24 1-1.35Tradeandotherpayables - - 2,088 2,088 -

- 24 2,088 2,112



Separate financial statements as at 31 December 2013Fixed interest



Non-interest bearing

Total Effective interest rate

(Million Baht) (% p.a.)FinancialassetsCashandcashequivalents - 316 4 320 0.1-0.875Tradeandotherreceivables - - 1,447 1,447 -

- 316 1,451 1,767

FinancialliabilitiesTradeandotherpayables - - 1,439 1,439 -

- - 1,439 1,439

Separate financial statements as at 31 December 2012Fixed interest



Non-interest bearing

Total Effective interest rate

(Million Baht) (% p.a.)FinancialassetsCashandcashequivalents - 92 2 94 0.1-0.875Tradeandotherreceivables - - 1,262 1,262 -

- 92 1,264 1,356

FinancialliabilitiesTradeandotherpayables - - 775 775 -

- - 775 775

Foreigncurrencyrisk

TheCompany’sanditssubsidiaries’exposuretoforeigncurrencyriskarisemainlyfromtradingtransactionsandborrowingsthataredenominatedinforeigncurrencies.TheCompanyanditssubsidiariesseektoreducethisriskbyenteringintoforwardexchangecontractswhentheyconsiderappropriate.Generally,theforwardcontractswillmaturewithinoneyear.

Thebalancesoffinancialassetsandliabilitiesdenominatedinforeigncurrenciesasat31December2013and2012aresummarisedbelow.




Foreign currency

Financial assets as at 31 December

Financial liabilitiesas at 31 December

Average exchange rate as at 31 December

2013 2012 2013 2012 2013 2012(Million) (Million) (Million) (Million) (Baht per foreign currency unit)

ChinaYuan 288 318 85 102 5.4087 4.9164USDollar 201 165 12 59 32.8136 30.6316JapanYen 90 64 5 5 0.3130 0.3545IndianRupee 43 45 - - 0.5289 0.5597Euro 7 9 - - 45.0217 40.5563HongKongdollar 4 3 - 1 4.2316 3.9510PoundSterling 3 3 - - 53.9162 49.3458Australiadollar 2 2 1 1 29.1776 31.7757SingaporeDollar 2 2 - - 25.8826 25.0340Brazilianreal 2 2 - - 13.7700 15.1800

Asat31December2013and2012,thetwooverseassubsidiarycompanieshadoutstandingforwardexchangecontracts,ofwhichdetailsarepresentedbelow.

As at 31 December 2013Sold amount Contractual maturity date Contractual exchange rate for amount sold(Million USD) (Baht per USD)

10 27January2014 32.8510 4February2014 31.2210 28February2014 31.8510 28February2014 32.0510 3March2014 32.4920 15January2014 31.4520 15January2014 31.4420 31January2014 32.23

(MillionEuro) (USDperEuro)3 12May2014 1.35

As at 31 December 2012Sold amount Contractual maturity date Contractual exchange rate for amount sold(Million USD) (Baht per USD)

10 4March2013 31.5710 26March2013 31.1720 13March2013 30.8020 13March2013 30.8020 28March2013 31.22

(MillionEuro) (USDperEuro)5 20May2013 1.28



Inaddition,thesubsidiarycompanyenteredintoalinkedassetswapagreementwithanoverseasbank.Thedetailsoftheswapagreementoutstandingasat31December2012asfollows:

As at 31 December 2012

Swap agreementNotional amount Contractual

maturity date Yield to maturity Fair value gain (loss)

(Million USD) (Percent) (Million Baht)Creditdefaultswap-quotedbonds

2 20June2013 1.43 (0.75)

31.2 Fairvalueoffinancialinstruments

SincethemajorityoftheCompany’sanditssubsidiaries’financialinstrumentsareshort-terminnatureandcarryfloatinginterestrateortheinterestrateclosetomarketrates,theirfairvalueisnotexpectedtobemateriallydifferentfromtheamountspresentedinthestatementsoffinancialposition.

Afairvalueistheamountforwhichanassetcanbeexchangedoraliabilitysettledbetweenknowledgeable,willingpartiesinanarm’slengthtransaction.Thefairvalueisdeterminedbyreferencetothemarketpriceofthefinancialinstrumentorbyusinganappropriatevaluationtechnique,dependingonthenatureoftheinstrument.

32. Capital management

TheprimaryobjectiveoftheCompany’scapitalmanagementistoensurethatithasappropriatecapitalstructureinordertosupportitsbusinessandmaximiseshareholdervalue.Asat31December2013,theGroup'sdebt-to-equityratiowas0.21:1(2012:0.20:1)andtheCompany'swas0.26:1(2012:0.19:1).

33. Prior year’s adjustment

InApril2013,thesubsidiaryreceivedinformationfortheclaimsonitspropertydamagefromtheinsurancecompany,causingittoreconsiderandrecomputethecorporateincometaxfortheyear2012.Inthisregard,thesubsidiaryrecordedadditionalincometaxexpensesofBaht50.2million.TheCompanythereforerestatedtheconsolidatedfinancialstatementsasat31December2012toreflecttheadjustmentofincometaxofthesubsidiary.TheadjustmentresultedinaBaht6.7milliondecreaseinothercurrentassets,aBaht43.5millionincreaseincorporateincometaxpayable,aBaht50.2milliondecreaseinunappropriatedretainedearningsandaBaht50.2millionincreaseinincometaxexpenses.Thecumulativeeffectoftheprioryear’sadjustmenthasbeenpresentedundertheheadingof“Cumulativeeffectoftheprioryear’sadjustment”inthestatementofchangesinshareholders’equity.

34. Event after the reporting period

On20February2014,themeetingoftheBoardofDirectorsoftheCompanyNo.1/2014passedtheresolutionapprovingthefinaldividendpaymentfortheyear2013totheCompany'sshareholdersatBaht1pershare.Thedividendwillbepaidtotheshareholderson16May2014.

ThedividendpaymentwilllaterbeproposedforapprovalintheAnnualGeneralMeetingoftheCompany'sshareholders.

35. Approval of financial statements

ThesefinancialstatementswereauthorisedforissuebytheCompany’sBoardofDirectorson20February2014.


Documents

HANA: Hana Microelectronics Public Company Limited ... · PDF fileHana Microelectronics Public Company Limited ANNUAL REPORT 2013 1. Dear Shareholder, The year 2013 has been a challenging