UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2014

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-14542

ASIA PACIFIC WIRE & CABLE

CORPORATION LIMITED

(Exact name of Registrant as specified in its charter)

Bermuda

(Jurisdiction of incorporation or organization)

7/Fl. B, No. 132, Sec. 3

Min-Sheng East Road

Taipei, 105, Taiwan

Republic of China

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Common Shares, par value 0.01 per share	NASDAQ Global Market

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

13,819,669 Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  Large accelerated Filer ¨ Accelerated filer ¨  Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:  U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board x  Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.     Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨ No x

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FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Annual Report on Form 20-F contain some forward-looking statements.  Forward-looking statements give our current beliefs or expectations or forecasts of future events.  You can identify these statements by the fact that they do not relate strictly to historical or current facts.  Such statements may include words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.

Such statements are not promises or guarantees and are subject to a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements.  Important factors that could cause or contribute to such differences include our ability to maintain and develop market share for our products; global, regional or national economic and financial conditions the recent global drop in demand for and the pricing of commodities, including copper, our principal raw material, and their individual or collective impact on demand for our products and services; the introduction of competing products or technologies; our inability to successfully identify, consummate and integrate acquisitions; our potential exposure to liability claims; the uncertainty and volatility of the markets in which we operate; changes in laws or regulations applicable to the Company in the markets in which we conduct business; the availability and price of copper, our principal raw material; our ability to negotiate extensions of labor agreements on acceptable terms and to successfully deal with any labor disputes; our ability to service and meet all requirements under our debt, and to maintain adequate credit facilities and credit lines, in certain markets, our ability to compete effectively with state-owned enterprises (“SOEs”), which may receive governmental subsidies to enhance results or receive preferred vendor status in state controlled projects, our ability to make payments of interest and principal under our existing and future indebtedness; our ability to increase manufacturing capacity and productivity; the fact that we have operations outside the United States that may be materially and adversely affected by acts of terrorism, war and political and social unrest, or major hostilities; increased exposure to political and economic developments, crises, instability, terrorism, civil strife, expropriation and other risks of doing business in foreign markets; economic consequences arising from natural disasters and other similar catastrophes, such as floods, earthquakes, hurricanes and tsunamis; the fact that Asia Pacific Wire & Cable Corporation Limited (“APWC” or the “Company”) is a holding company that depends for income upon distributions from operating subsidiaries, most of which are not wholly-owned and for which there may be restrictions on the timing and amount of distributions; price competition and other competitive pressures; the impact of climate change on our business and operations and on or customers; tax inefficiencies associated with our cross-border operations, including without limitation, limitations on our ability to utilize net losses within our group of Companies for income tax purposes; fluctuations in currency, exchange and interest rates, operating results and the impact of technological changes and other factors that are discussed in this report and in our other filings made with the Securities and Exchange Commission (the “SEC” or the “Commission”).

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In particular, these statements include, among other things, statements relating to:

• our business strategy;

• our prospects for future revenues and profits in the markets in which we operate;

• the impact of political, legal or regulatory changes or developments in the markets in which we do business;

• our dependence upon the level of business activity and investment by our customers for the generation of our sales revenue;

• our reliance on our majority shareholder for research and development relating to our product lines

• the fact that our Common Shares are traded on a national exchange in the United States;

• our dependence on a limited number of suppliers for our raw materials and our vulnerability to fluctuations in the cost of our raw materials; and

• our liquidity.

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We undertake no obligation to update any forward-looking statements or other information contained in this Annual Report, whether as a result of new information, future events or otherwise, except as required by law.  You are advised, however, to consult any additional disclosures we make in our filings with the SEC.  Also note that we provide a cautionary discussion of risks and uncertainties under the “Risk Factors” section of this Annual Report.  These are factors that we think could cause our actual results to differ materially from expected results.  Other factors besides those listed there could also adversely affect us.

This discussion is permitted by the Private Securities Litigation Reform Act of 1995.

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OTHER CONVENTIONS

Unless otherwise specified, all references in this Annual Report to “Thailand” are to the Kingdom of Thailand, all references to “Singapore” are to The Republic of Singapore, all references to “Taiwan” are to Taiwan, The Republic of China, all references to “China” and to the “PRC” are to The People’s Republic of China (for the purpose of this Annual Report, excluding Hong Kong and Macau), all references to “Australia” are to the Commonwealth of Australia and all references to the “U.S.” are to the United States of America.

Most measurements in this Annual Report are given according to the metric system.  Standard abbreviations of metric units (e.g., “mm” for millimeter) have been employed without definitions.  All references in this Annual Report to “tons” are to metric tons, which are equivalent in weight to 2,204.6 pounds.

With respect to measurements relating to the manufacture of wire and cable products, references to “pkm” are to kilometers of twisted pairs of copper wire.

Dollar amounts in this Annual Report are expressed in thousands ($000), except where otherwise indicated or with respect to earnings per share.

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Part I

Item 1: Identity of Directors, Senior Management and Advisers

(Not applicable)

Item 2: Offer Statistics and Expected Timetable

(Not applicable)

Item 3: Key Information

3.1         Selected Consolidated Financial Data

The following selected consolidated financial data is derived from the consolidated financial statements of the Company for the years ended December 31,2012, 2013 and 2014, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Until and including our consolidated financial statements included in our annual report on Form 20-F for the year ended December 31, 2012, we prepared our consolidated financial statements in accordance with generally accepted accounting principles accepted in the United States (“U.S. GAAP”). As required by First Time Adoption of International Financial Reporting Standards, or IFRS 1, financial results for the year ended December 31, 2012 were adjusted in our annual report for the fiscal year ended December 31, 2013 (the “2013 Annual Report”) in accordance with IFRS and differ from the results reported in the annual reports filed with the Commission prior to the 2013 Annual Report.

The selected data set forth below should be read in conjunction with, and is qualified in its entirety by, the discussion in “Item 5:  Operating and Financial Review and Prospects” and the consolidated financial statements and the notes thereto included in “Item 18:  Financial Statements.”

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	For the Year Ended December 31,
	2014			2013			2012
	(in US$ thousands)
Income Statement Data:
Net sales	$	451,327		$	460,676		$	462,265
Costs of sales		(414,583	)		(408,860	)		(411,786	)
Gross profit		36,744			51,816			50,479
Other operating income		89			181			5,825
Selling general & administrative expenses		(29,479	)		(34,559	)		(34,593	)
Other operating expenses		(2,168	)		(196	)		(888	)
Operating profit		5,186			17,242			20,823
Finance cost		(1,697	)		(1,734	)		(2,195	)
Finance income		1,167			1,306			1,322
Share of profit of an associate		(338	)		(211	)		(21	)
Gain on disposal of investment		—			232		­­­­­­—
Loss on disposal of a subsidiary		(178	)		—			—
Gain on liquidation of subsidiaries	­­­­­­—			­­­­­­—				279
Exchange gain (loss)		(206	)		(1,245	)		2,411
Other income		1,150			1,454			1,933
Other expenses		(49	)		(260	)	­­­­­­—
Income from continuing operations before income taxes		5,035			16,784			24,552
Income taxes expenses		(2,274	)		(5,518	)		(7,578	)
Net income	$	2,761		$	11,266		$	16,974
Net income attributable to non-controlling interests	$	2,189		$	5,419		$	7,280
Net income attributable to APWC		572			5,847			9,694
Basic and diluted earnings per share(1)	$	0.04		$	0.42		$	0.70

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___________

(1) The calculation of the earnings per share is based on 13,830,751, 13,820,200 and 13,819,669 basic and diluted weighted common shares issued and outstanding for the year ended December 31, 2012, 2013 and 2014, respectively.

	As of December 31,
	2014		2013		2012
	(in US$ thousands)
Balance Sheet Data:
Cash and cash equivalents	$	68,863	$	62,509	$	72,816
Working capital		169,533		174,124		181,805
Total assets		378,672		364,635		391,751
Total debt		55,400		43,521		59,577
Net assets		221,211		228,127		237,160
Capital stock		138		138		138
Total APWC shareholders’ equity		153,032		157,248		162,102

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3.2 Exchange Rates

Unless otherwise specified, all references in this Annual Report to “$,” “U.S. dollars” or “US$” are to United States dollars; all references to “Bt,” “Thai Baht” or “Baht” are to Baht, the legal tender currency of Thailand; all references to “S$” are to Singapore dollars, the legal tender currency of Singapore; all references to “A$” are to Australian dollars, the legal tender currency of Australia; and all references to “RMB” are to Chinese Renminbi, the legal tender currency of China.

Unless otherwise noted, for the convenience of the reader, translations of amounts from Baht, Singapore dollars, Renminbi and Australian dollars to U.S. dollars have been made at the respective noon buying rates in New York City for cable transfers in those currencies as certified for customs purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”) on December 31, 2014.  The respective Noon Buying Rates on December 31, 2014 were US$ 1.00 = Bt 32.90; S$ 1.324; RMB 6.205; and A$1.224.  The respective Noon Buying Rates on April 3, 2015, the latest practicable date before publication of this Annual Report, were US$1.00 = Bt32.38; S$1.349; RMB6.193 and A$1.308.  No representation is made that the foreign currency amounts could have been or could be converted into U.S. dollars on these dates at these rates or at any other rates.

Sources:  Federal Reserve Bulletin, Board of Governors of the Federal Reserve System.  Federal Reserve Statistical Release H.10(512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

Thailand

The Thai Baht is convertible into foreign currencies and is subject to a managed float against a basket of foreign currencies, the most significant of which is the U.S. dollar.  The composition of the basket for determining the value of the Baht is not made public by the Bank of Thailand.  The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Thai Baht.  No representation is made that the Baht or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Baht, as the case may be, at any particular rate or at all.

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Year Ended December 31,	At Period End		Average(1)		High		Low
	(Bt per $1.00)
2010		30.16		31.66		33.18		29.49
2011		31.51		30.46		31.76		29.68
2012		30.59		30.99		31.87		30.29
2013		32.68		30.85		32.85		28.60
2014		32.90		32.54		33.08		31.74

(1) Average means the average of the Noon Buying Rates on the last day of each month during a year.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Month	High		Low
October 2014		32.62		32.24
November 2014		32.85		32.67
December 2014		33.02		32.75
January 2015		32.95		32.51
February 2015		32.66		32.34
March 2015		32.94		32.34

Sources:  Federal Reserve Bulletin, Board of Governors of the Federal Reserve System.  Federal Reserve Statistical Release H.10(12), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

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Singapore

The Singapore dollar is convertible into foreign currencies and floats against a trade-weighted basket of foreign currencies, the composition of which is not made public by Singapore’s central bank, the Monetary Authority of Singapore, but of which the U.S. dollar is a component.  The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Singapore dollar.  No representation is made that the Singapore dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Singapore dollars, as the case may be, at any particular rate or at all.

	At Period End		Average(1)		High		Low
	(S$ per $1.00)
2010		1.289		1.359		1.423		1.282
2011		1.295		1.260		1.314		1.202
2012		1.221		1.245		1.294		1.216
2013		1.262		1.253		1.283		1.220
2014		1.324		1.270		1.324		1.238

______________

(1) Average means the average of the Noon Buying Rates on the last day of each month during a year.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Month	High		Low
October 2014		1.285		1.271
November 2014		1.306		1.289
December 2014		1.324		1.305
January 2015		1.353		1.326
February 2015		1.361		1.345
March 2015		1.391		1.362

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Sources:  Federal Reserve Bulletin, Board of Governors of the Federal Reserve System.  Federal Reserve Statistical Release H.10(12), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

China

The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign currencies, including the conversion rate limitations on capital transfers and through restrictions on foreign trade and other regulatory impediments to the free transferability of capital.  The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Renminbi.  No representation is made that the Renminbi or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

Year Ended December 31,	At Period End		Average(1)		High		Low
	(RMB per $1.00)
2010		6.600		6.760		6.833		6.600
2011		6.294		6.460		6.636		6.294
2012		6.230		6.299		6.338		6.222
2013		6.054		6.141		6.244		6.054
2014		6.205		6.170		6.259		6.040

_____________

(1) Average means the average of the Noon Buying Rates on the last day of each month during a year.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Month	High		Low
October 2014		6.138		6.111
November 2014		6.143		6.112
December 2014		6.226		6.149
January 2015		6.254		6.187
February 2015		6.270		6.250
March 2015		6.274		6.196

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Sources:  Federal Reserve Bulletin, Board of Governors of the Federal Reserve System.  Federal Reserve Statistical Release H.10 (512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

Australia

The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Australian dollar.  No representation is made that the Australian dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Australian dollars, as the case may be, at any particular rate or at all.

Year Ended December 31,	At Period End		Average(1)		High		Low
	(A$ per $1.00)
2010		0.988		1.087		1.224		0.985
2011		0.976		0.968		1.058		0.907
2012		0.962		0.964		1.032		0.925
2013		1.120		1.048		1.129		0.945
2014		1.224		1.115		1.235		1.054

________________

(1) Average means the average of the Noon Buying Rates on the last day of each month during a year.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Month	High		Low
October 2014		1.153		1.123
November 2014		1.174		1.145
December 2014		1.235		1.174
January 2015		1.289		1.218
February 2015		1.297		1.266
March 2015		1.319		1.271

Sources:  Federal Reserve Bulletin, Board of Governors of the Federal Reserve System.  Federal Reserve Statistical Release H.10 (512), from the website of the Board of Governors of the Federal Reserve System at  http://www.federalreserve.gov.

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3.3 Risk Factors

You should carefully consider the following risks before you decide to buy our Common Shares.  If any one of these risks or uncertainties were to occur, our business, financial condition, results and performance could be seriously harmed and/or the price of our Common Shares might significantly decrease.  The risks and uncertainties described in this Annual Report on Form 20-F are not the only ones facing us.  Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses, results of operations, condition (financial or otherwise) and the value of any investment in our common shares.

3.3.1 The auditors’ reports included in this annual report are prepared by relying on audit work which is not inspected by the Public Company Accounting Oversight Board and, as such, investors may be deprived of the benefits of such inspection

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Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the U.S. Public Company Accounting Oversight Board (“PCAOB”), and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards.  Because the Company has substantial operations within China, our auditor relied on its China affiliates to perform the audit on the Company’s consolidated financial statements in so far as they relate to the condition (financial and otherwise) or results of operations of the Company in China and its overall impact on the consolidated financial statements of the Company as a whole.  The PCAOB is currently unable to conduct inspections of the work of our auditor’s affiliates in China as it is prohibited by the China authorities.  Investors should be mindful that our auditor’s work related to our operations in China is not currently inspected by the PCAOB.

The lack of PCAOB’s inspection of the audit work performed in China prevents the PCAOB from regularly evaluating the audit work of any auditor that is performed in China including the audit work performed by our auditor.  As a result, investors may be deprived of the full benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work.  Investors may lose confidence in our reported financial information and the quality of our consolidated financial statements.

3.3.2 Risks Related to the Continuing Impacts of the Global Economic and Financial Crisis

Shortly after the 2008 global financial and economic crises, the U.S. Federal Reserve Bank (the “U.S. Fed”) and the central banks of most of the leading industrialized nations lowered their short-term interest rates to near zero in an effort to stimulate borrowing and increase economic activity.  The U.S. Fed and certain other of those central banks also undertook a series of government bond repurchase programs to enhance market liquidity and to maintain a very low interest rate environment.  The extremely low cost of borrowing, which has continued for an extremely long period of time, has enhanced liquidity and facilitated borrowing to stimulate investment. Some economists and policymakers have expressed concern that this artificially low interest rate environment will have negative repercussions once interest rates start to rise.  Recently, the U.S. Fed and certain other central banks have curtailed their bond repurchase programs and indicated that one or more increases in short-term borrowing rates may be implemented in 2015 or shortly thereafter.  An increase in U.S dollar borrowing costs could adversely affect our business in the four Asian markets where we have operating plants (Thailand, China, Singapore and Australia).  Our financial statements for our operating subsidiaries in those markets are reported and denominated in local currencies and when translated into US dollars, our reporting currency, these operating subsidiaries would suffer a decrease in reported revenue and operating profits due to foreign currency translation if one takes into account only increased U.S. dollar borrowing costs.  Moreover, our copper purchases are based on U.S. dollar quotations, which means the operating subsidiaries would have to pay more in local currency in order to meet their trade payable obligations.

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Price Volatility for our Principal Raw Material

A comparison of copper prices on the London Metals Exchange (the “LME”), between year-end 2013 and year-end 2014 shows thatthe average price for copper fell from $7,326 per metric ton to $6,860 per metric ton by year-end 2014, representing an 6.4% price decline.  The effect of that decrease has impacted the Company’s ability to improve its overall financial performance.  The decrease in the average LME copper price over 2014 was the principal contributing factor to the drop in 2014 of our ASP (average selling price) compared with 2013.

Copper prices on the LME dropped during the course of the year 2014 to lower than $6,400 per ton. Consistent with industry practice, customers would expect that the selling prices of our products, particularly of copper based wires, would therefore be lower than our product prices at the end of 2013.  The decrease in copper prices and other commodity prices also resulted in a decreased turnover for the entire year, as customers delayed placing orders with the Company or reduced the quantity of such orders in anticipation of a possible further reduction in copper prices.  A further decrease in copper prices would likely have an adverse effect on the revenues of the Company.

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The Company is unable to determine the precise impact of the volatility of copper prices, and the fragile state of the global recovery, on its operations and cash flow, since its operating results are also affected by factors that are, or may be, unrelated to the economic volatility and the downward pressures on commodity prices, such as the completion of routine purchase cycles by customers and the completion, expansion or contraction of large infrastructure projects.  However, the Company is of the opinion that the falling copper prices have negatively affected the Company’s operations and cash flow.  The Company believes that any efforts to forecast likely future performance with any degree of specificity would be fraught with uncertainty.  Accordingly, the Company cautions against placing reliance on any efforts to identify trends for the foreseeable future.

3.3.3 Risks Related to the Common Shares and the Company

Consolidation of Charoong Thai Group Accounts

As of December 31, 2014, the Company effectively owned 50.93% of the issued and outstanding shares of Charoong Thai Wire and Cable Public Company Limited (“Charoong Thai” or “CTW”), a decrease from the Company’s initial ownership percentage which was attributable to the exercise of warrants or conversion of convertible securities by third parties.  The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai.  However, there may be circumstances under which the Company cannot maintain majority ownership of Charoong Thai.  In the event Charoong Thai were to make a further offering of voting securities, or securities convertible into or exchangeable for voting securities, and the Company was not in a position to fund or finance its participation in the offering, the ownership interest of the Company in Charoong Thai could fall below a level necessary for consolidated treatment, and the Company may lose the controlling interest in Charoong Thai.  If that were the case, the accounts of the Charoong Thai group, which includes all of the Company’s Thailand operations, would not be consolidated under IFRS, but instead would be accounted for under the equity method.  In such an event, the Company’s accounts would show a significant decrease in revenue and most categories of assets and liabilities, which events could have a material adverse effect on the value of the Common Shares.

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Potential Illiquidity of Common Shares

Approximately 75.5% of our Common Shares are either unregistered securities or registered securities held by affiliates (or were repurchased by the Company), which are subject to restrictions on trading.  Accordingly, approximately 75.5% of our Common Shares are not fully liquid investments.  APWC has been listed on NASDAQ since April 2011, the volume of trading in our Common Shares has picked up fractionally.  However, the value of our Common Shares may be impacted negatively by their relative illiquidity when compared to the publicly-traded shares of many other issuers.

Control of the Company Rests with Majority Shareholder; Controlled Company Exemption; Risks Related to PEWC

As the majority shareholder, Pacific Electric Wire & Cable Co., Ltd. (“PEWC”), a Taiwanese company, has sufficient votes to control the outcome of any matters presented for a shareholder vote, including the election of a member of the Board of Directors.  PEWC may vote its shares in the Company in the manner that it sees fit.  In addition, subject to applicable securities laws, PEWC may sell, convey or encumber all or a portion of its ownership interest in the Company without regard to the best interests of the other shareholders of the Company except to the extent that it is:  (i) prohibited from engaging in conduct oppressive to non-controlling interests under applicable law and (ii) required to comply with the terms of the Amended and Restated Shareholders’ Agreement dated March 27, 2009 among the Company, PEWC and MSD Credit Opportunity Master Fund, L.P. (“MSDC” (and sometimes referred to as “COF”)) (as the assignee of SOF Investments, L.P. (“SOF”) effective July 2011) (the “Amended and Restated Shareholders Agreement”), a Delaware limited partnership which owned, as of April 25, 2015, beneficially approximately 9.8% of the issued and outstanding Common Shares.

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The Common Shares of the Company are traded on the NASDAQ Global Market tier.  However, as the Company has a more than fifty percent (50%) shareholder, the Company is entitled to rely upon a “controlled company exemption” to the requirement that a company have a board of directors comprised of a majority of independent directors in order to be listed on NASDAQ.  At present, a majority of the board of directors of the Company is affiliated with PEWC.

PEWC was delisted from the Taipei Stock Exchange in 2003 following the disclosure of a major corporate scandal involving fraud and embezzlement by certain former executives of PEWC, one or more of whom are now serving prison sentences for their actions.  Commencing in 2004, PEWC brought a number of actions in different jurisdictions against those former executives and others seeking to recover substantial assets that had been misappropriated.  Some of those actions are ongoing.  PEWC is still seeking to recover financially, and in terms of its market reputation, from the malfeasance of those former executives.  The financial and governance problems experienced by PEWC increase the uncertainty regarding its ability to perform under the Composite Services Agreement between PEWC and the Company, although to date PEWC has met its obligations under that agreement.  (See---section 10.3 Material Contracts).

Limited Trading Volume

Although our Common Shares are traded on the NASDAQ Global Market tier, the trading and demand for our Common Shares has been limited.  As a consequence, shareholders may find that their ability to sell their Common Shares quickly or in substantial amounts is adversely affected by the limited public trading market.  Thinly-traded equity can be more volatile than equity securities traded in an active trading market.  The high and low daily closing prices for our Common Shares during the past 24 months (March 2013 – March 2015) were $4.25 and $2.27, respectively.  In the future, our Common Shares may experience significant price fluctuations which could adversely affect the value of your ownership interest in the Company.

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Disclosure Controls and Procedures and Internal Control over Financial Reporting

We identified a material weakness in our internal control over financial reporting and cannot assure you that such material weakness will be remediated or any additional material weakness will not be identified in the future.  Our failure to maintain an effective system of internal control over financial reporting could result in a material misstatement in our financial statement reports or cause the Company to fail to provide material financial information in a timely manner, which may cause our investors to lose confidence in our reported financial information, and the market price of our Common Shares may be adversely affected.

We are subject to reporting obligations under the U.S. securities laws. Among other things, the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company, including us, to include a report from management on the effectiveness of its internal control over financial reporting in its annual report.

In connection with management’s assessment of the effectiveness of our internal control over financial reporting for the period covered by this annual report, our management has identified a material weakness in our internal control over financial reporting and has concluded that as of December 31, 2014, our disclosure controls and procedures and our internal control over financial reporting were not effective. See “Item 15 — Disclosure Controls and Procedures.” A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In 2014, our material weakness was related to the aggregation of design deficiencies in our controls over the accounting and reporting of derivative transactions as well as the recurring lack of oversight by our personnel with satisfactory knowledge in SEC financial reporting requirements.

Despite our ongoing efforts to remediate the material weaknesses and ensure the integrity of our financial reporting process, we cannot assure you when the material weakness identified in our internal control over financial reporting will be successfully remediated. Further, we cannot assure you that additional weaknesses in our internal control over financial reporting will not be identified in the future. Any repeated failure to maintain satisfactory controls or implement new controls, as necessary, could result in additional material weaknesses which could reasonably be expected to have a material adverse effect on the value of our Common Shares and could adversely impact the Company’s ability to remain current in its periodic report reporting under the Exchange Act. In those circumstances, the Company may be exposed to shareholder or regulatory actions. Further, any such failure could result in material misstatements and adversely affect the results of annual management evaluations regarding the effectiveness of our internal control over financial reporting. In addition, we may require more resources and incur more costs than currently expected to remediate our identified material weakness or any additional material weakness that may be identified in the future, which may adversely affect our results of operations.

Reporting of Financial Results

The Company is currently compliant with its reporting obligations under the Exchange Act.  As a foreign private issuer, the Company is not required by the rules of the Commission to provide financial results on a quarterly or semi-annual basis.  In addition, Bermuda law does not require the Company to provide interim financial information to its shareholders, whether on a quarterly or semi-annual basis.  As such, investors may not have the same access to financial information of the Company as they customarily receive in the case of a domestic issuer disclosing quarterly results on a Form 10-Q.  Under the NASDAQ rules; however, listed issuers are required to report semi-annual unaudited financial results, which the Company has been doing since its listing on NASDAQ.

Potential Conflict of Certain Officers and Directors

In March 2011, the Company appointed a third independent director as required by NASDAQ.  Other than our three independent directors, all of the members of the Board of Directors are also directors or officers or otherwise affiliated with PEWC, the majority shareholder.  Certain of our officers are also affiliated with PEWC.  In each case, they may be subject to potential conflicts of interest.  In addition, certain of our officers and directors who are also officers and/or directors of PEWC may be subject to conflicts of interest in connection with, for example, pursuing corporate opportunities in which we and PEWC or one of its affiliates have competing interests, and in the performance by us and PEWC of our respective obligations under existing agreements, including the Composite Services Agreement (discussed in section 10.3).  In addition, some of these persons will devote time to the business and affairs of PEWC and its affiliates as is appropriate under the circumstances, which could reduce the amount of time available for overseeing or managing our business and affairs.  Notwithstanding any such potential conflicts, however, such individuals, in their capacities as our directors and officers, are subject to fiduciary duties to our shareholders.

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The Bermuda Companies Act 1981, as amended (the “Companies Act”), subjects our officers and directors to certain fiduciary standards in the exercise of their executive and management duties on behalf of the Company.  Under the Companies Act, an officer of ours (which term includes our directors) is subject to a duty of care requiring him to act honestly, in good faith and in the best interests of the Company in the discharge of his duties and to, among other things, give notice to the Board of Directors at the first opportunity of any interest he has in any material contract or proposed material contract with us or any of our subsidiaries.  The Companies Act also prohibits us, subject to certain exceptions, from making loans to any directors without first obtaining the consent of shareholders holding in the aggregate not less than nine-tenths of the total voting rights of all the shareholders having the right to vote at any shareholders meeting.  We do not make any loans to our directors or executive officers in accordance with the provisions of the Sarbanes-Oxley Act of 2002.

Obligations under the Amended and Restated Shareholders Agreement

Pursuant to the original shareholders agreement dated June 28, 2007 (the “Shareholders Agreement”), the Company granted to SOF certain rights and protections (now held by MSDC, as successor-in-interest to SOF, as explained below).  Under the Shareholders Agreement, the Company agreed to indemnify SOF and its partners and certain of its affiliates (the “SOF Indemnified Persons”), for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the Internal Revenue Service (the “IRS”) to be a “controlled foreign corporation” (a “CFC”) or a “passive foreign investment company” (a “PFIC”), as such terms are interpreted and defined under IRS rules and regulations.  The Company has determined that it was not a CFC or PFIC at any time during the 2014 fiscal year and does not believe that it is likely to become a CFC or a PFIC; however, the Company cannot provide any assurances that it will not become a CFC or a PFIC in the future.

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In addition, the Company granted certain registration rights to SOF with respect to its Common Shares (the “Registrable Securities”) in the Shareholders Agreement.  In particular, the Company agreed to use its reasonable best efforts to prepare and file, and cause to go effective, as soon as practicable, a shelf registration statement covering the resale of the Registrable Securities on a delayed or continuous basis.  The Company also agreed to use its reasonable best efforts to keep its shelf registration statement effective until all Registrable Securities have been sold or until all Registrable Securities may be sold without restriction pursuant to Rule 144 promulgated pursuant to the U.S. Securities Act of 1933, as amended (the “Securities Act”).  In addition, the Company granted to SOF two demand registration rights for underwritten offerings and customary piggyback registration rights with regard to the Registrable Securities.  Moreover, the Company agreed to use its reasonable best efforts to cause the Common Shares to be listed on a national “Securities Market,” which means any of the NASDAQ Stock Market, Inc. (Global Market or Global Select Market), the American Stock Exchange LLC (now known as NYSE Amex Equities) or the New York Stock Exchange LLC, not later than January 31, 2009, subject to notice and a sixty (60) day cure period.  All of the costs and expenses of the Company in connection with the fulfillment of its obligations under the Shareholders Agreement were to be paid by the Company, other than underwriting fees, discounts and commissions attributable to the sale of Common Shares held by SOF.

Under the Shareholders Agreement, if the Company failed to fulfill its obligations thereunder, SOF would have a claim for damages against the Company.  No such claim has been made.  In addition, if the Company fulfilled its reasonable best efforts undertakings but failed to meet one or more of the stated goals, SOF would have a put right of their Common Shares to PEWC.  In accordance with those terms, on February 2, 2009, SOF delivered to PEWC notice of its exercise of the put right under the Shareholders Agreement due to the fact that the Common Shares were not listed on a national Securities Market as of January 31, 2009.  On March 27, 2009, SOF sold 51% of its Common Shares to PEWC pursuant to the terms of a share purchase agreement between those parties.  Upon the consummation of that share purchase agreement, SOF held 1,355,415 registered Common Shares of the Company and PEWC held 1,410,739 registered Common Shares, respectively, representing 9.8% and 10.2% of the outstanding Common Shares, with PEWC holding an additional 7,664,615 unregistered Common Shares, giving it an aggregate of 65.6% of the total issued and outstanding Common Shares.  In connection with this transaction, the Company, PEWC and SOF entered into the Amended and Restated Shareholders Agreement, which among other things, granted to the Company an extension for listing the Common Shares on a national Securities Market until February 2011 and maintained for SOF the right to sell its remaining Common Shares to PEWC in the event the Company did not list its Common Shares on a national Securities Market by such time.  In April 2011, the Common Shares of the Company were approved for trading on the NASDAQ Capital Markets tier, which tier does not fit within the definition of a national “Securities Market”, as provided in the Amended and Restated Shareholders Agreement.  As of July 1, 2011, SOF transferred its Common Shares to MSDC, at which time MSDC executed a joinder agreement and became a party to the Amended and Restated Shareholders Agreement and succeeded to the rights and interests of SOF thereunder.  The Company is not aware that MSDC has taken any action with respect to the Common Shares held by it.  The Amended and Restated Shareholders Agreement also provides for those put, registration and indemnification rights set forth above in the description of the Shareholders Agreement and such rights now apply to MSDC in place of SOF.  While the sale of Common Shares by MSDC to PEWC resulted in PEWC holding a higher concentration of Common Shares which may impact liquidity for the other shareholders, the Company does not believe that any definitive impact can be determined.

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In addition, sales of Common Shares held by MSDC and registered under the shelf registration statement, or any registration statement that goes effective following an exercise of demand registration rights, will increase the number of Common Shares available for purchase in the public market and may adversely affect the value of the Common Shares held by other shareholders.  Even without substantial sales by MSDC or PEWC of their respective Registrable Securities, the possibility of such sales may create a “market overhang” that has the effect of depressing the trading price of the Common Shares.

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The Company has also granted to MSDC preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that MSDC may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company.

Holding Company Structure; Potential Restrictions on the Payment of Dividends

We have no direct business operations other than our ownership of the capital stock of our subsidiaries and associate holdings.  While we have no present intention to pay dividends, should we decide in the future to do so, as a holding company our ability to pay dividends and meet our other obligations will depend upon the amount of distributions, if any, received from our operating subsidiaries and other holdings and investments.  Our operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory restrictions.  For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accordance with relevant PRC accounting standards and regulations.  Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds.  These reserves are not distributable as cash dividends.  The foregoing restrictions may also affect our ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.

Requirement to Maintain Effectiveness of the Registration Statement and to List on a National Securities Exchange; Effect of the Put of the MSDC Shares to PEWC

Under the Amended and Restated Shareholders Agreement, MSDC has retained the right to sell its remaining Common Shares (the “MSDC Shares”) to PEWC if the Company does not achieve a listing on a national Securities Market within the time frame provided in the agreement or the Company fails to maintain a listing on a national Securities Market after it has been attained.  The Company’s Common Shares are currently listed on the NASDAQ Global Market tier. In addition, the Company has agreed to maintain the effectiveness of the registration statement on Form F-3, for the benefit of MSDC, and if the Company fails to do so for any period of thirty (30) consecutive trading days or an aggregate of sixty (60) trading days during any twelve month period, then MSDC may, subject to compliance with notice and other procedural requirements, exercise a right to sell its remaining Common Shares to PEWC.  At all times, the Company must exercise its reasonable best efforts to comply with its covenants under the Amended and Restated Shareholders Agreement.  Otherwise, the Company could be subject to a damages claim by MSDC.

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Corporate Matters; Limited Recourse; Limited Enforceability

We are incorporated in and organized pursuant to the laws of Bermuda.  In addition, all of our directors and officers reside outside the United States and our material assets are located outside the United States.  As a result, it may be difficult for investors to effect service of process within the United States upon such persons or to realize against them in courts of the United States upon judgments predicated upon civil liabilities under the United States federal securities laws.  Even if investors are successful in realizing against such persons in courts of the United States, the laws of Taiwan may render such investors unable to enforce the judgment against the Company’s assets or the assets of its officers and directors.  Also, investors may have difficulty in bringing an original action based upon the United States federal securities law against such persons in the Taiwan courts.  Additionally, we have been advised by our legal counsel in Bermuda, Appleby (Bermuda) Limited, that there is doubt as to the enforcement in Bermuda, in original actions or in actions for enforcement of judgments of United States courts, of liabilities predicated upon U.S. federal securities laws, although Bermuda Courts will enforce foreign judgments for liquidated amounts in civil matters subject to certain conditions and exceptions.  As a result, shareholders may encounter more difficulties in enforcing their rights and protecting their interests in the face of actions taken by management, the Board of Directors or controlling shareholders than they would if the Company were organized under the laws of the United States or one of the states therein, or if the Company had material assets located within the United States or some of the directors and officers were resident within the United States.  See “Enforceability of Certain Civil Liabilities” for additional information.

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3.3.4 Risks Relating to Our Business

Risks Relating to Copper

Copper is the principal raw material we use, accounting for a majority of the cost of sales.  We purchase copper at prices based on the average prevailing international spot market prices on the LME for copper for the one month prior to purchase, or the first five days of the current average copper price.  The price of copper is affected by numerous factors beyond our control, including international economic and political conditions, supply and demand, inventory levels maintained by suppliers, actions of participants in the commodities markets and currency exchange rates.  As with other costs of production, changes in the price of copper may affect the Company’s cost of sales.  Whether this has a material impact on our operating margins and financial results depends primarily on the Company’s ability to adjust selling prices to its customers, such that increases and decreases in the price of copper are fully reflected in those selling prices.  Most of our sales of manufactured products reflect the cost of copper used to manufacture those products at the time the products are ordered.  In the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business.  These inventories typically reflect the cost of copper prevailing in the market at the time of purchase.  A long-term decrease in the price of copper would require the Company to revalue its inventory at periodic intervals to the then net realizable value, which could be below cost.  Copper prices have been subject to considerable volatility and it is not always possible to manage our copper purchases and inventory so as to neutralize the impact of copper price volatility.  Accordingly, significant volatility in copper prices could have an adverse effect on our operations.  No assurance can be given that such volatility will not recur.

Risks related to our Customer Base and our Geographic Markets

Our sales of manufactured and distributed products are made primarily to customers that use our products as components in their own products or in construction or infrastructure projects in which they participate.  The volume of our sales is significantly correlated with overall economic conditions in the markets in which we compete, including how much our customers invest in their own product manufacturing or project development.  Increases or decreases in economic activity and investment in the markets where we operate generally will result in higher or lower sales volume and higher or lower net income for the Company.

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Risks relating to Force Majeure Events

Operations and other business conducted at our plants and other facilities are at risk to acts of god consisting of uncontrollable natural and climatic events (often referred to as force majeure events), such as the 2011 flooding in much of Thailand that severely disrupted our manufacturing operations at the Siam Pacific Electric Wire and Cable Ltd. (“Siam Pacific”) plant, a subsidiary 100% controlled by Charoong Thai.  The flooding affected much of our Thai operations and forced the suspension of operations of Siam Pacific for a period of five months resulting in a 20% reduction in product sales in 2011.  The adverse impact of the flooding carried over into 2012.  Since then in Thailand the insurance coverage includes fire and theft, but does not include flood nor losses due to business interruption.

Risks Relating to North Asia Region

Economic Reform Measures in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The PRC government has gradually moved away from a planned economic model and implemented economic reform measures emphasizing decentralization, utilization of market forces in the development of the economy and a high level of management autonomy.  When General Secretary Xi Jinping took office in December 2012, the government decreased its focus on export-oriented activities and placed greater emphasis on building up rural areas in China, including integrating a number of primitive, largely inaccessible agricultural areas into the national economy.  However, many of the reforms are unprecedented and may be subject to revision, modification or termination based on the outcomes of the reform efforts and other considerations, including their impact on societal stability.  There is not sufficient administrative or judicial precedent to allow the Company to determine with any degree of certainty how the reforms will impact our business in China.

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Any Decrease in Real Estate Development and Construction Activities in China May Affect the Company’s Operations or Financial Condition

Our wire and cable products are manufactured and sold in China and are used in the commercial and residential real estate industry and in infrastructure development.  Therefore, the demand for our wire and cable products is affected by the pace of modernization and the growth of the real estate industry in China, which could in turn be affected by a number of factors, such as the level of governmental investment in infrastructure development, the strength of the commercial and residential real estate markets, the level of disposable income, consumer confidence, unemployment rate, interest rates, credit availability and volatility in the stock markets.

To dampen an over-heated real estate market, the PRC government implemented a series of measures in the real estate market.  Beginning in 2011, the PRC government began to curtail real estate credit and the credit curtailment policy remains ongoing for the present. The real estate market in China may also be negatively affected by the reform of the real estate tax system in respect of levying real estate tax on individually owned real estate which is not used for a business purpose, which has already been implemented by certain local government authorities and may be expanded nationwide sometime in the future.

Any decrease in commercial and residential real estate development and construction activities would certainly affect the demand for our manufactured products and may affect the Company’s results of operations or financial condition.

The PRC Legal System May Limit the Company’s Remedies

The PRC legal system is a civil law system based on written statutes.  Prior court decisions may be cited for reference but have limited precedential value.  Since the late 1970s, the PRC central government has promulgated a large volume of laws and regulations governing economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade.  In particular, since reforms were first introduced in 1979, the PRC legislation and regulations have significantly enhanced the protections provided to various forms of foreign investment in China.  Foreign investment laws and regulations in China are evolving and the interpretations of many laws, regulations and rules are not always uniform.  Accordingly, enforcement of these laws, regulations and rules involves uncertainties, which may limit the remedies available to us in the event of any claims or disputes with third parties.  In addition, any litigation in China may be protracted and could result in substantial costs and diversion of resources and management attention.  As the PRC legal system continues to evolve, we cannot predict future developments in the PRC legal system, including promulgation of new laws, changes to existing laws or the interpretation and enforcement thereof.

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Uncertainties Exist with respect to the Enactment Timetable, Interpretation and Implementation of Draft PRC Foreign Investment Law and how it may affect the Company’s Corporate Governance

On January 19, 2015, the PRC Ministry of Commerce published a discussion draft of the proposed PRC Foreign Investment Law, aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules.  The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.  The PRC Ministry of Commerce is currently soliciting comments on this draft and uncertainties exist with respect to its enactment timetable, interpretation and implementation.  The draft Foreign Investment Law, if enacted as proposed, may materially affect our corporate governance practice and increase our compliance costs.  For instance, the draft Foreign Investment Law imposes periodic information reporting requirements on foreign investors.  Aside from investment implementation report and investment amendment report that are required for each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis.  Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities.

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PRC Regulations of Loans to and Direct Investment in PRC Entities by Offshore Holding Companies may delay or prevent us from making Loans or additional Capital Contributions to our PRC Subsidiaries, which could adversely affect our ability to fund and expand our business

We conduct substantial business operations in China.  We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our PRC subsidiaries.  Loans by APWC or any of our offshore subsidiaries to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registrations.  Such loans to any of our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange (“SAFE”).  The statutory limit for the total amount of foreign debts of a foreign-invested enterprise is the difference between the amount of total investment as approved by the PRC Ministry of Commerce or its local counterpart and the amount of registered capital of such foreign-invested enterprise.  We may also decide to finance our PRC subsidiaries by means of capital contributions.  These capital contributions must be approved by the PRC Ministry of Commerce or its local counterpart.

On August 29, 2008, the SAFE promulgated SAFE Circular No. 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how converted Renminbi may be used.  This notice requires that the Renminbi capital converted from the foreign currency-denominated capital of a foreign-invested enterprise only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless specifically provided for otherwise in its business scope.  In addition, the SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from the foreign currency-denominated capital of a foreign-invested enterprise.  The use of such Renminbi capital may not be changed without SAFE’s approval and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used for purposes within the Company’s approved business scope.  As a result, SAFE Circular No. 142 may impose an additional layer of bureaucratic compliance and could, under certain circumstances, limit our ability to transfer the proceeds from our non-RMB denominated borrowing arrangements outside of the PRC to our PRC subsidiaries, which may, absent the requisite approvals from SAFE, adversely affect the continued growth of our business.

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Furthermore, the SAFE promulgated a SAFE Circular No. 45 on November 9, 2011, which, among other things, restricted a foreign-invested enterprise from using the Renminbi capital converted from its registered capital to provide entrusted loans or repay loans between non-financial companies.  Violations of these circulars may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulation.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circulars referred to above, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC subsidiaries and conversion of such loans or capital contributions into Renminbi.  If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could adversely affect our ability to fund and expand our business.

Political or Social Instability in the PRC May Adversely Affect the Company’s Operations or Financial Condition

Political or social instability in China could also adversely affect our business operations or financial condition.  In addition, adverse public health epidemics or pandemics in China could not only interfere with our ability to operate our PRC subsidiaries, but could also affect the country’s overall economic growth, which could in turn affect the sales of our products in China.  Growing environmental awareness and concern over the deterioration of the quality of the environment in China, including air and water quality, could dampen domestic industrial growth and reduce foreign investor interest in PRC investment.  In addition, as our corporate headquarters are located in Taipei, any escalation in political tensions between the PRC and the government of Taiwan could impact adversely our ability to manage our Chinese operations efficiently or without third party interference.

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Inflation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The rapid growth of the PRC economy has historically resulted in high levels of inflation, coupled with a rise in the value of RMB against the U.S. dollar.  The PRC government has publicly announced its commitment to control inflation, and the anti-inflation policies of the PRC government may have an adverse effect on the business climate and growth of private enterprise in the PRC.  An economic slowdown may increase our costs.  If inflation is significant, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.

PRC Power Shortages and Lack of Insurance May Adversely Affect the Company’s Operations or Financial Condition

We consume substantial amounts of electricity in our manufacturing processes at our production facilities in China.  Certain parts of China have been subject to power shortages in recent years.  We have experienced a number of power shortages at our production facilities in China to date, particularly in Shenzhen where numerous clusters of factories are situated.  We are sometimes given advance notice of power shortages, but often power shortages or outages occur unexpectedly for various periods of time.  We currently have a backup power system at certain of our production facilities in China.  However, there can be no assurance that in the future our backup power system will be completely effective in the event of a power shortage, particularly if that power shortage is over a sustained period of time and/or we are not given advance notice thereof.  Any power shortage, brownout or blackout for a significant period of time may disrupt our manufacturing, and as a result, may have an adverse impact on our business.

The insurance industry in China is still at an early stage of development and foreign insurance companies are permitted to operate only in a certain large cities.  PRC insurance companies do not offer extensive business insurance products.  As a result, we have limited business liability and disruption insurance coverage for our operations in China.  Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of resources, which could have a material adverse effect on our business and operations.

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PRC Tax Treatments May Affect the Company’s Operations or Financial Condition

Under current tax law in China, foreign-invested enterprises no longer receive more favorable tax treatment than domestic enterprises. China has in place a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises) and has revoked the prior tax exemptions, reductions and preferential treatments applicable to foreign-invested enterprises.

Dividends Payable by Our PRC Subsidiaries to Their Respective Offshore Investors May Be Subject to PRC Withholding Taxes

Under Chinese tax law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our PRC subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax.  Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax.  Bermuda, where APWC, the ultimate owner of our PRC subsidiaries and investments, is incorporated, does not have such a tax treaty with China.  Hong Kong, where Crown Century Holdings Limited (“CCH HK”), the sole shareholder in Pacific Electric Wire and Cable (Shenzhen) (“PEWS”), is incorporated, has a tax arrangement with China that provides for a 5% withholding tax, or 10% for 2013 and onwards, on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the PRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends.  If our PRC subsidiaries declare and distribute profits earned after January 1, 2008 to their respective offshore investors in the future, such payments will be subject to withholding tax.

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Labor Law Legislation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The PRC Labor Contract Law formalizes workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions.  Considered one of the strictest labor laws in the world, among other things, this law requires an employer to conclude an “open-ended employment contract” with any employee who either has worked for the employer for ten years or more or has had two consecutive fixed-term contracts.  An “open-ended employment contract” is in effect a lifetime, permanent contract, which is terminable only in specified circumstances, such as a material breach of the employer’s rules and regulations, or for a serious dereliction of duty.  Such employment contracts with qualifying workers would not be terminable if, for example, the Company determined to downsize its workforce in the event of an economic downturn.  Under the current law, downsizing by 10% or more (or more than 20 persons) may occur only under specified circumstances, such as a restructuring undertaken pursuant to the PRC Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations.  Any of the Company’s staff employed to work exclusively within the PRC are covered by the law and thus, the Company’s ability to adjust the size of its operations when necessary in periods of recession or less severe economic downturns has been curtailed.  Accordingly, if the Company faces future periods of decline in business activity generally or adverse economic periods specific to the Company’s business, this law can be expected to exacerbate the adverse effect of the economic environment on the Company’s results of operations and financial condition.  Additionally, this law has affected labor costs of our customers which could result in a decrease in such customers’ production and a corresponding decrease in their purchase of our products.

Exposure to Foreign Exchange Risks

Fluctuations in foreign exchange rates influence our results of operations.  Our principal operations are located in the three geographic regions that have now been designated as our revised business segments; namely, the North Asia region, the Thailand region and the Rest of the World (“ROW”) region.  See---section 4.1.1---Certain Recent Events.  A substantial portion of our aggregate revenues is denominated in the following currencies:  Baht, Australian dollars, Singapore dollars or Renminbi.  Nearly all of the raw materials for these operations are imported and paid for in U.S. dollars and a substantial portion of our future capital expenditures are expected to be in U.S. dollars.  We require a significant amount of U.S. dollars for our ongoing equipment upgrade and maintenance programs.  Any devaluation of any of the Baht, the Australian dollar, the Singapore dollar or the Renminbi against the U.S. dollar would increase the effective cost of foreign manufacturing equipment and the amount of our foreign currency denominated expenses and liabilities and would have an adverse impact on our operations.

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Although our reporting currency is U.S. dollars, the functional currency of our Thailand region, which accounted for 37.0% of our sales in 2014, is the Thai Baht.  The functional currencies of our ROW region, which accounted for 37.6% of sales in 2014, are the Australia dollar and the Singapore dollar.  The functional currencies for our North Asia operations, which, in total accounted for 25.4% of our sales in 2014, are divided into two groups: for Shandong Pacific Rubber Cable Company, Ltd. (“SPRC”, equity investee with 25% equity owned by APWC, accounting under equity method), and Shanghai Asia Pacific Electric Co., Ltd. (“Shanghai Yayang”), their functional currency is Renminbi, while for CCH HK and PEWS their functional currency is U.S. dollars.  Accordingly, the functional currency accounts of these operations are all translated into U.S. dollars utilizing the reporting date exchange rate for balance sheet accounts, and an average exchange rate for the year for the income statement accounts for the reporting purposes.  Any devaluation of the Baht, the Australian dollar, the Singapore dollar, or the Renminbi against the U.S. dollar would adversely affect our financial performance measured in U.S. dollars.

Competition

The wire and cable industry in the Asia Pacific region is highly competitive, and if we fail to successfully invest in and maintain product development, productivity improvements and customer service and support, sales of our products could be adversely affected.  Our competitors include a large number of independent domestic and foreign suppliers.  Certain competitors in each of our markets have substantially greater manufacturing, sales, research and financial resources than we do.  We and other wire and cable producers compete primarily on the basis of product quality and performance, reliability of supply, customer service and price.  To the extent that one or more of our competitors are more successful with respect to the primary competitive factors, our business could be adversely affected.  In addition, the Company’s profit could be adversely impacted if low margin wire and cable manufacturers in China enter into the markets where we operate.  With respect to certain of our products, they are made to common specifications and may be interchangeable with the products of certain of our competitors.  Since customers could potentially substitute our products with those of our competitors, customer loyalty is an important pillar of our business’s competitive position.

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Highly Concentrated Markets

Failure to properly execute customer projects in certain highly concentrated markets may adversely impact our ability to obtain similar contracts from other customers in the market and may result in material financial penalties.  In certain markets, sales of manufactured products are highly concentrated in large state-controlled entities or large private infrastructure developers.  As those markets are often highly concentrated, the loss of individual customers in such markets may have a material adverse impact on our position in that market as a whole.

Risks associated with Required Productivity Increases

Our business strategy includes a focus on increasing profitability through increased efficiency and productivity.  In the event we are not able to implement measures to increase efficiencies and productivity, we may be limited in achieving increased profitability or may become less profitable.  Moreover, productivity increases are linked to capacity utilization rates.  A drop in the utilization rate of our manufacturing capacity would adversely impact productivity.

Employees’ Unions

Some of the operating subsidiaries of the Company have a large number of employees that are members of employees’ unions.  Failure to successfully negotiate and/or renew collective agreements, strikes, or other labor disputes could result in a disruption of our operations.  The Company believes that approximately 100% and 99% of the employees of PEWS and Shanghai Yayang, respectively, are members of their respective Company Workers’ Unions.  Approximately 16% of the employees of APEC are members of the Australian Workers’ Union.  While the Company has never experienced a strike or other disruption due to labor disputes, the possibility exists that a labor dispute could lead to a disruption of our operations, hindering our ability to serve our customers, and ultimately having a material adverse impact on the Company’s results of operations.

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Information Systems

Failure or disruptions of our information systems could have a material impact on our business and operations.  The Company heavily relies on information systems and technology for, amongst other tasks, processing customer orders, shipment of products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.  Disruptions in our system, whether from external or internal causes, could have a significant material adverse impact on our business.  Specifically, a disruption in our systems could adversely affect our ability to properly serve our customers and as a result, could affect our customer loyalty and ultimately, have an adverse impact on our business.  The Company is actively engaged in the monitoring of our information systems to manage the risk of security threats and sophisticated computer crime and to reduce the risk of disruption to the integrity of our data.

Employees and Personnel

If we fail to retain our key employees and attract qualified personnel, our business may be harmed.  The loss of any of our executive officers or other key employees, without a properly implemented transition plan, could have an adverse affect on operations.  The loss of executive officers or key employees could impair customer relationships and result in the loss of vital industry knowledge, expertise, and experience.  There is also a risk of losing key employees to our competitors, which can lead to the theft of trade secrets as well as competitors gaining valuable information about our manufacturing process. The Company’s future success depends on its continued ability to attract and retain talented and qualified personnel.

Indebtedness

As of December 31, 2014, the Company had a total of $278.4 million in credit available to itself, or one or more of its operating subsidiaries.  The available credit is provided by a total of 16 banks in the various regions/territories in which we operate.  Out of total available credit, $168.2 million was unused and available for borrowing.  The Company, collectively and on an individual basis is not highly leveraged and management does not consider it to be likely that the Company will become highly leveraged.  The weighted average borrowing rate, for all the outstanding loans combined, was 3.57% for 2014, which runs, at this point in time, slightly higher than like-kind borrowing rates that might be available to us in the marketplace, i.e., three month LIBOR (data of April 7, 2015) of 0.27% plus 2.5%.

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Impairment Charges

As a result of market and industry conditions or in the event we close any of our manufacturing facilities, we may be required to recognize impairment charges for our long-lived assets, including goodwill.  To the extent the Company must incur goodwill impairment on our long-lived assets, there may be an adverse effect on our financial condition, including earnings per share and other financial results.

As of December 31, 2014, the Company performed impairment testing for SPRC, equity investee with 25% equity owned by APWC, accounting under equity method, as SPRC had been reporting losses in the past few years owning to slower economy growth and sluggish mining business in China in recent years. The Company determined that no impairment loss was recognized against SPRC. Nevertheless, the Company cannot guarantee that no impairment loss will incur in the future for various reasons including, but not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment to our business or a material adverse change in our relationship with our clients. If we recognize significant impairment charges, our results of operations may be materially and adversely affected.

Composite Services Agreement with PEWC

We engage in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the distribution of PEWC products in various countries in the Asia Pacific region.  We and PEWC have entered into a composite services agreement dated November 7, 1996, as amended and supplemented (the “Composite Services Agreement”), which contains provisions that define our relationship and the conduct of our respective businesses and confers certain preferential benefits on us.  The Composite Services Agreement is renewable at our option and is currently in force.  However, we are unable to predict whether PEWC would, at some future date, seek to limit, or be unable to perform in whole or in part, the business it conducts with the Company pursuant to the terms of the Composite Services Agreement.

Risks Relating to Thailand Region

A substantial portion of our Thai operations, which accounted for approximately 37.0% of our total net sales in 2014, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand.  As a result, our future results will depend in part on the political situation in Thailand and the general state of the Thai economy.  With the political tension remaining high in Thailand, the continuing political uncertainty and the risk of further social unrest tends to lessen the attractiveness of the local market for foreign investment, and diminishes the focus of the government on infrastructure development, both of which considerations may adversely impact on the volume of business of the Company’s actual and potential customers in the Thai market.

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The Company’s Thai operations remain vulnerable to uncertainties with regard to payment for current sales and the award of future contracts in view of the ongoing political instability in Thailand.  Additionally, in recent years the Thai economy has been highly cyclical and volatile, depending for economic growth in substantial part on a number of government initiatives for economic expansion.  Moreover, the Baht remains volatile and subject to significant fluctuations in relation to the U.S. dollar.  Such fluctuations in the value of the Baht may negatively impact our performance.

Environmental Liabilities

We are subject to certain environmental protection laws and regulations governing our operations and the use, handling, disposal and remediation of hazardous substances used by us.  A risk of environmental liability could arise from our manufacturing activities in the event of a release or discharge by us of a hazardous substance.  Under certain environmental laws, we could be held responsible for the remediation of any hazardous substance contamination at our facilities and at third party waste disposal sites and could also be held liable for any consequences arising out of human exposure to such substances or other environmental damage.  There can be no assurance that the costs of complying with environmental, health and safety laws and requirements in our current operations or the liabilities arising from past releases of, or exposure to, hazardous substances, will not result in future expenditures by us that could materially and adversely affect our financial results, cash flows or financial condition.

Alternative Transmission Technologies

Our fiber optic and copper-based telecommunications business is subject to competition from other transmission technologies, principally wireless-based technologies.  Fiber optic cable is presently being used in telecommunications trunks and feeder cable businesses and minimally in the access cable business.  In November 2011 we sold our entire 51% equity interest in Shandong Pacific Fiber Optic Cable Co., Ltd. (“SPFO”) to a group of buyers in China for a cash consideration of $2.9 million, due to its low profit margin generation and fierce competition in the local fiber optic cable market.  In January 2013 we completely disposed of another 49% ownership associate in Shangdong China:  Shangdong Huayu Pacific Fiber Optics, thus we entirely pulled out of the fiber optics business in China.  Wireless telecommunications businesses have sometimes made substantial inroads in early emerging markets where sufficient funding may not then be available to install the infrastructure necessary for market-wide fixed line telecommunications.  In addition, the ease of use of wireless telecommunications may make that medium an attractive alternative in circumstances where access to fixed line telecommunications is limited.  While these technologies do present significant competition in the markets in which we conduct or plan to conduct business, the Company believes that demand for its fixed wire products will remain strong.  However, no assurance can be given that the future development and use of such alternative technologies will not adversely affect our results of operations.

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International Business Risks

We are subject to risks specific to our international business operations, including:  the risk of supply disruption; production disruption or other disruption arising from events of force majeure, such as the severe weather and climatic events that caused the 2011 floods in Thailand; the outbreak of highly infectious or communicable diseases such as Severe Acute Respiratory Syndrome, swine influenza or pandemics of a similar nature; the risk of potential conflict and further instability in the relationship between Taiwan and the PRC; risks related to national and international political instability, such as disruptions to business activities and investment arising out of the political unrest and turmoil in Thailand; risks related to the recent global economic turbulence and adverse economic developments in a number of Asian markets;risks related to changes in governmental or private sector policies and priorities with respect to infrastructure investment and development; unpredictable consequences on the economic conditions in the U.S. and the rest of the world arising from terrorist attacks, and other military or security operations; unexpected changes in regulatory requirements or legal uncertainties regarding tax regimes; tariffs and other trade barriers, including current and future import and export restrictions; difficulties in staffing and managing international operations in countries such as Australia, Singapore, the PRC, Thailand and Taiwan; risks that changes in foreign currency exchange rates will make our products comparatively more expensive; limited ability to enforce agreements and other rights in foreign countries; changes in labor conditions; longer payment cycles and greater difficulty in collecting accounts receivable; burdens and costs of compliance with a variety of foreign laws; limitation on imports or exports and the possible expropriation of private enterprises; and reversal of the current policies (including favorable tax and lending policies) encouraging foreign investment or foreign trade by our host countries.  Although we have not experienced any serious harm, except for the flooding situation in Thailand in 2011, in connection with our international operations, we cannot assure you that such problems will not rise in the future.

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Item 4: Information on the Company

4.1 History and Development of the Company

General

Asia Pacific Wire & Cable Corporation Limited was formed on September 19, 1996 as a Bermuda exempted limited liability Company under the Companies Act.  The address of the Company’s principal place of business is 7/Fl. B, No. 132, Sec. 3, Min-Sheng East Road, Taipei, 105, Taiwan, Republic of China, and its telephone number is (886) 2-2712-2558.  Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, is the Company’s agent for service of process in the United States.

The Company is principally engaged in the manufacture and distribution of telecommunications (copper and fiber optic) and power cable, enameled wire and electronic wire products in the Asia Pacific region, primarily in Thailand, China, Singapore and Australia.  The Company manufactures and distributes its own wire and cable products (“Manufactured Products”) and also distributes wire and cable products (“Distributed Products”) manufactured by its principal shareholder, PEWC, and other third party suppliers.  The Company also provides project engineering services in the supply, delivery and installation (“SDI”) of power cables to certain of its customers.

Principal Capital Expenditures

Total purchases of property, plant and equipment amounted to $10.9 million in 2012, $9.5 million in 2013 and $6.0 million in 2014, mostly for newly purchased production machinery and equipment for the CTW group in Thailand and Ningbo Pacific Cable Co., Ltd. (“NPC” or “Ningbo”) in China and for a new plant at Shenzhen for the Chinese domestic market.

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4.1.1 Certain Recent Events

In 2012, the Company determined to convert its financial accounting principles from US GAAP to IFRS.  The Company made this change to align the accounting principles used at its public holding company level with those employed for some years by its principal operating subsidiaries and because of the increasing acceptance and usage of IFRS by foreign private issuers.  Accordingly, the financial data contained in this report for the fiscal years ended December 31, 2014, 2013 and 2012 are reported in accordance with IFRS.

As part of the Company’s evaluation of its financial reporting, the Company examined its historical business reporting segments, consisting of manufactured products, distribution and SDI project engineering.  The Company noted that in some years manufactured products represented 90% or more of total revenues, that SDI project engineering to date has been limited to the Singapore market and that distribution has traditionally been viewed as an ancillary component of the Company’s overall business plan.  After careful deliberation, management decided in 2013 to reorganize the Company’s business segments along regional lines, which it believes better reflects the organizational structure, deployment of its assets, cost allocations and information gathering and reporting of the consolidated group.  In addition, in 2013 the Company appointed Mr. William Gong Wei as it chief operating officer (“COO”) and Mr. Gong Wei undertook, at the Company’s request, a reorganization of the lines of reporting among the Company’s operating subsidiaries to reflect the determination of management to emphasize regional reporting.

The Company now has three operating segments, consisting of the North Asia region, the Thailand region and the Rest of the World (“ROW”) region.

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Each segment engages in business activities generating revenues and incurring expenses.  Each segment generates a management report which contains its own financial information and submits to the Company’s chief operating decision maker (“CODM”) for review on a monthly basis.  The Company’s CEO and COO are the ones who review all the management reports provided by each segment, make the decisions on how the resources are to be allocated and assesses the operating performances based on the reports.  Each reporting segment has a segment manager who is in charge of the business operations in such region and regularly contacts the Company’s CEO and COO to discuss operational-related matters.

On December 31, 2014, the Company announced its financial results for the first nine months of 2014. On October 8, 2014, APWC announced its financial results for the first six months of 2014. On August 13, 2014, the Company announced its financial results for the first three months of 2014. At that time, the Company announced also that its Board of Directors had authorized the future implementation of a share repurchase program of up to $1 million worth of its Common Shares. APWC did not announce a commencement date for that future share repurchase program and, to date, it has not yet been implemented.  In addition, Mr. Yuan Chun Tang, CEO, and Mr. Ivan Hsia, CFO, were authorized to take all actions necessary to organize and implement the Company’s 2014 annual general meeting of shareholders (the “2014 AGM”).

The Company conducted its 2014 AGM in Taipei on October 9, 2014, where all matters put to a vote of the shareholders were approved.

4.1.2 Managing Our Business in Current Market Conditions

In order to address the continuing market challenges facing our business, the Company has taken and plans to continue to implement a number of measures in order to maintain efficient operations.

Specifically, the Company has continued to focus on increased efforts to collect its receivables on a timely basis.  The days of sales outstanding in 2014 was 85 days compared to 98 days in 2013.  The Company continues to focus on working actively with all of its significant customers to reduce collection times and minimize write-offs.  The Company has also reduced its inventory levels through planned reductions in raw material purchases while negotiating with suppliers to reduce costs of raw materials and supplies.  The Company has focused also on reducing operating costs where practicable.  We believe that the successful implementation of these actions has had a positive effect on our cash resources, and we intend to continue these measures in order to preserve our liquidity and maintain a strong cash position.  As of December 31, 2014, the Company had available and unused lines of credits from suppliers, banks and other lenders totaling, in the aggregate, approximately $168.2 million, a decrease of $3.5 million from that date one year prior.  We believe that available and unused amounts of credit are sufficient to support our current working capital needs.  The total bank loans and trust receipts outstanding as of December 31, 2014 were $12.1 million higher than that as of December 31, 2013.  Trust receipts represent debt were incurred by the Company for goods then in its possession.

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4.1.3 Recent Business Trends

APWC experienced a 2% reduction in overall 2014 revenues against revenue of 2013 and a decrease in gross profit by 29.1% against that of 2013.  Operating profit was down from $17.2 million in 2013 to $5.2 million in 2014, due primarily to the lower drop in gross margin of the Thailand region which was caused, in part, by the continuous political unrest in Thailand and more intense competition with the Company’s business in Australia as well as the provision of $2.2 million provided for the delinquent accounts of our customers in China.  The Company's gross margin yielded earnings per share of $0.04 in 2014, compared to earnings per share of $0.42 in 2013 and $0.70 in 2012.

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4.2 Business Overview

The Company is a holding company that operates its business through operating subsidiaries and associates, principally located in Thailand, China, Singapore and Australia.

The following chart shows the organizational structure of the Company as of December 31, 2014 and its principal operating subsidiaries, including affiliate ownerships, and the percentage of ownership interest and voting power in each case.  The location of the headquarters of each company is indicated in parentheses under the company’s name (“S” for Singapore, “T” for Thailand, “A” for Australia and “C” for China or Hong Kong).

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Thailand Region

The Company’s Thai operations are conducted through Charoong Thai, Siam Pacific, Double D Cable Company Ltd. (“DD”) and Siam Fiber Optics Co. Ltd. (“Siam Pacific Optics”)

Charoong Thai is a publicly-traded Thai corporation, the shares of which are listed on the Stock Exchange of Thailand (“SET”).  It manufactures aluminum and copper electric wire, medium and high voltage power cable and telecommunications cable.  It has subsidiaries and affiliates in the businesses of optic fiber cable manufacturing and telecommunication and network services.  Charoong Thai was established in Thailand in 1967 as a limited public company.  As of December 31, 2014, the Company effectively owned 50.93% of the issued and outstanding shares of Charoong Thai.  The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai.  The board of directors of Charoong Thai may authorize the issuance of additional shares of common stock of Charoong Thai.  The Company has preemptive rights to purchase its pro rata share of any additional authorized shares, less amounts reserved for directors, officers and employees.  In the event the board of Charoong Thai decides to cause it to issue additional shares, the Company may decide not to exercise its preemptive rights, in which case the Company’s interest may be diluted.  In May 2013, rather than producing premium products, a new subsidiary – named “DD” was formed by Charoong Thai in order to produce cable products that were just on par with, or exceeded, national standards.

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Siam Pacific was established in 1988 as a joint venture between PEWC and Italian-Thai Development Plc (“Ital-Thai”), a third party, which at the time was the largest diversified construction company in Thailand, principally engaging in the design, engineering, construction and project management of large-scale civil engineering and telecommunications projects in Thailand.  Capitalizing on PEWC’s wire and cable manufacturing expertise and Ital-Thai’s significant presence in the local market, Siam Pacific was able to establish its presence in this market and gain knowledge of business opportunities in Thailand.  Siam Pacific is now a 100%-owned subsidiary of Charoong Thai and it focuses on the manufacture of telecommunications cable, and enameled wire for the domestic Thailand market.  As we have reported previously, the Siam Pacific operation suffered significant flooding damage in September and October of 2011 but with support from affiliated companies in Taiwan and in China, Siam Pacific resumed full operations during the course of 2012.  During 2013 and 2014, Siam Pacific conducted its operations without any material disruptions.

Based on information published by the Thai Ministry of Commerce on sales by dollar value, the Company believes that Siam Pacific and Charoong Thai are two of the leading telecommunications and power cable and wire manufacturers in Thailand and are two of a very limited number of the government-approved suppliers of telecommunications cables for major public telecommunications projects in Thailand.

North Asia Region

During 2014, the Company’s China (and North Asia) operations were conducted through six business entities – Shanghai Yayang, CCH HK, PEWS, Ningbo, SPRC (equity investee) and PEWC Hong Kong.  The operating entities include Shanghai Yayang, formerly known as Shanghai Pacific Electric Co., Ltd., a subsidiary in Shanghai incorporated in June 1998 to manufacture enameled wires.  The Company’s effective holding in Shanghai Yayang is 66.35%.  Shanghai Yayang manufactures enameled wires with a diameter between 0.05mm and 2.5mm for sale and distribution in the eastern part of China, including to local and Taiwanese based end-users.  The board consist of six directors, each of whom is either a member of management of Shanghai Yayang who are expatriated from Taiwan or Thai representatives, also expatriated or designated by APWC or PEWC.

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The Company owns 100% of CCH HK, a Hong Kong registered company, and its wholly-owned subsidiary company, PEWS.  PEWS manufactures enameled wires for electric, video and audio products for both domestic and export sales.

A new subsidiary - PEWC Hong Kong was created by CCH in August 2013 for the purpose of becoming the trading arm for PEWS, replacing Epan Industries Pte Ltd. (“Epan”) in Singapore, an indirect, wholly-owned subsidiary of APWC, which originally acted as the distributor for PEWS products.  The Company believes that PEWS is one of the major manufacturers of enameled wire products in the southern Chinese market.  In August 2014, PEWC Hong Kong was sold to Dragon Conqueror Ltd., which is a subsidiary of PEWC. The Company received $0.2 million in sale proceeds and realized a loss of $0.2 million from the sale of PEWC Hong Kong. The sale benefited the Company because it was not in a position to continue to support PEWC Hong Kong. As a subsidiary of PEWC, PEWC Hong Kong can call on the resources of PEWC and it continues to act as the distributor of PEWS products.

In January 2014, Epan was sold to Sigma Cable Company (Private) Limited (“Sigma Cable”), an indirect, 98.3%-owned subsidiary of the Company in Singapore.  Currently, Epan is acting as the distributor of Sigma Cable and other third party suppliers.

Throughout 2013 and 2014, the Company engaged in the development of new, and the refurbishment of existing, manufacturing facilities and operations located in Ningbo, China.  After ceasing operations at Ningbo in 2006, the Company maintained its interests in land and certain plant and equipment located at the Ningbo site.  APWC also bought out the interest from its partner and now owns 100% of the property, plant and equipment at Ningbo.

The Company holds a 25.0% interest in SPRC, which manufactures rubber cable for the China market.  The remaining 75% is owned by Shandong Yanggu Wire & Cable Corp. Ltd. (“Shandong Yanggu”), an established cable manufacturer in Shandong Province that produces a wide range of cable products and is considered one of the major cable producers in China.

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The Company held a 49% interest in Shandong Huayu Pacific Fiber Optics Communication, Co., Ltd. (“SHP”), which engages in the manufacture of optic fibers.  In January 2013, the Company completed the sale of its 49% interest in SHP to its partner, Shandong Pacific Fiber Optics Cable Co. Ltd., which acquired 100% of SHP as of the closing of that sale.  Due to a severe downturn in the market for fiber optic cable after SHP was established, the plant intended to be constructed for manufacturing fiber optic cable was not completed and a production date for commencing operations had not been determined.  The Company received RMB 9.5 million for its 49% interest in SHP, which yielded a gain for the Company of over $0.2 million in 2013.  The management considered disposing of its interest in SHP for some time because this equity investee has been in a loss position for several years and because fiber optic cable in Shandong Province is not an element of the Company’s core business plan.

Rest of the World (“ROW”) Region

The Company’s ROW region currently includes its Singapore and Australian operations.

The Company’s Singapore operations are principally conducted through its 98.3%-owned subsidiary, Sigma Cable.  The Company believes that Sigma Cable is one of the major suppliers of power cable products in Singapore.  Sigma Cable manufactures and sells a range of low voltage power cable products, used mainly in infrastructure projects and commercial and residential developments.  Sigma Cable is the exclusive distributor in Singapore of medium and high voltage wire and cable products manufactured by PEWC.  It is also the distributor for general wire manufactured by a third party supplier.

Sigma Cable also has project engineering operations in Singapore to supply, deliver and install primarily medium and high voltage cable to power transmission projects.  While the Company currently obtains its supply of medium and high voltage power cable for its SDI operations from PEWC, other suppliers are also available if necessary.  The Company anticipates that there will be modest demand for medium and high voltage power cable projects sponsored by the Singapore government in the fairly near future.

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Australia

The Company’s business in Australia is conducted by Australia Pacific Electric Cable Pty. Ltd. (“APEC”).  The Company went through group restructurings in March 2010 and in June 2012. CCH HK, in total, acquired 64.79% of the shares of APEC from Sigma Cable.  The Company’s effective interest in APEC is now 99.4%.  APEC is located near Brisbane and is one of three major wire and cable manufacturers in Australia.  APEC produces a range of power cables supplemented by imports from overseas sister companies.  APEC possesses a substantial marketing and distribution infrastructure with a network of sales offices and warehouses in the major cities of Brisbane, Sydney, Melbourne and Perth.

4.2.1 Products and Services

The Company engages in three principal business lines consisting of the manufacture of wire and cable products, the distribution of certain wire and cable products manufactured by PEWC, as well as some third party products, and the provision of project engineering services to certain of its customers.  The Company manufactures and sells a wide variety of wire and cable products primarily in four general categories:  telecommunications cable, power transmission cable, enameled wire, and electronic wire.  The Company’s telecommunications and power cables are used in a range of infrastructure projects and in commercial and residential developments.  The Company’s enameled wire is used in the manufacturing of components and sub-components of a number of household appliances and various small machinery.  The electronic wire products, which include cable harnesses, are used in the electronics, computer, building automation, audio and communication industries.  In addition, the Company acts as a distributor of wire and cable products in Singapore manufactured by PEWC and other third party suppliers.  The Company also offers SDI (Supply, Deliver and Install) project engineering services of medium and high voltage cable for power transmission projects in Singapore.

Distribution Products

The Company has a sales and marketing force for the distribution of its Manufactured Products in the markets where it has manufacturing facilities and in certain other Asian markets.  In addition, the Company is a distributor of wire and cable products manufactured by PEWC and other third party suppliers.  The leading PEWC products sold by the Company are medium and high voltage power cable (with capacities ranging from 3.3 kilovolts to 69 kilovolts), with the vast majority of such sales made in Singapore.  The PEWC products sold by the Company do not compete with the Company’s Manufactured Products.  In addition, from time to time, certain subsidiaries also sell distributed products from other suppliers in Thailand and Australia.

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SDI Project Engineering Services

Based upon the needs of government and the private sector with regard to residential and commercial buildings and infrastructure projects in Singapore, the Company anticipates modest demand for medium and high voltage power and for value added services in the power supply industry.  To take advantage of these opportunities, the Company has developed its SDI project engineering capability.  The SDI project engineering involves supply, delivery and installation primarily of medium and high voltage cable to power transmission projects in Singapore. After entering into a contract to supply, deliver and install cable for a power transmission project, the Company delivers medium and high voltage cables and enters into subcontracting agreements with local companies to install the cable as required by the project.

4.2.2 Manufacturing

Copper rod is the base component for most of the Company’s products.  The manufacturing processes for these products require that the rod be “drawn” and insulated.  In the “drawing” process, copper rod is drawn through a series of dies to reduce the copper to a specific diameter.  For certain applications, the drawn copper conductor is then plated with tin.  Copper used in cable is covered with various insulating materials that are applied in an extrusion process.  The insulated wires are then combined, or “cabled” to produce the desired electrical properties and transmission capabilities.  Then, depending upon the cable, some form of protective cover is placed over the cabled wires.  A summary of the manufacturing process used for the Company’s primary wire and cable products is set forth below.

Telecommunications Cable

The Company produces a wide range of bundled telecommunications cable for telephone and data transmissions with different capacities and insulations designed for use in various internal and external environments principally as access cable to connect buildings and residents to trunk cables.  Telecommunications cables produced by the Company include copper-based and fiber optic cables.

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Production of copper-based telecommunications cable begins by drawing a copper rod until it has reached the desired diameter, after which the drawn wires are subjected to a process called “annealing” in which the wires are heated in order to make the wires softer and more pliable.  Utilizing an extrusion process, which involves the feeding, melting and pumping of a compound through a die to shape it in final form as it is applied to insulate the wire, the wires are then covered by a polyethylene (“PE”) or polyvinyl chloride (“PVC”) compound and foam skin, suitable for different installations and environmental conditions.  In order to reduce the cross-talk between pairs of communication wires, the insulated wires are then “twinned” or twisted so that two insulated single wires are combined to create a color-coded twisted pair.  The twisted pairs of wire are then “cabled” or “stranded” into units of 25 twisted pairs for combination with other 25 pair units to form cable of various widths and capacities.  The appropriate number of units is cabled together after stranding to form a round cable core.  Depending upon the planned environment, a petroleum jelly compound may then be added to fill the cable core to seal out moisture and water vapor.  Aluminum or copper tape is used to “shield” the cable and, finally, the shielded cable core is covered by plastic outer sheathing.  The Company manufactures telecommunications cable with capacities and sizes ranging from 25 to 3,000 pairs of 0.4 mm-diameter wire to 10 to 600 pairs of 0.9 mm-diameter wire.

Power Cable

The Company produces a range of armored and unarmored low voltage power transmission cable.  Low voltage power cable, generally considered to be cable with a capacity of 1 to 3.3 kilovolts, is typically used to transmit electricity to and within commercial and residential buildings, as well as to outdoor installations such as street lights, traffic signals and other signs.  Armored low-voltage power cable is usually used for public lighting and power transmission running to buildings and installed either above or below ground.  Unarmored low voltage cable is mainly used as lighting and power supply cable inside and outside of buildings. The voltage capacity of the Company’s power cables range from 300 volts to one kilovolt.

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Production of unarmored cable begins by drawing and annealing of copper rods. The drawn copper wires are then stranded or “bunched” into round or sector-shaped conductors in sizes ranging from 1.5 square millimeters to 1000 square millimeters.  The copper conductors are then covered in an extrusion process with a plastic insulator such as PVC, after which 2-5 conductors are twisted into a circular cable core in a cabling process and covered by a plastic outer cover.

Unarmored cable is composed of one or more cores of copper wire, insulated by substances such as PVC.  Armored cable is produced in the same manner and the same range of configurations as unarmored cable, but with the addition of an outer layer of galvanized steel or iron wires to protect the cable from damage.

Enameled Wire

The Company also produces several varieties of enameled wire.  Enameled wire is copper wire varnished, in an enameling process, by insulating materials.  The enameling process makes the wire more resistant to oil, heat, friction and fusion, and therefore suitable for use in machinery and components and sub-components of manufactured goods.  The Company manufactures enameled wire in sizes that range from 0.02 mm to 4.00 mm in diameter, varnished by various types of petroleum insulation materials including polyvinyl formal, polyurethane wire and polyester, among others.  Enameled wire products are used in the assembly of a wide range of electrical products, including oil-filled transformers, refrigerator motors, telephones, radios, televisions, fan motors, air conditioner compressors and other electric appliances.

Electronic Wire

The Company produces electronic wire with its major production facilities in Ningbo, China.  The electronic wire is predominately used for heat resistant applications in consumer electronics and in the automotive industry.  The factory concluded production testing in 2013 and is currently locating potential buyers.

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4.2.3 Raw Materials

Copper is the principal raw material used by the Company for copper-based products.  The Company purchases copper at prices based on the average prevailing international spot market prices on the LME for copper for the one month prior to purchase.  The price of copper is influenced heavily by global supply and demand as well as speculative trading.  As with other costs of production, changes in the price of copper may affect the Company’s cost of sales.  Whether this has a material impact on the Company’s operating margins and financial results depends primarily on the Company’s ability to adjust selling prices to its customers, such that increases and decreases in the price of copper are reflected in those selling prices.  Most sales of the Company’s Manufactured Products reflect copper prices prevailing at the time the products are ordered.  A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost.

The Company purchases copper in the form of rods and cathodes.  Copper cathodes are thin sheets of copper purified from copper ore.  Copper purchased by the Company in the form of cathodes must be sent to subcontractors to be melted and cast into the copper rods necessary for the manufacturing processes, for a processing fee equal to approximately 3.5% (based on the Company’s past experience) of the copper cathode purchase price.  The Company presently utilizes the services of Thai Metal Processing Co., Ltd. to process its copper cathodes into copper rods in Thailand, although the Company has a variety of processing companies from which it may obtain these services.  Construction of a copper processing facility could also be an additional source of revenues and profit, to the extent that sales are made to unaffiliated parties.  However, the Company does not have any present plans to establish or acquire a copper processing facility.  Copper rods are drawn into copper wire for the production of telecommunications cable, power cable and enameled wire.

The Company has historically purchased a substantial portion of its copper rods from PEWC.  Under the Composite Services Agreement between the Company and PEWC, PEWC agreed to supply to the Company on a priority basis its copper rod requirements at prices at least as favorable as prices charged to other purchasers in the same markets purchasing similar quantities.  PEWC continues to be a leading supplier of copper rods to the Company’s operations.  Under the Company’s copper rod supply arrangements, orders are typically placed between eight to ten weeks before the desired delivery date, with prices “pegged” to the average spot price of copper on the LME for the one month prior to delivery plus a premium.

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The Company purchases both copper cathodes which are subjected to a 1.0% import tariff, and copper rods which normally are subject to a 5.0% import tariff for its Thailand operations.  The key suppliers are Sterlite Industries (India) Ltd - India, PEWC-Taiwan, Prime Global Corp.-Korea, Lanexang Mineral Ltd.-Laos and the Mitsubishi Corporation Unimetal Ltd.-Japan, Mitsubishi Corporation-Japan, Glencore International AG.-Switzerland, and Marubeni Corporation-Japan.  The Company has regularly signed one-year contracts with each of the copper suppliers, pursuant to which the Company agrees to purchase a set quantity of copper each month.  Under the terms of such contracts, the price of copper is usually pegged to the monthly average of the spot price of copper on the LME for the delivery month (M-0), or 1 month before delivery month (M-1) plus a premium.  The Company has almost two decades of good relationships with many copper suppliers, and currently believes that the copper suppliers will be capable of providing an adequate supply of copper for the Company’s requirements.  The Company does not anticipate any change in relations with its copper suppliers in the near term.

The Company attempts to maintain approximately a three to five week supply of copper rods and cathodes for its Thai operations and approximately a two to four week supply in Singapore.  In PEWS, the Company generally maintains one to two weeks of supply of copper rods and cathodes.  In APEC, the copper supply is generally maintained at one to two weeks of anticipated requirements.  The Company has never experienced a material supply interruption or difficulty obtaining a sufficient supply of copper rod or cathode.

Other raw materials used by the Company include aluminum used as a conductor in power cable and petroleum-based insulation materials such as PE, PVC and jelly compounds for insulating covers on cables and varnishes on enameled wire; aluminum foils for sheathing of communication cable; and galvanized steel wire for the production of armored wire.  The Company has not had any difficulty in maintaining adequate supplies of these raw materials and expects to continue to be able to purchase such raw materials at prevailing market prices.

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Other than import tariffs in Thailand, the Company does not face any restriction or control on the purchase or import of its raw materials.  The Company may freely choose its suppliers and negotiate the price and quantity of material with its suppliers.  The Company formulates consumption plans for raw materials regularly and continually monitors market conditions in respect of the supply, price and quality of raw materials.

Inflation would increase the cost of raw materials and operating expenses for the Company.  The Company would try to maintain its gross margins by increasing the prices of its products.

4.2.4 Quality Control

The Company places a significant emphasis on product quality.  The Company has implemented a range of quality control procedures with stringent quality standards under the supervision of dedicated quality control staff.  Quality control procedures are implemented from the raw material to the finished product stages at each of the Company’s major production facilities.  Raw materials are inspected to ensure they meet the necessary level of quality before production begins.  During the manufacturing process, quality control procedures are performed at several stages of production.  Upon completion, finished goods are brought to quality control centers set up in the factory for inspection and testing of different electrical and physical properties.

Depending on the requirements of its customers, the Company has the capability to manufacture its products to meet a variety of different quality and production standards.  These include local standards and certifications, such as the Singapore Institute of Standards and Industrial Research Quality Mark and the Thailand Industrial Standard, as well as other standards including the National Electrical Manufacturers Association Standard, the British Standard, the Japan Industrial Standard and Underwriters Laboratories Inc. Standard, as applicable.

All the major companies in the APWC group have attained International Standards Organization (“ISO”) 9002 certification for quality management and assurance standards in the manufacture of electric wire and cable and have maintained that certification for at least the last ten years.  The certifications mean that the companies have in place quality assurance systems and the capability to consistently manufacture products of quality.

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4.2.5 Sales and Marketing

The Company’s telecommunications cable and power cable products are primarily sold in the domestic markets of the countries where they are manufactured, whereas most of the enameled wire manufactured by the Company in Thailand is exported.  The enameled wire is also exported to customers throughout Southeast Asia.  The following table sets forth the Company’s sales revenues for the periods indicated in its three reporting segments – North Asia region, Thailand region and ROW region for its three principal product lines, i.e., Manufactured Products, Distributed Products, and SDI together with their respective percentage share of total sales by reporting segment for such periods.

	For the year ended December 31, (figures in US$ are in thousands)
	2014				2013				2012
	$		%		$		%		$		%
Regions:
North Asia	$	114,836	25.40	%	$	69,347	15.00	%	$	55,633	12.00	%
Thailand		166,864	37.00	%		175,347	38.10	%		190,379	41.20	%
ROW		169,627	37.60	%		215,982	46.90	%		216,253	46.80	%
Total Net Sales	$	451,327	100.00	%	$	460,676	100.00	%	$	462,265	100.00	%

Our operating subsidiaries are also responsible for sales planning, marketing strategy and customer liaison.  The Company’s sales staff is knowledgeable about the Company’s products and frequently must render technical assistance, consulting services and repair and maintenance services to the Company’s customers.  In order to ensure quality service and maintain sensitivity to market conditions, the Company does not conduct sales through independent sales agents on a commission basis but uses its own sales employees located at the operating subsidiaries.

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As copper constitutes the most significant component of the Company’s wire and cable products, the price of the Company’s products depends primarily upon the price of copper.  In order to minimize the impact of copper price fluctuations, the Company attempts to determine the prices of its products based on the prevailing market price of copper.  The Company may be affected, to a degree, in the short term by significant fluctuations in the price of copper.

Payment methods for the Company’s products vary with markets and customers.  The majority of sales by the Company of its Manufactured Products requires payment within 90 days, but may vary depending on the customer and payment record.  Sales pursuant to a successful project tender or sales to governmental or public utilities are conducted in accordance with the tender or other applicable regulations.  In connection with the distribution of medium and high voltage power cable manufactured by PEWC, the Company is required to pay PEWC 90% of the cost of the products either within 30 days of receipt of the product or, in the case of SDI products, upon installation, with the remaining 10% in either case to be paid within one year.  In connection with the purchase of copper rod, the Company is required to pay PEWC the cost of the copper rod within 30 days from obtaining the products from PEWC.  For the export market, payment is usually made by prior delivery of an irrevocable letter of credit.  Neither the Company nor its local subsidiaries offers financing for purchases of the Company’s products.  Company employees engaged in sales and marketing are paid a salary and may also receive a bonus based on performance.

Products are marketed under the respective names of each company.  For instance, products manufactured by Siam Pacific are marketed under the “Siam Pacific”.  Products manufactured by Sigma Cable are sold under the “Sigma Cable” brand.

Thailand

The Company produces and sells telecommunication cable, enameled wire and power cable in Thailand. Charoong Thai is one of the leading cable manufacturers in Thailand.  Our distribution channels include both direct sales to government entities and private sector participants in the infrastructure sector, and sales to agents for governmental entities.  Sales within Thailand region are made directly by the sales department of the Company’s local subsidiaries in accordance with terms and pricing set by the local subsidiaries.  The major customers of the Company include many prominent clients working with the government and its contractors (True Corporation Plc (“True”), TT&T (“Triple T”), etc.), subcontractors, and distributors for the private sector.  Charoong Thai has successfully participated in many major projects, which included, Suwannabhumi International Airport, Government Center, PTT Maptaput, and BRT (Bus Rapid Transit).

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ROW

The Company produces and sells low voltage power cable in Singapore and Australia.  In addition, the Company sells a wide range of wire and cable products produced by PEWC.  The Company also offers SDI project engineering services for medium and high voltage power cable to power transmission projects in Singapore.

In Singapore alone, sales of Manufactured Products in 2014 accounted for 32% of the total net sales in Singapore; sales of Distributed Products in 2014 accounted for 50%, the remaining 18% representing SDI project engineering services.  SP Power Assets Ltd. has historically been far and away the leading customer for the Company’s SDI services.  Sales to the customer are under a comprehensive contract, with purchase orders placed from time to time with the Company by SP Power Assets Ltd.

China

The Company produces and sells copper-based telecommunication cable and enameled wire in China.  The Company’s China operations are now conducted through six business entities; following the sale in early 2013 of the Company’s interest in SHP as described earlier.  Copper-based telecommunication cables are generally sold to the national, providential or local offices of the fixed-line and mobile telecommunications network operators or sub-contractors of such agencies.  The Company generally sells enameled wire directly to manufacturers of electric motors for use in various consumer appliances.

4.2.6 Competition

The wire and cable industry in the Asia Pacific region is highly competitive.  The Company’s competitors include a large number of independent domestic and foreign suppliers.  Certain competitors in each of the Company’s markets have substantially greater manufacturing, sales, research and financial resources than the Company.  The Company and other wire and cable producers increasingly compete on the basis of product quality and performance, reliability of supply, customer service and price.  To the extent that one or more of the Company’s competitors is more successful with respect to the primary competitive factors, the Company’s business could be adversely affected.

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Thailand

The wire and cable industry in Thailand is highly competitive.  In its various product lines, the Company competes with a total of approximately thirty local wire and cable manufacturers and, to a lesser extent, with foreign producers for sales in Thailand of telecommunications cable, power cable and enameled wire.  The Company is one of the five largest producers in the Thai market.  These five largest producers are the only producers of telecommunications cable approved by the Thai Industrial Standards Institute and, therefore, the only cable producers whose products may be used in government-commissioned projects.  Stringent governmental approval processes, tariffs and other import restrictions have limited competition in the Thailand market from foreign wire and cable producers.  The Company also experiences significant competition from a number of smaller producers with regard to sales of enameled wire products.

Singapore

The Company believes that Sigma Cable is one of the major suppliers of power cable products in Singapore; however, it experiences significant competition from other local producers.  There is no tariff or other barrier against foreign competition in the local Singapore market and potential competitors are free to enter the industry.  However, because of high capital costs, the Company does not presently anticipate that it is likely there will be new domestic entrants to the wire and cable industry in Singapore in the near future.

Australia

Currently, besides APEC, there are two major wire and cable producers with operations located in Australia:  Olex Cables (owned by Nexans) and Prysmian Cables, with factories in the states of Victoria and New South Wales, respectively.  Also, Advance Cable, a cable producer with a factory in Victoria, has recently obtained a bigger market share. In addition, a significant portion of the Australian market is serviced by two importers:  (i) General Cables Australia, which imports cables from its parent company General Cables, which manufactures cables in New Zealand and (ii) Electra Cables, which imports cables from factories in China.  These companies are APEC’s principal competitors.  APEC however is the only power cable producer in Queensland and therefore seeks to take advantage of its comparative proximity to Queensland-based customers in contrast to competitors that are required to transport their products into Queensland from other states in Australia.  APEC has also opened sales offices with warehousing facilities in Sydney, Melbourne, Brisbane, and Perth in order to attract and service the customers in those regions.  APEC also has a distribution agreement with one of the regional suppliers with the goal of generating additional business for the Australia operations.  Foreign competition barriers exist with import duties and the more stringent Australian cable specifications standards.  Asean (Association of South East Asian Nations) Free Trade Area (AFTA) Agreements are in effect with Singapore and Thailand, among other Asian countries.

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China

PEWS manufactures enameled wires in the Shenzhen Special Economic Zone in Guangdong Province for electronic, video and audio products for the South China market and for export.  PEWC Hong Kong, one of the subsidiaries of PEWC, is the trading arm of PEWS.  It supplies mainly to overseas transformer, motor and coil manufacturers.  It faces competition principally from overseas imports and local manufacturers.

Shanghai Yayang is the only major enameled wire producer in Shanghai and it supplies mainly to transformer, motor and coil manufacturers in the eastern part of China.  It faces competition principally from overseas imports and manufacturers from other provinces in China.

4.2.7 Regional Considerations

The principal Asian markets in which we do business have displayed exceptional overall economic growth in recent years compared to the United States and a number of other more developed markets, subject to occasional episodes of economic and currency exchange volatility attributable to various factors including the increased risks of emerging market investment, actual or potential political instability and occasional pandemics.  In some countries, the International Monetary Fund (the “IMF”) exerts considerable influence over economic policy and provides support to stabilize the domestic economy.  In general, the Asian markets in which we do business have been export-driven in recent years and have in the case of China and Singapore, for example, accumulated considerable capital reserves, which contributes to a more stable business environment.

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Thailand Region

A substantial portion of the Company’s Thai operations, whose sales accounted for approximately 37.0% of the Company’s net sales in 2014, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand.  The volume of sales of these products tends to correlate with the general level of economic activity in Thailand.  As a result, the performance of the Company’s Thai operations depends in significant part on the general state of the Thai economy.  Infrastructure development and related construction projects in Thailand depend significantly upon government sponsored initiatives.  In recent years, the level of government involvement in infrastructure development has tended to track increases or contractions in Thailand’s gross domestic product (“GDP”).  Overall, the construction industry and infrastructure projects have slowed considerably, thereby affecting local sales, placing competitive pressure on prices and prompting the Company to rationalize Thai operations and actively seek overseas export markets.

Telecommunications

Sales of the Company’s telecommunication products in Thailand have depended to a significant degree on the substantial investment in and development of the telecommunications sector by the Thai government.  In particular, the Company’s sales of Manufactured Products are affected by the dollar value of contracts awarded by the government for telecommunications and other infrastructure projects.

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The Company produces and sells copper core telecommunications cable, enameled copper wire and enameled aluminum wire to the Thai market, and also exports enameled wire to overseas markets. Sales of telecommunications cable, one of the Company’s leading products in Thailand, are conducted either by tender for participation in large scale telecommunications projects of the Telephone Organization of Thailand Corporation Plc. (“TOT”), or by sales directly to subcontractors of Triple T and True, the two private telephone line contractors which would be licensed by TOT with regard to particular projects.  The Company generally sells enameled wire directly to electrical appliance manufacturers or an OEM (original equipment manufacturers) for both the local and export markets, and in smaller units that are sold to local dealers.

Power

In Thailand, the prevailing historical trend has been that economic growth would stimulate rapid growth in the demand for electric power, and annual rates of growth in electricity demand would outpace annual economic growth rates.  Despite the rapid growth in electricity demand, electricity consumption in Thailand remains low by international standards.  The Company believes that, in the medium to longer term, there will be an increased demand for power supply which will lead to increased demand for the Company’s power cable products from both developers of power production facilities and contractors installing power supply lines.

Singapore

The Company’s distribution and project engineering business segments are concentrated in the Singapore market.  In 2014, the Company realized $21.6 million in revenues from SDI projects, compared to $18.6 million in 2013 and $6.4 million in 2012.  Revenue in Singapore from Distributed Products in 2014 was $61.0 million, compared to $54.8 million in 2013 and $45.2 million in 2012.

The Singapore government has established targets to increase the population from 4.6 million in 2007 to approximately 6 million by the end of 2020.  This planned growth in population is expected to result in an increase in demand for residential property and construction.  The Company continues to seek ways to increase its business volume in its project engineering business segment.

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China

The economy of China differs from that of most developed free-market economies in a number of respects, including structure, degree of government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position.  In recent years, the PRC government has implemented economic reform measures which emphasize decentralization, expansion of consumption in the domestic market, utilization of market forces and the development of foreign investment projects of which Shanghai Yayang is an example.

4.3 Organization Structure

Please refer to Business Overview in section 4.2

4.4 Property, Plant and Equipment

The Company’s Manufactured Products are produced at facilities located on premises owned or leased by Siam Pacific, Charoong Thai, Sigma Cable, APEC, Shanghai Yayang, PEWS and NPC.  The following is a summary of the Company’s material facilities and operations as of December 31, 2014.

Siam Pacific owns a 7.45 acre production facility near Bangkok, Thailand, located on a 26.79 acre site that it also owns.  Telecommunications cable and enameled wire are manufactured at this facility.  The production facility constitutes a portion of certain property and assets which are pledged to a financial institution.

Charoong Thai owns a 24.7 acre production facility in Chachoengsao province, near Bangkok, Thailand, where telecommunications cable and power cable are manufactured.  The production facility is located on a 57.9 acre site which Charoong Thai also owns.  Neither the production facility nor the land is mortgaged.

Sigma Cable produces power cable on a 19,373 square meter site in Singapore leased from the Jurong Town Corporation (“JTC”) for 30 years from September 16, 2000 to September 16, 2030.  JTC is a government-linked corporation and is Singapore’s largest industrial landlord.  Building assets are pledged to United Overseas Bank.

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APEC owns a 6,735 square meter power cable manufacturing facility on a 39,000 square meter land parcel in Brisbane, Australia.  Neither the production facility nor the land is mortgaged.

Shanghai Yayang operates a factory that produces enameled wires, located in an area of approximately 27,839 square meters of state-owned land in an industrial district in Fengxian, Shanghai.  Assets consisting of buildings with a value of approximately $1 million are pledged to Industrial and Commercial Bank of China.

PEWS manufactures enameled wire in a facility on 36,000 square meters of state-owned land with a built-up area of 20,367 square meters in Long Gang, Shenzhen, China.  A leasehold right of industrial land use for the land has been granted for 49 years.  The land and building is pledged to Agricultural Bank of China as security for a $3.7 million bank loan.

NPC is situated in Ing-Chiang Township in Ningbo City in Zhè Jiāng Province, China.  NPC manufactures electronic wire in a facility that occupies 44,000 total square meters, with a land use right expiring July, 2044.  The factory and the land use right are pledged to the local financing institute for a $7.5 million loan.

All of the Company’s facilities in Thailand, Singapore, Australia and China use production processes and equipment of international standard imported from Europe, the United States, Taiwan, and Japan.

The production capacity and extent of utilization of the Company’s facilities varies from time to time and such information is considered to be commercially sensitive and proprietary information.

4.5 Insurance

The Company maintains insurance policies covering certain buildings, machinery and equipment against specified amounts of damage or loss caused by fire, flooding, other natural disasters and burglary and theft.  The Company does not carry insurance for consequential loss arising from business interruptions or political disturbances and does not carry product liability insurance.  In addition, the availability of insurance in China is limited, and the Company does not have business liability or disruption insurance for our operations in China.  The Company believes that it maintains insurance coverage commensurate with the nature of and risks associated with its business.  Siam Pacific renewed its insurance policy in 2013 which covers fire and theft but does not provide coverage for flood damage or business interruption, as in Thailand insurance companies are generally unwilling to issue policies covering flood or business interruption.

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4.6 Environmental Matters

The Company is subject to a variety of laws and regulations covering the storage, handling, emission and discharge of materials into the environment.  The Company believes that all of its operations are in compliance with, and in certain circumstances exceed, all applicable environmental laws and regulations.  The Company’s operations in Thailand have recovered fully from the property damage and cessation of operations that occurred there in 2011 by reason of the nationwide flooding crisis.  The Company has not been subject to any legal, regulatory or other action alleging violations or breaches of environmental standards.  While it is difficult to accurately estimate future environmental compliance costs and potential liabilities, if any, the Company does not currently anticipate any material adverse effect on its consolidated results of operations, financial position or cash flows as a result of compliance with these laws.

Item 4A: Unresolved Staff Comments

(Not applicable)

Item 5: Operating and Financial Review and Prospects

The following discussion should be read in conjunction with the information contained in our audited consolidated financial statements and notes thereto (the “Financial Statements”) presented in Item 18 of this Annual Report.

5.1 Disclosures of Critical Accounting Policies

Summarized below are our accounting policies that we believe are important to the portrayal of our financial results and also involve the need for management to make estimates about the effect of matters that are uncertain in nature. Actual results may differ from these estimates, judgments and assumptions. Certain accounting policies are particularly critical because of their significance to our reported financial results and the possibility that future events may differ significantly from the conditions and assumptions underlying the estimates used and judgments made by our management in preparing our financial statements. The following discussion should be read in conjunction with the consolidated financial statements and related notes, which are included in this annual report.

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Fair Value Measurement

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

} In the principal market for the asset or liability, or

} In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

} Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities

} Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

} Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Inventories

Inventories are stated at the lower of cost and net realizable value.  Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, direct labor and an appropriate proportion of overheads.  Net realizable value is based on estimated selling prices less any estimated costs to be incurred to completion and the estimated cost necessary to make the sale.

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Financial Instruments

(i) Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.  The Company determines the classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as described below:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.  Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in the income statement.

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Derivatives not designated as hedging instruments

A derivative is a financial instrument or other contract within the scope of IAS 39 with all of the following characteristics:

(a) its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the 'underlying');

(b) it requires no initial net investment, or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and

(c) it is settled at a future date.

Fair value is the measurement basis for all financial instruments meeting the definition of a derivative.  Change in fair value of non-hedged item is recorded in profit and loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (“EIR”) method, less impairment.  Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.  The EIR amortization is included in finance income in the income statement.  The losses arising from impairment are recognized in the other operating expenses for receivables.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Company has the positive intention and ability to hold them to maturity.  After initial measurement, held to maturity investments are measured at amortized cost using the EIR, less impairment.  Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.  The EIR amortization is included as finance income or finance cost in the income statement.  The losses arising from impairment are recognized in the income statement in finance costs.

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Available-for-sale financial assets

Available-for-sale financial assets include equity investments and debt securities.  Equity investments classified as available for sale are those that are neither classified as held for trading nor designated at fair value through profit or loss.  Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealized gains or losses recognized as other comprehensive income in the available-for-sale reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the income statement in finance costs.  Interest earned whilst holding available-for-sale financial investments is reported as finance income using the EIR method.

For a financial asset  reclassified out of from the available-for-sale category, the fair value carrying amount at the date of reclassification becomes its new amortized cost and any previous gain or loss on the asset that has been recognized in equity is amortized to profit or loss over the remaining life of the investment using the EIR.  Any difference between the new amortized cost and the maturity amount is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the income statement.

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(ii) Impairment of financial assets

The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired.  A financial asset or a group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.  Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant.  If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment.  Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred).  The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.  If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.

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The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.  The interest income is recorded as finance income in the income statement.  Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company.  If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account.  If a write-off is later recovered, the recovery is credited to finance costs in the income statement.

Trade Receivables Impairment:

For a trade receivable, impairment assessment is performed on an individual basis:

A financial asset is impaired (and impairment losses are determined) if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the holder about the following loss events:

} significant financial difficulty of the issuer or obligor;

} breach of contract, such as a default or delinquency in interest or principal payments;

} the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that would not otherwise be considered;

} it becoming probable that the borrower will enter bankruptcy or other financial reorganization;

} the disappearance of an active market for that asset because of financial difficulties (but not simply because the asset is no longer publicly traded ; or

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} observable data indicating that there is a measurable decrease in the estimated future cash flows from a Company of financial assets since initial recognition, although the decrease cannot yet be identified with the individual assets in the Company, including:

} adverse changes in the payment status of borrowers in the Company (e.g. an increased number of delayed payments); or

} national or local economic conditions that correlate with defaults on the assets in the Company.

For trade receivables that have been individually assessed, but for which there is no objective evidence of impairment, the review for impairment is performed on a group basis, based on similar credit risk characteristics.

Available for sale financial assets

For available-for-sale financial assets, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.  ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.  The Company's policy considers a significant decline to be one in which the fair value is below the weighted average original cost by more than 20%.  A prolonged decline is considered to be one in which the fair value is below the weighted average original cost for a period of more than 12 months.  When there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in the income statement – is removed from other comprehensive income and recognized in the income statement.  Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income.

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In the case of debt instruments classified as available for sale, impairment is assessed based on the same criteria as financial assets carried at amortized cost.  However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the income statement.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.  The interest income is recorded as part of finance income.  If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the income statement, the impairment loss is reversed through the income statement.

(iii) Financial Liabilities

Financial liabilities initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.  The Company determines the classification of its financial liabilities at initial recognition.

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All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, bank overdrafts and interest bearing loans and borrowings.

Subsequent measurement

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the EIR method.  Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.  The EIR amortization is included as finance costs in the income statement.

Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired.  If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount.  An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use.  A CGU is the smallest group of assets that generates cash inflows that are largely independent of the cash flows from other assets or groups of assets. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.  When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.  These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company’s CGUs to which the individual assets are allocated.  These budgets and forecast calculations generally cover a period of five years.  For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the income statement in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased.  If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount.  A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized.  The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.  Such reversal is recognized in the income statement.

Taxes

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

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Deferred tax liabilities are recognized for all taxable temporary differences, except:

} When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

} In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.  Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

} When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

} In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.  Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.  Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Uncertain tax position

An entity’s tax position might be uncertain; for example, where the tax treatment of an item of expense or structured transaction may be challenged by the tax authorities.

Local management should consider each uncertain tax positions individually, by first consider whether each position taken in the tax return is probable of being sustained on examination by the taxing authority.  It should recognize a liability for each item that is not probable of being sustained.  The liability then is measured using a single best estimate of the most likely outcome.  The uncertain tax positions are presented in the current tax liabilities.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.

Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.  Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment  and excluding taxes or duty.  The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent.  The specific recognition criteria described below must also be met before revenue is recognized.

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SDI

The Company’s supply, delivery and installation services are considered as multiple elements arrangements in accordance with IAS 18.  The sale of cables and the installation service are considered as one single arrangement.

Revenue of SDI is accounted for using the percentage-of-completion method, based on the customer certification of the length of cable laid with respect to the estimated total length of cable under the contracts in accordance with IAS 11.

When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract shall be made.  The recognition of provision for losses shall be in the period in which they become evident.  On a quarterly basis, the Company should review the budget and forecast whether a loss provision should be recorded.

5.2 Selected Gross Margin Data

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements presented in Item 18 of this Annual Report.

Results are analyzed and reported along the lines of our three principal business segments, consisting of the North Asia region, the Thailand region, and the ROW region.  For the benefit of our shareholders, included in the summary table below are certain results for product lines within our 3 business segments with regard to net sales, gross profit and gross profit margin for the periods covered.  The following table sets forth selected summary data for the periods indicated (dollar ($) amounts in thousands of US$).

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	For the year ended December 31,
	2014			2013			2012
	(in thousands except for percentage)
Net Sales:
North Asia region	$	114,836		$	69,347		$	55,633
Thailand region		166,864			175,347			190,379
ROW region		169,627			215,982			216,253
Total	$	451,327		$	460,676		$	462,265
Gross profit:
North Asia region	$	4,441		$	3,096		$	4,274
Thailand region		15,882			26,385			25,063
ROW region		16,421			22,335			21,142
Total gross profit	$	36,744		$	51,816		$	50,479
Gross profit margin:
North Asia region		3.87	%		4.47	%		7.68	%
Thailand region		9.52	%		15.05	%		13.16	%
ROW region		9.68	%		10.34	%		9.78	%
Total gross profit margin		8.14	%		11.25	%		10.92	%

5.3 Operating Results

The Company is 65.6% owned and controlled by PEWC, a Taiwanese company.  An additional 9.8% of the Common Shares are owned and controlled by a U.S.-based private equity fund.  The remaining 24.6% of the outstanding Common Shares are publicly-traded in the United States and listed on NASDAQ.  Based upon a review of Schedule 13D and 13G filings made with the Commission by shareholders, and a review of the share register maintained by the Company’s transfer agents in Bermuda and the U.S., the Company is not aware that it has any shareholders resident in the jurisdictions where the Company has business operations.  While the Company’s operations and results are impacted by economic, fiscal, monetary and political policies of the respective governments in the countries where the Company operates, that impact is not a function of the shareholder base of the Company.

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5.3.1 Year Ended December 31, 2014 Compared with Year Ended December 31, 2013

	For the Year Ended December 31,
	2014			2013			Changes in $			Changes in %
	(in thousands)
Income Statement Data:
Net sales	$	451,327		$	460,676			(9,349	)		(2.0	)
Costs of sales		(414,583	)		(408,860	)		(5,273	)		(1.3	)
Gross profit		36,744			51,816			(15,072	)		(29.1	)
Other operating income		89			181			(92	)		(50.8	)
Selling general & administrative expenses		(29,479	)		(34,559	)		5,080			14.7
Other operating expenses		(2,168	)		(196	)		(1,972	)		(1,006.1	)
Operating profit		5,186			17,242			(12,056	)		(69.9	)
Finance cost		(1,697	)		(1,734	)		37			2.1
Finance income		1,167			1,306			(139	)		(10.6	)
Share of loss of an associate		(338	)		(211	)		(127	)		(60.2	)
Gain on disposal of investment		—			232			(232	)		(100.0	)
Loss on sale of a subsidiary		(178	)		—			(178	)		(100.0	)
Exchange loss		(206	)		(1,245	)		1,039			83.5
Other income		1,150			1,454			(304	)		(20.9	)
Other expenses		(49	)		(260	)		211			81.2
Income from continuing operations before income taxes		5,035			16,784			(11,749	)		(70.0	)
Income taxes expenses		(2,274	)		(5,518	)		3,244			58.7
Net income	$	2,761		$	11,266			(8,505	)		(75.5	)
Net income attributable to non-controlling interests		2,189			5,419			(3,230	)		(59.6	)
Net income attributable to APWC		572			5,847			(5,275	)		(90.2	)

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General

Results of operations are determined primarily by market demand and government infrastructure projects, market selling prices of our products, our ability to manufacture high quality products efficiently in quantities sufficient to meet demand and to control production and operating costs.  Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for majority of the cost of sales in 2014 and 2013.

In order to minimize the impact of copper price fluctuations, we attempt to “peg” the prices of our products to the prevailing market price of copper and pass changes in the cost of copper through to customers as much as possible.  In certain circumstances, however, we remain affected by fluctuations in the price of copper.  A recent rise or decline in copper prices may not be fully reflected under this pricing scheme for several months.

Average copper prices per metric ton decreased by 6.4% from $7,326 in 2013 to $6,860 in 2014 (annual average).

Copper prices indicated in this report are quoted from the LME index.  The 2014 and 2013 copper prices were as follows:

		2014		2013
Average LME copper price ($/Ton)	Q1		7,038		7,928
	Q2		6,787		7,146
	Q3		6,992		7,079
	Q4		6,621		7,153
	Year		6,860		7,326

The average copper price in March 2015 on the LME was $5,926 per metric ton.

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Net Sales

Total sales in the North Asia region increased by $45.5 million, or 65.6%, from $69.3 million in 2013 to $114.8 million in 2014. The increase in sales was primarily due to the fact that starting November 2013, the region's export sales were no longer made through EPAN, and as a result, a substantial portion of the export sales was moved to the North Asia region. The increase in sales was also contributed by the increase in the sales of manufactured products due to a different sales strategy, which increased both domestic and export sales.

Revenue from the Thailand region decreased by $8.4 million from $175.3 million in 2013 to $166.9 million in 2014, or 4.8%. The decrease was primarily attributable to the fact that the volatile political situation adversely impacted the level of infrastructure investment and customer demand for our products.

Revenue decreased by $46.4 million, or 21.5%, from $216.0 million in 2013 to $169.6 million in 2014 in the ROW region. The decrease was primarily because starting November 2013, a substantial portion of the export business was transferred to the North Asia region rather than being conducted through the ROW region. The decrease was also attributable to the decrease in sales in APEC due to stronger competition in the Australia market and the depreciation of the Australian dollar.

Gross Profit

Gross profit for 2014 was $36.7 million, representing a decrease of $15.1 million, or 29.1% down compared to $51.8 million in 2013. The decrease was primarily attributable to the lower margin in the Thailand region and the Company’s business in Australia in the ROW region.

The gross profit margin of the North Asia region was down from 4.47% in 2013 to 3.87% in 2014. The Company’s main product in this region is enameled wire, as the technology required to manufacture the product is low and the manufacturing process is not sophisticated, the Company’s business in the region was adversely affected by competition in the local market. In order to maintain the market share without sacrificing the product quality, the Company lowered the selling price to match competitors’ prices.

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The gross margin of the Thailand region was 9.52% in 2014, down from 15.05% in 2013, a decrease of 36.7%.  Our major clients in this region included government entities, private sector participants in the infrastructure sector and agents for governmental entities.  The unstable political environment adversely affected Thai government’s spending on infrastructure.  The gross margin of the Thailand region was eroded by the decrease in sales to the public sector, from which our subsidiaries in the Thailand region enjoyed a higher profit margin.

The gross profit margin of the ROW region decreased from 10.34% in 2013 to 9.68% in 2014.  The decrease of the gross margin was primarily due to the competition in the Australia market, where the Company’s Australia subsidiary lowered the selling price to compete with similar products imported from China by other competitors.

Operating Profit

SG&A expenses were $29.5 million in 2014, decreased by $5.1 million, or 14.7%, from $34.6 million in 2013.   The decrease in SG&A was primarily attributable to the decrease in sales-related commissions and remuneration.  The decrease was partially due to the depreciation of the Thai Baht and Australian dollar.  For the years ended 2014 and 2013, SG&A expenses accounted for 6.5% and 7.5% of the net sales, respectively.

In 2014, we recorded a net provision of allowance for doubtful accounts of $2.2 million, owing to the fact that some of the major customers of the Company were not able to settle their overdue payments.  Our internal controls provide that we perform a detailed review of our outstanding receivables, and make adjustments to our estimate to reflect significant delinquent accounts receivable.  The Company is not aware of other significant delinquent accounts receivable that have not already been adequately reserved.  The Company has brought actions against some customers who failed to settle their delinquent accounts.  The outcome of those actions will not have a material impact on our results of operations or financial condition.

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Finance Income

The finance income was interest earned from bank deposits.  Interest income decreased from $1.3 million in 2013 to $1.2 million in 2014 by $0.1 million, or 10.6%, primarily due to tighter cash position in the North Asia region and the depreciation of the Thai Baht and Australian dollar against the U.S. dollar.

Share of Loss of an Associate

The increase in the share of loss of an associate by $0.1 million in 2014, as compared to that of 2013, was primarily due to the loss that the Company recognized of $0.3 million according to its shareholding in SPRC.

Gain on Disposal of Investment

In 2013, a gain of $0.2 million was recognized from the disposal of the Company’s equity investment in Shandong Huayu Pacific Fiber Optics.

Loss on Disposal of a Subsidiary

In August 2014, the Company recognized a loss of $0.2 million from the disposal of PEWC Hong Kong, a wholly-owned subsidiary of the Company.

Exchange Gain/(Loss)

The exchange rates at December 31, 2014 and 2013 are listed below, based on the Noon Buying Rate.  However, they do not actually reflect the ongoing rates during the year when transactions actually took place.

	As of December 31,
	2014		2013
Foreign currency to US$1:
Thai Baht		32.90		32.68
Singapore $		1.324		1.262
Australian $		1.224		1.120
Chinese RMB		6.205		6.054

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Other Income

Other income decreased by $0.3 million compared to 2013 primarily due to a non-recurring income in 2013.

Other Expense

Other expenses decreased by $0.2 million compared to 2013 primarily due to the net loss on financial instruments in 2013.

Income Taxes

Income tax expense was $2.3 million in 2014 compared to $5.5 million in 2013.  The change was mainly due to the decrease in pre-tax income.  The increase in effective tax rate from 32.88% in 2013 to 45.16% in 2014 was owning to the fact that our future tax benefits resulting from loss carry forwards could not be recognized.

5.3.2 Year Ended December 31, 2013 Compared with Year Ended December 31, 2012

	For the Year Ended December 31,
	2013			2012			Changes in $			Changes in %
	(in thousands)
Income Statement Data:
Net sales	$	460,676		$	462,265			(1,589	)		(0.34	)
Costs of sales		(408,860	)		(411,786	)		2,926			0.71
Gross profit		51,816			50,479			1,337			2.65
Other operating income		181			5,825			(5,644	)		(96.89	)
Selling general & administrative expenses		(34,559	)		(34,593	)		34			0.10
Other operating expenses		(196	)		(888	)		692			77.93
Operating profit		17,242			20,823			(3,581	)		(17.20	)
Finance cost		(1,734	)		(2,195	)		461			21.00
Finance income		1,306			1,322			(16	)		(1.21	)
Share of loss of an associate		(211	)		(21	)		(190	)		(904.76	)
Gain on disposal of investment		232			—			232			100.00
Gain on liquidation of subsidiaries		—			279			(279	)		(100.00	)
Exchange gain (loss)		(1,245	)		2,411			(3,656	)		(151.64	)
Other income		1,454			1,933			(479	)		(24.78	)
Other expenses		(260	)		—			(260	)		(100.00	)
Income from continuing operations before income taxes		16,784			24,552			(7,768	)		(31.64	)
Income taxes expenses		(5,518	)		(7,578	)		(2,060	)		(27.18	)
Net income	$	11,266		$	16,974			(5,708	)		(33.63	)
Net income attributable to non-controlling interests		5,419			7,280			(1,861	)		(25.56	)
Net income attributable to APWC		5,847			9,694			(3,847	)		(39.68	)

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General

Results of operations are determined primarily by market demand and government infrastructure projects, market selling prices of our products, our ability to manufacture high quality products efficiently in quantities sufficient to meet demand and to control production and operating costs.  Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for majority of the cost of sales in 2013 and 2012.

In order to minimize the impact of copper price fluctuations, we attempt to “peg” the prices of our products to the prevailing market price of copper and pass changes in the cost of copper through to customers as much as possible.  In certain circumstances, however, we remain affected by fluctuations in the price of copper.  A recent rise or decline in copper prices may not be fully reflected under this pricing scheme for several months.

Average copper prices per metric ton decreased by 7.8% from $7,950 in 2012 to $7,326 in 2013 (annual average).

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Copper prices indicated in this report are quoted from the LME index.  The 2013 and 2012 copper prices are as follows:

		2013		2012
Average LME copper price ($/Ton)	1Q		7.928		8,308
	2Q		7,146		7,867
	3Q		7,079		7,717
	4Q		7,153		7,909
	Year		7,326		7,950

Net Sales

Total sales in the North Asia region increased by $13.7 million, or 24.7%, from $55.6 million in 2012 to $69.3 million in 2013. The increase was primarily due to the increase of domestic sales in 2013 comparing to that of 2012 and starting November 2013, a portion of export sales was conducted through the North Asia region rather than the ROW region.

Revenue from the Thailand region decreased by $15.0 million from $190.4 million in 2012 to $175.3 million in 2013, or 7.9%.  The decrease was primarily attributable to the fact that the volatile political situation adversely impacted the level of infrastructure investment and customer demand for our products.

Revenue decreased by $0.3 million, or 0.1%, from $216.3 million in 2012 to $216.0 million in 2013 in the ROW region. The decrease in sales in this region was primarily because starting November 2013, a portion of the export business was transferred to the North Asia region, and no longer conducted by the ROW region. The decrease of EPAN's revenue was partially offset by the increase of sales in SDI.

Gross Profit

Gross profit for 2013 was $51.8 million, representing an increase of $1.3 million, or 2.7% up compared to $50.5 million in 2012.  The increase was primarily attributable to the higher margin on power cables in the Thailand region, despite the margin erosion on enameled wires.

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The gross profit margin of the North Asia region was down from 7.68% in 2012 to 4.47% in 2013. The decrease was primarily caused by the decrease in the copper price and weak demand in this market. In addition, the Company’s main product in this region is enameled wire, as the technology required to manufacture the product is low and the manufacturing process is not sophisticated, the margin was eroded by competition in the local market.

Notwithstanding the drop of sales in the Thailand region by 7.9% as mentioned above, gross profit margin of the region was 15.05% in 2013, up from 13.16% in 2012, an increase of 14%. Our major clients in this region included government entities, private sector participants in the infrastructure sector and agents for governmental entities. As the selling price was set at a predetermined amount based on the sales agreements signed with these customers, the region enjoyed a higher profit margin as the copper price decreased leading to products manufactured at a lower cost.

The gross profit margin of the ROW region increased slightly from 9.78% in 2012 to 10.34% in 2013. The gross profit margin of the region in 2013 remained stable compared to that of 2012.

Operating Profit

SG&A expenses were $34,559 in 2013, slightly decreased by $34, or 0.1%, from $34,593 in 2012.  For the years ended 2013 and 2012, SG&A expenses accounted for 7.5% of the net sales for both years.

In 2013, we recorded a provision of allowance for doubtful accounts of $0.2 million, owing to the fact that some of the major customers of the Company were not able to settle their outstanding trade receivables.  Our internal controls provide that we perform a detailed review of our outstanding receivables, and make adjustments to our estimate to reflect significant delinquent accounts receivable.  The Company is not aware of any significant delinquent accounts receivable that have not already been adequately reserved.  In addition, we believe that our periodic allowance for doubtful accounts will continue to not have a material impact on our liquidity.

The decrease in the operating income in 2013, as compared to 2012, was attributable to the insurance proceeds in 2012 in the amount of $4.8 million (Baht 149 million) due to the suspended operations temporarily in the fourth quarter of 2011 because of damage sustained from the flooding in Thailand.  The decrease in operating expenses in 2013 was also for the same reason as there was no flooding related spending in 2013.

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Finance Cost

The finance cost included interest from debts and borrowings.  The interest decreased as the Company’s interest-bearing loans and borrowings decreased from $57.8 million at December 31, 2012 to $41.8 million at December 31, 2013.

Finance Income

The finance income was interest earned from bank deposits.  The total long-term and short-term bank deposits decreased by $7.1 million, from $17.4 million at December 31, of 2012 to $10.3 million at December 31, 2013, which led to the decrease in interest income in 2013.

Share of Profit of an Associate

The increase in the share of loss of an associate by $0.2 million in 2013, as compared to that of 2012, was primarily due to the Company recognized $0.2 million loss according to its shareholding in SPRC in 2013.

Gain on Disposal of Investment

The gain was from the disposal of the Company’s equity investment in Shandong Huayu Pacific Fiber Optics in 2013.

Gain on Liquidation of Subsidiaries

The gain was generated from the liquidation of the subsidiary, Myanmar Sigma Cable Co. Ltd.

Exchange Gain/(Loss)

The exchange rates at December 31, 2013 and 2012 are listed below, based on the Noon Buying Rate.  However, they do not actually reflect the ongoing rates during the year when transactions actually took place.

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	As of December 31,
	2013		2012
Foreign currency to US$1:
Thai Baht		32.68		30.59
Singapore $		1.262		1.221
Australian $		1.120		0.962
Chinese RMB		6.054		6.230

Other Income

Other income decreased by $0.5 million from $1.9 million in 2012 to $1.5 million in 2013 primarily due to the net gain from financial instruments recognized in 2012.

Other Expense

Other expenses increased by $0.3 million compared to 2012 primarily due to the net loss on financial instruments in 2013.

Income Taxes

Income tax expense was $5.5 million in 2013 compared to $7.6 million in 2012.  The change was mainly due to the decrease in pre-tax income.

5.4 Liquidity and Capital Resources

As of December 31, 2014 we had $68.9 million in cash and cash equivalents, primarily in bank accounts and cash on hand.  Our current sources of cash are our cash on hand, cash generated by our operations and our credit facilities.  Our primary financing needs will continue to be focused on the purchase and replacement of property, plant and equipment, future acquisitions and expenditures for ongoing operations.

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We have no direct business operations other than our ownership of the capital stock of our subsidiaries and equity investees.  Consequently, our subsidiaries have been and will continue to be the primary source of funds generated by operations.  Corporate needs are funded primarily through distributions from our subsidiaries.  Although we have no current intention to pay dividends, we would rely upon distributions of dividends from our subsidiaries in order to do so.  As noted in our risk factors, our operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to us.  Such restrictions could result from restrictive covenants contained in our loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other currency and other regulatory restrictions.  For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accordance with relevant PRC accounting standards and regulations.  Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds.  These reserves are not distributable as cash dividends.  The foregoing restrictions may also affect our ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.  We are not aware of any other restrictions in other countries in which we do business other than those discussed in the “Risk Factors” section.  Distributions may also be limited from time to time by reason of restrictions protective of the rights of minority shareholders of our subsidiaries and by reason of the current cash requirements of the operating subsidiaries.  Consequently, we periodically need to manage our corporate cash needs to align with the permitted timing of distributions.

We maintain several working capital and overdraft credit facilities with various commercial bank groups and financial institutions.  Under our line of credit arrangements for short-term debt with our banks, we may borrow up to approximately $278.4 million, including letters of credit for commodity purchases, on such terms as we and the banks mutually agreed upon.  These arrangements do not have termination dates but are reviewed annually for renewal.  As of December 31, 2014, the unused portion of the credit lines was approximately $168.2 million.  Letters of credit are issued on our behalf in the ordinary course of business by our banks as required by certain supplier contracts.  As of December 31, 2014, the Company had obligations in respect of amounts callable under issued, but undrawn letters of credit totaling $49.0 million.  Liabilities relating to the letters of credit are included in current liabilities.  There is no seasonality to the Company’s borrowing.

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Net cash provided by operating activities in the year ended December 31, 2014 was $8.1 million, as compared to $20.6 million of net cash provided by operating activities in the year ended December 31, 2013. The decrease was primarily the result of a decrease in net income in 2014.

In 2013, net cash provided by operations was $20.6 million compared to $10.7 million in 2012. The increase in net cash provided by operating activities was primarily attributable to a decrease in trade and other receivable in 2013 compared to an increase from 2011 to 2012

Days of sales outstanding (“DSO”) is a measure of the average collection period of accounts receivable, and although the calculation is influenced by the period used and the timing of sales within that period, it can provide insight into the variances in collections from period to period.  Our days of sales outstanding as of December 31, 2014 was 85 days, as compared to 98 days as of December 31, 2013.  We have in place rigorous policies across the Company that emphasize the importance of continuous focus on collection efforts.

In 2014, cash used in investing activities was $6.3 million compared to $5.5 million in 2013. The increase in net cash used in investing activities was primarily due to the proceeds from disposal of available-for-sale financial assets and held-for-sale assets in 2013 which was partially offset by the decrease in cash used to purchase property, plant and equipment in 2014 comparing to 2013.

In 2013, net cash used in investing activities was $5.5 million compared to $13.3 million in 2012. The decrease in net cash used in investing activities was primarily due to the proceeds from disposal of  available-for-sale financial assets and held-for-sale assets in 2013 as compared to the purchase of available-for-sale financial assets in 2012.

Net cash provided by financing activities was $7.7 million in 2014.  In 2014, net cash provided by financing activities reflected primarily proceeds from borrowings and the repayment of borrowings.

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Net cash used in financing activities was $19.4 million and $0.9 million in 2013 and 2012, respectively. Net cash used in financing activities reflected primarily the repayment of borrowings and proceeds from borrowings.

We engage in various transactions with PEWC, including the purchase of certain raw materials and the distribution of PEWC, products, mainly in Singapore.  The Composite Services Agreement contains provisions that define our relationship and the conduct of our respective businesses and confer certain preferential benefits on us.  Under the Composite Services Agreement, the material terms of which are summarized in the “Material Contracts” section, there are no obligations binding on the Company in favor of PEWC, nor are there any pre-established purchase commitments for copper.  As such, the Composite Services Agreement should not impact cash flows or liquidity until such time as actual purchases are made in the ordinary course of business such as for the purchase of raw materials.  The Composite Service Agreement may, however, impact operations to the extent that PEWC is not able to fulfill its obligations, such as supplying copper, and copper is not otherwise readily available on comparable terms from other market sources.  Cash generated by operations and borrowings, when needed, from our credit facilities have been the primary sources of funding purchases under the Composite Services Agreement, and we believe these sources will continue to provide sufficient funds for future purchases under this agreement.

We believe funds generated by our operating activities, our cash on hand and amounts available to us under our credit facilities will provide adequate cash to fund our requirements through at least the next twelve months.  We continue to have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, and other short-term and long-term obligations as they come due.  We may further enhance our liquidity in the future, as needs arise, by establishing additional lines of credit, with the support of one or more of our principal shareholders if necessary and available.  We currently anticipate that we will retain all of our earnings to fund our operations and do not anticipate paying any cash dividends in the foreseeable future.

5.5 Research and Development

The Company does not currently engage in its own research and development.  Under the Composite Services Agreement with PEWC described herein, the Company benefits from research and development conducted by PEWC at little or no cost to the Company.  In 2014, the Company utilized technology from its parent company, PEWC, to assist in developing the Company’s new business line of electronic wire being manufactured in NPC’s facility.  Accordingly, the Company has not made material expenditures on or commitments to research and development since formation.

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5.6 Trend Information

We are not aware of any trend, commitment, event or uncertainty that can reasonably be expected to have a material effect on our current or future business other than the following, each of which has materially impacted our financial results in the past and may do so in the future:

· Uncertainty arising from the volatility in the cost of copper, our principal raw material.  In 2014, the copper price went down from $7,326 (yearly average for 2013) per metric ton to $6,860 per metric ton (yearly average for 2014).  Under our business model, the Company, like other companies in the industry, remains subject to movements in the price of copper, our principal raw material.

· Fluctuations in the demand for our products in the markets in which we do business, based upon variations in the level of governmental and private investments in communications, power and industrial projects and programs that utilize our products.  We are not an end-user of our products and, therefore, we depend upon the requirements of our customers to generate sales.

See “Quantitative and Qualitative Disclosures About Market Risk.”

5.7 Off-Balance Sheet Arrangements

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company.

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5.8 Contractual Obligations

The following table sets forth our obligations and commitments to make future payments under contracts and other commitments as of December 31, 2014:

	Payments due by period
Contractual obligations (In thousands of US$)	Total		Less than 1 year		2-3 years		4-5 years		More than 5 years
Bank loans and overdrafts	$	53,863	$	53,863	$	­–­	$	–	$	–
Finance lease obligations (principal amount only)		69		31		38		–		–
Finance charges on finance lease obligations		7		4		3		–		–
Operating lease obligations		4,785		1,680		903		538		1,664
Capital commitment relating to installation of equipment and acquisition of machinery		4,591		4,591		–		–		–
Capital commitment relating to repair and maintenance consulting service		62		62		–		–		–
Purchase obligations for copper cathodes		159,995		159,995		–		–		–
	$	223,372	$	220,226	$	944	$	538	$	1,664

The contractual obligation for the purchase of coper cathodes disclosed in the table above was the minimum purchase commitment.  For more details on financial commitments and contingencies, please refer to our audited consolidated financial statements and the notes thereto in Item 18:  “Financial Statements.”

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Item 6: Directors, Senior Management and Employees

6.1 Directors and Senior Management

There is only one class of directorships and no one or more directors possesses any veto power over matters presented to the Board or any other special or enhanced voting rights.  The Bye-Laws provide that a quorum consists of a majority of the directors then in office.  As of December 31, 2014, there were a total of nine (9) directors on the Board, including three independent directors, Mr. Anson Chan, Dr. Yichin Lee, and Dr. Lambert Ding.  By a resolution passed at the Company’s most recent annual general meeting of shareholders (the “2014 AGM”) held on October 9, 2014, the shareholders determined that the minimum number of directors shall be fixed at two (2), the maximum number of directors be fixed at ten (10) and that one (1) vacancy shall exist on the Board of Directors, which shall be deemed to be a casual vacancy, which may be filled from time to time by the Board of Directors in accordance with the provisions of the Bye-Laws.  Each director is entitled to one vote, and approval of any matter requires a simple majority assuming a quorum is present.  The following table sets forth certain information concerning the current directors and certain other officers of the Company.  All directors are subject to annual election by the shareholders of the Company.  Each of the directors was reelected at the Company’s 2014 AGM.  Officers generally hold office for such period and upon such terms as the Board may determine.

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Name	Date of Birth	Position
Appleby Services (Bermuda) Ltd.	N/A	Assistant Resident Secretary
Anson Chan	November 3, 1963	Independent director, Audit Committee Chairman
Andy C.C. Cheng	April 29, 1958	Director and Non-Executive Chairman of the Board
Fang Hsiung Cheng	May 31, 1942	Director
Alex Erskine	September 7, 1963	Resident Secretary in Bermuda
Daphne Hsu	August 12, 1962	Financial Controller
Lambert L. Ding	October 12, 1959	Independent director, Audit Committee Member
Michael C. Lee	September 28, 1951	Director
Yichin Lee	January 4, 1961	Independent director, Audit Committee Member
Ching Rong Shue	March 4, 1950	Director
David Sun	December 22, 1953	Director
Yuan Chun Tang	November 26, 1960	Director, Chief Executive Officer
William Gong Wei	October 31, 1961	Chief Operating Officer
Ivan Hsia	August 14, 1973	Chief Financial Officer

Certain officers and directors of the Company are or were also officers and directors of PEWC and/or PEWC affiliates, as described below.  A brief professional summary for each member of the Board of Directors and senior management is as follows:

Mr. Anson Chan has been an independent member of the Company’s Board of Directors and a member and Chairman of the Audit Committee and compensation committee since 2007.  Mr. Chan is also a Managing Director of the Bonds Group of Companies and was a Senior Advisor to Elliott Associates from 2005 to 2008.

Mr. Andy C.C. Cheng was a member of the Company’s Board of Directors from 2004 to 2005 and was re-elected in 2007.  Mr. Cheng was appointed as Chairman of the Board in 2009.  From 1987 to 2003, Mr. Cheng served as Vice President in charge of procurement at PEWC.  Mr. Cheng has been an Executive Vice President at PEWC since 2004 and Chairman of each of the investment divisions of PEWC, Tai Ho Investment Co., Ltd. and You Chi Investment Co., Ltd., since June 2008.  Mr. Andy C.C. Cheng is not related to Mr. Fang Hsiung Cheng.

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Mr. Fang Hsiung Cheng has been a member of the Company’s Board of Directors since 2006.  He also serves as Assistant Vice President of PEWC.  Mr. Fang Hsiung Cheng is not related to Mr. Andy C.C. Cheng.

Mr. Alex Erskine was appointed as resident Secretary in Bermuda in October 2008.  Mr. Erskine is a partner in the Bermuda law firm of Appleby, which firm he joined in 1999.  From March 2007 until October 2008, Mr. Erskine was the managing partner of the British Virgin Islands office of Appleby.  Prior to joining Appleby, Mr. Erskine was Deputy Legal and Compliance Director of the Asset Management Division of UBS AG.

Ms. Daphne Hsu has been Financial Controller of the Company since March 2005, prior to which she served as Financial Controller for ten years in Taiwan and China at a Thomson SA joint venture.

Dr. Lambert Ding was appointed March 17, 2011 as an independent member of the Board of Directors. Dr. Ding is the president and CEO of Union Environmental Engineering Services and before that, he was an associate professor at Yuan Ze University.  Dr. Ding holds a Doctor of Philosophy degree from the University of Southern California, awarded in 1989.  He is also a Registered Environment Assessor and holds several patents. Dr. Ding serves as a member of the audit committee and compensation committee.

Mr. Michael C. Lee has been a member of the Company’s Board of Directors since 2004 and is also Chief Executive Officer of PEWC and Chairman of Pacific USA Holdings, Ltd.  Mr. Michael C. Lee is not related to Dr. Yichin Lee.

Dr. Yichin Lee has been an independent member of the Company’s Board of Directors and served on the Audit Committee since 2007.  He is also a member of the compensation committee.  Dr. Lee is the Managing Director of FCC partners. Dr. Yichin Lee holds a doctorate degree in Resource Planning and Management from Stanford University.  Dr. Yichin Lee is not related to Mr. Michael C. Lee.

Mr. Ching Rong Shue has been a member of the Company’s Board of Directors since 2006.  He also serves as Vice President of PEWC.

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Mr. David Sun has been a member of the Company’s Board of Directors since 2007.  He also serves as President of PEWC and Managing Director of Charoong Thai Wire and Cable Public Company Limited.

Mr. Yuan Chun Tang has been a member of the Company’s Board of Directors since 2004 and Chief Executive Officer since 2005.  Mr. Yuan served as the Company’s Chairman from 2005 to 2009.  He has also served as Chairman of PEWC since 2004 and has been the Director of Pacific Construction Corp. Ltd since 2002.  Mr. Yuan served as the Director of the Taiwan Co-generation Corp from 2005 to 2008.  Mr. Yuan has also been the Chairman of the Taiwan Electric Wire & Cable Industries Association since 2004.  He has served as the Supervisor to the Taipei Importers/Exporters Association as well as the Director of Chinese National Federation of Industries in Taiwan since 1998 and 2004, respectively.

Mr. William Gong Wei has been appointed Chief Operating Officer effective April 1, 2013.  He was first assigned to Charoong Thai Wire and Cable Pte. Co. Ltd. as Engineer, Assistant Plant Manager, and later consultant to the high voltage cable division from 1991 to 2000.  Thereafter, Mr. Gong left Charoong Thai to pursue other professional activities until he rejoined the Company in 2009.  In April 2009 he was appointed as General Manager of Sigma Cable in Singapore.  Mr. Gong Wei holds a master’s degree from the Asian Institute of Technology in Bangkok, Thailand.

Mr. Ivan Hsia was appointed as Chief Financial Officer effective August 1, 2013.  Mr. Hsia previously served as the Deputy CFO of the Company.  Prior to that, he served as the Senior Internal Audit Manager of the Company.  Before joining APWC, Mr. Hsia was the head of internal audit at Newegg.com in Los Angeles, CA, USA.

The Company’s Common Shares are traded on the Global Markets tier of NASDAQ.  Notwithstanding that, the Board of Directors is not composed of a majority of independent directors.  The Company is relying upon the “controlled company exemption” that is available to issuers under the rules of NASDAQ.  In effect, the “controlled company exemption” provides that an issuer is not required to have its Board of Directors consist of a majority of independent directors if a shareholder, or two or more shareholders who constitute a group, have beneficial ownership of more than 50% of the issued and outstanding voting securities of the issuer.  PEWC owns and controls, directly or indirectly, 65.6% of the issued and outstanding Common Shares of the Company.

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No service contract exists between any director and the Company or any of its subsidiaries providing for benefits upon termination of employment.

The Company has no arrangements or understandings with any major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.

6.2 Audit Committee

The Audit Committee of the Board of Directors primarily functions to assist the Board in its oversight of: (i) the reliability and integrity of accounting policies and financial reporting and disclosure practices and (ii) the establishment and maintenance of processes to ensure that there is compliance with all applicable laws, regulations and company policy and an adequate system of internal control, management of business risks and safeguard of assets.

The Audit Committee is composed of Mr. Anson Chan, Dr. Yichin Lee and Dr. Lambert Ding, with Mr. Chan serving as the chairman of the Audit Committee.

The Audit Committee, as currently constituted, complies with the requirements of Regulation 10A-3 of the Exchange Act and the corporate governance requirements of NASDAQ.

6.3 Compensation Committee

The Compensation Committee primarily functions to assist the Company in determining the compensation to be paid to the executive directors and certain members of the senior management of the Company.  According to the charter under which it operates, the Compensation Committee is authorized to:  (i) review and recommend to the Board, or determine, the annual salary, bonus, stock options, and other benefits, direct and indirect, of the senior management of the Company and its principal operating subsidiaries; (ii) review new executive compensation programs, review on a periodic basis the operations of the Company’s executive compensation programs to determine whether they are properly coordinated, establish and periodically review policies for the administration of executive compensation programs, and take steps to modify any executive compensation programs that yield payments and benefits that are not reasonably related to executive performance; (iii) engage outside auditors and consultants to advise on market compensation; and (iv) establish and periodically review policies in the area of management perquisites.

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The Compensation Committee is comprised of three independent directors, Mr. Anson Chan, Dr. Yichin Lee, and Dr. Lambert Ding. Mr. Andy Cheng and Mr. Yuan Chun Tang, the Company’s Chairman and Chief Executive Officer, respectively, serve in a non-voting advisory capacity to the Compensation Committee.

6.4 Compensation

The aggregate amount of compensation paid by the Company to all of the Company’s directors and executive officers, as a group, for services in all capacities during 2014 was approximately $2.2 million.   As of March 31, 2015, our directors and executive officers beneficially owned approximately 103,000 Common Shares representing approximately 0.7% of the issued and outstanding Common Shares.  The annual compensation of its executive officers and directors on an individual basis is not a disclosure item under the laws applicable to the Company.

In 2014, the fee payable to each independent director was $30,000 per year and the fee payable to each director who is an executive officer of the Company or PEWC was $20,000 per year, together with, in each case, reimbursement of reasonable travel expenses for attendance at meetings of the Board of Directors.

No funds or provisions have been set aside for providing compensation to directors or management except for government mandated programs.

6.5 Employees

The Company employed a total of 1,448 employees as of December 31, 2014, of which about 18.4% were administrative and management personnel.  Approximately 56.7% of employees were located in the Thailand region, 27.7% in the North Asia region and 15.6% in the ROW region.    Production workers are usually organized into two 12-hour shifts or three 8-hour shifts to allow continuous factory operations.

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The Company offers a range of employee benefits, which it believes are comparable to industry practice in its local markets.  Such benefits include performance-based pay incentives, medical benefits, vacation, pension, housing for a small number of workers in Singapore and in Thailand, and a small housing supplement to other workers.  The Company also provides training programs for its personnel designed to improve worker productivity and occupational safety.

Presently, there is no group bonus, profit-sharing or stock option plan.  However, some of the Company’s subsidiaries have bonus or profit-sharing plans based on individual performance and the profitability of the particular subsidiary for the fiscal year, which plans are generally in accordance with the industry practice and market conditions in the respective countries.

The Company has several defined benefit and defined contribution plans covering its employees in Thailand, Australia, the PRC and Singapore.  Contributions to the plans are made on an annual basis and totaled $1.3 million in 2014.  Additionally, the Company has several defined benefit plans in accordance with Thailand labor law.  In its Thai subsidiaries, the Company must pay a retiring employee from one to twenty-nine times such employee’s salary rate during his or her final month, depending on the length of service.  During 2014, the Company’s total expenses under this labor law were $0.5 million.  These plans are not funded and the amount is recognized and included in Employee Benefit Liabilities in the Company’s balance sheet.  The Company settles it obligations as and when employees retire.  The accumulated benefit obligations under this plan amounted to $6.7 million as at December 31, 2014.

Approximately 21% of the employees of Sigma Cable are members of the United Workers of Electronics & Electrical Industries, an employees’ union in Singapore.  Under the terms of a collective agreement signed in June 2003, the Company is required to negotiate salary and wage increases yearly.  All other worker benefits and employment terms are included in the collective agreement.  The Company believes that approximately 100% and 99% of the employees of PEWS and Shanghai Yayang, respectively, are members of their respective Company Workers’ Unions.  These unions generally operate in accordance with related labor regulations in China.  Approximately 16% of the employees of APEC are members of the Australian Workers’ Union.  None of the employees of the other operating subsidiaries of the Company are members of a union.

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The Company has never experienced a strike or other disruption due to labor disputes.  The Company considers its employee relations to be satisfactory and has not experienced difficulties attracting and retaining qualified employees.  In Singapore, employee turnover is approximately 24.4% of total employees annually.  In Thailand, average employee turnover is approximately 5% of total employees annually.

Item 7: Major Shareholders and Related Party Transactions

7.1 Major Shareholders

On March 27, 2009, PEWC acquired 1,410,739 Common Shares of the Company from SOF, which amount represented 51% of the Common Shares then held by SOF. Following that transaction, PEWC and SOF held 65.6% and 9.8% of the issued and outstanding Common Shares of the Company, respectively.  As of July 1, 2011, SOF transferred and conveyed its ownership interest in the 1,355,415 Common Shares held by it to MSDC.  Pursuant to a 2012 Share Buy-back Plan, the Company re-purchased 9,300 Common Shares, which are now held by the Company and booked as treasury shares.  In a subsequent private transaction in June 2013, the Company repurchased a further 1,800 Common Shares, such that a total of 11,100 Common Shares are now issued but not outstanding and are booked as treasury shares.  The remaining approximately 24.5% of the issued and outstanding Common Shares are publicly traded in the U.S. on the NASDAQ Global Markets tier.

The following table sets forth certain information regarding beneficial ownership of the Company’s Common Shares as of March 31, 2015 by (i) all persons who are known to the Company to own beneficially more than five percent of the Common Shares of the Company and (ii) the officers and directors of the Company as a group.  The information set forth in the following table is derived from public filings made by holders and information obtained from directors and officers.  The voting rights attaching to the Common Shares below are the same as those attaching to all other Common Shares.

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Identity of Person or Group	Number of Shares		Percent of Class
Pacific Electric Wire & Cable Co., Ltd.(1)		9,075,354		65.617	%
MSD Credit Opportunity Master Fund, L.P.(2)		1,355,415		9.800	%
Directors and Officers of the Company		102,954		0.744	%

 (1) PEWC owns 1,410,739 shares directly and owns its remaining shares indirectly, as a result of PEWC’s control of its direct wholly-owned subsidiary, Moon View Ventures Limited, a BVI company, which beneficially owns 7,007,948 Common Shares, and as a result of PEWC’s control of its indirect wholly-owned subsidiary, Pacific Holdings Group, a Nevada corporation, which beneficially owns 656,667 Common Shares.

(2) MSD Credit Opportunity Master Fund, L.P. is the record and direct beneficial owner of the Common Shares.  MSDC Management, L.P. is the investment manager of, and may be deemed to have or share voting and dispositive power over, and/or beneficially own Common Shares owned by, MSD Credit Opportunity Master Fund, L.P..  MSDC Management (GP), LLC is the general partner of, and may be deemed to have or share voting and dispositive power over, and/or beneficially own Common Shares owned by, MSDC Management, L.P.  Each of Glenn R. Fuhrman and Marc R. Lisker is a manager of MSDC Management (GP), LLC and may be deemed to have or share voting and/or dispositive power over, and beneficially own, the Common Shares beneficially owned by MSDC Management (GP), LLC.  Each of Mr. Fuhrman and Mr. Lisker disclaims beneficial ownership of such common shares, except to the extent of the pecuniary interest of such person in such shares.

The Company has 6,166,154 Common Shares that are registered securities, of which 3,388,900 Common Shares are publicly-traded on the NASDAQ Global Markets tier, which represents approximately 24.5% of the issued and outstanding Common Shares.  With regard to the remaining 2,777,254 registered securities, 2,766,154 Common Shares, are held by PEWC and MSDC, and 11,100 Common Shares are held by the Company in treasury, and all of those shares are subject to trading restrictions under Rule 144 promulgated under the Securities Act.  Other than the approximately 103,000 Common Shares held by directors or officers who are not resident in the United States and the 1,410,739 registered securities held indirectly by PEWC, the Company believes that substantially all of its registered securities are held by U.S. residents (other than the 11,100 Common Shares held by the Company in treasury).  The Company has no means to definitively confirm that belief, however, which is based upon a review of the share registers maintained by the Company’s Bermuda transfer agent and U.S. transfer agent and the addresses provided by the record holders.  Based upon a review of the records of the Company’s U.S. transfer agent, including a list of non-objecting beneficial holders (“NOBOs”), the Company believes there are substantially more than 400 beneficial holders that are resident in the United States, although that constitutes only the Company’s best estimate of the number of U.S. beneficial holders.

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7.2 Related Party Transactions

The Company incurs ordinary course trade payables with PEWC in connection with copper purchases under the Composite Services Agreement and the sale by the Company of Distributed Products that are manufactured by PEWC.

As of December 31, 2014 the Company, including its subsidiaries, had a net principal balance outstanding of $20.2 million borrowed from PEWC and subsidiaries of PEWC.  This short-term indebtedness is payable on a demand basis and does not accrue interest.

The Company used the proceeds from each of the related party loans described above for working capital and purchases of capital equipment.  The terms of borrowing by APWC or any of its subsidiaries from PEWC are on terms at least no less favorable than terms available in arms-length transactions with unaffiliated parties.

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Other than the Amended and Restated Shareholders Agreement, the Company is not a party to any agreements, and has not engaged in any other transactions, with COF or SOF, or to the Company’s knowledge, their owners.  For a more detailed description of the Company’s obligations under the Shareholders Agreement, see the risk factor entitled “Obligations under the Amended and Restated Shareholders Agreement.”

Under the terms of the Composite Services Agreement, APWC pays a management fee to PEWC in connection with the secondment, or temporary assignment and relocation, of certain PEWC managers to APWC facilities in Thailand and Shanghai.  The assigned managers assist APWC in implementing the results of certain research and development conducted by PEWC and made available by PEWC to the Company under the terms of the Composite Services Agreement.  The assigned managers also assist APWC in the procurement of raw materials, primarily copper, which is also provided for under the Composite Services Agreement.  The amount of such annual management fee was approximately $256 thousand as of December 31, 2014.

From time to time we have engaged in a variety of transactions with our affiliates. We generally conduct transactions with our affiliates on an arm’s-length basis. The sales and purchase prices with related parties are determined through negotiation, generally based on the quoted copper price on LME plus a certain premium.

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Additional details regarding related party balances as of December 31, 2014 and related party transactions, including copper purchases from PEWC, are disclosed in our audited consolidated financial statements in Item 18:  Financial Statements.

Item 8: Financial Information

8.1 Legal Proceedings

There are currently no material proceedings in which any director, senior manager, or affiliate is adverse to the Company or has an adverse material interest.  There are no actual or pending legal proceedings to which the Company is, or is likely to become, a party which may reasonably be expected to have, or have had in the recent past, a material effect on the Company’s condition (financial or otherwise) or results of operations.

8.2 Dividend Policy

To date, the Company, a Bermuda company formed in 1996, has not paid any dividends.  While the Company has no present intention to pay dividends, should it decide in the future to do so, as a holding company the Company’s ability to pay dividends, as well as to meet its other obligations, will depend upon the amount of distributions, if any, received from the Company’s operating subsidiaries and other holdings and investments.  The Company’s operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to the Company.  Those restrictions may also affect the Company’s ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.

8.3 Significant Changes

There have been no material or significant changes in the Company’s affairs since the end of the fiscal year ended December 31, 2014 that have not been described herein.

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Item 9: The Offer and Listing

9.1 Historical Trading Information

The high and low market prices for Common Shares on the over-the-counter bulletin board (the “OTC BB”) (from April 2008 until April 2011), and on the NASDAQ since April 29, 2011, for each period specified are as follows:

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	Price per Share ($)
	High		Low
Five most recent full financial years:
2010		7.85		2.20
2011		7.05		1.92
2012		3.99		2.25
2013		4.34		3.00
2014		3.38		2.27
Two most recent full financial years:
2013
First quarter		4.34		3.35
Second quarter		4.25		3.26
Third quarter		3.96		3.25
Fourth quarter		3.84		3.00
2014
First quarter		3.38		2.73
Second quarter		2.8		2.46
Third quarter		2.78		2.27
Fourth quarter		2.61		2.49
2015
First quarter		2.6		2.35
Most recent six months:
October 2014		2.57		2.49
November 2014		2.58		2.50
December 2014		2.61		2.50
January 2015		2.6		2.47
February 2015		2.57		2.40
March 2015		2.6		2.35

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9.2 Markets

The Company’s Common Shares were listed on NASDAQ Capital Markets tier on April 29, 2011 under the symbol “APWC”.  On February 15, 2013, the Company’s Common Shares were elevated to NASDAQ Global Markets tier.  Prior to its NASDAQ listing, the Common Shares were traded on the OTC BB since April 2008 under the symbol “AWRCF”.  See the risk factor entitled “Potential Illiquidity of Common Shares.”  The Common Shares are not listed on any other exchanges or otherwise publicly traded within or outside the United States.  The elevation of the Common Shares to NASDAQ’s Global Markets tier was achieved due primarily to an improved trading price of the Common Shares.

Item 10: Additional Information

10.1 Share Capital

As of December 31, 2014 and as of the date of the filing of this Annual Report, the Company has an authorized share capital of 50,000,000 Common Shares, par value $0.01 per share.  During 2012, the Company repurchased 1,900 Common Shares.  On December 31, 2012 there were 13,830,769 Common Shares issued and 13,828,869 Common Shares outstanding.  During 2013, the Company repurchased a further 7,400 Common Shares, for a total of 9,300 Common Shares that were repurchased under the Company’s Share Buy-back Plan during 2012 and 2013, until the Company suspended the Share Buy-back Plan effective as of April 25, 2013.  Subsequently in 2013, in a private transaction, the Company purchased a further 1,800 Common Shares that were also booked as treasury shares and are classified as issued but not outstanding.  No Common Shares have been purchased by or on behalf of the Company under the share buy-back program that was announced by the Company in 2014, but not yet implemented.  As of December 31, 2014, and as of the date of the filing of this Annual Report, there were and there are 13,830,769 Common Shares issued and 13,819,669 Common Shares issued outstanding.  No capital of the Company is under option or agreed conditionally or unconditionally to be put under option.  The Company does not have any classes of capital stock other than its Common Shares.

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10.2 Memorandum of Association and Bye-Laws

10.2.1 General

For a detailed description of the Company’s principal activities, see Section 4.1:  “History and Development of the Business.”  Pursuant to the Company’s Bye-Laws the Board of Directors consists of a single class of directors, each director has one vote on all matters put to the Board, and a quorum consists of a majority of the members of the Board of Directors then in office.  The Company’s Bye-Laws were amended on October 7, 2011 to allow the Company to purchase its own shares for cancellation or acquire them to be held as treasury shares.

In 2012, the Company commenced a Share Buy-back Plan, pursuant to which the Company repurchased, in the aggregate, 9,300 issued and outstanding Common Shares, with the most recent purchase under the Share Buy-back Plan having been made on January 10, 2013.  Subsequently in 2013, in a private transaction, the Company purchased a further 1,800 Common Shares that were also booked a treasury shares and are classified as issued but not outstanding.  Those repurchased Common Shares are booked as treasury shares and may be re-sold to third parties by the Company in the future.  In April 2013, the Company announced the suspension of the Share Buy-back Plan, although the Board of Directors may re-implement it in the future if it so determines.

In August 2014, the Company announced that the Board of Directors had authorized a further share buy-back plan of up to $1 million in Common Shares. The Company has not announced a commencement date for that further buy-back plan and it has not yet determined a commencement date, which will depend upon a number of factors including the trading price of the Common Shares and general market conditions.

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10.2.2 Description of Shareholder Rights Attaching to Our Common Shares

The Company was incorporated in Bermuda on September 19, 1996 under the Companies Act. The rights of our shareholders are governed by Bermuda law and our memorandum of association and Bye-Laws.

The following discussion of our Common Shares and the laws governing the rights of our shareholders is based upon the advice of Appleby (Bermuda) Limited, our Bermuda counsel.

Our authorized share capital as of December 31, 2014 was $500,000 consisting of 50,000,000 Common Shares, par value $0.01 per share, of which, as of December 31, 2014, and as of the date of the filing of this Annual Report, there were and are 13,830,769 Common Shares issued of which 13,819,669 Common Shares outstanding.  There are 11,100 Common Shares that are issued (but not outstanding) and held as treasury shares by the Company.

· Holders of the Common Shares have no preemptive, redemption, conversion or sinking fund rights, except by contract in the case of MSDC pursuant to the Amended and Restated Shareholders Agreement.

· Holders of the Common Shares are entitled to one vote per share on all matters submitted to a poll vote of holders of Common Shares and do not have any cumulative voting rights.

· In the event of our liquidation, dissolution or winding-up and subject to any alternative resolution that may be pursued by our shareholders, the holders of Common Shares are entitled to share ratably in our assets, if any, remaining after the payment of all our debts and liabilities.

· Our outstanding Common Shares are fully paid and non-assessable.

· Additional authorized but unissued Common Shares, and issued shares held in treasury, may be issued or conveyed by the Board without the approval of the shareholders.

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The holders of Common Shares will receive such dividends, if any, as may be declared by the Board of Directors out of funds legally available for such purposes.  We may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that:

· we are, or after the payment would be, unable to pay our liabilities as they become due; or

· the realizable value of our assets after such payment or distribution would be less than the aggregate amount of our liabilities and our issued share capital and share premium accounts.

The following is a summary of provisions of Bermuda law and our organizational documents, including our memorandum of association and Bye-Laws.  We refer you to our memorandum of association and our Bye-Laws, copies of which have been filed with the SEC.  You are urged to read these documents in their entirety for a complete understanding of the terms thereof.

10.2.3 Share Capital

Our authorized capital consists of one class of Common Shares.  Under our Bye-Laws, our Board of Directors has the power to issue any authorized and unissued shares on such terms and conditions as it may determine.  Any shares or class of shares may be issued with such preferred, deferred, qualified or other special rights or any restrictions with regard to such matters, whether in regard to dividend, voting, return of capital or otherwise, as we may from time to time by resolution of the shareholders prescribe, or in the absence of such shareholder direction, as the Board of Directors may determine.  This provision in the Bye-Laws could be used to prevent a takeover attempt, or to make a takeover attempt prohibitively expensive, and thereby preclude shareholders from realizing a potential premium over the market value of their shares.

10.2.4 Voting Rights

Generally, under Bermuda law and our Bye-Laws, questions brought before a general meeting are decided by a simple majority vote of shareholders present or represented by proxy, with no provision for cumulative voting.  Matters will be decided by votes cast by way of voting cards, proxy cards or a show of hands unless a poll is demanded.

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If a poll is demanded, each shareholder who is entitled to vote and who is present in person or by proxy has one vote for each Common Share entitled to vote on such question.  A poll may only be demanded under the Bye-Laws by:

· the chairman of the meeting;

· at least three shareholders present in person or represented by proxy;

· any shareholder or shareholders present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all shareholders having voting rights; or

· a shareholder or shareholders present in person or represented by proxy holding Common Shares conferring the right to vote on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Common Shares.

Unless the Board of Directors otherwise determines, no shareholder shall be entitled to vote at any general meeting unless all calls or other sums presently payable by that shareholder in respect of all shares held by such shareholder have been paid.

10.2.5 Dividend Rights

Under Bermuda law, a company may declare and pay dividends unless there are reasonable grounds for believing that the company is, or would, after the payment, be unable to pay its liabilities as they become due or that the realizable value of the company’s assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts.

Under our Bye-Laws, the Board may from time to time declare dividends or distributions out of contributed surplus to be paid to the shareholders according to their rights and interests.  With the sanction of a shareholders resolution, the Board of Directors may determine that any dividend may be paid by distribution of specific assets, including paid-up shares or debentures of any other company.  The Board of Directors may also pay any fixed cash dividend which is payable on any of our Common Shares half-yearly or on other dates, whenever our position, in the opinion of the Board of Directors, justifies such payment.

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Dividends, if any, on our Common Shares will be at the discretion of our Board of Directors, and will depend on our future operations and earnings, capital requirements, surplus and general financial condition as our Board of Directors may deem relevant.

10.2.6 Purchases by the Company of its own Common Shares

Under Bermuda law and as authorized by the Company’s memorandum of association, we may purchase our own Common Shares out of the capital paid up on the Common Shares in question or out of funds that would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of Common Shares made for the purposes of the purchase.  We may not purchase our shares if, on the date on which the purchase is to be effected, there are reasonable grounds for believing that the Company is, or after the purchase would be, unable to pay its liabilities as they become due.

However, to the extent that any premium is payable on the purchase, the premium must be provided out of the funds of the Company that would otherwise be available for dividend or distribution or out of the Company’s share premium account.

10.2.7 Preemptive Rights

Our Bye-Laws generally do not provide the holders of our Common Shares preemptive rights in relation to any issues of Common Shares by us or any transfer of our shares.

However, the Company has in the Amended and Restated Shareholders Agreement granted to MSDC preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that MSDC may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company.  See the risk factor entitled “Obligations under the Amended and Restated Shareholders Agreement.”

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10.2.8 Variation of Rights

We may issue more than one class of shares and more than one series of shares in each class.  The rights attached to any class of shares may be altered or abrogated either:

· with the consent in writing of the holders of more than fifty percent of the issued shares of that class; or

· pursuant to a resolution of the holders of such shares.

The Bye-Laws provide that the necessary quorum shall be two or more persons present in person or by proxy holding shares of the relevant class.  The Bye-Laws specify that the creation or issuance of shares ranking pari passu with existing shares will not, subject to any statement to the contrary in the terms of issuance of those shares or rights attached to those shares, vary the special rights attached to existing shares.

10.2.9 Transfer of Common Shares

Subject to the “Transfer Restrictions” section below, a shareholder may transfer title to all or any of his shares by completing an instrument of transfer in the usual common form or in such other form as the Board of Directors may approve.  The form of transfer is required to be signed by or on behalf of the transferor and also the transferee where any share is not fully paid.  The transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the Register of Members.

10.2.10 Transfer Restrictions

The Board of Directors may, in its absolute discretion and without assigning any reason therefor, decline to register any transfer of any share which is not a fully paid share.  The Board of Directors may also refuse to register an instrument of transfer of a share unless the instrument of transfer:

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· is duly stamped, if required by law, and lodged with us;

· is accompanied by the relevant share certificate and such other evidence of the transferor’s right to make the transfer as the Board of Directors shall reasonably require;

· is in respect of one class of shares; and

· has obtained, where applicable, permission of the Bermuda Monetary Authority.

Our Common Shares are traded on the NASDAQ Stock Market, Inc. as of April 2011, which qualifies as an “appointed stock exchange” for purposes of the Companies Act and the Bermuda Exchange Control Act and regulations made thereunder, in particular a notice to the public dated 1 June 2005.  Accordingly, our Common Shares benefit from a general permission for free transferability for all transfers between persons who are not resident in Bermuda for exchange control purposes, for as long as such Common Shares remain listed on an appointed stock exchange.

The Company, PEWC and MSDC (as successor-in-interest to SOF), are parties to the Amended and Restated Shareholders Agreement which provides, among other things, for certain transfer restrictions, notice requirements and tag-along rights in the event PEWC wishes to transfer any of its Common Shares in certain types of transactions.

10.2.11 Transmission of Shares

In the event of the death of a shareholder, the survivor or survivors, where the deceased shareholder was a joint holder, and the estate representative, where the deceased shareholder was sole holder, shall be the only persons recognized by us as having any title to the shares of the deceased.  “Estate representative” means the person to whom probate or letters of administration has or have been granted in Bermuda, or failing any such person, such other person as the Board of Directors may in its absolute discretion determine to be the person recognized by us for this purpose.

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10.2.12 Disclosure of Interests

Under the Companies Act, a director who has an interest in a material contract or a proposed material contract, or a 10% or more interest (directly or indirectly) in an entity that is interested in a contract or proposed contract or arrangement with us, is obligated to declare the nature of such interest at the first opportunity at a meeting of the Board of Directors, or by writing to the Board of Directors.  If the director has complied with the relevant sections of the Companies Act and the Bye-Laws with respect to the disclosure of his interest, the director may vote at a meeting of the Board of Directors or a committee thereof on a contract, transaction or arrangement in which that director is interested, in which case his vote shall be counted and he shall be taken into account in ascertaining whether a quorum is present.

10.2.13 Rights in Liquidation

Under Bermuda law, in the event of liquidation or winding-up of a company, after satisfaction in full of all claims of creditors and subject to the preferential rights accorded to any series of preferred stock, the proceeds of such liquidation or winding-up are distributed among the holders of shares in accordance with a company’s bye-laws.

Under our Bye-Laws, if we are wound up, the liquidator may, pursuant to a resolution of the shareholders and any approval required by the Companies Act, divide among the shareholders in cash or other assets the whole or part of our assets, whether such assets shall consist of property of the same kind or not, and may for such purposes set such values as such liquidator deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders.

10.2.14 Meetings of Shareholders

Under Bermuda law, a company, unless it elects to dispense with the holding of annual general meetings, is required to convene at least one general meeting per calendar year.  The directors of a company, notwithstanding anything in such company’s bye-laws, shall, on the requisition of the shareholders holding at the date of the deposit of the requisition not less than one-tenth of the paid-up capital of the company carrying the right of vote, duly convene a special general meeting.  Our Bye-Laws provide that the Board of Directors may, whenever it thinks fit, convene a special general meeting.

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Bermuda law requires that shareholders be given at least five days’ notice of a meeting of the Company.  Our Bye-Laws extend this period to provide that not less than 20 days’ written notice of a general meeting must be given to those shareholders entitled to receive such notice.  The accidental omission to give notice to or non-receipt of a notice of a meeting by any person does not invalidate the proceedings of a meeting.

Our Bye-Laws state that no business can be transacted at a general meeting unless a quorum of at least two shareholders representing a majority of the issued shares of the Company are present in person or by proxy and entitled to vote.

Under our Bye-Laws, notice to any shareholders may be delivered either personally or by sending it through the post, by airmail where applicable, in a pre-paid letter addressed to the shareholder at his address as appearing in the share register or by delivering it to, or leaving it at, such registered address.  Any notice sent by post shall be deemed to have been served seven (7) days after dispatch.  A notice of a general meeting is deemed to be duly given to the shareholder if it is sent to him by cable, telex or tele-copier or other mode of representing or reproducing words in a legible and non-transitory form and such notice shall be deemed to have been served twenty-four (24) hours after its dispatch.

10.2.15 Access to Books and Records and Dissemination of Information

Under Bermuda law, members of the general public have the right to inspect the public documents of a company available at the office of the Bermuda Registrar of Companies.  These documents include the memorandum of association and any amendment to the memorandum of association.

Under Bermuda law, the minutes of shareholder meetings will be open for inspection by any shareholder or director without charge for not less than two hours during business hours each day, subject to any reasonable restrictions that we may impose.  The shareholders shall be entitled to receive a copy of every balance sheet and statement of income and expenditure before a general meeting as required under the Bye-Laws.

Under our Bye-Laws, unless the Board otherwise determines, the register of shareholders of the Company is required to be open for inspection between 10:00 a.m. and 12:00 noon each working day without charge to members of the general public.  A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda.  We have established a branch register with our transfer agent, Computershare Limited, which is based in Jersey City, New Jersey.

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Under Bermuda Law, a company is required to keep at its registered office a register of its directors and officers that is open for inspection for not less than two hours in each day by members of the public without charge.  Under our Bye-Laws, the register of directors and officers is available for inspection by the public between 10:00 a.m. and 12:00 noon every working day.

Bermuda law does not provide a general right for shareholders to inspect or obtain copies of any other corporate records, except for the Bye-Laws of the Company.

10.2.16 Election or Removal of Directors

The Bye-Laws provide that the number of directors will be such number, not less than two, as our shareholders by resolution may from time to time determine.  A director will serve until re-elected or his successor is appointed at the next annual general meeting or his prior removal in the manner provided by the Companies Act or the Bye-Laws.  There is no requirement under Bermuda law, the Company’s memorandum of association or its Bye-Laws that a majority of the Company’s directors be independent.

The Bye-Laws provide that each director shall have one vote on all matters presented to the Board for a vote.  At the Annual General Meeting held on October 9, 2014, all nine directors then in office were re-elected.

The shareholders may by resolution determine that one or more vacancies in the Board of Directors shall be deemed casual vacancies for the purposes of the Bye-Laws.  The Board, so long as a quorum of directors remains in office, shall have the power at any time and from time to time to appoint any individual to be a director so as to fill a casual vacancy.  The shareholders may approve the appointment of alternate directors or may authorize the Board to appoint them.  Directors may also appoint and remove their own alternates.  At the Annual General Meeting held on October 9, 2014, the shareholders approved the reservation of one directorship as a casual vacancy.

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We may, in a special general meeting called for this purpose, remove a director, provided notice of such meeting is served upon the director concerned not less than fourteen days before the meeting and he shall be entitled to be heard at that meeting.

The office of a director will be vacated in the event of any of the following:

· if he resigns his office by notice in writing to be delivered to our registered office or tendered at a meeting of the Board of Directors;

· if he becomes of unsound mind or a patient for any purpose under any statute or applicable law relating to mental health and the Board of Directors resolves that his office is vacated;

· if he becomes bankrupt or enters into a general settlement with his creditors;

· if he is prohibited by law from being a director; or

· if he ceases to be a director by virtue of the Companies Act or is removed from office pursuant to the Bye-Laws.

10.2.17 Amendment of Memorandum of Association and Bye-Laws

Bermuda law provides that the memorandum of association of a company may be amended by resolution passed at a general meeting of which due notice has been given.  An amendment to a memorandum of association does not require the consent of the Minister of Finance save for specific circumstances, for example, the adopting of any authority to carry on restricted business activities.

Under Bermuda law, the holders of:

· an aggregate of not less than twenty percent in par value of a company’s issued share capital or any class thereof; or

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· not less in the aggregate than twenty percent of the company’s debentures entitled to object to amendments to its memorandum of association,

· have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association.  Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda Supreme Court.  An application for an annulment of an amendment of the memorandum of association must be made within twenty-one days after the date on which the resolution amending the memorandum of association is passed and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.

Our Bye-Laws may be amended in the manner provided for in the Companies Act, which provides that the directors may amend the Bye-Laws, provided that any such amendment shall be effective only to the extent approved by the shareholders.

10.2.18 Merger or Amalgamation

The Companies Act provides that two or more Bermuda companies may merge and their undertaking, property and liabilities shall vest in one of such companies as the surviving company (referred to as a “merger” under Bermuda law).  The Companies Act also provides that a Bermuda company may amalgamate with another company and continue as an amalgamated company (referred to as an “amalgamation” under Bermuda law).  A merger or amalgamation requires a merger or amalgamation agreement which must be approved by the board of directors and at a meeting of the shareholders by seventy-five percent of the shareholders present and entitled to vote at such meeting in respect of which the quorum shall be two persons holding or representing by proxy more than one-third of the issued shares of the company.  These provisions do not apply where a holding company is merging or amalgamating with one or more of its wholly-owned subsidiaries or where two or more wholly-owned companies of the same holding company are merging or amalgamating.

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Under Bermuda law, in the event of a merger or an amalgamation of a Bermuda company, a shareholder who did not vote in favor of the transaction and who is not satisfied that fair value has been offered for the shares, may apply to the Supreme Court of Bermuda within one month of notice of the meeting of shareholders to appraise the fair value of those shares.

10.2.19 Class Actions and Derivative Actions

Class actions, as they are commonly understood in the United States, are not available to shareholders under Bermuda law.  Derivative actions are generally only available to shareholders under Bermuda law in very limited circumstances.  A shareholder may commence an action in the name of a company to remedy a wrong done to the company where the wrongdoers are in control of the company and the act complained of is of a fraudulent character, oppressive, beyond the corporate power of the company, illegal or would have required the approval of a greater percentage of the company’s shareholders than those that actually approved it.  A shareholder may not commence such an action where the wrong complained of is capable of ratification by the company in a general meeting by ordinary resolution.

When one or more shareholders believes the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interest of some of the shareholders, the Supreme Court of Bermuda, upon petition, may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company, and in the case of a purchase of the shares by the company, for the reduction accordingly of the company’s capital or otherwise.

10.2.20 Personal Liability of Directors and Indemnity

The Companies Act requires every officer, including directors, of a company in exercising powers and discharging duties, to act honestly in good faith with a view to the best interests of the company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.  The Companies Act further provides that any provision, whether in the bye-laws of a company or in any contract between the company and any officer or any person employed by the company as auditor, exempting such officer or person from liability, or indemnifying him against any liability which by virtue of any rule of law would otherwise attach to him, in respect of any fraud or dishonesty of which he may be guilty in relation to the company, shall be void.

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Every director, officer and committee member shall be indemnified out of our funds against all civil liabilities, loss, damage or expense including liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable, incurred or suffered by him as director, officer or committee member; provided that the indemnity contained in the Bye-Laws will not extend to any matter which would render it void under the Companies Act as discussed above.

10.2.21 Exchange Controls

We have been designated by the Bermuda Monetary Authority as a non-resident under the Exchange Control Act of 1972 (the “Exchange Control Act”).  This designation allows us to engage in transactions in currencies other than the Bermuda dollar.

The transfer of Common Shares between persons regarded as resident outside Bermuda for exchange control purposes and the issue of Common Shares to such persons may be effected without specific consent under the Exchange Control Act and regulations thereunder, provided the Common Shares are listed on an appointed stock exchange.

Notwithstanding the recording of any special capacity, we are not bound to investigate or incur any responsibility in respect of the proper administration of any estate or trust.

We will take no notice of any trust applicable to any of our Common Shares whether or not we had notice of such trust.

As an “exempted company,” we are exempt from Bermuda laws which restrict the percentage of share capital that may be held by non-Bermudians.  However, as an exempted company we may not participate in certain designated business transactions, which we do not consider relevant to our present or planned business activities.

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10.3 Material Contracts

Composite Services Agreement (“CSA”)

The Company engages in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the distribution of PEWC products in various countries in the Asia Pacific region.  The Company and PEWC are parties to a composite services agreement dated November 7, 1996 (the “Composite Services Agreement” or “CSA”), which the Company has renewed annually, at its option.  The Composite Services Agreement contains provisions that define the relationship and the conduct of the respective businesses of the Company and PEWC and confers certain preferential benefits on the Company.  In 2014 there were no material changes to the CSA between APWC and PEWC.  Pursuant to the Composite Services Agreement,

· PEWC agrees to (a) sell copper rod to the Company, upon the Company’s request, (i) at a price consisting of the spot price of copper on the LME plus an agreed upon premium and (ii) at prices and on terms at least as favorable as PEWC provides copper rod to other purchasers of similar amounts of copper rod in the same markets, and (b) give priority in the supply of copper rod to the Company over other purchasers of copper rod from PEWC.

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

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

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

· Without the consent of the Company, PEWC will not compete with respect to the manufacture or distribution of wire and cable products in any market in which the Company is manufacturing or has taken significant steps to commence manufacturing.

· For purposes of the Composite Services Agreement, each province in China is considered the equivalent of a country.

To the extent that transactions occur in the future between the Company and PEWC or affiliates of PEWC other than under the Composite Services Agreement, such transactions will be entered into on an arm’s length basis on terms no less favorable than those available from unaffiliated third parties.

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Amended and Restated Shareholders Agreement

In connection with the 2007 acquisition by SOF of twenty percent (20%) of the Company’s issued and outstanding Common Shares, the Company, PEWC and SOF entered into Shareholders Agreement, pursuant to which the Company granted to SOF certain rights and protections.  Under the Shareholders Agreement, the Company agreed to indemnify the SOF Indemnified Persons (as defined in the Shareholders Agreement) for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the IRS to be a “controlled foreign corporation” (a “CFC”) or a “passive foreign investment company” (a “PFIC”) as such terms are interpreted and defined under IRS rules or regulations  In addition, under the Shareholders Agreement, the Company granted to SOF certain registration rights with respect to the Common Shares owned by it, including the undertaking by the Company to prepare and file a shelf registration statement, and the further right of SOF to exercise two demand registration rights with regard to its Common Shares and to further exercise certain piggyback registration rights in connection with its Common Shares  The Shareholders Agreement was amended and restated on March 27, 2009 in connection with the sale by SOF to PEWC of 51% of the Common Shares held by SOF.  However, the foregoing rights of SOF have been preserved in the Amended and Restated Shareholders Agreement notwithstanding its sale of 51% of its original interest in APWC.  As of July 1, 2011, MSDC succeeded to all of the right, title and interest in the Common Shares then held by SOF.  Each of the rights of SOF under the Shareholders Agreement was conveyed to, and is now held by, MSDC.  For a further description of the Company’s obligations under the Shareholders Agreement, see the risk factor entitled “Obligations under the Amended and Restated Shareholders Agreement.”

10.4 Taxation

The following is a summary of the material tax consequences of the acquisition, ownership and disposition of Common Shares based on the tax laws of the United States and Bermuda, subject to the assumptions, qualifications and limitations in our discussion below.  Such summary is subject to changes in United States and Bermuda law, including changes that could have retroactive effect.  The following summary does not take into account the individual circumstances of an investor, nor does it purport to be a complete technical analysis or examination of all potential tax effects relevant to a decision to purchase Common Shares, including without limitation, the tax laws of the various states or localities within the United States.

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10.4.1      United States Taxation

The following is a summary of the material United States federal income tax consequences of the acquisition, ownership and disposition of Common Shares by a U.S. Holder (as defined below) and a Non-U.S. Holder (as defined below), in each case, subject to the assumptions, qualifications and limitations in our discussion below.  Such summary is subject to changes in United States law, including changes that could have retroactive effect.  The summary does not purport to be a comprehensive description of all possible tax considerations that may be relevant to a decision to purchase Common Shares.  This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated under the Code by the U.S. Treasury Department (the “Treasury”) (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect.  Such change could materially and adversely affect the tax consequences described below.  No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.  Further, this summary does not discuss any foreign, state or local tax consequences.

In particular, this summary deals only with Common Shares held as capital assets and does not address the United States tax treatment of U.S. Holders and Non-U.S. Holders that are subject to special treatment under the Code, such as dealers in stocks, securities, or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, financial institutions, insurance companies, tax-exempt entities, real estate investment trusts, regulated investment companies, qualified retirement plans, individual retirement accounts, and other tax deferred accounts, expatriates of the United States, persons subject to the alternative minimum tax, persons holding shares as part of a hedging or conversion transaction or a straddle, or other integrated transaction, persons who acquired Common Shares pursuant to the exercise of any employee stock option or otherwise as compensation for services, or persons whose functional currency is not the United States dollar or who own (directly, indirectly or by attribution) 10% or more of the stock of the Company.  This discussion is limited to investors who hold their shares as capital assets.  No ruling has been or will be sought from the IRS regarding any matter discussed herein.  Counsel to the Company has not rendered any legal opinion regarding any tax consequences to the Company or others of an investment in the Company.  Consequently, prospective purchasers who are U.S. Holders or Non-U.S. Holders are advised to satisfy themselves as to the overall United States federal, state, local and foreign tax consequences of their acquisition, ownership and disposition of Common Shares by consulting their own tax advisors.

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As used herein, the term “U.S. Holder” means a beneficial owner of Common Shares that is (i) a citizen or resident of the United States, (ii) a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any state (or the District of Columbia), (iii) an estate, the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more “United States persons” (as defined in Section 7701(a)(30) of the Code) has the authority to control all substantial decisions of the trust, or, to the extent provided in the Regulations, certain trusts in existence on August 20, 1996, and treated as U.S. Persons prior to such date, that elect to be treated as U.S. Persons.

The term “Non-U.S. Holder” means a beneficial owner of Common Shares that is not a U.S. Holder.  As described in “Taxation of Non-U.S. Holders” below, the consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of Common Shares, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership.  A holder of Common Shares that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of Common Shares.

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U.S. Federal Income Taxation of the Company

The Company expects that it will be treated as a foreign corporation for U.S. federal income tax purposes, and it will make no election to the contrary.  As a foreign corporation, subject to the rules discussed below, the income, gains, losses, deductions and expenses of the Company will not be passed through to the investors, and all distributions by the Company to the investors will be treated as dividends, return of capital, and/or capital gains.

The Company currently does not conduct activities in the United States and expects that it will continue to conduct activities in a manner so as not to constitute the conduct of a trade or business in the United States or, invest in securities the income from which is treated, for U.S. federal income tax purposes, as arising from a U.S. trade or business.  As a result, the income of the Company generally should not be subject to U.S. federal income tax on a net income basis.  However, gains realized from certain investments in United States real property interests by foreign persons, such as the Company, may be subject to U.S. federal income tax on a net basis, withholding tax and a branch profits tax.  Debt instruments with an equity component linked to a United States real property interest and stock in certain United States corporations holding significant real property interests may be considered United States real property interests taxable as described above.

Taxation of U.S. Holders

The discussion in “Taxation of Dividends” and “Taxation of Capital Gains” below assumes that the Company will not be treated as a PFIC for U.S. federal income tax purposes.  For a discussion of the rules that apply if the Company is treated as a PFIC, see the discussion in “Passive Foreign Investment Company” below.

Taxation of Dividends

The Company has never declared or paid any cash dividends and does not presently anticipate paying dividends.  A U.S. Holder receiving a distribution with respect to Common Shares generally will be required to include such distribution in gross income (as ordinary income subject to regular, and not reduced, tax rates) on the day received as foreign-source dividend income to the extent such distribution is paid from the Company’s current or accumulated earnings and profits (as determined under United States federal income tax   principles).  Such dividends will not be eligible for the dividends received deduction (generally allowed to certain United States corporations in respect of dividends received from United States corporations).  U.S. Holders that are corporations and directly own 10% or more of the voting stock of the Company may be entitled to claim a foreign tax credit for United States federal income tax purposes in respect of foreign taxes paid by the Company and certain subsidiaries.  However, if a U.S. Holder claims the foreign tax credit, it must “gross-up” the deemed tax payment and treat the grossed-up amount as part of the dividend distribution, so that the amount included in income is equal to the dividend received plus the amount of the foreign tax deemed paid by such U.S. Holder.

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Under U.S. federal income tax laws, a dividend paid to an individual U.S. shareholder from either a domestic corporation or a “qualified foreign corporation” is subject to tax at the reduced rates applicable to certain capital gains.  A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary of the Treasury determines is satisfactory for purposes of this provision and which includes an exchange of information program.  In addition, a foreign corporation not otherwise treated as a qualified foreign corporation is so treated with respect to any dividend it pays if the stock with respect to which it pays such dividend is readily tradable on an established securities market in the United States.

In the absence of a comprehensive income tax treaty between the United States and Bermuda, the Company will not be treated as a “qualified foreign corporation” under the treaty test.  So long as the Company is not a PFIC (as discussed below), dividends paid by the Company to individual shareholders would qualify for these reduced rates if its stock was treated as readily tradable on an established securities market in the United States.

In Notice 2003-71, 2003-2 C.B. 922, the IRS determined that common or ordinary stock, or an American depositary receipt in respect of such stock, is considered readily tradable on an established securities market in the United States if it is listed on a national securities exchange that is registered under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or on the Nasdaq Stock Market.  As stated in the SEC’s Annual Report for 2002, registered national exchanges as of September 30, 2002 include the American Stock Exchange (now known as NYSE Amex Equities), the Boston Stock Exchange, the Cincinnati Stock Exchange, the Chicago Stock Exchange, the NYSE, the Philadelphia Stock Exchange, and the Pacific Exchange, Inc.

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For so long as the Common Shares continue to be traded on NASDAQ, or are readily tradable on any other established securities market in the United States, any dividends paid by the Company should qualify for the reduced rates referred to above so long as they remain in effect.

To the extent any distribution exceeds the current and accumulated earnings and profits of the Company for a taxable year, the distribution will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in the Common Shares with respect to which the distribution is made, causing a reduction in the adjusted basis of the Common Shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the U.S. Holder on a subsequent disposition of the Common Shares).  To the extent such distribution exceeds the U.S. Holder’s adjusted tax basis in the Common Shares, such excess will be treated as capital gain.

Taxation of Capital Gains

A U.S. Holder will recognize taxable gain or loss on any sale, exchange or other disposition of Common Shares (including a liquidation, dissolution or as a result of a non-pro rata redemption of Common Shares that qualified for treatment as a sale or exchange for United States federal income tax purposes) in an amount equal to the difference between the amount realized for the Common Shares and the U.S. Holder’s adjusted tax basis in the Common Shares.  Such gain or loss generally will be treated as capital gain or loss and will be long-term capital gain or loss if the Common Shares have been held for more than one year on the date of the sale, exchange or other disposition thereof, and will be short-term capital gain or loss if the Common Shares   have been held for one year or less on the date of the sale or exchange thereof.  Any gain recognized by a U.S. Holder generally will be treated as United States source income.  In general, an individual’s short-term capital gains are taxable as ordinary income and an individual’s long-term capital gains are subject to U.S. federal income tax at preferential rates.

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Long-term capital gains of corporations generally are subject to the U.S. federal income tax at a current maximum marginal rate of 35%.  Short-term capital gain generally is taxable at ordinary income rates.  Although capital gains of corporations currently are taxed at the same rates as ordinary income, the distinction between capital gain and ordinary income or loss is relevant for purposes of, among other things, limitations on the deductibility of capital losses.  Corporations may deduct capital losses only to the extent of capital gains and generally may carry back capital losses to each of the preceding three years and carry forward capital losses to each of the succeeding five years.  Individuals may deduct capital losses to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate returns) and may carry forward capital losses indefinitely.

Backup Withholding

In general, information reporting requirements may be applicable to dividend payments (or other taxable distributions) made in respect of Common Shares to non-corporate U.S. Holders, and “backup withholding” at the rate of 28% will apply to such payments (i) if the holder or beneficial owner fails to provide a taxpayer identification number in the manner required by U.S. law and applicable regulations, (ii) if the IRS notifies the payor that the taxpayer identification number furnished by the holder or beneficial owner is incorrect, (iii) if there has been notification from the IRS of a failure by the holder or beneficial owner to report all interest or dividends required to be shown on its United States federal income tax returns or (iv) in certain circumstances, if the holder or beneficial owner fails to comply with applicable certification requirements.  In general, payment of the proceeds from a sale of Common Shares to or through a United States office of a broker is subject to both United States backup withholding and information reporting unless the holder or beneficial owner establishes an exemption.  U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9.  Amounts withheld under the backup withholding rules may be credited against a holder’s tax liability, and a holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS.  Payment of the proceeds from the sale of Common Shares effected outside the United States by a foreign office of certain United States connected brokers will not be subject to backup withholding tax but will be subject to information reporting requirements unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. Holder and has no actual knowledge to the contrary, or the beneficial owner otherwise establishes an exemption.

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Passive Foreign Investment Company

In general, the Company will be treated as a PFIC for United States federal income tax purposes for any taxable year if either (i) at least 75% of the gross income of the Company is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of the Company’s assets is attributable to assets that produce or are held for the production of passive income.  The Company believes, based on its current operations and assets, that it is not a PFIC and does not expect to become a PFIC in the future.  This conclusion is a factual determination based on, among other things, a valuation of the Company’s assets, which will likely change from time to time.

If the Company were a PFIC for any taxable year during which a U.S. Holder held Common Shares, the U.S. Holder would be subject to special tax rules with respect to (i) any “excess distribution” by the Company to the U.S. Holder (generally any distribution received by the U.S. Holder in a taxable year that is greater than 125% of the average annual distribution received by the U.S. Holder in the three preceding taxable years, or the U.S. Holder’s holding period for the Common Shares, if shorter) and (ii) any gain realized on the sale or other disposition (including a pledge) of Common Shares.

Under these special tax rules, (i) the excess distribution or gain would be allocated ratably over the U.S. Holder’s holding period for the Common Shares, (ii) the amount allocated to the U.S. Holder’s current taxable year and to any period prior to the first taxable year in which the Company was a PFIC would be includible as ordinary income in the U.S. Holder’s current taxable year and (iii) the amount allocated to a prior year during which the Company was a PFIC would be subject to tax at the highest tax rate in effect for that year, and an interest charge would also be imposed with respect to the resulting tax attributable to each such prior year.  The interest charge is computed using the applicable rates imposed on underpayments of United States federal income tax for the relevant periods.

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The above rules will not apply if a “mark-to-market” election is available and a U.S. Holder validly makes such an election by filing a properly completed IRS Form 8621.  If such election were made, a U.S. Holder generally would be required to take into account the difference, if any, between the fair market value and its adjusted tax basis in the Common Shares at the end of each taxable year as ordinary income or ordinary loss (to the extent of any net mark-to-market gains previously included in income).  Thus, the U.S. Holder may recognize taxable income without receiving any cash to pay its tax liability with respect to such income.  A U.S. Holder’s tax basis in the Common Shares would be adjusted to reflect any such income or loss amount.  In addition, any gain from a sale, exchange or other disposition of the Common Shares would be treated as ordinary income, and any loss would be treated as ordinary loss (to the extent of any net mark-to-market gains previously included in income).  A mark-to-market election is available to a U.S. Holder only if the Common Shares are considered “marketable stock” for these purposes.  Generally, shares of a PFIC will be considered marketable stock if they are “regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations.  A class of shares is regularly traded during any calendar year during which such class of shares is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.  A “qualified exchange” is defined to include a national securities exchange registered with the SEC or certain foreign exchanges.  As the Common Shares of the Company commenced trading on the NASDAQ beginning on April 29, 2011, the mark-to-market election under the rules discussed above is available if the Company were otherwise classified as a PFIC, for so long as the Common Shares continue to be regularly traded on NASDAQ or another qualified exchange.

The special tax rules described above will also not apply to a U.S. Holder if the U.S. Holder elects to have the Company treated as a “qualified electing fund” (a “QEF election”) and the Company provides certain information to U.S. Holders.  If the Company is treated as a PFIC, it will notify the U.S. Holders and provide such holders with the information necessary to make an effective QEF election, including information as to the procedures for making such an election.  The QEF election is made on a shareholder-by-shareholder basis and can ordinarily be revoked only with the consent of the IRS.

A U.S. Holder that makes a valid QEF election will be currently taxable on its pro rata share of the Company’s ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year that the Company is classified as a PFIC, regardless of whether distributions are received.  Thus, the U.S. Holder may recognize taxable income without receiving any cash to pay its tax liability with respect to such income.  The U.S. Holder’s basis in the Common Shares will be increased to reflect taxed but undistributed income.  Distributions of income that have been previously taxed will result in a corresponding reduction of basis in the Common Shares and will not be taxed again as a distribution to the U.S. Holder.

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A U.S. Holder owning Common Shares during any year that the Company is a PFIC must file IRS Form 8621.  U.S. Holders should consult their tax advisors concerning the United States federal income tax consequences of holding Common Shares and of making a mark-to-market or QEF election if the Company is treated as a PFIC in the future.

Controlled Foreign Corporation

A non-U.S. corporation generally will be a CFC for U.S. tax purposes if United States shareholders collectively own more than 50 percent of the total combined voting power or total value of the corporation’s   stock on any day during any taxable year.  For this purpose, United States shareholders are limited to those U.S. persons who own, directly, indirectly or constructively, 10 percent or more of the total combined voting power of all classes of stock of the non-U.S. corporation.  If a corporation is a CFC for an uninterrupted period of 30-days in any tax year, every United States shareholder that owns stock on the last day of the CFC’s tax year, must include in gross income such shareholder’s pro rata share of the CFC’s “subpart F income” and income from investments in certain types of U.S. property (i.e., tangible personal property located in the United States, stock of a United States corporation, an obligation of a United States person, or a right to use patents, copyrights, and other similar property in the United States) even if the income has not been distributed to the shareholders in the form of dividends or otherwise.  Subpart F income consists of certain specified categories of income including, among others, dividends, interest, rents, royalties, net gains from the sale of property giving rise to such income and income from certain types of transactions involving “related persons” as defined for U.S. federal income tax purposes.

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Taxation of Non-U.S. Holders

Taxation of Dividends

Subject to the discussion in “Backup Withholding” below, Non-U.S. Holders generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on Common Shares, unless the distributions are effectively connected with a trade or business conducted in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment maintained in the United States).

If distributions are effectively connected with a U.S. trade or business (and, if applicable, attributable to a U.S. permanent establishment), Non-U.S. Holders generally will be subject to tax on such distributions in the same manner as U.S. Holders, as described in “Taxation of U.S. Holders — Taxation of Dividends” above.  In addition, any such distributions received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Taxation of Capital Gains

Gain realized by Non-U.S. Holders upon the sale or exchange or complete redemption of Common Shares held as a capital asset generally should not be subject to United States federal income tax provided that the gain is not effectively connected with a trade or business conducted in the United States (and, if an applicable tax treaty so requires, attributable to a permanent establishment maintained in the United States).  However, in the case of nonresident alien individuals, such gain will be subject to the 30% (or lower tax treaty rate) U.S. flat tax if (i) such person is present in the United States for 183 days or more during the taxable year (on a calendar year basis unless the nonresident alien individual has previously established a different taxable year) and certain other conditions are met; and (ii) such gain is derived from U.S. sources.

Generally, the source of gain upon the sale or exchange or complete redemption of Common Shares is determined by the place of residence of the shareholder.  For purposes of determining the source of gain, the Code defines residency in a manner that may result in an individual who is otherwise a nonresident alien with respect to the United States being treated as a United States resident for purposes of determining the source of income only.  Each potential individual investor who anticipates being present in the United States for 183 days or more (in any taxable year) should consult a separate, outside tax advisor with respect to the possible application of this rule.

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Special rules may apply in the case of shareholders (i) that have an office or fixed place of business in the United States to which a distribution or gain in respect of the Common Shares is attributable; or (ii) that are former citizens or residents of the United States, CFCs, foreign personal holding companies or corporations   that accumulate earnings to avoid United States federal income tax.  Such persons in particular are urged to consult their United States tax advisors before investing in the Company.

Backup Withholding

In the case of Common Shares held by a Non-U.S. Holder, or held in the United States by a custodian or nominee for a Non-U.S. Holder, U.S. back-up withholding taxes may apply to distributions in respect of such Common Shares unless such Non-U.S. Holder properly certifies as to its non-U.S. status using IRS Form W-8.

Backup withholding is not an additional tax.  Amounts withheld as backup withholding from a payment to a Non-U.S. Holder may be credited against his U.S. federal income tax liability and a Non-U.S. Holder may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

Future Tax Legislation

Future amendments to the Code, other legislation, new or amended U. S. Treasury Regulations, administrative rulings or guidance by the IRS, or judicial decisions may adversely affect the federal income tax aspects of an investment in the Company, with or without advance notice, and retroactively or prospectively.

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U.S. Treasury Circular 230 Notice

Any United States federal tax advice included in this Annual Report (a) was not intended to be used, and cannot be used, for the purpose of avoiding United States federal tax penalties, and (b) was not written to support the promotion or marketing of the Company, its Common Shares or any transaction(s) or matter(s) addressed in the written advice.  The taxpayer should seek advice based upon the taxpayer’s particular circumstances from an independent tax adviser.

10.4.2 Bermuda Taxation

In the opinion of Appleby, the following discussion correctly describes the material tax consequences of the ownership of Common Shares under Bermuda law, subject to the assumptions, qualifications and limitations in the discussion below.  Such summary is subject to changes in Bermuda law, including changes that could have retroactive effect.

Under current Bermuda law, there are no taxes on profits, income or dividends nor is there any capital gains tax.  Furthermore, the Company has received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966, as amended, an undertaking that, in the event that Bermuda enacts any legislation imposing tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be applicable to the Company or to any of its operations, or the shares, debentures or other obligations of the Company, until March 31, 2035.  This undertaking does not, however, prevent the imposition of any such tax or duty on such persons as are ordinarily resident in Bermuda and holding such shares, debentures or obligations of the Company or of property taxes on Company-owned real property or leasehold interests in Bermuda.

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As an exempted company, the Company must pay to the Bermuda government an annual government fee calculated on a sliding-scale basis by reference to its assessable capital, that is, its authorized share capital plus any share premium.

There is no stamp duty or other transfer tax payable upon the transfer of shares in the Company by shareholders.

The United States does not have a comprehensive income tax treaty with Bermuda.

10.5 Documents on Display

We are required to comply with the reporting requirements of the Exchange Act, applicable to a foreign private issuer.  We are currently required to file annually a Form 20-F no later than four months after the close of our fiscal year, which is December 31.  Any time the Company is delinquent in filing timely any periodic reports, including an Annual Report on Form 20-F, with the SEC, that delinquency may adversely affect the Company’s status on any exchange or quotation service on which its shares are listed or quoted and the Company may not be entitled to use certain abbreviated registration statements with the SEC in connection with the registration of any of its securities.  We have not been delinquent in filing our annual reports in any of the past five years.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

Our reports and other information, when so filed, may be inspected and copied (at prescribed rates) at the public reference facilities maintained by the SEC at Judiciary Plaza, 100 F Street, N.E., Washington D.C. 20549.  Please call the SEC at 1-800-SEC-0330 for further information.  In addition, the SEC maintains a web site that contains information filed electronically with the SEC, which can be accessed over the Internet at http://www.sec.gov.  We have filed all our reports electronically since November 4, 2002.  Such reports can be accessed over the Internet at http://www.sec.gov.

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In addition, we post certain information regarding the Company and its operations on our website located at www.apwcc.com.  Summary information regarding the Company posted on our website should not be considered to be a substitute for, or a restatement of, the more complete information regarding the Company, its results of operations and financial condition set forth in this Annual Report or other documents or information which we may file with the SEC.

Item 11: Quantitative and Qualitative Disclosures About Market Risks

The Company has exposure to several quantitative market risks, including fluctuations in interest rates, foreign currency exchange rates and the pricing of commodities, principally copper, the Company’s main raw material.  Risk management measures undertaken by the Company include entering into derivative agreements covering foreign exchange rates and copper pricing, as well as copper forward pricing agreements.  The Company does not purchase or sell derivative instruments for trading purposes.  The Company does not engage in trading activities involving copper contracts for which a lack of marketplace quotations would necessitate the use of fair value estimation techniques.

11.1 Interest Rate Risk

The Company is not currently a party to any derivative instruments to manage interest rate exposure.  In the current interest rate environment, the Company does not believe that the limited potential loss limitation protection available through the purchase of interest rate swaps or other derivative instruments against its exposure under floating rate finance facilities merits the cost that would be incurred in those transactions.

11.2 Foreign Currency Risk

The Company has exposure to fluctuations in currency exchange rates.  The Company’s revenues are generated primarily in the local currency or currencies in its principal operating regions, North Asia, Thailand, and the ROW, which are also its reporting segments.  However, nearly all of the costs associated with the purchase of the Company’s raw materials, including copper, and its capital expenditures, including ongoing equipment upgrade and maintenance programs, are in U.S. dollars.

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As the Company’s operating subsidiaries incur operating costs in the local currency where they operate, the Company believes it is prudent that those operating subsidiaries incur indebtedness in the local currency when debt financing is necessary.  The amount of indebtedness incurred by our operating subsidiaries from time to time is a function of our business strategy, the attractiveness of borrowing as opposed to other methods of financing operations and tax implications, among other considerations.  The Company has exposure to currency exchange risk when the results of its operating subsidiaries are translated from the local currency into the U.S. dollar.  At December 31, 2013 and 2014, the other comprehensive income in the total equity section of the consolidated balance sheets included currency translation adjustments of $(11.2) million and $(4.3) million, respectively.

11.3 Market Risks Relating to Copper

Copper is the principal raw material we use, accounting for a majority portion of the cost of sales in 2014.  We purchase copper at prices based on the average prevailing international spot market prices on the LME for copper for the one month prior to purchase.  The price of copper is influenced heavily by global supply and demand as well as speculative trading.  As with other costs of production, changes in the price of copper may affect our cost of sales.  Whether this has a material impact on our operating margins and financial results depends primarily on our ability to adjust our selling prices to our customers, such that increases and decreases in the price of copper are reflected in those selling prices.  The purchase price of our products is based in part on the cost of copper used to manufacture those products.  In addition, in the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business.  These inventories typically reflect the cost of copper prevailing in the market at the time we purchase.  Most of our sales of Manufactured Products reflect copper prices prevailing at the time the products are ordered.  A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then market value, which could be below cost.  Copper prices have been subject to considerable volatility and it is not always possible to manage our copper purchases and inventory so as to neutralize the impact of copper price volatility.  Accordingly, significant volatility in copper prices could have an adverse effect on our operations.  No assurance can be given that such volatility will not recur.

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11.4 Equity Price Risk

The Company is exposed to equity price risk as a result of our unlisted available-for-sale equity securities.  The carrying value of these investments in private companies is subject to fluctuations and their fair market value may be significantly different from the carrying value.

11.5 Fair Value of Designated Market-Sensitive Derivative Contracts

(Not applicable)

Item 12: Description of Securities Other Than Equity Securities

(Not applicable)

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Part II

Item 13: Defaults, Dividend Arrearages and Delinquencies

The Company has not experienced any material default in the payment of principal, interest, a sinking or purchase fund installment, or incurred any other material default, not cured within 30 days relating to the Company’s or any of its consolidated subsidiaries’ indebtedness.

Item 14: Material Modifications to the Rights of Security Holders and Use of Proceeds

(Not applicable)

Item 15: Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures in accordance with the provisions of Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon that evaluation and for the reasons stated in the management’s report on internal control over financial reporting below, our management concluded that our existing disclosure controls and procedures were ineffective as of December 31, 2014.

Management’s report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Rule 13a-15(f) under the Exchange Act.  

Based on the Company’s evaluation under the applicable framework set forth in Internal Control — Integrated Framework issued in 1992 by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission, our management, including our CEO and CFO, concluded that a material weakness in the Company’s internal controls over financial reporting was identified. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.  

Design deficiencies were noted in our controls over the accounting and reporting of derivative transactions. At one of our subsidiaries, derivative transactions were not identified and properly accounted for due to the lack of experience and knowledge of our accounting personnel at the subsidiary in relevant financial accounting and reporting requirements for financial instruments. In addition, inadequate guidelines on communications and on internal control monitoring of certain types of transactions in our decentralized reporting structure resulted in certain derivative transactions not being reported to the senior management at headquarters for required approvals.

Design deficiencies were also noted in our controls over the financial statement closing process due to the recurring lack of oversight by senior qualified personnel possessing satisfactory knowledge of SEC financial reporting requirements.

 

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The aggregate effect of these deficiencies represented a material weakness. Based on this assessment, the Company’s management, including its CEO and CFO, concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2014.

Senior management commenced to implement remedial measures to address this material weakness in 2015, including:

1)   arranging regular constructive training sessions on an ongoing basis for the accounting personnel at our subsidiaries with an emphasis on the identification of and accounting for financial derivative instruments;

2)   having the accounting personnel at headquarters attend the training with regard to the SEC reporting requirements on a regular basis, and assign individuals including qualified personnel designated to provide  a financial reporting oversight role, and designating personnel at headquarters, with satisfactory knowledge of accounting and financial reporting, to actively participate in the supervision and review of SEC reporting;

3)   strengthening the application of internal controls in the financial transaction approval process by implementing procedures to ensure that material financial transactions are reviewed and approved in advance by the senior management at headquarters; and

4)   coordinating the internal audit department’s audit effort to focus on financial transactions review.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d), under the Exchange Act, our management, including our chief executive officer, president and our chief financial officer, also has conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the period covered by this report, which changes could reasonably be expected to have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, it has been determined that there have been no such changes during the period covered by this annual report.

Item 16A. Audit Committee Financial Expert

During 2010 and until April 29, 2011, the Common Shares of the Company were traded on the over-the-counter bulletin board (“OTCBB”).  As of April 29, 2011, the Common Shares of the Company began trading on NASDAQ.  While the Company’s Common Shares were traded on the OTCBB, the Company was not required to have an audit committee that met the requirements of, nor was it required to have an audit committee financial expert as contemplated by, Regulation 10A-3 under the Exchange Act.  During those periods of time when the Company did not have any independent directors, our full Board of Directors fulfilled the functions of an audit committee pursuant to Section 3(a)(58)(B) of the Exchange Act.  For all of 2013 and 2014, our audit committee has consisted of our three independent directors, Mr. Anson Chan, Dr. Yichin Lee and Dr. Lambert L. Ding, with Mr. Chan serving as the Audit Committee’s chairman and financial expert.  The Audit Committee of the Company’s Board of Directors meets the requirements set forth in Regulation 10A-3 under the Exchange Act and under the rules of NASDAQ.

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Item 16B. Code of Ethics

On April 26, 2005, the Company adopted a code of ethics applicable to its Chief Executive Officer and senior financial officers.  A copy of the Company’s code of ethics for senior executives is on file with the SEC.

Item 16C. Principal Accountant Fees and Services

Audit Fees

The aggregate fees for fiscal years 2014 and 2013 for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements totaled $0.8 million and $0.9 million, respectively.

Tax Fees

The aggregate fees for fiscal years 2014 and 2013 for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning totaled approximately $95 thousand and $131 thousand, respectively.

All Other Fees

(None)

Audit Committee Approval

The engagement of the accountant to render audit, audit-related and non-audit services is entered into pursuant to pre-approval policies and procedures established in the Charter of the Audit Committee of the Company.  Each of the services described in this Item 16C was approved by the Audit Committee.

Item 16D. Exemptions from the Listing Standards for the Audit Committees

The Audit Committee of the Company’s Board of Directors consists of three directors, each of whom is independent, as such term is defined in Regulation 10A-3 promulgated under the Exchange Act, and one of whom is a financial expert.

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Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During 2014, neither the Company nor an “affiliated purchaser” engaged in any purchase of Common Shares or any other securities of the Company.

Item 16F. Change in Registrant’s Certifying Accountant

(Not applicable)

Item 16G. Corporate Governance

The Common Shares of the Company are traded on the NASDAQ Global Markets tier.  However, as the Company has a more than fifty percent (50%) shareholder, the Company is entitled to rely upon a “controlled company exemption” that exempts it from having a board of directors comprised of a majority of independent directors.  At present, a majority of the board of directors of the Company is affiliated with PEWC.  The Company also relies on the NASDAQ’s allowance for foreign private issuers to follow home country practices in lieu of the requirement that listed companies have regularly scheduled meetings at which only independent directors are present (“executive sessions”).  The independent directors of the Company meet periodically in executive session in their capacity as members of the Audit Committee of the Board of Directors of the Company without other Directors present, but on occasion meet with the independent auditors of the Company present in such executive session, and on occasion meet with members of management present in order to understand more fully management’s analysis of the Company’s financial performance and compliance with relevant corporate governance requirements.  These are the only material differences between the Company’s corporate governance practices and the corporate governance practices set forth for domestic companies under the NASDAQ rules on the subject matter.

Item 16H. Mine Safety Disclosure

(Not applicable)

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Part III

Item 17: Financial Statements

The Company has elected to provide the financial statements and related information specified in  Item 18 in lieu of Item 17.

Item 18: Financial Statements

See pages F-1 – F-91.

Item 19: Exhibits

19.1	Index to Audited Financial Statements
	Reports of independent registered accounting firms
	Consolidated income statements for the years ended December 31, 2014 and 2013
	Consolidated statements of comprehensive income for the years ended December 31, 2014 and 2013
	Consolidated balance sheets as of December 31, 2014, December 31, 2013 and December 31, 2012
	Consolidated  statements of shareholder´s equity for the years ended December 31, 2014 and 2013
	Consolidated statements of cash flows for the years ended December 31, 2014 and 2013
	Notes to consolidated financial statements
19.2	Index to Exhibits
1.1	Memorandum of Association of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 1.1 of the Company’s annual report on Form 20-F filed with the Securities and Exchange Commission on June 21, 2001).
1.2	Third Amended and Restated Bye-Laws of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 3.2 of the Company’s annual report on Form 20-F filed with the Securities and Exchange Commission on April 30, 2012).

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4.1	Amended and Restated Shareholders’ Agreement dated March 27, 2009 (incorporated by reference to Exhibit 3.4 of the Company’s Post-Effective Amendment No. 1 to Form F-1 filed with the Securities and Exchange Commission on April 2, 2009).
4.2	Shareholders’ Agreement Joinder dated as of July 1, 2011(incorporated by reference to Exhibit 3.5 of the Company’s Post-Effective Amendment No. 8 to Form F-1 on Form F-3 filed with the Securities and Exchange Commission on August 31, 2011).
4.3	Composite Services Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form F-1 filed with the Securities and Exchange Commission on November 13, 1996).
4.4	Amended and Restated summaries of Joint Venture Agreements (incorporated by reference to Exhibit 4.6 of the Company’s annual report on Form 20-F filed with the Securities and Exchange Commission on April 30, 2013).
4.5	Loan Facility Agreement between Crown Century Holdings Limited and Bangkok Bank Public Company Limited dated March 17, 2011 (incorporated by reference to Exhibit 10.8 of the Company’s Post-Effective Amendment No. 8 to Form F-1 on Form F-3 filed with the Securities and Exchange Commission on August 31, 2011).
4.6	Rule 10b5-1 Issuer Purchase Plan (incorporated by reference to the Company’s report on Form 6-K filed with the Securities and Exchange Commission on April 25, 2013).
8	List of significant subsidiaries (see Note 1 to the consolidated financial statements).
11	Code of Ethics (incorporated by reference to Exhibit 11 of the Company’s annual report on Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
12.1	Certification of Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.
12.2	Certification of Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.

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13.1	Certification by Chief Executive Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
13.2	Certification by Chief Financial Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
15(a)	Amended and Restated Audit Committee Charter (incorporated by reference to Exhibit 16.G of the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on May 13, 2011).

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SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED
Date: April 30, 2015	/s/ Yuan Chun Tang
	Yuan Chun Tang
	Chief Executive Officer

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Asia Pacific Wire & Cable Corporation Limited

Audited Consolidated Financial Statements

As of December 31, 2014 and 2013

Years ended December 31, 2014, 2013 and 2012

INDEX TO FINANCIAL STATEMENTS

CONTENTS

Report of independent registered public accounting firm	2
Consolidated income statements	3
Consolidated statements of comprehensive income	4
Consolidated balance sheets	5
Consolidated statements of changes in equity	7
Consolidated statements of cash flows	8
Notes to the consolidated financial statements	9

1.   Principal activities and corporate information

2.   Basis of preparation

2.1   Basis of preparation

2.2   Basis of consolidation

3.   Summary of significant accounting policies

4.   Standards issued but not yet effective

5.   Segment information

6.   Material partly-owned subsidiaries

7.   Other income/expenses and adjustments

7.1   Other operating income

7.2   Other operating expenses

7.3   Finance costs

7.4   Finance income

7.5   Other income

7.6   Other expense

7.7   Depreciation, amortization and lease expense included in the consolidated income statements

7.8   Employee benefits expense

8.   Income tax

9.   Earnings per share

10.   Cash and cash equivalents

11.   Other financial assets and financial liabilities

11.1   Other financial assets

11.2   Interest-bearing loans and borrowings

11.3   Hedging activities and derivatives

11.4   Fair values

12.   Trade and other receivables

13.   Inventories

14.   Gross amounts due from customers for contract work-in-progress

15.   Property, plant and equipment

16.   Prepaid land lease payments

17.   Investment properties

18.   Intangible assets

19.   Investment in associates

20.   Trade and other payables

21.   Employee benefit

22.   Equity

23.   Related party transactions

24.   Commitments and contingencies

25.   Fair value measurement

26.   Financial risk management objectives

27.   Subsequent event

28.   Approval of the financial statements

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Asia Pacific Wire & Cable Corporation Limited:

We have audited the accompanying consolidated balance sheets of Asia Pacific Wire & Cable Corporation Limited (the “Company”) as of December 31, 2014 and 2013, and the related consolidated income statements, statements of comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Asia Pacific Wire & Cable Corporation Limited at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ Ernst & Young

Taipei, Taiwan

April 30, 2015

F-2

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED INCOME STATEMENTS

For the years ended December 31, 2014, 2013 and 2012

		2014			2013			2012
	Note	US$’000			US$’000			US$’000
Sales of goods / services	3.14		451,327			460,676			462,265
Cost of sales	7,13		(414,583	)		(408,860	)		(411,786	)
Gross profit			36,744			51,816			50,479
Other operating income	7		89			181			5,825
Selling, general and administrative expenses	7		(29,479	)		(34,559	)		(34,593	)
Other operating expenses	7		(2,168	)		(196	)		(888	)
Operating profit			5,186			17,242			20,823
Finance costs	7		(1,697	)		(1,734	)		(2,195	)
Finance income	7		1,167			1,306			1,322
Share of loss of associates	19		(338	)		(211	)		(21	)
Gain on disposal of investment – held for sale			-			232			-
Loss on disposal of a subsidiary			(178	)		-			-
Gain on liquidation of subsidiaries			-			-			279
Exchange gain (loss)			(206	)		(1,245	)		2,411
Other income	7		1,150			1,454			1,933
Other expense	7		(49	)		(260	)		-
Profit before tax			5,035			16,784			24,552
Income tax expense	8		(2,274	)		(5,518	)		(7,578	)
Profit for the year			2,761			11,266			16,974
Attributable to:
Equity holders of the parent			572			5,847			9,694
Non-controlling interests			2,189			5,419			7,280
			2,761			11,266			16,974

Earnings per share
}Basic and diluted profit for the year attributable to equity holders of the parent	9	$	0.04	$	0.42	$	0.70

The accompanying notes are an integral part of these consolidated financial statements.

F-3

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2014, 2013 and 2012

		2014			2013			2012
	Note	US$’000			US$’000			US$’000
Profit for the year			2,761			11,266			16,974
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations, net of tax of $0	22		(4,521	)		(15,418	)		6,113
Net gain (loss) on available-for-sale financial assets			(713	)		(1,338	)		572
Income tax effect	8		214			402			(172	)
	22		(499	)		(936	)		400
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Re-measuring losses on defined benefit plans	21		(712	)		(51	)		(153	)
Income tax effect	8		213			15			46
Defined benefit pension plan, net of tax	22		(499	)		(36	)		(107	)
Other comprehensive (loss) income for the year, net of tax			(5,519	)		(16,390	)		6,406
Total comprehensive (loss) income for the year, net of tax			(2,758	)		(5,124	)		23,380
Attributable to:
Equity holders of the parent			(4,216	)		(5,822	)		14,938
Non-controlling interests			1,458			698			8,442
			(2,758	)		(5,124	)		23,380

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED BALANCE SHEETS

		As of December 31,
		2014		2013
	Note	US$’000		US$’000
Assets
Current assets
Cash and cash equivalents	10		68,863		62,509
Trade receivables	12		88,194		122,893
Other receivables	12		23,024		11,139
Due from related parties	23		24,711		3,842
Inventories	13		107,408		95,945
Gross amounts due from customers for contract work-in-progress	14		1,931		2,249
Prepayments			1,279		1,559
Other current assets			2,582		2,113
			317,992		302,249
Non-current assets
Other non-current financial assets – available for sale	11,25		2,479		3,189
Other non-current financial assets – held to maturity	11		336		335
Property, plant and equipment	15		47,929		48,709
Prepaid land lease payments	16		1,859		1,939
Investment properties	17,25		757		746
Intangible assets	18		110		104
Investments in associates	19		2,571		2,937
Other non-current assets			88		449
Deferred tax assets	8		4,551		3,978
			60,680		62,386
Total assets			378,672		364,635

F-5

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED BALANCE SHEETS

		As of December 31,
		2014			2013
	Note	US$’000			US$’000
Current liabilities
Interest-bearing loans and borrowings	11		53,863			41,789
Trade and other payables	20		36,467			41,369
Due to related parties	23		22,208			11,126
Due to immediate holding company	23		1,537			1,732
Accruals			12,060			13,336
Current tax liabilities	8		7,752			9,874
Employee benefit liability	21		665			419
Financial lease liabilities	24		31			37
Provisions for employee benefit	21		413			353
Onerous contracts provisions	3.14		41			125
Dividend payable			428			348
Other current liabilities			12,994			7,617
			148,459			128,125
Non-current liabilities
Employee benefit liability	21		6,073			5,455
Financial lease liabilities	24		38			28
Provisions for employee benefit	21		171			224
Deferred tax liabilities	8		2,720			2,676
			9,002			8,383
Total liabilities			157,461			136,508
Equity	22
Issued capital			138			138
Additional paid-in capital			110,608			110,608
Treasury shares			(38	)		(38	)
Retained earnings			52,338			51,766
Other components of equity			(10,014	)		(5,226	)
Equity attributable to equity holders of the parent			153,032			157,248
Non-controlling interests	6		68,179			70,879
Total equity			221,211			228,127
Total liabilities and equity			378,672			364,635

The accompanying notes are an integral part of these consolidated financial statements.

F-6

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2014, 2013 and 2012

	Attributable to the equity holders of the parent
	Issued capital		Additional paid-in capital			Treasury shares			Retained earnings		Actuarial losses on defined benefit plans			Available-for-sale reserve			Foreign currency translation reserve			Total			Non-controlling interests			Total equity
	US$’000		US$’000			US$’000			US$’000		US$’000			US$’000			US$’000			US$’000			US$’000			US$’000
Balance at January 1, 2012		138		111,541			-			36,166		-			1,199			-			149,044			68,686			217,730
Purchase of treasury shares		-		-			(6	)		-		-			-			-			(6	)		-			(6	)
Net income		-		-			-			9,694		-			-			-			9,694			7,280			16,974
Other comprehensive (loss) income		-		-			-			-		(54	)		203			5,095			5,244			1,162			6,406
Increase in shareholding in a subsidiary (Note 22)		-		(933	)		-			59		-			-			-			(874	)		(3	)		(877	)
Dividend paid to non-controlling shareholders of subsidiaries		-		-			-			-		-			-			-			-			(3,067	)		(3,067	)
Balance at December 31, 2012		138		110,608			(6	)		45,919		(54	)		1,402			5,095			163,102			74,058			237,160
Purchase of treasury shares		-		-			(32	)		-		-			-			-			(32	)		-			(32	)
Net income		-		-			-			5,847		-			-			-			5,847			5,419			11,266
Other comprehensive loss		-		-			-			-		(19	)		(476	)		(11,174	)		(11,669	)		(4,721	)		(16,390	)
Dividend paid to non-controlling shareholders of subsidiaries		-		-			-			-		-			-			-			-			(3,877	)		(3,877	)
Balance at December 31, 2013		138		110,608			(38	)		51,766		(73	)		926			(6,079	)		157,248			70,879			228,127
Net income		-		-			-			572		-			-			-			572			2,189			2,761
Other comprehensive loss		-		-			-			-		(254	)		(254	)		(4,280	)		(4,788	)		(731	)		(5,519	)
Dividend paid to non-controlling shareholders of subsidiaries		-		-			-			-		-			-			-			-			(4,158	)		(4,158	)
Balance at December 31, 2014		138		110,608			(38	)		52,338		(327	)		672			(10,359	)		153,032			68,179			221,211

The accompanying notes are an integral part of these consolidated financial statements.

F-7

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
	US$’000			US$’000			US$’000
Operating activities:
Profit before tax		5,035			16,784			24,552
Adjustments to reconcile profit before tax to net
cash provided by operating activities:
Depreciation		6,015			5,590			5,341
Reversal of impairment loss of investment properties		(26	)		(68	)		-
Amortization of prepaid land lease payments		59			59			59
Amortization of intangible assets		31			69			80
Gain on disposal of property, plant and equipment		(63	)		(113	)		(354	)
Gain on disposal of investment - held for sale		-			(232	)		-
Loss on disposal of a subsidiary		178			-			-
Noncash other income		-			(324	)		-
Dividend income		(104	)		(110	)		(109	)
Finance income		(1,167	)		(1,306	)		(1,322	)
Finance costs		1,697			1,734			2,195
Share of loss of associates		338			211			21
Impairment (reversal of impairment) for trade receivables		2,168			196			(709	)
Impairment (write-back of impairment) of inventories		2,394			(1,046	)		(5,161	)
Unrealized foreign exchange difference, net		405			687			26
Gain on liquidation of subsidiaries		-			-			(279	)
Changes in operating assets and liabilities
Trade and other receivable, net		7,589			2,999			(23,473	)
Inventories		(15,521	)		(5,350	)		(12,022	)
Prepayment and other current assets		(1,788	)		877			1,451
Amounts due to/from related parties		4,305			1,696			(2,102	)
Other non-current assets		363			349			497
Trade and other payables, accruals, other current liabilities and other non-current liabilities		178			3,704			27,100
Cash flows provided by operating activities		12,086			26,406			15,791
Dividend received		104			110			109
Interest received		1,249			1,334			1,305
Interest paid		(699	)		(1,420	)		(1,704	)
Income tax paid		(4,598	)		(5,818	)		(4,829	)
Net cash provided by operating activities		8,142			20,612			10,672
Investing activities:
Purchase of available-for-sale financial assets		-			-			(2,378	)
Proceeds from disposal of available-for-sale financial assets		-			2,378			-
Purchases of held-to-maturity securities		-			-			(360	)
Purchases of property, plant and equipment		(5,951	)		(9,494	)		(10,892	)
Purchases of intangible assets		(39	)		(15	)		(105	)
Proceeds from disposal of  held for sale assets		-			1,512			-
Net cash outflow on disposal of subsidiaries		(327	)		-			-
Proceeds from disposal of property, plant and equipment		65			157			413
Net cash used in investing activities		(6,252	)		(5,462	)		(13,322	)
Financing activities:
Dividend paid to non-controlling shareholders of subsidiaries		(4,158	)		(3,877	)		(3,067	)
Repayments of borrowings		(14,535	)		(40,818	)		(6,000	)
Proceeds from borrowings		26,392			25,521			9,888
Share buy-back		-			(32	)		(6	)
Acquisition of non-controlling interest		-			-			(877	)
Change in financial lease liabilities		(41	)		(165	)		(870	)
Net cash provided by (used in) financing activities		7,658			(19,371	)		(932	)
Effect of exchange rate changes on cash and cash equivalents		(3,194	)		(6,086	)		(274	)
Net increase (decrease) in cash and cash equivalents		6,354			(10,307	)		(3,856	)
Cash and cash equivalents at beginning of year		62,509			72,816			76,672
Cash and cash equivalents at end of year		68,863			62,509			72,816

The accompanying notes are an integral part of these consolidated financial statements.

F-8

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   PRINCIPAL ACTIVITIES AND CORPORATE INFORMATION

Asia Pacific Wire & Cable Corporation Limited (“APWC” or the “Company”), which is a subsidiary of Pacific Electric Wire & Cable Co., Ltd. (“PEWC”), a Taiwanese company, was incorporated as an exempted company in Bermuda on September 19, 1996 under the Companies Act 1981 of Bermuda (as amended) for the purpose of acting as a holding company. The Company is principally engaged in owning operating companies engaged in the power cable, telecommunication cable, enameled wire and electronic cable industry. The Company’s registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM EX, Bermuda. The Company’s executive business office is presently located in Taipei, Taiwan.

The Company’s operating subsidiaries (the “Operating Subsidiaries”) are engaged in the manufacturing and distribution of telecommunications, power cable and enameled wire products in Singapore, Thailand, Australia, the People’s Republic of China (“PRC”) and other markets in the Asia Pacific region. Major customers of the Operating Subsidiaries include government organizations, electric contracting firms, electrical dealers, and wire and cable factories. The Company’s Operating Subsidiaries also engage in the distribution of certain wire and cable products manufactured by PEWC and third parties. The Company also provides project engineering services in supply, delivery and installation (the “SDI”) of power cable to certain of its customers.

The Company was listed on the New York Stock Exchange in March 1997. On December 24, 2001, the staff of the New York Stock Exchange (“NYSE”) announced that it had determined that the trading of the common shares of APWC should be suspended prior to December 31, 2001. The decision was reached in view of the fact that the Company’s share price had fallen below NYSE’s continued listing standards. Following the delisting of the Company’s common shares on the NYSE, the Company’s common shares were traded under the ticker AWRCF, on the Over-the-Counter Bulletin Board (“OTC BB”), operated by the National Association of Securities Dealers, Inc. (“NASD”). After the Company failed to timely file its annual report on Form 20-F for the 2004 fiscal year, the Company was delisted from the OTC BB in August 2005 and thereafter its common shares were quoted on the “pink sheets” market by Pink Sheets LLC, a privately owned company that provides pricing and financial information for over-the-counter securities.

On June 28, 2007, SOF Investment, L.P. (“SOF”), a Delaware limited partnership controlled by MSD Capital, L.P. acquired 20% of the issued and outstanding shares of the Company from a private equity investor and entered into a shareholders’ agreement with the Company and PEWC.

On April 9, 2008, the Company was listed again and began trading its common shares on the OTC BB after completing all reporting requirements and filing all outstanding financial reports with the US Securities and Exchange Commission (“SEC”). The Company is subject to the reporting requirements under the Securities Exchange Act of 1934.

On March 27, 2009, SOF sold 10.2% of the issued and outstanding shares of the Company to PEWC. PEWC is currently holding 65.6% of the equity of the Company and MSD Credit Opportunity Master Fund, L.P. (“COF”) (as successor-in-interest to SOF) is holding 9.8%. The remaining 24.6% of the issued and outstanding common shares were publicly traded on the Over-the-Counter Bulletin Board (“OTC BB”) prior to that date.

On April 29, 2011, the Company’s common shares commenced trading on NASDAQ Capital Market tier.

As of  July 1, 2011, SOF transferred its 9.8% interest in the Company to COF, which became a party to the shareholders agreement, as amended and restated on March 27, 2009 (the “Amended Shareholders Agreement”), and succeeded to all of the right, title, and interest in the common shares previously held by SOF.

On February 15, 2013, the Company’s common shares started trading on the NASDAQ Global Markets tier.

Share Capital

On September 8, 2008, the Company’s shareholders approved an increase to the authorized share capital from 20,000,000 common shares, par value $0.01 per share, to 50,000,000 common shares, par value $0.01 per share.

Share Capital Repurchase Program

The Company’s board of directors authorized a share capital repurchase program for its common shares on August 28, 2012, up to $2 million worth of its common shares over the next twelve months. As of December 31, 2014 and 2013 the Company had repurchased nil and 11,100 shares with total considerations of $nil and $38, respectively.  The Company records the value of its common shares held in the treasury at cost.

On August 13, 2014, the Company announced that its Board of Directors had authorized the future implementation of a share repurchase program of up to $1 million worth of its Common Shares. The Company did not announce a commencement date for that future share repurchase program and, to date, it has not yet been implemented.

F-9

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   PRINCIPAL ACTIVITIES AND CORPORATE INFORMATION (continued)

Put Right and Option

Under the terms of the Amended Shareholders Agreement, COF has the right and option (but not the obligation) to sell to PEWC upon the occurrence of a Put Event (defined below), and PEWC agreed to purchase from COF upon the occurrence of a Put Event, all registrable securities then owned by COF (the “ Put Shares ”), for an amount equal to the Put Price (defined below) together with interest (calculated on the basis of a 360 day year) on the Put Price, computed (x) from June 28, 2007 through May 31, 2010 at a rate per annum that shall be equal to the Libor rate plus fifty (50) basis points (compounded annually), and (y) from June 1, 2010 until the Put Closing (defined below) at a rate per annum that shall be equal to the Libor rate plus one hundred and fifty (150) basis points compounded annually) (the “ Put Right ”).

If the Put Event terminates prior to the closing of such Put Right, the exercise of the Put Right is deemed rescinded and the transaction relating to the Put Right is deemed cancelled, but this will not terminate the existence of a future Put Right upon the triggering of a future Put Event.

A “Put Event” means any date (i) after March 11, 2009 whereby an event has occurred and continues to occur, or (ii) after February 1, 2011 whereby the shares are not listed on a US Securities Market, which means any of the NASDAQ Stock Market, Inc. (Global Market or Global Select Market), Alternext U.S. (f/k/a the American Stock Exchange LLC), the New York Stock Exchange LLC or in conjunction with a dual listing on, or a transfer from, a US Securities Market to one or more of the principal or secondary exchanges for the public trading of equity securities in any of Hong Kong, Tokyo or Singapore. The “Put Price” means for (i) shares purchased pursuant to the Purchase Agreement, an aggregate amount equal to the product of (a) the number of shares being sold and (b) US$4.35 and (ii) shares purchased under preemptive right provisions of the amended shareholders agreement (the “Shareholders Agreement”), and aggregate amount equal to the purchase price thereof.

The Shareholders Agreement does not contain any provisions that impose any purchase, reimbursement or financing obligations on the Company in the event that SOF exercises the Put Right. The Put Right is an obligation solely of PEWC and not of the Company. However, for the avoidance of doubt and as a re-affirmation that the financial and  other obligation to SOF in the event of an exercise of the Put Right rest exclusively with PEWC, the Company has, on March 27, 2009, entered into a non-recourse confirmation agreement (the “Non-recourse Confirmation Agreement”) with PEWC whereby PEWC (i) covenants that it has no put right against the Company relating to the Put Shares and that PEWC’s obligations to SOF are without recourse to the Company, (ii) waives any such right should it arise in the future, and (iii) agrees that it shall not cause the Company, directly or indirectly, to incur any costs associated with the exercise of the Put Right.

The Shareholders Agreement provides, and the Non-recourse Confirmation Agreement confirms, that the Put Right is solely the obligation of PEWC. The Company has no purchase, reimbursement or financing obligations in the event that SOF exercises the Put Right. As such, the Company has classified the Put Shares as equity in the accompanying financial statements.

The Company received an approval letter from Nasdaq on April 13, 2011 for the listing of its common shares on NASDAQ, with “APWC” as the trading symbol and, as noted, on April 29, 2011, the Company’s common shares commenced trading on NASDAQ Capital Markets, which tier does not fit within the definition of a national “Securities Market”, as provided in the Shareholders Agreement. The Company applied to list the common shares on the NADAQ Global Markets after the Company fulfilled NASDAQ’s requirement for the migration, which included trading price per shares, liquidity requirements, operating history and a diversified shareholder list. The Company’s common shares began trading on the NASDAQ Global Markets effective February 15, 2013. There is no impact on existing shareholders from this change in trading tiers.

F-10

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.   BASIS OF PREPARATION

2.1   The consolidated financial statements are prepared in accordance with International Financial Reporting Standard (IFRS) as issued by the International Accounting Standards Board (IASB).

These financial statements for the year ended December 31, 2013 were the first the Company has prepared in accordance with IFRS as issued by IASB.

The financial statements have been prepared on a historical basis except where otherwise disclosed in the accounting policies. The consolidated financial statements are presented in U.S. Dollars and all values are rounded to the nearest thousand (US$’000), except when otherwise indicated.

2.2   Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of December 31, 2014 and 2013, and the results of all subsidiaries for the years ended December 31, 2014, 2013 and 2012.

Subsidiaries are fully consolidated from the date of acquisition (the date on which the Company obtains control), and continue to be consolidated until the date that such control ceases. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statements, statements of comprehensive income, statements of changes in equity and balance sheets respectively. Total comprehensive income (loss) within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it:

u Derecognizes the assets (including goodwill) and liabilities of the subsidiary

u Derecognizes the carrying amount of any non-controlling interest

u Derecognizes the cumulative transaction differences recorded in equity

u Recognizes the fair value of the consideration received

u Recognizes the fair value of any investment retained

u Recognizes any surplus or deficit in profit or loss

u Reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Company had directly disposed of the related assets or liability.

F-11

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.   BASIS OF PREPARATION (continued)

2.2   Basis of consolidation (continued)

The subsidiaries of the Company are set out below:

	Percentage of equity interest
	As of December 31,
Place of incorporation and operations	2014			2013
The British Virgin Islands
APWC General Holdings Limited		100	%		100	%
PRC (APWC) Holding Ltd.		100	%		100	%
Samray Inc.		100	%		100	%
Siam (APWC) Holdings Ltd.		100	%		100	%
Moon View Ltd.		100	%		100	%
Trigent Investment Holdings Limited		100	%		100	%
Crown Century Holdings Ltd.		100	%		100	%
Singapore
Sigma Cable Company (Private) Limited (“Sigma Cable”)		98.30	%		98.30	%
Sigma-Epan International Pte Ltd. (“Sigma-Epan”) (under liquidation)		100	%		100	%
Epan Industries Pte Ltd.		98.30	%		100	%
Epan Data-Comm System Pte Ltd.(liquidated)		-			100	%
Singvale Pte Ltd.		100	%		100	%
Malaysia
Elecain Industry Sdn. Bhd. (liquidated)		-			92.60	%
Sigma-Epan Malaysia Sdn. Bhd. (under liquidation)		100	%		100	%
The People’s Republic of China (“PRC”)
Ningbo Pacific Cable Co., Ltd. (“Ningbo Pacific”).		100	%		100	%
Shanghai Yayang Electric Co., Ltd. (“SYE”)		66.35	%		66.35	%
Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. (“PEWS”).		100	%		100	%
Hong Kong
Crown Century Holdings Limited (“CCH (HK)”)		100	%		100	%
Pacific Electric Wire & Cable (Hong Kong) Limited (“PEWC (HK)”) (disposed)		-			100	%
Australia
Australia Pacific Electric Cable Pty Limited (“APEC”)		99.40	%		99.40	%

F-12

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.   BASIS OF PREPARATION (continued)

2.2   Basis of consolidation (continued)

	Percentage of equity interest
	As of December 31,
Place of incorporation and operations	2014			2013
Thailand
Charoong Thai Wire and Cable Public Company Limited (“Charoong Thai”)		50.93	%		50.93	%
Siam Pacific Electric Wire & Cable Company Limited (“Siam Pacific”)		50.93	%		50.93	%
Double D Cable Company Limited (“Double D”)		50.93	%		50.93	%
Hard Lek Limited.		73.98	%		73.98	%
APWC (Thailand) Co., Ltd.		99.48	%		99.48	%
PEWC (Thailand) Co., Ltd.		99.48	%		99.48	%
CTW Beta Co. Ltd.		50.89	%		50.89	%
Siam Fiber Optics Co. Ltd.		30.56	%		30.56	%

*    Charoong Thai is listed on the Stock Exchange of Thailand and is engaged in the manufacturing of wire and cable products for the power and telecommunications industries in Thailand.

Changes in ownerships in subsidiaries during the years ended December 31, 2014 and 2013 included the following:

(a)   On August 19, 2013, the CCH (HK)’s board of directors resolved to acquire a wholly owned Hong Kong company with limited liability (“subsidiary”) and the principal activities of the subsidiary is to carry out trading for PEWSC. On October 25, 2013, CCH (HK) acquired 1 million shares of HK$1 each representing 100% of the issued share capital in "PEWC (HK)".

(b)   On January 13, 2014, Sigma-Epan sold its 100% interest in the Epan Industries to Sigma Cable for a total cash consideration of S$1. APWC effective interest in Epan Industreis decreased from 100% to 98.30%.

Sigma-Epan has gone into voluntary liquidation process after disposal of Epan Industries.

(c)   On August 5, 2014, CCH (HK) sold its 100% interest of PEWC (HK) to Dragon Conqueror Ltd. (a PEWC’s subsidiary) for a total consideration of US$220,154. PEWC (HK) became an affiliated company.

F-13

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1   Current versus non-current classification

The Company presents assets and liabilities in the balance sheets based on current and non-current classification. An asset as current when it is:

u Expected to be realized or intended to be sold or consumed in the normal operating cycle;

u Held primarily for the purpose of trading;

u Expected to be realized within twelve months after the reporting period; or

u Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

u It is expected to be settled in normal operating cycle;

u It is held primarily for the purpose of trading;

u It is due to be settled within twelve months after the reporting period; or

u There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3.2   Operating profit

The operating profit is the profit earned from core business operations, and does not include any profit earned from investment and the effects of interest and taxes.

3.3   Fair value measurement

The Company measures financial instruments at fair value at each balance sheet date. In addition, fair values of financial instruments measured at amortized cost are disclosed in Note 11.4.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

u In the principal market for the asset or liability, or

u In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

u Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

u Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

u Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

F-14

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.3   Fair value measurement (continued)

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

3.4   Cash and Cash Equivalents

Cash and cash equivalents in the consolidated balance sheet comprise of cash at banks and highly liquid investments with purchased maturities of three months or less, which are subject to an insignificant risk of change in value.

For the purpose of the consolidated statements of cash flows, cash and cash equivalents are net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

3.5   Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, direct labor and an appropriate proportion of overheads based on the normal operating capacity. Net realizable value is based on estimated selling prices less any estimated costs to be incurred to completion and the estimated cost necessary to make the sale.

3.6 Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

Spare parts and servicing equipment are usually carried as inventory and recognized in profit or loss as consumed. However, major spare parts and stand-by equipment qualify as property, plant and equipment when an entity expects to use them for more than one year.

The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. A provision shall be recognized when:

(a)   an entity has a present obligation (legal or constructive) as a result of a past event;

(b)   it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(c)   a reliable estimate can be made of the amount of the obligation.

If these conditions are not met, no provision shall be recognized.

F-15

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.6   Property, Plant and Equipment (continued)

Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

}Buildings	20-30 years
}Building improvement	5-20 years
}Machinery and equipment	5-15 years
}Motor vehicles	3-10 years
}Office equipment	3-10 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The assets’ residual values (presumably nil), useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

Impairment

If circumstances arise which indicate assets might be impaired, a review should be undertaken of their cash generating abilities through either use or sales. This review will produce an amount, which should be compared with the asset’s carrying value, and if the carrying value is higher, the difference must be written off as an impairment adjustment in the income statement. Further detailed methodology used for an impairment test is given in Note 3.11 - Impairment of non-financial assets.

3.7   Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Finance leases

Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Company, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the income statement.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating leases

Operating lease payments are recognized as an operating expense in the income statement on a straight-line basis over the lease term.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognized on the straight-line basis over the lease terms. The prepaid land lease payments are presented as current or non-current assets on the face of balance sheet, depending on the amount to be recognized less or more than twelve months after the reporting period.

F-16

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.8   Borrowing Costs

Borrowing costs are required to be capitalized as part of the cost of the asset if they are directly attributable to the acquisition, construction or productions of a qualifying asset (whether or not the funds have been borrowed specifically). All other borrowing costs are recognized as an expense in the period in which they are incurred.

A qualifying asset is an asset that necessarily takes a substantial period to get ready for its intended use or sale.

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Borrowing costs include:

} interest expense calculated using the effective interest method;

} finance charges in respect of finance leases; and

} exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Exchange differences are generally regarded as borrowing costs only to the extent that the combined borrowing costs, including exchange differences, approximate the amount of borrowing costs on functional currency equivalent borrowings.

For specific borrowings, the borrowing costs eligible for capitalization are the actual borrowing costs incurred related to funds that are borrowed specifically to obtain a qualifying asset less any investment income earned on the temporary investment of those borrowings.

For general borrowings, the capitalization rate applied to borrowing costs on the consolidation level will be based on cash management strategy, which might be the weighted average of the group borrowings outstanding during the period.

3.9   Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at historical cost less provisions for depreciation and impairment. Additional costs incurred subsequent to the acquisition of an asset increase the carrying amount of the asset or recognized as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Company and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred. While land is not depreciated, all other investment property is depreciated based on the respective assets estimated useful lives ranging from 20 to 30 years using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in income or loss in the period in which the property is derecognized.

International Accounting Standards (“IAS”) 40 requires disclosures about the fair value of any investment property recorded at cost. See Note 17 – Investment Properties.

F-17

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments

(i)  Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as described below:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in the income statement.

Derivatives not designated as hedging instruments

A derivative is a financial instrument or other contract within the scope of IAS 39 with all of the following characteristics:

(a)   its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the 'underlying');

(b)   it requires no initial net investment, or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and

(c)   it is settled at a future date.

Fair value is the measurement basis for all financial instruments meeting the definition of a derivative.  Change in fair value of non-hedged item is recorded in profit and loss.

F-18

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments  (continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (“EIR”) method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the income statement. The losses arising from impairment are recognized in the other operating expenses for receivables.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Company has the positive intention and ability to hold them to maturity. After initial measurement, held to maturity investments are measured at amortized cost using the EIR, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance income or finance cost in the income statement. The losses arising from impairment are recognized in the income statement as finance costs.

Available-for-sale financial assets

Available-for-sale financial assets include equity investments and debt securities. Equity investments classified as available for sale are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealized gains or losses recognized as other comprehensive income in the available-for-sale reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized in other income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the income statement in finance costs. Interest earned whilst holding available-for-sale financial investments is reported as finance income using the EIR method.

For a financial asset reclassified out of the available-for-sale category, the fair value carrying amount at the date of reclassification becomes its new amortized cost and any previous gain or loss on the asset that has been recognized in equity is amortized to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortized cost and the maturity amount is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is recognized in the income statement.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

} The rights to receive cash flows from the asset have expired, or

} The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

F-19

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments (continued)

Derecognition (continued)

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

(ii)    Impairment of financial assets

The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as finance income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the income statement.

F-20

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments (continued)

(ii)  Impairment of financial assets (continued)

Trade receivables impairment

For trade receivables, impairment assessment is performed firstly on an individual basis:

A financial asset is impaired (and impairment losses are determined) if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the holder about the following loss events:

} significant financial difficulty of the issuer or obligor;

} breach of contract, such as a default or delinquency in interest or principal payments;

} the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that would not otherwise be considered;

} it becoming probable that the borrower will enter bankruptcy or other financial reorganization;

} the disappearance of an active market for that asset because of financial difficulties (but not simply because the asset is no longer publicly traded ; or

} observable data indicating that there is a measurable decrease in the estimated future cash flows from a Company of financial assets since initial recognition, although the decrease cannot yet be identified with the individual assets in the Company, including:

l adverse changes in the payment status of borrowers in the Company (e.g. an increased number of delayed payments); or

l national or local economic conditions that correlate with defaults on the assets in the Company.

For trade receivables that have been individually assessed, but for which there is no objective evidence of impairment, the review for impairment is performed on a group basis, based on similar credit risk characteristics.

Available-for-sale financial assets

For available-for-sale financial assets, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. The Company's policy considers a significant decline to be one in which the fair value is below the weighted average original cost by more than 20%. A prolonged decline is considered to be one in which the fair value is below the weighted average original cost for a period of more than 12 months. When there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in the income statement – is removed from other comprehensive income and recognized in the income statement. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income.

F-21

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments (continued)

Available for sale financial assets(continued)

In the case of debt instruments classified as available for sale, impairment is assessed based on the same criteria as financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the income statement.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the income statement, the impairment loss is reversed through the income statement.

(iii)  Financial liabilities

Financial liabilities initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, bank overdrafts and interest-bearing loans and borrowings.

Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the income statement.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different  terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the income statement.

(iv)  Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

F-22

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.10   Financial Instruments (continued)

(v)    Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:

} Using recent arm’s length market transactions

} Reference to the current fair value of another instrument that is substantially the same

} A discounted cash flow analysis or other valuation models

3.11   Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use. A CGU is the smallest group of assets that generates cash inflows that are largely independent of the cash flows from other assets or groups of assets. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Company of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the income statement in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement.

F-23

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12   Intangible assets

Computer software

The costs of acquiring software is capitalized separately as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Acquired software (licenses) is stated at cost less accumulated amortization and impairment losses.

Amortization of software applications is charged to operating expenses and/or cost on a straight-line basis over their estimated useful lives, from the date they are available for use.

The residual values and useful lives are reviewed at each balance sheet date and adjusted, if appropriate.

3.13   Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities.  The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

} When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

} In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

} When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

} In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

F-24

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.13   Taxes (continued)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Uncertain tax position

An entity’s tax position might be uncertain; for example, where the tax treatment of an item of expense or structured transaction may be challenged by the tax authorities.

The Company considers each uncertain tax positions individually, by first considering whether each position taken in the tax return is probable of being sustained on examination by the taxing authority, and recognizing a liability for each item that is not probable of being sustained. The liability then is measured using a single best estimate of the most likely outcome. The uncertain tax positions are presented in the current tax liabilities.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.

3.14   Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The specific recognition criteria described below must also be met before revenue is recognized.

Sale of manufactured goods and distributed products

Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

SDI

The Company’s supply, delivery and installation services are considered as multiple elements arrangements and are accounted for in accordance with IAS 18. The sale of cables and the installation service are considered as one single arrangement.

Revenue of SDI is accounted for using the percentage-of-completion method, based on the customer certification of the length of cable laid with respect to the estimated total length of cable under the contract in accordance with IAS 11.

F-25

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.14   Revenue recognition (continued)

When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made. Provision for losses is recognized in the period in which they become evident. On a quarterly basis, the Company reviews the budget and forecast whether a loss provision should be recorded.

Onerous operating contracts

Onerous contract is a type of contract in which the costs of meeting the obligations under the contract are higher than the economic benefits received under the contract.

The Company has contracts to supply products that cost more to produce than originally determined in the contracts due to a rise in raw material costs. The Company established the unavoidable costs of meeting the obligations under the contract as a liability for the contractual responsibilities. The liability has been calculated based on the difference between the copper price on the London Metal Exchange (the “LME”) at reporting date and the prices determined in the contracts.  As of December 31, 2014 and 2013 the amount of onerous contracts were $41 and $125, respectively.

Bill and hold transaction

For a 'bill and hold' sales transaction, where delivery is delayed at the buyer's request, but the buyer takes title and accepts billing, the Company’s policy is not to recognize revenue until the delivery is made.

Payment received on the revenue of undelivered goods under bill and hold arrangements are recorded on the balance sheet as other current liabilities, as of December 31, 2014 and 2013 amounted to $11,202 and $5,297, respectively.

Rebates

Based on IAS 18, the amount of revenue arising on a transaction is usually determined by agreement between the entity and the buyer or user of the asset. It is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity. Consequently, where an entity provides sales incentives to a customer when entering into a contract these are usually treated as rebates and will be included in the measurement of (i.e. deducted from) revenue when the goods are delivered or services provided.

Provisions for rebates based on attainment of sales targets are estimated and accrued as each of the underlying sales transactions is recognized.

Provision for rebate should only be recorded when there is a contractually formal signed rebate contract exists.

At interim dates, if no reliable estimate can be made, the revenue recognized on the transaction should not exceed the consideration that would be received if the maximum rebates were taken. Therefore, the Company assumes that the customers will achieve the necessary sales volume target to earn the maximum rebate. The provisions are subject to continuous review and adjustment as appropriate based on the most recent information available to management.

As of the balance sheet date, the Company recalculates and adjusts the provision for rebate based on the actual sales.

Interest income

For all financial assets measured at amortized cost, interest income is recorded using EIR. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the income statement.

Rental income

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue due to its operating nature.

Dividends

Dividend revenue is recognized when the Company’s right to receive the payment is established, which is generally when shareholders approve the dividend.

F-26

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.15   Foreign currencies

The Company’s consolidated financial statements are presented in USD, which is also the parent company’s functional currency. For each entity the Company determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Company’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognized in profit or loss with the exception of monetary items that are designated as part of the hedge of the Company’s net investment of a foreign operation. These are recognized in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensive income or profit or loss, respectively).

Translation to the presentation currency

The results and financial position of an entity whose functional currency are translated into a different presentation currency using the following procedures:

a.   assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

b.   income and expenses for each statement presenting profit or loss and other comprehensive income (ie including comparatives) are translated at exchange rates at the dates of the transactions;

c.   all resulting exchange differences shall be recognized in other comprehensive income; and

d.   for equity items, the historical rate is used; therefore, these equity items are not retranslated.

F-27

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.16   Employee benefits

The Company has both defined contribution and defined benefit obligation. The liabilities of the Company arising from defined benefit obligations, and the related current service cost, are determined using the projected unit credit method.

For defined benefit plans, the cost charged to the income statement consists of current service cost, net interest cost and past service cost.  Re-measurements, comprising of actuarial gains and losses but excluding net interest are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur.  Re-measurements are not reclassified to profit or loss in subsequent periods. Contributions to defined contribution plans are charged to the income statement as incurred.  All past service costs are recognized at the earlier of when the amendment occurs.

Compensated absence

The cost of accumulating paid absences is recognized when employees render the service that increases their entitlement to future paid absences.

The cost of accumulating paid absences is measured as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period.

3.17   Earnings per share

The Company presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held.

In calculating diluted EPS, the number of shares should be that used in calculating the basic EPS, plus the weighted average number of shares that would be issued on the conversion of all the dilutive potential common shares into common shares. The earnings figure should be that used for basic EPS adjusted to reflect any post-tax effects from changes that would arise if the potential shares outstanding in the period were actually issued.

3.18   Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity.  No gain or loss is recognized in the profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in additional paid-in capital. Voting rights related to treasury shares are nullified and no dividends are allocated to them.

F-28

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.19   Investments in an associate

The Company’s investment in its associates are accounted for using the equity method. An associate is an entity in which the Company has significant influence. Under the equity method, the investment is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Company’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.

The income statement reflects the Company’s share of the results of operations of the associate. Any change in other comprehensive income of those investees is presented as part of the Company’s other comprehensive income.  When there has been a change recognized directly in the equity of the associate, the Company recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the interest in the associate.

The Company’s share of profit or loss of an associate is shown on the face of the income statement and represents profits or loss after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Company. When necessary, adjustments are made to bring the accounting policies in line with those of the Company.

After application of the equity method, the Company determines whether it is necessary to recognize an impairment loss on its investment in its associate. The Company determines at each reporting date whether there is any objective evidence that the investment in associates is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in share of losses of associates in the income statement.

Upon loss of significant influence over the associate, the Company measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

3.20   Government grant

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as other income on a systematic basis over the periods that the related costs, which it is intended to compensate, are expensed.  When the grant relates to an asset, it is recognized as an liability in equal amounts over the expected useful life of the related asset.

3.21   Non-current assets held for sale

The Company classifies non-current assets and disposal groups as held for sale/distribution to owners if their carrying amounts will be recovered principally through a sale/distribution rather than through continuing use. Non-current assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. The criteria for held for sale classification is regarded met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Property, plant and equipment and intangible assets once classified as held for sale/distribution to owners are not depreciated or amortized.

When equity method investments are classified as held for sale, the investor discontinues the use of the equity method from the date that the investment (or the portion of it) is classified as held for sale; instead, the associate or joint venture is then measured at the lower of its carrying amount and fair value less cost to sell.

F-29

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.22   Significant accounting judgements, estimates and assumptions

The preparation of the Company’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Bill and hold transaction

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have been transferred to the buyer, usually on delivery of the goods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

At each reporting date or whenever events indicate that the asset’s value has declined or significant changes in the market with an adverse effect have taken place, the Company assesses whether there is an indication that an asset in the scope of IAS 36 may be impaired. If any indication exists, the Company completes impairment testing for the CGU to which the individual assets belong. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The recoverable amount of an individual asset or CGU is the higher of fair value less costs to sell and its value in use. The fair value less costs of disposal calculation is based on available data from binding sale arrangements, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposal of the assets. The value in use is measured at the net present value of the future cash flows the entity expects to derive from the asset or CGU. Cash flow projection involves subjective judgments and estimates which include the estimated useful lives of property, plant and equipment, capacity that generates future cash flows, capacity of physical output, potential fluctuations of economic cycle in the industry and the Company’s operating situation.

Fair value disclosure of investment properties

The Company carries its investment properties at cost, and discloses the fair value of the investment properties in footnotes.  The Company engaged an independent valuation specialist to assess fair value. The valuation has been made on the assumption to sell the property interests on the open market in the neighborhood without the benefit of any deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests. The method of valuation used to determine the fair value of the investment properties is provided in Note 17.

F-30

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.22   Significant accounting judgements, estimates and assumptions (continued)

Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including income approach (for example, the discounted cash flows model) or the market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 11 for more details.

Impairment of trade receivables

The Company maintains an allowance for estimated loss arising from the inability of its customers to make the required payments. The Company makes its estimates based on the ageing of its trade receivable balances, customers’ creditworthiness, historical write-off experience and recovery of collateral. If the financial condition of its customers was to deteriorate so that the actual impairment loss might be higher than expected, the Company would be required to revise the basis of making the allowance and its future result would be affected.

Refer to Note 12 and Note 26 for more information regarding the impairment of trade receivables and the related credit risks.

Net realizable value of inventory

Net realized value is the estimated selling price in the ordinary course of business less estimated costs to completion and the estimated costs necessary to make the sale. Management makes reference to actual sales prices after reporting date when making their estimate of net realizable value.

Refer to Note 13 for more information regarding the net realizable value of inventory.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results  and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Company companies.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

As of December 31, 2014, the Company has $7,730 (2013: $7,739) of tax losses carried forward. These losses related to subsidiaries that have a history of losses, do not expire and may not be used to offset taxable income elsewhere in the Company except for $40 (2013: $194) that will be realized. The subsidiaries do not have any tax planning opportunities available that could support the recognition of these losses as deferred tax assets. On this basis, the Company has determined that it cannot recognize deferred tax assets on the tax losses carried forward.

If the Company was able to recognize all unrecognized deferred tax assets, profit and equity would have increased by $2,815 (2013: $1,566; 2012: $1,341). Further details on taxes are disclosed in Note 8.

Post-employment benefits under defined benefit plans

In accordance with the Thailand labor law, Charoong Thai and its subsidiaries are obliged to make payment to retiring employees, at rate of 1 to 10 times of their monthly salary rate, depending on the length of service.  In addition, Charoong Thai also has the extra benefit plan to make payment to qualified retiring employees 29 times of their final monthly salary.

F-31

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.22   Significant accounting judgements, estimates and assumptions (continued)

Post-employment benefits under defined benefit plans (continued)

The cost of the defined benefit pension plan and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the limited corporate bond in Thailand, taken into account the yields on Thai Government Bonds and extrapolated maturity corresponding to the expected duration of the defined benefit obligation.

The mortality rate is based on most recent mortality investigation on policyholders of life insurance companies in Thailand. Future salary increases and pension increases are based on expected future inflation rates derived from external economic data and together with historical experience of Charoong Thai.

Further details about the assumptions used, including a sensitivity analysis, are given in Note 21.

Revenue recognition of SDI projects

Changes in percentage of completion would result in changes in contract revenue and costs recognized in the statement of comprehensive income during the year. Significant estimation by management is also required in assessing the recoverability of the contracts based on estimated total contract revenue and contract costs.  In making the estimation, management’s evaluation is based on the actual level of work performed and past experience.

The carrying amount of the Company’s gross amounts due from customers for contract work-in-progress is disclosed in Note 14.

F-32

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4.   STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below.  The Company intends to adopt these standards, if applicable, when they become effective.

IFRS 15 Revenue from contracts with customers

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers. According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to the entity expects to be entitled in exchange for those goods or services. Revenue is recognized when, or as, the customer obtains control of the goods or services. IFRS 15 also includes guidance on the presentation of contract balances, this is, assets and liabilities arising from contracts with customers, depending on the relationship between the entity’s performance and the customer’s payment. In addition, the new standard requires a set of quantitative and qualitative disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts with customers. IFRS 15 supersedes IAS 11, Construction Contracts and IAS 18, Revenue aswell as related interpretations. IFRS 15 is effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. The Company is currently assessing the impact of the standard on its consolidated financial statements.

Accounting for Acquisitions of interests in Joint Operations-Amendments to IFRS 11

In May 2014, the IASB issued an amendment to IFRS 11, Joint Arrangements, entitled Accounting for Acquisitions of Interest in Joint Operations.The amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business and requires the application of IFRS 3, Business Combinations, for such acquisitions. The amendment is effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. The Company does not expect the amendments to have an impact on its consolidated financial statements.

Clarification of Acceptable Methods of Depreciation and Amortization- Amendments to IAS 16 and IAS 38

In May 2014, the IASB issued amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets, entitled Clarification of Acceptable Methods of Depreciation and Amortization. Amendments clarify that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate, because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. These amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. The Company does not expect these amendments to have an impact on its consolidated financial statements.

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments, which replaces the guidance in IAS 39, Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. This final version includes requirements on: (1) classification and measurement of financial assets and liabilities; (2) impairment; and (3) hedge accounting. IFRS 9 introduces a single approach for the classification and measurement of financial assets according to their cash flow characteristic and the business model they are managed in, and provides a new impairment model based on expected credit losses. IFRS 9 also includes new regulations regarding the application of hedge accounting to better reflect an entity’s risk management activities especially with regard to managing non-financial risks. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted. The Company is currently assessing the impact of the standard on its consolidated financial statements.

Sales or Contribution of Assets between an investor and its Associate or Joint Venture-Amendments to IFRS 10 and IAS 28

In September 2014, the IASB issued amendments to IFRS 10, Consolidated Financial Statements and IAS 28, Investments in Associates and Joint Ventures, entitled Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. These narrow scope amendments clarify, that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not), and a partial gain or loss is recognized when a transaction involves assets that do not constitute a business. The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. The Company does not expect the amendments to have an impact on its consolidated financial statements.

F-33

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. STANDARDS ISSUED BUT NOT YET EFFECTIVE (continued)

Investment Entities: Applying the Consolidated Exception-Amendments to IFRS 10, IFRS 12 and IAS 28

In December 2014, IASB issued narrow scope amendments to IFRS 10, Consolidated Financial Statements, IFRS 12, Disclosure of Interests in Other Entities and IAS 28, Investments in Associates and Joint Ventures. These amendments introduce clarifications to the requirements when accounting for investment entities.  The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. The Company does not expect the amendments to have an impact on its consolidated financial statements.

Disclosure Initiative – Amendments to IAS 1

In December 2014, IASB issued the amendments to IAS 1, Presentation of Financial Statements. The amendments mark the completion of the five narrow-focus improvements to disclosure requirements include (1) amended guidance on materiality in IAS 1 to clarify that immaterial information can detract from useful information, materiality applies to the whole of the financial statements and materiality applies to each disclosure requirement in an IFRS; and (2) amended guidance on the order of the notes, including accounting policies to  remove language from IAS 1 that has been interpreted as prescribing the order of notes to the financial statements and clarify that entities have flexibility about where they disclose accounting policies in the financial statements. The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. The Company does not expect the amendments to have a material impact on its consolidated financial statements.

5.   SEGMENT INFORMATION

For management purposes, the Company organizes its business segments along regional lines and has three operating segments, consisting of the North Asia region, the Thailand region and the Rest of the World (“ROW”) region.

Each segment engages in business activities generating revenues and incurring expenses.  Each segment generates a management report which contains its own financial information and submits to the Company’s chief operating decision maker (“CODM”) for review on a monthly basis.  The Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) are the ones who review all the management reports provided by each segment, makes the decisions on how the resources are to be allocated and assesses the operating performances based on the reports.  Each reporting segment has a segment manager who is in charge of the business operations in such region and regularly contacts the Company’s CEO and COO to discuss operational-related matters.

As the three operating segments exceed the quantitative thresholds, they are also reportable segments.

In 2014, the Company changed the structure of its internal organization, which caused the composition of its operating segments to change.  The segment information was restated retroactively to reflect the change.

F-34

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.   SEGMENT INFORMATION (continued)

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. The accounting policies for segment information, including transactions entered between segments are generally the same as those described in the summary of significant accounting policies.

Inter-segment revenues are eliminated upon consolidation and reflected in the “adjustments and eliminations” column. All other adjustments and eliminations are part of detailed reconciliations presented further below.

													Corporate expense
													adjustments
Year ended December 31, 2014	North Asia			Thailand			ROW			Total segments			and eliminations			Consolidated
	US$’000			US$’000			US$’000			US$’000			US$’000			US$’000
Sales of goods / services
External customers		114,836			166,864			169,627			451,327			-			451,327
Inter-segment		1,665			53			-			1,718			(1,718	)		-
Segment net income (loss)		(2,181	)		6,338			7,571			11,728			(8,967	)		2,761
Depreciation and amortization		(1,385	)		(3,068	)		(1,646	)		(6,099	)		(6	)		(6,105	)
Interest income		38			1,036			90			1,164			3			1,167
Interest expense		(846	)		(427	)		(91	)		(1,364	)		(9	)		(1,373	)
Income tax (expense)/benefit		583			(1,834	)		(552	)		(1,803	)		(471	)		(2,274	)
Other disclosures
Capital expenditure		2,154			3,159			677			5,990			-			5,990

													Corporate expense
													adjustments
Year ended December 31, 2013	North Asia			Thailand			ROW			Total segments			and eliminations			Consolidated
	US$’000			US$’000			US$’000			US$’000			US$’000			US$’000
Sales of goods / services
External customers		69,347			175,347			215,982			460,676			-			460,676
Inter-segment		43,136			117			38,724			81,977			(81,977	)		-
Segment net income (loss)		(2,000	)		10,969			5,851			14,820			(3,554	)		11,266
Depreciation and amortization		(1,063	)		(2,947	)		(1,675	)		(5,685	)		(33	)		(5,718	)
Interest income		67			1,101			135			1,303			3			1,306
Interest expense		(735	)		(517	)		(95	)		(1,347	)		(11	)		(1,358	)
Income tax expense		(328	)		(2,969	)		(1,726	)		(5,023	)		(495	)		(5,518	)
Other disclosures
Capital expenditure		3,817			4,606			1,086			9,509			-			9,509

F-35

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.   SEGMENT INFORMATION (continued)

													Corporate expense
													adjustments
Year ended December 31, 2012	North Asia			Thailand			ROW			Total segments			and eliminations			Consolidated
	US$’000			US$’000			US$’000			US$’000			US$’000			US$’000
Sales of goods / services
External customers		55,633			190,379			216,253			462,265			-			462,265
Inter-segment		111,318			14			56,253			167,585			(167,585	)		-
Segment net income (loss)		(184	)		14,916			6,036			20,768			(3,794	)		16,974
Depreciation and amortization		(948	)		(2,881	)		(1,617	)		(5,446	)		(34	)		(5,480	)
Interest income		145			1,065			108			1,318			4			1,322
Interest expense		(877	)		(670	)		(129	)		(1,675	)		(14	)		(1,690	)
Income tax expense		(290	)		(4,619	)		(2,015	)		(6,924	)		(654	)		(7,578	)
Other disclosures
Capital expenditure		4,333			5,658			995			10,986			11			10,997

Adjustments and eliminations

Corporate expenses, gain on disposal of investment, and share of gain (loss) of associates are not allocated to individual segments as the underlying instruments are managed on a group basis.

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties including assets from the acquisition of subsidiaries.

Reconciliation of profit

	For the year ended December 31,
	2014			2013			2012
	US$’000			US$’000			US$’000
Segment net income		11,728			14,820			20,768
Corporate expense		(4,103	)		(3,136	)		(3,476	)
Gain on disposal of investment held for sale		-			232			-
Loss on disposal of a subsidiary		(178	)		-			-
Share of net loss of associates		(338	)		(211	)		(21	)
Gain on liquidation of subsidiaries		-			-			279
Inter-segment profit (elimination)		(3,877	)		56			78
Tax expenses		(471	)		(495	)		(654	)
Profit after tax		2,761			11,266			16,974

F-36

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.   SEGMENT INFORMATION (continued)

	North Asia		Thailand		ROW		Total segments		Corporate expense adjustments and eliminations		Consolidated
	US$’000		US$’000		US$’000		US$’000		US$’000		US$’000
As of December 31, 2014
Total assets		74,686		194,231		98,517		367,434		11,238		378,672
Total liabilities		41,917		75,590		33,254		150,761		6,700		157,461
As of December 31, 2013
Total assets		48,581		175,379		130,716		354,676		9,959		364,635
Total liabilities		13,876		52,967		65,042		131,885		4,623		136,508

Reconciliation of assets:

	As of December 31,
	2014			2013
	US$’000			US$’000
Segment operating assets		367,434			354,676
Corporate and other assets		4,828			4,212
Investment in associates		2,571			2,937
Deferred tax assets		4,551			3,978
Inter-segment elimination		(712	)		(1,168	)
Total assets		378,672			364,635

Reconciliation of liabilities:

	As of December 31,
	2014			2013
	US$’000			US$’000
Segment operating liabilities		150,761			131,885
Corporate liabilities		4,877			5,081
Deferred tax liabilities		2,720			2,676
Inter-segment elimination		(897	)		(3,134	)
Total liabilities		157,461			136,508

F-37

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.   SEGMENT INFORMATION (continued)

Revenue from external customers is attributed to individual countries based on the customer’s country of domicile and is summarized as follows:

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Revenues from external customers
Thailand		141,661		154,646		167,762
Singapore		115,399		109,790		93,285
Australia		48,706		61,463		64,402
PRC		125,131		116,497		120,763
Vietnam		8,037		6,436		6,366
Southeast Asia		12,393		11,844		7,376
Northeast Asia		-		-		2,311
		451,327		460,676		462,265

Countries in the Southeast Asia region include Cambodia, Indonesia, India, Laos, Malaysia and Myanmar.

Countries in the Northeast Asia region include Japan and South Korea.

Major customer information

Revenue from one customer amounted to $47,175 (2013: $58,984) represent 10.5% (2013: 12.8%), arising from sales in the ROW segment. There was no customer that accounted for more than 10% of our consolidated revenue in 2012.

Long-lived assets by the country of domicile are summarized as follow:

	As of December 31,
	2014		2013
	US$’000		US$’000
Long-lived assets by area:
Thailand		23,574		23,370
North Asia		14,029		13,432
ROW		13,050		14,690
Corporate		2		6
Total long-lived assets		50,655		51,498

F-38

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6.   MATERIAL PARTLY-OWNED SUBSIDIARIES

The Company has a subsidiary with material non-controlling interests (“NCI”). Information regarding the subsidiary is as follows:

Proportion of equity interest held by NCI:

		As of December 31,
Name	Country of incorporation and operation	2014			2013
Charoong Thai and its subsidiaries (“CTW Consolidated”)	Thailand		49.07	%		49.07	%
SYE	China		33.65	%		33.65	%

As of December 31, 2013, SYE was owned by APWC through Charoong Thai group and CCH (HK) with the effective shareholding of 66.35%, as compared to 54.41% in 2012, in consequence, an effect of $(27) on the equity attributable to the parent arose from changes in percentage of ownership in subsidiary. From APWC group perspective, SYE is considered an entity with material non-controlling interests and should be separated from Charoong Thai group.

	As of December 31,
	2014		2013
	US$’000		US$’000
Accumulated balances of material NCI:
CTW Consolidated		62,479		63,771
SYE		2,192		3,190

	For the year ended December 31,
	2014			2013			2012
	US$’000			US$’000			US$’000
Profit / (loss) of material NCI:
CTW Consolidated		2,874			1,029			9,268
SYE		(953	)		(254	)		(187	)

F-39

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6.   MATERIAL PARTLY-OWNED SUBSIDIARIES (continued)

The summarized financial information of the subsidiary is provided below. This information is based on amounts before inter-company eliminations:

Summarized income statements for 2014:

	CTW consolidated			SYE
	US$’000			US$’000
Revenues		166,917			40,372
Cost of sales		(151,021	)		(38,783	)
Administrative expenses		(7,063	)		(3,665	)
Finance costs		(651	)		(767	)
Others		128			11
Profit/(loss) before tax		8,310			(2,832	)
Income tax		(1,834	)		-
Profit/(loss) for the year		6,476			(2,832	)
Total comprehensive income/(loss)		5,856			(2,832	)
Profit/(loss) attributable to non-controlling interests		2,874			(953	)
Dividends paid to non-controlling interests		4,158			-

Summarized income statements for 2013:

	CTW consolidated			SYE
	US$’000			US$’000
Revenues		175,464			41,251
Cost of sales		(148,861	)		(39,699	)
Administrative expenses		(12,117	)		(1,475	)
Finance costs		(770	)		(747	)
Others		(564	)		(85	)
Profit/(loss) before tax		13,152			(755	)
Income tax		(2,968	)		-
Profit/(loss) for the year		10,184			(755	)
Total comprehensive income/(loss)		2,098			(755	)
Profit/(loss) attributable to non-controlling interests		1,029			(254	)
Dividends paid to non-controlling interests		3,877			-

Summarized income statements for 2012:

	CTW consolidated			SYE
	US$’000			US$’000
Revenues		190,394			42,405
Cost of sales		(165,330	)		(40,639	)
Administrative expenses		(7,953	)		(1,390	)
Finance costs		(916	)		(780	)
Others		3,121			(7	)
Profit/(loss) before tax		19,316			(411	)
Income tax		(4,641	)		-
Profit/(loss) for the year		14,675			(411	)
Total comprehensive income/(loss)		18,887			(411	)
Profit/(loss) attributable to non-controlling interests		9,268			(187	)
Dividends paid to non-controlling interests		3,067			-

F-40

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6.   MATERIAL PARTLY-OWNED SUBSIDIARIES (continued)

Summarized balance sheets as of December 31, 2014:

	CTW consolidated			SYE
	US$’000			US$’000
Cash, inventory and other current assets		167,785			14,903
Property, plant and equipment and other non-current assets		38,193			2,170
Trade and other payable (current)		(69,516	)		(10,558	)
Other non-current liabilities		(6,073	)		-
Non-controlling interest		(3,062	)		-
Total equity		127,327			6,515
Equity attributable to equity holders of the parent		64,848			4,323
Non-controlling interests		62,479			2,192

Summarized balance sheets as of December 31, 2013:

	CTW consolidated			SYE
	US$’000			US$’000
Cash, inventory and other current assets		148,319			18,583
Property, plant and equipment and other non-current assets		38,086			2,481
Trade and other payable (current)		(47,512	)		(11,584	)
Other non-current liabilities		(5,455	)		-
Non-controlling interest		(3,479	)		-
Total equity		129,959			9,480
Equity attributable to equity holders of the parent		66,188			6,290
Non-controlling interests		63,771			3,190

Summarized cash flow information for the year ended December 31, 2014:

	CTW consolidated			SYE
	US$’000			US$’000
Operating		7,985			1,544
Investing		(13,881	)		(97	)
Financing		7,443			(1,189	)
Effect of changes in exchange rate on cash		90			(18	)
Net increase in cash and cash equivalents		1,637			240

Summarized cash flow information for the year ended December 31, 2013:

	CTW consolidated			SYE
	US$’000			US$’000
Operating		15,644			(1,715	)
Investing		771			(72	)
Financing		(11,772	)		1,819
Effect of changes in exchange rate on cash		511			(3	)
Net increase in cash and cash equivalents		5,154			29

Summarized cash flow information for the year ended December 31, 2012:

	CTW consolidated			SYE
	US$’000			US$’000
Operating		13,040			406
Investing		(8,392	)		(29	)
Financing		(11,900	)		224
Effect of changes in exchange rate on cash		(73	)		(14	)
Net (decrease) / increase in cash and cash equivalents		(7,325	)		587

F-41

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.   OTHER INCOME/EXPENSES AND ADJUSTMENTS

7.1   Other operating income

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Recovery of losses from flooding		-		-		4,762
Reversal of allowance for trade receivables		-		-		709
Reversal of allowance for investment properties		26		68		-
Gain on disposal of property, plant, and equipment		63		113		354
Total other operating income		89		181		5,825

7.2   Other operating expenses

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Charge related to flooding		-		-		888
Allowance for trade receivables		2,168		196		-
Total other operating expenses		2,168		196		888

7.3    Finance costs

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Interest on debts and borrowings		1,368		1,339		1,649
Finance charges payable under finance leases and hire  purchase contracts		5		19		41
Total interest expenses		1,373		1,358		1,690
Banking charges		324		376		505
Total finance costs		1,697		1,734		2,195

7.4    Finance income

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Interest income		1,167		1,306		1,322
Total finance income		1,167		1,306		1,322

7.5   Other income

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Sales of scrap copper		493		392		564
Net gain on financial instruments		-		-		603
Dividend income		104		110		109
Others		553		952		657
Total other income		1,150		1,454		1,933

F-42

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.  OTHER INCOME/EXPENSES AND ADJUSTMENTS (continued)

7.6   Other expenses

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Net loss on financial instruments		-		207		-
Others		49		53		-
Total other expenses		49		260		-

7.7    Depreciation, amortization and lease expense included in the consolidated income statements

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Included in cost of sales:
Depreciation – tangible assets		4,986		4,582		4,235
Amortization – intangible assets		2		-		-
Included in selling expenses:
Depreciation – tangible assets		188		223		181
Included in general and administrative expenses:
Depreciation – tangible assets		823		767		907
Amortization – intangible assets		29		69		80
Amortization – prepaid land lease payment		59		59		59
Depreciation – investment property		18		18		18
Minimum lease payments recognised as an operating lease expense		1,100		1,301		866
		7,205		7,019		6,346

7.8    Employee benefits expenses

	For the year ended December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Included in cost of sales:
Wages and salaries		14,183		14,469		13,243
Labor and health insurance costs		67		53		48
Pension costs		927		917		2,208
Other employment benefits		788		838		732
Included in selling expenses:
Wages and salaries		3,784		3,774		3,659
Labor and health insurance costs		10		9		10
Pension costs		324		318		444
Other employment benefits		51		84		74
Included in general and administrative expenses:
Wages and salaries		9,569		9,746		8,336
Labor and health insurance costs		81		81		71
Pension costs		576		599		1,783
Director fees		907		2,120		1,148
Other employment benefits		366		386		664
Total employee benefits expenses		31,633		33,394		32,420

F-43

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.   INCOME TAX

Under current Bermuda law, the Company is not subject to tax on income or capital gains, nor is withholding tax of Bermuda imposed upon payments of dividends by the Company to its shareholders.

The Company’s investments in the Operating Subsidiaries are held through subsidiaries incorporated in the British Virgin Islands (“BVI”). Under current BVI law, dividends from the BVI subsidiaries’ investments are not subject to income taxes and no withholding tax is imposed on payments of dividends by the BVI subsidiaries to the Company.

The Operating Subsidiaries and equity investees are governed by the income tax laws of Singapore, Thailand, Australia and the PRC.  The corporate income tax rate in Singapore was 17% for each of the three years ended December 31, 2014, and there is no withholding tax on dividends applicable to the Company.  For Thailand, the statutory corporate income tax rate was 30% and a withholding tax of 10% is levied on dividends received by the Company. Charoong Thai is listed on Stock Exchange of Thailand (“SET”). As a part of an initiative to promote Thailand’s competitiveness, the Thai Government announced in Royal Decree (No. 530) to provide for a reduction of corporate income tax from 30% to: (1) 23% for any accounting periods commencing between January 1, 2012 and December 31, 2012; (2) 20% from any accounting periods commencing between January 1, 2013 and December 31, 2014. Thai Government announced in Royal Decree (No. 577) the corporate income tax continues at 20% on or after January 1, 2015, but not exceeding December 31, 2015. In Australia, the corporate income tax rate was 30% for 2012/2013, 2013/2014 and 2014/2015 tax years. The applicable corporate income tax rate for the subsidiaries in the PRC was 25% for each of the three years ended December 31, 2014.

Under the Corporate Income Tax Law (the “CIT Law”) of the PRC, dividend distributions of profits earned prior to January 1, 2008 to foreign investor(s) are exempt from withholding tax; distribution of the profits earned after January 1, 2008 is subject to withholding tax of 10%, reduced to 5% under the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income provided that the Hong Kong holding company, CCH (HK) qualified as the “beneficial owner” of the dividend income under Guoshuifa [2009] No.601. As the management of APWC decided to simplify the CCH (HK) to have the sole function of controlling and directing its subsidiaries. CCH (HK) does not carry on substantive business activities effective early 2013. This may lead it not qualify as the “beneficial owner” of the dividend income under Circular 601 to be applicable to withholding tax of 5%.  As such, the withholding tax for 2013 and 2014 were calculated based on 10% tax rate.

F-44

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.   INCOME TAX (continued)

The major components of income tax expenses for the years ended December 31, 2014, 2013 and 2012 are:

	2014			2013			2012
	US$’000			US$’000			US$’000
Consolidated income statements
Current income tax:
Current income tax charge		2,462			4,725			6,042
Deferred tax expenses / (benefits):
Relating to origination and reversal of temporary differences		(188	)		793			1,536
Income tax expense reported in the income statement		2,274			5,518			7,578
Consolidated statements of comprehensive income
Deferred tax related to items recognized in other comprehensive income during the year:
Unrealized gain (loss) on available-for-sale financial assets		(214	)		(402	)		172
Net loss on actuarial gains and losses		(213	)		(15	)		(46	)
Income tax expenses / (benefits) charged to other comprehensive (loss) income		(427	)		(417	)		126

The parent company’s tax is filed in Bermuda, which does not have a statutory tax rate. The provision for income taxes differs based on the tax incurred by the Operating Subsidiaries, in their respective jurisdiction. The Company determines its statutory tax rate based on its major commercial domicile that is its subsidiaries in Thailand. The reconciliation of the statutory tax rate and the Company’s effective tax rate is as follows:

	2014			2013			2012
	US$’000			US$’000			US$’000
Profit before tax		5,035			16,784			24,552
Tax at statutory rate of 20% (2013: 20%; 2012: 23%)		1,007			3,356			5,645
Foreign income taxed at different rate		868			930			694
Expenses not deductible/(solely deductible) for tax purpose		(358	)		100			277
Utilization of previously unrecognised tax losses		-			(10	)		(31	)
Net deferred tax asset not recognized		1,196			656			281
Written-off deferred tax		-			-			17
Tax exempt on income		(187	)		(43	)		(99	)
Uncertain tax position		(984	)		82			34
Return to provision adjustment		12			(151	)		-
Deferred tax liability arising from undistributed earnings		85			239			303
Effect of changes in temporary differences to be realized in different periods with different enacted tax rates		14			(36	)		19
Withholding tax on dividends		558			584			427
Others		63			(189	)		11
Income tax expense reported in income statement		2,274			5,518			7,578

At the effective income tax rate of 45.16% (2013: 32.88%; 2012: 30.87%)

F-45

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.   INCOME TAX (continued)

Deferred tax

Deferred tax relates to the following:

	Consolidated balance sheet						Consolidated income statement
	As of December 31,						For the year ended Decembers 31,
	2014			2013			2014			2013			2012
	US$’000			US$’000			US$’000			US$’000			US$’000
Outside basis differences		(2,775	)		(2,690	)		85			239			302
Revaluations of available-for-sale investment to fair value		(565	)		(779	)		-			-			-
Book over tax basis in subsidiary		(36	)		(33	)		6			1			(14	)
Accrued interest income		(77	)		(68	)		9			10			14
Unutilized building allowance (net)		63			(231	)		(286	)		231			-
Unused tax losses		40			194			146			(197	)		326
Allowance for doubtful accounts		102			131			27			143			291
Inventory impairment		750			279			(470	)		137			444
Allowance for impairment in investments		411			410			-			33			66
Rebates and other accrued liabilities		701			774			4			417			716
Unpaid retirement benefits		1,680			1,659			(14	)		(115	)		(740	)
Charges related to flooding in Thailand		-			-			-			8			895
Deferred revenue and cost of sales		416			690			277			(118	)		(282	)
Actuarial loss		275			62			-			-			-
Unabsorbed depreciation		842			893			21			19			(482	)
Allowance for investment property impairment		4			11			7			(15	)		-
Deferred tax expenses / (benefits)								(188	)		793			1,536
Net deferred tax assets		1,831			1,302

Reflected in the balance sheet as follows:

Deferred tax assets	4,551		3,978
Deferred tax liabilities	(2,720	)	(2,676	)
Deferred tax assets, net	1,831		1,302

Reconciliation of deferred tax assets, net

	2014			2013			2012
	US$’000			US$’000			US$’000
Opening balance as of January 1		1,302			2,096			3,560
Tax benefit/(expenses) during the period recognized in profit or loss		188			(793	)		(1,536	)
Tax benefit/(expenses) during the period recognized in other comprehensive income		427			417			(126	)
Exchange difference on translation foreign operations		(86	)		(418	)		198
Closing balance as of December 31		1,831			1,302			2,096

The Company offset tax assets and liabilities if and only if it has legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same tax authority.

F-46

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.   INCOME TAX (continued)

The Company has available unused net operating losses which arose in Thailand and China as of December 31, 2014, and arose in Thailand, China and Singapore as of December 31, 2013, that may be applied against future taxable income and that expire as follows respectively:

	As of December 31,
Year of expiration	2014		2013
	US$’000		US$’000
2014		-		161
2015		355		866
2016		836		842
2017		1,577		1,594
2018		2,774		3,288
2019		2,188		988
No expiration		-		-
		7,730		7,739

Deferred tax assets have not been recognized in respect of these losses as they may not be used to offset taxable profits elsewhere in the Company, as they have arisen in subsidiaries that have been loss-making for some time, and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company were able to recognize all unrecognized deferred tax assets, the profit would increase by $2,815 for the year ended December 31, 2014 (2013: $1,566; 2012: $1,341).

There are no income tax consequences attached to the payment of dividends in either 2014 or 2013 by the Company to its shareholders.

As of December 31, 2014 and 2013, the Company is subject to taxation in PRC, Australia, Thailand, and Singapore.  The Company’s tax years from 2009 and forward are still subject to examination by the tax authorities in various tax jurisdictions.

F-47

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.   INCOME TAX (continued)

A reconciliation of the beginning and ending amounts of uncertain tax position is as follows:

Change in Uncertain Tax Positions
	2014			2013			2012
	US$’000			US$’000			US$’000
Balance as of January 1		2,266			2,302			2,640
Additions based on tax positions related to the current year		-			72			28
Decrease due to lapses in statute of limitations		(375	)		(108	)		(366	)
Balance as of December 31		1,891			2,266			2,302

The Company is not expecting there would be any reasonably possible change in the total amounts of uncertain tax position within twelve months of the reporting date. As of December 31, 2014, 2013 and 2012, the amount of uncertain tax position (excluding interest and penalties) included in the consolidated balance sheets that would, if recognized, affect the effective tax rate is $1,891, $2,266 and $2,302 respectively.

The Company recognized interest expense and penalties related to income tax matters as a component of income tax expense. The amount of related interest and penalties the Company has provided as of the dates listed below were:

	As of December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
Accrued interest on uncertain tax position		2,116		2,368		2,143
Accrued penalties on uncertain tax position		1,818		2,176		2,284
Total accrued interest and penalties on uncertain tax position		3,934		4,544		4,427

For the years ended December 31, 2014, 2013 and 2012, the Company recognized $327, $395 and $409 in interest and $nil, $nil and $28 in penalty, respectively. For the years ended December 31, 2014, 2013 and 2012, the Company reversed $579, $170 and $49 in interest and $358, $108 and $nil in penalties, respectively, due to lapses in statute of limitations.

The Company consider each uncertain tax positions individually, by first consider whether each position taken in the tax return is probable of being sustained on examination by the taxing authority. It should recognize a liability for each item that is not probable of being sustained. The liability then is measured using a single best estimate of the most likely outcome. The uncertain tax positions presented in the current tax liability is the total liability for uncertain tax positions.

F-48

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

9.   EARNINGS PER SHARE

Earnings per share are calculated by dividing net profit attributable to equity holders of the parent by the weighted average number of shares outstanding during the year. The Company does not have any dilutive securities beyond the treasury shares disclosed in Note 22. The treasury shares transaction resulted in an immediate reduction in outstanding shares used to calculate the weighted-average common shares outstanding for both basic and diluted earnings per share.

The following table sets forth the computation of basic and diluted earnings attributable to common shareholders per share:

	For the year ended
	December 31,
	2014		2013		2012
	US$’000		US$’000		US$’000
	(except for number of shares and earnings per share)
Numerator:
Net profit attributable to APWC from continuing operations		572		5,847		9,694
Net profit attributable to APWC		572		5,847		9,694
Denominator:
Weighted-average common shares outstanding – basic and diluted		13,819,669		13,820,200		13,830,751
Earnings per share – basic and diluted
Continuing operations		0.04		0.42		0.70
Total earnings per share – basic and diluted		0.04		0.42		0.70

Income from continuing operations attributable to non-controlling interests are $2,189, $5,419 and $7,280 for the years ended December 31, 2014, 2013 and 2012, respectively.

10.   CASH AND CASH EQUIVALENTS

	As of December 31,
	2014		2013
	US$’000		US$’000
Cash on hand and cash at banks		68,863		62,509

Cash at banks earns interest at floating rates based on daily bank deposit rates. Cash equivalents include short-term deposits which are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. As of December 31, 2014 and 2013, the Company had no cash equivalents.

F-49

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11.   OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES

11.1 Other financial assets

	As of December 31,
	2014		2013
	US$’000		US$’000
Assets held-to-maturity
Quoted debt securities		336		335
Total assets held-to-maturity		336		335
Available for sale investments
Unquoted equity shares		2,479		3,189
Total available for sale investments		2,479		3,189
Total other financial assets		2,815		3,524
Total current		-		-
Total non-current		2,815		3,524

Assets held-to-maturity – quoted debt securities

A Thai subsidiary invested $360 (Baht 11 million) in subordinated debentures of Bangkok Bank Public Company Limited. The debentures bear a fixed interest rate of 4.375% per annum with a maturity of ten years callable at the option of the issuer after five years. As the call option is clearly and closely related to the debt host contract, no bifurcation of embedded call option is required. The debentures are marketable and rated AA- by Fitch Rating (Thailand) Ltd.

The market yield is close to coupon rate. The fair value approximated its amortized cost as of December 31, 2014 and 2013.

Available-for-sale investments - unquoted equity shares

The investments in shares of a non-listed company, which are recognized initially at fair value plus transaction costs. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealized gains or losses recognized as the other comprehensive income. Available-for-sale investments – unquoted equity share consist of the investments in Thai Metal Processing Co., Ltd, (“TMP”) which is engaged in the fabrication of copper rods. During the years ended December 31, 2014, 2013 and 2012, the Company received dividends of $104, $110 and $109 from TMP, respectively, which were recorded in other income in the consolidated income statements.

F-50

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 

11.   OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

11.2   Interest-bearing loans and borrowings

Under the line of credit arrangements for short-term debt with the Company’s banks, the Company may borrow up to approximately $278,370 and $351,794 as of December 31, 2014 and 2013, respectively, on such terms as the Company and the banks may mutually agree upon. These arrangements do not have termination dates but are reviewed annually for renewal. As of December 31, 2014 and 2013, the unused portion of the credit lines was approximately $168,241 and $236,532, respectively, which included unused letters of credit amounting to $85,943 and $106,480, respectively. Letters of credit are issued by the Company in the ordinary course of business through major financial institutions as required by certain vendor contracts. As of December 31, 2014 and 2013, the Company had open letters of credit totaling $49,042 and $33,668, respectively.  Liabilities relating to the letters of credit are included in current liabilities.

	As of December 31,
	2014					2013
	Interest rate %	Maturity	Local currency ‘000	US$’000		Interest rate %	Maturity	Local currency ‘000	US$’000
Current interest-bearing loans and borrowings
Bank loans					-	3.30	Aug. 2014	US$1,500		1,500
Bank loans	5.88 ~ 6.45	Mar. 2015 ~ Dec. 2015	RMB$78,250		12,589	6.30	Aug. 2014 ~ Nov. 2014	RMB$69,292		11,336
Trust receipt	1.20 ~ 1.60	Jan. 2015 ~ Jun. 2015	THB$1,291,811		39,469	1.20 ~ 1.80	Jan. 2014 ~ Jun. 2014	THB$748,589		22,779
Trust receipt	1.97 ~ 1.98	Dec. 2015	SGD$2,386		1,805	1.94 ~ 2.04	Dec. 2014	SGD$7,832		6,174
Total current interest-bearing loans and borrowings					53,863					41,789

During 2011, CCH (HK) entered into a bank loan agreement with Bangkok Bank Hong Kong Branch with a total loan amount of $14 million and a trade facility of $8 million. The loan carried an interest rate of SIBOR (Singapore Inter-bank Borrowing Rate) plus 2.5% for a period of 5.5 years, adjusted on a quarterly basis. The bank loan was guaranteed by the Company, as guarantor. As of January 1, 2012, CCH (HK) was not in compliance with certain financial and non-financial loan covenants and the loan became callable on demand. The outstanding balance was classified as current liabilities as of January 1, 2012.  As of December 31, 2012, the loan was classified as current liabilities and it had been fully repaid in 2013.  For information with respect to the collateral, please refer to Note 26.

F-51

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11.   OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

11.3  Hedging activities and derivatives

Commodity price risk

The Company purchases copper on an ongoing basis as its operating activities require a continuous supply of copper for the manufactured products. The Company exercises rigorous controls through the commodity forward contracts to reduce its exposure to the fluctuations in market prices for cooper for selected operating units. The majority of these transactions take the form of contracts that are entered into and continue to be held for the purpose of receipt or delivery of the copper in accordance with the Company’s expected sales or production timing or usage requirements. Such contracts are not within the scope of hedging accounting, or derivatives. To date, these contract positions have not had a material effect on the Company’s financial position, results of operations or cash flow.

F-52

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11.   OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

11.4 Fair values

Set out below is a comparison of the carrying amounts and fair value of the Company’s financial instruments that are carried in the financial statements:

	Carrying amount				Fair value
	As of December 31,				As of December 31,
	2014		2013		2014		2013
	US$’000		US$’000		US$’000		US$’000
Financial assets-current
Cash and cash equivalents		68,863		62,509		68,863		62,509
Trade receivables		88,194		122,893		88,194		122,893
Other receivables		23,024		11,139		23,024		11,139
Due from related parties		24,711		3,842		24,711		3,842
Financial assets-non-current
Other non-current financial assets – available for sale		2,479		3,189		2,479		3,189
Other non-current financial assets – held to maturity		336		335		336		335
Total		207,607		203,907		207,607		203,907
Financial liabilities-current
Interest-bearing loans and borrowings		53,863		41,789		53,863		41,789
Trade and other payables		36,467		41,369		36,467		41,369
Due to related parties		22,208		11,126		22,208		11,126
Due to immediate holding company		1,537		1,732		1,537		1,732
Financial lease liabilities		31		37		31		37
Financial liabilities-non-current
Financial lease liabilities		38		28		38		28
Total		114,144		96,081		114,144		96,081

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

u Cash and cash equivalents, trade receivables, other receivables, due from related parties, trade and other payables, due to related parties, due to immediate holding company and financial lease liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

u Fixed-rate and variable-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As of December 31, 2014, the carrying amounts of such receivables, net of allowances, were not materially different from their calculated fair values.

F-53

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11.   OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

 11.4 Fair value (continued)

u Fair value of unquoted available-for-sale financial assets is estimated using appropriate valuation techniques.

u Fair value of interest-bearing borrowings and loans and other non-current financial assets – held to maturity are determined by using discounted cash flow method using discount rate that reflects the issuer’s borrowing rate as of the end of the reporting period. The own non-performance risk as of December 31, 2014 was assessed to be insignificant.

Description of significant unobservable inputs to valuation

	Valuation technique	Significant unobservable inputs	Liquidity discount	Sensitivity of the input to fair value
			(2014 and 2013)
				2014	2013
Financial asset
Available-for-sale financial assets in unquoted equity instruments	Market Approach Method	Liquidity Discount	30%	5%  decrease in the discount would increase in fair value by $183	5% decrease in the discount would increase in fair value by $234

The Company estimates the fair value of available-for-sale financial investments in unquoted equity shares by using the market approach (market comparatives approach). The key in this method is the selection of quoted comparable companies and accommodate adjustments to bring the accounts of different companies into a broadly consistent framework for analysis. Then, select appropriate Indicators of Value. The followings should be taken into account:

} Enterprise Value (EV) versus Market Capitalization;

} Earnings-based: EBITDA +/or EBIT versus Net Earnings +/or Net Cash Flow

} Balance Sheet based: Net Total Assets versus Shareholders Funds

Discount for the lack of liquidity to reflect the lesser liquidity of unquoted equity instruments compared with those of its comparable public company peers. The Company assessed the discount for the lack of liquidity to be 30 percent on the basis of relevant studies applicable in the region and industry as well as on the specific facts and circumstances of the unquoted equity shares. The unquoted equity shares’ finance performance is characterized by stable, consistent growth and profitability. The Company believes the liquidity discount of 30% would be appropriate.

The Company carries unquoted equity shares as available-for-sale financial instruments classified as level 3 within the fair value hierarchy.  A reconciliation of the beginning and closing balances is summarized below:

	Total
	US$’000
At January 1, 2013		4,577
Re-measurement recognized in other comprehensive income (loss)		(1,338	)
Exchange difference		(50	)
At December 31, 2013		3,189
Re-measurement recognized in in other comprehensive income (loss)		(713	)
Exchange difference		3
At December 31, 2014		2,479

F-54

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12.   TRADE AND OTHER RECEIVABLES

	As of December 31,
	2014			2013
	US$’000			US$’000
Trade receivables		91,899			124,581
Less: Provision for impairment		(3,705	)		(1,688	)
Trade receivable, net		88,194			122,893
Other receivable		23,024			11,139

As of December 31, 2014 and 2013 trade receivables of an initial value of $3,705 and $1,688, respectively, were fully impaired. See below for the movement in the provision for impairment of trade receivables.

	Individually impaired			Collectively impaired			Total
	US$’000			US$’000			US$’000
At January 1, 2013		2,402			178			2,580
Charge for the year		371			37			408
Write-off		(1,016	)		(1	)		(1,017	)
Unused amounts reversed		(170	)		(42	)		(212	)
Currency translation adjustment		(46	)		(25	)		(71	)
At December 31, 2013		1,541			147			1,688
Charge for the year		2,359			73			2,432
Write-off		(46	)		(31	)		(77	)
Unused amounts reversed		(253	)		(28	)		(281	)
Currency translation adjustment		(53	)		(4	)		(57	)
At December 31, 2014		3,548			157			3,705

The ageing analysis of trade receivables is as follows:

					Past due but not impaired
	Total		Neither past due nor impaired		Past due 1-3 months		Past due 3-6 months		Past due 6-12 months		Past due over 12 months
	US$’000		US$’000		US$’000		US$’000		US$’000		US$’000
December 31, 2014		88,194		73,552		12,502		578		840		722
December 31, 2013		122,893		98,853		22,296		760		553		431

The Company maintains provision for impairment of trade receivables for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, customer financial condition, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. The impairment losses assessed individually as of December 31, 2014 and 2013 primarily resulted from the financial difficulties of the counter trading parties and the amounts recognized were the difference between the carrying amount of the accounts receivable and the present value of expected collectable amounts.

The Company obtained collateral in respect of customer doubtful accounts. The collateral takes the form of a lien over the customer’s assets and gives the Company a claim on these assets for the doubtful accounts. The Company has the first lien for the collateral. The collateral is in general, not recorded on the balance sheet. The fair value of the collateral has been determined based on the valuation performed by independent appraisers. As of December 31, 2014 and 2013, the fair values of the collateral were $917and $902, respectively, which were higher than the amounts of the associated delinquent accounts, as a result, no impairments were recognized.

See Note 26(b) credit risk of trade receivables, which discusses how the Company manages and measures credit quality of trade receivables that are neither past due nor impaired.

F-55

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13.   INVENTORIES

	As of December 31,
	2014			2013
	US$’000			US$’000
Raw materials and supplies		37,535			23,669
Work in progress		13,790			14,750
Finished goods		42,896			44,042
Distributed products		16,957			14,880
		111,178			97,341
Allowance for inventories		(3,770	)		(1,396	)
Total inventories at the lower of cost and net realizable value		107,408			95,945

To conform with the current year’s presentation, the inventory of $2,249 related to SDI previously presented in 2013 financial statements has been reclassified to the gross amount due from customers for contract work-in-process.  The reclassification is a change in the Company’s classification which had no effect on financial condition, gross profit, income from operations or net income.

For the year ended December 31, 2014, the Company recognized allowance for inventory of $2,394 as an expense in cost of sales for inventories carried at net realizable value.

For the year ended December 31, 2013 and 2012, the amount of $1,046 and $5,161, respectively, were credited to cost of sales when the circumstances that caused the net realizable value of inventory to be lower than its cost no longer existed.

14.   GROSS AMOUNTS DUE FROM CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS

	As of December 31,
	2014			2013
	US$’000			US$’000
Construction contract work-in-progress
Construction costs		36,976			17,094
Attributable loss/(profit)		141			(107	)
		37,117			16,987
Less: Progress billing received and receivable		(35,186	)		(14,738	)
Total gross amounts due from customers for contract work		1,931			2,249

Revenues recognized in excess of amounts billed are classified as current assets under contract work-in-progress. Amounts billed to clients in excess of revenues recognized to date are classified as current liabilities under advance billings on contracts.

F-56

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15.   PROPERTY, PLANT AND EQUIPMENT

	Land			Buildings			Building improvement			Machinery and equipment			Motor vehicle and other asset and assets under finance lease			Office equipment			Construction in progress			Total
	US$’000			US$’000			US$’000			US$’000			US$’000			US$’000			US$’000			US$’000
Cost
At January 1, 2013		5,681			48,848			3,152			120,991			4,539			6,599			6,418			196,228
Additions		-			-			36			584			642			586			7,646			9,494
Disposals		-			(17	)		-			(15,558	)		(383	)		(540	)		-			(16,498	)
Transfer		-			5,139			641			2,868			232			72			(8,952	)		-
Exchange differences		(598	)		(3,245	)		(206	)		(8,173	)		(300	)		(414	)		(42	)		(12,978	)
At December 31, 2013		5,083			50,725			3,623			100,712			4,730			6,303			5,070			176,246
Additions		-			-			16			1,003			564			331			4,083			5,997
Disposals		-			-			-			(1,941	)		(364	)		(145	)		-			(2,450	)
Transfer		-			1,636			425			4,164			-			44			(6,269	)		-
Exchange differences		(39	)		(886	)		(2	)		(816	)		(99	)		(103	)		(21	)		(1,966	)
At December 31, 2014		5,044			51,475			4,062			103,122			4,831			6,430			2,863			177,827
Depreciation
At January 1, 2013		-			(30,243	)		(2,404	)		(106,981	)		(3,342	)		(5,794	)		-			(148,764	)
Depreciation charge for the year		-			(1,894	)		(109	)		(2,661	)		(559	)		(349	)		-			(5,572	)
Depreciation on disposals		-			17			-			15,549			351			537			-			16,454
Transfer		-			-			-			1			-			(1	)		-			-
Exchange differences		-			2,362			167			7,251			213			352			-			10,345
At December 31, 2013		-			(29,758	)		(2,346	)		(86,841	)		(3,337	)		(5,255	)		-			(127,537	)

F-57

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

	Land		Buildings			Building improvement			Machinery and equipment			Motor vehicle and other asset and assets under finance lease			Office equipment			Construction in progress		Total
	US$’000		US$’000			US$’000			US$’000			US$’000			US$’000			US$’000		US$’000
At December 31, 2013		-		(29,758	)		(2,346	)		(86,841	)		(3,337	)		(5,255	)		-		(127,537	)
Depreciation charge for the year		-		(1,932	)		(163	)		(2,923	)		(593	)		(386	)		-		(5,997	)
Depreciation on disposals		-		-			-			1,941			364			138			-		2,443
Transfer		-		-			-			-			-			-			-		-
Exchange differences		-		468			(6	)		570			71			90			-		1,193
At December 31, 2014		-		(31,222	)		(2,515	)		(87,253	)		(3,495	)		(5,413	)		-		(129,898	)
Net book value
At December 31, 2014		5,044		20,253			1,547			15,869			1,336			1,017			2,863		47,929
At December 31, 2013		5,083		20,967			1,277			13,871			1,393			1,048			5,070		48,709
At January 1, 2013		5,681		18,605			748			14,010			1,197			805			6,418		47,464

F-58

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15.   PROPERTY, PLANT AND EQUIPMENT (continued)

Capitalized borrowing costs

Capitalized interest on construction in progress is added to the cost of the underlying asset and is depreciated over the estimated useful life of the asset in the same manner as the underlying asset. The capitalized interest was related to and has been included as part of the cost of Ningbo Pacific’s construction in progress.

The amount of borrowing costs capitalized during the years ended December 31, 2014, 2013 and 2012 were $43, $30 and $69, respectively. The rate used to determine the amount of borrowing costs eligible for capitalization was in the range of 1.15% to 6.30 %, 1.5% to 6.23% and 1.7% to 6.77%, during each of 2014, 2013 and 2012, respectively.

Financial leases under property, plant and equipment

The carrying value of motor vehicles under financial leases as of December 31, 2014 and 2013 were $43 and $8, respectively.

Pledge

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 26.

16.   PREPAID LAND LEASE PAYMENTS

	2014			2013
	US$’000			US$’000
Carrying amount as of January 1,		1,999			2,018
Recognized lease expense during the year		(59	)		(59	)
Exchange difference		(22	)		40
Carrying amount as of December 31,		1,918			1,999
Current portion included in prepayments		59			60
Non-current portion included in prepaid land lease payments		1,859			1,939

The property land is situated in Mainland China and is held under a long-term operating lease for 33 – 50 years.

F-59

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17.   INVESTMENT PROPERTIES

The net book value of investment properties as of December 31, 2014 and 2013 was as follow:

	Land not being used for operation			Office buildings for rent			Total
	US$’000			US$’000			US$’000
As of December 31, 2014
Cost		583			346			929
Less: Accumulated depreciation		-			(160	)		(160	)
Less: Accumulated impairment		(12	)		-			(12	)
Net book value		571			186			757

	Land not being used for operation			Office buildings for rent			Total
	US$’000			US$’000			US$’000
As of December 31, 2013 :
Cost		581			345			926
Less: Accumulated depreciation		-			(142	)		(142	)
Less: Accumulated impairment		(38	)		-			(38	)
Net book value		543			203			746

A reconciliation of the net book value of investment properties was as follow:

	2014			2013
	US$’000			US$’000
Net book value at January 1		746			751
Depreciation (included in administrative expenses)		(18	)		(18	)
Reversal of impairment loss		26			68
Exchange difference		3			(55	)
Net book value at December 31		757			746

Investment properties are carried at historical cost less accumulated depreciation and impairment. Land is not depreciated and office buildings are depreciated on a straight-line basis over the estimated useful lives from 20 to 30 years.

F-60

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17.   INVESTMENT PROPERTIES (continued)

The amount recognized in profit arising from the investment properties for the years ended December 31, 2014, 2013 and 2012 was as follow:

	2014	2013	2012
	US$’000	US$’000	US$’000
Rental income derived from investment properties	11	21	21
Direct operating expenses (including repairs and maintenance)	(1)	(1)	(1)
generating rental income
Direct operating expenses (including repairs and maintenance) that did not	(1)	(1)	(1)
generate rental income
Net profit arising from investment properties carried at cost	9	19	19

The fair value of the investment properties are stated below:

	As of December 31,
	2014		2013
	US$’000		US$’000
Land not being used for operation		11,509		11,437
Office building for rent		647		617

The fair value of aforementioned investment properties have been determined based on the valuation performed by  independent appraisers and is considered a level 3 measurement.  The valuation has been made on the assumption to sell the property interests in the open market in the neighborhood without the benefit of any deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which would serve to increase the value of the property interests. The valuation adopted market comparison approach to estimate the fair market value of the properties. Under the market comparison approach, the appraisal is based on recent sales and listings of comparable property. Adjustments were made for differences between the subject property and those actual sales and listings regarded as comparable. The factors which used for considering the property valuation include the significant unobservable inputs, such as location, transportation, land uses, facilities, neighboring area, land characteristics, potential, regulations and liquidity.

18.   INTANGIBLE ASSETS

Computer software

	2014			2013
	US$’000			US$’000
Cost
At January 1		346			342
Addition		39			15
Exchange difference		(4	)		(11	)
At December 31		381			346
Accumulated amortization
At January 1		(242	)		(179	)
Amortization		(31	)		(69	)
Exchange difference		2			6
At December 31		(271	)		(242	)
Net book value
At December 31		110			104

The cost of acquiring software is capitalized separately as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Intangible assets are stated at cost less accumulated amortization. Amortization of intangible assets are charged to operating expenses and cost on a straight-line basis over 5 years from the date they are available for use.

F-61

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19.   INVESTMENTS IN ASSOCIATES

The associates of the Company are set out below:

			Percentage of equity interest
		Country of incorporation	As of December 31
Company Name	Nature of business		2014	2013
Shandong Pacific Rubber Cable Co., Ltd. (“SPRC”)	Manufacturing of rubber cable	PRC	25.00%	25.00%
Siam Pacific Holding Company Limited (“SPHC”)	Investment & holding company	Thailand	49.00%	49.00%
Loxpac (Thailand) Company Limited (“Loxpac”) (Formerly known as “Loxley Pacific Co., Ltd.)	Providing telecommunication service	Thailand	21.39%	21.39%
Loxpac Hong Kong Co., Limited (“Loxpac HK”) (Formerly known as “Loxley Pacific Hong Kong Co., Limited” )	Investment & holding company	Hong Kong	28.06%	28.06%

	As of December 31,
	2014			2013
	US$’000			US$’000
Balance at January 1		2,937			3,133
Additions		-			16
Capital return		-			(16	)
Share of loss of associates		(338	)		(211	)
Exchange difference		(28	)		15
Balance at December 31		2,571			2,937

The investments in Loxpac and Loxpac HK have been fully impaired.

F-62

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19.   INVESTMENTS IN ASSOCIATES (continued)

The Company’s investments in associates are accounted for using the equity method in the consolidated financial statements.

The following table summarized financial information of the Company’s investments in associates:

	As of December 31,
	2014			2013
	US$’000			US$’000
Current assets		108,269			92,044
Non-current assets		13,214			16,231
Current liabilities		(100,454	)		(84,188	)
Non-current liabilities		(2,160	)		(2,937	)
Equity		18,869			21,150

	For the year ended December 31,
	2014			2013			2012
	US$’000			US$’000			US$’000
Revenue		49,105			49,813			57,467
Loss for the year (continuing operations)		(2,136	)		(874	)		(1,067	)
Other comprehensive income		-			-			-

As of December 31, 2014 and 2013, the Company's associates had no contingent liabilities or capital commitments.

20.   TRADE AND OTHER PAYABLES

	As of December 31,
	2014		2013
	US$’000		US$’000
Trade payables		30,411		34,304
Other payables		6,056		7,065
		36,467		41,369

Terms and conditions of the above financial liabilities:

u    Trade payables are non-interest bearing and are normally settled on 60-day terms.

u    Other payables are non-interest bearing and have an average term of 60 days.    

u    For terms and conditions relating to other related parties, refer to Note 23.

F-63

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21.   EMPLOYEE BENEFIT

Pension – Defined contribution plans

The Company has several defined contribution plans covering its employees in Australia, PRC and Singapore. Contributions to the plan are made annually. Total charges for the years ended December 31, 2014, 2013 and 2012, were $1,283, $1,285 and $1,186, respectively.

Pension – Defined benefit plans

The defined benefit liability recognized in the consolidated balance sheet in respect to defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period, together with adjustments for past service costs and actuarial losses. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using future actuarial assumptions about demographic and financial variables that affect the determination of the amount of such benefits.

In accordance with the Thailand labor law, Charoong Thai and its subsidiaries are obliged to make payment to retiring employees, at rates of 1 to 10 times of their final month’s salary rate, depending on the length of service.  In addition, Charoong Thai also has the extra benefit plan to make payment to qualified retiring employees, the extra benefits payment to retiring employees was changed at rates of 1 to 5 times of final month's salary to 29 times effective January 1, 2012. The changes created a prior service cost and increased the benefit obligation totaling $3 million (Baht 91million). The Company’s net benefit cost was $544, $549 and $3,249 for the years ended December 31, 2014, 2013 and 2012, respectively.  The plan is not funded. As of December 31, 2014 and 2013, the amount recognized were $665 and $419 in current liabilities, $6,073and $5,455 in non-current liabilities, respectively. The Company pays to settle the obligations as and when employees retire.

The following tables summaries the components of net benefit expense recognized in the income statement and the funded status and amounts recognized in the consolidated balance sheet for the plan:

	For the year ended December 31,
Net benefit cost	2014		2013		2012
	US$’000		US$’000		US$’000
Current service cost		305		322		192
Interest cost on benefit obligation		239		227		128
Past service costs recognized		-		-		2,929
Net benefit cost		544		549		3,249

	For the year ended December 31,
Other comprehensive income	2014			2013			2012
	US$’000			US$’000			US$’000
Actuarial (gain) / loss – experience		(1	)		185			499
Actuarial (gain) / loss – demographic assumption		-			23			-
Actuarial (gain) / loss – financial assumption		713			(157	)		(346	)
Actuarial (gain) / loss		712			51			153

	For the year ended December 31,
Change in the defined obligation	2014		2013		2012
	US$’000		US$’000		US$’000
Defined benefit obligation at January 1		5,874		5,840		3,315
Current service cost		305		322		192
Interest cost on benefit obligation		239		227		128
Past service costs recognized		-		-		2,929

Net benefit cost for the current period	6,418		6,389		6,564
Benefits paid directly by the Company	(408	)	(138	)	(1,038	)
Actuarial loss in other comprehensive income	712		51		153
Exchange differences	16		(428	)	161
Defined benefit obligation at December 31	6,738		5,874		5,840

F-64

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21.   EMPLOYEE BENEFIT (continued)

Actuarial assumptions

The significant assumptions used in determining the actuarial present value of the defined benefit obligations for the year ended December 31, 2014 and 2013 are as follows:

	2014		2013
	%		%
Discount rate		3.2		4.3
Rate of salary increase		6.0		6.0

Maturity profile of defined benefit obligation

The following pension benefit payments are expected payments to be made in the future years out of the defined benefit plan obligation:

	As of December 31,
	2014		2013
	US$’000		US$’000
Within the next 12 months (next annual reporting period)		665		419
Between 2 and 5 years		1,322		1,467
Between 5 and 10 years		2,535		2,352
Beyond 10 years		15,583		15,342
Total expected payments		20,105		19,580
Weight average duration of defined benefit obligation	13 years		15 years

Sensitivity analysis

A one-percentage point change in the assumed rates would have yielded the following effects:

	2014			2013
	US$’000			US$’000
Discount rate – 1% increase		(655	)		(544	)
Discount rate – 1% decrease		771			638
Rate of salary increase – 1% increase		741			621
Rate of salary increase – 1% decrease		(644	)		(541	)

The sensitivity result above determines their individual impact on the plan’s year-end defined benefit obligation. In reality, the plan is subject to multiple external experience items which may move the defined benefit obligation in similar or opposite directions, while the plan’s sensitivity to such changes can vary over time.

Long service leave

The liability for long service leave is recognized in the provision for employee benefits and measured as present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departure, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match as closely as possible, the estimated future cash outflows.  As of December 31, 2014 and 2013, the amounts of long service leave was $584 and $577, respectively.

F-65

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22.   EQUITY

	As of December 31,
Authorized shares	2014		2013
	Number of shares		Number of shares
Common shares of US$0.01 each		50,000,000		50,000,000

Common shares issued and fully paid	Number of shares		US$’000
At December 31, 2014		13,830,769		138
At December 31, 2013		13,830,769		138
At January 1, 2013		13,830,769		138

Outstanding shares
	Number of shares
At January 1, 2012		13,830,769
Purchase of treasury shares		(1,900	)
At December 31, 2012		13,828,869
Purchase of treasury shares		(9,200	)
At December 31, 2013		13,819,669
Purchase of treasury shares		-
At December 31, 2014		13,819,669

Additional paid-in-capital
	US$,000
At January 1, 2012		111,541
Increase in shareholding in a subsidiary		(933	)
At December 31, 2012		110,608
Increase in shareholding in a subsidiary		-
At December 31, 2013		110,608
Increase in shareholding in a subsidiary		-
At December 31, 2014		110,608

F-66

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22.   EQUITY (continued)

Other comprehensive income – net of tax

The disaggregation of changes of other comprehensive income by each type of reserve in equity is shown below:

	For the year ended December 31, 2014
	Available-for-sale reserve			Foreign currency translation reserve			Actuarial losses on defined benefit plans			Total
	US$’000			US$’000			US$’000			US$’000
Exchange difference on translation of foreign operations		-			(4,521	)		-			(4,521	)
Re-measuring losses on defined benefit plans		-			-			(499	)		(499	)
Net loss on available-for-sale financial assets		(499	)		-			-			(499	)
		(499	)		(4,521	)		(499	)		(5,519	)

	For the year ended December 31, 2013
	Available-for-sale reserve			Foreign currency translation reserve			Actuarial losses on defined benefit plans			Total
	US$’000			US$’000			US$’000			US$’000
Exchange difference on translation of foreign operations		-			(15,418	)		-			(15,418	)
Re-measuring losses on defined benefit plans		-			-			(36	)		(36	)
Net gain on available-for-sale financial assets		(936	)		-			-			(936	)
		(936	)		(15,418	)		(36	)		(16,390	)

	For the year ended December 31, 2012
	Available-for-sale reserve		Foreign currency translation reserve		Actuarial losses on defined benefit plans			Total
	US$’000		US$’000		US$’000			US$’000
Exchange difference on translation of foreign operations		-		6,113		-			6,113
Re-measuring losses on defined benefit plans		-		-		(107	)		(107	)
Net gain on available-for-sale financial assets		400		-		-			400
		400		6,113		(107	)		6,406

F-67

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23.   RELATED PARTY TRANSACTIONS

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

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

(a)  Outstanding balance with related parties:

The following table provided the total amount of outstanding balance at December 31, 2014 and 2013.

	Amounts due from related parties				Amounts due to related parties
	As of December 31,				As of December 31,
	2014		2013		2014		2013
	US$’000		US$’000		US$’000		US$’000
The ultimate parent company
PEWC		639		1,233		4,288		7,630
PEWC, Singapore Branch		-		1,114		-		892
PEWC Singapore Co. (Pte) Ltd.		-		-		973		1,074
PEWC (HK)		21,141		-		14,938		-
Dragon Conqueror Limited		220		-		-		-
The immediate holding company
Moon View		-		-		1,537		1,732
Associate
SPHC		178		177		1,362		1,362
Non-controlling shareholder of subsidiary
Italian-Thai and its affiliates		2,532		1,318		450		-
Fujikura Limited		-		-		104		98
Others		-		-		93		70
Total		24,711		3,842		23,745		12,858

As of December 31, 2014 and 2013, the interest rates on the balance due to PEWC Singapore Co., (Pte) Ltd. range from 1.23% to 1.24% and 1.25% to 1.31%, respectively, and the payables are repayable upon demand. All balances with related parties are unsecured.

F-68

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23.   RELATED PARTY TRANSACTIONS (continued)

(b)   Transactions with related parties:

The transactions undertaken with related parties are summarized as follows:

		For the year ended December 31,
		2014		2013		2012
		US$’000		US$’000		US$’000
The ultimate parent company
PEWC	Purchases of materials		16,036		15,505		21,443
	Purchases of products		4,782		-		9,083
	Purchases of machinery		-		-		203
	Sales		410		287		106
	Management fee received		19		19		19
	Management fee paid		256		252		388
	Information technology service fee paid		115		118		136
PEWC, Singapore Branch	Management fee received		-		-		15
PEWC Singapore Co. (Pte) Ltd.	Interest expenses paid		9		11		14
PEWC (HK)	Purchases of materials		23,132		-		-
	Sales		19,789		-		-
Non-controlling shareholder of subsidiary
Italian Thai and its affiliates	Sales		2,418		2,192		2,563
Fujikura Limited	Purchases of products		1,179		1,412		1,074

Terms and condition of transactions with related parties

The sales to and purchases from related parties are based on negotiation by the entities. Outstanding balances at the year-end are unsecured and interest free. There have been no guarantees provided or received for any related party receivables or payables. For the years ended December 31, 2014, 2013 and 2012, the Company did not record any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Copper is the major raw material of the Company’s wire and cable products.  The Company purchases copper in the form of copper rods and copper cathode.  Copper cathode is purchased by Siam Pacific to avoid the high import tariffs levied on copper rods.  Copper cathode needs to be processed into copper rods prior to the manufacturing of wire and cable products. 

Substantially all of the Company’s copper rods are supplied by PEWC while copper cathodes are supplied by unrelated third parties. The price of copper rods purchased from PEWC is determined by reference to the quoted copper prices on the London Metal Exchange (the “LME”) plus a certain premium.

F-69

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23.   RELATED PARTY TRANSACTIONS (continued)

Terms and condition of transactions with related parties (continued)

In addition to copper rods, the Company purchases high voltage power cable from PEWC for distribution purposes. The purchase price of power cable from PEWC is determined by reference to the quoted copper prices on the LME. No sales commission was received from PEWC during the years ended December 31, 2014, 2013 and 2012.  

Pursuant to the composite services agreement:

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

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

(c)   PEWC will make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, access to certain of PEWC’s technology (and PEWC personnel necessary to use such technology) with respect to the design and manufacture of wire and cable products, including, without limitation, certain fiber optic technology.

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

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

(c)   Compensation of key management personnel of the Company

	For the years ended December, 31
	2014		2013		2012
	US$’000		US$’000		US$’000
Short-term employee benefits		4,853		6,432		5,682
Post-employment benefits		92		95		91
Termination benefits		126		182		684
Total compensation paid to key management personnel		5,071		6,079		6,457

The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel.

F-70

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24.   COMMITMENTS AND CONTINGENCIES

(a)   Operating lease commitments – the Company as lessee

The Company leases a piece of land in Singapore and certain buildings under non-cancellable operating lease arrangements for terms from 5 to 30 years.

Future minimum rental payable under non-cancellable operating leases with initial terms of one year or more consisted of the following:

	As of December 31,
	2014		2013
	US$’000		US$’000
Within one year		1,680		913
After one year but not more than five years		1,440		1,706
More than five years		1,665		2,060
		4,785		4,679

(b)   Finance lease and hire purchase commitments

The Company leases certain machinery and equipment under finance leases.

Future minimum payments under finance leases with initial terms of one year or more consisted of the following as of December 31:

	2014					2013
	Minimum payments			Present value of payments (Note 15 )		Minimum payments			Present value of payments (Note 15 )
	US$’000			US$’000		US$’000			US$’000
Within one year		34			31		41			37
After one year but not more than five years		42			38		29			28
More than five years		-			-		-			-
Total minimum lease payments		76			69		70			65
Less: amount representing finance charges		(7	)		-		(5	)		-
Present value of minimum lease payment		69			69		65			65

As of December 31, 2014 and 2013, the finance lease liabilities are secured by the leased machinery and equipment at cost of $149 and $139, respectively. The accumulated depreciation of these leased assets as of December 31, 2014 and 2013 amounted to $106 and $131, respectively. The depreciation of machinery and equipment under finance leases are included in the depreciation expenses under costs of sales.  The average discount interest rate implicit in the lease is in the range of 7.84% and 6.57% to 8.58%, for 2014 and 2013, respectively.

F-71

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24.   COMMITMENTS AND CONTINGENCIES (continued)

(c)   Purchase commitments

As of December 31, 2014 and 2013, the Company and its subsidiaries had commitments to purchase raw materials totaling $160 million to $213 million and $174.9 million to 234 million (24,500 to 32,590 metric tons and 23,116 to 30,780 metric tons), respectively, from third parties at the prices stipulated in the contracts.

(d)   Capital commitments

As of December 31, 2014 and 2013, the Company and its subsidiaries had capital commitment relating to the construction of factory building improvement and acquisition of machinery, totaling $4.6 million and $3.1 million, respectively.

(e)   Guarantees

As of December 31, 2014 and 2013, Charoong Thai and its subsidiaries had given continuing corporate guarantee of $6.9 million and $10.7 million, respectively, in respect of banking facilities extended to two operating subsidiaries.

As of December 31, 2014 and 2013, the Company provided a corporate guarantee not exceeding the sum of $31.2 million and $31.2 million, respectively, for the bond performance and banking facility of Sigma Cable.

As of December 31, 2014 and 2013, there were outstanding bank guarantees of $31.5 million and $34.78 million, respectively, issued by the banks on behalf of Charoong Thai and its subsidiaries in respect of certain performance bonds as required in the normal course of business of the companies. These guarantees generally expire within 1 year.

(f)   Service commitments

As of December 31, 2014 and 2013, the Company and its subsidiaries had commitments in respect of repair and maintenance consulting services with related parties totaling $0.1 million and $0.2 million, respectively.

(g)   Shareholders’ Agreement

As disclosed in Note 1, on June 28, 2007 SOF entered into a Shareholders’ Agreement with the Company and PEWC. On March 27, 2009, SOF sold 10.2% of the issued and outstanding shares of the Company to PEWC. On July 1, 2011, SOF transferred its remaining 9.8% interest in the Company to COF, which became a party to the Amended Shareholders Agreement, which provides for the following:

Indemnification

The Company must certify to SOF (now became COF) whether or not it is considered a Controlled Foreign Corporation or a Passive Foreign Investment Company as of each fiscal year end. Should this certification be challenged by the taxing authorities and found to be incorrect, the Company must indemnify SOF (now became COF) and its shareholders against interest and penalties that may be imposed and reasonable attorney’s fees incurred.

It is management’s opinion that this indemnification will not result in any adverse material financial consequence to the Company.

Controlled Foreign Corporation is any foreign corporation of which more than 50 percent of either –

(1) The total combined voting power of all classes of stock of the corporation entitled to vote; or

F-72

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24.   COMMITMENTS AND CONTINGENCIES (continued)

(g)   Shareholders’ Agreement (continued)

(2) The total value of the stock of the corporation, is owned by United States shareholders on any day during the taxable year of such foreign corporation. The term “United States Shareholders” is defined to mean only U.S. shareholders holding blocks of 10% or more of the common shares.

Passive Foreign Investment Company (“PFIC”) has one of the following attributes:

(1) At least 75% of the corporation's income is considered "passive", which is based on investments rather than standard operating business.

(2) At least 50% of the company's assets are investments that produce interest, dividends and/or capital gains.

PFICs include foreign-based mutual funds, partnerships and other pooled investment vehicles that have at least one U.S. shareholder.

Registration Rights

The Company has prepared and filed with the SEC a registration statement on Form F-1 (now converted to Form F-3) covering the resale of the “Registrable Securities” for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act of 1933, which registration statement was declared effective under the Securities Act by the SEC on March 11, 2009, but requires updating by means of incorporation by reference of futures filings with the SEC or the filing of a post-effective amendment to include the most recent annual audited financial statements, and, from time to time, unaudited financial statements for the six month period then ended.  “Registrable Securities” includes the shares beneficially owned by COF and the 10.2% of the common shares acquired by PEWC from SOF in March 2009.

Subject to the Amended Shareholders Agreement, the Company must use its reasonable best efforts to keep such registration statement continuously effective until (i) all Registrable Securities either have been sold or may be sold without volume restrictions pursuant to Rule 144 of the Securities Act of 1933 and (ii) COF receives freely transferable shares from the Company’s transfer agent.

If any such registration statement ceases to remain continuously effective for any reason after the effective date and during any time when the registration statement is required to be effective, or SOF (now became COF) is otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, in either case, for more than thirty (30) consecutive trading days or more than an aggregate of sixty (60) trading days during any twelve month period (an “Event”), then the “Put Right” (as explained in Note 1) will become immediately exercisable and will continue until such event has been cured.

F-73

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25.   FAIR VALUE MEASUREMENT

Quantitative disclosures fair value measurement hierarchy for assets as of December 31, 2014:

		Fair value measurement using
	Date of valuation	Total		Quoted prices in active markets		Significant observable inputs		Significant unobservable inputs
				(Level 1)		(Level 2)		(Level 3)
		US$’000		US$’000		US$’000		US$’000
Fair value information:
Available-for-sale financial assets (Note 11.1)
Unquoted equity shares
Thai Metal Processing Co., Ltd.	31-Dec-14		2,479		-		-		2,479
Assets for which fair values are disclosed:
Investment properties (Note 17)
Land	31-Dec-14		11,509		-		-		11,509
Office buildings	31-Dec-14		647		-		-		647

There have been no transfers between Level 1 and Level 2 during the year.

F-74

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25.   FAIR VALUE MEASUREMENT (continued)

Quantitative disclosures fair value measurement hierarchy for assets as of December 31, 2013:

		Fair value measurement using
	Date of valuation	Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
		US$’000		US$’000		US$’000		US$’000
Fair value information:
Available-for-sale financial assets (Note 11.1)
Unquoted equity shares
Thai Metal Processing Co., Ltd.	December 31, 2013		3,189		-		-		3,189
Assets for which fair values are disclosed:
Investment properties (Note 17)
Land	December 31, 2013		11,437		-		-		11,437
Office buildings	December 31, 2013		617		-		-		617

There have been no transfers between Level 1 and Level 2 during the year.

F-75

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.   FINANCIAL RISK MANAGEMENT OBJECTIVES

Financial risks are those derived from financial instruments the Company is exposed to during or at the closing of each fiscal year. The objective of the Company’s financial risk management is to minimize its risk exposure against various financial risks, which include market risk, credit risk and liquidity risk. The Company uses derivate instruments to cover certain risks when it considers them necessary. It is the Company’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The Company manages its exposure to key financial risks, as described in the succeeding paragraphs.

(a)    Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, equity price risk, foreign currency risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, available-for-sale investments and derivative financial instruments.

The sensitivity analyses in the following sections relate to the position as of December 31, 2014 and 2013.

The analyses exclude the impact of movements in market variables on the carrying value of other post-retirement obligations provisions and on the non-financial assets and liabilities of foreign operations.

Interest rate risk

The Company’s exposure to interest rate risk is arising from borrowing at floating interest rates.  Changes in interest rate will affect future cash flows but not the fair value. Less than 40% of the Company’s financial liabilities bear floating interest rate and rest of financial liabilities either bears fixed interest rate which are close to the market rate or non-interest rate.

At the reporting dates, a change of 30 basis points of interest rate in a reporting period could cause the profit for the years ended December 31, 2014 and 2013 to increase/decrease by $127 and $100, respectively.

Equity price risk

The Company’s unlisted equity security is classified as non-current financial assets-available for sale which is subsequently measured at estimated fair value.

At the reporting date, the exposure to unlisted equity security at fair value was $2.5 million (2013: $3.2 million).  Sensitivity analysis of the unlisted equity investment has been provided in Note 11.4.

F-76

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.    FINANCIAL RISK MANAGEMENT OBJECTIVES (continued)

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates arise from sales, purchases and borrowings by operating units in currencies other than the unit’s functional currency. The Company’s principal operations are located in Thailand, the PRC and Singapore and a substantial portion of its revenues are denominated in Thai Baht, US Dollars or Singapore Dollars, whereas a substantial portion of the Company’s cost of sales are denominated in US Dollars. Any devaluation of the Thai Baht or Singapore dollar against the US dollar would have an adverse impact on the operations of the Company. The Company currently does not maintain a foreign currency hedging policy. However, management monitors the foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

The balance of financial assets and liabilities denominated in a currency different from the Company’s functional currency are summarized below.

	Financial Assets				Financial Liabilities
	As of December 31,				As of December 31
	2014		2013		2014		2013
Thai Baht (THB)		10,158		228,870		-		214,816
Singapore dollar (SGD)		79		2,514		56		7,637
Taiwan dollar (TWD)		10,976		26,248		4,217		3,910
Renminbi (RMB)		91,037		80,404		13,197		5,389
Hong Kong dollar (HKD)		2,360		10,327		167		58
Japanese yen (JPY)		-		-		12,000		-

Foreign currency sensitivity

The following table demonstrates the sensitivity of the Company’s profit before tax and equity to a reasonably possible change of each foreign currency exchange rates against US dollar, with all other variables held constant.

	Change rate			THB			SGD			TWD			RMB			HKD			JPY
2013		5	%		21			(202	)		37			614			66			-
		-5	%		(21	)		202			(37	)		(614	)		(66	)		-
2014		5	%		16			1			11			626			14			(5	)
		-5	%		(16	)		(1	)		(11	)		(626	)		(14	)		5

F-77

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.   FINANCIAL RISK MANAGEMENT OBJECTIVES (continued)

Commodity price risk

The Company is affected by the volatility of certain commodities. Copper is the principal raw material used by the Company. The Company purchases copper at price closely related to the prevailing international spot market on the London Metal Exchange for copper. The price of copper is influenced heavily by global supply and demand as well as speculative trading. Consequently, a change in the price of copper will have a direct effect on the Company’s cost of sales.  The Company does not use derivative instruments to hedge the price risk associated with the purchase of these commodities.  However, we cover some of these risks through long-term purchase contracts.

Commodity price sensitivity

The following table shows the effect of price changes in copper.

	Change in year-end price			Effect on profit before tax			Effect on equity
	US$’000			US$’000			US$’000
2014		+13	%		3,751			N/A
Copper		-13	%		(3,751	)		N/A
2013		+13	%		3,730			N/A
Copper		-13	%		(3,730	)		N/A

In average, copper composes around 84% of the product cost.  The above sensitivity analysis is based on the average fluctuation rate in the past five years and one month manufacturing lead time to estimate its impact on profit before tax.

(b)    Credit risk

Credit risk arises from the financial assets of the Company, which comprises cash and cash equivalents, held-to-maturity securities and trade and other receivables.

The Company maintains cash and cash equivalents with various financial institutions. These financial institutions are located in Singapore, Thailand, Australia, Hong Kong and the People’s Republic of China. The Company’s policy is designed to limit its exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. In addition, in selected countries, the Company uses credit rating agency such as Dun and Bradstreet to screen out new low performing customers. Customers are given credit terms over time when they establish good payment patterns with the Company.

Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising the Company’s customer base. The Company carefully assesses the financial strength of its customers and generally does not require any collateral. The Company’s exposure to credit risk arises from default of counterparty, with maximum exposure equal to the carrying amount of these financial instruments.

The Company is exposed to credit loss in the event of non-performance by counter-parties on foreign exchange contracts and trade and other receivables. In 2014, the Company recorded a provision of allowance for doubtful accounts of $2.2 million for a customer of a subsidiary who was not able to settle overdue payments.

As of December 31, 2014 and 2013, trade receivables from one customer represented 7.1% and 10.2% of total trade receivables of the Company, respectively. The credit concentration risk of other trade receivables is insignificant.

F-78

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.   FINANCIAL RISK MANAGEMENT OBJECTIVES (continued)

(c)    Liquidity risk

Liquidity risk arises from the financial liabilities of the Company and its subsequent ability to meet their obligations to repay their financial liabilities as and when they fall due. Management manages the Company’s liquidity risk by closely monitoring cash flow from the operations. The Company has about $69 million cash and cash equivalents, $168 million unutilized amount of bank loans, and the total financial liabilities is $114 million at the reporting date, which results in a net asset position. Liquidity risk is considered to be minimal.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

	< 1 year		2 to 3 years		4 to 5 years		> 5 years		Total
	US$’000		US$’000		US$’000		US$’000		US$’000
As of  December 31, 2014
Financial liabilities
Interest-bearing loans and borrowings		54,712		-		-		-		54,712
Trade and other payables		36,467		-		-		-		36,467
Due to related parties		22,208		-		-		-		22,208
Due to immediate holding company		-		-		-		1,537		1,537
Finance lease liability		34		25		17		-		76
		113,421		25		17		1,537		115,000
As of December 31, 2013
Financial liabilities
Interest-bearing loans and borrowings		42,565		-		-		-		42,565
Trade and other payables		41,369		-		-		-		41,369
Due to related parties		11,126		-		-		-		11,126
Due to immediate holding company		-		-		-		1,732		1,732
Finance lease liability		41		29		-		-		70
		95,101		29		-		1,732		96,862

F-79

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.   FINANCIAL RISK MANAGEMENT OBJECTIVES (continued)

(d)    Capital management

The primary objectives of the Company’s capital management are to safeguard the Company’s ability to continue as a going concern and maintain healthy capital ratios in order to support its business, maximize shareholders’ value and to maintain an optimal capital structure to reduce the cost of capital.

The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions and the risks characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders, or issue new shares, conduct stock repurchase programs. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2014 and 2013.

In line with industry practices, the Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

	As of December 31,
	2014			2013
	US$’000			US$’000
Interest bearing loans and borrowings		53,863			41,789
Trade and other payables		36,467			41,369
Less: cash and cash equivalents		(68,863	)		(62,509	)
Net debt		21,467			20,649
Total Equity		221,211			228,127
Capital and net debt		242,678			248,776
Gearing ratio		8.8	%		8.3	%

The Company has no direct business operations other than its ownership of the capital stock of its subsidiaries and joint venture holdings.  While the Company has no present intention to pay dividends, should the Company decides in the future to do so, as a holding company its ability to pay dividends and meet its other obligations will depend upon the amount of distributions, if any, received from its operating subsidiaries and other holdings and investments.  The Company’s operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to the Company, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory restrictions.  For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accordance with relevant PRC accounting standards and regulations.  Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds.  These reserves are not distributable as cash dividends.  The foregoing restrictions may also affect the Company’s ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.

(e)   Collateral

The credit lines of the Company were collateralized by:

(i)   Mortgage of the Company’s land, buildings, machinery and equipment with a total carrying amount of $12,988 at December 31, 2014 (2013: $14,416);

(ii)   Pledge of other receivables of $9,595 at December 31, 2014 (2013: $10,340) ;

(iii)   Corporate guarantee issued by the Company and a subsidiary of the Company.

(iv)   A trading facility was secured by all the assets and uncalled capital with total carrying amount of $31,466 of a subsidiary as of December 31, 2014 (2013: $ 33,314).

The weighted average interest rates on bank loans and overdrafts as of December 31, 2014 and 2013 were 3.57% and 3.68% per annum, respectively.

F-80

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

26.   FINANCIAL RISK MANAGEMENT OBJECTIVES (continued)

(f)   Derivative - offsetting loans

The Company entered into Import Bill Advance Loan denominated in USD at floating rate and time deposit denominated in USD or RMB at fixed rate with one bank for a term of less than twelve months for the amount of $17.0 million as of December 31, 2013.

In 2014, the Company entered into Import Bill Advance Loan denominated in SGD at floating rate and time deposit denominated in USD at fixed rate with one bank for the amount of $2.9 million. At same time, the Company entered into a currency forward transaction to sell SGD to reduce the currency risk.

These transactions were net settled upon the maturity of the loan agreement. The contractual effect of the loans is the equivalent of a cross-currency interest rate swap arrangement with no initial net investment.

The patterns of these transactions met all the indicators under IAS 391G B.6 based on the fact that the loan and time deposit were entered into at the same time, had same counterparty, had underlying variable of foreign exchange rate and interest rate, and no initial net investment. The transactions should be accounted for at fair value through profit or loss; therefore, the Company recognized $5 and $21 as exchange gain for the year ended December 31, 2014 and 2013.

27.   SUBSEQUENT EVENT

Since the end of financial year the Company is not aware of any matter or circumstance not otherwise dealt with in the report that has significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company.

28.   APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorized for issue by the board of directors on April 30, 2015.

F-81